Acquisitions (Notes)

6 Months Ended

Jun. 30, 2015

Business Combinations [Abstract]

Acquisitions

Acquisitions

On March 6, 2015, Peoples completed its acquisition of NB&T for total consideration of $102.7 million which reflected the conversion of each of the 3,442,329 outstanding NB&T common shares into $7.75 in cash and 0.9319 in Peoples' common shares. NB&T merged into Peoples and NB&T's wholly-owned subsidiary, The National Bank and Trust Company, which operates 22 full-service branches in southwest Ohio, merged into Peoples Bank. The acquisition was accounted for as a business combination under the acquisition method of accounting under US GAAP. The assets purchased, liabilities assumed, and related identifiable intangible assets were recorded at their acquisition date fair values. Per the applicable accounting guidance for business combinations, these fair values are preliminary and subject to refinement for up to one year after the closing date of the acquisition as additional information relative to closing date fair values becomes available. The goodwill recognized will not be deductible for income tax purposes.

As a result of the NB&T acquisition, Peoples acquired loans of $384.9 million and deposits of $629.5 million after preliminary acquisition accounting adjustments. The balances and operations related to the acquisition are included in Peoples' Unaudited Consolidated Financial Statements from the date of the acquisition.

The following table is a preliminary summary of changes in goodwill and intangible assets during the preliminary purchase price calculation as of the date of acquisition for NB&T, and the assets acquired and liabilities assumed at their estimated fair values.

(Dollars in thousands, except per share data)	NB&T
Purchase Price
Common shares outstanding of acquired company at acquisition date	3,442,329
Cash purchase price per share	$	7.75
Cash consideration	26,678
Number of common shares of Peoples issued for each common share of acquired company	0.9319
Price per Peoples common share, based on closing stock price on acquisition date	$	23.70
Common share consideration	76,027
Total purchase price	$	102,705
Net Assets at Fair Value
Assets
Cash and cash equivalents	$	124,825
Investment securities	156,392
Loans, including loans held for sale, net of deferred fees and costs	384,859
Bank premises and equipment, net	10,702
Other intangible assets	10,130
Other assets	24,181
Total assets	711,089
Liabilities
Deposits	629,512
Borrowings	6,570
Accrued expenses and other liabilities	5,992
Total liabilities	642,074
Net assets	$	69,015
Goodwill	$	33,690

The estimated fair values presented in the above table reflect additional information that was obtained during the three months ended June 30, 2015, which resulted in changes to certain fair value estimates made as of the date of acquisition. Material adjustments to acquisition date estimated fair values are recorded in the period in which the acquisition occurred and, as a result, previously recorded results have changed. After considering this additional information, the cash acquired decreased $5.4 million, the estimated fair value of loans decreased $5.1 million, the intangible assets acquired increased $1.3 million, the other assets increased $0.1 million, and the estimated fair value of accrued expenses and other liabilities decreased $1.6 million as of the date of acquisition from that originally reported in the three months ended March 31, 2015. The change in accrued expenses and other liabilities was mainly due to a decrease in the net deferred tax asset of $1.2 million as a result of these revised fair values. These revised fair value estimates resulted in a net increase to goodwill of $7.6 million from that originally reported for the three months ended March 31, 2015 to $33.7 million, which is recognized in the June 30, 2015 consolidated balance sheet.

Acquired loans are reported net of the unamortized fair value adjustment. The following table details the preliminary fair value adjustment for acquired loans as of the acquisition date:

(Dollars in thousands, except per share data)	NB&T
Nonimpaired Loans
Contractual cash flows	$	497,451
Nonaccretable difference	45,830
Expected cash flows	451,621
Accretable yield	90,346
Fair value	$	361,275
Purchase Credit Impaired Loans
Contractual cash flows	$	40,259
Nonaccretable difference	13,053
Expected cash flows	27,206
Accretable yield	3,622
Fair value	$	23,584

Peoples recorded non-interest expenses related to acquisitions, mainly the NB&T acquisition, of $9.7 million and net losses on asset disposals related to the NB&T acquisition of $0.6 million in the Consolidated Statement of Income for the six months ended June 30, 2015. The $9.7 million was included in the following line items on the Consolidated Statement of Income for the six months ended June 30, 2015, salaries and employee benefit costs contained $4.4 million, professional fees contained $1.7 million, and other non-interest expenses contained $3.6 million.

The following table is a preliminary summary of the changes in goodwill and intangible assets during the period ended June 30, 2015:

(Dollars in thousands)	Goodwill		Gross Core Deposits		Gross Customer Relationships
Balance, December 31, 2014	$	98,562	$	13,546	$	8,859
Acquired intangible assets	33,690		8,623		1,262
Balance, June 30, 2015	$	132,252	$	22,169	$	10,121

(Dollars in thousands)	Gross Intangible Assets		Accumulated Amortization			Net Intangible Assets
June 30, 2015
Core deposits	$	22,169	$	(9,130	)	$	13,039
Customer relationships	10,121		(6,734		)	3,387
Total acquired intangible assets	$	32,290	$	(15,864	)	$	16,426
Servicing rights						2,491
Total other intangible assets						$	18,917