8-K/A 1 d8ka.htm AMENDMENT NO. 1 TO FORM 8-K Amendment No. 1 to Form 8-K
 
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
 
FORM 8-K/A
 
AMENDMENT NO. 1 TO CURRENT REPORT
 
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
Date of report (Date of Earliest Event Reported): October 1, 2002
 
 
FIRST STATE BANCORPORATION
(Exact Name of Registrant as Specified in Charter)
 
New Mexico
  
001-12487
  
85-0366665
(State or Other Jurisdiction
of Incorporation)
  
(Commission File Number)
  
(IRS Employer
Identification No.)
7900 Jefferson, N.E., Albuquerque, New Mexico
  
87109
(Address of Principal Executive Offices)
  
(Zip Code)
 
(505) 241-7500
(Registrant’s telephone number, including area code)
 
N/A
(Former Name or Former Address, if Changed Since Last Report)
 

 
This Amendment No. 1 to Current Report on Form 8-K/A amends and supplements Item 7 of the Current Report on Form 8-K, dated October 1, 2002 and filed on October 11, 2002 by First State Bancorporation, a New Mexico corporation (“First State”), to include the remaining required financial information with respect to First State’s acquisition of First Community Industrial Bank, a Colorado industrial bank, from Blazer Financial Corporation, a Louisiana corporation and an indirect wholly-owned subsidiary of Washington Mutual, Inc.
 
Item 7.    Financial Statements, Pro Forma Financial Information and Exhibits.
 
 
(a)
 
Financial Statements of Business Acquired.
 
 
(1)
 
First Community Industrial Bank Unaudited Condensed Balance Sheet as of September 30, 2002
 
 
(b)
 
Pro Forma Financial Information.
 
 
(1)
 
First State Bancorporation Unaudited Pro Forma Combined Condensed Financial Information
 
(2)
 
First State Bancorporation Unaudited Pro Forma Combined Condensed Balance Sheet as of September 30, 2002
 
(3)
 
First State Bancorporation Unaudited Pro Forma Combined Condensed Statement of Operations for the Nine Months Ended September 30, 2002
 
(4)
 
First State Bancorporation Unaudited Pro Forma Combined Condensed Statement of Operations for the Year Ended December 31, 2001
 
(5)
 
Notes to the Unaudited Pro Forma Combined Condensed Financial Information
 
 
 
 
 

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.
 
       
FIRST STATE BANCORPORATION COMPANY
Date:    December 13, 2002        
      
By:
  
/s/    H. PATRICK DEE        
               
H. Patrick Dee
Executive Vice President and
Chief Operating Officer
 

INDEX TO FINANCIAL STATEMENTS
 
First Community Industrial Bank Unaudited Condensed Balance Sheet as of September 30, 2002
   
F-2
First State Bancorporation Unaudited Pro Forma Combined Condensed Financial Information
   
F-3
First State Bancorporation Unaudited Pro Forma Combined Condensed Balance Sheet as of September 30, 2002
   
F-4
First State Bancorporation Unaudited Pro Forma Combined Condensed Statement of Operations for the Nine Months Ended September 30, 2002
   
F-5
First State Bancorporation Unaudited Pro Forma Combined Condensed Statement of Operations for the Year Ended December 31, 2001
   
F-6
Notes to the Unaudited Pro Forma Combined Condensed Financial Information
   
F-7

F-1

First Community Industrial Bank
Unaudited Condensed Balance Sheet as of September 30, 2002
(Dollars in thousands)
 
    
September 30,
2002
Assets
       
Cash and due from banks
   
$
3,988
Interest-bearing bank balances
   
 
4,827
Securities:
       
Available for sale
   
 
12,781
Federal Reserve Board and Federal Home Loan Bank stock
   
 
5,867
Loans:
       
Loans held for investment
   
 
346,204
Less: allowance for loan losses
   
 
4,172
    
Net loans
   
 
342,032
Premises and equipment, net
   
 
126
Accrued interest receivable
   
 
2,030
Other assets
   
 
1,020
    
Total assets
   
$
372,671
    
Liabilities and Stockholder’s Equity
       
Deposits:
       
Non-interest bearing
   
$
71
Interest bearing
   
 
240,457
    
Total deposits
   
 
240,528
Borrowed funds
   
 
100,000
Accrued interest payable
   
 
1,264
Other liabilities
   
 
116
    
Total liabilities
   
 
341,908
Stockholder’s equity:
       
Common stock
   
 
24,254
Retained earnings
   
 
5,885
Unrealized gains
   
 
624
    
Total stockholder’s equity
   
 
30,763
    
Total liabilities and stockholders’ equity
   
$
372,671
    

F-2

 
First State Bancorporation
Unaudited Pro Forma Combined Condensed Financial Information
 
On October 1, 2002, First State Bancorporation (FSB) completed the acquisition and merger of First Community Industrial Bank (First Community) into its wholly owned subsidiary, First State Bank N.M. FSB purchased First Community, which was an indirect subsidiary of Washington Mutual, Inc., for approximately $67.1 million. FSB financed this acquisition through a public offering of its common stock in August 2002, which netted approximately $51.4 million and through the issuance of approximately $25.0 million in trust preferred securities in June of 2002.
 
The following unaudited pro forma combined condensed financial information and explanatory notes are presented to show the impact of the merger of First Community with and into First State Bank N.M. on FSB’s historical financial position and results of operations. The merger is reflected in the pro forma financial information using the purchase method of accounting.
 
The Unaudited Pro Forma Combined Condensed Balance Sheet reflects the historical financial position of FSB and First Community as of September 30, 2002 with pro forma adjustments based on the assumption that the merger was effective September 30, 2002. The Unaudited Pro Forma Combined Condensed Statements of Operations assume that the merger was consummated on January 1 of the earliest indicated period. The adjustments are based on information available and certain assumptions that we believe are reasonable.
 
The following information should be read in conjunction with, and is qualified in its entirety by, the consolidated financial statements and accompanying notes of FSB and the consolidated financial statements and accompanying notes of First Community. Interim results of FSB and First Community as of and for the nine months ended September 30, 2002 are not necessarily indicative of results of operations or the combined financial position that would have resulted had the merger been consummated at the beginning of the periods indicated.
 
The unaudited pro forma financial information is intended for informational purposes and is not necessarily indicative of the future financial position or future operating results of the combined company or of the financial position or operating results of the combined company that would have actually occurred had the merger been in effect as of the date or for the periods presented.

F-3

 
First State Bancorporation
Unaudited Pro Forma Combined Condensed Balance Sheet
(Dollars in thousands)
 
The following unaudited pro forma combined condensed balance sheet combines our (FSB) consolidated historical balance sheet with the historical balance sheet of First Community Industrial Bank (FCIB) assuming the companies had been combined as of September 30, 2002, on a purchase accounting basis.
 
    
September 30, 2002
    
FSB Historical
   
FCIB Historical
   
Pro Forma Adjustments
     
Pro Forma
Combined
Assets
                              
Cash and due from banks
   
$
36,448
   
$
3,988
   
$
—  
 
   
$
40,436
Interest-bearing bank balances
   
 
42,848
   
 
4,827
   
 
(16,078
)(2)
   
 
31,597
Federal funds sold
   
 
52,653
   
 
—  
   
 
(52,653
)(2)
   
 
—  
Securities:
                              
Available for sale
   
 
111,470
   
 
12,781
   
 
—  
 
   
 
124,251
Held to maturity
   
 
75,215
   
 
—  
   
 
—  
 
   
 
75,215
Federal Reserve Board and Federal Home Loan Bank stock
   
 
2,332
   
 
5,867
   
 
—  
 
   
 
8,199
Loans:
                              
Loans available for sale
   
 
—  
   
 
—  
   
 
9,200
(2)
   
 
9,200
Loans held for investment
   
 
637,300
   
 
346,204
   
 
(12,044
)(2)
   
 
971,460
Less: allowance for loan losses
   
 
8,048
   
 
4,172
   
 
(1,007
)(2)
   
 
11,213
    
  
  
  
Net loans
   
 
629,252
   
 
342,032
   
 
(1,837
)
   
 
969,447
Premises and equipment, net
   
 
15,036
   
 
126
   
 
—  
 
   
 
15,162
Accrued interest receivable
   
 
3,495
   
 
2,030
   
 
—  
 
   
 
5,525
Intangible assets
   
 
361
   
 
—  
   
 
43,892
(1)(2)
   
 
44,253
Other assets
   
 
29,437
   
 
1,020
   
 
(178
)(2)
   
 
30,279
    
  
  
  
Total assets
   
$
998,547
   
$
372,671
   
$
(26,854
)
   
$
1,344,364
    
  
  
  
Liabilities and Stockholders’ Equity
                              
Deposits:
                              
Non-interest bearing
   
$
176,522
   
$
71
   
$
—  
 
   
$
176,593
Interest bearing
   
 
607,879
   
 
240,457
   
 
1,530
(2)
   
 
849,866
    
  
  
  
Total deposits
   
 
784,401
   
 
240,528
   
 
1,530
 
   
 
1,026,459
Securities sold under agreements to repurchase
   
 
61,975
   
 
—  
   
 
—  
 
   
 
61,975
Borrowed funds
   
 
1,001
   
 
100,000
   
 
1,957
(2)
   
 
102,958
Trust preferred debt
   
 
32,500
   
 
—  
   
 
—  
 
   
 
32,500
Accrued interest payable
   
 
1,365
   
 
1,264
   
 
—  
 
   
 
2,629
Other liabilities
   
 
2,052
   
 
116
   
 
422
(2)
   
 
2,590
    
  
  
  
Total liabilities
   
 
883,294
   
 
341,908
   
 
3,909
 
   
 
1,229,111
Stockholders’ equity:
                              
Common stock
   
 
77,190
   
 
24,254
   
 
(24,254
)(2)
   
 
77,190
Retained earnings
   
 
37,279
   
 
5,885
   
 
(5,885
)(2)
   
 
37,279
Unrealized gains
   
 
784
   
 
624
   
 
(624
)(2)
   
 
784
    
  
  
  
Total stockholders’ equity
   
 
115,253
   
 
30,763
   
 
(30,763
)
   
 
115,253
    
  
  
  
Total liabilities and stockholders’ equity
   
$
998,547
   
$
372,671
   
$
(26,854
)
   
$
1,344,364
    
  
  
  
 
See notes to the unaudited pro forma combined condensed financial information.

F-4

First State Bancorporation
Unaudited Pro Forma Combined Condensed Statement of Operations
(Dollars in thousands, except share data)
 
The following unaudited pro forma combined condensed statement of operations combines our (FSB) consolidated historical statements of operations with that of First Community Industrial Bank (FCIB) assuming the companies had been combined as of January 1, 2002, on a purchase accounting basis.
 
    
For the Nine Months Ended September 30, 2002
    
FSB Historical
   
FCIB
Historical
   
Pro Forma Adjustments
     
Pro Forma
Combined
Interest income:
                              
Interest and fees on loans
   
$
33,793
   
$
23,889
   
$
(490
)(3)
   
$
57,192
Interest and dividends on securities:
                              
Taxable securities
   
 
6,599
   
 
1,173
   
 
(1,075
)(3)
   
 
6,697
Non-taxable securities
   
 
113
   
 
101
   
 
(101
)(3)
   
 
113
    
  
  
  
Total interest and dividends on securities
   
 
6,712
   
 
1,274
   
 
(1,176
)
   
 
6,810
Federal funds sold and interest bearing bank balances
   
 
465
   
 
403
   
 
(215
)(3)
   
 
653
    
  
  
  
Total interest income
   
 
40,970
   
 
25,566
   
 
(1,881
)
   
 
64,655
Interest expense:
                              
Interest on deposits
   
 
10,732
   
 
7,392
   
 
(884
)(3)
   
 
17,240
Short-term borrowings
   
 
460
   
 
—  
   
 
—  
 
   
 
460
Long-term borrowings
   
 
714
   
 
3,692
   
 
(1,356
)(3)
   
 
3,050
    
  
  
  
Total interest expense
   
 
11,906
   
 
11,084
   
 
(2,240
)
   
 
20,750
    
  
  
  
Net interest income before provision for loan losses
   
 
29,064
   
 
14,482
   
 
359
 
   
 
43,905
Provision for loan losses
   
 
1,657
   
 
1,770
   
 
—  
 
   
 
3,427
    
  
  
  
Net interest income after provision for loan losses
   
 
27,407
   
 
12,712
   
 
359
 
   
 
40,478
Non-interest income
   
 
9,134
   
 
38
   
 
—  
 
   
 
9,172
Non-interest expenses
   
 
26,097
   
 
5,291
   
 
79
(3)
   
 
31,467
    
  
  
  
Income before taxes
   
 
10,444
   
 
7,459
   
 
280
 
   
 
18,183
Income tax expense
   
 
3,827
   
 
3,042
   
 
103
(3)
   
 
6,972
    
  
  
  
Net income
   
$
6,617
   
$
4,417
   
$
177
 
   
$
11,211
    
  
  
  
Average common shares outstanding, basic
   
 
5,288,664
          
 
2,015,384
(4)
   
 
7,304,048
Average common shares outstanding, diluted
   
 
5,485,968
          
 
2,015,384
(4)
   
 
7,501,352
Basic earnings per share
   
$
1.25
                   
$
1.53
Diluted earnings per share
   
$
1.21
                   
$
1.49
 
See notes to the unaudited pro forma combined condensed financial information.

F-5

 
First State Bancorporation
Unaudited Pro Forma Combined Condensed Statement of Operations
(Dollars in thousands, except share data)
 
The following unaudited pro forma combined condensed statement of operations combines our (FSB) consolidated historical statements of operations with that of First Community Industrial Bank (FCIB) assuming the companies had been combined as of January 1, 2001, on a purchase accounting basis.
 
    
For the Year Ended December 31, 2001
    
FSB Historical
   
FCIB Historical
   
Pro Forma Adjustments
     
Pro Forma
Combined
Interest income:
                              
Interest and fees on loans
   
$
46,650
   
$
37,753
   
$
(612
)(3)
   
$
83,791
Interest and dividends on securities:
                              
Taxable securities
   
 
8,092
   
 
1,988
   
 
(1,461
)(3)
   
 
8,619
Non-taxable securities
   
 
174
   
 
107
   
 
(107
)(3)
   
 
174
    
  
  
  
Total interest and dividends on securities
   
 
8,266
   
 
2,095
   
 
(1,568
)
   
 
8,793
Federal funds sold and interest bearing bank balances
   
 
798
   
 
443
   
 
(286
)(3)
   
 
955
    
  
  
  
Total interest income
   
 
55,714
   
 
40,291
   
 
(2,466
)
   
 
93,539
Interest expense:
                              
Interest on deposits
   
 
18,181
   
 
12,728
   
 
(1,001
)(3)
   
 
29,908
Short-term borrowings
   
 
2,160
   
 
—  
   
 
—  
 
   
 
2,160
Long-term borrowings
   
 
138
   
 
6,668
   
 
(1,316
)(3)
   
 
5,490
    
  
  
  
Total interest expense
   
 
20,479
   
 
19,396
   
 
(2,317
)
   
 
37,558
    
  
  
  
Net interest income before provision for loan losses
   
 
35,235
   
 
20,895
   
 
(149
)
   
 
55,981
Provision for loan losses
   
 
2,386
   
 
1,124
   
 
—  
 
   
 
3,510
    
  
  
  
Net interest income after provision for loan losses
   
 
32,849
   
 
19,771
   
 
(149
)
   
 
52,471
Non-interest income
   
 
9,414
   
 
92
   
 
—  
 
   
 
9,506
Non-interest expenses
   
 
29,600
   
 
7,936
   
 
105
(3)
   
 
37,641
    
  
  
  
Income before taxes
   
 
12,663
   
 
11,927
   
 
(254
)
   
 
24,336
Income tax expense
   
 
4,521
   
 
4,562
   
 
(91
)(3)
   
 
8,992
    
  
  
  
Net income
   
$
8,142
   
$
7,365
   
$
(163
)
   
$
15,344
    
  
  
  
Average Common Shares Outstanding, basic
   
 
4,892,657
          
 
2,415,000
(4)
   
 
7,307,657
Average Common Shares Outstanding, diluted
   
 
5,049,349
          
 
2,415,000
(4)
   
 
7,464,349
Basic earnings per share
   
$
1.66
                   
$
2.10
Diluted earnings per share
   
$
1.61
                   
$
2.06
 
See notes to the unaudited pro forma combined condensed financial information.

F-6

First State Bancorporation
Notes to the Unaudited Pro Forma Combined Condensed Financial Information
 
Basis of Presentation
 
The acquisition will be accounted for using the purchase method of accounting, and accordingly, the assets and liabilities of First Community Industrial Bank (First Community or FCIB) will be recorded at their respective fair values on the date the merger is completed.
 
The pro forma financial information includes estimated adjustments to record certain assets and liabilities of First Community at their respective fair values. The actual adjustments may be materially different from the unaudited pro forma adjustments presented herein.
 
The final allocation of the purchase price will be determined after completion of thorough analyses to determine the fair values of First Community’s tangible and identifiable intangible assets and liabilities as of October 1, 2002. Any change in the fair value of First Community’s net assets will change the amount of the purchase price allocable to goodwill.
 
Certain merger-related adjustments are not included in the pro forma statements of operations since they will be recorded in the combined results of operations after completion of the merger and are not indicative of what the historical results of the combined companies would have been had the companies been actually combined during the periods presented.
 
First State Bancorporation adjustments and pro forma adjustments
 
(1)
 
The computation of the purchase price, the allocation of the purchase price to net assets of First Community based on fair values estimated at September 30, 2002, and the resulting goodwill are presented below (in thousands).
 
                 
PURCHASE PRICE
                
Consideration for FCIB common shares
            
$
67,154
NET ASSETS ACQUIRED
                
FCIB stockholder’s equity
   
$
30,763
 
   
 
30,763
    
  
Excess purchase price over carrying value of net assets acquired
            
 
36,391
Fair value adjustments:
                
Loans available for sale
   
 
3,964
 
       
Allowance for loan losses
   
 
(1,007
)
       
Loan portfolio
   
 
(1,120
)
       
Fixed maturity deposits
   
 
1,530
 
   
 
3,367
    
  
Acquisition costs:
                
Investment banking and professional fees
            
 
1,577
             
Other:
                
Prepayment penalty of FHLB debt
   
 
1,957
 
       
Severance payments
   
 
422
 
       
Miscellaneous
   
 
178
 
   
 
2,557
    
  
Core deposit intangible
            
 
881
             
Goodwill
            
$
43,011
             

F-7

 
(2)
 
The pro forma adjustments related to the pro forma combined condensed balance sheet at September 30, 2002, are presented below (in thousands).
 
    
Adjustments increase (decrease)
  
ASSETS
                  
Cash and due from banks:
                  
Cash consideration paid for First Community’s common shares
   
$
(67,154
)
         
Investment banking and professional fees
   
 
(1,577
)
   
$
(68,731
)
    
  
Loans:
                  
Loans available for sale fair value adjustment (a)
   
 
(3,964
)
         
Loans held for investment fair value adjustment
   
 
1,120
 
         
Allowance for loan losses attributable to loans available for sale (a)
   
 
1,007
 
   
 
(1,837
)
    
  
Intangible assets:
                  
Goodwill
   
 
43,011
 
         
Core deposit intangible
   
 
881
 
   
 
43,892
 
    
  
Other assets:
                  
Other
            
 
(178
)
             
             
$
(26,854
)
             
LIABILITIES AND STOCKHOLDERS’ EQUITY
                  
Liabilities:
                  
Interest-bearing deposits:
                  
Fixed maturity deposits, fair value adjustment
            
$
1,530
 
Borrowed funds:
                  
Prepayment penalty FHLB debt (b)
            
 
1,957
 
Other liabilities:
                  
Severance payments
            
 
422
 
             
Total liabilities
            
 
3,909
 
             
Stockholders’ equity:
                  
Common stock:
                  
Elimination of First Community’s common stock
            
 
(24,254
)
Retained earnings:
                  
Elimination of remaining First Community retained earnings
            
 
(5,885
)
Unrealized gains:
                  
Elimination of First Community unrealized gains
            
 
(624
)
             
Total stockholders’ equity
            
 
(30,763
)
             
             
$
(26,854
)
             
(a)    Loans with a balance of approximately $13.1 million are currently in negotiations to be sold at a discount of approximately $3.9 million. The allowance for loan losses associated with these loans at September 30, 2002 is approximately $1.0 million. The effect of this transaction has been included in the pro forma balance sheet at September 30, 2002, as this loan sale represents the estimated fair value of these acquired loans and is currently in negotiations.
 
(b)    The prepayment penalty of FHLB debt is due to FSB’s election to prepay $100 million of FHLB debt with an average interest rate of 4.85% acquired from FCIB. FSB refinanced the debt at an average rate of 2.09%, however due to the debt prepayment, FSB incurred a prepayment penalty of $1.957 million.

F-8

 
(3)
 
The pro forma adjustments related to the pro forma combined condensed statements of operations for the nine months ended September 30, 2002, and for the year ended December 31, 2001, are presented below (in thousands).
 
      
Nine Months Ended
September 30, 2002
Increase (decrease)
       
Year Ended December 31, 2001
Increase (decrease)
  
INTEREST INCOME
                      
Amortization of the loan fair value adjustment using the effective interest method
     
$
(490
)
     
$
(612
)
Elimination of securities and federal funds sold income for the dividend of capital
     
 
(1,391
)
     
 
(1,854
)
      
    
Total interest income adjustment
     
 
(1,881
)
     
 
(2,466
)
      
    
INTEREST EXPENSE
                      
Amortization of the fixed maturity deposits fair value adjustment using the straight line method over the estimated remaining contractual maturities
     
 
(884
)
     
 
(1,001
)
Long-term borrowings
                      
Pro forma adjustment of interest expense on FHLB advances to reflect current rates at October 1, 2002
     
 
(2,068
)
     
 
(2,758
)
Interest on trust preferred junior subordinated debentures at 5.59%, plus amortization of issuance costs
     
 
712
 
     
 
1,442
 
      
    
Total interet expense adjustment
     
 
(2,240
)
     
 
(2,317
)
      
    
Total net interest income adjustment
     
 
359
 
     
 
(149
)
      
    
NON-INTEREST EXPENSES
                      
Amortization of the core deposit intangible over a period of ten years using the double declining balance method
     
 
79
 
     
 
105
 
      
    
Total non-interest expenses adjustment
     
 
79
 
     
 
105
 
      
    
Increase (decrease) in income before income taxes
     
 
280
 
     
 
(254
)
Income tax expense
     
 
103
 
     
 
(91
)
      
    
Increase (decrease) in income
     
$
177
 
     
$
(163
)
      
    
 
(4)
 
The pro forma computation of basic and diluted average common shares outstanding for the nine months ended September 30, 2002, and for the year ended December 31, 2001, is presented below.
 
      
Nine Months Ended
September 30, 2002
     
Year Ended December 31, 2001
Average common shares outstanding, basic:
              
Average common shares outstanding, basic
     
5,288,664
     
4,892,657
Average common share effect of shares issued in August 2002
     
2,015,384
     
2,415,000
      
    
      
7,304,048
     
7,307,657
      
    
Average common shares outstanding, diluted:
              
Average common shares outstanding, diluted
     
5,485,968
     
5,049,349
Average common share effect of shares issued in August 2002
     
2,015,384
     
2,415,000
      
    
      
7,501,352
     
7,464,349
      
    

F-9