XML 32 R20.htm IDEA: XBRL DOCUMENT
v3.23.1

Business Combinations | 9 Months Ended
--- | ---
Mar. 31, 2023
Business Combinations |
Business Combinations | ​ ​ Note 12: Business Combinations ​ On January 20, 2023, the Company completed its acquisition of Citizens Bancshares, Co., Kansas City, Missouri (“Citizens”), and its wholly owned subsidiary, Citizens Bank and Trust Company, in a stock and cash transaction. In late February 2023, the Company merged Citizens Bank and Trust Company with and into Southern Bank, coincident to the data systems conversion. For the three- and nine- month periods ended March 31, 2023, the Company incurred $3.3 million and $4.1 million respectively, of third-party acquisition-related costs, included in noninterest expense in the Company’s condensed consolidated statements of income. ​ Under the acquisition method of accounting, the total purchase price is allocated to the net tangible and intangible assets acquired based on their estimated fair values on the date of the acquisition. Based on preliminary valuations of the fair value of tangible and intangible assets acquired and liabilities assumed, the purchase price for the Citizens acquisition is detailed in the following table. If, prior to the end of the one-year measurement period for finalizing the purchase price allocation, information becomes available about facts and circumstances that existed as of the acquisition date, which would indicate adjustments are required to the purchase price allocation, such adjustments will be included in the purchase price allocation retrospectively. ​
​ | ​ | ​ | ​
Citizens Bancshares Company | ​ | ​ | ​
Fair Value of Consideration Transferred | ​ | ​
(dollars in thousands) | ​ | ​
Cash | ​ | $ | 32,522
Common stock, at fair value | ​ | ​ | 98,280
Total consideration | ​ | $ | 130,802
​ |  | ​ | ​
Recognized amounts of identifiable assets acquired and liabilities assumed |  | ​ | ​
​ | ​ |  | ​
Cash and cash equivalents | ​ | $ | 243,225
Investment securities | ​ |  | 226,451
Loans | ​ |  | 447,388
Premises and equipment | ​ |  | 23,430
BOLI | ​ |  | 21,733
Identifiable intangible assets | ​ |  | 24,645
Miscellaneous other assets | ​ |  | 7,596
​ | ​ |  | ​
Deposits | ​ |  | (851,140)
Securities sold under agreements to repurchase | ​ |  | (27,629)
Miscellaneous other liabilities | ​ | ​ | (8,266)
Total identifiable net assets | ​ | ​ | 107,433
Goodwill | ​ | $ | 23,369
​ Of the total purchase price, $22.1 million was allocated to core deposit intangible, and will be amortized over ten years on a straight line basis, $2.5 million was allocated to trust intangible and will be amortized over ten years on a straight line basis, and $23.4 million was allocated to goodwill. None of the purchase price is deductible. Goodwill is attributable to synergies and economies of scale expected from combining the operations of the Citizens Bank. To the extent that management revises any of the fair value of the above fair value adjustments as a result of continuing evaluation, the amount of goodwill recorded in the acquisition will change. ​ The Company acquired the $461.5 million loan portfolio at an estimated fair value discount of $14.1 million. The excess of expected cash flows above the fair value of the performing portion of loans will be accreted to interest income over the remaining lives of the loans in accordance with ASC 310-30. Loans acquired that were not subject to guidance relating to PCD loans include loans with a fair value of $419.5 million and gross contractual amounts receivable of $520.0 million at the date of acquisition. Management identified 48 PCD loans, with a book balance of $27.5 million, associated with the Citizens acquisition (ASC 310-30). ​ The acquired business contributed revenues of $5.7 million and earnings of $1.2 million for the period from January 20, 2023 through March 31, 2023. The following unaudited pro forma summaries present consolidated information of the Company as if the business combination had occurred on the first day of each period: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Pro Forma
​ | ​ | For the three months ended
​ | ​ | March 31,
(dollars in thousands) | ​ | ​ | 2023 | ​ | ​ | 2022 | ​
Revenue | ​ | $ | 43,232 | ​ | $ | 40,529 | ​
Earnings | ​ | $ | 4,103 | ​ | $ | 11,987 | ​
​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Pro Forma
​ | ​ | For the nine months ended
​ | ​ | March 31,
(dollars in thousands) | ​ | ​ | 2023 | ​ | ​ | 2022 | ​
Revenue | ​ | $ | 138,709 | ​ | $ | 121,128 | ​
Earnings | ​ | $ | 35,595 | ​ | $ | 41,265 | ​
​ ​ On February 25, 2022, the Company completed its acquisition of Fortune, and its wholly owned subsidiary, Fortune Bank (“FB”), in a stock and cash transaction valued at approximately $35.5 million. The acquired financial institution was merged with and into Southern Bank simultaneously with the acquisition of Fortune. For the three- and nine- month periods ended March 31, 2023, the Company incurred $0 and $45,000, respectively, compared to $1.1 million and $1.3 million in the same periods of the prior fiscal year, of third-party acquisition-related costs, included in noninterest expense in the Company’s condensed consolidated statements of income. ​ Under the acquisition method of accounting, the total purchase price is allocated to the net tangible and intangible assets acquired based on their estimated fair values on the date of the acquisition. Based on valuations of the fair value of tangible and intangible assets acquired and liabilities assumed, the purchase price for the Fortune acquisition is detailed in the following table. ​
​ | ​ | ​ | ​
Fortune Financial Corporation | ​ | ​ | ​
Fair Value of Consideration Transferred | ​ | ​
(dollars in thousands) | ​ | ​
Cash | ​ | $ | 12,664
Common stock, at fair value | ​ | ​ | 22,884
Total consideration | ​ | $ | 35,548
​ |  | ​ | ​
Recognized amounts of identifiable assets acquired and liabilities assumed |  | ​ | ​
​ | ​ |  | ​
Cash and cash equivalents | ​ | $ | 34,280
Interest bearing time deposits | ​ |  | 2,300
Loans | ​ |  | 202,053
Premises and equipment | ​ |  | 7,690
BOLI | ​ |  | 3,720
Identifiable intangible assets | ​ |  | 1,602
Miscellaneous other assets | ​ |  | 3,512
​ | ​ |  | ​
Deposits | ​ |  | (213,670)
FHLB Advances | ​ |  | (9,681)
Subordinated debt | ​ |  | (7,800)
Miscellaneous other liabilities | ​ | ​ | (1,214)
Total identifiable net assets | ​ | ​ | 22,792
Goodwill | ​ | $ | 12,756
​ Of the total purchase price, $1.6 million was allocated to core deposit intangible, and will be amortized over seven years on a straight line basis. Additionally, $12.8 million was allocated to goodwill, and none of the purchase price is deductible. Goodwill is attributable to synergies and economies of scale expected from combining the operations of the Bank and Fortune. To the extent that management revises any of the fair value of the above fair value adjustments as a result of continuing evaluation, the amount of goodwill recorded in the acquisition will change. ​ The Company acquired the $204.1 million loan portfolio at an estimated fair value discount of $2.1 million. The excess of expected cash flows above the fair value of the performing portion of loans will be accreted to interest income over the remaining lives of the loans in accordance with ASC 310-30. Loans acquired that were not subject to guidance relating to PCD loans include loans with a fair value and gross contractual amounts receivable of $187.0 million and $211.0 million at the date of acquisition. Management identified 31 PCD loans, with a book balance of $15.1 million, associated with the Fortune acquisition (ASC 310-30). ​ On December 15, 2021, the Company completed its acquisition of the Cairo, Illinois, branch of First National Bank, Oldham, South Dakota. The deal resulted in Southern Bank relocating its facility from its prior location to the First National Bank location in Cairo. The Company views the acquisition and updates to the new facility as an expression of its continuing commitment to the Cairo community. For the three- and nine- month periods ended March 31, 2023, the Company incurred no third-party acquisition-related costs, compared to $26,000 and $50,000, respectively, in the same periods of the prior fiscal year. ​ ​ Based on valuations of the fair value of tangible and intangible assets acquired and liabilities assumed, the purchase price for the Cairo acquisition is detailed in the following table. ​
​ | ​ | ​ | ​
First National Bank - Cairo Branch | ​ | ​ | ​
Fair Value of Consideration Transferred | ​ | ​ | ​
(dollars in thousands) | ​ | ​ | ​
Cash | ​ | $ | (26,932)
​ |  | ​ | ​
Recognized amounts of identifiable assets acquired and liabilities assumed |  | ​ | ​
​ | ​ |  | ​
Cash and cash equivalents | ​ | $ | 220
Loans | ​ |  | 408
Premises and equipment | ​ |  | 468
Identifiable intangible assets | ​ |  | 168
Miscellaneous other assets | ​ |  | 1
​ | ​ |  | ​
Deposits | ​ |  | (28,540)
Miscellaneous other liabilities | ​ | ​ | (99)
Total identifiable net liabilities | ​ | ​ | (27,374)
Goodwill | ​ | $ | 442
​ Of the total purchase price, $168,000 was allocated to core deposit intangible, and will be amortized over seven years on a straight line basis. Additionally, $442,000 was allocated to goodwill, and none of the purchase price is deductible. Goodwill is attributable to synergies and economies of scale expected from combining the operations of the Southern Bank existing facility with the acquired Cairo branch. ​

X
- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI https://asc.fasb.org/topic&trid=2303972 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 5 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=128092470&loc=d3e4946-128472 + Details
Name: | us-gaap_BusinessCombinationDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_BusinessCombinationsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration