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Business Combinations | 3 Months Ended
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Mar. 31, 2020
Business Combinations [Abstract] |
Business Combinations | Business Combinations Citizens First Acquisition Effective July 1, 2019, the Company acquired Citizens First Corporation (“Citizens First”) and its subsidiary, Citizens First Bank, Inc., pursuant to an Agreement and Plan of Reorganization dated February 22, 2019. The acquisition was accomplished by the merger of Citizens First with and into the Company, immediately followed by the merger of Citizens First Bank with and into the Company’s subsidiary bank, German American Bank. Citizens First Bank operated 8 banking offices in Barren, Hart, Simpson and Warren Counties in Kentucky. Citizens First's consolidated assets and equity (unaudited) as of July 1, 2019 totaled $456.0 million and $49.8 million, respectively. The Company accounted for the transaction under the acquisition method of accounting which means that the acquired assets and liabilities were recorded at fair value at the date of acquisition. The fair value estimates included in these financial statements are based on preliminary valuations; certain loan and deferred tax measurements have not been finalized and are subject to change. The Company does not expect material variances from these estimates and expects that final valuation estimates will be completed prior to June 30, 2020. In accordance with ASC 805, the Company has expensed approximately $3.3 million of direct acquisition costs and recorded $17.1 million of goodwill and $4.5 million of intangible assets. The intangible assets are related to core deposits and are being amortized over 8 years. For tax purposes, goodwill totaling $17.1 million is non-deductible but will be evaluated annually for impairment. The following table summarizes the fair value of the total consideration transferred as a part of the Citizens First acquisition as well as the fair value of identifiable assets acquired and liabilities assumed as of the effective date of the transaction.
Consideration |  |  |
Cash for Options and Fractional Shares |  | $ | 216 |
Cash Consideration |  | 15,294 |
Equity Instruments |  | 50,118 |
Fair Value of Total Consideration Transferred |  | $ | 65,628 |
Recognized Amounts of Identifiable Assets Acquired and Liabilities Assumed: |  |
Cash |  | $ | 21,055 |
Interest-bearing Time Deposits with Banks |  | 2,231 |
Securities |  | 43,839 |
Loans |  | 356,970 |
Stock in FHLB of Indianapolis and Other Restricted Stock, at Cost |  | 2,065 |
Premises, Furniture & Equipment |  | 10,772 |
Other Real Estate |  | — |
Intangible Assets |  | 4,547 |
Company Owned Life Insurance |  | 8,796 |
Accrued Interest Receivable and Other Assets |  | 3,863 |
Deposits - Non-interest Bearing |  | (52,521 | )
Deposits - Interest Bearing |  | (318,966 | )
FHLB Advances and Other Borrowings |  | (31,068 | )
Accrued Interest Payable and Other Liabilities |  | (3,044 | )
Total Identifiable Net Assets |  | $ | 48,539 |
Goodwill |  | $ | 17,089 |
Under the terms of the merger agreement, each Citizens First common shareholder of record at the effective time of the merger (other than those holding shares in the Citizens First Bank 401(k) Profit Sharing Plan (the "CFB 401(k) Plan")) became entitled to receive a cash payment of $5.80 and a 0.6629 share of common stock of the Company for each of their former shares of Citizens First common stock. In addition, as record holder of shares of Citizens First common stock held in the CFB 401(k) Plan, the plan administrator was entitled to receive a cash payment of $25.77 for each share held by the CFB 401(k) Plan, which amount is equal to (i) the exchange ratio multiplied by the closing trading price of the Company's common stock on June 28, 2019, plus (ii) $5.80. As a result, in connection with the closing of the merger on July 1, 2019, the Company issued approximately 1,664,000 shares of its common stock to the former shareholders of Citizens First and paid cash consideration in the aggregate amount of $15.5 million. This acquisition is consistent with the Company's strategy to build a regional presence in central and western Kentucky. The acquisition offers the Company the opportunity to increase profitability by introducing existing products and services to the acquired customer base as well as add new customers in the expanded region. The fair value of net assets acquired includes fair value adjustments to certain receivables that were not considered impaired as of the acquisition date. The fair value adjustments were determined using discounted cash flows. However, the Company believes that all contractual cash flows related to these financial instruments will be collected. As such, these receivables were not considered impaired at the acquisition date and were not subject to the guidance relating to purchased credit impaired loans, which are loans that have shown evidence of credit deterioration since origination. Receivables acquired that were not subject to these requirements include non-impaired loans and customer receivables with a fair value of $349.9 million and unpaid principal of $353.3 million on the date of acquisition. The following table presents unaudited pro forma information as if the acquisition had occured on January 1, 2019 after giving effect to certain adjustments. The unaudited pro forma information for the three months ended March 31, 2020 and 2019 includes adjustments for interest income on loans and securities acquired, amortization of intangibles arising from the transaction, interest expense on deposits and borrowings acquired, and the related income tax effects. The unaudited pro forma financial information is not necessarily indicative of the results of operations that would have occurred had the transaction been effected on the assumed date.
|  | Unaudited Pro Forma Three Months Ended 3/31/2020 |  | Unaudited Pro Forma Three Months Ended 3/31/2019
Net Interest Income |  | $ | 36,256 |  |  | $ | 38,139 |
Non-interest Income |  | 14,081 |  |  | 12,503 |
Total Revenue |  | 50,337 |  |  | 50,642 |
Provision for Loan Losses Expense |  | 5,150 |  |  | 675 |
Non-interest Expense |  | 30,265 |  |  | 30,423 |
Income Before Income Taxes |  | 14,922 |  |  | 19,544 |
Income Tax Expense |  | 2,403 |  |  | 3,045 |
Net Income |  | $ | 12,519 |  |  | $ | 16,499 |
Earnings Per Share and Diluted Earnings Per Share |  | $ | 0.47 |  |  | $ | 0.62 |
The above pro forma financial information includes approximately $1,351 of net income and $3,979 of total revenue related to the operations of Citizens First during the three months ended March 31, 2020.

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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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