ACQUISITIONS

3 Months Ended

Mar. 31, 2020

ACQUISITIONS

ACQUISITIONS

Note 3 – Acquisitions

HomeStar Financial Group, Inc.

On July 17, 2019, the Company completed its acquisition of HomeStar, and its wholly owned subsidiary, HomeStar Bank, which operated five full-service banking centers in northern Illinois. In aggregate, the Company acquired HomeStar for consideration valued at approximately $11.4 million, which consisted of approximately $1.0 million in cash and the issuance of 404,968 shares of the Company’s common stock. The acquisition was accounted for under the acquisition method of accounting. Accordingly, the Company recognized amounts for identifiable assets acquired and liabilities assumed at their estimated acquisition date fair values, while $7.4 million of transaction and integration costs associated with the acquisition were expensed as incurred.

Management’s valuation of the tangible and intangible assets acquired and liabilities assumed, which are based on assumptions that are subject to change, and the resulting allocation of the consideration paid for the allocation is reflected in the table below. Prior to the end of the one-year measurement period for finalizing the consideration paid allocation, if information becomes available which would indicate adjustments are required to the allocation, such adjustments will be included in the allocation in the reporting period in which the adjustment amounts are determined. During the first quarter of 2020, the Company updated its valuation of deferred tax assets and other liabilities, which required a measurement period adjustment of $1.0 million to increase goodwill.

(dollars in thousands)		HomeStar
Assets acquired:
Cash and cash equivalents	$	70,900
Investment securities available for sale		54,963
Equity securities		2,153
Loans		211,070
Loans held for sale		3,562
Premises and equipment		4,049
Operating lease right-of-use asset		5,177
Other real estate owned		1,092
Nonmarketable equity securities		454
Accrued interest receivable		1,185
Loan servicing rights		1,089
Mortgage servicing rights held for sale		1,701
Intangible assets		4,600
Deferred tax assets, net		2,732
Other assets		1,541
Total assets acquired		366,268
Liabilities assumed:
Deposits		321,740
FHLB advances and other borrowings		31,369
Accrued interest payable		115
Operating lease liabilities		6,232
Other liabilities		3,575
Total liabilities assumed		363,031
Net assets acquired		3,237
Goodwill		8,123
Total consideration paid	$	11,360
Intangible assets:
Core deposit intangible	$	4,300
Customer relationship intangible		300
Total intangible assets	$	4,600
Estimated useful lives:
Core deposit intangible		12 years
Customer relationship intangible		6 years

Goodwill arising from the acquisition consists largely of the synergies and economies of scale expected from combining the operations of HomeStar into the Company. The goodwill is assigned as part of the Company’s banking reporting unit. The portion of the consideration paid allocated to goodwill will not be deductible for tax purposes.

The identifiable assets acquired from HomeStar included core deposit intangibles and customer relationship intangibles, which are being amortized on an accelerated basis as shown above.