Merger accounting (Tables)

12 Months Ended

Dec. 31, 2013

The table below illustrates the calculation of the consideration effectively transferred.


Penseco shares outstanding at November 30, 2013(A)		3,275,217
Exchange ratio		1.3636
Peoples shares issued to Penseco shareholders(B)		4,465,538
Peoples shares outstanding at November 30, 2013		3,087,406
Total Peoples shares outstanding at November 30, 2013		7,552,944
Penseco % ownership		59.12	%
Peoples % ownership		40.88	%

Theoretical Penseco share to be issued as consideration
Penseco shares outstanding at November 30, 2013(A)		3,275,217
Ownership % held by Penseco shareholders		59.12	%
Theoretical Penseco shares after consideration paid		5,539,653
Ownership % by legacy Peoples shareholders		40.88	%
Theoretical Penseco shares issued as consideration		2,264,436
Fair value of Penseco shares at November 30, 2013 ($34.50 multiplied by 1.3636)	$	47.04
Fair value of theoretical Penseco shares offered				$	106,519
Cash paid for fractional shares					17

				$	106,536

(A)	Excludes 9,928 shares of Penseco common shares owned by Peoples which were retired.

(B)	Excludes payment for fractional shares.


Total Purchase Price				$	106,536
Net Assets Acquired:
Cash and due from banks	$	6,982
Federal funds sold		15,410
Investment securities available-for-sale		156,435
Restricted equity securities		997
Loans, net		504,002
Accrued interest receivable		3,625
Premises and equipment		11,737
Core deposit and other intangible assets		6,323
Other assets		18,647
Deposits		(628,304	)
Short-term borrowings		(17,737	)
Long-term debt		(2,516	)
Accrued interest payable		(473	)
Other liabilities		(5,976	)

Net assets acquired					69,152

Treasury stock acquired					412

Goodwill resulting from merger				$	36,972

The following is a summary of the acquired nonimpaired and impaired loans from the merger with Peoples:


	Acquired Nonimpaired Loans			Acquired Impaired Loans
Contractually required principal and interest at acquisition	$	501,423		$	19,353
Contractual cash flows not expected to be collected (nonaccretable discount)					(10,873	)

Expected cash flows at acquisition		501,423			8,480
Interest component of expected cash flows (accretable discount)		(4,773	)		(1,128	)

Fair value of acquired loans	$	496,650		$	7,352

A summary of merger related costs included in the consolidated statements of income for the year ended December 31, 2013 is summarized as follows:


December 31,	2013
Accounting	$	65
Legal and consulting		1,011
Salaries and benefits		1,851
Equipment disposition and contract termination		709
System conversion/deconversion costs		956
Other		17

Total	$	4,609

The following table presents unaudited pro forma information as if the merger between Peoples and Penseco had been completed on January 1, 2011.


Years ended December 31,	2013		2012		2011
Net interest income after loan loss provision	$	52,734	$	52,917	$	51,312
Noninterest income		16,080		16,287		18,186
Noninterest expense		52,295		49,827		56,319

Net income	$	16,519	$	19,377	$	13,179

Net income per share	$	2.19	$	2.55	$	1.73