EX-99.3 5 exhibit993.htm UNAUDITED PRO FORMA CONDENSED BALANCE SHEET AND SUMMARIES OF INCOME exhibit993.htm
 
 

Exhibit 99.3
 
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

The following tables present unaudited pro forma combined financial statements for Community Bancorp. and its Subsidiary, Community National Bank (the Company) and LyndonBank that has been prepared to give you a better picture of the possible financial position of the combined company. In presenting the pro forma balance sheet information, we assumed that the Company and LyndonBank had been merged as of the balance sheet date of September 30, 2007. In presenting the pro forma income statement information, we assumed that the Company and LyndonBank had been merged as of the period beginning on January 1, for each calendar period presented. This information is known as "pro forma" information and has been prepared by combining certain selected historical information about the Company and LyndonBank together. This pro forma information has been prepared for illustrative purposes only. For purposes of this pro forma presentation, it has been assumed that $26,717,823 in cash will be paid to LyndonBank shareholders in exchange for all of the issued and outstanding shares of LyndonBank common stock. You should not rely on this information as being indicative of the financial results the combined company would have had if the merger had already been completed or will have in the future. This information should be read in conjunction with the respective consolidated financial statements of the Company and LyndonBank, and the respective related notes.

 
 
 


     The following preliminary unaudited pro forma condensed combined balance sheet as of September 30, 2007 combines the September 30, 2007 balance sheets of the Company and LyndonBank assuming the merger was completed on September 30, 2007.
 
 
                                     
September 30, 2007
  
Community
          
 
              
   
Bancorp. &
          
Pro Forma Adjustments
          
Pro Forma
  
   
Subsidiary
    
LyndonBank
    
Debit
    
Credit
          
Combined
  
                                     
Assets
                                    
Cash and due from banks
   $ 7,609,332     $ 8,058,116     $ 15,387,000     $ 26,717,823       (1)(2)     $ 4,336,625  
Federal funds sold and overnight deposits
     12,389,462       3,901,284                               16,290,746  
Investments held-to-maturity
     29,431,718       0                               29,431,718  
Investments available-for-sale
     25,074,048       24,330,330                               49,404,378  
Restricted equity securities
     2,450,150       1,006,700                               3,456,850  
Loans held-for-sale
     982,576       0                                982,576  
Gross loans
     255,926,578       102,545,992       784,000       92,000       (3)(10)       359,164,570  
Allowance for loan losses
     (2,321,409 )     (971,019 )                             (3,292,428 )
Deferred loan fees-net
     (490,826 )     3,228                               (487,598 )
     Net loans
     253,114,343       101,578,201                               355,384,544  
Bank premises & equipment, net
     12,072,266       4,538,247                               16,610,513  
Accrued interest
     1,755,545       688,460                               2,444,005  
BOLI
     0       3,526,604                               3,526,604  
Other assets
     5,928,109       264,246       692,601       596,000       (11)(4)       6,288,956  
Core deposit intangibles
     0       0       4,161,000               (5)       4,161,000  
Goodwill
     0       0       8,754,608               (6)       8,754,608  
   Total assets
   $ 350,807,549     $ 147,892,188                             $ 501,073,123  
                                                 
Liabilities:
                                                
Deposits:
                                                
  Non-interest bearing
   $ 167,194,946     $ 17,087,005                             $ 184,281,951  
  Interest bearing
     134,843,845       96,775,251       702,000               (7)       230,917,096  
      302,038,791       113,862,256                               415,199,047  
Repurchase agreements
     14,212,876       6,562,000                               20,774,876  
Fed funds purchased/other advances
     40,000       12,000,000                               12,040,000  
Capital lease obligations
     0       950,287                               950,287  
Subordinated debentures
     0       0               12,887,000       (1)       12,887,000  
Accrued interest & other liabilities
     2,653,456       286,051               1,919,980       (8)       4,859,487  
Total liabilities
     318,945,123       133,660,594                               466,710,697  
                                                 
                                                 
                                                 
Common stock
     11,481,838       653,400       653,400               (9)       11,481,838  
Preferred stock
     0       0               2,500,000       (1)       2,500,000  
Additional paid-in capital
     24,818,896       2,138,439       2,138,439               (9)       24,818,896  
Retained earnings (deficit)
     (1,749,560 )     14,210,059       14,210,059               (9)       (1,749,560 )
Treasury stock
     (2,622,777 )     (2,259,270 )             2,259,270       (9)       (2,622,777 )
Accumulated other comprehensive loss
     (65,971 )     (511,034 )             511,034       (9)       (65,971 )
Total shareholders' equity
     31,862,426       14,231,594                               34,362,426  
Total liabilities & shareholders' equity
   $ 350,807,549     $ 147,892,188                             $ 501,073,123  

 
 


(1)
Trust preferred securities and non-cumulative stock issued to fund a portion of the transaction.
(2)
Cash paid for transaction.
(3)
Loans estimated fair value adjustment will be amortized over the remaining life of the loan portfolio.
(4)
Estimated purchase accounting accruals related to legal, accounting, and investment banking fees associated with the merger transaction.
(5)
Core deposit intangible on transaction account at December 31, 2007 will be amortized over 10 years using an accelerated method.
(6)
Estimated goodwill as a result of the merger transaction, calculated as follows:

Cash at closing
   $ 26,717,823  
Acquisition costs
     596,000  
Net premium received from sale of branch
     (600,601 )
Total purchase price
     26,713,222  
Less shareholders' equity of LB 9/30/07
     (14,231,594 )
Equals Premium paid over book
     12,481,628  
Less core deposit intangible, adjusted for tax
     (2,746,260 )
Less: net Loan fair value adj., adjusted for tax
     (517,440
)
Less: net fair value of CDs, adjusted for tax
     (463,320 )
Goodwill
   $ 8,754,608  

(7)
Certificate of deposit fair value adjustment will be amortized over the remaining life of the CD portfolio.
(8)
Estimated deferred tax accrual related to fair value adjustment.
(9)
Under the purchase method of accounting, the equity accounts of LyndonBank are eliminated.
(10)
Fair value of loans sold on acquisition date.
(11)
Premium received on deposits sold on acquisition date.
 
Bank premises and equipment will be adjustment to fair value based on updated appraisals.

 
 

     The following preliminary unaudited pro forma condensed combined statement of income for the nine months ended September 30, 2007 combines the statements of income of the Company and LyndonBank assuming the merger was completed on January 1, 2007

For the Nine Months Ended September 30, 2007
  
   
Community
                            
Proforma
  
   
Bancorp.
          
Proforma Adjustments
          
Combined
  
   
& Subsidiary
    
LyndonBank
    
Debit
    
Credit
          
Company
  
Interest and dividend income
                                    
  Loans, including fees
   $  14,406,502     $  6,242,869     $  147,000             (1)     $  20,502,371   
  Investment income
     1,639,471       1,101,739               21,943       (2)       2,763,153   
     Total interest and dividend income
     16,045,973       7,344,608                               23,265,524   
                                                 
Interest Expense:
                                                
  Deposits
     5,774,457       2,421,095       819,150               (3)       9,014,702   
  Other borrowings
     331,330       658,473       871,318               (4)       1,861,121   
     Total interest expense
     6,105,787       3,079,568                               10,875,823   
Net interest and dividend income
     9,940,186       4,265,040                               12,389,701   
Provision for loan losses
     122,500       30,000                               152,500   
Net interest and dividend income after                                                
  the provision for loan losses
     9,817,686       4,235,040                               12,237,201   
                                                 
Noninterest income:
                                                
  Service charges on deposits accounts
     1,031,526       417,865                               1,449,391   
  Securities, gains, net
     0       51,449                               51,449   
  Gain on sales of loans
     0       150                               150   
  Increase in cash surrender value of bank
                                                
   owned life insurance
     0       94,783                               94,783    
  Other income
     1,676,660       336,151                               2,012,811   
     Total noninterest income
     2,708,186       900,398                               3,608,584    
Noninterest expense:
                                                
  Salaries and employee benefits
     4,771,326       2,337,317                               7,108,643   
  Occupancy and equipment expense
     1,776,935       1,269,999                               3,046,934   
  Other operating expenses
     3,004,450       1,049,866                               4,054,316   
     Total noninterest expenses
     9,552,711       4,657,182                               14,209,893   
Income before income taxes
     2,973,161       478,256                               1,635,892    
Income tax (benefit) expense
     512,850       55,721               617,279       (5)       (48,708)  
    Net income
   $  2,460,311     $  422,535                             $  1,684,599   
                                                 
Net income per share of common stock
   $ 0.56     $ 0.40                             $ 0.39   
                                                 
Shares outstanding
     4,357,565       1,058,132                               4,357,565   


 
 
 

     The following preliminary unaudited pro forma condensed combined statement of income for the year ended December 31, 2006 combines the statements of income of the Company and LyndonBank assuming the merger was completed on January 1, 2006

For the Year Ended December 31, 2006
                                
               
Proforma Adjustments
          
Proforma
  
                                 
Combined
  
   
Community
    
LyndonBank
    
Debit
    
Credit
          
Company
  
Interest and dividend income
                                    
  Loans, including fees
   $  18,471,445     $  7,355,319     $  196,000             (1)     $  25,630,764  
  Investment income
     2,504,399       1,643,416               29,257       (2)       4,177,072  
     Total interest and dividend income
     20,975,844       8,998,735                               29,807,836  
                                                 
Interest Expense:
                                                
  Deposits
     6,684,827       2,574,733       1,092,200               (3)       10,351,760  
  Other borrowings
     1,018,261       619,471       1,161,757               (4)       2,799,489  
     Total interest expense
     7,703,088       3,194,204                               13,151,249  
Net interest and dividend income
     13,272,756       5,804,531                               16,656,587  
Provision for loan losses
     137,500       0                               137,500  
Net interest and dividend income after                                                
  the provision for loan losses
     13,135,256       5,804,531                               16,519,087  
                                                 
Noninterest income:
                                                
  Service charges on deposits accounts
     1,322,360       562,353                               1,884,713  
  Securities, gains, net
     56,875       0                               56,875  
  Gain on sales of loans
     0       11,040                               11,040  
  Increase in cash surrender value of bank
                                                
    owned life insurance
     0       118,956                               118,956  
  Other income
     1,744,941       363,421                               2,108,362  
     Total noninterest income
     3,124,176       1,055,770                               4,179,946  
Noninterest expense:
                                                
  Salaries and employee benefits
     6,261,405       3,157,769                               9,419,174  
  Occupancy and equipment expense
     2,180,336       1,062,679                               3,243,015  
  Other operating expenses
     3,712,629       1,528,418                               5,241,047  
     Total noninterest expenses
     12,154,370       5,748,866                               17,903,236  
Income before income taxes
     4,105,062       1,111,435                               2,795,797  
Income tax (benefit) expense
     729,614       112,000               823,038       (5)       18,576  
    Net income
   $  3,375,448     $  999,435                             $  2,777,221  
                                                 
Net income per share of common stock
   $ 0.82     $ 0.95                             $ 0.68  
                                                 
Average shares outstanding
     4,097,577       1,057,591                               4,097,577  

Community Bancorp anticipates it will incur conversion and integration charges.  Community Bancorp further anticipates realizing cost savings from the consolidation of operational functions.  These adjustments are not included in these unaudited pro forma combined statements of income.

(1)
Loans estimated fair value adjustment will be amortized over the remaining life (4 years) of the loan portfolio.
(2)
Trust preferred security interest received on common securities as a result of the trust preferred securities issued to fund a portion of the transaction.
(3)
Amortization of core deposit intangible using a double-declining method over 10 years, and assuming the transaction closed on January 1, 2007.  A time deposit fair value adjustment is also being amortized over the average life (2.7 years) of the portfolio.
(4)
Interest on trust preferred securities issued ($12,887,000 x 7.56% annual rate) and interest on non-cumulative stock issued ($2,500,000 x 7.50%) to fund a portion of the transaction.
(5)
Tax effects of the pro forma adjustments.