On September 25, 2020, the Company and Eval Sub Inc., a newly formed Illinois corporation and wholly-owned subsidiary of the Company ("Merger Sub"), entered into an Agreement and Plan of Merger (the "Merger Agreement") with LINCO Bancshares, Inc., a Missouri corporation ("LINCO"), and the sellers as defined therein, pursuant to which, among other things, the Company agreed to acquire 100% of the issued and outstanding shares of LINCO pursuant to a business combination whereby Merger Sub will merge with and into LINCO, whereupon the separate corporate existence of Merger Sub will cease and LINCO will continue as the surviving company and a wholly-owned subsidiary of the Company (the "Merger").

Subject to the terms and conditions of the Merger Agreement, at the effective time of the Merger, each share of common stock, par value $1.00 per share, of LINCO issued and outstanding immediately prior to the effective time of the Merger (other than shares held in treasury by LINCO) will be converted into and become the right to receive, cash or shares of common stock, par value $4.00 per share, of the Company and cash in lieu of fractional shares, less any applicable taxes required to be withheld, and subject to certain potential adjustments. On an aggregate basis, the total consideration payable by the Company at the closing of the Merger was $103.5 million in cash and 1,262,246 shares of the Company’s common stock, provided that the shareholders of LINCO have collectively elected pursuant to the Merger Agreement to receive varying amounts of cash or shares of common stock of the Company as consideration in the Merger. In addition, immediately prior to the closing of the proposed merger, LINCO paid a special dividend to its shareholders in the aggregate amount of $13 million.

The acquisition was accounted for under the acquisition method of accounting in accordance with ASC 805, “Business
Combinations ("ASC 805"),” and accordingly the assets and liabilities were recorded at their estimated fair values as of the
date of acquisition. Fair values are subject to refinement for up to one year after the closing date of February 22, 2021 as
additional information regarding the closing date fair values become available. The total consideration paid was used to
determine the amount of goodwill resulting from the transaction. As the total consideration paid exceeded the net assets
acquired, goodwill of $8.9 million was recorded for the acquisition. Goodwill recorded in the transaction, which reflects the
synergies and economies of scale expected from combining operations and the enhanced revenue opportunities from the
Company’s service capabilities, is not tax deductible, and was all assigned to the banking segment of the Company.

	Acquired			Fair Value			As Recorded by
	Book Value			Adjustments			Providence Bank

Assets
Cash and due from banks	$	130,561		$	-		$	130,561
Investment Securities		119,234			264			119,498
Loans		838,377			(9,401	)		828,976
Allowance for credit losses		(8,656	)		6,583			(2,073	)
Other real estate owned		8,435			2,456			10,891
Premises and equipment		23,440			4,819			28,259
Goodwill		-			8,956			8,956
Core deposit intangible		123			2,025			2,148
Right of use asset		-			794			794
Other assets		43,697			1,736			45,433
Total assets acquired	$	1,155,211		$	18,232		$	1,173,443

Liabilities
Deposits	$	988,329		$	2,081		$	990,410
Securities sold under agreements to repurchase		-			-			-
FHLB advances		26,941			975			27,916
Other borrowings		-			-			-
Lease liability		-			794			794
Other liabilities		7,242			(610	)		6,632
Total liabilities assumed		1,022,512			3,240			1,025,752
Net assets acquired	$	132,699		$	14,992		$	147,691

Consideration Paid
Cash							$	103,500
Common stock								44,191
							$	147,691

The Company has recognized approximately $3.1 million, pre-tax, of acquisition costs for the LINCO acquisition. Of this amount, $2.6 million was recognized during the first quarter of 2021. These costs are included in salaries and benefits, legal and professional and other expense. Of the $9.4 million adjustment to loans, $11.1 million is being accreted to interest income over the remaining term of the loans. The remaining $1.7 million was the elimination of deferred fees and unearned discounts previously recorded by Providence Bank. The Company also recorded approximately $2 million directly to the allowance for credit losses for loans identified as PCD. Of the $838 million of loans acquired, approximately $64.6 million was identified as PCD.

The differences between fair value and acquired value of the assumed time deposits of $2.1 million and the assumed FHLB advances of $975,000, are being amortized to interest expense over the remaining life of the liabilities. The core deposit intangible assets, with a fair value of $2 million, will be amortized on an accelerated basis over its estimated life of 10 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 LINCO acquisition
taken place at the beginning of the period (dollars in thousands):

	Three months ended March 31, 2021		Three months ended March 31, 2020
Net interest income	$	38,237	$	40,626
Provision for loan losses		12,136		5,492
Non-interest income		17,749		17,651
Non-interest expense		37,659		32,060
Income before taxes		6,191		20,725
Income tax expense (benefit)		1,078		5,277
Net income (loss)	$	5,113	$	15,448

Earnings per share
Basic	$	0.30	$	0.86
Diluted		0.29		0.86

Basic weighted average shares o/s		17,299,927		17,955,429
Diluted weighted average shares o/s		17,352,947		18,002,337