-----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, QrOfnoKLzdLD2yj7eNhbKMmN2OfM5gZO/jNjSEnVzvS6UVTvLZpuk689/x+aSW/1 hBQogB24gYABt/E9czIFjg== 0000755933-03-000069.txt : 20030724 0000755933-03-000069.hdr.sgml : 20030724 20030714170143 ACCESSION NUMBER: 0000755933-03-000069 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20030714 ITEM INFORMATION: Acquisition or disposition of assets FILED AS OF DATE: 20030714 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERCHANGE FINANCIAL SERVICES CORP /NJ/ CENTRAL INDEX KEY: 0000755933 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 222553159 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-10518 FILM NUMBER: 03785742 BUSINESS ADDRESS: STREET 1: PARK 80 WEST PLAZA TWO STREET 2: ATTN INTERCHANGE STATE BANK CITY: SADDLE BROOK STATE: NJ ZIP: 07662 BUSINESS PHONE: 2017032265 MAIL ADDRESS: STREET 1: PARK 80 WEST STREET 2: PLAZA II CITY: SADDLE BROOK STATE: NJ ZIP: 07663 FORMER COMPANY: FORMER CONFORMED NAME: INTERCHANGER STATE BANK DATE OF NAME CHANGE: 19870416 FORMER COMPANY: FORMER CONFORMED NAME: INTERCHANGE FINANCIAL SERVICES CORP DATE OF NAME CHANGE: 19861209 8-K/A 1 currentjuly8ka.txt JULY 14 - 8-K/A UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _____________ FORM 8-K/A _____________ CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (date of earliest event reported): July 14, 2003 INTERCHANGE FINANCIAL SERVICES CORPORATION (Exact name of registrant as specified in its charter) New Jersey 1-10518 22-2553159 _______________________________ ________________________ _____________________ (State or other jurisdiction of (Commission File Number) (I.R.S. Employer incorporation or organization) Identification No.) Park 80 West/Plaza Two, Saddle Brook, N.J. 07663 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (201) 703-2265 Not Applicable _______________________________________________________________________________ (Former name or former address, if changed since last report.) Item 2. Acquisition or Disposition of Assets On April 30, 2003 Interchange Financial Services Corporation (the "Company" or "Interchange"), holding company for Interchange Bank, consummated its previously announced acquisition of Bridge View Bancorp ("Bridge View"), holding company for Bridge View Bank. The acquisition was accomplished by merging Bridge View directly with and into the Company (the "Merger"). Interchange was the surviving corporation in the Merger and the separate corporate existence of Bridge View ceased. The Merger, which was structured as a tax free reorganization, was completed following approval of the Merger by the shareholders of Bridge View at a special meeting held on April 24, 2003 and following approval of the issuance of additional shares of Interchange common stock by the shareholders of Interchange at its annual meeting held on April 24, 2003. The Agreement and Plan of Merger, dated November 18, 2002, by and between the Company and Bridge View (the "Merger Agreement") provided that the Company would issue up to 2,949,719 shares of its common stock, no par value per share, and pay cash in an amount not to exceed $33,528,472 (less an amount of cash paid to holders of unexercised options to acquire shares of Bridge View common stock) to Bridge View's shareholders. Subject to these limitations, Shareholders of Bridge View were given the opportunity prior to completion of the Merger to elect to receive either cash, Interchange stock or a combination of cash and stock. Based on the formula set forth in the Merger Agreement, the exchange ratio for each share of Bridge View common stock was 1.2601 shares of Interchange common stock and the cash value per share of Bridge View common stock was $21.9891. The Company has funded the cash portion of the merger consideration with cash-on-hand and cash equivalents. As of the date of the Merger, the aggregate value of the merger consideration received by shareholders of Bridge View (including cash paid to holders of unexercised options to acquire shares of Bridge View common stock) was approximately $85 million. Immediately following completion of the Merger,Bridge View Bank was merged with and into Interchange Bank. All of the Bridge View Bank facilities now operate as branches of Interchange Bank. Interchange has appointed former Bridge View directors Gerald A. Calabrese, Jr., Joseph C. Parissi and John A. Schepisi to the Company's board of directors at the first board meeting of Interchange following completion of the Merger. In addition, Messrs. Jeremiah F. O'Connor, Jr., Glenn L. Creamer, and Mark Metzger, were appointed to the board of directors of Interchange Bank at the first Interchange Bank board meeting following the completion of the Merger. Mr. O'Connor, who also served as a director of Bridge View, is the son of Jeremiah F. O'Connor, the Company's Vice Chairman of the Board. Item 7. Financial Statement, Pro Forma Financial Information and Exhibits _________________________________________________________________ a) Financial Statements of Business Acquired. The audited consolidated balance sheets of Bridge View and its subsidiaries as of December 31, 2002 and 2001, and the related consolidated statements of income, changes in stockholders equity, and cash flows for the years ended December 31, 2002, 2001 and 2000, including the auditor's report with respect thereto, are contained in Annex E to the Joint Proxy Statement/Prospectus forming a part of Amendment No. 1 to the Company's Registration Statement on Form S-4/A (File No. 333-103256) as filed with the Securities and Exchange Commission on March 24, 2003 and incorporated herein by reference. Below is the required Bridge View historical financial statements for the quarter ended March 31, 2003 . BRIDGE VIEW BANCORP CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION ( in thousands)
March 31, December 31, 2003 2002 ____________ ____________ (unaudited) ASSETS Cash and cash equivalents : Cash and due from banks $ 15,859 $ 19,673 Federal funds sold 48,500 19,500 __________ ________ TOTAL CASH AND CASH EQUIVALENTS 64,359 39,173 __________ ________ Securities: Available for sale 39,715 40,110 Held to maturity 523 525 __________ ________ TOTAL SECURITIES 40,238 40,635 __________ ________ Loans, net of allowance for losses of $1,936 and $1,916, and deferred loan fees of $498 and $506, respectively 184,131 188,804 Premises and equipment, net 10,222 10,326 Accrued interest receivable and other assets 2,521 2,628 __________ ________ TOTAL ASSETS $ 301,471 $ 281,566 ========== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Deposits: Non-interest bearing demand deposits $ 109,428 $ 94,034 Interest bearing deposits: Savings and time deposits 142,788 139,396 Certificates of deposit $100,000 +.. 17,272 17,620 __________ ________ TOTAL DEPOSITS 269,488 251,050 __________ ________ Accrued interest payable and other liabilities 1,702 1,484 __________ ________ TOTAL LIABILITIES 271,190 252,534 __________ ________ Commitments and Contingencies
Stockholders' equity: Common stock, no par value, authorized 10,000,000 shares issued and outstanding 3,747,318 in 2003 and 3,576,344 in 2002 27,943 27,196 Retained earnings(note 2) 2,168 1,618 Accumulated other comprehensive income 170 218 __________ ________ TOTAL STOCKHOLDERS' EQUITY 30,281 29,032 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY __________ ________ $ 301,471 $281,566 ========== ======== See notes to unaudited consolidated financial statements. BRIDGE VIEW BANCORP CONSOLIDATED STATEMENTS OF INCOME (unaudited, in thousands) Three months ended March 31,
2003 2002 _______ _______ Loans $3,144 $ 2,786 Federal funds sold 77 31 Investment Securities Taxable 277 491 Tax - exempt 37 51 _______ _______ TOTAL INTEREST INCOME 3,535 3,359 _______ _______ Interest Expense : Savings deposits 130 142 Other time deposits 240 135 Time deposits $100,000 + 105 127 Short term borrowings 0 1 ______ _______ TOTAL INTEREST EXPENSE 475 405 ______ _______ Net Interest Income 3,060 2,954 Provision for loan losses 15 60 ______ _______ Net interest income after provision for loan losses 3,045 2,894 Non-interest income : Service charge income 551 482 _______ _______ TOTAL NON-INTEREST INCOME 551 482 _______ _______ Non-interest expense : Salaries and employee benefits 1,016 945 Occupancy and equipment expense 449 367 Other 645 496 ______ _______ TOTAL NON-INTEREST EXPENSE 2,110 $ 1,808 ______ ______ Income before income taxes 1,486 1,568 Income tax expense 562 533 ______ _______ NET INCOME $ 924 $ 1,035 ====== ======= Earnings per share : Basic $0.25 $0.29 Diluted $0.24 $0.28 See notes to unaudited consolidated financial statements.
BRIDGE VIEW BANCORP CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited, in thousands)
Three months ended March 31, 2003 2002 ------------------ ----------------- Cash flows from operating activities : Net Income $ 924 $ 1,035 Adjustments to reconcile net income to net cash Provided by operating activities : Depreciation and amortization 113 107 Provision for loan losses 15 60 Gains from sales of loans held for sale (8) 0 Decrease in accrued interest receivable and other assets 107 107 Increase(decrease) in accrued interest payable and Other liabilities 218 (199) _______ _______ Net cash provided by operating activities 1,369 1,110 _______ _______ Cash flows from investing activities : Proceeds from maturities of investment securities 2,120 9,434 Purchases of investment securities (1,778) 0 Net decrease(increase) in loans 4,673 (11,816) Purchases of premises and equipment (9) (33) _______ _______ Net cash provided by(used in) investing activities 5,006 (2,415) _______ _______ Cash flows from financing activities : Net increase in deposits 18,438 11,742 Proceeds from issuance of common stock 747 29 Cash paid for dividends (374) (323) _______ ______ Net cash provided by financing activities 18,811 11,448 _______ ______ Net change in cash and cash equivalents 25,186 10,143 Cash and cash equivalents at beginning of period 39,173 24,271 _______ ______ Cash and cash equivalents at end of period $ 64,359 $34,414 ======= ====== Cash paid during the period for : Interest 486 431 Income taxes 30 846 See notes to unaudited consolidated financial statements. BRIDGE VIEW BANCORP AND SUBSIDIARIES Notes to Unaudited Consolidated Financial Statements (1) Summary of Significant Accounting Policies The accompanying unaudited consolidated financial statements include the accounts of Bridge View Bancorp (the Company) and its direct and indirect wholly-owned subsidiaries, Bridge View Bank, Bridge View Investment Company, and Bridge View Delaware, Inc. (the Bank). All significant inter-company accounts and transactions have been eliminated in consolidation. The unaudited consolidated condensed financial statements included herein have been prepared without audit pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. The accompanying consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. Such adjustments are of a normal recurring nature. These consolidated unaudited financial statements should be read in conjunction with the audited financial statements and the notes thereto as of and for the year ended December 31, 2002. The results for the three months ended March 31, 2003 are not necessarily indicative of the results that may be expected for the year ended December 31, 2003. Organization The Company is a New Jersey Corporation and registered bank holding company with the Board of Governors of the Federal Reserve System. The Bank is a commercial bank which provides a full range of banking services to individuals and corporate customers in New Jersey. Both the Company and the Bank are subject to competition from other financial institutions. The Bank is regulated by state and federal agencies and is subject to periodic examinations by those regulatory authorities. Basis of Financial Presentation The unaudited consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. In preparing the unaudited consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated statement of financial condition and revenues and expenses for the quarter. Actual results could differ significantly from those estimates. Certain prior period amounts have been reclassified to conform to the financial statements presentation of 2003. The reclassifications have no effect upon stockholders' equity or net income as previously reported. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses. In connection with the determination of the allowance for loan losses, management generally obtains independent appraisals for significant properties. Securities Available for Sale Management determines the appropriate classification of securities at the time of purchase. If management has the intent and the Bank securities at the time of purchase. If management has the intent and the Bank has the ability at the time of purchase to hold securities until maturity, they are classified as investment securities, held to maturity. Securities to be held for indefinite periods of time and not intended to be held to maturity are classified as securities available for sale. Gains or losses on sales of securities available for sale are based upon the specific identification method. Securities available for sale are reported at fair value with changes in the carrying value from period to period included as a separate component of stockholders' equity. Securities Held to Maturity Investment securities, held to maturity are carried at the principal amount outstanding, adjusted for amortization of premiums and accretion of discounts using a method that approximates the level-yield method over the terms of the securities. Investment securities are carried at the principal amount outstanding because the Bank has the ability and it is management's intention to hold these securities to maturity. (2) Subsequent Event After receiving regulatory approval and following the approval of the majority of shareholders of Bridge View Bancorp and Interchange Financial Services Corporation (the holding company for Interchange Bank), Interchange Financial Services completed the acquisition of Bridge View Bancorp on April 30, 2003. (3) Earnings Per Share Reconciliation The reconciliation of the numerator and the denominator of Basic EPS with that of Diluted EPS is presented for the three month periods ended March 31, 2003, and 2002. Three Months Ended March 31, 2003 2002 ____ _____ (in thousands, except per share data) Basic earnings per share : Net Income $ 924 1,035 ===== ===== Average number of shares outstanding 3,733 3,549 ===== ===== Basic earnings per share $ 0.25 0.29 ===== ===== Diluted earnings per share : Net Income $ 924 1,035 ===== ===== Average number of shares of common stock and equivalents outstanding : Average common shares outstanding 3,733 3,549 Additional shares considered in diluted computation assuming : Exercise of options 59 114 _____ _____ Average number of shares outstanding on a diluted basis 3,792 3,663 ===== ===== Diluted earnings per share $ 0.24 0.28
Stock-Based Compensation Stock based compensation is accounted for under the intrinsic value based method. Included in the Notes to unaudited Consolidated Financial Statements are the pro forma disclosures required by Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based Compensation", which assumes the fair value based method of accounting had been adopted. The Company applies APB Opinion No. 25 in accounting for its Plans and, accordingly, no compensation cost has been recognized for its stock options in the consolidated financial statements. Had the Company determined compensation cost based on the fair value at the grant date for its stock options under SFAS No. 123, the Company's net income and earnings per share would have been reduced to the pro forma amounts indicated below (in thousands, except per share data): Three Months Ended March 31, 2003 2002 ____ ____ Net income: As reported $ 924 $ 1,035 LESS: compensation expense determined Under the fair value based method for all Awards, net of tax 59 120 ____ ____ Pro forma 865 915 ==== ==== Basic earnings per share: As reported $ 0.25 $ 0.29 Pro forma 0.23 0.26 ==== ==== Diluted earnings per share: As reported $ 0.24 $ 0.28 Pro forma 0.23 0.25 ==== ====
(4) Comprehensive Income Total comprehensive income is presented for the three month periods ended March 31, 2003 and 2002, respectively. Three months ended March 31, (in thousands) 2003 2002 ____ ____ Comprehensive Income ____________________ Net income $ 924 $1,035 Other comprehensive loss, net of taxes (48) (205) _______ _______ Total comprehensive income $ 876 $ 830 _______ _______
(5) Recent Accounting Pronouncements SFAS No. 148 In December, 2002, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 148, "Accounting for Stock-Based Compensation, Transition and Disclosure." SFAS No. 148 provides alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. SFAS No. 148 also requires that disclosures of the pro forma effect of using the fair value method of accounting for stock-based employee compensation be displayed more prominently and in a tabular format. Additionally, SFAS No. 148 requires disclosure of the pro forma effect in interim financial statements. The additional disclosure requirements of SFAS No. 148 are effective for fiscal years ended after December 15, 2002. The Company adopted the expanded disclosure provisions of this statement effective December 31, 2002. b) Pro Forma Financial Information. The unaudited pro forma condensed combined balance sheet as of December 31, 2002 and unaudited pro forma condensed combined statements of income for the year ended December 31, 2002 for the Company and Bridge View are contained in the Joint Proxy Statement/Prospectus forming a part of Amendment No. 1 to the Company's Registration Statement on Form S-4 (File No. 333-103256) as filed with the Securities and Exchange Commission on March 24, 2003 and incorporated herein by reference. The following required unaudited pro forma condensed consolidated balance sheet as of March 31, 2003 and the unaudited pro forma condensed consolidated statements of income for the three months ended March 31, 2003 give effect to the merger. These statements were prepared giving effect to the purchase accounting adjustments and other assumptions described in the accompanying notes. The unaudited pro forma condensed combined consolidated balance sheet gives effect to the merger as if the merger had been consummated as of March 31, 2003. The unaudited pro forma condensed combined consolidated statements of income give effect to the merger as if the merger had been consummated on January 1, 2003. The unaudited pro forma condensed combined financial statements contain adjustments relating to estimated fair values of assets and liabilities acquired and estimated fair values of assets and liabilities acquired and estimated transaction and integration costs. In connection with the merger, Interchange and Bridge View expect to incur combined pre-tax merger related charges of approximately $2.8 million, which include costs for severance, legal, printing and investment banking fees. You should read the unaudited pro forma condensed combined consolidated financial statements in conjunction with the consolidated historical financial statements of Interchange and Bridge View, including the respective notes to those statements. The pro forma information is not necessarily indicative of the combined financial position or the results of operations in the future or of the combined financial position or the results of operations which would have been realized had the merger been consummated during the periods or as of the dates for which the pro forma information is presented. The pro forma information, while helpful in illustrating the financial characteristics of the new company under one set of assumptions, does not reflect these benefits and costs and, accordingly, does not attempt to predict or suggest future results. Unaudited Pro Forma Condensed Combined Consolidated Balance Sheet As of March 31, 2003 (in thousands) Bridge View Interchange Pro forma adjustments Combined ______________ ___________ ______________________ ___________ Cash and cash equivalents $ 64,359 $ 70,925 (33,528) (I) 101,756 Securities 40,238 249,813 (J) 290,081 Loans and Leases 186,067 606,739 1,595 (H) 794,401 Allowance for loan and lease losses (1,936) (7,226) (9,162) Foreclosed real estate and other repossessed assets - 197 197 Goodwill - 1,538 54,425 (E) 55,963 Other intangible assets - 213 4,295 (H) 4,508 Other assets 12,743 40,668 (2,071) (F) 51,340 _______________________________________________ ____________ Total assets $ 301,471 $ 962,867 $ 24,746 $ 1,289,084 =============================================== ============ Non-interest bearing deposits $ 109,428 $ 118,216 $ 227,644 Interest bearing deposits 160,060 722,699 882,759 _______________________________________________ ___________ Total deposits 269,488 840,915 - 1,110,403 Securities sold under repurchase agreements - 15,956 15,956 Short term borrowings - - - Long term borrowings - 10,000 10,000 Other liabilities 1,702 12,554 2,846 (C) 17,102 ________________________________________________ ____________ Total liabilities 271,190 879,425 2,846 1,153,461 ________________________________________________ ____________ Common stock 27,943 5,397 (27,943) 5,397 Capital surplus - 21,178 52,181 73,359 Retained earnings 2,168 65,588 (2,168) 65,588 Accumulated other comprehensive income 170 3,720 (170) 3,720 Less: treasury stock - (12,441) (12,441) _________________________________________________ ____________ Total Stockholders' equity 30,281 83,442 21,900 (G) 135,623 _________________________________________________ ____________ Total liabilities and stockholders' equity $ 301,471 $ 962,867 $ 24,746 $ 1,289,084
See Accompanying Notes to the Unaudited Pro Forma Condensed Combined Financial Statements. Unaudited Pro Forma Condensed Combined Consolidated Statements of Income For the Three Months Ended March 31, 2003 (in thousands) Bridge View Interchange Pro forma adjusments Combined Interest income $ 3,535 $ 13,450 $ (120) (H) $ 16,865 Interest expense 475 3,598 4,073 ____________________________________________ ________ Net interest income 3,060 9,852 (120) 12,792 ____________________________________________ ________ Provision for loan and lease losses 15 265 280 ____________________________________________ ________ Net interest income after provision for loan and lease losses 3,045 9,587 (120) 12,512 Non-interest income 551 1,844 2,395 Non-interest expense Salaries and benefits 1,016 3,628 4,644 Occupancy and FF&E 449 1,181 1,630 Other expenses 645 1,718 108 (H) 2,471 ____________________________________________ ________ 2,110 6,527 108 8,745 Net income before taxes 1,486 4,904 (228) 6,162 Income Taxes 562 1,548 (80) (H) 2,030 _____________________________________________ ________ Net income $ 924 $ 3,356 $ (148) $ 4,132 ============================================= ======== Earnings per common share: Basic 0.25 0.34 0.32 Diluted 0.24 0.34 0.32 Average shares: Basic 3,733 9,829 (783) 12,779 Diluted 3,792 9,968 (842) 12,918
See Accompanying Notes to the Unaudited Proforma Condensed Combined Consolidated Financial Statements. NOTES TO PRO FORMA UNAUDITED CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS NOTE A. BASIS OF PRESENTATION The unaudited pro forma condensed combined consolidated balance sheet as of March 31,2003, and the pro forma combined condensed consolidated statements of income for the year ended March 31, 2003 combine the historical financial statements of Interchange with Bridge View after giving effect to the merger using the purchase method of accounting. Pro forma adjustments to the balance sheet are computed as if the transaction occurred at March 31, 2003, while the pro forma adjustments to the statements of income are computed as if the transaction occurred on January 1, 2003, the earliest period presented. The merger is accounted for as a purchase. Under this method of accounting, assets and liabilities of Bridge View are adjusted to their estimated fair value and combined with the recorded book values of the assets and liabilities of Interchange. Applicable income tax effects of such adjustments are included as a component of Interchange's net deferred tax asset with a corresponding offset to goodwill. For purposes of the uaudited pro forma condensed combined consolidated financial statements, estimates of the fair value of Bridge View's assets and liabilities as of March 31, 2003 have been combined with the recorded values of the assets and liabilities of Interchange. Fair value adjustments are subject to update as Interchange is currently in the process of obtaining appraisals and fair value evaluations, including a core deposit study, for Bridge View's assets and liabilities. NOTE B. PURCHASE PRICE The aggregate purchase price is based upon holders of Bridge View common stock receiving 2,949,719 shares of Interchange common stock plus $33,528,472 in cash, less any amounts paid for unexercised stock options. The total consideration to Bridge View shareholders in connection with the merger is calculated as follows (in thousands, except share data): Interchange Common Stock to be issued 2,949,719 Average market price per share of Interchange common stock several days prior to and after completion of merger on April 30, 2003 $ 17.69 ___________ Total market value of Interchange common stock to be issued 52,181 Total cash to be distributed to Bridge View shareholders 33,528 ___________ Total Purchase Price of Bridge View $ 85,709 ===========
NOTE C. TRANSACTION COSTS AND INTEGRATION EXPENSES Interchange's management anticipates, based upon preliminary plans and estimates, that approximately $2.8 million of costs related to severance, professional fees, printing and other restructuring charges will be incurred in connection with the merger and will be included as part of the allocation of the purchase price of Bridge View. The estimated transaction costs expected to be incurred are as follows (in thousands): Directors Expenses $ 221 Consulting Fees 1,200 Legal Fees 225 Severance 700 Printing Fees 100 Other 400 ______ $2,846 ====== NOTE D. ALLOCATION OF PURCHASE PRICE The purchase price of Bridge View has been allocated as described in the table below (in thousands): Net assets applicable to Bridge View's common stock $ 30,281 Total transaction costs incurred in connection with the merger (2,846) Increases to Bridge View's net asset value to record: Core deposit intangible, net of taxes of $1,503 2,792 Loan premium, net of taxes of $558 1,037 Fair market value adjustment for securities Held-to-Maturity, net of taxes of $10 20 _________ Total preliminary allocation of purchase 31,824 Goodwill due to the merger 54,425 _________ Total purchase price $ 86,249 ========= NOTE E. TOTAL GOODWILL DUE TO MERGER Total purchase price $ 85,709 Total estimated transaction costs to be incurred 2,846 Total common stockholders' equity of Bridge View (30,281) Core deposit intangible, net of taxes of $1,503 (2,792) Loan premium, net of taxes of $558 (1,037) Securities Held-to-Maturity, net of taxes of $10 (20) _________ Total goodwill due to merger $ 54,425 ========= _______________________
The loan premium and securities Held-to-Maturity adjustment will be amortized over the average lives of the corresponding assets as a yield adjustment. The core deposit intangible of $2.8 million (net of applicable income tax effects) will be amortized over the estimated period of benefit on a straight-line basis. NOTE F. OTHER ASSETS Adjustments to other assets are as follows (in thousands): Deferred Tax Asset Deferred tax liability from core deposit intangible $ (1,503) Deferred tax liability from loan premium (558) Deferred tax liability from securities Held-to-Maturity (10) ________ Total reduction in net deferred tax asset (2,071) ========
NOTE G. SHAREHOLDERS' EQUITY The purchase price of approximately $85.7 million is reduced by Bridge View's total shareholders' equity of approximately $30.3 million. The average price of Interchange's common stock for a period of several days prior to and after the merger date, April 30, 2003, was $17.69, and the total value of the newly based shares of Interchange common stock will be approximately $52.2 million and represents additional paid-in capital. NOTE H. PURCHASE ACCOUNTING ADJUSTMENTS Adjustments are made to reflect the recording of intangibles, as well as to eliminate any intangible balances previously recorded by Bridge View in accordance with the purchase method of accounting. Purchase accounting adjustments will be recorded on a gross basis with related adjustments to Interchange's net deferred tax asset as follows (in thousands): Net of Income Tax (Income) Expense Gross Effect Effect _________________________________________________________________ Interest Income Estimated fair value adjustment to investments Available-for-Sale* $ 359 $ 233 $ 60 Estimated fair value adjustment to securities Held to-Maturity* 30 20 3 Loan premium 1,595 1,037 57 _________________________________________________________________ 1,984 1,291 120 _________________________________________________________________ Non-Interest Expense Core deposit intangible due to the merger** 4,295 2,792 108 _________________________________________________________________ 4,295 2,792 108 _________________________________________________________________ Tax effect (2,071) (80) _________________________________________________________________ Totals $4,208 $4,083 $148 ========================================= ========================
* Net unrealized pretax gains of $359 thousand and $30 thousand on Bridge View's securities Available-for-Sale and Held-to-Maturity, respectively, are amortized over the estimated remaining life of the securities. ** The core deposit intangible due to the Merger is amortized over the estimated period of benefit on a straight line basis. The incremental effect on net income of the purchase accounting adjustments is estimated to be a net after-tax expense of approximately $0.6 million for the first 12-month period subsequent to the merger. NOTE I. CASH PAYMENT It is anticipated that the cash payment of $33,528,472 to Bridge View stockholders will be funded by Interchange from either cash on hand or sale of certain securities. NOTE J. SECURITIES The estimated fair value adjustment for securities Held-to-Maturity amounted to $30 thousand as of March 31, 2003 and will be amortized over the remaining life of the securities as a yield adjustment. c) Exhibits Exhibit No. Document Description ___________ ____________________ 2.1 Agreement and Plan of Merger dated November 18, 2002, between the Company and Bridge View (previously filed as Exhibit 2.1 to the Company's Current Report on Form 8-K dated November 18, 2002). SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: July 14, 2003 Interchange Financial Services Corporation By: /s/ Charles T. Field _______________________ Charles T. Field Senior Vice President & CFO -----END PRIVACY-ENHANCED MESSAGE-----