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Acquisitions | 3 Months Ended
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Mar. 31, 2023
Business Combinations [Abstract] |
Acquisitions | Acquisition Great Western Bank. On September 15, 2021, the Company entered into a definitive agreement (“Agreement”) to acquire 100% of the outstanding stock of Great Western Bancorp, Inc. (“Great Western”), the parent company of Great Western Bank (“GWB”), a Sioux Falls, South Dakota based community bank with 174 banking offices across Arizona, Colorado, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota (“GWB acquisition”). The acquisition of GWB expanded the Company’s geographical footprint with an enhanced platform for future growth. Consideration for the acquisition was $1,723.3 million, consisting of the issuance of 46.9 million shares of the Company’s Class A common stock valued at $36.76 per share, which was the opening price of the Company’s Class A common stock as quoted on the NASDAQ stock market on the acquisition date. The acquisition was completed on February 1, 2022. The Company accounted for the transaction under the acquisition method of accounting in accordance with ASC 805, Business Combinations, which requires purchased assets and liabilities assumed and consideration exchanged to be recorded at their respective estimated fair values at the date of acquisition. The determination of estimated fair values required management to make certain estimates about discount rates, future expected cash flows, and market conditions at the time of the acquisition, as well as other future events that are highly subjective in nature. The following table provides the purchase price allocation as of the acquisition date and the Great Western assets acquired and liabilities assumed at their estimated fair value as of the acquisition date as amended for measurement period adjustments. We recorded the estimate of fair value based on valuations at the acquisition date. The excess value of the consideration paid over the fair value of assets acquired and liabilities assumed was recorded as goodwill. The purchase price allocation resulted in goodwill of $479.3 million, of which $31.7 million is deductible for income tax purposes. Goodwill resulting from the acquisition was allocated to the Company’s one operating segment, community banking, and consists largely of the synergies and economies of scale expected from combining the operations of Great Western and the Company. All amounts reported were finalized during the fourth quarter of 2022.
As of February 1, 2022 |  |  |  |
Assets acquired: |  |  |  |
Cash and cash equivalents |  |  |  | $ | 2,006.9 |
Investment securities |  |  |  | 2,699.0 |
Securities purchased under agreement to resell |  |  |  | 101.1 |
Loans held for sale |  |  |  | 217.0 |
Loans held for investment |  |  |  | 7,705.0 |
Allowance for credit losses |  |  |  | (59.5) |
Premises and equipment, including right of use lease assets |  |  |  | 144.7 |
OREO |  |  |  | 15.8 |
Company-owned life insurance |  |  |  | 186.6 |
Core deposit intangibles |  |  |  | 50.1 |
Customer relationship intangible |  |  |  | 22.8 |
Mortgage servicing rights |  |  |  | 1.3 |
Deferred tax assets, net |  |  |  | 60.2 |
Other assets |  |  |  | 200.8 |
Total assets acquired |  |  |  | 13,351.8 |
Liabilities assumed: |  |  |  |
Deposits |  |  |  | 11,688.0 |
Securities sold under repurchase agreements |  |  |  | 74.0 |
Accrued expenses and other liabilities |  |  |  | 110.4 |
FHLB advances |  |  |  | 122.9 |
Subordinated debt |  |  |  | 36.4 |
Subordinated debentures held by subsidiary trusts |  |  |  | 76.1 |
Total liabilities assumed |  |  |  | 12,107.8 |
Net assets acquired |  |  |  | $ | 1,244.0 |
Consideration paid: |  |  |  |
Class A common stock |  |  |  | 1,723.3 |
Total consideration paid (1) |  |  |  | $ | 1,723.3 |
Goodwill |  |  |  | $ | 479.3 |
(1) Includes $13 thousand of cash paid in lieu of fractional shares. For a description of the fair value and unpaid principal balance of loans from the GWB acquisition, as well as the methods used to determine the fair values of significant assets and liabilities, see “Note 2 – Acquisitions” in Part IV, Item 15 “Notes to Consolidated Financial Statements” within our Annual Report on Form 10-K for the year ended December 31, 2022. There were no and $65.2 million of acquisition related expenses related to the GWB acquisition for the three month periods ended March 31, 2023 and 2022, respectively. During the three months ended March 31, 2022, the Company contributed $21.5 million to the First Interstate Foundation and reimbursed an aggregate of $8.2 million of the Scott family control group’s acquisition expenses pursuant to the Agreement. The accompanying consolidated statements of income for the three months ended March 31, 2023 and 2022, include the results of operations of the acquired entity from the February 1, 2022 acquisition date. The disclosure of GWB post-acquisition revenue and net income is not practical due to the combining of certain GWB operations with and into FIB as of the acquisition date. GWB was merged with our existing bank subsidiary, FIB, contemporaneously with the closing of the parent company merger. The core system conversion was completed on May 23, 2022. The following table presents certain unaudited pro forma financial information for illustrative purposes only, for the three month period ended March 31, 2022 as if GWB had been acquired on January 1, 2021. This unaudited pro forma information combines the historical results of GWB with the Company’s consolidated historical results and includes certain adjustments reflecting the estimated impact of certain fair value adjustments for the respective periods. The pro forma information is not indicative of what would have occurred had the acquisition occurred at the beginning of the year prior to the acquisition. The unaudited pro forma information does not consider any changes to the provision for credit losses resulting from recording loan assets at fair value, cost savings, or business synergies. As a result, actual amounts would have differed from the unaudited pro forma information presented, and the differences could be significant.
|  | Three Months Ended March 31, |  |
|  | 2022 |  |  |
Total revenues |  | $ | 268.9 |  |  |  |
Net income |  | $ | 76.4 |  |  |  |
Earnings per common share (Basic) |  | $ | 0.70 |  |  |  |
Earnings per common share (Diluted) |  | $ | 0.70 |  |  |  |

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI https://asc.fasb.org/subtopic&trid=2122178 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI https://asc.fasb.org/topic&trid=2303972 + Details
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