Note 13: Acquisitions

9 Months Ended

Mar. 31, 2015

Notes

Note 13: Acquisitions

Note 13: Acquisitions

On August 5, 2014, the Company completed its acquisition of Peoples Service Company (PSC) and its subsidiary, Peoples Bank of the Ozarks (Peoples), Nixa, Missouri. Peoples was merged into the Company’s bank subsidiary, Southern Bank, in early December, 2014, in connection with the conversion of Peoples’ data system. The Company acquired Peoples primarily for the purpose of conducting commercial banking activities in markets where it believes the Company’s business model will perform well, and for the long-term value of its core deposit franchise. Through March 31, 2015, the Company incurred $678,000 in third-party acquisition-related costs. Expenses totaling $528,000 are included in noninterest expense in the Company’s consolidated statement of income for the nine months ended March 31, 2015, compared to $0 for the nine months ended March 31, 2014. Notes payable of $2.9 million were contractually required to be repaid on the date of acquisition. The goodwill of $3.0 million arising from the acquisition consists largely of synergies and economies of scale expected from combining the operations of the Company and Peoples. Total goodwill was assigned to the acquisition of the bank holding company.

The following table summarizes the consideration paid for PSC and Peoples, and the amounts of assets acquired and liabilities assumed recognized at the acquisition date:

Fair Value of Consideration Transferred
(dollars in thousands)
Cash	$12,094
Common stock, at fair value	12,331
Total consideration	$24,425
Recognized amounts of identifiable assets acquired
and liabilities assumed
Cash and Cash equivalents	$18,236
Interest bearing time deposits	9,950
Investment Securities	31,257
Loans	190,445
Premises and equipment	11,785
Identifiable intangible assets	3,000
Miscellaneous other assets	4,045
Deposits	(221,887)
Advances from FHLB	(16,038)
Subordinated debt	(4,844)
Miscellaneous other liabilities	(1,558)
Notes Payable	(2,921)
Total identifiable net assets	21,492
Goodwill	$2,955

The following unaudited pro forma condensed financial information presents the results of operations of the Company, including the effects of the purchase accounting adjustments and acquisition expenses, had the acquisition taken place at the beginning of each period:

	Three months ended		Nine months ended
	March 31,		March 31,
	2015	2014	2015	2014
(dollars in thousands except per share data)
Interest income	13,909	13,161	42,551	38,790
Interest expense	2,212	2,204	6,594	6,686
Net interest income	11,697	10,957	35,957	32,104
Provision for loan losses	837	253	2,526	1,048
Noninterest income	2,094	1,854	6,376	5,477
Noninterest expense	8,091	9,107	26,063	24,743
Income before income taxes	4,863	3,451	13,744	11,790
Income taxes	1,497	940	4,264	3,410
Net income	3,366	2,511	9,480	8,380
Dividends on preferred shares	50	50	150	150
Net income available to common stockholders	3,316	2,461	9,330	8,230
Earnings per share
Basic	$0.45	$0.34	$1.25	$1.13
Diluted	$0.44	$0.33	$1.23	$1.10
Basic weighted average shares outstanding	7,413,257	7,315,266	7,442,084	7,283,634
Diluted weighted average shares outstanding	7,603,917	7,538,606	7,630,789	7,489,342

The unaudited pro forma condensed combined financial statements do not reflect any anticipated cost savings or revenue enhancements. Accordingly, the pro forma results of operations of the Company as of and after the business combination may not be indicative of the results that actually would have occurred if the combination had been in effect during the periods presented or of the results that may be attained in the future.