Business Combination

12 Months Ended

Dec. 31, 2015

Business Combinations [Abstract]

Business Combination

2.  Business Combination

In the first quarter of 2013, the Corporation announced the signing of a definitive merger agreement to acquire 100% of the outstanding equity interests of FC Banc Corp. and its subsidiary, Farmers Citizens Bank, for $30.00 per share in cash and stock. Farmers Citizens Bank served the central Ohio markets of Bucyrus, Cardington, Fredericktown, Mount Hope and Shiloh, as well as the markets of Worthington and Upper Arlington in the greater Columbus, Ohio area, with 8 branch locations. The transaction closed on October 11, 2013 and resulted in consideration paid to FC Banc Corp. shareholders totaling approximately $41.6 million, comprised of approximately $8.0 million in cash and 1,873,879 shares of the Corporation’s common stock valued at approximately $33.6 million based on the October 11, 2013 closing price of $17.91 per share. FC Banc Corp.’s results of operations were included in the Corporation’s results beginning October 12, 2013.

On December 30, 2015, the Corporation announced the signing of a definitive merger agreement to acquire Lake National Bank of Mentor, Ohio for $22.50 per share in cash, or approximately $24.75 million in the aggregate. The transaction is expected to close in the third quarter of 2016, subject to customary closing conditions, including regulatory approvals and the approval of Lake National Bank shareholders. Following completion of the merger, Lake National Bank will operate as part of the ERIEBANK division of CNB Bank. As of December 31, 2015, Lake National Bank had total assets of $153.0 million, total loans of $122.3 million, and total deposits of $134.8 million.

The Corporation’s management and board of directors have periodically conducted strategic reviews as part of their ongoing efforts to improve the Corporation’s banking franchise and enhance shareholder value. In connection with these strategic reviews, the Corporation has considered potential acquisition targets, including banking institutions in Ohio. On March 26, 2013, the Corporation’s board of directors unanimously approved the merger transaction with FC Banc Corp. and authorized the Corporation’s management to execute and deliver the merger agreement.

As disclosed in the accompanying consolidated statements of income, the Corporation incurred merger costs of $308 during the year ended December 31, 2015 and $2,396 during the year ended December 31, 2013. All merger costs have been expensed as incurred.

The following table summarizes the consideration paid for FC Banc Corp. and the amounts of the assets acquired and liabilities assumed that were recognized at the acquisition date:

Consideration paid:
Cash	$	8,013
Common stock		33,561
Fair value of total consideration transferred		41,574
Recognized amounts of identifiable assets acquired and liabilities assumed:
Cash and cash equivalents		54,995
Securities available for sale		34,214
Loans		247,737
FHLB and other equity interests		1,789
Premises and equipment		4,328
Bank owned life insurance		3,955
Mortgage servicing rights		83
Core deposit intangible		4,834
Accrued interest receivable and other assets		8,093
Total assets acquired		360,028
Demand deposits		248,812
Time deposits		83,214
Accrued interest payable and other liabilities		2,676
Total liabilities assumed		334,702
Total identifiable net assets		25,326
Goodwill	$	16,248

Included in accrued interest receivable and other assets is a deferred tax asset totaling $5,696 representing the tax effect of temporary differences between the tax basis and fair values assigned to the assets and liabilities, as well as the effect of FC Banc Corp.’s net operating loss carryforward. See Note 13.

Acquired loans were recorded at fair value with no carryover of the related allowance for loan losses. Determining the fair value of loans involved estimating the amount and timing of principal and interest cash flows expected to be collected on the loans and discounting those cash flows at a market rate of interest. Loans acquired with evidence of credit quality deterioration totaled $2,225. The Corporation acquired $256,418 of gross loans, including purchased credit impaired loans, and recognized a net combined yield and credit mark of $8,681.

Goodwill of $16,248 arising from the acquisition consisted largely of synergies and the cost savings resulting from the combining of the operations of the Corporation and FC Banc Corp. None of the goodwill is expected to be deductible for income tax purposes.