EX-99.2 3 w58009exv99w2.htm PRO FORMA FINANCIAL INFORMATION exv99w2
 

Exhibit 99.2
A SUMMARY SELECTED CONSOLIDATED CONDENSED COMBINED COMPANY
UNAUDITED PRO FORMA FINANCIAL INFORMATION
     At the close of business on February 29, 2008, First Priority completed its acquisition of Prestige Community Bank (“Prestige”), a de novo bank headquartered in Newtown, Bucks County, Pennsylvania. Prestige, with $28 million in total assets, $5.8 million in loans and $19.8 million in deposits as of February 29, 2008, operates from its main office in Newtown, Pennsylvania, and a second office in Pipersville, Pennsylvania.
     The acquisition was consummated pursuant to the Agreement and Plan of Merger, dated as of October 19, 2007, by and among First Priority, First Priority Bank, and Prestige. Under the Purchase Agreement, Prestige shareholders received one share of common stock and one warrant of First Priority for each share of common stock and each warrant of Prestige held immediately prior to the closing of the transaction. First Priority issued 976,137 shares of common stock and 195,227 warrants in the merger transaction. In connection with the merger, four directors of Prestige were appointed to the First Priority Board of Directors.
     The acquisition has been accounted for using the purchase method of accounting, which requires that the financial statements of First Priority include activity of Prestige effective March 1, 2008. Under the purchase method of accounting, First Priority will record the assets and liabilities of Prestige at their fair values on the closing date of the merger.
     The Selected Unaudited Pro Forma Condensed Statements of Financial Condition as of December 31, 2007 assumes that the merger was completed on that date. Prestige’s initial date of inception was April 4, 2007 and opened for business on October 16, 2007. The Selected Unaudited Pro Forma Condensed Statements of Operations for the period ended December 31, 2007, have been prepared under the assumption that the merger was completed on April 4, 2007, Prestige’s date of inception.
     The selected unaudited pro forma condensed financial information is presented for illustrative purposes only, and does not indicate either future results of operations or financial condition. The selected unaudited pro forma condensed financial information is based upon assumptions and adjustments that First Priority believes are reasonable. No assumptions have been applied to the selected pro forma condensed financial statements regarding possible revenue enhancements or expense efficiencies. Adjustments are included related to certain write-offs of software contracts and known asset dispositions. The selected unaudited pro forma condensed financial statements should be read in conjunction with First Priority’s and Prestige’s consolidated financial statements and related notes, which are included in this document.

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Selected Unaudited Pro Forma Condensed Statements of Financial Condition
As of December 31, 2007
                                         
    First Priority     Prestige                      
    Stand-Alone     Stand-Alone                      
    December 31,     December 31,     Purchase             Pro Forma  
    2007     2007     Adjustments             Combined  
    (Dollars in thousands)  
Assets
                                       
Cash and cash equivalents
  $ 943     $ 509     $ (960 )     (1,2 )   $ 492  
Securities available for sale
    45,026       33,995       0               79,021  
Loans receivable, net of allowance for loan losses
    104,152       2,035       (3,969 )     (3,4 )     102,218  
Goodwill
    0       0       1,166       (5 )     1,166  
Other assets
    1,490       1,027       (197 )     (6 )     2,320  
 
                               
 
                                       
Total Assets
  $ 151,611     $ 37,566     $ (3,960 )           $ 185,217  
 
                               
 
                                       
Liabilities and Shareholders’ Equity
                                       
Liabilities
                                       
Deposits
  $ 116,304     $ 13,820     $ 161       (3 )   $ 130,285  
Short-term borrowings
    18,097       15,365       (3,997 )     (4 )     29,465  
Long-term debt
    390       0       0               390  
Other liabilities
    1,500       283       (26 )     (7 )     1,757  
 
                               
 
                                       
Total Liabilities
    136,291       29,468       (3,862 )             161,897  
 
                               
 
                                       
Shareholders’ Equity
                                       
Common equity
    15,320       8,098       (98 )     (2,3 )     23,320  
 
                               
 
                                       
Total Shareholders’ Equity
    15,320       8,098       (98 )             23,320  
 
                               
 
                                       
Total Liabilities and Shareholders’ Equity
  $ 151,611     $ 37,566     $ (3,960 )           $ 185,217  
 
                               
 
    Notes:
 
(1)   To record cash paid for transaction costs.
 
(2)   To record receipt of cash for Prestige stock subscriptions issued prior to merger.
 
(3)   To record purchase accounting fair value adjustments for loans and deposits.
 
(4)   To eliminate Prestige’s secured borrowing outstanding with First Priority Bank at December 31, 2007.
 
(5)   To record goodwill.
 
(6)   To record purchase accounting adjustments to write off software contracts and fixed assets.
 
(7)   To record purchase accounting adjustment related to Prestige’s straight-line rent.

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Selected Unaudited Pro Forma Condensed Statements of Operations
For the Period Ended December 31, 2007
                                         
    First Priority     Prestige (1)                      
    Stand-Alone     Stand-Alone                      
            For the                      
            Period from                      
            April 4, 2007                      
    For the Year     (Date of                      
    Ended     Inception) to                      
    December 31,     December 31,     Purchase             Pro Forma  
    2007     2007     Adjustments             Combined  
    (Dollars in thousands)  
Interest Income
                                       
Loans receivable, including fees
  $ 5,471     $ 14     $             $ 5,485  
Securities – taxable
    496       3                     499  
Interest bearing deposits
    2       11                     13  
Federal funds sold
    1,097       243       (10 )     (2 )     1,330  
 
                               
 
                                       
Total Interest Income
    7,066       271       (10 )             7,327  
 
                               
 
                                       
Interest Expense
                                       
Deposits
    4,267       69                     4,336  
Short-term borrowings
    15       2                     17  
Long-term debt
    11       0                     11  
 
                               
 
                                       
Total Interest Expense
    4,293       71                     4,364  
 
                               
 
                                       
Net Interest Income
    2,773       200       (10 )             2,963  
 
                                       
Provision for Loan Losses
    421       25                     446  
 
                               
 
                                       
Net Interest Income after Provision for Loan Losses
    2,352       175       (10 )             2,517  
 
                               
 
                                       
Non-Interest Income
    265       1                     266  
 
                               
 
                                       
Non-Interest Expenses
                                       
Salaries and employee benefits
    3,242       1,403                     4,645  
Occupancy and equipment
    412       284                     696  
Data processing equipment and operations
    233       51                     284  
Other
    1,106       656                     1,762  
 
                               
 
                                       
Total Non-Interest Expenses
    4,993       2,394                     7,387  
 
                               
 
                                       
Net Loss
  $ (2,376 )   $ (2,218 )   $ (10 )           $ (4,604 )
 
                               
 
    Notes:
 
(1)   Prestige Community Bank was formed and opened for business on October 16, 2007.
 
(2)   To reduce interest income for the effects of cash used in the acquisition based on an average rate earned on overnight investments of 4.5%, for the period from the date Prestige opened for business (October 16, 2007) to December 31, 2007.

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