Attached files
| file | filename |
|---|---|
| EX-99.3 - EXHIBIT 99.3 - Reliant Bancorp, Inc. | ex99_3.htm |
| EX-99.2 - EXHIBIT 99.2 - Reliant Bancorp, Inc. | ex99_2.htm |
| EX-23.1 - EXHIBIT 23.1 - Reliant Bancorp, Inc. | ex23_1.htm |
| 8-K/A - 8-K/A - Reliant Bancorp, Inc. | form8ka.htm |
EXHIBIT 99.4
UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma condensed combined consolidated statement of income for the year ended December 31, 2019 has been prepared to show the impact on
Reliant Bancorp, Inc.’s (“Reliant Bancorp”) results of operations of (i) the completion of the acquisition of Tennessee Community Bank Holdings, Inc. (“TCB Holdings”) on January 1, 2020 (the “TCB Holdings Merger”) including the issuance of 811,210
shares of Reliant Bancorp common stock to TCB Holdings shareholders, and (ii) the completion of the acquisition of First Advantage Bancorp (“FABK”) on April 1, 2020 (the “FABK Merger”) including the issuance of 4,606,419 shares of Reliant Bancorp
common stock to FABK shareholders. The following unaudited pro forma condensed combined consolidated balance sheet as of March 31, 2020 and the unaudited pro forma condensed combined consolidated statement of income for the three months ended March
31, 2020 have been prepared to show the impact on Reliant Bancorp’s historical financial position and results of operations of the completion of the FABK Merger, including the issuance of 4,606,419 shares of Reliant Bancorp common stock to FABK
shareholders.
The unaudited pro forma condensed combined consolidated financial information and explanatory notes are presented using the acquisition method of accounting.
Consideration paid by Reliant Bancorp is allocated to the assets and liabilities of TCB Holdings and FABK at their respective fair values as of the effective date of the TCB Holdings Merger and FABK Merger, respectively. Any excess of consideration
paid over the fair values of TCB Holdings’ or FABK’s net assets has been recorded as goodwill.
Reliant Bancorp, TCB Holdings, and FABK
The following unaudited pro forma condensed combined consolidated financial information is based on the historical financial statements of Reliant Bancorp and FABK,
adjusted for the estimated effects of the FABK Merger. The unaudited pro forma condensed combined consolidated balance sheet as of March 31, 2020 is presented as if the FABK Merger had occurred on that date. The unaudited pro forma condensed combined
consolidated statement of income for the year ended December 31, 2019 is presented as if the TCB Holdings Merger and the FABK’s Merger both had occurred on January 1, 2019. The unaudited pro forma condensed combined consolidated statement of income
for the three months ended March 31, 2020 is presented as if the FABK Merger had occurred on January 1, 2019. The historical financial statements of FABK include certain reclassifications to conform to the historical presentation of Reliant Bancorp.
Pro forma adjustments are included only to the extent they are (i) directly attributable to either or both of the acquisitions, (ii) factually supportable and (iii) with
respect to the unaudited pro forma condensed combined consolidated statements of income, expected to have a continuing impact on the combined results. The pro forma adjustments are based on estimates made for the purpose of preparing these unaudited
pro forma financial statements and are described in the accompanying footnotes. Reliant Bancorp’s management believes that the estimates used in these unaudited pro forma condensed combined consolidated financial statements are reasonable under the
circumstances.
The pro forma adjustments as presented are subject to change as additional information becomes available and additional analyses are performed. The final allocation of
the purchase price for each acquisition will be determined after further valuation analyses under generally accepted accounting principles in the United States (“GAAP”) are performed with respect to the fair values of certain tangible and intangible
assets and liabilities as of the respective date of acquisition. The final adjustments may be materially different from the unaudited pro forma adjustments presented herein. In addition, the unaudited condensed combined pro forma financial statements
do not include the effects of any potential cost savings which Reliant Bancorp’s management believes will result from combining certain operating procedures.
F-1
Certain subjective estimates have been utilized in determining the pro forma adjustments applied to the historical results of operations of TCB Holdings and FABK. 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 entity would have been had Reliant Bancorp, TCB Holdings and FABK been combined during these periods.
The accompanying unaudited pro forma condensed combined consolidated balance sheet as of March 31, 2020 is presented if the FABK Merger had become effective on March 31,
2020. The unaudited pro forma condensed combined consolidated statements of income for the year ended December 31, 2019, and the three months ended March 31, 2020, are presented as if the TCB Holdings Merger and the FABK Merger had become effective
on January 1, 2019. In preparing the unaudited pro forma condensed combined consolidated financial information in accordance with GAAP, the following historical information was used:
| • |
Reliant Bancorp’s Quarterly Report on Form 10-Q for the period ended March 31, 2020;
|
|
•
|
FABK’s unaudited consolidated financial statements as of and for the three months ended March 31, 2019;
|
| • |
Reliant Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2019;
|
| • |
FABK’s audited consolidated financial statements as of for the year ended December 31, 2019;
|
|
•
|
TCB Holdings’ audited consolidated financial statements as of and for the year ended December 31, 2019.
|
The unaudited pro forma condensed combined consolidated financial statements should also be read in conjunction with the above listed filings and consolidated financial
statements.
F-2
UNAUDITED HISTORICAL AND PRO FORMA CONDENSED COMBINED CONSOLIDATED BALANCE SHEET
March 31, 2020
(Dollars in thousands)
|
Reliant
Bancorp, Inc.
(Historical)
|
First
Advantage
Bancorp
(Historical)
|
First
Advantage
Bancorp
Pro Forma
Adjustments
|
Note
|
Pro Forma
Combined
|
||||||||||||||||
| ASSETS | ||||||||||||||||||||
|
Cash and due from banks
|
$
|
46,318
|
$
|
6,645
|
$
|
(12,180
|
)
|
(1)
|
$
|
32,936
|
||||||||||
| (7,847 |
)
|
(2) |
||||||||||||||||||
|
Federal funds sold
|
1,714
|
725
|
|
2,439
|
||||||||||||||||
|
Interest-bearing deposits in other financial institutions
|
-
|
3,789
|
-
|
3,789
|
||||||||||||||||
|
Cash and cash equivalents
|
48,032
|
11,159
|
(20,027
|
)
|
39,164
|
|||||||||||||||
|
Securities available for sale
|
256,928
|
35,970 | - |
292,898
|
||||||||||||||||
|
Loans, net of unearned income
|
1,619,703
|
644,187
|
(21,764
|
)
|
(3)
|
2,242,126
|
||||||||||||||
|
Less allowance for loan losses
|
15,121
|
5,426
|
(5,426
|
)
|
(4)
|
|
15,121
|
|||||||||||||
|
Loans, net
|
1,604,582
|
638,761
|
(16,338
|
)
|
2,227,005
|
|||||||||||||||
|
Mortgage loans held for sale, net
|
70,352
|
5,790
|
88
|
(5)
|
|
76,230
|
||||||||||||||
|
Accrued interest receivable
|
7,289
|
2,385
|
-
|
9,674
|
||||||||||||||||
|
Premises and equipment, net
|
27,609
|
8,053
|
(94
|
)
|
(6)
|
|
35,568
|
|||||||||||||
|
Operating lease right-of-use assets
|
11,473
|
6,101
|
435
|
(7)
|
|
18,009
|
||||||||||||||
|
Restricted equity securities, at cost
|
14,405
|
3,312
|
-
|
17,717
|
||||||||||||||||
|
Other real estate and repossessed assets, net
|
-
|
1,639
|
(380
|
)
|
(8)
|
|
1,259
|
|||||||||||||
|
Cash surrender value of life insurance contracts
|
52,556
|
14,776
|
-
|
67,332
|
||||||||||||||||
|
Deferred tax assets, net
|
5,426
|
2,472
|
4,319
|
(9)
|
|
12,217
|
||||||||||||||
|
Goodwill
|
50,723
|
-
|
328
|
(10)
|
|
51,051
|
||||||||||||||
|
Core deposit intangibles
|
10,486
|
-
|
2,280
|
(11)
|
|
12,766
|
||||||||||||||
|
Other assets
|
17,927
|
4,832
|
-
|
22,759
|
||||||||||||||||
|
TOTAL ASSETS
|
$
|
2,177,788
|
$
|
735,250
|
$
|
(29,389
|
)
|
$
|
2,883,649
|
|||||||||||
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||||||||||||||
|
LIABILITIES
|
||||||||||||||||||||
|
Deposits
|
$
|
1,722,448
|
$
|
606,442
|
$
|
2,248
|
(12)
|
|
$
|
2,331,138
|
||||||||||
|
Accrued interest payable
|
3,995
|
730
|
-
|
4,725
|
||||||||||||||||
|
Subordinate debentures
|
70,391
|
-
|
-
|
70,391
|
||||||||||||||||
|
FHLB advances
|
127,628
|
35,962
|
-
|
163,590
|
||||||||||||||||
|
Dividends payable
|
9
|
-
|
-
|
9
|
||||||||||||||||
|
Operating lease liabilities
|
11,761
|
6,269
|
267
|
(7)
|
|
18,297
|
||||||||||||||
|
Other liabilities
|
6,884
|
9,876
|
-
|
16,760
|
||||||||||||||||
|
TOTAL LIABILITIES
|
1,943,116
|
659,279
|
2,515
|
2,604,910
|
||||||||||||||||
|
STOCKHOLDERS’ EQUITY
|
||||||||||||||||||||
|
Common stock
|
12,014
|
39
|
4,567
|
(13)
|
|
16,620
|
||||||||||||||
|
Additional paid-in capital
|
184,523
|
39,189
|
8,119
|
(14)
|
|
231,831
|
||||||||||||||
|
Common stock held by:
|
||||||||||||||||||||
|
Nonqualified Deferred Compensation Plan
|
-
|
(2,430
|
)
|
2,430
|
(15)
|
|
-
|
|||||||||||||
|
Employee Stock Ownership Plan
|
-
|
(160
|
)
|
160
|
(15)
|
|
-
|
|||||||||||||
|
2008 Equity Incentive Plan
|
-
|
(499
|
)
|
499
|
(15)
|
|
-
|
|||||||||||||
|
Retained earnings
|
39,150
|
39,995
|
(39,995
|
)
|
(16)
|
|
31,303
|
|||||||||||||
|
(7,847
|
)
|
(2)
|
|
|||||||||||||||||
|
Accumulated other comprehensive loss
|
(1,015
|
)
|
(163
|
)
|
163
|
(16)
|
|
(1,015
|
)
|
|||||||||||
|
TOTAL STOCKHOLDERS’ EQUITY
|
234,672
|
75,971
|
(31,904
|
)
|
278,739
|
|||||||||||||||
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$
|
2,177,788
|
$
|
735,250
|
$
|
(29,389
|
)
|
$
|
2,883,649
|
|||||||||||
See accompanying notes to Unaudited Pro Forma Condensed Combined Consolidated Financial Statements
F-3
UNAUDITED HISTORICAL AND PRO FORMA CONDENSED COMBINED CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2019
(Dollar amounts in thousands, except per share amounts)
|
Reliant
Bancorp, Inc.
(Historical)
|
Tennessee
Community
Bank Holdings,
Inc.
(Historical)
|
First
Advantage
Bancorp
(Historical)
|
Tennessee
Community
Bank Holdings,
Inc.
Pro Forma
Adjustments
|
First
Advantage
Bancorp
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|||||||||||||||||||||||||
|
INTEREST INCOME
|
||||||||||||||||||||||||||||||
|
Interest and fees on loans
|
$
|
68,421
|
$
|
9,181
|
$
|
35,848
|
$
|
520
|
(17
|
) |
$
|
5,349
|
(24
|
)
|
$
|
119,319
|
||||||||||||||
|
Interest and fees on loans held for sale
|
961
|
-
|
-
|
-
|
-
|
961
|
||||||||||||||||||||||||
|
Interest on investment securities, taxable
|
2,099
|
1,136
|
627
|
-
|
-
|
3,862
|
||||||||||||||||||||||||
|
Interest on investment securities, nontaxable
|
6,452
|
211
|
433
|
-
|
-
|
7,096
|
||||||||||||||||||||||||
|
Federal funds sold and other
|
1,252
|
189
|
453
|
-
|
-
|
1,894
|
||||||||||||||||||||||||
|
TOTAL INTEREST INCOME
|
79,185
|
10,717
|
37,361
|
520
|
5,349
|
133,132
|
||||||||||||||||||||||||
|
INTEREST EXPENSE
|
||||||||||||||||||||||||||||||
|
Deposits
|
21,899
|
1,667
|
9,657
|
(480
|
)
|
(18
|
)
|
(2,248
|
)
|
(25
|
)
|
30,495
|
||||||||||||||||||
|
Federal Home Loan Bank advances
|
543
|
278
|
871
|
(64
|
)
|
(19
|
)
|
-
|
1,628
|
|||||||||||||||||||||
|
Subordinated debentures
|
938
|
-
|
-
|
-
|
-
|
938
|
||||||||||||||||||||||||
|
Other borrowings
|
-
|
6
|
-
|
-
|
-
|
6
|
||||||||||||||||||||||||
|
TOTAL INTEREST EXPENSE
|
23,380
|
1,951
|
10,528
|
(544
|
)
|
(2,248
|
)
|
33,067
|
||||||||||||||||||||||
|
NET INTEREST INCOME
|
55,805
|
8,766
|
26,833
|
1,064
|
7,597
|
100,065
|
||||||||||||||||||||||||
|
PROVISION FOR LOAN LOSSES
|
1,211
|
(742
|
)
|
725
|
-
|
-
|
1,194
|
|||||||||||||||||||||||
|
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
|
54,594
|
9,508
|
26,108
|
1,064
|
7,597
|
98,871
|
||||||||||||||||||||||||
|
NONINTEREST INCOME
|
||||||||||||||||||||||||||||||
|
Service charges on deposit accounts
|
3,746
|
523
|
1,331
|
-
|
-
|
5,600
|
||||||||||||||||||||||||
|
Gains on mortgage loans sold, net
|
4,905
|
-
|
1,727
|
-
|
-
|
6,632
|
||||||||||||||||||||||||
|
Other
|
3,313
|
917
|
964
|
-
|
-
|
5,194
|
||||||||||||||||||||||||
|
TOTAL NONINTEREST INCOME
|
11,964
|
1,440
|
4,022
|
-
|
-
|
17,426
|
||||||||||||||||||||||||
|
NONINTEREST EXPENSE
|
||||||||||||||||||||||||||||||
|
Salaries and employee benefits
|
30,514
|
3,995
|
12,181
|
-
|
-
|
46,690
|
||||||||||||||||||||||||
|
Occupancy
|
5,423
|
724
|
2,959
|
46
|
(20
|
)
|
(9
|
)
|
(26
|
)
|
9,143
|
|||||||||||||||||||
|
Information technology
|
6,213
|
1,346
|
1,399
|
-
|
-
|
8,958
|
||||||||||||||||||||||||
|
Merger expenses
|
1,603
|
1,472
|
4,271
|
(2,353
|
) |
(21
|
)
|
(4,993
|
)
|
(27
|
)
|
-
|
||||||||||||||||||
|
Other operating
|
10,139
|
2,092
|
4,125
|
685
|
(22
|
)
|
532
|
(28
|
)
|
17,573
|
||||||||||||||||||||
|
TOTAL NONINTEREST EXPENSE
|
53,892
|
9,629
|
24,935
|
(1,622
|
)
|
(4,470
|
)
|
82,364
|
||||||||||||||||||||||
|
INCOME BEFORE PROVISION FOR INCOME TAXES
|
12,666
|
1,319
|
5,195
|
2,686
|
12,067
|
33,933
|
||||||||||||||||||||||||
|
INCOME TAX EXPENSE
|
2,129
|
204
|
1,255
|
401
|
(23 | ) |
2,989
|
(29
|
)
|
6,978
|
||||||||||||||||||||
|
NET INCOME
|
10,537
|
1,115
|
3,940
|
2,285
|
9,078
|
26,955
|
||||||||||||||||||||||||
|
NONCONTROLLING INTEREST IN NET LOSS OF SUBSIDIARY
|
5,659
|
-
|
-
|
-
|
-
|
5,659
|
||||||||||||||||||||||||
|
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS
|
$
|
16,196
|
$
|
1,115
|
$
|
3,940
|
$
|
2,285
|
$
|
9,078
|
$
|
32,614
|
||||||||||||||||||
|
Basic net income attributable to common shareholders, per share
|
$
|
1.44
|
$
|
1.06
|
$
|
1.02
|
$
|
1.96
|
||||||||||||||||||||||
|
Diluted net income attributable to common shareholders, per share
|
$
|
1.44
|
$
|
1.04
|
$
|
0.93
|
$
|
1.95
|
||||||||||||||||||||||
| Weighted average common shares outstanding | ||||||||||||||||||||||||||||||
|
Basic
|
11,212,127
|
1,055,041
|
3,878,844
|
16,627,480
|
||||||||||||||||||||||||||
|
Diluted
|
11,281,262
|
1,067,355
|
4,230,702
|
16,696,615
|
||||||||||||||||||||||||||
See accompanying notes to Unaudited Pro Forma Condensed Combined Consolidated Financial Statements
F-4
UNAUDITED HISTORICAL AND PRO FORMA CONDENSED COMBINED CONSOLIDATED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2020
(Dollar amounts in thousands, except per share amounts)
|
Reliant
Bancorp, Inc.
(Historical)
|
First
Advantage
Bancorp
(Historical)
|
First
Advantage
Bancorp
Pro Forma
Adjustments
|
Pro Forma
Combined
|
|||||||||||||||
|
INTEREST INCOME
|
||||||||||||||||||
|
Interest and fees on loans
|
$
|
20,645
|
$
|
9,607
|
$
|
1,337
|
(30
|
)
|
$
|
31,589
|
||||||||
|
Interest and fees on loans held for sale
|
560
|
-
|
-
|
560
|
||||||||||||||
|
Interest on investment securities, taxable
|
451
|
151
|
-
|
602
|
||||||||||||||
|
Interest on investment securities, nontaxable
|
1,371
|
98
|
-
|
1,469
|
||||||||||||||
|
Federal funds sold and other
|
279
|
71
|
-
|
350
|
||||||||||||||
|
TOTAL INTEREST INCOME
|
23,306
|
9,927
|
1,337
|
34,570
|
||||||||||||||
|
INTEREST EXPENSE
|
||||||||||||||||||
|
Deposits
|
4,837
|
2,485
|
-
|
7,322
|
||||||||||||||
|
Federal Home Loan Bank advances
|
361
|
118
|
-
|
479
|
||||||||||||||
|
Subordinated debentures
|
993
|
-
|
-
|
993
|
||||||||||||||
|
TOTAL INTEREST EXPENSE
|
6,191
|
2,603
|
-
|
8,794
|
||||||||||||||
|
NET INTEREST INCOME
|
17,115
|
7,324
|
1,337
|
25,776
|
||||||||||||||
|
PROVISION FOR LOAN LOSSES
|
2,900
|
575
|
-
|
3,475
|
||||||||||||||
|
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
|
14,215
|
6,749
|
1,337
|
22,301
|
||||||||||||||
|
NONINTEREST INCOME
|
||||||||||||||||||
|
Service charges on deposit accounts
|
1,208
|
324
|
-
|
1,532
|
||||||||||||||
|
Gains on mortgage loans sold, net
|
1,573
|
914
|
-
|
2,487
|
||||||||||||||
|
Loss on disposal of equipment
|
-
|
(199
|
)
|
-
|
(199
|
)
|
||||||||||||
|
Other
|
501
|
192
|
-
|
693
|
||||||||||||||
|
TOTAL NONINTEREST INCOME
|
3,282
|
1,231
|
-
|
4,513
|
||||||||||||||
|
NONINTEREST EXPENSE
|
||||||||||||||||||
|
Salaries and employee benefits
|
9,237
|
3,417
|
-
|
12,654
|
||||||||||||||
|
Occupancy
|
1,486
|
780
|
(2
|
)
|
(31
|
)
|
2,264
|
|||||||||||
|
Information technology
|
1,819
|
377
|
-
|
2,196
|
||||||||||||||
|
Merger expenses
|
4,186
|
6,215
|
(10,401
|
)
|
(32
|
)
|
-
|
|||||||||||
|
Other operating
|
2,870
|
1,563
|
115
|
(33
|
)
|
4,548
|
||||||||||||
|
TOTAL NONINTEREST EXPENSE
|
19,598
|
12,352
|
(10,288
|
)
|
21,662
|
|||||||||||||
|
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAX
|
(2,101
|
)
|
(4,372
|
)
|
11,625
|
5,152
|
||||||||||||
|
INCOME TAX EXPENSE (BENEFIT)
|
(910
|
)
|
(1,829
|
)
|
2,872
|
(34
|
)
|
133
|
||||||||||
|
NET INCOME (LOSS)
|
(1,191
|
)
|
(2,543
|
)
|
8,753
|
5,019
|
||||||||||||
|
NONCONTROLLING INTEREST IN NET LOSS OF SUBSIDIARY
|
976
|
-
|
-
|
976
|
||||||||||||||
|
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS
|
$
|
(215
|
)
|
$
|
(2,543
|
)
|
$
|
8,753
|
$
|
5,995
|
||||||||
|
Basic net income (loss) attributable to common shareholders, per share
|
$
|
(0.02
|
)
|
$
|
(0.65
|
)
|
$
|
0.36
|
||||||||||
|
Diluted net income (loss) attributable to common shareholders, per share
|
$
|
(0.02
|
)
|
$
|
(0.65
|
)
|
$
|
0.36
|
||||||||||
| Weighted average common shares outstanding | ||||||||||||||||||
|
Basic
|
11,892,723
|
3,883,233
|
16,496,866
|
|||||||||||||||
|
Diluted
|
11,895,020
|
3,883,233
|
16,499,163
|
|||||||||||||||
See accompanying notes to Unaudited Pro Forma Condensed Combined Consolidated Financial Statements
F-5
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands, except per share amounts)
NOTE 1 – BASIS OF PRESENTATION
The unaudited pro forma condensed combined consolidated financial statements included herein have been prepared pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and disclosures normally included in financial statements prepared in accordance with GAAP have been omitted.
The unaudited pro forma condensed combined consolidated financial statements present the estimated effects of the TCB Holdings Merger and the FABK Merger. The
information is presented for illustrative purposes only and may differ materially from the actual results that would have occurred had the TCB Holdings Merger and/or FABK Merger occurred at the beginning of the period presented.
The TCB Holdings Merger, which was completed effective January 1, 2020, resulted in the issuance of 0.769 shares of Reliant common stock, $1.00 par value per share
(“Reliant common stock”), in exchange for each share of TCB Holdings common stock. Based on the closing sale price per share of Reliant common stock on the Nasdaq Capital Market (“Nasdaq”) on December 31, 2019 of $22.24, the estimated value of the
TCB Holdings’ Merger consideration per share of TCB Holdings common stock was $34.64.
The FABK Merger, which was completed effective April 1, 2020, resulted in the issuance of 1.17 shares of Reliant common stock in exchange for each share of FABK common
stock. Based on the closing sale price of shares of Reliant common stock on Nasdaq on March 31, 2020 of $11.27, the estimated value of the FABK Merger consideration per share of FABK common stock was $16.28.
The TCB Holdings Merger and the FABK Merger were accounted for as acquisitions by Reliant Bancorp using the acquisition method of accounting. Accordingly, the assets and
liabilities of TCB Holdings and FABK have been recorded at their respective estimated fair values based on currently available information. The pro forma adjustments included herein are subject to change depending on changes in market interest rates
and the composition of asset and liability balances, as well as additional information that becomes available and additional analysis that is performed. The final allocation of each purchase price will be determined after completion of thorough
analyses to determine the fair value of TCB Holdings’ and FABK’s tangible and identifiable intangible assets and liabilities as of the date each respective acquisition was completed. Increases or decreases in the estimated fair values of the net
assets, commitments, executory contracts, and other items of TCB Holdings and FABK as compared with the information shown in the unaudited pro forma condensed combined consolidated financial information may change the amount of the purchase price
allocated to goodwill and other assets and may impact the statements of income (loss) due to adjustments in yield and/or amortization of the adjusted assets or liabilities. The final adjustments may be materially different from the unaudited pro
forma adjustments presented herein.
The accounting policies of Reliant Bancorp, TCB Holdings and FABK are in the process of being reviewed in detail. Upon completion of such review, conforming adjustments
or financial restatement reclassification may be determined to be necessary.
F-6
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands, except per share amounts)
NOTE 2 – PRO FORMA ADJUSTMENTS
The following estimated adjustments were made to the pro forma condensed combined consolidated financial statements:
| 1) |
This adjustment includes an adjustment for the estimated payment of cash for the cash portion of the FABK Merger. The calculation consists of 3,935,165 shares of FABK common stock outstanding
multiplied by the cash settlement price of $3.00 per share. In addition, outstanding options of FABK, totaling 34,800, were paid out at a settlement price of $30.00 per share less the weighted average exercise price per share of $19.44.
|
| 2) |
This adjustment reflects estimated non-recurring transaction costs of $7,847, net of tax effect and assuming 94% of that amount is deductible and utilizing a 26.135% blended federal and state tax
rate for Reliant Bancorp and FABK.
|
| 3) |
To adjust FABK’s estimated loan portfolio fair value by $21,764. For the purpose of the pro forma financial statements, the future accretion of the fair value adjustment will be recorded as a
component of interest income based on the straight-line method over a period of 44 months which is the weighted average life of the acquired loan portfolio. The non-accretable discount for the loan fair market value adjustment is $2,133.
|
| 4) |
Elimination of FABK’s allowance for loan losses. Estimated credit losses in FABK’s loan portfolio are included in the loan valuation adjustment described in (3) above.
|
| 5) |
To adjust to the fair market value for loans held for sale.
|
| 6) |
To reflect the mark to market adjustment for premises and equipment to be recognized on the straight-line method over 10 years.
|
| 7) |
Revaluation of operating leases for the right-of-use assets and corresponding lease liability.
|
| 8) |
To reflect the net estimated realizable value of repossessed manufactured housing units.
|
| 9) |
This is the adjustment for the estimated deferred tax asset related to fair value acquisition accounting adjustments of FABK using a blended federal and state statutory tax rate of 26.135%.
|
| 10) |
To recognize goodwill equal to the excess of consideration paid by Reliant Bancorp over the net fair value of FABK’s assets and liabilities acquired.
|
| 11) |
To recognize a core deposit intangible asset of $2,280 related to deposit customer relationships acquired associated with the FABK Merger. The related amortization expense will be recognized based on
the sum-of-months-digits method over an eight-year period.
|
| 12) |
To adjust FABK’s deposits to estimated fair value and amortize the adjustment as an increase to interest expense based on the straight-line method over the estimated remaining life of eight months.
|
F-7
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands, except per share amounts)
NOTE 2 – PRO FORMA ADJUSTMENTS (Continued)
| 13) |
To reflect cancellation of FABK’s common stock and record the issuance of 4,606,419 shares of Reliant common stock, based on converting 3,395,165 shares of FABK’s common stock at the conversion rate
of 1.17 per share as well as 2,000 restricted stock units using the same conversion rate. Fractional shares totaling 64 were redeemed for $1.
|
| 14) |
To reflect the purchase accounting fair value adjustments of FABK and remove the additional paid in capital and remaining shareholders’ accounts of FABK.
|
| 15) |
To recognize the settlement of compensation plans at the time of the FABK Merger.
|
| 16) |
Adjustments to eliminate FABK’s retained earnings and accumulated other comprehensive income.
|
| 17) |
This represents the accretable portion of the loan discount on TCB Holdings’ loans using the straight-line basis over a 37-month period.
|
| 18) |
To reflect the accretion of discount on TCB Holdings’ deposits using the straight-line basis over a one-year period.
|
| 19) |
To estimate the accretion of TCB Holdings’ FHLB advances discount using the straight-line basis over a 19-month period.
|
| 20) |
To adjust for the additional depreciation for the increase to TCB Holdings’ premises and equipment recognized over a 25-year period.
|
| 21) |
This reflects the removal of non-recurring expenses which are primarily related to the TCB Holdings Merger costs, contract settlements, and employee compensation.
|
| 22) |
This is to present the amortization of the core deposit intangible asset from the TCB Holdings Merger and will be amortized over a 10-year period using the sum-of-the-months-digits method.
|
| 23) |
This is the adjustment for the estimated deferred tax liability related to fair value adjustments using a blended federal and state statutory tax rate of 26.135%.
|
| 24) |
This represents the accretable portion of the loan discount on FABK’s loans using the straight-line basis over a 44-month period.
|
| 25) |
To reflect the amortization of the FABK’s deposit premium over an eight-month period.
|
| 26) |
To reflect the reduced depreciation related to the fair market value adjustment related to premises and equipment.
|
| 27) |
This reflects the removal of non-recurring expenses which are primarily related to the FABK Merger costs, contract settlements, and employee compensation.
|
F-8
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(Dollar amounts in thousands, except per share amounts)
NOTE 2 – PRO FORMA ADJUSTMENTS (Continued)
| 28) |
This is to present the amortization of the core deposit intangible asset from the FABK Merger and will be amortized over an eight-year period using the sum-of-the-months-digits method.
|
| 29) |
This is the adjustment for the estimated deferred tax liability related to fair value adjustments and the recording of the core deposit intangible for the FABK Merger using a blended federal and
state statutory tax rate of 26.135%.
|
| 30) |
This represents the accretable portion of the discount on FABK’s loans using the straight-line basis over a 44-month period.
|
| 31) |
To reflect the reduced depreciation related to the fair market value adjustment related to premises and equipment.
|
| 32) |
This reflects the removal of non-recurring expenses which are primarily related to the FABK Merger costs, contract settlements, and employee compensation.
|
| 33) |
This is to present the amortization of the core deposit intangible asset from the FABK Merger and will be amortized over an eight-year period using the sum-of-the-months-digits method.
|
| 34) |
This is the adjustment for the estimated deferred tax liability related to fair value adjustments and the recording of the core deposit intangible for the FABK Merger using a blended federal and
state statutory tax rate of 26.135%.
|
F-9
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(Dollar amounts in thousands, except per share amounts)
NOTE 3 – PRELIMINARY PURCHASE PRICE ALLOCATION
Tennessee Community Bank Holdings, Inc.
The pro forma adjustments include the estimated purchase accounting entries to record the TCB Holdings Merger. Measurement of the acquisition consideration is based on
the market price of Reliant Bancorp common stock as of the close of business on December 31, 2019 multiplied by the number of common shares to be issued in the TCB Holdings Merger. The consideration is allocated to the estimated fair values of assets
acquired and liabilities assumed, net of deferred taxes, with any remaining excess recorded as goodwill. Estimated fair value adjustments included in the pro forma financial statements are based upon available information and certain assumptions
considered reasonable and may be revised as additional information becomes available.
The purchase price allocation for TCB Holdings is as follows:
|
Shares of common stock to be issued
|
811,210
|
|||
|
Market price of common stock on January 1, 2020
|
$
|
22.24
|
||
|
Estimated fair value of common stock issued
|
18,041
|
|||
|
Cash disbursement for share exhange
|
18,073
|
|||
|
Cash disbursement for fractional shares
|
3
|
|||
|
Cash disbursement for stock options settlement
|
430
|
|||
|
Total consideration
|
36,547
|
|||
|
Fair value of assets acquired and liabilities assumed:
|
||||
|
Cash and cash equivalents
|
11,026
|
|||
|
Investment securities available for sale
|
56,336
|
|||
|
Loans
|
171,445
|
|||
|
Premises and equipment
|
6,440
|
|||
|
Deferred tax asset, net
|
(337
|
)
|
||
|
Cash surrender value of life insurance
|
5,629
|
|||
|
Restricted equities
|
909
|
|||
|
Core deposit intangible
|
3,617
|
|||
|
Other assets
|
1,781
|
|||
|
Deposits
|
(210,538
|
)
|
||
|
Borrowings
|
(58
|
)
|
||
|
FHLB advances
|
(13,102
|
)
|
||
|
Other liabilities
|
(3,682
|
)
|
||
|
Total fair value of net assets acquired
|
29,466
|
|||
|
Goodwill
|
$
|
7,081
|
F-10
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (Continued)
(Dollar amounts in thousands, except per share amounts)
NOTE 3 – PRELIMINARY PURCHASE PRICE ALLOCATION (Continued)
First Advantage Bancorp
The pro forma adjustments include the estimated purchase accounting entries to record the merger. Measurement of the acquisition consideration is based on the market
price of Reliant Bancorp common stock prior to the opening of business on April 1, 2020 multiplied by the number of common shares to be issued in the FABK Merger. The consideration is allocated to the estimated fair values of assets acquired and
liabilities assumed, net of deferred taxes, with any remaining excess recorded as goodwill. Estimated fair value adjustments included in the pro forma financial statements are based upon available information and certain assumptions considered
reasonable and may be revised as additional information becomes available.
The purchase price allocation for FABK is as follows:
|
Shares of common stock to be issued
|
4,606,419
|
|||
|
Market price of common stock on April 1, 2020
|
$
|
11.27
|
||
|
Estimated fair value of common stock issued
|
51,914
|
|||
|
Cash disbursement for share exchange (including restricted stock units)
|
11,811
|
|||
|
Cash related to fractional share settlement
|
1
|
|||
|
Cash related to stock options settlement
|
368
|
|||
|
Total consideration
|
64,094
|
|||
|
Fair value of assets acquired and liabilities assumed:
|
||||
|
Cash and cash equivalents
|
11,159
|
|||
|
Investment securities available for sale
|
35,970
|
|||
|
Loans
|
622,423
|
|||
|
Mortgage loans held for sale
|
5,878
|
|||
|
Premises and equipment
|
7,959
|
|||
|
Deferred tax asset
|
6,791
|
|||
|
Cash surrender value of life insurance
|
14,776
|
|||
|
Other real estate and repossessed assets
|
1,259
|
|||
|
Core deposit intangible
|
2,280
|
|||
|
Operating lease right-of-use assets
|
6,536
|
|||
|
Other assets
|
10,529
|
|||
|
Deposits
|
(608,690
|
)
|
||
|
Borrowings
|
(35,962
|
)
|
||
|
Operating lease liabilities
|
(6,536
|
)
|
||
|
Other liabilities
|
(10,606
|
)
|
||
|
Total fair value of net assets acquired
|
63,766
|
|||
|
Goodwill
|
$
|
328
|
F-11
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (Continued)
(Dollar amounts in thousands, except per share amounts)
NOTE 4 – MERGER AND INTEGRATION COSTS
The branch operations, commercial lending activities, mortgage banking operations, along with all other operations of TCB Holdings and FABK are being integrated into
Reliant Bancorp. The specific details of the plan to integrate the operations of TCB Holdings and FABK into Reliant Bancorp will continue to be refined over the next several months, and will include assessing personnel, benefit plans, premises,
equipment and service contracts to determine where we may take advantage of redundancies. Certain decisions arising from these assessments may involve involuntary termination of employees, vacating leased premises, changing information systems,
canceling contracts with certain service providers, and selling or otherwise disposing of certain premises, furniture and equipment. Reliant Bancorp also expects to incur merger-related costs including professional fees, legal fees, system conversion
costs and costs related to communications with customers and others. To the extent there are costs associated with these actions, the costs will be recorded based on the nature of the cost and the timing of these integration actions. Reliant Bancorp
expects to realize cost savings and may generate revenue enhancements from the acquisition of TCB Holdings and/or FABK. Such cost savings and any potential revenue enhancements are not reflected in the pro forma condensed combined consolidated
financial statements and there can be no assurance they will be achieved in the amount or manner currently contemplated.
NOTE 5 – COVID-19
A pandemic now referred to as COVID-19 is stressing the health and economies of the world in a material manner. There is much uncertainty as to the eventual quantifiable
impact of COVID-19 on our current and pro forma market areas, quality of the loan portfolio, and the future capital capacity for issuers of securities. The duration of the pandemic and its severity will be determinative in the ultimate impact on the
economy and that of Reliant Bancorp. The pro forma information presented does not and is not intended to consider the effects of the pandemic in the pro forma operating results and has been considered in the estimated fair values of acquired assets
and assumed liabilities-based information available presently. Revisions to the estimated fair values are to be reassessed during the business combination measurement periods which may, if necessary, extend up to one year from the acquisition date.
F-12