Acquisition

On October 1, 2015, the Company completed the acquisition of Columbus, Ohio based First Community Bank for $14.75 million cash. Upon closing of the transaction, First Community Bank merged into First Commonwealth Bank. First Community Bank operated four branch locations which after the merger operate under the First Commonwealth name. The acquisition expanded the Company’s market into the central Ohio area.

The table below summarizes the net assets acquired (at fair value) and consideration transferred in connection with the First Community acquisition:



Consideration Paid
Cash Paid to shareholders	$	14,750
Total consideration paid	14,750

Fair Value of Assets Acquired
Cash and cash equivalents	11,217
Investment Securities	25,980
FHLB Stock	832
Loans	61,173
Premises and other equipment	1,801
Core deposit intangible	172
Other real estate	816
Other assets	1,115
Total assets acquired	103,106

Fair Value of Liabilities Assumed
Deposits	90,311
Other Liabilities	1,115
Total liabilities assumed	91,426

Total Fair Value of Identifiable Net Assets	11,680

Goodwill	$	3,070

The Company determined that this acquisition constitutes a business combination as defined in FASB ASC Topic 805, “Business Combinations.” Accordingly, as of the date of the acquisition, the Company recorded the assets acquired and liabilities assumed at fair value. The Company determined fair values in accordance with the guidance provided in FASB ASC Topic 820, “Fair Value Measurements and Disclosures.” Acquired loans were recorded at fair value with no carryover of the related allowance for loan losses. Fair value is established by discounting the expected future cash flows with a market discount rate for like maturities and risk instruments. At the date of acquisition, none of the loans were accounted for under the guidance of ASC Topic 310-30, “Receivables-Loans and Debt Securities Acquired with Deteriorated Credit Quality.” We acquired $62.5 million in gross loans and recognized a net combined yield and credit market adjustment of $1.3 million.

The fair value of the acquired assets and liabilities noted in the table may change during the provisional period, which may last up to twelve months subsequent to the acquisition date. The Company may obtain additional information to refine the valuation of the acquired assets and liabilities and adjust the recorded fair value, although such adjustments are not expected to be significant. Adjustments recorded to the acquired assets and liabilities will be applied prospectively in accordance with ASU No. 2015-16, “Business Combinations.”

Costs related to the acquisition totaled $0.9 million. These amounts were expensed as incurred and are recorded as a merger and acquisition related expense in the Consolidated Statements of Income.