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Acquisition of Riverview Financial Corporation (Tables)

9 Months Ended

Sep. 30, 2022

Business Combinations [Abstract]

Allocation of the Purchase Price

The allocation of the purchase price is as follows:

(Dollars in thousands)
Assets acquired:
Cash and cash equivalents			$	316,079
Investment securities			226
Restricted stock			2,209
Loans			837,505
Goodwill			51,031
Core deposit intangible			4,096
Customer list intangible			2,160
Bank owned life insurance			32,120
Premises and equipment			11,819
Deferred income taxes			7,116
Accrued interest receivable			1,919
Other assets			6,641
Total assets acquired			1,272,921
Liabilities assumed:
Deposits:
Noninterest-bearing demand			182,291
Interest-bearing demand			371,283
Money Market			152,365
Savings			176,294
Time			199,414
Long-term debt			6,500
Subordinated debt and trust preferred securities			36,308
Accrued interest payable			439
Other liabilities			5,043
Total liabilities assumed			1,129,937
Consideration paid			$	142,984
Cash paid			$	792
Fair value of common stock issued			142,192

Summary of the Final Estimated Fair Value of the Assets Acquired and Liabilities and Equity Assumed

Accounting Standards Codification (“ASC”) Topic 805, Business Combinations, allows for adjustments to goodwill up to one year after the merger date for information that becomes available during this post-merger period that reflects circumstances at the date of merger. During the third quarter of 2022 the Company increased its goodwill $36 thousand to account for changes to the deferred income tax asset and current income tax receivable upon the completion of the Riverview final tax return.

The following table summarizes the estimated fair value of the assets acquired and liabilities and equity assumed in the Riverview Acquisition that management believes are final:

(Dollars in thousands)
Total purchase price (consideration paid)			$	142,984
Net assets acquired:
Cash and cash equivalents			316,079
Investment securities			226
Restricted stock			2,209
Loans			837,505
Core deposit intangible			4,096
Customer list intangible			2,160
Bank owned life insurance			32,120
Premises and equipment			11,819
Deferred income taxes			7,116
Accrued interest receivable			1,919
Other assets			6,641
Deposits:
Noninterest-bearing demand			(182,291)
Interest-bearing demand			(371,283)
Money Market			(152,365)
Savings			(176,294)
Time			(199,414)
Long-term debt			(6,500)
Subordinated debt and trust preferred securities			(36,308)
Accrued interest payable			(439)
Other liabilities			(5,043)
Net assets acquired			91,953
Goodwill			$	51,031

Fair Value Adjustments Made to the Amortized Cost Basis, Presented at the Fair Value of Loans Acquired

The table below illustrates the fair value adjustments made to the amortized cost basis in order to present a fair value of the loans acquired.

(Dollars in thousands)
Gross amortized cost basis at November 30, 2021			$	850,920
Market rate adjustment			529
Credit fair value adjustment on pools of homogeneous loans			(13,117)
Credit fair value adjustment on impaired loans			(827)
Fair value of purchased loans at November 30, 2021			$	837,505

Fair Value of the Loans Acquired

The information about the acquired Riverview impaired loan portfolio as of November 30, 2021 is as follows:

(Dollars in thousands)
Contractually required principal and interest at acquisition			$	5,591
Contractual cash flows not expected to be collected (nonaccretable discount)			(1,739)
Expected cash flows at acquisition			3,852
Interest component of expected cash flows (accretable discount)			(541)
Fair value of acquired loans			$	3,311

Pro Forma Information

The following table presents pro forma information as if the merger between Mid Penn and Riverview had been completed on January 1, 2021. The pro forma information does not necessarily reflect the results of operations that would have occurred had Mid Penn merged with Riverview at the beginning of 2021. The pro forma financial information does not include the impact of possible business model changes, nor does it consider any potential impacts of current market conditions or revenues, expense efficiencies, or other factors.

(Dollars in thousands, except per share data)
			Three Months Ended September 30, 2021						Nine Months Ended September 30, 2021
Net interest income after loan loss provision			$	36,894					$	108,307
Noninterest income			7,597						24,179
Noninterest expense			31,391						92,099
Net income			13,100						40,387
Net income per common share			0.62						2.08

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Tabular disclosure of the nature and amount of any material, nonrecurring adjustments directly attributable to the business combination(s) included in the reported pro forma revenue and earnings (supplemental pro forma information).

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