XML 29 R15.htm IDEA: XBRL DOCUMENT v3.5.0.2
Business Combinations (Notes)
 6 Months Ended
Jun. 30, 2016
Business Combinations [Abstract]  
Business Combination Disclosure [Text Block]
Business Combination

On August 14, 2015, First Mid-Illinois Bank completed the acquisition of twelve Illinois bank branches ("ONB Branches") from Old National Bank, a national banking association having its principal office in Evansville, Indiana. The acquisition expanded First Mid Bank's service area into Southern Illinois and provided a stable source of core deposits. Pursuant to the terms of the Branch Purchase and Assumption Agreement, dated January 30, 2015, as amended, by and between First Mid Bank and Old National Bank, First Mid Bank, among other matters, assumed certain deposit liabilities and acquired certain loans, as well as cash, real property, furniture, and other fixed operating assets associated with the ONB Branches. The deposit and loan balances assumed were approximately $453 million and $156 million at book value, respectively. First Mid Bank also assumed certain leases, and entered into certain subleases, related to the ONB Branches.

First Mid Bank agreed to pay Old National Bank the sum of: (i) a deposit premium of 3.6% on the amount of deposit accounts of the ONB Branches, other than brokered deposits and municipal deposits, which equated to approximately $15.9 million, (ii) $500,000, representing the fixed deposit premium related to the municipal deposits of the Branches, (iii) the principal amount of the loans being purchased, plus the accrued but unpaid interest, (iv) the aggregate net book value of the other assets purchased including facilities of approximately $4.5 million, and (v) the aggregate amount of cash on hand of $2.7 million as of the closing. The acquisition was settled by Old National Bank paying cash of approximately $276.8 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 Accounting Standards Codification (“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
$
279,468

$
—

$
279,468

     Loans
155,774

(3,377
)
152,397

     Premises and equipment
4,547

(125
)
4,422

     Goodwill
—

14,274

14,274

     Core deposit intangible
—

6,216

6,216

     Other assets
1,433

(259
)
1,174

              Total assets acquired
$
441,222

$
16,729

$
457,951

Liabilities
 
 
 
     Deposits
$
452,810

$
837

$
453,647

     Securities sold under agreements to repurchase
3,797

—

3,797

     Other liabilities
507

—

507

              Total liabilities assumed
$
457,114

$
837

$
457,951


  
The Company recognized approximately $1.4 million of costs related to completion of the acquisition during 2015. These acquisition costs are included in legal and professional and other expense. The difference between the fair value and acquired value of the purchased loans of $3,377,000 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 $837,000 is being amortized to interest expense over the remaining term of the time deposits. The core deposit intangible asset, with a fair value of $6,216,000, will be 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 the period (in thousands):
 
Three months ended
Six months ended
 
June 30,
June 30,
 
2015
2015
Net interest income
$
16,804

$
32,516

Provision for loan losses
184

548

Non-interest income
6,338

12,939

Non-interest expense
14,161

28,693

  Income before income taxes
8,797

16,214

Income tax expense
3,153

5,866

   Net income
$
5,644

$
10,348

Dividends on preferred shares
550

1,100

Net income available to common stockholders
$
5,094

$
9,248

 
 
 
Earnings per share
 
 
   Basic
$
0.71

$
1.30

   Diluted
$
0.66

$
1.22

 
 
 
Basic weighted average shares outstanding
7,198,980

7,112,309

Diluted weighted average shares outstanding
8,563,773

8,477,102


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.