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ACQUISITIONS

9 Months Ended

Sep. 30, 2023

ACQUISITIONS

ACQUISITIONS

NOTE 2 – ACQUISITIONS

On February 10, 2023, the Company completed a merger with Hometown Bancorp, Ltd. (“Hometown”), a bank holding company headquartered in Fond du Lac, Wisconsin, pursuant to the Agreement and Plan of Bank Merger (“Merger Agreement”), dated as of July 25, 2022 by and among the Company and Hometown, whereby Hometown merged with and into the Company, and Hometown Bank, Hometown’s wholly-owned banking subsidiary, merged with and into the Bank. Hometown’s principal activity was the

ownership and operation of Hometown Bank, a state-chartered banking institution that operated ten (10) branches in Wisconsin at the time of closing. The merger consideration totaled approximately $130.5 million.

Pursuant to the terms of the Merger Agreement, Hometown shareholders could elect to receive either 0.3962 shares of the Company’s common stock or $29.16 in cash for each outstanding share of Hometown common stock, subject to a maximum of 30% cash consideration in total, with cash paid in lieu of any remaining fractional share. Company stock issued totaled 1,450,272 shares valued at approximately $115.1 million, with cash of $15.4 million comprising the remainder of merger consideration.

The fair value of the assets acquired and liabilities assumed on February 10, 2023 was as follows:


		As Recorded by			Fair Value			As Recorded by
		Hometown			Adjustments			the Company
Cash, cash equivalents and securities		$	174,582		$	(1,010)		$	173,572
Other investments			1,195			—			1,195
Loans, net			406,168			(10,367)			395,801
Premises and equipment, net			7,577			(1,109)			6,468
Core deposit intangible			405			16,085			16,490
Other assets			28,011			(6,432)			21,579
Total assets acquired		$	617,938		$	(2,833)		$	615,105

Deposits		$	532,165		$	209		$	532,374
Other borrowings			5,000			(331)			4,669
Junior subordinated debentures			12,372			(1,464)			10,908
Other liabilities			469			1,144			1,613
Total liabilities assumed		$	550,006		$	(442)		$	549,564

Excess of assets acquired over liabilities assumed		$	67,932		$	(2,391)		$	65,541
Less: purchase price									130,452
Goodwill									64,911
Refinement to fair value estimates (1)									(30)
Goodwill (after refinement)								$	64,881

(1)

Refinement consists of adjustments to the initial fair value estimates of other assets and liabilities.

The Company purchased loans through the acquisition of Hometown for which there was, at the date of acquisition, more than insignificant deterioration of credit quality since origination (PCD Loans). The carrying amount of these loans at acquisition was as follows:


		February 10, 2023
Purchase price of PCD loans at acquisition		$	30,276
Allowance for credit losses on PCD loans at acquisition			5,534
Par value of PCD acquired loans at acquisition		$	35,810

The Company accounted for this transaction under the acquisition method of accounting, and thus, the financial position and results of operations of Hometown prior to the consummation date was not included in the accompanying consolidated financial statements. The accounting required assets purchased and liabilities assumed to be recorded at their respective fair values at the date of acquisition. The Company determined the fair value of core deposit intangibles, securities, premises and equipment, loans, other assets and liabilities and deposits with the assistance of third-party valuations, appraisals and third-party advisors. The estimated fair values will be subject to refinement for up to one year after deal consummation as additional information becomes available relative to the closing date fair values.

For more information concerning the Company’s acquisitions, see “Note 2 – Acquisition” in the Company’s audited consolidated financial statements included in the Company’s Annual Report.