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WFBI > SEC Filings for WFBI > Form 8-K/A on 16-May-2014All Recent SEC Filings

Show all filings for WASHINGTONFIRST BANKSHARES, INC.

Form 8-K/A for WASHINGTONFIRST BANKSHARES, INC.


16-May-2014

Completion of Acquisition or Disposition of Assets, Financial


Item 2.01. Completion of Acquisition of Disposition of Assets.
The disclosure in the Explanatory Note is incorporated in this Item 2.01. Pursuant to the Millennium Transaction, the Bank acquired approximately $121.6 million in deposits, $51.3 million in loans, $43.2 million in cash and cash equivalents and $19.2 million in marketable securities. The foregoing amounts are subject to customary post-closing adjustments based upon the final closing date balance sheet for Millennium Bank and will be recorded at their estimated fair values as of the February 28, 2014 acquisition date. The Millennium Transaction also included the two branches of Millennium Bank, located in Sterling and Herndon, Virginia. The FDIC agreed to retain all other real estate owned by Millennium Bank. The Bank agreed to pay a premium of 1.00 percent to assume all of the deposits of Millennium Bank. The terms of the Agreement provide for the FDIC to indemnify the Bank against, among other things, claims with respect to liabilities, losses and expenses (including reasonable attorney's fees) of Millennium Bank or any of its affiliates not assumed or otherwise purchased by the Bank, and with respect to any claims made by any shareholder of Millennium Bank or its affiliates.
In connection with the Millennium Transaction, there will be no loss sharing agreement between the FDIC and the Bank.
The consideration received, and the estimated fair value of identifiable assets acquired and liabilities assumed, as of the Agreement date are summarized in the following table:
                                               February 28, 2014
                                                 (in thousands)
Assets acquired:
Cash and cash equivalents                     $            43,235
Investment securities                                      19,240
Other equity securities                                       683
Loans, net of unearned income                              51,332
Cash paid to WashingtonFirst Bank by the FDIC              15,812
Goodwill                                                    2,639
Core deposit intangibles                                      470
Other assets                                                  440
Total assets acquired                         $           133,851
Liabilities assumed:
Deposits                                      $           121,592
FHLB advances                                              12,209
Other liabilities                                              50
Total liabilities assumed                     $           133,851




Item 9.01 Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired. Discussion.
The disclosure in the Explanatory Note and Item 2.01 is incorporated in this Item 9.01(a). A narrative description of the anticipated effects of the Millennium Transaction on the Company's financial condition, liquidity, capital resources and operating results is presented below. This discussion should be read in conjunction with the historical financial statements and the related notes of the Company, which were filed with the Commission on Form 10-K on March 19, 2014 and Form 10-Q on May 13, 2014 and the Audited Statement of Assets Acquired and Liabilities Assumed by WashingtonFirst Bank, which is attached hereto as Exhibit 99.1.
The Millennium Transaction increased the Bank's total assets and total deposits, which are expected to positively affect the Bank's operating results, to the extent the Bank earns more from interest earned on its assets than it pays in interest on deposits and other borrowings. The ability of the Bank to successfully collect interest and principal on loans acquired will also impact the Bank's cash flows and operating results.
The Company has determined that the acquisition of the net assets of Millennium Bank constitutes a business acquisition as defined by the Business Combinations topic of the FASB ASC. Accordingly, the assets acquired and liabilities assumed as of February 28, 2014 are presented at their estimated fair values in Item 2a as required by that topic. In many cases, the determination of these fair values required management to make estimates about discount rates, expected cash flows, market conditions and other future events that are highly subjective in nature and subject to change.
Financial Condition.
In the Millennium Transaction, the Bank purchased loans with a contractual value of $57.0 million and a fair value of $51.3 million. This amount represents approximately 6.2% of the Bank's total loans, net of allowance, as of December 31, 2013. In addition, the Bank acquired $43.2 million in cash and cash equivalents, $19.2 million in investment securities at fair value, and $0.7 million in other equity securities. The Bank also assumed $121.6 million in deposits, $12.2 million in FHLB advances, and $0.1 million in other liabilities. Finally, in connection with the Millennium Transaction, the Bank recorded goodwill of $2.6 million and core deposit intangibles of $0.5 million. Operating Results and Cash Flows.
The Company's management has from time to time become aware of acquisition and merger opportunities and has performed various levels of review related to potential acquisitions in the past. The Millennium Transaction was attractive to the Company for a variety of reasons, including the:
ability to increase the Bank's market share in the greater Washington, D.C. Metropolitan Area,

attractiveness of immediate core deposit growth with a low cost of funds, and

opportunities to enhance income and improve efficiency.

The Company expects that the Millennium Transaction will positively affect its operating results throughout the remainder of 2014 and forward. The Company believes that the Millennium Transaction will improve net interest income as it earns more interest on its loans and investments than it pays in interest on deposits and borrowings.


Liquidity and Capital Resources.
The Company believes that the Bank's liquidity position has improved as a result of this transaction. The Bank acquired $43.2 million of cash and cash equivalents and $19.2 million of investment securities. The Company believes these increases will further support the Bank's business activities. The Millennium Transaction did leverage the balance sheet and slightly decrease the Bank's capital ratios as a result of the increased assets without raising additional capital and the additional goodwill and core deposit intangibles recorded as a result of the Millennium Transaction. Management does not believe these decreases are material.
The following table shows the Bank's capital ratios and the minimum capital ratios currently required by bank regulators as of March 31, 2014, which includes the Millennium Transaction, and as of December 31, 2013, which is prior to the Millennium Transaction:

                                                                 To Be Well
                                                                Capitalized
                                                                Under Prompt     For Minimum
                                                                 Corrective        Capital
                                                                   Action          Adequacy
                      March 31, 2014      December 31, 2013      Provisions      Requirements
Capital Ratios:
Total risk-based
capital ratio                12.89 %               14.05 %         10.00%           8.00%
Tier 1 risk-based
capital ratio                11.79 %               12.80 %         6.00%            4.00%
Tier 1 leverage
ratio                         9.60 %               10.53 %         5.00%            4.00%

Financial Statements.
Attached hereto as Exhibit 99.1 and incorporated by reference into this Item
9.01(a) is the Audited Statement and the accompanying notes thereto.
(b) Pro forma financial information.
The disclosure in the Explanatory Note is incorporated in this Item 9.01(b).
(c) Not applicable.
(d) Exhibits.
  Number     Description
   2.3       Purchase and Assumption Agreement by and among the Federal Deposit
             Insurance Corporation, Receiver of Millennium Bank, N.A., the
             Federal Deposit Insurance Corporation and WashingtonFirst Bank,
             dated as of February 28, 2014 (included as Exhibit 2.1 to Form 8-K
             filed with the Securities and Exchange Commission by WashingtonFirst
             on March 5, 2014 (File No. 001-35768)).
    23       Consent of BDO USA, LLP to the incorporation by reference in the
             Registration Statement of Form S-8 (File No. 333-192923), of the
             Statement of Assets Acquired and Liabilities Assumed by
             WashingtonFirst Bank.
   99.1      Report of Independent Registered Accounting Firm; Statement of
             Assets Acquired and Liabilities Assumed by WashingtonFirst Bank at
             February 28, 2014; Notes to Statement of Assets Acquired and
             Liabilities Assumed by WashingtonFirst Bank.


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