Business Acquisitions

9 Months Ended

Sep. 30, 2020

Acquisition of LBC Bancshares, Inc.

On May 1, 2019, the Company completed its acquisition of LBC Bancshares, Inc. (“LBC”), a bank holding company headquartered in LaGrange, Georgia. Upon consummation of the acquisition, LBC was merged with and into the Company, with Colony as the surviving entity in the merger. At that time, LBC’s wholly owned bank subsidiary, Calumet Bank, was also merged with and into the Bank. The acquisition expanded the Company’s market presence, as Calumet Bank had two full-service banking locations, one each in LaGrange, Georgia and Columbus, Georgia, as well as a loan production office in Atlanta, Georgia. Under the terms of the Agreement and Plan of Merger, each LBC shareholder had the option to receive either $23.50 in cash or 1.3239 shares of the Company’s common stock in exchange for each share of LBC common stock, subject to customary proration and allocation procedures such that 55% of LBC shares received the stock consideration and 45% received the cash consideration, with at least 50% of the merger consideration paid in the Company's common stock. As a result, the Company issued 1,053,875 common shares at a fair value of $18.2 million and paid $15.3 million in cash to the former shareholders of LBC as merger consideration.

The merger was effected by the issuance of shares of the Company’s common stock along with cash consideration to shareholders to LBC. The assets and liabilities of LBC as of the effective date of the merger were recorded at their respective estimated fair values and combined with those of the Company. The excess of the purchase price over the net estimated fair values of the acquired assets and liabilities was allocated to identifiable intangible assets with the remaining excess allocated to goodwill. Goodwill of $15.2 million was recorded as part of the LBC acquisition and is not expected to be deductible for income tax purposes.

The following table presents the assets acquired and liabilities assumed of LBC as of May 1, 2019, and their fair value estimates. The fair value estimates were subject to refinement for up to one year after the closing date of the acquisition for new information obtained about facts and circumstances that existed at the acquisition date. The Company continues its evaluation of the facts and circumstances available as of May 1, 2019, to assign fair values to assets acquired and liabilities assumed, which could result in further adjustments to the fair values presented below.


(dollars in thousands, except market price)	Initial Fair Value Adjustments		Subsequent Adjustments (1)		Final Balance
Purchase price consideration:
Shares of CBAN common stock issued to LBC shareholders as of May 1, 2019	1,053,875		1,053,875		1,053,875
Market price of CBAN common stock on May 1, 2019	$	17.75	$	(0.46)	$	17.29
Estimated fair value of CBAN common stock issued	18,706		(485)		18,221
Cash consideration paid	15,315		—		15,315
Total consideration	$	34,021	$	(485)	$	33,536

Assets acquired at fair value:
Cash and cash equivalents	$	15,678	$	—	$	15,678
Investments securities available for sale	49,172		—		49,172
Investments securities held to maturity	1,766		—		1,766
Restricted investments	479		—		479
Loans	130,568		—		130,568
Premises and equipment	3,009		—		3,009
Core deposit intangible	3,100		—		3,100
Other real estate	243		—		243
Prepaid and other assets	6,143		—		6,143
Total fair value of assets acquired	$	210,158	$	—	$	210,158

Liabilities assumed at fair value:
Deposits	$	(189,896)	$	—	$	(189,896)
FHLB advances	(1,000)		—		(1,000)
Payables and other liabilities	(975)		—		(975)
Total fair value of liabilities assumed	$	(191,871)	$	—	$	(191,871)

Net assets acquired at fair value:	$	18,287	$	—	$	18,287

Amount of goodwill resulting from acquisition	$	15,734	$	(485)	$	15,249

(1) Subsequent adjustments were done within the one year period allowed after the acquisition.

In the acquisition, the Company purchased $130.6 million of loans at fair value, net of $2.2 million, or 1.63%, estimated discount to the outstanding principal balance. Of the total loans acquired, management identified $176,000 that were considered to be credit impaired and are accounted for under ASC Topic 310-30. The table below summarizes the total contractually required principal and interest cash payments, management’s estimate of expected total cash payments and fair value of the loans as of the acquisition date for purchased credit impaired loans. Contractually required principal and interest payments have been adjusted for estimated prepayments.


(dollars in thousands)
Contractually required principal and interest	$	695
Non-accretable difference	(519)
Cash Flows expected to be collected	176
Accretable yield	—
Total purchased credit-impaired loans acquired	$	176

The following table presents the acquired loan data for the LBC acquisition.


(dollars in thousands)	Fair Value of Acquired Loans at Acquisition Date		Gross Contractual Amounts Receivable at Acquisition Date		Estimate at Acquisition Date of Contractual Cash Flows Not Expected to be Collected
Acquired receivables subject to ASC 310-30	$	176	$	695	$	519
Acquired receivables not subject to ASC 310-30	130,392		132,381		—

Acquisition of PFB Mortgage from Planters First Bank

On May 1, 2019, the Bank completed its acquisition of PFB Mortgage, the secondary market mortgage business of Planters First Bank for a total cash consideration of $833,000.The assets acquired included premises and equipment as well as all pipeline loans. The assets acquired were recorded at their respective estimated fair values as of the effective date of the transaction. The excess of the purchase price over fair value of net assets acquired was allocated to goodwill.

The following table presents the assets acquired as of May 1, 2019, and their fair value estimates. The fair value estimates were subject to refinement for up to one year after the closing date of the acquisition for new information obtained about facts and circumstances that existed at the acquisition date. The Company continues its evaluation of the facts and circumstances available as of May 1, 2019, to assign fair values to assets acquired and liabilities assumed, which could result in further adjustments to the fair values presented below.


(dollars in thousands)
Purchase price consideration:
Cash consideration paid	$	833
Total consideration	$	833

Assets acquired at fair value:
Premises and equipment	$	78
Premium on loan commitments	209
Other assets	5
Total fair value of assets acquired	$	292

Liabilities assumed at fair value:
Total fair value of liabilities assumed	$	—

Net assets acquired at fair value:	$	292

Amount of goodwill resulting from acquisition	$	541