-----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, CBC2iaHhdlJmB1E8HnEscDLDmg/GeUvq35PeE9hs7VeONyYI4jGca/Un9bP/xrRr BALn2fmqyIkSgJLK0k71Sw== 0000908834-04-000528.txt : 20040811 0000908834-04-000528.hdr.sgml : 20040811 20040811163246 ACCESSION NUMBER: 0000908834-04-000528 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20040811 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20040811 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LINCOLN BANCORP /IN/ CENTRAL INDEX KEY: 0001070259 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035] IRS NUMBER: 352055553 STATE OF INCORPORATION: IN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-25219 FILM NUMBER: 04967464 BUSINESS ADDRESS: STREET 1: 1121 EAST MAIN STREET CITY: PLAINFIELD STATE: IN ZIP: 46168-0510 BUSINESS PHONE: 3178396539 MAIL ADDRESS: STREET 1: 1121 EAST MAIN STREET CITY: PLAINFIELD STATE: IN ZIP: 46168-0510 8-K 1 lin8k_0812.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(b) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): August 2, 2004 LINCOLN BANCORP (Exact name of registrant as specified in its charter) INDIANA (State or other jurisdiction of incorporation) 000-25219 35-2055553 (Commission File Number) (IRS Employer Identification No.) 1121 East Main Street Plainfield, Indiana 46168-0510 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (317) 839-6539 Item 2. Acquisition or Disposition of Assets On August 2, 2004, the Registrant completed the merger of First Shares Bancorp, Inc. ("First Shares") with and into Registrant (the "Merger") and the merger of First Bank with and into Lincoln Bank ("Lincoln Bank"). Information as to this transaction was previously reported in the joint proxy statement/prospectus contained in Registrant's Registration Statement on Form S-4, Registration Number 333-114741, which is incorporated herein by reference (the "Proxy/Prospectus"). For a discussion of the terms and conditions of the transaction, reference is made to the Proxy/Prospectus. Upon consummation of the Merger, each outstanding share of common stock, $.01 par value per share, of First Shares was converted into the right to receive, at the election of each First Shares shareholder, either .75 shares of Registrant's common stock, without par value ("Registrant Common Stock"), or $14.80 in cash; provided that an aggregate of 878,685 shares of Registrant Common Stock were issued in the Merger. As a result of the various shareholder elections made, all shareholders who elected only cash and all shareholders who failed to make a proper election by the July 14, 2004 deadline will receive $14.80 for each First Shares share they own. Because more shareholders elected stock than were permitted in the Merger, shareholders electing stock of the Registrant will receive for each share of First Shares common stock approximately .55 shares of Registrant common stock and approximately $4.00 in cash, based on a stock exchange pro ration factor of .7293141, an exchange ratio of .75 and a cash payment of $14.80. Cash will be paid for fractional shares in an amount determined by multiplying the fractional interest by $19.73. In the aggregate, Registrant issued 878,685 shares of Registrant common stock in the merger and paid cash in the aggregate of approximately $17.3 million in cash. The cash consideration was derived from borrowings by Lincoln Bank that were paid to Registrant in the form of dividend distributions and borrowings by Registrant under its line of credit. The Merger will be accounted for under the purchase method of accounting. In addition, options for 31,500 shares of First Shares common stock were purchased at the closing of the Merger by Registrant for an aggregate of $329,490 in cash. Moreover, options for an aggregate of 93,186 shares of Registrant common stock with an average option price per share of $7.42 were exchanged for options for 124,250 shares of First Shares common stock with an average option price of $5.56 per share. Pursuant to General Instruction F to Form 8-K, the press release issued August 2, 2004, concerning the closing of the Merger between the Registrant and First Shares is attached hereto as Exhibit 99.1 and incorporated by reference herein. When used in this Current Report on Form 8-K, the words or phrases "pro forma," "will likely result," "are expected to," "will continue," "is anticipated," "estimate," "project" or similar expressions are intended to identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties, including, among other things, the possibility that expected cost savings from the acquisition of First Shares cannot be fully realized or realized within the expected time frame, the possibility that revenues following the acquisition of First Shares may be lower than expected, changes in economic conditions in the Registrant's market area, changes in policies by regulatory agencies, fluctuations in interest rates, and demand for loans in Registrant's market area and competition, that could cause actual results to differ materially from historical results and those presently anticipated or projected. Readers should not place undue reliance on any such forward-looking statements, which speak only as of the date made. The factors listed above could affect the Registrant's financial performance and could cause the Registrant's actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements. The Registrant does not undertake and specifically declines any obligation to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. 2 Item 7. Financial Statements and Exhibits (a) Financial Statements or Business Acquired. 1. The audited financial statements of First Shares, including its consolidated balance sheets as of December 31, 2003 and 2002, and related consolidated statements of income, shareholders' equity and cash flows for each of the three years in the period ended December 31, 2003, are hereby incorporated by reference from pages 18 to 31 of First Shares' Annual Report to Shareholders, attached as Annex F to the Registrant's Registration Statement on Form S-4 (Registration Number 333-114741) initially filed with the Commission on April 22, 2004. 2. The unaudited financial statements of First Shares, including its consolidated balance sheet as of March 31, 2004, and related consolidated statements of income and comprehensive income and cash flows for the three months ended March 31, 2004 and 2003 are attached hereto as Exhibit 99.2. (b) Pro Forma Financial Statements. The pro forma financial information required by this Item 7(b) will be filed by amendment to this Current Report on Form 8-K no later than 60 days after the date that this report is required to be filed with the Securities and Exchange Commission. (c) Exhibits Exhibit 2 - Agreement and Plan of Reorganization among Lincoln Bancorp, First Shares Bancorp, Inc., Lincoln Bank and First Bank, dated March 10, 2004 (incorporated by reference from Annex A to the Registrant's Registration Statement on Form S-4 (Registration Number 333-114741) initially filed with the Commission on April 22, 2004). Exhibit 20 - Proxy Statement/Prospectus dated March 12, 2004 (incorporated by reference to the Registrant's Registration Statement on Form S-4 (Registration Number 333-114741) initially filed with the Commission on April 22, 2004). Exhibit 99.1 - Press release dated August 2, 2004 announcing the closing of the merger between First Shares Bancorp, Inc. and the Registrant. Exhibit 99.2 - Consolidated Balance Sheet as of March 31, 2004 and Consolidated Statements of Income and Comprehensive Income and Cash Flows for the three-months ended March 31, 2004 and 2003, for First Shares Bancorp, Inc. 3 SIGNATURES 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. /s/ T. Tim Unger -------------------------------------- T. Tim Unger, President Dated: August 11, 2004 4 EX-99 2 lin8k_0812ex991.txt 99.1 - PRESS RELEASE Exhibit 99.1 FOR IMMEDIATE RELEASE August 2, 2004 LINCOLN BANCORP ANNOUNCES CLOSING OF MERGER WITH FIRST SHARES BANCORP, INC. PLAINFIELD, INDIANA -- August 2, 2004 -- Lincoln Bancorp ("Lincoln") (NASDAQ-NM: LNCB), headquartered in Plainfield, Indiana, announced today that its previously announced merger (the "Merger") with First Shares Bancorp, Inc. ("First Shares"), headquartered in Greenwood, Indiana, has closed. Shareholders of First Shares had the right to elect to receive either .75 shares of Lincoln common stock or $14.80 in cash for each share of First Shares common stock owned by them, provided that an aggregate of 878,685 shares of Lincoln common stock will be issued in the merger. The Merger consideration tabulation and calculation process for election forms submitted to the exchange agent by shareholders of First Shares is final. Based on the final exchange election results, all shareholders electing cash and all shareholders making no election will receive $14.80 per share in cash in the Merger. All shareholders electing stock of Lincoln will receive for each share of First Shares common stock approximately .55 shares of Lincoln common stock and approximately $4.00 in cash, based on a stock exchange pro ration factor of ..7293141, an exchange ratio of .75 and a cash payment of $14.80 per share. Fractional shares of Lincoln common stock will not be issued in the merger. Rather, shareholders of First Shares will receive cash in the amount of $19.73 multiplied times the fractional share of Lincoln common stock to which they would otherwise have been entitled. The exchange agent expects to mail Lincoln Bancorp common stock and cash in exchange for common stock of First Shares in accordance with the terms of the Merger Agreement within the next few days to shareholders of First Shares who have completed proper election forms and delivered their certificates for First Shares common stock to the exchange agent. Those remaining shareholders of First Shares who have not filed proper election forms or delivered their stock certificates for First Shares common stock to the exchange agent will be automatically determined as eligible to receive $14.80 per share in cash. Such cash will be held by the exchange agent or Lincoln until such shareholders of First Shares submit their First Shares' certificates to the exchange agent or Lincoln. Any questions regarding the exchange or tabulation process should be directed to the exchange agent, Computershare Trust Company of New York, at 1-800-245-7630. Lincoln will issue 878,685 shares of common stock in the aggregate and pay approximately $17.3 million in cash to the former shareholders of First Shares in the merger. In addition, options to acquire an aggregate of 124,250 shares of First Shares common stock will be exchanged for options for an aggregate of 93,186 shares of Lincoln common stock with an average option price per share of $7.42. Moreover, options to acquire an aggregate of 31,500 shares of First Shares common stock will be cashed out for an aggregate consideration of $329,490. Now that the merger is complete, Lincoln has total assets of approximately $815 million and operates from 16 locations in Hendricks, Johnson, Morgan, Clinton, Montgomery and Brown counties of Indiana. Additional information may be found on the company's website at www.lincolnbankonline.com. For Additional Information, contact: T. Tim Unger, President and CEO Lincoln Bancorp 317 839-6539 EX-99 3 lin8k_0812ex992.txt 99.2 - FINANCIALS Exhibit 99.2 FIRST SHARES BANCORP, INC. CONSOLIDATED BALANCE SHEETS (Dollar amounts in thousands, except per share data) (unaudited) March 31, December 31, 2004 2003 --------- --------- ASSETS Cash and cash equivalents $ 8,997 $ 2,983 Securities available for sale 38,677 29,357 FHLB stock, at cost 705 670 Loans held for sale 1,582 699 Loans, net of allowance ($1,622 and $1,513) 134,092 131,456 Premises and equipment, net 3,180 3,238 Intangible assets, net 21 32 Cash surrender value of life insurance 4,594 4,544 Accrued interest receivable and other assets 3,166 2,809 --------- --------- $ 195,014 $ 175,788 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities Non-interest-bearing deposits $ 17,559 $ 14,920 Interest-bearing deposits 150,195 127,873 --------- --------- Total deposits 167,754 142,793 Federal Home Loan Bank advances 5,000 10,000 Federal funds purchased -- 516 Repurchase agreements 5,217 6,508 Note Payable 1,125 1,200 Debentures 4,880 5,000 Accrued interest payable and other liabilities 828 738 --------- --------- 184,804 166,755 Shareholders' equity Preferred stock, 2,000,000 shares authorized; none outstanding -- -- Common stock, $.01 par value: 10,000,000 shares authorized, 1,625,662 and 1,592,662 shares issued andoutstanding 16 16 Additional paid in capital 5,788 4,758 Retained Earnings 4,449 4,665 Accumulated other comprehensive (loss) (43) (406) --------- --------- 10,210 9,033 --------- --------- $ 195,014 $ 175,788 ========= ========= See accompanying notes. FIRST SHARES BANCORP, INC. CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME Three months ended March 31, 2004 and 2003 (Unaudited) (Dollar amounts in thousands, except per share data) 2004 2003 ------- ------- Interest Income Loans, including related fees $ 2,151 $ 1,998 Taxable securities 285 245 Nontaxable securities 82 88 Other 7 10 ------- ------- Total Interest Income 2,525 2,341 Interest expense Deposits 674 762 Other 189 188 ------- ------- Total Interest Income 863 950 ------- ------- Net interest income 1,662 1,391 Provision for loan losses 45 110 ------- ------- Net interest income after provision for loan losses 1,617 1,281 Noninterest income Service charges on deposit accounts 121 107 Gain of sale of loans 222 353 Increase in cash surrender value of life insurance 50 29 Net gain of sale of securities 8 91 Other 48 51 ------- ------- Total Noninterest Income 449 631 Noninterest expenses Salaries and employee benefits 1,050 1,012 Stock option compensation expense 810 -- Occupancy 144 126 Equipment and data processing 117 113 Other 423 409 ------- ------- Total Noninterest Expense 2,544 1,660 ------- ------- Income before income taxes (478) 252 Income tax expense (262) 58 ------- ------- Net Income $ (216) $ 194 ======= ======= Comprehensive Income $ 147 $ 277 ======= ======= Per share data Earnings per share $ (.13) $ (.12) Earnings per share, assuming dilution (.13) .11 See accompanying notes. 2 FIRST SHARES BANCORP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Three months ended March 31, 2004 and 2003 (Unaudited) (Dollar amounts in thousands) 2004 2003 -------- -------- Cash flows from operating activities Net income (loss) $ (216) $ 194 Adjustments to reconcile net income (loss) to net cash from operating activities: Depreciation and amortization 103 83 Provision for loan losses 45 110 Discount (accretion) and premium amortization 36 88 (Gain) loss on sale of securities (8) (91) Amortization of intangible assets 11 10 Stock option expense 810 -- FHLB stock dividend (35) -- Increase in cash surrender value of life insurance (50) (29) Changes in assets and liabilities: Loans held for sale (883) 4,720 Interest receivable and other assets (174) 35 Interest payable and other liabilities 90 4 -------- -------- Net cash from operating activities (271) 5,124 Cash flows from investing activities Proceeds from sales, maturities, calls and pay downs of securities available for sale 5,076 10,006 Purchases of securities available for sale (13,823) (22,067) Loans made to customers net of payments received (3,102) (2,976) Premises and equipment purchases (45) (403) -------- -------- Net cash from investing activities (11,894) (15,440) Cash flows from financing activities Change in deposit accounts 24,961 19,664 Change in repurchase agreements (1,291) (118) Proceeds from Federal Home Loan Bank advances -- 2,000 Payments on Federal Home Loan Bank advances (5,000) (5,700) Change in Federal Funds Purchase (516) (2,245) Payments on note payable (75) (50) Shares issued under equity contracts 100 -- -------- -------- Net cash from financing activities 18,179 13,551 -------- -------- Net change in cash and cash equivalents 6,014 3,235 Cash and cash equivalents at beginning of period 2,983 5,348 -------- -------- Cash and cash equivalents at end of period $ 8,997 $ 8,583 ======== ======== See accompanying notes. 3 NOTE 1 - BASIS OF PRESENTATION The accompanying consolidated financial statements include the accounts of First Shares Bancorp, Inc. (the Company) and its wholly owned subsidiary, First Bank (the Bank). The significant accounting policies followed for interim financial reporting are consistent with the policies followed for annual reporting. The consolidated interim financial statements have been prepared according to accounting principles generally accepted in the United States of America and in accordance with the instructions for Form 10-QSB. The interim statements do not include all information and footnotes normally included in the annual financial statements. It is the opinion of management that all adjustments necessary for a fair presentation of the results for the reporting period have been included in the accompanying consolidated financial statements and all adjustments are of a normal recurring nature. Certain prior period information may be reclassified to conform to the 2004 presentation. Stock Compensation: Employee compensation expense under stock options is reported using the intrinsic value method. Except for 90,000 options subject to modification agreements (see Note 7), stock-based compensation cost is not reflected in net income, as all options granted had an exercise price equal to or greater than the market price of the underlying common stock at date of grant. The following table illustrates the effect on net income and earnings per share if expense was measured using the fair value recognition provisions of FASB Statement No. 123, Accounting for Stock-Based Compensation. 2004 2003 ------ ------ Net income as reported $(216) $194 Add: Stock based compensation expense recognized under the intrinsic method, net of tax 489 -- Deduct: Stock-based compensation expense determined under fair value based method (534) (6) ------ ------ Pro forma net income (261) 188 Basic earnings per share as reported (.13) .12 Pro forma basic earnings per share (.16) .12 Diluted earnings per share as reported (.13) .11 Pro forma diluted earnings per share (.16) .11 4 NOTE 2 - SECURITIES The fair values of securities available for sale and related gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) were as follows: Gross Gross Unrealized Unrealized Fair Value Gains Losses ---------- ---------- ---------- March 31, 2004 U.S. Treasury and government agency securities $20,501 $ 92 $ (101) Obligations of states and political subdivisions 10,208 172 (67) Other securities 1,796 5 (153) Mortgage backed securities 6,172 -- (20) ------- ------- ------- $38,677 $ 269 $ (341) ======= ======= ======= December 31, 2003 U.S. Treasury and government agency securities $17,336 $ 37 $ (434) Obligations of states and political subdivisions 9,665 68 (229) Other securities 2,336 6 (121) Mortgage backed securities 20 -- -- ------- ------- ------- $29,357 $ 111 $ (784) ======= ======= ======= 5 NOTE 3 -- LOANS Total loans are comprised of the following: March 31, 2004 December 31, 2003 -------------- ----------------- Commercial $ 28,130 $ 29,073 Commercial Real Estate 27,541 22,518 Residential Real Estate 38,173 38,228 Construction 14,893 16,799 Consumer 26,977 26,351 -------- -------- Subtotal 135,714 132,969 Less: Allowance for loan losses (1,622) (1,513) -------- -------- $134,092 $131,456 ======== ======== NOTE 4 -- ALLOWANCE FOR LOAN LOSSES An analysis of the allowance for loan losses follows: 2004 2003 ------ ------ Balance, January 1 $1,513 $1,386 Provision charged to operations 45 110 Loans charged off (65) (43) Recoveries 129 5 ------ ------ Balance, March 31 $1,622 $1,458 ====== ====== 6 NOTE 5 - BORROWINGS The Bank has advances from the Federal Home Loan Bank. Advances were as follows: Maturity Date Interest Rate March 31, 2004 December 31, 2003 ------------- ------------- -------------- ----------------- March 15, 2004 1.11% $ -- $ 5,000 March 7, 2005 1.89% 2,000 2,000 January 23, 2006 4.73% 1,000 1,000 December 27, 2010 5.30% 1,000 1,000 March 7, 2011 4.75% 1,000 1,000 ------ ------- $5,000 $10,000 ====== ======= The advances are collateralized by first mortgage loans under a blanket lien arrangement. The Company maintains a note payable with a financial institution. The outstanding balance at March 31, 2004 and December 31, 2003 was $1,125 and $1,200, respectively. The outstanding balance accrues interest at prime minus ..50% (the interest rate was 3.50% at March 31, 2004). The note requires monthly principal payments of $25 plus interest. Scheduled annual principal reductions over the next four years are $300 per year through 2007. The note matures March 1, 2008 and is secured by Bank stock and other assets of the Company. During the first quarter of 2002, the Company initiated a public offering of Debentures and Stock Purchase Contracts. The Company raised $5,000 with the offering closing during the third quarter of 2002. Capitalized costs in connection with the offering totaled $661. The Debentures are unsecured and subordinated, have a term of approximately 8 years, and accrue interest at 8% per annum payable quarterly in arrears. The Debentures mature on July 1, 2011, but are redeemable by the Company at any time prior to their maturity. The stock purchase contracts require a purchaser to buy common shares of the Company at $6.67 per share on January 1, 2011. A purchaser may elect to purchase the common shares of the Company at any time prior to that date at the same price per share. The Stock Purchase Contracts will be cancelled in the event the Debentures are redeemed. Proceeds of $3,000 were contributed to the Bank to support growth. The Debentures qualify as part of total capital for the Company's regulatory capital requirements. See Note 7 regarding pending merger and the effect on the Debentures. 7 NOTE 6 - EARNINGS (LOSS) PER SHARE Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average shares outstanding during the period. A reconciliation of the numerators and denominators used to compute earnings (loss) per share is presented below: March 31, 2004 March 31, 2003 -------------- -------------- Earnings (loss) per share Net income (loss) $ (216) $ 194 =========== =========== Weighted average shares outstanding 1,608,255 1,579,162 ----------- ----------- Earnings (loss) per share $ (.13) $ .12 =========== =========== Earnings (loss) per share assuming dilution Net income (loss) $ (216) $ 194 Add: interest expense, net of tax, assuming conversion of debentures -- 74 ----------- ----------- $ (216) $ 268 Weighted average shares outstanding 1,608,255 1,579,162 Add: effect of assumed stock options exercised, if dilutive -- 71,401 Add: convertible debentures, if dilutive -- 750,000 ----------- ----------- Weighted average and dilutive potential shares outstanding 1,608,255 2,400,563 =========== =========== Earnings (loss) per share assuming dilution $ (.13) $ .11 =========== =========== In 2004, stock options for 156,250 shares and stock purchase contracts for 717,000 shares were not considered in computing diluted earnings per share because they were anti-dilutive. 8 NOTE 7 - PENDING MERGER On March 10, 2004, the Company signed a definitive agreement to merge with Lincoln Bancorp, Plainfield, Indiana. Per the terms of the agreement, shareholders of the Company will receive .75 shares of Lincoln Bancorp stock or $14.80 cash per share of Company stock, with at least 50% of the total consideration paid to be in the form of shares of Lincoln Bancorp stock. The transaction is subject to shareholder and regulatory approval, and is expected to close during the third quarter of 2004. In connection with the merger, the Company announced its intention to redeem its debentures and cancel its stock purchase contracts on May 7, 2004 (see Note 5). Under the terms of the agreement, the holders of the stock purchase contracts will have until May 7, 2004 to exercise the contracts by surrendering the related debentures as payment of the exercise price. To the extent stock purchase contracts are not exercised, the Company will redeem the related debentures, which will reduce the Company's regulatory capital. Debentures redeemed by the Company will be subject to a redemption premium of 7%, with a 1% cancellation fee for the related stock purchase contract, and unamortized debt issuance costs related to any debentures redeemed will be expensed upon redemption (these costs totaled $529 at March 31, 2004). Approximately $100 of debentures were redeemed and subject to the redemption premium which totaled $7. Subsequent to the end of the quarter, the conversion of the debentures was completed through the exercise of the stock purchase contracts by May 7, 2004. Remaining debt issue costs of $515 were transferred to additional paid in capital upon completion of the conversion. Additionally the Board of Directors approved extending the expiration date of 90,000 options with an exercise price of $5.49 from May 2004 to May 2009. With the modification agreement, a new measurement date was established and expense of $810 was recognized in the first quarter of 2004. 9 -----END PRIVACY-ENHANCED MESSAGE-----