Talmer Bancorp, Inc. (TLMR)

[56Chevy]

Annual Report (10-k)

Date : 03/27/2014 @ 4:40PM
Source : Edgar (US Regulatory)
Stock : Talmer Bancorp, Inc. (TLMR)
Quote : $14.38 0.51 (3.68%) @ 1:11PM

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The number of shares outstanding of the registrant's Class A common stock, par value $1.00 per share, as of March 27, 2014 was 69,962,461.

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On April 30, 2010, we closed on a private placement of our common stock that raised $200.0 million from new investors. Also on April 30, 2010, Talmer Bank acquired certain of the assets and certain of the deposits of CF Bancorp, a Michigan chartered savings bank, from the FDIC, as receiver. Since then, Talmer Bank has completed three additional FDIC-assisted acquisitions of First Banking Center on November 19, 2010, People State Bank on February 11, 2011 and Community Central Bank on April 29, 2011.

On February 21, 2012, we closed on a private placement of our common stock consisting of an initial drawdown by us of approximately $21.0 million and commitments from investors for up to approximately $153.0 million of event driven capital at $8.00 per share. On December 27, 2012, we closed on the remaining $153.0 million of capital commitments from our investors, which was used to fund the acquisition of all of the outstanding common stock of First Place Bank, which closed on January 1, 2013.

As a result of our private placements and our acquisitions described below, we have transformed from a small community bank in Troy, Michigan to a much larger commercial bank. As of December 31, 2013, we had $3.0 billion in total loans. Of this amount, $1.9 billion, or 62.8%, consist of loans we acquired (all of which were adjusted to their estimated fair values at the time of acquisition), and $1.1 billion, or 37.2%, consist of loans we originated. In each of our FDIC-assisted acquisitions, we entered into loss share agreements with the FDIC that cover certain of the acquired assets, including 100% of the acquired loans (other than consumer loans with respect to our acquisition of First Banking Center, Peoples State Bank and Community Central Bank) and other real estate. As of December 31, 2013, of our $3.0 billion of total loans, $530.1 million, or 17.6%, are covered by loss share agreements with the FDIC.

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As of December 31, 2013, our total assets were approximately $4.5 billion, our total loans were approximately $3.0 billion, our total deposits were approximately $3.6 billion and our total shareholders' equity was approximately $617.0 million. We are headquartered at 2301 West Big Beaver Rd., Suite 525, Troy, Michigan 48084.

On February 14, 2014, we completed the initial public offering of 15,555,555 shares of our common stock. Of the 15,555,555 shares sold, 3,703,703 shares were sold by us and 11,851,852 shares were sold by certain selling shareholders. In addition, on February 21, 2014, the selling shareholders sold an additional 2,333,333 shares of common stock to cover the exercise of the underwriters' over-allotment option. We received net proceeds of approximately $42.1 million from the offering, after deducting the underwriting discounts and commissions and estimated offering expenses. We did not receive any proceeds from the sale of shares by the selling shareholders.

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Tangible book value per share: $9.12

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Earnings per share (EPS): Basic $1.49

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Stock Warrants

The Company has issued five different sets of stock warrants: 1) to seed capital investors in February 2010; 2) to an investor in relation to the April 2010 capital raise from private equity investors; 3) to the FDIC in relation to the Company's April 2010 acquisitions of CF Bancorp; 4) to an investor in relation to the Company's February 2012 capital raise from private equity investors and 5) to an investor in relation to the Company's December 2012 capital raise from private equity investors.

On February 10, 2010, 38,855 common stock warrants were issued to certain seed investors. These warrants have a strike price of $10.00 per share and expire April 28, 2017. These warrants have a feature that dictates that the warrants only become exercisable after an eligible capital transaction, which is either an initial public offering or a sale of the Company in which the stock of the Company is valued above certain threshold levels. These warrants were not issued concurrently with the issuance of stock and meeting the definition of a derivative under ASC 815-40 " Derivatives and Hedging—Contracts in Entity's Own Equity " (ASC 815-40), however, they fall under the scope exception which states that contracts issued that are both a) indexed to its own stock; and b) classified in stockholders' equity are not considered derivatives. The warrants were recorded at their fair value on the date of grant as a component of stockholder's equity. These warrants remain outstanding at December 31, 2013.

On April 30, 2010, 1,623,162 common stock warrants were issued to investment vehicles associated with an investor. The warrants have a strike price of $6.00 per share and a 10 year term. These warrants were issued concurrently with the issuance of stock to this investor and meet the definition of a derivative under ASC 815-40, however, they fall under the scope exception which states that contracts issued that are both a) indexed to its own stock; and b) classified in stockholders' equity are not

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17. STOCK-BASED COMPENSATION AND STOCK WARRANTS (Continued)

considered derivatives. The warrants were recorded at their fair value on the date of grant as a component of stockholder's equity. These warrants remain outstanding at December 31, 2013.

On April 30, 2010, 390,000 common stock warrants were issued to the FDIC. These warrants have a strike price of $6.00 and a 10 year term. These warrants have a feature that allows settlement in cash and were issued as consideration paid to the FDIC for the purchase of assets of CF Bancorp. These warrants meet the definition of a liability due to the cash settlement feature and are recorded as such in the Consolidated Balance Sheets. The purchase accounting adjustments related to the CF Bancorp acquisition included an estimated present value of the potential cash settlement that may be paid to the FDIC of $2.9 million which was recorded in "FDIC warrants payable" in the Consolidated Balance Sheets. At each subsequent reporting period, the Company determined the potential cash settlement amount for these warrants and, to the extent that the present value of the potential cash settlement amount is greater than the initial contingent purchase accounting adjustment, the company would accrue additional expense to fully reflect the present value of the potential cash settlement amount. For the years ended December 31, 2013, 2012 and 2011, $219 thousand, $195 thousand and $144 thousand, respectively, was recognized as periodic amortization expense. For the years ended December 31, 2013, 2012 and 2011, $163 thousand, $326 thousand and $101 thousand were recognized as additional expense due to the change in potential cash settlement amount. At December 31, 2013, the Company's recorded balance of FDIC Warrants Payable was $4.1 million.

On February 21, 2012, 109,122 common stock warrants were issued to investment vehicles associated with an investor. The warrants have a strike price of $8.00 per share and a 10 year term. These warrants were issued concurrently with the issuance of stock to this investor and meet the definition of a derivative under ASC 815-40, however, they fall under the scope exception which states that contracts issued that are both a) indexed to its own stock; and b) classified in stockholders' equity are not considered derivatives. The warrants were recorded at their fair value on the date of grant as a component of stockholder's equity. These warrants remain outstanding at December 31, 2013.

On December 27, 2012, 797,132 common stock warrants were issued to investment vehicles associated with an investor. The warrants have a strike price of $8.00 per share and a 10 year term. These warrants were issued concurrently with the issuance of stock to this investor and meet the definition of a derivative under ASC 815-40, however, they fall under the scope exception which states that contracts issued that are both a) indexed to its own stock; and b) classified in stockholders' equity are not considered derivatives. The warrants were recorded at their fair value on the date of grant as a component of stockholder's equity. These warrants remain outstanding at December 31, 2013.

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Marker: (mid-day)
Talmer Bancorp, Inc. (TLMR)
$14.5 up 0.63 (4.54%)
Volume: 378,349

*This 10K is a very good read and the blueprint on exactly how an agressive group of investors take a small bank and the steps they take to turn it into a much larger bank.