Acquisitions

During 2015, Peoples completed two acquisitions, which were accounted for as business combinations 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, and are detailed below. The balances and operations related to these acquisitions are included in Peoples' consolidated financial statements from the respective dates of acquisition.

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 operated 22 full-service branches in southwest Ohio, merged into Peoples Bank. Per the applicable accounting guidance for business combinations, the acquisition date fair values of the assets purchased, liabilities assumed and related identifiable intangible assets 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.

On July 21, 2015, Peoples Insurance acquired an insurance agency and related customer accounts in the Lebanon, Ohio area for total cash consideration of $0.9 million, and recorded $0.5 million of customer relationship intangibles and $0.4 million of goodwill.

On January 6, 2016, Peoples Bank acquired a small financial advisory book of business in Marietta, Ohio for cash consideration of $0.5 million. This acquisition did not materially impact Peoples' financial position, results of operations or cash flows.

The following table provides the purchase price calculation as of the date of acquisition for the NB&T acquisition, 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 at merger announcement	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	0.93
Price per Peoples common share, based on closing date	$	23.70
Common share consideration	76,027
Cash in lieu of fractional common shares of Peoples	4
Total purchase price	$	102,709

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	384,588
Bank premises and equipment, net	10,702
Other intangible assets	10,130
Other assets	24,458
Total assets	711,095
Liabilities
Deposits	629,512
Borrowings	6,570
Accrued expenses and other liabilities	5,941
Total liabilities	642,023
Net assets	$	69,072
Goodwill	$	33,637

The estimated fair values presented in the above table reflect additional information that was obtained during the three months ended December 31, 2015, which resulted in changes to certain fair value estimates made as of the date of acquisition. Adjustments to acquisition date estimated fair values are recorded in the period in which the adjustment is determined and, as a result, previously recorded results have changed. After considering the additional information obtained during the three months ended December 31, 2015, the estimated fair value of other assets increased $0.6 million, the revised fair value estimate resulted in a net decrease to goodwill of $0.6 million from the amount reported as of September 30, 2015, to $33.6 million, which was recognized in the December 31, 2015 Consolidated Balance Sheet. Refer to Note 6 for details of the changes in goodwill and intangible assets arising from the acquisitions.

Acquired loans are reported net of the unamortized fair value adjustment. The following table details the 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	45,828
Expected cash flows	451,623
Accretable yield	90,346
Fair value	$	361,277

Purchase Credit Impaired Loans
Contractual cash flows	$	40,258
Nonaccretable difference	13,336
Expected cash flows	26,922
Accretable yield	3,611
Fair value	$	23,311

Peoples recorded non-interest expenses related to acquisitions of $10.7 million and net losses on asset disposals of $0.6 million in the Consolidated Statement of Income during 2015. The $10.7 million was included in the following line items on the Consolidated Statement of Income for the year ended December 31, 2015: salaries and employee benefit costs contained $4.4 million, professional fees contained $1.7 million, data processing and software expense contained $0.3 million and other non-interest expenses contained $4.3 million.

The following table illustrates the unaudited pro forma information for the results of operations for periods ended December 31, as if the NB&T acquisition had occurred on January 1 of each year. This information includes the impact of certain purchase accounting adjustments, including the amortization/accretion related to loans, other intangible assets, deposits and borrowings. This information is presented for illustrative purposes only, and is not necessarily indicative of the results of operations had the acquisition been completed at the beginning of the earliest periods presented, and is not necessarily indicative of future results of operations.



	For the Twelve Months Ended
	December 31
(Dollars in thousands)	2015		2014
Total revenue (net interest income and non-interest income)	$	149,965	$	141,221
Net income available to common shareholders	12,259		23,512

Peoples' total revenue for the year ended December 31, 2015 included $26.2 million provided by NB&T and $7.8 million of net income.