SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): March, 30, 2001
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Berkshire Bancorp Inc.
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(Exact name of registrant as specified in its charter)
Delaware 0-13649 94-2563513
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
160 Broadway, New York, New York 10038
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 791-5362
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Not Applicable
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Former name or former address, if changed since last report
INFORMATION TO BE INCLUDED IN THE REPORT
Items 1, 3, 4, 5, 6, 8 and 9 are not applicable and are omitted from this
Current Report. The information required by Items 2 and 7(c) has been previously
filed. This amended report is filed to provide the financial information
required by Items 7(a) and 7(b).
Item 2. Acquisition of GSB Financial Corporation and Goshen Savings Bank.
On March 30, 2001, Berkshire Bancorp Inc. ("Berkshire"), through its
wholly owned subsidiaries, The Berkshire Bank and Greater American Finance
Group, Inc., completed its merger with GSB Financial Corporation ("GSB
Financial"). Under the terms of the merger, 978,032 shares of GSB Financial
common stock were converted into 589,460 shares of Berkshire common stock,
and 974,338 shares of GSB Financial common stock were purchased for $20.75
per share totaling approximately $20.2 million. This transaction was accounted
for under the purchase method of accounting. Goodwill of approximately
$8.5 million will be amortized over a 15-year period.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
a. Financial Statements of Business Acquired.
See Exhibit 20
b. Proforma financial statements.
UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL INFORMATION
The following unaudited pro forma condensed combined financial information
should be read in conjunction with the historical consolidated financial
statements and related notes of Berkshire and GSB Financial Corp. The unaudited
pro forma information is presented for illustration purposes only in accordance
with the assumptions set forth below. This information is not necessarily
indicative of the operating results or of the financial position that would have
occurred if the merger had been consummated nor is it necessarily indicative of
future operating results or financial position of the combined enterprise. The
unaudited pro forma condensed combined financial information does not reflect
any adjustments to conform accounting practices or to reflect any cost savings
or other synergies anticipated as a result of the merger.
Unaudited Pro Forma Condensed Combined Balance Sheet
The following unaudited pro forma condensed combined balance sheet presents,
under the purchase method of accounting, the consolidated balance sheets of
Berkshire and GSB combined as of December 31, 2000 as if the merger had occurred
on that date.
Condensed Combined Proforma Balance Sheet
As of December 31, 2000
(unaudited)
Historical
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Berkshire GSB Adjust Proforma
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ASSETS
Cash and due from banks $ 2,512 $ 3,940 $ -- $ 6,452
Interest bearing deposits 6,605 - 6,605
Federal funds sold 27,250 525 (20,222) (2) 7,553
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Total cash and cash equivalents 36,367 4,465 (20,222) 20,610
-------- -------- -------- --------
Total investment securities 117,060 53,333 170,393
Net loans 74,515 128,861 203,376
Accrued interest receivable 1,355 1,654 3,009
Premises and equipment, net 359 3,244 3,603
Prepaid expenses and other 2,824 1,438 (1,186) (6) 3,076
Goodwill, net 11,543 - 8,161 (7) 19,704
-------- -------- -------- --------
Total assets $244,023 $192,995 $(13,247) $423,771
======== ======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $137,647 $120,415 $258,062
Securities sold under agreements to repurchase 23,127 - 23,127
Borrowings 1,500 39,000 40,500
Other liabilities 2,642 2,273 4,915
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Total liabilities 164,916 161,688 - 326,604
-------- -------- -------- --------
Stockholders' equity
Common stock 256 22 (22) (1) 256
Additional paid-in capital 78,549 21,560 (21,560) (1) 89,464
10,269 (2)
(471) (4)
1,117 (5)
Accumulated other comprehensive (loss) income, net (85) (88) - (173)
Retained earnings 8,352 15,478 (15,575) (1) 8,255
Unearned ISAP stock - (471) 471 (5) -
Unallocated ESOP stock - (1,169) 1,169 (4) -
Less: Treasury stock (7,965) (4,025) 7,887 (3) (635)
3,468 (1)
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Total stockholders' equity 79,107 31,307 (13,247) 97,167
-------- -------- -------- --------
$244,023 $192,995 $(13,247) $423,771
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(1) Elimination of equity of the company
(2) Purchase price of $20,221,880 ($20.75 per share of GSB common stock) in cash
and 589,460 share of Berkshire common stock.
Berkshire GSB Adjustments Proforma
--------- --------- ----------- --------
Common Stock - Berkshire Bancorp, Inc. ($0.10 par value) 2,566,095
Common Stock - GSB ($0.01 par value) 1,952,370 (1,952,370) -
Common Stock outstanding issued (978,032)
Common Stock issued (exchange rate .6027) 589,460 589,460
--------- --------- ---------- -----------
974,338 (1,368,910) 589,460
========= ========= ========== ===========
Shares Issued for Purchase 589,460
Fair Value at 12/31/00 $ 30.50
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17,978,527
Less Treasury stock, cost recorded (3) 7,886,975
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Amount Capitalized into Additional Paid in Capital $10,091,552
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(3) Issuance of treasury stock for all shares purchased by GSB shareholders at
an average cost of $13.38.
(4) Termination of ESOP plan with the shares sold back to the company to repay
debt of the ESOP. Remaining shares distributed to participates creating
additional goodwill of $1.1 million, included in goodwill of $8.5 million.
(5) Termination of ISAP assuming that all remaining shares will be terminated.
(6) Direct costs associated with the acquisition which are capitalized into
Goodwill.
(7) Goodwill represents the difference between the fair value of the net assets
and total purchase price of $38.2 million and certain adjustments for
direct costs, termination of benefit plans described above.
The following unaudited pro forma condensed combined income statements
present, under the purchase method of accounting, the consolidated income
statements of Berkshire and GSB for the year ended December 31, 2000 as if the
merger had occurred on January 1, 2000.
Condensed Combined Proforma Income Statement
For the year ended December 31, 2000
(unaudited)
Historical
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BERKSHIRE GSB ADJUSTMENTS PROFORMA
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INTEREST INCOME
Short-term interest-earning assets $ 1,241 $ 33 $(1,011) (1) $ 263
Securities and other investments 6,381 3,791 10,172
Loans 6,397 9,187 15,584
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Total interest income 14,019 13,011 (1,011) 26,019
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INTEREST EXPENSE
Deposits 4,344 4,303 8,647
Borrowings 840 2,740 3,580
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Total interest expense 5,184 7,043 - 12,227
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Net interest income 8,835 5,968 (1,011) 13,792
PROVISION FOR LOAN LOSSES 55 135 190
Net interest income after (1,011)
provision for loan losses 8,780 5,833 13,602
NON-INTEREST INCOME -
Investment securities gain 13,288 138 13,426
Other income 1,330 565 1,895
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Total non-interest income 14,618 703 - 15,321
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NON-INTEREST EXPENSE
Salaries and employee benefits 2,125 1,929 4,054
Net occupancy expense 548 367 915
Amortization of goodwill 635 - 424 (2) 1,059
Other 1,156 1,732 - 2,888
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Total non-interest expense 4,464 4,028 424 8,916
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Income before provision for taxes 18,934 2,508 (1,435) 20,007
Provision for income taxes 6,868 1,073 (465)(1) 7,476
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Net income $12,066 $1,435 $ (970) $12,531
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Net income per share:
Basic $ 5.76 $ 0.80 $ 4.67
Diluted $ 5.76 $ 0.78 $ 4.67
Shares Outstanding - Basic 2,095 1,790 (1,790) 2,684
589 (3)
Shares Outstanding - Diluted 2,096 1,829 (1,829) 2,685
589 (3)
(1) Interest forgone for cash paid for acquisition ($20.2 million), assuming a
5% interest rate and a net tax benefit utilizing an effective tax rate of
46%.
(2) Goodwill amortization of $8.5 million over a 15 year period.
(3) Conversion of GSB shares to Berkshire Bancorp common shares.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BERKSHIRE BANCORP INC.
Dated: May 11, 2001 By: /s/ Steven Rosenberg
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Steven Rosenberg
President and Chief Financial Officer
INDEX TO EXHIBITS
Exhibit No. Page Description
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20 Consolidated financial statements of GSB Financial
Corporation and Subsidiaries as of December 31, 2000
and 1999, and for each of the years ended December 31,
2000 and 1999, the three months ended December 31, 1998
and the year ended September 30, 1998
23 Consent of Nugent & Haeussler P.C.