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Business Combinations | 12 Months Ended
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Dec. 31, 2022
Business Combinations [Abstract] |
Business Combinations | NOTE 2 – BUSINESS COMBINATIONS On July 1, 2022, Farmers National Insurance, LLC acquired substantially all of the assets of Randy L. Jones Agency, Inc., doing business as Champion Insurance for $900 thousand. Intangible assets of $633 thousand were recorded along with goodwill of $400 thousand. On November 1, 2021, the Company completed the merger with Cortland Bancorp (“Cortland”), the parent company of The Cortland Savings and Banking Company (“Cortland Bank”), pursuant to the Agreement and Plan of Merger, dated as of June 22, 2021, as amended by that certain Amendment to Agreement and Plan of Merger, dated October 12, 2021 (collectively, the “Merger Agreement”), by and among the Company, Cortland, and FMNB Merger Subsidiary IV, LLC, a wholly-owned subsidiary of the Company (“Merger Sub”). Pursuant to the terms of the Merger Agreement, on November 1, 2021, Cortland merged with and into Merger Sub (the “Merger”), with Merger Sub as the surviving entity in the Merger. Promptly following the consummation of the Merger, Merger Sub was dissolved and liquidated and Cortland Bank merged with and into the Bank (the “Bank Merger”), with the Bank as the surviving bank in the Bank Merger. Pursuant to the terms of the Merger Agreement, at the effective time of the Merger, each common share, without par value, of Cortland issued and outstanding immediately prior to the effective time (except for certain Cortland common shares held directly by Cortland or the Company) was converted into the right to receive, without interest, $28.00 per share in cash or 1.75 shares of the Company’s common stock, subject to an overall limitation of 75% of the Cortland shares being exchanged for the Company’s shares and the remaining 25% being exchanged for cash. The Company issued 5.6 million shares of its common stock along with cash of $29.6 million, which represented a transaction value of approximately $128.5 million based on its closing stock price of $17.82 on October 31, 2021, the closing of the Merger. In accordance with ASC 805, the Company expensed approximately $4.1 million of merger related costs during the year ended December 31, 2022 and $7.1 million of merger related costs for the year ended December 31, 2021, as part of the above acquisitions. The Company recorded goodwill of $48.5 million as a result of the Cortland combination. Goodwill represents the future economic benefits arising from net assets acquired that are not individually identified and separately recognized and is attributable to synergies, including the reduction of personnel and overlapping contracts, expected to be derived from the Company’s strategy to enhance and expand its presence in northeast Ohio. The mergers offer the Company the opportunity to increase profitability by introducing existing products and services to the acquired customer base as well as add new customers in the expanded market area. The goodwill was determined not to be deductible for income tax purposes. The following table summarizes the consideration paid for Cortland and the amounts of the assets acquired and liabilities assumed on the closing date of the acquisition.
Consideration |  |  |
Cash |  | $ | 29,618 |
Stock |  |  | 98,921 |
Fair value of total consideration transferred |  | $ | 128,539 |
Fair value of assets acquired |  |  |
Cash and cash equivalents |  | $ | 113,391 |
Securities available for sale |  |  | 130,574 |
Other investments |  |  | 16,092 |
Loans, net |  |  | 482,168 |
Premises and equipment |  |  | 12,644 |
Bank owned life insurance |  |  | 21,547 |
Core deposit intangible |  |  | 5,886 |
Current and deferred taxes |  |  | 3,135 |
Other assets |  |  | 7,805 |
Total assets acquired |  |  | 793,242 |
Fair value of liabilities assumed |  |  |
Deposits |  |  | 695,274 |
Short-term borrowings |  |  | 4,246 |
Long-term borrowings |  |  | 4,262 |
Accrued interest payable and other liabilities |  |  | 9,386 |
Total liabilities |  |  | 713,168 |
Net assets acquired |  | $ | 80,074 |
Goodwill created |  |  | 48,465 |
Total net assets acquired |  | $ | 128,539 |
The following table presents unaudited pro forma information as if the Cortland acquisition that occurred on November 1, 2021 actually took place on January 1, 2020. The unaudited pro forma information for the years ended December 31, 2021 and 2020 include adjustments of interest income on loans, amortization of core deposit intangibles arising from the transaction, interest expense on deposits and borrowings acquired. The unaudited pro forma financial information is not necessarily indicative of the results of operations that would have occurred had the transaction been effective on the assumed date.
|  | 2021 |  |  | 2020 |
Net interest income |  | $ | 130,005 |  |  | $ | 120,651 |
Provision for credit losses |  |  | 10,893 |  |  |  | 10,675 |
Noninterest income |  |  | 45,393 |  |  |  | 43,661 |
Noninterest expense |  |  | 94,236 |  |  |  | 93,045 |
Income before income taxes |  |  | 70,269 |  |  |  | 60,592 |
Income tax expense |  |  | 11,299 |  |  |  | 33,818 |
Net income |  | $ | 58,970 |  |  | $ | 50,602 |
Basic earnings per share |  | $ | 1.75 |  |  | $ | 1.50 |
Diluted earnings per share |  | $ | 1.74 |  |  | $ | 1.49 |
The above unaudited pro forma information excludes nonrecurring merger cost that totaled $5.7 million on an after-tax basis.

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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 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
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