Company Quick10K Filing
Bryn Mawr Bank
Price36.74 EPS3
Shares20 P/E12
MCap743 P/FCF59
Net Debt-95 EBIT117
TEV649 TEV/EBIT6
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-03-31 Filed 2020-05-08
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8-K 2020-04-20
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8-K 2018-02-07
8-K 2018-01-29
8-K 2018-01-18

BMTC 10Q Quarterly Report

Part I. Financial Information
Item 1. Financial Statements
Note 1 - Basis of Presentation
Note 2 - Earnings per Common Share
Note 3 - Business Combinations
Note 4 - Investment Securities
Note 5 - Loans and Leases
Note 6 - Deposits
Note 7 - Borrowings
Note 8 - Stock-Based Compensation
Note 9 - Pension and Other Post-Retirement Benefit Plans
Note 10 - Segment Information
Note 11 - Mortgage Servicing Rights
Note 12 - Goodwill and Other Intangibles
Note 15 - Accounting for Uncertainty in Income Taxes
Note 16 - Fair Value Measurement
Note 17 - Fair Value of Financial Instruments
Note 18 - New Accounting Pronouncements
Item 2 Management's Discussion and Analysis of Results of Operation and Financial Condition
Item 3. Quantitative and Qualitative Disclosures About Market Risks
Item 4. Controls and Procedures
Part II Other Information.
Item 1. Legal Proceedings.
Item 1A. Risk Factorsnone.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures. Not Applicable.
Item 5. Other Information
Item 6. Exhibits
EX-31.1 ex31-1.htm
EX-31.2 ex31-2.htm
EX-32.1 ex32-1.htm
EX-32.2 ex32-2.htm

Bryn Mawr Bank Earnings 2016-06-30

Balance SheetIncome StatementCash Flow
4.93.92.92.01.00.02012201420172020
Assets, Equity
0.10.10.0-0.0-0.1-0.12013201520172020
Rev, G Profit, Net Income
0.30.20.1-0.1-0.2-0.32012201420172020
Ops, Inv, Fin

10-Q 1 bmtc20160630_10q.htm FORM 10-Q bmtc20160630_10q.htm Table Of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

  


 

Form 10-Q

 


 

Quarterly Report Under Section 13 or 15(d)

of the Securities Exchange Act of 1934

 

For Quarter ended June 30, 2016

 

Commission File Number 1-35746

 


 

Bryn Mawr Bank Corporation

(Exact name of registrant as specified in its charter)

 


 

Pennsylvania

23-2434506

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

identification No.)

   

801 Lancaster Avenue, Bryn Mawr, Pennsylvania

19010

(Address of principal executive offices)

(Zip Code)

 

Registrant’s telephone number, including area code (610) 525-1700

 

Not Applicable

Former name, former address and fiscal year, if changed since last report.

 


 

Indicate by checkmark whether the registrant (1) has filed all reports to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No   ☐

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ☒    No   ☐

 

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting company. See definition of “accelerated filer”, “large accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer  ☐    Accelerated filer  ☒

 

Non-accelerated filer  ☐    Smaller reporting company  ☐

 

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)    Yes  ☐    No   ☒

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

Classes 

 

Outstanding at August 2, 2016 

Common Stock, par value $1

 

16,833,180

 

  

BRYN MAWR BANK CORPORATION AND SUBSIDIARIES

FORM 10-Q

QUARTER ENDED June 30, 2016

Index

 

PART I -

FINANCIAL INFORMATION

 

     

ITEM 1.

Financial Statements (unaudited)

 

     

 

Consolidated Financial Statements

Page 3

     

 

Notes to Consolidated Financial Statements

Page 8

     

ITEM 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Page 46

     

ITEM 3.

Quantitative and Qualitative Disclosures About Market Risk

Page 62

     

ITEM 4.

Controls and Procedures

Page 62

     

PART II -

OTHER INFORMATION

Page 62

     

ITEM 1.

Legal Proceedings

Page 62

     

ITEM 1A.

Risk Factors

Page 62

     

ITEM 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Page 62

     

ITEM 3.

Defaults Upon Senior Securities

Page 62

     

ITEM 4.

Mine Safety Disclosures

Page 62

     

ITEM 5.

Other Information

Page 62

     

ITEM 6.

Exhibits

Page 63

 

 

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

 

BRYN MAWR BANK CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

 

 

 

 

 

(dollars in thousands)

 

June 30,

2016

(unaudited)

   

December 31,

2015

 

Assets

               

Cash and due from banks

  $ 13,710     $ 18,452  

Interest bearing deposits with banks

    20,481       124,615  

Cash and cash equivalents

    34,191       143,067  

Investment securities available for sale, at fair value (amortized cost of $359,832 and $347,776 as of June 30, 2016 and December 31, 2015 respectively)

    365,470       348,966  

Investment securities held to maturity, at amortized cost (fair value of $2,916 and $0 as of June 30, 2016 and December 31, 2015, respectively)

    2,915       -  

Investment securities, trading

    3,521       3,950  

Loans held for sale

    11,882       8,987  

Portfolio loans and leases, originated

    2,090,069       1,883,869  

Portfolio loans and leases, acquired

    333,752       385,119  

Total portfolio loans and leases

    2,423,821       2,268,988  

Less: Allowance for originated loan and lease losses

    (17,008 )     (15,857 )

Less: Allowance for acquired loan and lease losses

    (28 )     -  

Total allowance for loans and lease losses

    (17,036 )     (15,857 )

Net portfolio loans and leases

    2,406,785       2,253,131  

Premises and equipment, net

    43,607       45,339  

Accrued interest receivable

    8,144       7,869  

Mortgage servicing rights

    4,646       5,142  

Bank owned life insurance

    38,836       38,371  

Federal Home Loan Bank stock

    10,618       12,942  

Goodwill

    104,765       104,765  

Intangible assets

    22,123       23,903  

Other investments

    8,722       9,460  

Other assets

    23,865       25,105  

Total assets

  $ 3,090,090     $ 3,030,997  

Liabilities

               

Deposits:

               

Non-interest-bearing

  $ 689,214     $ 626,684  

Interest-bearing

    1,720,477       1,626,041  

Total deposits

    2,409,691       2,252,725  
                 

Short-term borrowings

    19,119       94,167  

Long-term FHLB advances

    224,802       254,863  

Subordinated notes

    29,505       29,479  

Accrued interest payable

    1,846       1,851  

Other liabilities

    32,660       32,201  

Total liabilities

    2,717,623       2,665,286  

Shareholders' equity

               

Common stock, par value $1; authorized 100,000,000 shares; issued 20,971,551 and 20,931,416 shares as of June 30, 2016 and December 31, 2015, respectively, and outstanding of 16,824,564 and 17,071,523 as of June 30, 2016 and December 31, 2015, respectively

    20,972       20,931  

Paid-in capital in excess of par value

    230,311       228,814  

Less: Common stock in treasury at cost - 4,146,987 and 3,859,893 shares as of June 30, 2016 and December 31, 2015, respectively

    (66,200 )     (58,144 )

Accumulated other comprehensive income (loss), net of tax

    2,488       (412 )

Retained earnings

    184,896       174,522  

Total shareholders' equity

    372,467       365,711  

Total liabilities and shareholders' equity

  $ 3,090,090     $ 3,030,997  

 

The accompanying notes are an integral part of the unaudited consolidated financial statements.

 

 

BRYN MAWR BANK CORPORATION AND SUBSIDIARIES

Consolidated Statements of Income - Unaudited

 

   

Three Months Ended June 30,

   

Six Months Ended June 30,

 
   

2016

   

2015

   

2016

   

2015

 

(dollars in thousands, except per share data)

                               

Interest income:

                               

Interest and fees on loans and leases

  $ 27,679     $ 25,568     $ 54,375     $ 50,732  

Interest on cash and cash equivalents

    42       124       88       239  

Interest on investment securities:

                               

Taxable

    1,384       1,161       2,735       2,481  

Non-taxable

    126       106       254       241  

Dividends

    55       34       103       54  

Total interest income

    29,286       26,993       57,555       53,747  

Interest expense:

                               

Interest on deposits

    1,402       1,062       2,478       2,090  

Interest on short-term borrowings

    20       10       37       31  

Interest on FHLB advances and other borrowings

    867       851       1,775       1,761  

Interest on subordinated notes

    370       -       736       -  

Total interest expense

    2,659       1,923       5,026       3,882  

Net interest income

    26,627       25,070       52,529       49,865  

Provision for loan and lease losses

    445       850       1,855       1,419  

Net interest income after provision for loan and lease losses

    26,182       24,220       50,674       48,446  

Non-interest income:

                               

Fees for wealth management services

    9,431       9,600       18,263       18,705  

Insurance commissions

    845       817       2,121       1,838  

Service charges on deposits

    713       752       1,415       1,464  

Loan servicing and other fees

    539       597       1,031       1,188  

Net gain on sale of loans

    896       778       1,656       1,586  

Net (loss) gain on sale of investment securities available for sale

    (43 )     3       (58 )     813  

Net gain (loss) on sale of other real estate owned ("OREO")

    -       75       (76 )     90  

Dividends on FHLB and FRB stock

    263       299       477       914  

Other operating income

    1,176       1,256       2,199       2,344  

Total non-interest income

    13,820       14,177       27,028       28,942  

Non-interest expenses:

                               

Salaries and wages

    12,197       11,064       23,935       21,934  

Employee benefits

    2,436       2,618       4,921       5,347  

Occupancy and bank premises

    2,367       2,808       4,855       5,274  

Furniture, fixtures, and equipment

    1,895       1,488       3,814       3,000  

Advertising

    372       479       656       1,036  

Amortization of intangible assets

    889       955       1,780       1,937  

Impairment (recovery) of mortgage servicing rights ("MSR"s)

    599       (22 )     682       51  

Due diligence, merger-related and merger integration expenses

    -       1,294       -       3,795  

Professional fees

    946       827       1,759       1,500  

Pennsylvania bank shares tax

    640       433       1,278       866  

Information technology

    875       814       1,923       1,516  

Other operating expenses

    3,043       3,224       5,707       7,155  

Total non-interest expenses

    26,259       25,982       51,310       53,411  
                                 

Income before income taxes

    13,743       12,415       26,392       23,977  

Income tax expense

    4,823       4,296       9,198       8,364  

Net income

  $ 8,920     $ 8,119     $ 17,194     $ 15,613  
                                 

Basic earnings per common share

  $ 0.53     $ 0.46     $ 1.02     $ 0.89  

Diluted earnings per common share

  $ 0.52     $ 0.45     $ 1.01     $ 0.87  

Dividends declared per share

  $ 0.20     $ 0.19     $ 0.40     $ 0.38  
                                 

Weighted-average basic shares outstanding

    16,812,219       17,713,794       16,830,211       17,630,263  

Dilutive shares

    212,818       340,869       123,905       349,163  

Adjusted weighted-average diluted shares

    17,025,037       18,054,663       16,954,116       17,979,426  

 

The accompanying notes are an integral part of the unaudited consolidated financial statements.                 

  

 

BRYN MAWR BANK CORPORATION AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income - Unaudited

 

(dollars in thousands)

 

Three Months Ended June 30,

   

Six Months Ended June 30,

 
   

2016

   

2015

   

2016

   

2015

 
                                 

Net income

  $ 8,920     $ 8,119     $ 17,194     $ 15,613  
                                 

Other comprehensive income (loss):

                               

Net change in unrealized gains (losses) on investment securities available for sale:

                               

Net unrealized gains (losses) arising during the period, net of tax expense (benefit) of $537, $(685), $1,588 and $299, respectively

    942       (1,273 )     2,853       554  

Less: reclassification adjustment for net losses (gains) on sales realized in net income, net of tax (benefit) expense of $(15), $1, $(20) and $285, respectively

    28       (2 )     38       (528 )

Unrealized investment gains (losses), net of tax expense (benefit) of $522, $(686), $1,568 and $14, respectively

    970       (1,275 )     2,891       26  

Net change in fair value of derivative used for cash flow hedge:

                               

Net unrealized gains (losses) arising during the period, net of tax expense (benefit) of $0, $98, $0 and $(28), respectively

    -       183       -       (51 )

Net change in unfunded pension liability:

                               

Change in unfunded pension liability related to unrealized loss, prior service cost and transition obligation, net of tax expense (benefit) of $9, $(137), $5 and $51, respectively

    16       (255 )     9       95  

Total other comprehensive income (loss)

    986       (1,347 )     2,900       70  
                                 

Total comprehensive income

  $ 9,906     $ 6,772     $ 20,094     $ 15,683  

 

The accompanying notes are an integral part of the unaudited consolidated financial statements.

 

BRYN MAWR BANK CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows - Unaudited

 

(dollars in thousands)

 

Six Months Ended June 30,

 
   

2016

   

2015

 

Operating activities:

               

Net Income

  $ 17,194     $ 15,613  

Adjustments to reconcile net income to net cash provided by operating activities:

               

Provision for loan and lease losses

    1,855       1,419  

Depreciation of fixed assets

    2,818       2,302  

Net amortization of investment premiums and discounts

    1,589       1,593  

Net loss (gain) on sale of investment securities available for sale

    58       (813 )

Net gain on sale of loans

    (1,656 )     (1,586 )

Stock based compensation cost

    789       737  

Amortization and net impairment of mortgage servicing rights

    998       315  

Net accretion of fair value adjustments

    (2,310 )     (2,994 )

Amortization of intangible assets

    1,780       1,937  

Impairment of other real estate owned ("OREO")

    -       90  

Net loss (gain) on sale of OREO

    76       (90 )

Net increase in cash surrender value of bank owned life insurance ("BOLI")

    (465 )     (352 )

Other, net

    (2,651 )     3  

Loans originated for resale

    (63,480 )     (75,646 )

Proceeds from loans sold

    61,739       65,738  

Provision for deferred income taxes

    225       3,215  

Excess tax benefit from stock-based compensation

    (20 )     (470 )

Change in income taxes payable/receivable

    1,339       (1,418 )

Change in accrued interest receivable

    (275 )     136  

Change in accrued interest payable

    (5 )     (43 )

Net cash provided by operating activities

    19,598       9,686  
                 

Investing activities:

               

Purchases of investment securities available for sale

    (75,999 )     (90,142 )

Purchases of investment securities held to maturity

    (2,928 )     -  

Proceeds from maturity and paydowns of investment securities available for sale

    28,358       33,980  

Proceeds from maturity and paydowns of investment securities held to maturity

    18       -  

Proceeds from sale of investment securities available for sale

    132       62,827  

Net change in FHLB stock

    2,324       4,962  

Proceeds from calls of investment securities

    33,801       55,365  

Net change in other investments

    738       (4,019 )

Net portfolio loan and lease originations

    (153,480 )     (75,683 )

Purchases of premises and equipment

    (1,152 )     (2,747 )

Acquisitions, net of cash acquired

    -       16,129  

Capitalize costs to OREO

    (28 )     -  

Proceeds from sale of OREO

    1,806       928  

Net cash (used in) provided by investing activities

    (166,410 )     1,600  
                 

Financing activities:

               

Change in deposits

    157,137       91,394  

Change in short-term borrowings

    (75,037 )     (105,958 )

Dividends paid

    (6,732 )     (6,719 )

Change in FHLB advances and other borrowings

    (30,000 )     (34,884 )

Excess tax benefit from stock-based compensation

    20       470  

Net purchase of treasury stock for deferred compensation plans

    (65 )     (71 )

Net purchase of treasury stock

    (8,034 )     (2,677 )

Proceeds from issuance of common stock

    -       20  

Proceeds from exercise of stock options

    647       4,410  

Net cash provided by (used in) financing activities

    37,936       (54,015 )
                 

Change in cash and cash equivalents

    (108,876 )     (42,729 )

Cash and cash equivalents at beginning of period

    143,067       219,269  

Cash and cash equivalents at end of period

  $ 34,191     $ 176,540  
                 

Supplemental cash flow information:

               

Cash paid during the year for:

               

Income taxes

  $ 7,712     $ 6,600  

Interest

  $ 5,031     $ 3,630  
                 

Non-cash information:

               
Available for sale securities purchased, not settled   $ -     $ 851  

Change in other comprehensive income

  $ 2,900     $ 70  

Change in deferred tax due to change in comprehensive income

  $ 1,573     $ 37  

Transfer of loans to other real estate owned

  $ -     $ 234  

Acquisition of noncash assets and liabilities:

               

Assets acquired

  $ -     $ 727,379  

Liabilities assumed

  $ -     $ 619,774  

 

The accompanying notes are an integral part of the unaudited consolidated financial statements.  

 

BRYN MAWR BANK CORPORATION AND SUBSIDIARIES

Consolidated Statements of Changes In Shareholders’ Equity - Unaudited

 

(dollars in thousands, except per share information)

 
   

For the Six Months Ended June 30, 2016

 
   

Shares of

Common

Stock Issued

   

Common

Stock

   

Paid-in Capital

   

Treasury

Stock

   

Accumulated

Other

Comprehensive

Income (Loss)

   

Retained

Earnings

   

Total

Shareholders'

Equity

 
                                                         

Balance December 31, 2015

    20,931,416     $ 20,931     $ 228,814     $ (58,144 )   $ (412 )   $ 174,522     $ 365,711  

Net income

    -       -       -       -       -       17,194       17,194  

Dividends declared, $0.40 per share

    -       -       -       -       -       (6,820 )     (6,820 )

Other comprehensive income, net of tax expense of $1,573

    -       -       -       -       2,900       -       2,900  

Stock based compensation

    -       -       789       -       -       -       789  

Excess tax benefit from stock-based compensation

    -       -       20       -       -       -       20  

Retirement of treasury stock

    (4,320 )     (4 )     (39 )     43       -       -       -  

Net purchase of treasury stock

    -       -       -       (8,099 )     -       -       (8,099 )

Common stock issued through share-based awards and options exercises

    44,455       45       727       -       -       -       772  

Balance June 30, 2016

    20,971,551     $ 20,972     $ 230,311     $ (66,200 )   $ 2,488     $ 184,896     $ 372,467  

 

The accompanying notes are an integral part of the unaudited consolidated financial statements.                                          

 

 

BRYN MAWR BANK CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

 

Note 1 - Basis of Presentation

 

The unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). In the opinion of Bryn Mawr Bank Corporation’s (the “Corporation”) management, all adjustments necessary for a fair presentation of the consolidated financial position and the results of operations for the interim periods presented have been included. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto in the Corporation’s Annual Report on Form 10-K for the twelve months ended December 31, 2015 (the “2015 Annual Report”).

 

The results of operations for the three and six months ended June 30, 2016 are not necessarily indicative of the results to be expected for the full year.

 

Note 2 - Earnings per Common Share

 

Basic earnings per common share excludes dilution and is computed by dividing income available to common shareholders by the weighted-average common shares outstanding during the period. Diluted earnings per common share takes into account the potential dilution computed pursuant to the treasury stock method that could occur if stock options were exercised and converted into common stock, as well as the effect of restricted and performance shares becoming unrestricted common stock. The effects of stock options are excluded from the computation of diluted earnings per share in periods in which the effect would be anti-dilutive. All weighted average shares, actual shares and per share information in the financial statements have been adjusted retroactively for the effect of stock dividends and splits.

 

   

Three Months Ended

   

Six Months Ended

 
   

June 30,

   

June 30,

 

(dollars in thousands except per share data)

 

2016

   

2015

   

2016

   

2015

 

Numerator:

                               

Net income available to common shareholders

  $ 8,920     $ 8,119     $ 17,194     $ 15,613  

Denominator for basic earnings per share – weighted average shares outstanding

    16,812,219       17,713,794       16,830,211       17,630,263  

Effect of dilutive common shares

    212,818       340,869       123,905       349,163  

Denominator for diluted earnings per share – adjusted weighted average shares outstanding

    17,025,037       18,054,663       16,954,116       17,979,426  

Basic earnings per share

  $ 0.53     $ 0.46     $ 1.02     $ 0.89  

Diluted earnings per share

  $ 0.52     $ 0.45     $ 1.01     $ 0.87  

Antidilutive shares excluded from computation of average dilutive earnings per share

                       

 

 

 

Note 3 - Business Combinations

 

Robert J. McAllister Agency, Inc. (“RJM”)

 

The acquisition of RJM, an insurance brokerage headquartered in Rosemont, Pennsylvania, was completed on April 1, 2015. The consideration paid by the Corporation was $1.0 million, of which $500 thousand was paid at closing, with five contingent cash payments, not to exceed $100 thousand each, to be payable on each of March 31, 2016, March 31, 2017, March 31, 2018, March 31, 2019, and March 31, 2020, subject to the attainment of certain revenue targets during the related periods. During the three months ended June 30, 2016, the first contingent payment in the amount of $85 thousand was issued. The acquisition enhanced the Corporation’s ability to offer comprehensive insurance solutions to both individual and business clients.

 

 

In connection with the RJM acquisition, the following table details the consideration paid, the initial estimated fair value of identifiable assets acquired and liabilities assumed as of the date of acquisition and subsequent adjustments, during the measurement period, to the fair value of the assets acquired, liabilities assumed and the resulting goodwill recorded:

 

 

(dollars in thousands)

 

Original

Estimates

   

Adjustments to

Estimates

   

Final

Valuation

 

Consideration paid:

                       

Cash paid at closing

  $ 500     $     $ 500  

Contingent payment liability

    500             500  

Value of consideration

    1,000             1,000  
                         

Assets acquired:

                       

Cash operating accounts

    20             20  

Intangible assets – trade name

    129       (129

)

     

Intangible assets – customer relationships

    424             424  

Intangible assets – non-competition agreements

    257             257  

Other assets

    4             4  

Total assets

    834       (129

)

    705  
                         

Liabilities assumed:

                       

Deferred tax liability

    336       (45

)

    291  

Other liabilities

    46             46  

Total liabilities

    382       (45

)

    337  
                         

Net assets acquired

    452       (84

)

    368  
                         

Goodwill resulting from acquisition of RJM

  $ 548     $ 84     $ 632  

 

During the three months ended December 31, 2015, a measurement-period adjustment was made which eliminated the value initially placed on the trade name (and its associated deferred tax liability), as the entity was immediately merged into PCPB.

 

As of December 31, 2015, the estimates of fair values of the assets acquired and liabilities assumed in the acquisition of RJM were finalized.

 

Continental Bank Holdings, Inc.

 

On January 1, 2015, the previously announced merger of Continental Bank Holdings, Inc. (“CBH”) with and into the Corporation, and the merger of Continental Bank with and into the Bank (collectively, the “Merger”) as contemplated by the Agreement and Plan of Merger, by and between CBH and the Corporation, dated as of May 5, 2014 (as amended by the Amendment to Agreement and Plan of Merger, dated as of October 23, 2014, the “Agreement”), were completed. In accordance with the Agreement, the aggregate share consideration paid to CBH shareholders consisted of 3,878,383 shares (which included fractional shares paid in cash) of the Corporation’s common stock. Shareholders of CBH received 0.45 shares of Corporation common stock for each share of CBH common stock they owned as of the effective date of the Merger. Holders of options to purchase shares of CBH common stock received options to purchase shares of Corporation common stock, converted at the same ratio of 0.45. In addition, $1.3 million was paid to certain warrant holders to cash-out certain warrants. In accordance with the acquisition method of accounting, assets acquired and liabilities assumed were preliminarily adjusted to their fair values as of the date of the Merger. The excess of consideration paid above the fair value of net assets acquired was recorded as goodwill. This goodwill is not amortizable nor is it deductible for income tax purposes.

 

  

In connection with the Merger, the following table details the consideration paid, the initial estimated fair value of identifiable assets acquired and liabilities assumed as of the date of acquisition and the subsequent adjustments, during the measurement period, to the fair value of the assets acquired, liabilities assumed and the resulting goodwill recorded:

 

(dollars in thousands)

 

Original

Estimates

   

Adjustments to

Estimates

   

Final

Valuation

 

Consideration paid:

                       

Common shares issued (3,878,304)

  $ 121,391     $     $ 121,391  

Cash in lieu of fractional shares

    2             2  

Cash-out of certain warrants

    1,323             1,323  

Fair value of options assumed

    2,343             2,343  

Value of consideration

    125,059             125,059  
                         

Assets acquired:

                       

Cash and due from banks

    17,934             17,934  

Investment securities available for sale

    181,838             181,838  

Loans*

    426,601       (1,864

)

    424,737  

Premises and equipment

    9,037             9,037  

Deferred income taxes

    6,288       1,396       7,684  

Bank-owned life insurance

    12,054             12,054  

Core deposit intangible

    4,191             4,191  

Favorable lease asset

    792       (68

)

    724  

Other assets

    18,085       (111

)

    17,974  

Total assets

    676,820       (647

)

    676,173  
                         

Liabilities assumed:

                       

Deposits

    481,674             481,674  

FHLB and other long-term borrowings

    19,726             19,726  

Short-term borrowings

    108,609             108,609  

Unfavorable lease liability

    2,884             2,884  

Other liabilities

    4,706       1,867       6,573  

Total liabilities

    617,599       1,867       619,466  
                         

Net assets acquired

    59,221       (2,514

)

    56,707  
                         

Goodwill resulting from the Merger

  $ 65,838     $ 2,514     $ 68,352  

 

*includes $507 thousand in loans held for sale

 

During the measurement period subsequent to the Merger, adjustments to the fair value of the assets acquired and liabilities assumed were related to circumstances that existed prior to the Merger date, but that were not known to the Corporation. The adjustments included reductions in the fair value of certain loans, unrecorded liabilities of CBH, and an immaterial adjustment to the calculation of a favorable lease asset, which reduced its value, along with the associated deferred tax items.

 

As of December 31, 2015, the estimates of fair values of the assets acquired and liabilities assumed in the Merger were finalized.

 

 

Due Diligence, Merger-Related and Merger Integration Expenses

 

Due diligence, merger-related and merger integration expenses include consultant costs, investment banker fees, contract breakage fees, retention bonuses for severed employees, and salary and wages for redundant staffing involved in the integration of the institutions. The following table details the costs identified and classified as due diligence, merger-related and merger integration costs for the periods indicated:

 

 

   

Three Months Ended June 30,

   

Six Months Ended June 30,

 

(dollars in thousands)

 

2016

   

2015

   

2016

   

2015

 

Employee benefits

  $     $ 59     $     $ 152  

Furniture, fixtures and equipment

          9             29  

Information technology

          218             457  

Professional fees

          572             1,766  

Salaries and wages

          264             744  

Other

          172             647  

Total due diligence and merger-related expenses

  $     $ 1,294     $     $ 3,795  

 

 

Note 4 - Investment Securities

 

 

The amortized cost and fair value of investment securities available for sale are as follows:

 

As of June 30, 2016

 

(dollars in thousands)

 

Amortized

Cost

   

Gross

Unrealized

Gains

   

Gross

Unrealized

Losses

   

Fair Value

 

U.S. Treasury securities

  $ 101     $ 1     $     $ 102  

Obligations of the U.S. government and agencies

    84,952       1,183       (1

)

    86,134  

Obligations of state and political subdivisions

    39,331       255       (7

)

    39,579  

Mortgage-backed securities

    182,397       3,957             186,354  

Collateralized mortgage obligations

    36,205       497             36,702  

Other investments

    16,846       71       (318

)

    16,599  

Total

  $ 359,832     $ 5,964     $ (326

)

  $ 365,470  

 

As of December 31, 2015

 

(dollars in thousands)

 

Amortized

Cost

   

Gross

Unrealized

Gains

   

Gross

Unrealized

Losses

   

Fair Value

 

U.S. Treasury securities

  $ 101     $     $ (1

)

  $ 100  

Obligations of the U.S. government and agencies

    101,342       470       (317

)

    101,495  

Obligations of state and political subdivisions

    41,892       123       (49

)

    41,966  

Mortgage-backed securities

    157,422       1,482       (215

)

    158,689  

Collateralized mortgage obligations

    29,756       166       (123