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Note 17: Acquisitions | 12 Months Ended
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Jun. 30, 2013
Notes |
Note 17: Acquisitions | NOTE 17: Acquisitions On December 17, 2010, the Bank entered into a Purchase and Assumption Agreement with the FDIC, as receiver, to acquire certain assets and assume certain liabilities of the former First Southern Bank, with headquarters in Batesville, Arkansas, and one branch location in Searcy, Arkansas. The results of operations of the former First Southern Bank locations have been included in the consolidated condensed financial statements since that date. As a result of the transaction, the Bank will have an opportunity to increase its deposit base and reduce transaction and other costs through economies of scale. The Company recorded $437,000 in third-party acquisition-related costs in fiscal 2011. The expenses are included in noninterest expense in the Company’s consolidated statement of income for fiscal 2011. The bargain purchase gain of $7.0 million arising from the acquisition is a result of the discount bid of $17.5 million made by the Company to acquire the assets and assume the liabilities of the failed financial institution. The transaction was accomplished without the loss-share coverage from the FDIC. The full amount of the bargain purchase gain is expected to be taxable, on a deferred basis. The following table summarizes the assets acquired and liabilities assumed at the acquisition date.
Fair Value of Consideration Transferred |  |  |  |  |  |
Equity position of target at closing |  |  |  |  |  | $ | (2,453,832)
Asset discount bid |  |  |  |  |  |  | (17,500,000)
Deposit premium bid |  |  |  |  |  |  | 224,028
Total cash (to) from buyer |  |  |  |  |  | $ | (19,729,804)
Recognized amounts of identifiable assets |  | Acquired from |  | Fair Value |  |  |
acquired and liabilities assumed |  | the FDIC |  | Adjustments |  | As Recorded
Cash and cash equivalents |  | $18,519,482 |  | $- |  |  | $18,519,482
Loans |  | 124,409,033 |  | (9,801,830) |  |  | 114,607,203
Premises and equipment |  | 1,159 |  | - |  |  | 1,159
Identifiable intangible assets |  | - |  | 624,952 |  |  | 624,952
Other |  | 1,680,991 |  | - |  |  | 1,680,991
Deposits |  | (130,314,617) |  | (524,043) |  |  | (130,838,660)
Long-term debt |  | (16,658,022) |  | (548,781) |  |  | (17,206,803)
Other |  | (91,858) |  | (29,520) |  |  | (121,378)
Total identifiable net assets |  | $(2,453,832) |  | $(10,279,222) |  |  | $(12,733,054)
Bargain purchase gain |  |  |  |  |  |  | $(6,996,750)
For the fiscal year ended June 30, 2011, the acquired business contributed revenues (net interest income and noninterest income) of $3.0 million, and earnings, net of tax of $1.0 million to the Company. The figure reported for earnings does not include additional administrative expenses incurred by the Company that could be attributed to growth resulting from the acquisition. The following pro forma summary presents consolidated information of the Company as if the business combination had occurred on July 1, 2010:
(dollars in thousands, except EPS) |
| Pro forma Fiscal Year ended June 30, 2011
Interest income | $38,796
Interest expense | 12,597
Net interest income | 26,199
Provision for loan losses | 2,632
Net interest income after provision for loan losses | 23,567
Noninterest income | 10,681
Noninterest expense | 17,068
Income before taxes | 17,180
Income taxes | 5,862
Net income | 11,318
Less: effective dividend on preferred shares | 512
Net income available to common shareholders | $10,806
Basic earnings per common share | $5.17
Diluted earnings per common share | $5.05
The above pro forma summary excludes earnings on investment securities as they were not included with the asset purchase. The fair value of the assets acquired included loans with a fair value of $114.6 million. The estimated gross amount due under the contracts was $124.4 million, of which $7.4 million was expected to be uncollectible. The determination of the initial fair value of assets acquired and liabilities assumed in the transaction involves a high degree of judgment and complexity. The carrying value of the acquired loans reflect management’s best estimate of the fair value of these assets as of the date of acquisition. However, the amount that we realize on these assets could differ materially from the carrying value reflected in these financial statements, based upon the timing and amount of collections on the acquired loans in future periods.

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References No definition available. + Details
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