XML 35 R22.htm IDEA: XBRL DOCUMENT v3.8.0.1
ACQUISITION (Tables)
 9 Months Ended
Sep. 30, 2017
Business Combinations [Abstract]  
Summary of Consideration Paid, and Fair Values of the Assets Acquired and Liabilities Assumed
Consideration paid, and fair values of Lake Sunapee’s assets acquired and liabilities assumed, along with the resulting goodwill, are summarized in the following tables:
(in thousands)
 
As Acquired
 
Fair Value Adjustments
 
 
 
As Recorded at Acquisition
Consideration paid:
 
 
 
 
 
 
 
 
Bar Harbor Bankshares common stock issued to Lake Sunapee Bank Group stockholders (4,163,853 shares)
 
 
 
 
 
 
 
$
181,919

Cash paid for fractional shares
 
 
 
 
 
 
 
27

Total consideration paid
 
 
 
 
 
 
 
181,946

Recognized amounts of identifiable assets acquired and liabilities assumed, at fair value:
 
 
 
 
 
 
 
 
Cash and short-term investments
 
$
40,970

 
$
(1,406
)
 
(a)
 
$
39,564

Investment securities
 
156,960

 
(1,381
)
 
(b)
 
155,579

Loans
 
1,217,927

 
(9,728
)
 
(c)
 
1,208,199

Premises and equipment
 
22,561

 
(351
)
 
(d)
 
22,210

Core deposit intangible
 
—

 
7,786

 
(e)
 
7,786

Other assets
 
102,298

 
(50,419
)
 
(f)
 
51,879

Deposits
 
(1,149,865
)
 
(746
)
 
(g)
 
(1,150,611
)
Borrowings
 
(232,261
)
 
(16
)
 
(h)
 
(232,277
)
Deferred taxes, net
 
(1,921
)
 
10,217

 
(i)
 
8,296

Other liabilities
 
(19,924
)
 
(4,087
)
 
(j)
 
(24,011
)
Total identifiable net assets
 
$
136,745

 
$
(50,131
)
 
 
 
$
86,614

 
 
 
 
 
 
 
 
 
Goodwill
 
 
 
 
 
 
 
$
95,332


Explanation of Certain Fair Value Adjustments
a.
Represents in-process payments that were made on the date of acquisition that were not recorded on Lake Sunapee's general ledger until after acquisition.
b.
Represents the write down of the book value of investments to their estimated fair value based on fair values on the date of acquisition.
c.
Represents the write down of the book value of loans to their estimated fair value based on current interest rates and expected cash flows, which includes an estimate of expected loan loss inherent in the portfolio. The adjustments also includes the reversal of Lake Sunapee Bank's historic allowance for loan losses. Loans that met the criteria and are being accounted for in accordance with ASC 310-30, Loans and Securities Acquired with Deteriorated Credit Quality, had a book value of $23.34 million and have a fair value $18.45 million. Non-impaired loans accounted for under ASC 310-10, Overall, had a book value of $1.20 billion and have a fair value of $1.188 billion. ASC 310-30 loans have a $1.09 million fair value adjustment discount that is accretable in earnings over the weighted average life of three years using the effective yield as determined on the date of acquisition. The effective yield is periodically adjusted for changes in expected flows. ASC 310-10 loans have a $11.40 million fair value adjustment discount that is amortized into expense over the remaining term of the loans using the effective interest method, or a straight-line method if the loan is a revolving credit facility.
d.
Represents the adjustment of the book value of buildings and equipment, to their estimated fair value based on appraisals and other methods. The adjustments will be depreciated over the estimated economic lives of the assets.
e.
Represents the value of the core deposit base assumed in the acquisition. The core deposit asset was recorded as an identifiable intangible asset and will be amortized using a straight-line method over the average life of the deposit base, which is estimated to be twelve years.
f.
Primarily represents the write-off of historical goodwill and unamortized intangibles recorded by Lake Sunapee from prior acquisitions that are not carried over to the Company's balance sheet.  These adjustments are not accretable into earnings in the statement of income. Also represents the value of customer list intangibles which are accretable into earnings in the statement of income.
g.
Represents adjustments made to time deposits due to the weighted average contractual interest rates exceeding the cost of similar funding at the time of acquisition. The amount will be amortized using a straight-line method over the estimated useful life of one year.
h.
Represents the present value difference between cash flows of current debt instruments using contractual rates and those of similar borrowings on the date of acquisition. The adjustment will be amortized over the remaining four year weighted average contractual life.
i.
Represents net deferred tax assets resulting from the fair value adjustments related to the acquired assets and liabilities, identifiable intangibles, and other purchase accounting adjustments.
j.
Primarily represents the impact of change in control effects on post-retirement liabilities assumed by the Company, which are not accretable into earnings in the statement of income.
Schedule of Acquired Loan Portfolio
Information about the acquired loan portfolio subject to ASC 310-30 as of January 13, 2017 is, as follows (in thousands):
 
ASC 310-30 Loans
Gross contractual receivable amounts at acquisition
$
23,338

Contractual cash flows not expected to be collected (nonaccretable discount)
(3,801
)
Expected cash flows at acquisition
19,537

Interest component of expected cash flows (accretable discount)
(1,089
)
Fair value of acquired loans
$
18,448
Pro Forma Financial Information
Information in the following table is shown in thousands, except earnings per share:
 
 
Pro Forma (unaudited)
Nine Months Ended September 30,
 
 
2017
 
2016
Net interest income
 
$
69,846

 
$
67,670

Non-interest income
 
20,883

 
25,808

Net income
 
26,133

 
21,371

 
 
 
 
 
Pro forma earnings per share:
 
 
 
 
Basic
 
$
1.69

 
$
1.40

Diluted
 
$
1.68

 
$
1.39