EX-99.2 3 exhibit992.htm EXHIBIT United States Securities & Exchange Commission EDGAR Filing

EXHIBIT 99.2

SUN AMERICAN BANCORP AND BEACH BANK
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

The following unaudited pro forma condensed combined financial information is based on the historical financial statements of Sun American Bancorp (after giving effect to the asset acquisition of Beach Bank) and Beach Bank and has been prepared by Sun American Bancorp to illustrate the effects of the acquisition transaction. The unaudited pro forma condensed consolidated balance sheet as of September 30, 2006 and the unaudited pro forma condensed consolidated statement of income for the nine months ended September 30, 2006 and for the fiscal year ended December 31, 2005 give effect to the acquisition transaction, accounted for under the purchase method of accounting. Under the purchase method of accounting, the aggregate consideration paid is allocated to the tangible and identifiable intangible assets acquired and liabilities assumed on the basis of their fair values on the effective date of the acquisition transaction. Any excess purchase price is recorded as goodwill.

The unaudited pro forma condensed combined consolidated financial statements have been prepared based on a final audited balance sheet of Beach Bank as of the date prior to the closing of the acquisition transaction. Sun American Bancorp has disputed certain components of the final audited balance sheet and the final results will be determined through the dispute resolution process described in the Asset Acquisition and Assumption Agreement among Sun American Bancorp, Sun American Bank (collectively “SAB”) and Beach Bank (the “Agreement”). The final results of the dispute resolution process may differ materially from the information presented in these unaudited pro forma condensed combined consolidated financial statements. In addition, the impact of ongoing integration activities could cause material differences in the information presented.

The unaudited pro forma condensed consolidated statement of income for the nine months ended September 30, 2006 has been derived from the unaudited interim financial statements of Sun American Bancorp and Beach Bank. The unaudited pro forma condensed consolidated statement of income for the fiscal year ended December 31, 2005 is based on the audited financial statements of Sun American Bancorp and Beach Bank. The unaudited pro forma condensed consolidated statements of income give effect to the acquisition transaction as if it had been consummated as of January 1, 2005. The unaudited pro forma condensed consolidated financial statements do not give effect to any anticipated cost savings or revenue enhancements in connection with the acquisition transaction.

These unaudited pro forma condensed consolidated financial statements should be considered together with the historical financial statements of Sun American Bancorp and Beach Bank, including the notes thereto. The pro forma financial information is based on certain assumptions described in the accompanying notes to the Unaudited Pro Forma Condensed Consolidated Financial Information and does not necessarily indicate the consolidated financial position or the results of operations in the future or the consolidated financial position or the results of operations that would have been realized had the acquisition transaction been consummated during the periods or as of the date for which the pro forma financial information is presented.



Exhibit 99.2 - Page 1


SUN AMERICAN BANCORP
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

 

 

As of September 30, 2006

 

 

 

Sun American
Bancorp

 

Beach
Bank

 

Purchase
Accounting
Adjustment

 

(m)

 

Pro Forma
Consolidated

 

 

 

(In thousands, except per share data)

 

ASSETS

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and balances due from financial institutions

 

$

8,102

 

$

2,158

 

$

(100

)

(a)

 

$

10,160

 

Federal funds sold

 

 

1,000

 

 

17,038

 

 

—

 

 

 

 

18,038

 

Total cash and cash equivalents

 

 

9,102

 

 

19,196

 

 

(100

)

 

 

 

28,198

 

Securities available for sale

 

 

5,190

 

 

—

 

 

—

 

 

 

 

5,190

 

Securities held to maturity

 

 

23,638

 

 

24,429

 

 

(742

)

(b)

 

 

47,325

 

Net Loans

 

 

272,378

 

 

68,483

 

 

(593

)

(c)

 

 

340,268

 

Federal Reserve Stock

 

 

1,702

 

 

—

 

 

—

 

 

 

 

1,702

 

Federal Home Loan Bank Stock

 

 

1,814

 

 

241

 

 

—

 

 

 

 

2,055

 

Premises and fixed assets

 

 

7,986

 

 

1,130

 

 

(310

)

(d)

 

 

8,806

 

Accrued Interest Receivable

 

 

1,626

 

 

537

 

 

—

 

 

 

 

2,163

 

Due from related party

 

 

—

 

 

1,206

 

 

—

 

 

 

 

1,206

 

Goodwill

 

 

5,287

 

 

—

 

 

11,918

 

(e)

 

 

17,205

 

Intangible Assets

 

 

564

 

 

—

 

 

1,120

 

(f)

 

 

1,684

 

Other assets

 

 

1,214

 

 

1,268

 

 

(890

)

(g)

 

 

1,592

 

 

 

$

330,501

 

$

116,490

 

$

10,403

 

 

 

$

457,394

 

LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing

 

$

29,190

 

$

22,554

 

$

—

 

 

 

$

51,744

 

Interest-bearing

 

 

207,488

 

 

84,260

 

 

(25

)

(h)

 

 

291,723

 

Total Deposits

 

 

236,678

 

 

106,814

 

 

(25

)

 

 

 

343,467

 

Federal funds purchased and securities sold u/a to repurchase

 

 


722

 

 


748

 

 


—

 

 

 

 


1,470

 

FHLB borrowings

 

 

28,000

 

 

—

 

 

—

 

 

 

 

28,000

 

Accrued expense and other liabilities

 

 

1,584

 

 

236

 

 

—

 

 

 

 

1,820

 

Total Liabilities

 

  

266,984

 

 

107,798

 

 

(25

)

 

 

 

374,757

 

Minority Interest

 

 

27

 

 

—

 

 

—

 

 

 

 

27

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

419

 

 

6,039

 

 

(6,001

)

(i)

 

 

457

 

Capital Surplus

 

 

67,822

 

 

3,685

 

 

15,397

 

(j)

 

 

86,904

 

Undivided Profits

 

 

(4,551

)

 

(1,032

)

 

1,032

 

(k)

 

 

(4,551

)

Unrealized Loss on AFS securities

 

 

(200

)

 

—

 

 

—

 

 

 

 

(200

)

Total Stockholders’ Equity

 

 

63,490

 

 

8,692

 

 

10,428

 

 

 

 

82,610

 

 

 

$

330,501

 

$

116,490

 

$

10,403

 

 

 

$

457,394

 

Number of Common Shares Outstanding

 

 

19,218

 

 

6,039

 

 

3,844

 

(l)

 

 

23,062

 

Total book value per common share

 

$

3.30

 

$

1.44

 

 

 

 

 

 

$

3.58

 

Tangible book value per common share

 

$

3.00

 

$

1.44

 

 

 

 

 

 

$

2.76

 

Pro forma equivalent book value per common
share for Beach Bank common shares exchanged for Sun American Bancorp common shares

 

 

 

 

 

 

 

 

 

 

 

 

$


2.28

 

———————

a)

To record direct costs of issuing common stock ($100) .

b)

To record fair value adjustment of securities.



Exhibit 99.2 - Page 2


c)

To record fair value adjustment of loans for $1,155 and offset by a fair value adjustment of the allowance for loan losses of $593.

d)

Adjustment to carrying value of premises and equipment for obsolete fixed assets.

e)

Goodwill (see Note 2).

f)

Core deposit intangible.

g)

To record fair value of Miami Beach branch lease and to reflect payment of $1 million to a related party of Beach Bank.

h)

To record fair value adjustment of certificates of deposit.

i)

To eliminate Beach Bank equity accounts ($6,039) and to issue 3,844,000 shares of Sun American Bancorp common stock ($38) with a par value of $0.01.

j)

To eliminate Beach Bank equity accounts ($3,685), record direct costs of issuing common stock ($100), and record capital surplus upon issuance of (3,844,000) shares of Sun American Bancorp common stock.

k)

To eliminate Beach Bank net loss ($1,032).

l)

Issuance of Sun American Bancorp common stock to purchase substantially all of the assets, and assume substantially all of the liabilities, of Beach Bank. The estimated number of shares for issuance is calculated as proceeds of $8,692 (capital as reflected in the final audited closing balance sheet) times 2.35 less $1.0 million of excluded assets and the payment of the directors’ and officers’ liability insurance premium ($208), all divided by $5.00 per share, which equals 3,844,000 shares.

m)

SAB has disputed certain components of the audited final balance sheet that was provided to us by Beach Bank and included herein. The dispute is subject to resolution through the dispute resolution process set forth in the Agreement.  (See 2.01 of this Form 8K)  The final resolution of the dispute is unknown at this time. The pro forma balance sheet reflects the audited final balance sheet of Beach Bank prepared by Beach Bank.  The primary impact of the changes that SAB believes are necessary to the balance sheet to reflect the final balance sheet of Beach Bank would result in a revised pro forma balance sheet that includes the following significant adjustments:

i)  the elimination of the related party receivable to $0.  

ii) a decrease of Beach bank total shareholder equity of $1,592 from $8,692 to $7,100.

iii) a decrease in the number of shares issued by SAB from 3,844 to 3,096.

iv) a decrease in share capital issued by SAB of $3,743 and a corresponding decrease in goodwill recorded of $3,743.



Exhibit 99.2 - Page 3


SUN AMERICAN BANCORP
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME

 

 

For the Nine Months Ended September 30, 2006

 

 

 

Sun American
Bancorp

 

Beach
Bank

 

Purchase
Accounting
Adjustment

 

(f)

 

Pro Forma
Consolidated

 

 

 

(In thousands, except per share data)

 

Interest income

     

$

17,996

     

$

5,425

     

$

263

  

(a)

     

$

23,684

 

Interest expense

 

 

6,476

 

 

2,106

 

 

18

 

(b)

 

 

8,600

 

Net interest income

 

 

11,520

 

 

3,319

 

 

245

 

 

 

 

15,084

 

Provision for loan losses

 

 

795

 

 

—

 

 

—

 

 

 

 

795

 

Net interest income after provision
for loan loses

 

 

10,725

 

 

3,319

 

 

245

 

 

 

 

14,289

 

Noninterest income

 

 

621

 

 

316

 

 

—

 

 

 

 

937

 

Noninterest expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

5,229

 

 

1,918

 

 

—

 

 

 

 

7,147

 

Occupancy, furniture and equipment expense

 

 

2,084

 

 

738

 

 

(49

)

(c)

 

 

2,773

 

Other operating expenses

 

 

2,688

 

 

1,573

 

 

180

 

(d)

 

 

4,441

 

Noninterest expenses

 

 

10,001

 

 

4,229

 

 

131

 

 

 

 

14,361

 

Net income

 

$

1,345

 

$

(594

)

$

114

 

 

 

$

865

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic net income per common share

 

$

0.07

 

$

(0.10

)

 

 

 

 

 

$

0.04

 

Diluted net income per common share

 

$

0.06

 

$

(0.10

)

 

 

 

 

 

$

0.03

 

Weighted average common shares outstanding, basic

 

 

18,850

 

 

6,039

 

 

3,844

 

(e)

 

 

22,694

 

Weighted average common shares outstanding, diluted

 

 

22,367

 

 

6,039

 

 

3,844

 

(e)

 

 

26,211

 

Pro forma equivalent net income per
common share for Beach Bank common
shares exchanged for Sun American
Bancorp common shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

 

 

 

 

 

 

 

 

 

$

0.02

 

Diluted

 

 

 

 

 

 

 

 

 

 

 

 

$

0.02

 

———————

a)

To record amortization of fair value adjustments of loans ($152) and securities ($111) over a 5.5 year straight line method.

b)

To record amortization of fair value adjustments of certificates of deposit over a 3 year straight line method.

c)

To record reduction in depreciation expense related to decrease in carrying value of equipment (-$77) and to record amortization of the fair value of leases ($28).

d)

To record amortization of core deposit intangible over a 9 year period using an accelerated method.

e)

Issuance of Sun American Bancorp common stock to purchase substantially all of the assets, and assume substantially all of the liabilities, of Beach Bank. The  number of shares for issuance is calculated as proceeds of $8,692 (capital as reflected on the final audited closing balance sheet) times 2.35 less $1.0 million of excluded assets  and the payment of the directors’ and officers’ liability insurance premium ($207), all divided by $5.00 per share, which equals 3,844,000 shares.



Exhibit 99.2 - Page 4


SUN AMERICAN BANCORP
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME

 

 

For the Year Ended December 31, 2005

 

 

 

Sun American
Bancorp

 

Beach
Bank

 

Purchase
Accounting
Adjustment

 

 

 

Pro Forma
Consolidated

 

 

 

(In thousands, except per share data)

 

Interest income

     

$

16,043

     

$

6,928

     

$

350

  

(a)

     

$

23,321

 

Interest expense

 

 

4,740

 

 

1,981

 

 

24

 

(b)

 

 

6,745

 

Net interest income

 

 

11,303

 

 

4,947

 

 

326

 

 

 

 

16,576

 

Provision for loan losses

 

 

475

 

 

325

 

 

—

 

 

 

 

800

 

Net interest income after provision
for loan losses

 

 

10,828

 

 

4,622

 

 

326

 

 

 

 

15,776

 

Noninterest income

 

 

1,075

 

 

631

 

 

 

 

 

 

 

1,706

 

Noninterest expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

4,247

 

 

2,577

 

 

—

 

 

 

 

6,824

 

Occupancy, furniture and equipment expense

 

 

1,724

 

 

947

 

 

(66

)

(c)

 

 

2,605

 

Other operating expenses

 

 

3,013

 

 

3,876

 

 

280

 

(d)

 

 

7,169

 

Noninterest expenses

 

 

8,984

 

 

7,400

 

 

214

 

 

 

 

16,598

 

Net income

 

$

2,919

 

$

(2,147

)

$

112

 

 

 

$

884

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic net income per common share

 

$

0.24

 

$

(0.36

)

 

 

 

 

 

$

0.06

 

Diluted net income per common share

 

$

0.21

 

$

(0.36

)

 

 

 

 

 

$

0.05

 

Weighted average common shares outstanding, basic

 

 

12,123

 

 

6,039

 

 

3,844

 

(e)

 

 

15,967

 

Weighted average common shares outstanding, diluted

 

 

13,604

 

 

6,039

 

 

3,844

 

(e)

 

 

17,448

 

Pro forma equivalent net income per
common share for Beach Bank common
shares exchanged for Sun American
Bancorp common shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

 

 

 

 

 

 

 

 

 

$

0.04

 

Diluted

 

 

 

 

 

 

 

 

 

 

 

 

$

0.03

 

———————

a)

To record amortization of fair value adjustments of loans ($202) and securities ($148) over a 5.5 year straight line method.

b)

To record amortization of fair value adjustments of certificates of deposit over a 3 year straight line method.

c)

To record reduction in depreciation expense related to decrease in carrying value of equipment (-$103) and to record amortization of the fair value of leases ($37).

d)

To record amortization of core deposit intangible over a 9 year period using an accelerated method.

e)

Issuance of Sun American Bancorp common stock to purchase substantially all of the assets, and assume substantially all of the liabilities, of Beach Bank. The estimated number of shares for issuance is calculated as proceeds of $8,692 (capital as reflected in the audited final balance sheet) times 2.35 less $1.0 million of excluded assets and the payment of the director’s and officers’ liability insurance premium ($207), all divided by $5.00 per share, which equals 3,844,000 shares.



Exhibit 99.2 - Page 5


NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS

Note 1 – Basis of Presentation

These unaudited pro forma condensed consolidated financial statements have been prepared based upon historical financial information of Sun American Bancorp (after giving effect to the acquisition of Beach Bank) and Beach Bank giving effect to the acquisition transaction and other related adjustments described in these footnotes. Certain footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted as permitted by SEC rules and regulations. These unaudited pro forma condensed consolidated financial statements are not necessarily indicative of the financial position or results of operations that would have been achieved had the acquisition transaction actually taken place during the periods or at the dates indicated and do not purport to be indicative of future financial position or results of operations. The unaudited pro forma condensed consolidated combined financial statements should be read in conjunction with the historical financial statements.

The acquisition transaction will be accounted for using the purchase method of accounting, in accordance with accounting principles generally accepted in the United States.

The unaudited pro forma condensed consolidated statements of income combine the historical consolidated statement of income of Sun American Bancorp and historical statement of income of Beach Bank, for the fiscal year ended December 31, 2005, and for the nine months ended September 30, 2006, giving effect to the acquisition transaction and related events as if they had been consummated on January 1, 2005. The unaudited pro forma condensed consolidated balance sheet combines the historical consolidated balance sheet of Sun American Bancorp and the historical balance sheet of Beach Bank, giving effect to the acquisition transaction and related events as if they had been consummated on September 30, 2006.

The unaudited pro forma condensed statements of income do not give effect to any anticipated cost savings or revenue enhancements in connection with the acquisition transaction.

Note 2 – Purchase Price and Purchase Accounting Adjustments

 

 

Sun American Bancorp

 

 

 

(In thousands, except
per share data)

 

 

     

 

 

Sun American Bancorp shares issued for outstanding shares of Beach Bank (a)

 

     

 

3,844

     

 

Fair value of Sun American Bancorp stock

 

 

$

5.00

 

 

Subtotal

 

 

$

19,220

 

 

Add: $1 million in cash as an excluded asset

 

 

 

1,000

 

 

 

 

 

 

 

 

 

Pro forma purchase price

 

 

$

20,220

 

 

 

 

 

 

 

 

 

Net assets of Beach Bank per September 30, 2006 financial statements

 

 

$

8,692

 

 

 

 

 

 

 

 

 

Purchase accounting adjustments to carrying value of asset or liability:

 

 

 

 

 

 

Securities

 

 

 

(742

)

 

Loans

 

 

 

(593

)

 

Premises & Equipment

 

 

 

(310

)

 

Core Deposit Intangible

 

 

 

1,120

 

 

Branch Lease

 

 

 

110

 

 

Certificates of Deposit

 

 

 

25

 

 

Net pro forma purchase accounting adjustments

 

 

 

(390

)

 

Goodwill

 

 

$

11,918

 

 

———————

a)

SAB has disputed certain components of the audited final balance sheet that was provided to us by Beach Bank and included herein. The dispute is subject to resolution through the dispute resolution process set forth



Exhibit 99.2 - Page 6


in the Agreement.  (See 2.01 of this Form 8K)  The final resolution of the dispute is unknown at this time. The pro forma balance sheet reflects the audited final balance sheet of Beach Bank prepared by Beach Bank.  The primary impact of the changes that SAB believes are necessary to the balance sheet to reflect the final balance sheet of Beach Bank would result in a revised pro forma balance sheet that includes the following significant adjustments:

i)  the elimination of the related party receivable to $0.  

ii) a decrease of Beach bank total shareholder equity of $1,592 from $8,692 to $7,100.

iii) a decrease in the number of shares issued by SAB from 3,844 to 3,096.

iv) a decrease in share capital issued by SAB of $3,743 and a corresponding decrease in goodwill recorded of $3,743.






Exhibit 99.2 - Page 7


SUN AMERICAN BANCORP AND INDEPENDENT COMMUNITY BANK
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

The following unaudited pro forma condensed consolidated financial information is based on the historical financial statements of Sun American Bancorp and Independent Community Bank and has been prepared to illustrate the effects of the merger transaction. The unaudited pro forma condensed consolidated balance sheet as of September 30, 2006 and the unaudited pro forma condensed consolidated statement of income for the nine months ended September 30, 2006 and for the year ended December 31, 2005 give effect to the merger transaction, accounted for under the purchase method of accounting. Under the purchase method of accounting, the aggregate consideration paid is allocated to the tangible and identifiable intangible assets acquired and liabilities assumed on the basis of their fair values on the effective dates of the merger transaction. Any excess purchase price is recorded as goodwill.

These unaudited pro forma condensed combined financial statements have been prepared based on preliminary estimates of fair values. The actual amounts recorded as of the closing of the merger transaction may differ materially from the information presented in these unaudited pro forma condensed combined consolidated financial statements. In addition, the impact of ongoing integration activities, the timing of the closing of the merger transaction and other changes in Independent Community Bank’s net tangible and intangible assets that occur prior to the closing of merger transaction could cause material differences in the information presented.

The unaudited pro forma condensed consolidated statement of income for the nine months ended September 30, 2006 has been derived from the unaudited pro forma condensed consolidated statement of income of Sun American Bancorp that has been adjusted to reflect the acquisition of Beach Bank and the unaudited interim financial statements of Independent Community Bank included elsewhere in this proxy statement/prospectus. The unaudited pro forma condensed consolidated statement of income for the year ended December 31, 2005 is based on the unaudited pro forma condensed consolidated statement of income of Sun American Bancorp that has been adjusted to reflect the acquisition of Beach Bank and the audited financial statements of Independent Community Bank included elsewhere in this proxy statement/prospectus. These unaudited pro forma condensed consolidated statements of income give effect to the merger transaction as if each had been consummated as of January 1, 2005. The unaudited pro forma condensed consolidated financial statements do not give effect to any anticipated cost savings or revenue enhancements in connection with the merger transaction.

The unaudited pro forma condensed combined consolidated financial statements of Sun American Bancorp that have been adjusted to reflect the acquisition of Beach Bank have been prepared based on a final audited balance sheet as of the date prior to the closing of the acquisition transaction. SAB has disputed certain components of the final audited balance sheet and the final results will be determined through the dispute resolution process described in the Agreement. The final results of the dispute resolution process may differ materially from the information presented in these unaudited pro forma condensed combined consolidated financial statements. In addition, the impact of ongoing integration activities could cause material differences in the information presented.

The unaudited pro forma condensed consolidated financial statements should be considered together with the historical financial statements of Sun American Bancorp and Independent Community Bank, including the notes thereto, included elsewhere in this proxy statement/prospectus. The pro forma information is based on certain assumptions described in the accompanying notes to Unaudited Pro Forma Condensed Consolidated Financial Information and does not necessarily indicate the consolidated financial position or the results of operations in the future or the consolidated financial position or the results of operations that would have been realized had the merger transaction been consummated during the periods or as of the date for which the pro forma information is presented.



Exhibit 99.2 - Page 8


SUN AMERICAN BANCORP

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

 

 

As of September 30, 2006

 

 

 

Sun

American

Bancorp

 

Independent
Community
Bank

 

Purchase

Accounting

Adjustment

 

 

 

Pro

Forma

Consolidated

 

 

 

(In thousands, except per share data)

 

ASSETS

     

 

                  

 

 

                  

 

 

                  

 

 

     

 

                  

 

Cash and balances due from financial institutions

 

$

10,160

 

$

3,021

     

$

(100

)

(a)

 

$

13,081

 

Federal funds sold

 

 

18,038

 

 

89

 

 

(19,070

)

(b)

 

 

(943

)

Total cash and cash equivalents

 

 

28,198

 

 

3,110

 

 

(19,170

)

 

 

 

12,138

 

Securities available for sale

 

 

5,190

 

 

9,977

 

 

—

 

 

 

 

15,167

 

Securities held to maturity

 

 

47,325

 

 

2,000

 

 

(74

)

(c)

 

 

49,251

 

Net Loans

 

 

340,268

 

 

105,685

 

 

(207

)

(d)

 

 

445,746

 

Federal Reserve Stock

 

 

1,702

 

 

—

 

 

—

 

 

 

 

1,702

 

Federal Home Loan Bank Stock

 

 

2,055

 

 

608

 

 

—

 

 

 

 

2,663

 

Premises and fixed assets

 

 

8,806

 

 

322

 

 

(50

)

(e)

 

 

9,078

 

Accrued Interest Receivable

 

 

2,163

 

 

499

 

 

—

 

 

 

 

2,662

 

Due from related party

 

 

1,206

 

 

-

 

 

—

 

 

 

 

1,206

 

Goodwill

 

 

17,205

 

 

—

 

 

23,713

 

(f)

 

 

40,918

 

Intangible Assets

 

 

1,684

 

 

—

 

 

3,580

 

(g)

 

 

5,264

 

Other assets

 

 

1,592

 

 

488

 

 

—

 

 

 

 

2,040

 

 

 

$

457,394

 

$

122,649

 

$

7,792

 

 

 

$

587,835

 

LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing

 

 

51,744

 

 

14,422

 

 

—

 

 

 

 

66,166

 

Interest-bearing

 

 

291,723

 

 

84,118

 

 

(41

)

(h)

 

 

375,800

 

Total Deposits

 

 

343,467

 

 

98,540

 

 

(41

)

 

 

 

441,966

 

Federal funds purchased and securities
sold u/a to repurchase

 

 


1,470

 

 


2,956

 

 


—

 

 

 

 


4,426

 

FHLB borrowings

 

 

28,000

 

 

7,000

 

 

—

 

 

 

 

35,000

 

Accrued expense and other liabilities

 

 

1,820

 

 

248

 

 

—

 

 

 

 

2,068

 

Total Liabilities

 

 

374,757

 

 

108,744

 

 

(41

)

 

 

 

483,460

 

Minority Interest

 

 

27

 

 

—

 

 

—

 

 

 

 

27

 

SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

457

 

 

5,408

 

 

(5,368

)

(i)

 

 

497

 

Capital Surplus

 

 

86,904

 

 

4,827

 

 

16,871

 

(j)

 

 

108,602

 

Undivided Profits

 

 

(4,551

)

 

3,819

 

 

(3,819

)

(k)

 

 

(4,551

)

Unrealized G/L on AFS securities

 

 

(200

)

 

(149

)

 

149

 

(l)

 

 

(200

)

Total Shareholders’ Equity

 

 

82,610

 

 

13,905

 

 

7,833

 

 

 

 

104,348

 

 

 

$

457,394

 

$

122,649

 

$

7,792

 

 

 

$

587,835

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of Common Shares Outstanding

 

 

23,062

 

 

1,082

 

 

4,044

 

(m)

 

 

27,106

 

Total book value per common share

 

$

3.58

 

$

12.86

 

 

 

 

 

 

$

3.85

 

Tangible book value per common share

 

$

2.76

 

$

12.86

 

 

 

 

 

 

$

2.18

 

Pro forma equivalent book value per common share for Independent Community Bank common shares exchanged for Sun American Bancorp common shares

 

 

 

 

 

 

 

 

 

 

 

 

$



24.82

 



Exhibit 99.2 - Page 9


———————

a)

To record direct costs of issuing common stock ($100).

b)

Cash consideration payable to Independent Community Bank for outstanding shares ($15,813) and cash consideration payable ($3,257) to Independent Community Bank for outstanding options.

c)

To record fair value adjustment of investment securities.

d)

To record fair value adjustment of loans.

e)

Adjustment to carrying value of premises and equipment for obsolete fixed assets.

f)

Goodwill (see Note 2).

g)

Core deposit intangible.

h)

To record fair value adjustment of certificates of deposits.

i)

To eliminate Independent Community Bank equity accounts ($5,408) and to issue 4.0 million shares ($40) of Sun American Bancorp common stock with a par value of $0.01.

j)

To eliminate Independent Community Bank equity accounts ($4,827), record direct costs of issuing common stock ($100), and record capital surplus upon issuance of 4.0 million shares of Sun American Bancorp common stock.

k)

To eliminate Independent Community Bank ($3,819) equity accounts.

l)

To eliminate Independent Community Bank ($149) equity accounts.

m)

Issuance of Sun American Bancorp common stock in connection with the merger of Independent Community Bank with and into Sun American Bank (4.044 million shares, assuming no outstanding options to purchase shares of Independent Community Bank common stock are exercised prior to the closing).



Exhibit 99.2 - Page 10


SUN AMERICAN BANCORP

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME

 

 

For the Nine Months Ended September 30, 2006

 

 

 

Sun

American

Bancorp

 

 

Independent

Community

Bank

 

 

Purchase

Accounting

Adjustment

 

 

 

Pro Forma

Consolidated

 

 

 

(In thousands, except per share data)

 

Interest income

     

$

23,684

 

     

$

7,092

 

     

$

(683

)

(a)

     

$

30,093

 

Interest expense

 

 

8,600

 

 

 

2,679

 

 

 

—

 

 

 

 

11,279

 

Net interest income

 

 

15,084

 

 

 

4,413

 

 

 

(683

)

 

 

 

18,814

 

Provision for loan losses

 

 

795

 

 

 

—

 

 

 

—

 

 

 

 

795

 

Net interest income after provision
for loan losses

 

 


14,289

 

 

 


4,413

 

 

 

(683

)

 

 

 

18,019

 

Noninterest income

 

 

937

 

 

 

140

 

 

 

—

 

 

 

 

1,077

 

Noninterest expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

7,147

 

 

 

1,268

 

 

 

—

 

 

 

 

8,415

 

Occupancy, furniture and equipment expense

 

 

2,773

 

 

 

340

 

 

 

(13

)

(b)

 

 

3,100

 

Other operating expenses

 

 

4,441

 

 

 

506

 

 

 

457

 

(c)

 

 

5,404

 

Noninterest expenses

 

 

14,361

 

 

 

2,114

 

 

 

444

 

 

 

 

16,919

 

Income before taxes

 

 

865

 

 

 

2,439

 

 

 

(1,127

)

 

 

 

2,177

 

Income tax expense

 

 

—

 

 

 

875

 

 

 

(875

)

(d)

 

 

—

 

Net income

 

$

865

 

 

$

1,564

 

 

$

(252

)

 

 

$

2,177

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic net income per common share

 

$

0.04

 

 

$

1.45

 

 

 

—

 

 

 

$

0.08

 

Diluted net income per common share

 

$

0.03

 

 

$

1.41

 

 

 

—

 

 

 

$

0.07

 

Weighted average common shares outstanding, basic

 

 


22,694

 

 

 


1,082

 

 

 


4,044

 

(e)

 

 


26,738

 

Weighted average common shares outstanding, diluted

 

 


26,211

 

 

 


1,110

 

 

 


4,044

 

(e)

 

 


30,255

 

Pro forma equivalent net income per

common share for Independent Community Bank common shares exchanged for Sun American Bancorp common shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

0.53

 

Diluted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

0.45

 

———————

a)

To record amortization of fair value adjustments of loans ($26) and investments ($6) over a 5 to 9 year periods using straight line and accelerated methods which approximate the interest method and to decrease interest income ($715) for the cost of funds used to purchase Independent Community Bank at a federal funds rate of 5%.

b)

To record reduction in depreciation expense related to decrease in carrying value of equipment.

c)

To record amortization of core deposit intangible over a 9 year period using an accelerated method.

d)

No income taxes are recorded as a result of decreasing the valuation allowance for the realizable portion of deferred tax assets associated with NOL carryforwards.

e)

Issuance of Sun American Bancorp common stock in connection with the merger of Independent Community Bank with and into Sun American Bank (4.044 million shares, assuming no outstanding options to purchase shares of Independent Community Bank common stock are exercised prior to the closing).



Exhibit 99.2 - Page 11


SUN AMERICAN BANCORP

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME

 

 

For the Year Ended December 31, 2005

 

 

 

Sun American

Bancorp

 

Independent

Community

Bank

 

Purchase

Accounting

Adjustment

 

 

 

Pro Forma

Consolidated

 

 

 

(in thousands, except per share data)

 

Interest income

     

$

23,321

     

$


7,517

     

$


(911

)

(a)

     

$

29,927

 

Interest expense

 

 

6,745

 

 

2,383

 

 

(41

)

(b)

 

 

9,169

 

Net interest income

 

 

16,576

 

 

5,134

 

 

(952

)

 

 

 

20,758

 

Provision for loan losses

 

 

800

 

 

645

 

 

—

 

 

 

 

1,445

 

Net interest income after provision
for loan losses

 

 

15,776

 

 


4,489

 

 


(952

)

 

 

 


19,313

 

Noninterest income

 

 

1,706

 

 

179

 

 

—

 

 

 

 

1,885

 

Noninterest expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

6,824

 

 

1,274

 

 

—

 

 

 

 

8,098

 

Occupancy, furniture and equipment expense

 

 

2,605

 

 

388

 

 

(17

)

(c)

 

 

2,976

 

Other operating expenses

 

 

7,169

 

 

695

 

 

752

 

(d)

 

 

8,616

 

Noninterest expenses

 

 

16,598

 

 

2,357

 

 

735

 

 

 

 

19,690

 

Income before taxes

 

 

884

 

 

2,311

 

 

(1,687

)

 

 

 

1,508

 

Income tax expense

 

 

—

 

 

909

 

 

(909

)

(e)

 

 

—

 

Net income

 

$

884

 

 

1,402

 

$

(778

)

 

 

$

1,508

 

 

 

 

                  

 

 

                  

 

 

                  

 

 

 

 

                  

 

Basic net income per common share

 

$

0.06

 

$

1.31

 

 

 

 

 

 

$

0.08

 

Diluted net income per common share

 

$

0.05

 

$

1.26

 

 

 

 

 

 

$

0.07

 

Weighted average common shares
outstanding, basic

 

 


15,967

 

 


1,071

 

 


4,044

 

(f)

 

 


20,011

 

Weighted average common shares
outstanding, diluted

 

 


17,448

 

 


1,111

 

 


4,044

 

(f)

 

 


21,492

 

Pro forma equivalent net income per common
share for Independent Community Bank
common shares exchanged for Sun
American Bancorp common shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

 

 

 

 

 

 

 

 

 

$

0.49

 

Diluted

 

 

 

 

 

 

 

 

 

 

 

 

$

0.44

 

———————

a)

To record amortization of fair value adjustments of loans ($35) and investments ($8) over a 5 to 9 year periods using straight line and accelerated methods which approximate the interest method and to decrease interest income ($954) for the cost of funds used to purchase Independent Community Bank at a federal funds rate of 5%.

b)

To record amortization of fair value adjustments of certificates of deposit over a 1 year straight line method.

c)

To record reduction in depreciation expense related to decrease in carrying value of equipment.

d)

To record amortization of core deposit intangible over a 9 year period using an accelerated method.

e)

No income taxes are recorded as a result of decreasing the valuation allowance for the realizable portion of deferred tax assets associated with NOL carryforwards.

f)

Issuance of Sun American Bancorp common stock in connection with the merger of Independent Community Bank with and into Sun American Bank (4.044 million shares, assuming no outstanding options to purchase shares of Independent Community Bank common stock are exercised prior to the closing).



Exhibit 99.2 - Page 12


NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS

Note 1 – Basis of Presentation

These unaudited pro forma condensed consolidated financial statements have been prepared based upon historical financial information of Sun American Bancorp and Independent Community Bank giving effect to the merger transaction and other related adjustments described in these footnotes. Certain footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted as permitted by SEC rules and regulations. These unaudited pro forma condensed consolidated financial statements are not necessarily indicative of the results of operations that would have been achieved had the acquisition actually taken place at the dates indicated and do not purport to be indicative of future financial position or operating results. The unaudited pro forma condensed consolidated combined financial statements should be read in conjunction with the historical financial statements.

The merger transaction will be accounted for using the purchase method of accounting, in accordance with accounting principles generally accepted in the United States.

The unaudited pro forma condensed consolidated statements of income combine the historical consolidated statements of income of Sun American Bancorp and historical statement of income of Independent Community Bank, for the fiscal year ended December 31, 2005, and for the nine months ended September 30, 2006, giving effect to the merger transaction and related events as if they had been consummated on January 1, 2005. The unaudited pro forma condensed consolidated balance sheet combines the historical consolidated balance sheet of Sun American Bancorp and the historical balance sheet of Independent Community Bank, giving effect to the merger transaction and related events as if they had been consummated on September 30, 2006.

The unaudited pro forma condensed statements on income do not give effect to any anticipated cost savings or revenue enhancements in connection with the transaction.

Note 2 – Purchase Price and Purchase Accounting Adjustments

 

 

Sun
American
Bancorp

 

 

 

 

(in thousands,
except
per share
data)

 

 

Sun American Bancorp shares to be issued for outstanding shares of
Independent Community Bank

     

 

4,044

 

 

Fair value of Sun American Bancorp stock

 

$

5.40

 

 

Fair value of Sun American Bancorp stock to be issued

 

$

21,838

 

 

Payment for outstanding shares of Independent Community Bank

 

 

15,813

 

 

Payment for outstanding options of Independent Community Bank

 

 

3,257

 

(b)

Pro forma purchase price

 

$

40,908

 

 

 

 

 

 

 

 

Net assets of Independent Community Bank per September 30, 2006
financial statements

 

$

13,905

 

 

 

 

 

 

 

 

Purchase accounting adjustments to carrying value of asset or liability: (a)

 

 

                  

 

 

Investment Securities

 

 

(74

)

 

Loans

 

 

(207

)

 

Premises & Equipment

 

 

(50

)

 

Core Deposit Intangible

 

 

3,580

 

 

Certificate of Deposits

 

 

41

 

 

Net pro forma purchase accounting adjustments

 

 

3,290

 

 

Goodwill

 

$

23,713

 

 



Exhibit 99.2 - Page 13


———————

a)

These purchase accounting adjustments are preliminary estimates and are subject to change primarily as a result of changes in market interest rates or decline in credit quality of the loan and investment security portfolio.

b)

Pro forma amount of cash to be paid for Independent Community Bank stock options at September 30, 2006.

Per Option Value as defined in agreement

     

 

 

 

Dollar per option

 

$

34.81

 

Less: Weighted average exercise price per option

 

 

10.55

 

Per Option Value

 

$

24.26

 

Total stock options outstanding

 

 

134,291

 

Total pro forma amount of cash due to option holders

 

$

3,257,900

 




Exhibit 99.2 - Page 14