BUSINESS COMBINATIONS AND BRANCH SALES

9 Months Ended

Sep. 30, 2024

NOTE 14 – BUSINESS COMBINATIONS AND BRANCH SALES

At close of business on February 9, 2024, the Company acquired 100% of the outstanding common shares of Rockhold BanCorp ("Rockhold"), the holding company of the Bank of Kirksville (“BOK”), based in Kirksville, Missouri. Results of operations of BOK were included in the Company’s results of operations beginning February 10, 2024. Acquisition-related costs associated with this acquisition were $79 ($60 on an after-tax basis) and are included in merger expense in the Company’s income statement for the nine months ended September 30, 2024.

Information necessary to recognize the fair value of assets acquired and liabilities assumed is currently still on-going. The acquisition was and expansion to the Company's current footprint in Missouri with the addition of eight branch locations in the Kirksville area.

The following table summarizes the amounts of assets acquired and liabilities assumed by BOK on February 9, 2024.


Fair value of consideration:
Cash	$	44,304
	$	44,304

Recognized amounts of identifiable assets acquired and
liabilities assumed:
Cash and due from banks	$	105,218
Available-for-sale securities		164,629
Loans		118,131
Premises and equipment		3,473
Core deposit intangible		11,530
Other assets		3,255
Total assets acquired		406,236
Deposits		349,777
Federal funds purchased and retail repurchase agreements		8,818
Interest payable and other liabilities		2,037
Total liabilities assumed		360,632
Total identifiable net assets		45,604
Bargain purchase gain		(1,300	)
	$	44,304

The following tables reconcile the par value of BOK loan portfolio as of the purchase date to the fair value indicated in the table above. For non-purchase credit deteriorated assets, the entire fair value adjustment including both interest and credit related components is recorded as an adjustment to par (“Fair Value Marks”) and reflected as an adjustment to the carrying value of that asset within the Consolidated Balance Sheet. Following purchase, an ACL is also established for these non-purchase credit deteriorated assets which is not reflected in this table as it is accounted for outside of the business combination. For purchase-credit deteriorated assets, as required by CECL, the fair value mark is divided between an adjustment to par (“Non-Credit Rate Marks”) and an addition to the ACL (“Credit Marks in ACL”). The addition to ACL is based on the application of management’s CECL methodology to the individual loans.


Non-Purchase Credit Deteriorated Loans	Loan Par Value		Fair Value Marks			Purchase Price
Commercial real estate	$	1,959	$	(85	)	$	1,874
Commercial and industrial		32,300		(578	)		31,722
Residential real estate		42,318		(1,182	)		41,136
Agricultural		37,641		(949	)		36,692
Consumer		1,373		(36	)		1,337
Total non-PCD loans	$	115,591	$	(2,830	)	$	112,761


Purchase Credit Deteriorated Loans	Loan Par Value		Discounts from Other Factors Excluding ACL			Credit Marks in ACL			Purchase Price
Commercial and industrial	$	1,366	$	(178	)	$	(119	)	$	1,069
Residential real estate		2,044		(210	)		(183	)		1,651
Agricultural		3,316		(472	)		(284	)		2,560
Consumer		115		(15	)		(10	)		90
Total PCD loans	$	6,841	$	(875	)	$	(596	)	$	5,370

Total Purchased Loans	Purchase Price
Non-Purchase Credit Deteriorated Loans	$	112,761
Purchase Credit Deteriorated Loans		5,370
Total loans	$	118,131

At close of business on July 1, 2024, the Company acquired 100% of the outstanding common shares of KansasLand Bancshares, Inc. ("KansasLand"), the holding company of KansasLand Bank (“KSL”), which has two branch locations in Quinter and Americus, Kansas. Results of operations of KSL were included in the Company’s results of operations beginning July 2, 2024.

Acquisition-related costs associated with this acquisition were $538 ($409 on an after-tax basis) and are included in merger expense in the Company’s income statement for the nine months ended September 30, 2024.

Information necessary to recognize the fair value of assets acquired and liabilities assumed is currently still on-going. The acquisition was and expansion to the Company's current footprint in Western Kansas with the addition of two branch locations.

The following table summarizes the amounts of assets acquired and liabilities assumed by KSL on July 1, 2024.


Fair value of consideration:
Cash	$	100
	$	100

Recognized amounts of identifiable assets acquired and
liabilities assumed:
Cash and due from banks	$	1,361
Available-for-sale securities		20,004
Loans		27,926
Premises and equipment		372
Core deposit intangible		506
Other assets		1,764
Total assets acquired		51,933
Deposits		42,418
Federal funds purchased and retail repurchase agreements		780
Federal Home Loan Bank advances		7,049
Bank stock loan		691
Interest payable and other liabilities		64
Total liabilities assumed		51,002
Total identifiable net assets		931
Bargain purchase gain		(831	)
	$	100

The following tables reconcile the par value of KSL loan portfolio as of the purchase date to the fair value indicated in the table above. For non-purchase credit deteriorated assets, the entire fair value adjustment including both interest and credit related components is recorded as an adjustment to par (“Fair Value Marks”) and reflected as an adjustment to the carrying value of that asset within the Consolidated Balance Sheet. Following purchase, an ACL is also established for these non-purchase credit deteriorated assets which is not reflected in this table as it is accounted for outside of the business combination. For purchase-credit deteriorated assets, as required by CECL, the fair value mark is divided between an adjustment to par (“Non-Credit Rate Marks”) and an addition to the ACL (“Credit Marks in ACL”). The addition to ACL is based on the application of management’s CECL methodology to the individual loans.


Non-Purchase Credit Deteriorated Loans	Loan Par Value		Fair Value Marks			Purchase Price
Commercial real estate	$	163	$	(14	)	$	149
Commercial and industrial		4,549		(258	)		4,291
Residential real estate		7,053		(103	)		6,950
Agricultural real estate		9,644		(387	)		9,257
Agricultural		2,133		(7	)		2,126
Consumer		1,524		(6	)		1,518
Total non-PCD loans	$	25,066	$	(775	)	$	24,291


Purchase Credit Deteriorated Loans	Loan Par Value		Discounts from Other Factors Excluding ACL			Credit Marks in ACL			Purchase Price
Commercial and industrial	$	109	$	(14	)	$	(9	)	$	86
Residential real estate		479		(48	)		(43	)		388
Agricultural real estate		3,717		(419	)		(330	)		2,968
Agricultural		244		(29	)		(22	)		193
Total PCD loans	$	4,549	$	(510	)	$	(404	)	$	3,635

Total Purchased Loans	Purchase Price
Non-Purchase Credit Deteriorated Loans	$	24,291
Purchase Credit Deteriorated Loans		3,635
Total loans	$	27,926

Assuming the Rockhold and KansasLand acquisitions would have taken place on January 1, 2023, total combined revenue would have been $168,626 for the nine months ended September 30, 2024, and $141,078 for the year ended December 31, 2023. Net income would have been $48,091 at September 30, 2024, and $7,518 at December 31, 2023. The pro forma amounts disclosed exclude merger expense from non-interest expense, which is considered a non-recurring adjustment. Separate revenue and earnings of the former Rockhold locations are not available subsequent to the acquisition.