Note 17: Acquisitions

12 Months Ended

Jun. 30, 2015

Notes

Note 17: Acquisitions

NOTE 17: 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 June 30, 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 year ended June 30, 2015, compared to $150,000 for the year ended June 30, 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. Goodwill from this transaction was assigned to the acquisition of the bank holding company, and is not expected to be deductible for tax purposes.

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:

Peoples Service Company
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	21,470
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 the period:

	For the year ended June 30,
	2015	2014
(dollars in thousands except per share data)
Interest income	$56,368	$52,734
Interest expense	8,864	8,907
Net interest income	47,504	43,827
Provision for loan losses	3,185	1,646
Noninterest income	8,774	7,449
Noninterest expense	34,066	33,159
Income before income taxes	19,027	16,471
Income taxes	5,982	4,743
Net income	13,045	11,728
Dividends on preferred shares	200	200
Net income available to common stockholders	$12,845	$11,528
Earnings per share
Basic	$1.72	$1.58
Diluted	$1.70	$1.61
Basic weighted average shares outstanding - split adjusted	7,469,027	7,308,146
Diluted weighted average shares outstanding - split adjusted	7,573,027	7,146,307