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Acquisitions and Preliminary Purchase Price Allocation Acquisitions and Preliminary Purchase Price Allocation | 12 Months Ended
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Dec. 31, 2018
Business Combinations [Abstract] |
Acquisitions and Preliminary Purchase Price Allocation | ACQUISITIONS AND PRELIMINARY PURCHASE PRICE ALLOCATION On December 7, 2018, the Company acquired 100% of the outstanding common stock of Poage Bankshares, Inc., the parent company of Town Square Bank (collectively, "Poage"). The acquisition of Poage was structured as a stock transaction in which the Company issued approximately 1.1 million shares, valued at approximately $82.6 million, or $24.22 per share of Poage common stock. On December 7, 2018, the Company acquired 100% of the outstanding common stock of Farmers Deposit Bancorp, Inc., the parent company of Farmers Deposit Bank (collectively, "Farmers Deposit"). The acquisition of Farmers Deposit was structured as a cash transaction valued at $24.9 million, or $1,174.14 per share of Farmers Deposit common stock. The Company accounted for both acquisitions using the acquisition method pursuant to "Topic 805 Business Combinations" of the FASB Accounting Standards Codification. The acquisition method requires the acquirer to recognize the assets acquired and the liabilities assumed at their fair values as of the acquisition date. The following table summarizes the estimated fair value of the assets acquired and liabilities assumed as of the date of acquisition (in thousands):
| Farmers |  |
| Deposit | Poage | Total
Consideration: |  |  |
Cash | $ | 24,900 |  | $ | 16 |  | $ | 24,916 |
Common stock | — |  | 82,565 |  | 82,565 |
Stock option buyout | — |  | 1,355 |  | 1,355 |
| 24,900 |  | 83,936 |  | 108,836 |
Identifiable assets: |  |  |
Cash and cash equivalents | 4,209 |  | 34,288 |  | 38,497 |
Investment securities | 46,235 |  | 72,321 |  | 118,556 |
Loans | 58,477 |  | 304,023 |  | 362,500 |
Bank owned life insurance | — |  | 7,439 |  | 7,439 |
Premises and equipment | 768 |  | 4,547 |  | 5,315 |
Deferred tax assets, net | (188 | ) | 2,300 |  | 2,112 |
Other assets | 2,302 |  | 8,799 |  | 11,101 |
Total identifiable assets | 111,803 |  | 433,717 |  | 545,520 |
Identifiable liabilities: |  |  |
Deposits | 92,241 |  | 379,285 |  | 471,526 |
Short-term borrowings | 2,025 |  | — |  | 2,025 |
Long-term debt | — |  | 4,053 |  | 4,053 |
Other liabilities | 709 |  | 3,130 |  | 3,839 |
Total identifiable liabilities | 94,975 |  | 386,468 |  | 481,443 |
Net identifiable assets | 16,828 |  | 47,249 |  | 64,077 |
Goodwill | 4,738 |  | 28,633 |  | 33,371 |
Core deposit intangible | 3,334 |  | 8,054 |  | 11,388 |
| $ | 24,900 |  | $ | 83,936 |  | $ | 108,836 |
Acquired Loans The following table presents information regarding the purchased credit-impaired and noncredit-impaired loans acquired in conjunction with both acquisitions (in thousands):
| Farmers |  |
| Deposit | Poage | Total
Acquired Credit-Impaired |  |  |
Contractually required principal and interest | $ | — |  | $ | 25,315 |  | $ | 25,315 |
Contractual cash flows not expected to be collected (non-accretable difference) | — |  | (13,977 | ) | (13,977 | )
Expected cash flows | — |  | 11,338 |  | 11,338 |
Interest component of expected cash flows (accretable difference) | — |  | (2,375 | ) | (2,375 | )
Estimated fair value of purchased credit impaired loans acquired | $ | — |  | $ | 8,963 |  | $ | 8,963 |
Acquired NonCredit-Impaired |  |  |
Outstanding balance | $ | 58,949 |  | $ | 295,425 |  | $ | 354,374 |
Less: fair value adjustment | (472 | ) | (365 | ) | (837 | )
Fair value of acquired noncredit-impaired loans | $ | 58,477 |  | $ | 295,060 |  | $ | 353,537 |
Acquired Deposits The fair values of non-time deposits approximated their carrying value at the acquisition date. For time deposits, the fair values were estimated based on discounted cash flows, using interest rates that are currently being offered compared to the contractual interest rates. Based on this analysis, management recorded a premium on time deposits acquired of $0.1 million and $1.7 million for the Farmers Deposit and Poage acquisitions, respectively, each of which is being amortized over 5 years. Core Deposit Intangible The Company believes that the customer relationships with the deposits acquired have an intangible value. In connection with the acquisitions, the Company recorded a core deposit intangible asset of $3.3 million and $8.1 million for Farmers Deposit and Poage, respectively. Each of the core deposit intangible assets represent the value that the acquiree had with their deposit customers. The fair value was estimated based on a discounted cash flow methodology that considered type of deposit, deposit retention and the cost of the deposit base. The core deposit intangibles are being amortized over 10 years. Goodwill Under GAAP, management has up to twelve months following the date of the acquisition to finalize the fair value of acquired assets and liabilities. The measurement period ends as soon as the Company receives information it was seeking about facts and circumstances that existed as of the acquisition date or learns more information is not obtainable. Any subsequent adjustments to the fair value of the acquired assets and liabilities, intangible assets or other purchase accounting adjustments will result in adjustments to the goodwill recorded. Given the form of the respective transactions, the $4.7 million goodwill preliminarily recorded in conjunction with the Farmers Deposit acquisition is expected to be deductible for tax purposes, while the $28.6 million goodwill preliminarily recorded in conjunction with the Poage acquisition is not expected to be deductible for tax purposes. Merger Related Costs During the year ended December 31, 2018, the Company incurred $13.3 million of merger-related costs in connection with the acquisitions of Farmers Deposit and Poage. These costs were primarily for severance ($3.2 million), professional fees ($3.7 million) and data processing costs ($5.2 million). Also included in merger related costs were asset write-down charges of $0.5 million, pertaining to the two existing City National branches that will be merged into existing former Poage branches during 2019.

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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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