-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, L+4tLGbIb0AoQ22gDzEaoi0O0goBQ2hjlyWklUSOdQmu2MW8FVVMmgJjKvaH4/fr T0b+ZZlN8y+TJzIN6gTdrg== 0000310979-97-000011.txt : 19971218 0000310979-97-000011.hdr.sgml : 19971218 ACCESSION NUMBER: 0000310979-97-000011 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19971201 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19971217 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST BANKS AMERICA INC CENTRAL INDEX KEY: 0000310979 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 751604965 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-08230 FILM NUMBER: 97739870 BUSINESS ADDRESS: STREET 1: P O BOX 630369 CITY: HOUSTON STATE: TX ZIP: 77263-0369 BUSINESS PHONE: 7137817171 FORMER COMPANY: FORMER CONFORMED NAME: BANCTEXAS GROUP INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: COMMERCE SOUTHWEST INC DATE OF NAME CHANGE: 19820831 8-K 1 FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): December 16, 1997 (December 1, 1997) FIRST BANKS AMERICA, INC. (Exact name of registrant as specified in its charter) Delaware -------- (State or other jurisdiction of incorporation) 0-8937 75-1604965 ------ ---------- (Commissioner File Number) (IRS Employer Identification No.) 135 N. Meramec, Clayton, Missouri 63105 --------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (314) 854-4600 Not Applicable -------------- (Former name or former address, if changed since last report) Item 2. Acquisition or Disposition of Assets On July 28, 1997, First Banks America, Inc. (FBA) and Surety Bank entered into an Agreement and Plan of Reorganization (Surety Agreement) providing for the acquisition of Surety Bank by FBA. Under the terms of the Surety Agreement, Surety Bank was be merged into a newly formed commercial banking subsidiary of FBA (Northern California Bank) effective December 1, 1997. Surety Bank common shareholders are allowed to elect to receive either $36.12 in cash or FBA common stock equivalent to the quotient of $38.12 divided by the exchange price for each share of Surety common stock that they hold. The exchange price, as defined in the Surety Agreement, is subject to a minimum and maximum price per share of common stock of $10.89 and $14.73, respectively. Holders of Surety Bank convertible preferred stock will receive either $30.73 in cash or FBA common stock equivalent to the quotient of $32.43 divided by the exchange price, which are the equivalent amounts assuming the preferred shareholders had exercised their rights to convert into Surety Bank common stock. The Surety Agreement requires that 51% of the Surety Bank stock be exchanged for FBA common stock. If Surety Bank shareholders representing more than 51% of the outstanding stock elect to receive FBA stock in the transaction, Surety Bank and FBA may mutually agree to increase the stock portion of the transaction to a maximum of 65% of the total Surety Bank stock. Based on the market value of FBA common stock of $20.12 as of December 10, 1997 and assuming 51% of the Surety Bank stock is exchanged for FBA common stock, the total transaction price would be $8.88 million. The transaction will be accounted for using the purchase method of accounting. FBA funded the cash portion of the acquisition from an advance under a $20 million promissory note payable with First Banks, Inc., a St. Louis based bank holding company which owns 70.2% of FBA's voting stock as of September 30, 1997. The borrowings under the promissory note payable bear interest at an annual rate of one-quarter percent less than the "Prime Rate" as reported in the Wall Street Journal. Principal and accrued interest outstanding under the promissory note payable are due and payable on October 31, 2001. Except as noted above, there were no material relationships between Surety Bank, or any of its affiliates, directors or officers, or any associates of any such directors or officers, and the Registrant, or any of its affiliates, directors or officers, or any associates of any such directors or officers. Item 7. Financial Statements and Exhibits a) Financial Statements of Business Acquired Pursuant to the requirements of Article 3 of Regulation S-X, the following consolidated financial statements for Surety Bank have been included in this filing or incorporated herein by reference as noted: 1. Consolidated Balance Sheet as of September 30, 1997 and December 31, 1996 (unaudited)-filed herewith. 2. Consolidated Statement of Operations for the three and nine months ended September 30, 1997 and 1996 (unaudited)-filed herewith. 3. Consolidated Statement of Changes in Stockholders' Equity for the year ended December 31, 1996 and the nine months ended September 30, 1997 (unaudited)-filed herewith. 4. Consolidated Condensed Statement of Cash Flows for the nine months ended September 30, 1997 and 1996 (unaudited)-filed herewith. 5. Audited Consolidated Financial Statements as of and for the years ended December 31, 1996 and 1995-incorporated herein by reference to Amendment No. 1 to the Registration Statement on Form S-4 of FBA (Registration No. 333-35721). The consolidated financial statements appear on pages F-1 through F-25 of the Amendment. (b) Pro Forma Financial Information 1. Pro Forma Combined Condensed Balance Sheet as of December 31, 1996 (unaudited)-filed herewith. 2. Pro Forma Consolidated Condensed Statement of Income for the nine months ended September 30, 1997 and 1996 and for the year ended December 31, 1996 (unaudited)-filed herewith. 3. Notes to Pro Forma Combined Condensed Financial Statements- filed herewith. (c) Exhibits The following exhibits are incorporated herein by reference: Exhibit No. Exhibit 2 Agreement and Plan of Reorganization, dated July 28, 1997 between FBA and Surety Bank (filed as Exhibit 2 to FBA's current report on Form 8-K filed on August 7, 1997). 10(o) Promissory Note Payable, dated November 4, 1997, by and between FBA and First Banks (filed as Exhibit 10(o) to FBA's quarterly report on Form 10-Q for the quarter ended September 30, 1997). Item 7(a) Financial Statements of Business Acquired
SURETY BANK AND SUBSIDIARY CONSOLIDATED BALANCE SHEET (dollars expressed in thousands, except per share data) September 30, December 31, 1997 1996 ------------ ------------ (unaudited) ASSETS Cash and due from banks............................................ $ 2,254 2,321 Federal funds sold................................................. 915 - Available-for-sale investment securities........................... 12,310 11,038 Loans held for sale................................................ 5,812 4,463 Loans, less allowance for loan losses of $526 at September 30, 1997 and $586 at December 31, 1996............................................... 50,365 50,932 Bank premises and equipment, net................................... 2,342 1,466 Note receivable.................................................... - 895 Accrued interest receivable and other assets....................... 1,334 941 ----------- ---------- Total assets.............................................. $ 75,332 72,056 =========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Deposits: Non-interest bearing.............................................. $ 4,280 4,284 Interest bearing.................................................. 63,562 60,085 ----------- ------ Total deposits.............................................. 67,842 64,369 Other borrowed funds................................................. 1,850 2,135 Accrued interest payable and other liabilities................................................. 513 662 ----------- ---------- Total liabilities........................................... 70,205 67,166 ----------- ---------- Stockholders' equity: Convertible preferred stock - Series A, $1 par value, $20 per share redemption value; authorized - 2,000,000 shares, issued and outstanding - 61,050 shares.................. 61 61 Common stock, $1 par value; authorized- 2,000,000 shares; issued and outstanding- 148,560 shares............................................... 149 149 Additional paid-in capital........................................ 2,541 2,541 Retained earnings................................................. 2,371 2,161 Unrealized gain (loss) on available-for-sale investment securities, net of taxes............................ 5 (22) ----------- ---------- Total stockholders' equity................................ 5,127 4,890 ----------- ---------- Total liabilities and stockholders' equity.................. $ 75,332 72,056 =========== ==========
SURETY BANK AND SUBSIDIARY CONSOLIDATED STATEMENT OF OPERATIONS (dollars expressed in thousands, except per share data) Three months ended Nine months ended September 30, September 30, 1997 1996 1997 1996 -------------- ------------- ----------- --------- (unaudited) Interest income: Interest and fees on loans..................... $ 1,239 1,082 3,547 3,218 Interest on investment securities and Federal funds sold....................... 212 184 571 511 -------------- ------------ ---------- --------- Total interest income.................... 1,451 1,266 4,118 3,729 -------------- ------------ ---------- --------- Interest expense: Interest on deposits........................... 642 600 1,876 1,736 Interest on other borrowed funds........................................ 2 - 5 7 -------------- ------------ ---------- --------- Total interest expense................... 644 600 1,881 1,743 -------------- ------------ ---------- --------- Net interest income...................... 807 666 2,237 1,986 Provision for loan losses......................... 30 175 95 265 -------------- ------------ ---------- --------- Net interest income after provision for loan losses............ 777 491 2,142 1,721 -------------- ------------ ---------- --------- Noninterest income: Service charges................................ 76 66 215 175 Gain on sale of loans.......................... 275 40 594 72 Loan servicing income.......................... 26 15 83 72 Other income................................... 28 62 159 215 -------------- ------------ ---------- --------- Total noninterest income................. 405 183 1,051 534 -------------- ------------ ---------- --------- Other expenses: Salaries and employee benefits................................... 516 338 1,404 1,010 Occupancy and furniture and equipment.......... 102 91 297 248 One-time SAIF assessment....................... - 351 - 351 Other expense.................................. 441 321 1,120 909 -------------- ------------ ---------- --------- Total other expenses..................... 1,059 1,101 2,821 2,518 -------------- ------------ ---------- --------- Income (loss) before income taxes........ 123 (427) 372 (263) Income tax expense (benefit)...................... 39 (171) 133 (106) -------------- ------------ ---------- --------- Net income (loss)........................ $ 84 (256) 239 (157) ============== ============ ========== ========= Earnings (loss) per share of common stock and common stock equivalents (net of preferred stock dividends)............. $ .55 (1.68) 1.56 (1.03) ============== ============ ========== ========= Weighted average number of shares outstanding.................................... 153,697 152,684 153,697 152,684 ============== ============ ========== =========
SURETY BANK AND SUBSIDIARY CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY For the year ended December 31, 1996 and nine months ended September 30, 1997 (dollars expressed in thousands, except for per share data) Unrealized (Loss) Gain Convertible on Available- Preferred Stock Common Stock Additional For-Sale --------------- ------------ ---------- -------- Paid-In Retained Investment Shares Amount Shares Amount Capital Earnings Securities Total Balance, December 31, 1995 61,050 61 148,560 149 2,541 2,425 16 5,192 Preferred stock cash dividend -$.9816 per share -- -- -- -- -- (60) -- (60) Net change in unrealized gain (loss) on available-for-sale investment securities, net of taxes -- -- -- -- -- -- (38) (38) Net loss -- -- -- -- -- (204) -- (204) - ------------------------------------------------------------------------------------------------------------------------- Balance, December 31, 1996 61,050 61 148,560 149 2,541 2,161 (22) 4,890 Preferred stock cash dividend - $.4771 per share (unaudited) -- -- -- -- -- (29) -- (29) Net change in unrealized gain (loss) on available- for-sale investment securities, net of taxes (unaudited) -- -- -- -- -- -- 27 27 Net income (unaudited) -- -- -- -- -- 239 -- 239 - ------------------------------------------------------------------------------------------------------------------------- Balance September 30, 1997 (unaudited) 61,050 $61 148,560 $149 2,541 2,371 5 5,127 =========================================================================================================================
SURETY BANK AND SUBSIDIARY CONSOLIDATED STATEMENT OF CASH FLOWS Nine months ended September 30, 1997 1996 ---- ---- (unaudited) Cash flows from operating activities: Net income (loss)............................................................................... $ 239 (157) Adjustments to reconcile net income (loss) to net cash used in operating activities: Provision for loan losses................................................................... 95 265 Deferred loan origination fees and costs, net............................................... (25) (86) Depreciation and amortization............................................................... 168 124 Accretion of discount on note receivable.................................................... - (32) Provision for other real estate losses...................................................... 73 - (Increase) in loans held for sale........................................................... (1,349) (356) Dividends on Federal Home Loan Bank stock................................................... (21) (18) (Increase) decrease in accrued interest receivable and other assets......................... (589) (500) Increase (decrease) in accrued interest payable and other liabilities....................... (274) 577 -------- ------- Net cash used in operating activities..................................................... (1,683) (183) -------- ------- Cash flows from investing activities: Proceeds from calls and maturities of available-for-sale investment securities.................. 2,765 4,379 Proceeds from sales of available-for-sale investment securities................................. 510 - Purchases of available-for-sale investment securities........................................... (5,474) (7,482) Proceeds from principal repayments of available-for-sale investment securities......................................................................... 64 249 Proceeds from calls and maturities of held-to-maturity investment securities......................................................................... 1,000 - Net decrease (increase) in loans................................................................ 322 (3,943) Purchases of equipment.......................................................................... (87) (33) Proceeds from sale of other real estate, net.................................................... 302 60 --------- ------- Net cash used in investing activities..................................................... (598) (6,770) -------- ------ Cash flows from financing activities: Net increase in demand, interest bearing and savings deposits................................... 3,114 3,535 Net increase in time deposits................................................................... 359 2,871 Net (decrease) increase in other borrowed funds................................................. (285) 450 Payments of cash dividends...................................................................... (59) (62) -------- ------- Net cash provided by financing activities................................................. 3,129 6,794 --------- ------- Increase (decrease) in cash and cash equivalents.......................................... 848 (159) Cash and cash equivalents at beginning of period................................................... 2,321 4,118 --------- -------- Cash and cash equivalents at end of period......................................................... $ 3,169 3,959 ========= ======== Supplemental disclosure of cash flow information: Cash paid during the period for: Interest expense.............................................................................. $ 1,881 1,743 Income taxes.................................................................................. 92 16 Non-cash investing activities: Real estate acquired through foreclosure........................................................ 316 271 Net change in unrealized gain (loss) on available-for-sale investment securities......................................................................... 40 (174) Other non-cash transactions: Acquisition of building in satisfaction of note receivable - dissolution of exchange agreement............................................................. 895 -
INDEPENDENT AUDITORS' CONSENT We consent to the use in this current report on Form 8-K under the Securities Exchange Act of 1934 of First Banks America, Inc. of our report dated March 13, 1997 on the financial statements of Surety Bank as of December 31, 1996 and 1995 and for each of the two years in the period ended December 31, 1996. /s/Perry-Smith & Co. - -------------------- PERRY-SMITH & CO. Sacramento, California December 16, 1997 Item 7(b) Pro Forma Financial Statements PRO FORMA FINANCIAL INFORMATION The following unaudited pro forma combined condensed balance sheet as of September 30, 1997 and unaudited pro forma combined condensed statements of income for the nine months ended September 30, 1997 and 1996, and for the year ended December 31, 1996, have been prepared to reflect the effects on the historical results of FBA and the acquisition of Surety. The unaudited pro forma combined condensed balance sheet has been prepared as if the acquisition occurred on September 30, 1997. The unaudited pro forma combined condensed statements of income have been prepared assuming the acquisition occurred on January 1, 1996. The pro forma financial information set forth below is unaudited and not necessarily indicative of the results that will occur in the future.
Unaudited Pro Forma Combined Condensed Balance Sheet September 30, 1997 ------------------------------------------------------------ Pro Forma Pro Forma FBA Surety Adjustments Combined(1) --- ------ ----------- ----------- Assets (dollars expressed in thousands, except per share data) Cash and cash equivalents: Cash and due from banks....................... $ 13,872 2,254 -- 16,126 Interest bearing deposits..................... 1,050 -- -- 1,050 Federal funds sold............................ 3,500 915 -- 4,415 ---------- -------- ------- --------- Total cash and cash equivalents........... 18,422 3,169 -- 21,591 ---------- -------- ------- --------- Investment securities - available for sale, at fair value....................... 86,764 12,310 -- 99,074 Loans: Commercial and financial...................... 61,377 5,174 -- 66,551 Real estate construction and development................................. 52,436 2,705 -- 55,141 Real estate mortgage.......................... 59,759 42,634 -- 102,393 Consumer and installment...................... 76,331 661 -- 76,992 Loans held for sale........................... -- 5,812 -- 5,812 ---------- -------- ------- --------- Total loans............................. 249,903 56,986 -- 306,889 Unearned discount............................. (1,441) (283) -- (1,724) Allowance for possible loan losses................................. (6,565) (526) -- (7,091) ---------- -------- ------- --------- Net loans............................... 241,897 56,177 -- 298,074 ---------- -------- ------- --------- Bank premises and equipment, net................. 6,244 2,342 200 (2) 8,786 Intangibles associated with the purchase of subsidiaries...................... 3,129 -- 3,172 (2) 6,301 Accrued interest receivable...................... 2,258 519 -- 2,777 Other real estate owned.......................... 375 228 -- 603 Deferred tax assets.............................. 14,664 -- 156 (2) 14,820 Other assets..................................... 2,794 587 210 (2) 3,591 ---------- -------- ------- --------- Total assets............................ $ 376,547 75,332 3,738 455,617 ========== ======== ======= ========= Liabilities Deposits: Demand: Noninterest bearing deposits................ $ 54,959 4,280 -- 59,239 Interest bearing deposits................... 47,647 11,335 -- 58,982 Savings....................................... 70,442 20,454 -- 90,896 Time deposits: Time deposits of $100 or more............... 28,696 9,796 -- 38,492 Other time deposits......................... 110,104 21,977 -- 132,081 ---------- -------- ------ --------- Total deposits.......................... 311,848 67,842 -- 379,690 Note payable to First Banks...................... 14,500 -- 3,548 (3) 18,048 12% convertible debentures....................... -- -- -- -- Other borrowings................................. 8,496 1,850 -- 10,346 Deferred tax liabilities......................... 1,487 245 164 (2) 1,896 Accrued expenses and other liabilities................................. 5,650 268 389 (2) 6,307 ---------- -------- ------- --------- Total liabilities....................... 341,981 70,205 4,101 416,287 ---------- -------- ------- --------- Stockholders' Equity Convertible preferred stock...................... -- 61 (61) (2,3) -- Common stock: Common stock.................................. 212 149 (109) (2,3)252 Class B common stock.......................... 375 -- -- 375 Capital surplus.................................. 37,768 2,541 2,183 (2,3) 42,492 Retained earnings................................ (145) 2,371 (2,371) (2,3) (145) Treasury stock................................... (3,817) -- -- (3,817) Net fair value adjustment for securities available for sale................. 173 5 (5) (2) 173 ---------- -------- ------- --------- Total stockholders' equity.............. 34,566 5,127 (363) 39,330 ---------- -------- ------- --------- Total liabilities and stockholders' equity................ $ 376,547 75,332 3,738 455,617 ========== ======== ======= ========= See notes to pro forma combined condensed financial statements.
Unaudited Pro Forma Combined Condensed Statement of Income For the nine months ended September 30, 1997 --------------------------------------------------------- Pro Forma Pro Forma FBA Surety Adjustments Combined(1) --- ------ ----------- ----------- (dollars expressed in thousands, except per share data) Interest income: Interest and fees on loans...................... $ 16,737 3,547 -- 20,284 Interest on investment securities............... 3,815 506 -- 4,321 Interest on federal funds sold.................. 529 65 -- 594 --------- ------- -------- --------- Total interest income....................... 21,081 4,118 -- 25,199 --------- ------- -------- --------- Interest expense: Interest on deposits............................ 8,278 1,876 -- 10,154 Note payable and other borrowings............... 1,138 5 216 (4) 1,359 --------- ------- -------- --------- Total interest expense...................... 9,416 1,881 216 11,513 --------- ------- -------- --------- Net interest income......................... 11,665 2,237 (216) 13,686 Provision for possible loan losses................. 1,750 95 -- 1,845 --------- ------- -------- --------- Net interest income after provision for possible loan losses........................ 9,915 2,142 (216) 11,841 --------- ------- -------- --------- Noninterest income: Service charges on deposit accounts and customer service fees......................... 1,206 298 -- 1,504 Other income.................................... 772 753 (16) (4) 1,509 --------- ------- -------- --------- Total noninterest income.................... 1,978 1,051 (16) 3,013 --------- ------- -------- --------- Noninterest expense: Salary and employee benefits.................... 3,075 1,404 -- 4,479 Occupancy, net of rental income................. 1,062 85 -- 1,147 Furniture and equipment......................... 588 212 -- 800 Legal, examination and professional fees........ 1,496 133 -- 1,629 Other noninterest expense....................... 2,300 987 158 (4) 3,445 --------- ------- -------- --------- Total noninterest expense................... 8,521 2,821 158 11,500 --------- ------- -------- --------- Income before provision for income tax expense (benefit)........................... 3,372 372 (390) 3,354 Provision for income tax expense (benefit)......... 1,266 133 (93) 1,306 --------- ------- -------- --------- Net income.................................. $ 2,106 239 (297) 2,048 ========= ======= ======== ========= Weighted average common stock and common stock equivalents outstanding (in thousands).................................. 3,626 -- -- 3,906 (5) Earnings per common stock and common stock equivalents outstanding............ $ 0.58 -- -- 0.52 (5) See notes to pro forma combined condensed financial statements.
Unaudited Pro Forma Combined Condensed Statement of Income For the nine months ended September 30, 1996 ------------------------------------------------------- Pro Forma Pro Forma FBA Surety Adjustments Combined(1) --- ------ ----------- ----------- (dollars expressed in thousands, except per share data) Interest income: Interest and fees on loans..................... $ 11,653 3,218 -- 14,871 Interest on investment securities.............. 2,344 495 -- 2,839 Interest on federal funds sold................. 1,292 16 -- 1,308 ---------- ------- ------- -------- Total interest income...................... 15,289 3,729 -- 19,018 ---------- ------- ------- -------- Interest expense: Interest on deposits........................... 6,743 1,736 -- 8,479 Note payable and other borrowings.............. 416 7 213 (4) 636 ---------- ------- ------- -------- Total interest expense..................... 7,159 1,743 213 9,115 ---------- ------- ------- -------- Net interest income........................ 8,130 1,986 (213) 9,903 Provision for possible loan losses................ 600 265 -- 865 ---------- ------- ------- -------- Net interest income after provision for possible loan losses....................... 7,530 1,721 (213) 9,038 ---------- ------- ------- -------- Noninterest income: Service charges on deposit accounts and customer service fees.................... 1,108 247 -- 1,355 Other income................................... 195 287 (16) (4) 466 ---------- ------- ------- -------- Total noninterest income................... 1,303 534 (16) 1,821 ---------- ------- ------- -------- Noninterest expense: Salary and employee benefits................... 2,040 1,010 -- 3,050 Occupancy, net of rental income................ 638 112 -- 750 Furniture and equipment........................ 456 136 -- 592 Legal, examination and professional fees......................................... 900 108 -- 1,008 Other noninterest expense...................... 2,588 1,152 158 (4) 3,898 ---------- ------- ------- -------- Total noninterest expense.................. 6,622 2,518 158 9,298 ---------- ------- ------- -------- Income before provision for income tax expense (benefit).......................... 2,211 (263) (387) 1,561 Provision for income tax expense (benefit)...................................... 855 (106) (92) (4) 657 ---------- -------- ------- -------- Net income................................. $ 1,356 (157) (295) 904 ========== ======= ======= ======== Weighted average common stock and common stock equivalents outstanding (in thousands)................................. 3,969 -- -- 4,247 (4) Earnings per common stock and common stock equivalents outstanding.................................... $ 0.34 -- -- 0.21 (4) See notes to pro forma combined condensed financial statements.
Unaudited Pro Forma Combined Condensed Statement of Income For the year ended December 31, 1996 ----------------------------------------------------------- Pro Forma Pro Forma FBA Surety Adjustments Combined(1) (dollars expressed in thousands, except per share data) Interest income: Interest and fees on loans................... $ 16,494 4,428 -- 20,922 Interest on investment securities............. 3,519 647 -- 4,166 Interest on federal funds sold................ 1,433 56 -- 1,489 ---------- ------- ------- -------- Total interest income..................... 21,446 5,131 -- 26,577 ---------- ------- ------- -------- Interest expense: Interest on deposits.......................... 9,301 2,359 -- 11,660 Note payable and other borrowings............. 692 8 285 (4) 985 ---------- ------- ------- -------- Total interest expense.................... 9,993 2,367 285 12,645 ---------- ------- ------- -------- Net interest income....................... 11,453 2,764 -- 14,217 Provision for possible loan losses............... 1,250 325 -- 1,575 ---------- ------- ------- -------- Net interest income after provision for possible loan losses...................... 10,203 2,439 -- 12,642 ---------- ------- ------- -------- Noninterest income: Service charges on deposit accounts and customer service fees................... 1,507 291 -- 1,798 Other income.................................. 341 421 (21) (4) 741 ---------- ------- ------- -------- Total noninterest income.................. 1,848 712 (21) 2,539 ---------- ------- ------- -------- Noninterest expense: Salary and employee benefits.................. 3,072 1,474 -- 4,546 Occupancy, net of rental income............... 951 148 -- 1,099 Furniture and equipment....................... 613 188 -- 801 Legal, examination and professional fees........................................ 1,276 97 -- 1,373 Other noninterest expense..................... 3,568 1,582 211 (4) 5,361 ---------- ------- ------- -------- Total noninterest expense................. 9,480 3,489 211 13,180 ---------- ------- ------- -------- Income before provision for income tax expense (benefit)......................... 2,571 (338) (517) 1,716 Provision for income tax expense (benefit)....... 1,002 (135) (122) 745 --------- ------- ------- -------- Net income................................ $ 1,569 (203) (395) 971 ========== ======= ======= ======== Weighted average common stock and common stock equivalents outstanding (in thousands)............................ 3,915 -- -- 4,193 (5) Earnings per common stock and common stock equivalents outstanding................. $ 0.40 -- -- 0.23 (5) See notes to pro forma combined condensed financial statements.
Notes to Pro Forma Combined Condensed Financial Statements (1) The unaudited pro forma combined condensed balance sheet has been prepared based on the historical financial statements of FBA and Surety as if the acquisition of Surety had occurred on September 30, 1997. The unaudited pro forma combined condensed statements of income for the nine months ended September 30, 1997 and 1996, and for the year ended December 31, 1996, set forth the results of operations as if the proposed transactions had occurred as of January 1, 1996. Intercompany balances between FBA and Surety are not material and have not been eliminated. (2) Adjustments to intangibles associated with the purchase of subsidiaries include $3.17 million in goodwill generated by the transaction between FBA and Surety, representing the difference between the purchase price of $8.31 million and the fair value of the net assets acquired. The fair value of net assets acquired reflects increases of $200,000 and $210,000 relating to bank premises and purchased mortgage servicing rights, respectively, offset by the accrual of $389,000 in estimated acquisition costs. The deferred tax effects of these adjustments were recorded using an effective tax rate of 40%. (3) Adjustments to stockholders' equity to reflect the merger of FBA and Surety include the assumed issuance of approximately 264,621 shares of FBA Common with a value of $4.76 million, and the elimination of $5.13 million in equity as the Surety shares are exchanged for FBA Common and cash. The amount of FBA Common to be issued is based on the assumption that the purchase price at September 30, 1997 would have been $8.31 million, $3.55 million of which has been distributed in cash funded through an advance on FBA's note payable with First Banks. Adjustments to stockholders' equity also reflect the application of the purchase method of accounting. (4) Adjustments to the pro forma combined condensed statements of income include the amortization of goodwill generated by the proposed transaction, amortized over a fifteen year period using the straight line method and the amortization of purchased mortgage servicing rights, amortized over a ten year period using the straight line method. During 1997 and 1996, the average prime rate of interest was approximately 8.375% and 8.27%, respectively. The prime rate is used in the unaudited combined condensed pro forma statements of income to calculate the amount of interest expense which would have been paid on the external financing required to fund the cash portion of the Surety acquisition. The external financing carries an interest rate equal to 25 basis points below the prime rate. No adjustments have been made for any operational synergies that may occur as a result of the proposed transaction. Earnings Per Share: (5) Pro forma earnings per share for the year ended December 31, 1996 were calculated based upon FBA's weighted average shares outstanding plus 264,621 shares assumed to be issued in the proposed transaction between FBA and Surety, and options to purchase Surety common stock totaling 13,637 which will be exchanged for equivalent options to purchase FBA Common. Pro forma earnings per share for the nine months ended September 30, 1997 and 1996 were calculated based upon FBA's weighted average shares outstanding plus 264,621 shares assumed to be issued in the proposed transaction between FBA and Surety, and 15,303 and 13,359 shares, respectively, of options to purchase Surety common stock which will be exchanged for equivalent options to purchase FBA Common. SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Dated: December 16, 1997 FIRST BANKS AMERICA, INC. By:/S/Allen H. Blake -------------------- Allen H. Blake Chief Financial Officer and Secretary -----END PRIVACY-ENHANCED MESSAGE-----