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ACQUISITIONS | 6 Months Ended
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Jun. 30, 2025
ACQUISITIONS |
ACQUISITIONS | NOTE B: ACQUISITIONS Pending Acquisition On June 25, 2025, the Company, through its subsidiary Community Bank, N.A. (“CBNA”), entered into an agreement with Santander Bank, N.A. (“Santander”) to acquire seven branch locations in the Allentown, Pennsylvania area including certain branch-related loans and deposits. In addition, CBNA’s wholly-owned subsidiary, Nottingham Investment Services, Inc., has agreed to purchase related wealth management relationships from Santander’s affiliate, Santander Securities LLC. The Company is expected to acquire approximately $33.0 million of loans and assume approximately $600.0 million of deposits. Total cash consideration will include a deposit premium of 8.0%, or approximately $48.0 million. The acquisition is expected to be completed in the fourth quarter of 2025, subject to customary regulatory approval. The Company expects to incur certain one-time, transaction-related costs in connection with the pending acquisition. Current and Prior Period Acquisitions On April 1, 2025, the Company, through its subsidiary Benefit Plans Administrative Services, LLC (“BPA”), completed the acquisition of certain assets of a New York based financial services company for $0.1 million in cash and contingent consideration with a fair value at acquisition of $1.8 million. The fair value of the contingent consideration at the acquisition date was determined by forecasting estimated amounts of retained revenue for each applicable period and applying the appropriate factor to those amounts based on the purchase agreement. The effects of the acquired assets are included in the consolidated financial statements from that date. The contingent consideration arrangement requires additional consideration to be paid by the Company based on a percentage of retained revenue over a two year period following the acquisition date. Net assets acquired were $1.5 million of customer list intangible assets and the Company recorded $0.4 million of goodwill in conjunction with the acquisitions. The operations of this acquisition have been integrated into the Company and discrete reporting of revenues and direct expenses for the three and six months ended June 30, 2025 and 2024 is not practicable. On February 1, 2025, BPA completed the acquisition of certain assets of two financial services companies based in New York and Kansas. Total aggregate consideration was $0.2 million in cash plus contingent consideration with an estimated fair value of $1.7 million at acquisition date. The fair value of the contingent consideration at the acquisition date was determined by forecasting estimated amounts of retained revenue for each applicable period and applying the appropriate factor to those amounts based on the purchase agreement. The effects of the acquired assets are included in the consolidated financial statements from that date. The contingent consideration arrangements require additional consideration to be paid by the Company based on a percentage of retained revenue over periods ranging from two to four years after the acquisition date. Net assets acquired were $0.7 million, including $0.7 million of customer list intangible assets, and the Company recorded $1.3 million of goodwill in conjunction with the acquisitions. The operations of these acquisitions have been integrated into the Company and discrete reporting of revenues and direct expenses for the three and six months ended June 30, 2025 and 2024 is not practicable. During 2024, the Company, through its subsidiary OneGroup NY, Inc. (“OneGroup”) completed acquisitions of certain insurance agencies headquartered in New York and Florida for aggregate consideration of $9.6 million in cash plus contingent consideration with an estimated fair value of $0.7 million at the respective acquisition dates. The effects of the acquired assets and liabilities are included in the consolidated financial statements from the date of acquisition. The contingent consideration arrangements require additional consideration to be paid by the Company based on a percentage of retained revenue two years after the date of acquisition, up to a maximum amount of $1.4 million. The fair value of the contingent consideration of $0.7 million at the acquisition date was estimated based on projected retained revenue levels. Net assets acquired were $6.5 million, including $6.8 million of customer list intangible assets, and the Company recorded $3.8 million of goodwill in conjunction with the acquisitions. The operations of these acquisitions have been integrated into the Company and discrete reporting of revenues and direct expenses for the three and six months ended June 30, 2025 and 2024 is not practicable. On February 1, 2024, the Company, through its subsidiary BPA, completed the acquisition of certain assets of Creative Plan Designs Limited (“CPD”), a financial services company that provides employee benefit plan design, administration and consulting services. Total consideration was $5.9 million in cash plus contingent consideration with an estimated fair value of $3.0 million at acquisition date. The effects of the acquired assets are included in the consolidated financial statements from that date. Net assets acquired were $4.5 million, including $5.5 million of customer list intangible assets, and the Company recorded $4.4 million of goodwill in conjunction with the acquisition. The operations of this acquisition have been integrated into the Company and discrete reporting of revenues and direct expenses for the three and six months ended June 30, 2025 and 2024 is not practicable. The acquisition of CPD includes contingent consideration arrangements that require additional consideration to be paid by the Company based on the future revenue levels of CPD over approximately three years and a contract holdback payment. The contract holdback will be paid upon satisfaction of certain customer retention requirements and will be prorated based on actual results. The contract holdback amount was estimated at the maximum level of $1.5 million at the acquisition date. The revenue-based contingent consideration is payable in four installments, based on future revenue levels of CPD in 2024, 2025, 2026 and the first quarter of 2027. The range of undiscounted amounts the Company could pay under the contingent consideration agreement is between zero and $2.0 million for the first three payments in total and a variable amount for the fourth payment, which is between zero and a percentage of annualized revenue above a threshold for a particular revenue stream in the first quarter of 2027. The fair value of the contingent consideration recognized on the acquisition date of $3.0 million was estimated by applying the income approach, a measure that is based on significant Level 3 inputs not readily observable in the market. Key assumptions at the date of acquisition include (1) a discount rate range of 15.1% to 19.1% to present value the payments and (2) probability of achievement of future revenue levels of 82%. The following table summarizes the estimated fair value of the assets acquired and liabilities assumed: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | 2025 | ​ | 2024
(000s omitted) |  | Other(1) |  | CPD |  | Other(2) |  | Total
Consideration: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Cash | ​ | $ | 302 | ​ | $ | 5,861 | ​ | $ | 9,599 | ​ | $ | 15,460
Contingent consideration | ​ | ​ | 3,499 | ​ | ​ | 3,066 | ​ | ​ | 750 | ​ | ​ | 3,816
Total net consideration | ​ | ​ | 3,801 | ​ | ​ | 8,927 | ​ | ​ | 10,349 | ​ | ​ | 19,276
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Recognized amounts of identifiable assets acquired and liabilities assumed: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Cash and cash equivalents | ​ | ​ | 0 | ​ | ​ | 0 | ​ | ​ | 33 | ​ | ​ | 33
Premises and equipment, net | ​ | ​ | 10 | ​ | ​ | 6 | ​ | ​ | 156 | ​ | ​ | 162
Other assets | ​ | ​ | 84 | ​ | ​ | 26 | ​ | ​ | 384 | ​ | ​ | 410
Other intangibles | ​ | ​ | 2,169 | ​ | ​ | 5,500 | ​ | ​ | 6,849 | ​ | ​ | 12,349
Other liabilities | ​ | ​ | (131) | ​ | ​ | (990) | ​ | ​ | (916) | ​ | ​ | (1,906)
Total identifiable assets, net | ​ | ​ | 2,132 | ​ | ​ | 4,542 | ​ | ​ | 6,506 | ​ | ​ | 11,048
Goodwill | ​ | $ | 1,669 | ​ | $ | 4,385 | ​ | $ | 3,843 | ​ | $ | 8,228
(1) | Includes amounts for BPA acquisitions completed as of June 30, 2025.
(2) | Includes amounts for OneGroup acquisitions completed in 2024.
The other intangibles related to the CPD acquisition are being amortized using an accelerated method over an estimated useful life of 12 years. The other intangibles related to the BPA acquisitions completed through the end of the second quarter of 2025 and the OneGroup acquisitions completed in 2024 are being amortized using an accelerated method over an estimated useful life of eight years. The goodwill, which is not amortized for book purposes, was assigned to the Employee Benefits Services segment for the BPA acquisitions completed through the end of the second quarter of 2025 and the CPD acquisition, and the Insurance segment for the OneGroup acquisitions completed in 2024. The goodwill arising from one of the OneGroup acquisitions in 2024 is not deductible for tax purposes, while the goodwill arising from the BPA acquisitions completed through the end of the second quarter of 2025 and the remaining OneGroup acquisitions completed in 2024 is deductible for tax purposes.

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