Lincoln Bancorp (LNCB) Reports Q3 Results Including Merger Costs
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Lincoln Bancorp (Nasdaq: LNCB) announced today that, excluding certain charges related to its proposed merger as discussed below, Lincoln's net income for the third quarter ended September 30, 2008 would have been $932,000, or $.18 for both basic and diluted earnings per share. Despite a difficult economic climate, Lincoln recorded increases in net interest income and net interest margin for the quarter compared to the third quarter of 2007. However, as a result of accounting charges related to the Lincoln's proposed merger -- most significantly a write-down of goodwill on the books from previous acquisitions -- Lincoln will show a net loss for financial reporting purposes. (results including merger costs was a loss of $4.60)
As announced on September 3, 2008, Lincoln entered an Agreement of Reorganization and Merger with First Merchants Corporation. In all merger transactions, goodwill recorded on the books of the company being acquired as a result of prior acquisitions of other companies is eliminated at the time of the merger. In the case of the proposed merger between Lincoln and First Merchants and the exchange ratio contained in the merger agreement, accounting rules required that an evaluation of goodwill for impairment be performed. This evaluation determined that goodwill from previous acquisitions should be eliminated immediately rather than at the conclusion of the merger. [SM]
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