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ACQUISITIONS (Tables) | 6 Months Ended
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Jun. 30, 2020
ACQUISITIONS [Abstract] |
Estimated Fair Value of Assets Acquired and Liabilities Assumed | The following table summarizes the estimated fair value of the assets acquired and liabilities assumed after considering the measurement period adjustments described above:
|  | 2020 |  |  | 2019 |
(000s omitted) |  | Steuben |  |  | Kinderhook |  |  | Other (1) |  |  | Total |
Consideration paid : |  |  |  |  |  |  |  |  |  |  |  |
Cash |  | $ | 21,613 |  |  | $ | 93,384 |  |  | $ | 1,650 |  |  | $ | 95,034 |
Community Bank System, Inc. common stock |  |  | 76,942 |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Total net consideration paid |  |  | 98,555 |  |  |  | 93,384 |  |  |  | 1,650 |  |  |  | 95,034 |
Recognized amounts of identifiable assets acquired and liabilities assumed: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  |  | 55,973 |  |  |  | 90,381 |  |  |  | 0 |  |  |  | 90,381 |
Investment securities |  |  | 180,497 |  |  |  | 39,770 |  |  |  | 0 |  |  |  | 39,770 |
Loans, net of allowance for credit losses on PCD loans (2) |  |  | 339,164 |  |  |  | 479,877 |  |  |  | 0 |  |  |  | 479,877 |
Premises and equipment, net |  |  | 8,307 |  |  |  | 13,970 |  |  |  | 0 |  |  |  | 13,970 |
Accrued interest and fees receivable |  |  | 2,712 |  |  |  | 1,130 |  |  |  | 0 |  |  |  | 1,130 |
Other assets |  |  | 19,303 |  |  |  | 14,109 |  |  |  | 0 |  |  |  | 14,109 |
Core deposit intangibles |  |  | 2,928 |  |  |  | 3,573 |  |  |  | 0 |  |  |  | 3,573 |
Other intangibles |  |  | 1,196 |  |  |  | 0 |  |  |  | 1,650 |  |  |  | 1,650 |
Deposits |  |  | (516,269 | ) |  |  | (568,161 | ) |  |  | 0 |  |  |  | (568,161 | )
Other liabilities |  |  | (6,436 | ) |  |  | (2,922 | ) |  |  | 0 |  |  |  | (2,922 | )
Other Federal Home Loan Bank borrowings |  |  | (6,000 | ) |  |  | (2,420 | ) |  |  | 0 |  |  |  | (2,420 | )
Subordinated notes payable |  |  | 0 |  |  |  | (13,831 | ) |  |  | 0 |  |  |  | (13,831 | )
Subordinated debt held by unconsolidated subsidiary trusts |  |  | (2,062 | ) |  |  | (2,062 | ) |  |  | 0 |  |  |  | (2,062 | )
Total identifiable assets, net |  |  | 79,313 |  |  |  | 53,414 |  |  |  | 1,650 |  |  |  | 55,064 |
Goodwill |  | $ | 19,242 |  |  | $ | 39,970 |  |  | $ | 0 |  |  | $ | 39,970 |
(1) Includes amounts related to both acquisitions completed by CISI in 2019. (2) Acquisition-related allowance for credit losses on purchased credit deteriorated (“PCD”) loans applicable beginning in 2020.
Loans Acquired | The Company has acquired loans from Steuben for which there was evidence of a more than insignificant deterioration in credit quality since origination. There were no investment securities acquired from Steuben for which there was evidence of a more than insignificant deterioration in credit quality since origination. The carrying amount of those loans is as follows at the date of acquisition:
(000s omitted) |  | PCD Loans |
Par value of PCD loans at acquisition |  | $ | 24,198 |
Allowance for credit losses at acquisition |  |  | (528 | )
Non-credit discount at acquisition |  |  | (80 | )
Fair value of PCD loans at acquisition |  | $ | 23,590 |
The following is a summary of the remaining loans acquired from Steuben for which there was no evidence of a more-than-insignificant deterioration in credit quality since origination at the date of acquisition:
(000s omitted) |  | Non-PCD Loans |
Contractually required principal and interest at acquisition |  | $ | 416,446 |
Contractual cash flows not expected to be collected |  |  | (3,177 | )
Expected cash flows at acquisition |  |  | 413,269 |
Interest component of expected cash flows |  |  | (97,695 | )
Fair value of non-PCD loans at acquisition |  | $ | 315,574 |
The following is a summary of the loans acquired from Kinderhook at the date of acquisition:
(000s omitted) |  | Acquired Impaired Loans |  |  | Acquired Non-impaired Loans |  |  | Total Acquired Loans |
Contractually required principal and interest at acquisition |  | $ | 13,350 |  |  | $ | 636,384 |  |  | $ | 649,734 |
Contractual cash flows not expected to be collected |  |  | (4,176 | ) |  |  | (5,472 | ) |  |  | (9,648 | )
Expected cash flows at acquisition |  |  | 9,174 |  |  |  | 630,912 |  |  |  | 640,086 |
Interest component of expected cash flows |  |  | (551 | ) |  |  | (159,658 | ) |  |  | (160,209 | )
Fair value of acquired loans |  | $ | 8,623 |  |  | $ | 471,254 |  |  | $ | 479,877 |
Pro Forma Financial Information | The pro forma information set forth below reflects the historical results of Steuben combined with the Company’s consolidated statements of income with adjustments related to (a) certain purchase accounting fair value adjustments and (b) amortization of customer lists and core deposit intangibles. Acquisition-related expenses totaling $3.3 million and $3.6 million for the three and six months ended June 30, 2020 related to Steuben were included in the pro forma information as if they were incurred in the first quarter of 2019.
|  | Pro Forma (Unaudited) Three Months Ended |  |  | Pro Forma (Unaudited) Six Months Ended |
(000’s omitted) |  | June 30, 2020 |  |  | June 30, 2019 |  |  | June 30, 2020 |  |  | June 30, 2019 |
Total revenue, net of interest expense |  | $ | 149,576 |  |  | $ | 154,878 |  |  | $ | 304,088 |  |  | $ | 303,152 |
Net income |  |  | 39,072 |  |  |  | 46,447 |  |  |  | 80,848 |  |  |  | 86,774 |

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- Definition Tabular disclosure of the amounts recognized as of the acquisition date for each major class of assets acquired and liabilities assumed. May include but not limited to the following: (a) acquired receivables; (b) contingencies recognized at the acquisition date; and (c) the fair value of noncontrolling interests in the acquiree. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=121647850&loc=d3e4845-128472 + Details
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