v2.4.0.6
Business Combinations (Notes)
 12 Months Ended
Dec. 31, 2012
Business Combinations [Abstract]  
Business Combinations
Business Combinations

On September 10, 2010, First Mid Bank completed its acquisition of 10 Illinois bank branches (the “Branches”) from First Bank, a Missouri state chartered bank, located in Bartonville, Bloomington, Galesburg, Knoxville, Peoria and Quincy, Illinois. The acquisition was consistent with the Company’s strategy to expand its overall service area and bring added convenience to its customers by offering banking capabilities in 25 Illinois communities. In accordance with the Branch Purchase and Assumption Agreement, dated as of May 7, 2010, by and between First Mid Bank and First Bank, First Mid Bank acquired approximately $336 million of deposits, approximately $135 million of performing loans and the bank facilities and certain other assets of the Branches.  First Mid Bank paid First Bank (a) the principal amount of the loans acquired, (b) the net book value, or approximately $5.3 million, for the bank facilities and certain assets located at the Branches, (c) a deposit premium of 4.77% on the core deposits acquired, which equated to approximately $15.6 million, and (d) approximately $1.8 million for the cash on hand at the Branches, with proration of certain periodic expenses.  The acquisition settled by First Bank paying cash of $178.3 million to First Mid Bank for the difference between these amounts and the total deposits assumed.  The purchase was accounted for under the acquisition method in accordance with ASC 805, “Business Combinations,” and accordingly the assets and liabilities were recorded at their fair values on the date of acquisition.

The following table summarizes the estimated fair values of assets acquired and liabilities assumed at the date of acquisition (in thousands).
 
 
 
Acquired
Book Value
 
Fair Value Adjustments
 
As Recorded by
First Mid Bank
Assets
 
 
 
 
 
 
Cash
 
$
180,074

 
$
—

 
$
180,074

Loans
 
135,219

 
(2,102
)
 
133,117

Premises and equipment
 
5,266

 
7,685

 
12,951

Goodwill
 
—

 
8,390

 
8,390

Core deposit intangible
 
—

 
3,050

 
3,050

Other assets
 
488

 
—

 
488

Total assets acquired
 
$
321,047

 
$
17,023

 
$
338,070

Liabilities
 
 

 
 

 
 

Deposits
 
$
336,016

 
$
1,413

 
$
337,429

Securities sold under agreements to repurchase
 
126

 
—

 
126

Other liabilities
 
515

 
—

 
515

Total liabilities assumed
 
$
336,657

 
$
1,413

 
$
338,070


 


The Company recognized $1,154,000 of costs related to completion of the acquisition during 2010. These acquisition costs were included in other expense. The difference between the fair value and acquired value of the purchased loans of $2,102,000 is being accreted to interest income over the remaining term of the loans. The difference between the fair value and acquired value of the assumed time deposits of $1,413,000 is being amortized to interest expense over the remaining term of the time deposits. The core deposit intangible asset, with a fair value of $3,050,000, is being amortized on an accelerated basis over its estimated life of ten years.

The following unaudited pro forma condensed combined financial information presents the results of operations of the Company, including the effects of the purchase accounting adjustments and acquisition expenses, had the acquisition taken place at the beginning of 2010 (in thousands). The actual results of operations of the Company include all of the effects of the purchase accounting adjustments and acquisition expenses and, accordingly, no pro forma information is provided.
 
For the year ended
 
December 31, 2010
Net interest income
$
46,425

Provision for loan losses
4,737

Non-interest income
14,686

Non-interest expense
41,614

Income before income taxes
14,760

Income tax expense
4,527

Net income
$
10,233

Dividends on preferred shares
2,240

Net income available to common stockholders
$
7,993

 
 

Earnings per share
 

Basic
$1.31
Diluted
$1.31
 
 

Basic weighted average shares outstanding
6,092,670

Diluted weighted average shares outstanding
6,116,727




The unaudited pro forma condensed combined financial statements do not reflect any anticipated cost savings and revenue enhancements. Accordingly, the pro forma results of operations of the Company as of and after the business combination may not be indicative of the results that actually would have occurred if the combination had been in effect during the periods presented or of the results that may be attained in the future.