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Business Combinations | 3 Months Ended
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Mar. 31, 2020
Business Combinations [Abstract] |
Business Combination Disclosure [Text Block] | Business Combinations CAB Financial Corporation On April 1, 2019, CAB Financial Corporation, a South Carolina corporation, merged with and into Park, with Park continuing as the surviving entity pursuant to the Agreement and Plan of Merger and Reorganization (the "CABF Merger Agreement"), dated as of September 12, 2018, by and between Park and CABF. Immediately following the CABF merger into Park, Carolina Alliance Bank, a South Carolina state-chartered bank and a wholly-owned subsidiary of CABF, was merged with and into PNB, with PNB as the surviving bank. In accordance with the transactions completed by the CABF Merger Agreement (the "Carolina Alliance acquisition"), CABF shareholders received for each share of their CABF common stock (i) $3.80 in cash (the cash consideration) and (ii) 0.1378 of a Park common share (the stock consideration). CABF stock options and restricted stock awards were fully vested (with any performance-based vesting condition deemed satisfied) and canceled and converted automatically into the right to receive merger consideration. Purchase consideration consisted of 1,037,205 Park common shares, valued at $98.3 million, and $28.6 million in cash to acquire 100% of CABF's outstanding shares of common stock. The Carolina Alliance acquisition is expected to provide additional revenue growth and geographic diversification. Carolina Alliance's results of operations were included in Park's results beginning April 1, 2019. For the three months ended March 31, 2020 and 2019, Park recorded merger-related expenses of $234,000 and $205,000, respectively, associated with the Carolina Alliance acquisition. Goodwill of $46.9 million arising from the Carolina Alliance acquisition consisted largely of synergies and the cost savings resulting from the combining of the operations of PNB and Carolina Alliance. The goodwill is not deductible for income tax purposes as the transaction was accounted for as a tax-free exchange. The following table summarizes the consideration paid in the Carolina Alliance acquisition and the amounts of the assets acquired and liabilities assumed at their fair value:
(in thousands) |
Consideration |
Cash | $ | 28,630 |
Park common shares | 98,275 |
Fair value of total consideration transferred | $ | 126,905 |
Recognized amounts of identifiable assets acquired and liabilities assumed |
Cash and cash equivalents | $ | 23,799 |
Securities | 97,606 |
Loans | 578,577 |
Premises and equipment | 8,337 |
Core deposit intangibles | 8,207 |
Other assets | 32,123 |
Total assets acquired | 748,649 |
Deposits | 632,649 |
Other liabilities | 35,951 |
Total liabilities assumed | 668,600 |
Net identifiable assets | 80,049 |
Goodwill | $ | 46,856 |
Park accounted for the Carolina Alliance acquisition using the acquisition method of accounting and accordingly, assets acquired, liabilities assumed and consideration exchanged were recorded at estimated fair value on the acquisition date, in accordance with FASB ASC Topic 805, Business Combinations. The fair value of net assets acquired includes fair value adjustments to loans that were not considered impaired as of the acquisition date. The fair value adjustments were determined using discounted contractual cash flows. However, Park believed that all contractual cash flows related to these loans would be collected. As such, these loans were not considered impaired at the acquisition date and were not subject to the guidance relating to purchased credit impaired loans which have shown evidence of credit deterioration since origination. Loans acquired that were not subject to these requirements included non-impaired loans with a fair value and gross contractual amounts receivable of $560.2 million and $572.6 million, respectively, on the date of acquisition. The table below presents information with respect to the fair value of acquired loans as well as their book balance at the acquisition date.
(in thousands) | Book Balance |  | Fair Value
Commercial, financial and agricultural | $ | 80,895 |  |  | $ | 80,580 |
Commercial real estate | 281,425 |  |  | 273,855 |
Construction real estate: |  |  |
Commercial | 43,106 |  |  | 42,176 |
Mortgage | 11,130 |  |  | 10,633 |
Residential real estate: |  |  |
Commercial | 48,546 |  |  | 48,684 |
Mortgage | 30,519 |  |  | 30,969 |
HELOC | 40,825 |  |  | 39,853 |
Consumer | 4,813 |  |  | 4,647 |
Leases | 28,589 |  |  | 28,781 |
Purchased credit impaired | 19,850 |  |  | 18,399 |
Total loans | $ | 589,698 |  |  | $ | 578,577 |
The following table presents supplemental pro forma information as if the Carolina Alliance acquisition had occurred as of January 1, 2019. The unaudited pro forma information includes adjustments for interest income on loans and securities acquired, amortization of intangibles arising from the respective transactions, depreciation expense on property acquired, interest expense on deposits acquired, and the related tax effects. The pro forma information is not necessarily indicative of the results of operations that would have occurred had the transactions been effected on the assumed date.
| Three months ended March 31, |
(dollars in thousands, except per share data) | 2020 | 2019
Net interest income | $ | 76,254 |  | $ | 75,114 |
Net income | $ | 22,540 |  | $ | 27,220 |
Basic earnings per share | $ | 1.38 |  | $ | 1.63 |
Diluted earnings per share | $ | 1.37 |  | $ | 1.62 |

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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