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Business Combinations | 12 Months Ended
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Dec. 31, 2018
Business Combinations [Abstract] |
Business Combinations | NOTE 2 – BUSINESS COMBINATIONS During August of 2017, the Company completed the acquisition of Monitor, the holding company of Monitor Bank. The transaction involved both cash and 465,787 shares of stock totaling $7.5 million. Pursuant to the terms of the merger agreement, common shareholders of Monitor were entitled to elect to receive consideration in cash or in common shares, without par value, of the Company, subject to an overall limitation of 85% of the Monitor common shares being exchanged for the Company’s common shares and 15% exchanged for cash. The per share cash consideration of $769.38 was equal to Monitor’s March 31 tangible book value multiplied by 1.25. Based on the volume weighted average closing price of the Company’s common shares for the 20 trading days ended August 11, 2017 of $14.04, the final stock exchange ratio was 54.80, resulting in an implied value per Monitor common share of $769.38. Goodwill of $1.0 million, which is recorded on the balance sheet, arising from the acquisition consisted largely of synergies and the cost savings resulting from the combining of the companies. The goodwill was determined not to be deductible for income tax purposes. The fair value of other intangible assets of $673 thousand is related to core deposits. The following table summarizes the consideration paid for Monitor and the amounts of the assets acquired and liabilities assumed on the closing date of the acquisition.
Consideration |  |  |  |
Cash |  | $ | 1,154 |
Stock |  |  | 6,358 |
Fair value of total consideration transferred |  | $ | 7,512 |
Fair value of assets acquired |  |  |  |
Cash and due from financial institutions |  | $ | 17,673 |
Securities available for sale |  |  | 3,057 |
Loans, net |  |  | 19,315 |
Premises and equipment |  |  | 192 |
Core deposit intangible |  |  | 673 |
Other assets |  |  | 272 |
Total assets acquired |  |  | 41,182 |
Fair value of liabilities assumed |  |  |  |
Deposits |  |  | 34,586 |
Accrued interest payable and other liabilities |  |  | 121 |
Total liabilities |  |  | 34,707 |
Net assets acquired |  | $ | 6,475 |
Goodwill created |  |  | 1,037 |
Total net assets acquired |  | $ | 7,512 |
During June of 2016, the Bank completed the acquisition of Bowers, and merged all activity of Bowers with Farmers Insurance, the Bank’s wholly-owned insurance agency subsidiary. The Bowers group is engaged in selling insurance, including commercial, farm, home, and auto property/casualty insurance and will help to meet the needs of all the Company’s customers. The transaction involved both cash and 123,280 shares of stock totaling $3.2 million, including up to $1.2 million of future payments, contingent upon Bowers meeting performance targets, with an estimated fair value at the acquisition date of $880 thousand. The first of three contingent payments were made during July 2017, totaling $316 thousand, which reduced the earnout payable to $564 thousand. Subsequent to the first payment, management conducted two annual valuations of the contingent consideration and found it necessary to reduce the future payment liability associated with the remaining two payments down to $200 thousand at year end 2017 and $20 thousand at year end 2018. The $364 thousand and $180 thousand were recorded as a reduction to acquisition related costs on the Consolidated Statements of Income as of December 31, 2017 and 2018, respectively. The Company conducts this valuation work annually. The earnout calculation for the second of three contingent payments was completed during June of 2018 and determined that no payment was earned or due. The acquisition is part of the Company’s plan to increase the levels of noninterest income and to complement the existing insurance services currently being offered. Goodwill of $1.8 million, which is recorded on the balance sheet, arising from the acquisition consisted largely of synergies and the cost savings resulting from the combining of the companies. The goodwill was determined not to be deductible for income tax purposes. The original fair value of other intangible assets of $1.6 million was related to client relationships, company name and noncompetition agreements. The following table summarizes the consideration paid for Bowers and the amounts of the assets acquired and liabilities assumed on the closing date of the acquisition.
Consideration |  |  |  |
Cash |  | $ | 1,137 |
Stock |  |  | 1,138 |
Contingent consideration |  |  | 880 |
Fair value of total consideration transferred |  | $ | 3,155 |
Fair value of assets acquired |  |  |  |
Cash |  | $ | 64 |
Premises and equipment |  |  | 290 |
Other assets |  |  | 34 |
Total assets |  |  | 388 |
Fair value of liabilities assumed |  |  | 124 |
Net assets acquired |  | $ | 264 |
Assets and liabilities arising from acquisition |  |  |  |
Identified intangible assets |  |  | 1,630 |
Deferred tax liability |  |  | (588 | )
Goodwill created |  |  | 1,849 |
Total net assets acquired |  | $ | 3,155 |
The following table presents pro forma information as if the above acquisitions that occurred during 2016 and 2017 actually took place at the beginning of 2016. The pro forma information includes adjustments for merger related costs, amortization of intangibles arising from the transaction and the related income tax effects. The pro forma financial information is not necessarily indicative of the results of operations that would have occurred had the transactions been effective on the assumed date.
|  | 2017 |  |  | 2016 |
Net interest income |  | $ | 74,409 |  |  | $ | 69,341 |
Net income |  | $ | 22,776 |  |  | $ | 20,661 |
Basic and diluted earnings per share |  | $ | 0.83 |  |  | $ | 0.77 |

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- 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 http://asc.fasb.org/topic&trid=2303972 + Details
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