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Acquisition Activity
9 Months Ended
Sep. 30, 2011
Acquisition Activity [Abstract] 
Acquisition Activity

3. Acquisition Activity

On July 15, 2011, the Company completed the acquisition of GS Financial Corp., the former holding company of Guaranty Savings Bank of Metairie, Louisiana. On the July 15, 2011 acquisition date, Home Bancorp Acquisition Corp., a newly created wholly owned subsidiary of the Company, was merged with and into GS Financial Corp. ("GSFC"), and immediately thereafter, GSFC was merged with and into the Company, with the Company as the surviving corporation, and Guaranty Savings Bank, the former subsidiary of GSFC, was merged with and into Home Bank, with Home Bank as the surviving institution. Shareholders of GSFC received $21.00 per share in cash, yielding an aggregate purchase price of $26,417,000.

The acquisition was accounted for under the purchase method of accounting in accordance with ASC 805, Business Combinations. In accordance with ASC 805, the Company recorded goodwill totaling $151,000 from the acquisition as a result of consideration transferred over net assets acquired. Both the assets acquired and liabilities assumed were recorded at their respective acquisition date fair values. Identifiable intangible assets, including core deposit intangible assets, were recorded at fair value.

The fair value estimates of the GSFC assets and liabilities recorded are preliminary and subject to refinement as additional information becomes available. Under current accounting principles, the Company's estimates of fair values may be adjusted for a period of up to one year from the acquisition date.

The assets acquired and liabilities assumed, as well as the adjustments to record the assets and liabilities at fair value, are presented in the following table as of July 15, 2011.

 

(dollars in thousands)

   As Acquired      Fair Value
Adjustments		     As recorded by
Home Bancorp		  

Assets

        

Cash and cash equivalents

    $ 9,262       $ —        $ 9,262   

Investment securities

      46,667         (186 ) (a)      46,481   

Loans

      184,345         (1,845 ) (b)      182,500   

Repossessed assets

      2,549         (384 ) (c)      2,165   

Office properties and equipment, net

      7,317         1,126  (d)      8,443   

Core deposit intangible

      —           859  (e)      859   

Other assets

      7,023         186        7,209   
  

 

 

     

 

 

    

 

 

  

Total assets acquired

    $ 257,163       $ (244 )    $ 256,919   
  

 

 

     

 

 

    

 

 

  

Liabilities

        

Interest-bearing deposits

    $ 179,193       $ 924  (f )    $ 180,117   

Noninterest-bearing deposits

      13,401         —          13,401   

FHLB advances

      33,762         945  (g )      34,707   

Other liabilities

      2,293         135        2,428   
  

 

 

     

 

 

    

 

 

  

Total liabilities assumed

    $ 228,649       $ 2,004      $ 230,653   
  

 

 

     

 

 

    

 

 

  

Excess of assets acquired over liabilities assumed

           26,266   

Cash consideration paid

           (26,417 ) 
       

 

 

  

Total goodwill recorded

         $ 151   
       

 

 

  

 

(a) The adjustment represents the market value adjustments of on GS Financial Corp's investments based on their credit quality exposure.
(b) The adjustment to reflect the fair value of loans includes:

 

  •  

Adjustment of $3.3 million to reflect the removal of GSFC's allowance for loan losses in accordance with ASC 805.

 

  •  

Adjustment of $3.4 million for loans within the scope of ASC 310-30. As a result of an analysis by management of all impaired loans, $9.6 million of loans were determined to be within the scope of, and were evaluated under, ASC 310-30. The contractually required payments receivable related to ASC 310-30 loans is approximately $12.9 million with expected cash flow to be collected of $7.4 million. The estimated fair value of such loans is $6.2 million, with a nonaccretable difference of $5.5 million and accretable yield of $1.2 million.

 

  •  

Adjustment of $1.4 million for all remaining loans determined not to be within the scope of ASC 310-30. Loans which are not within the scope of ASC 310-30 totaled $178.2 million. In determining the fair value of the loans which are not within the scope of ASC 310-30, the acquired loan portfolio was evaluated based on risk characteristics and other credit and market criteria to determine a credit quality adjustment to the fair value of the loan acquired. The acquired loan balance was reduced by the aggregate amount of the credit quality adjustment in determining the fair value of the loans.

 

(c) The adjustment represents the write down of the book value of GSFC's repossessed assets to their estimated fair value, as adjusted for estimated costs to sell.
(d) The adjustment represents the adjustment of GSFC's office properties and equipment to their estimated fair value at the acquisition date.
(e) The adjustment represents the value of the core deposit base assumed in the acquisition. The core deposit asset was recorded as an identifiable intangible asset and will be amortized on an accelerated basis over the estimated life of the deposit base of nine years.
(f) The adjustment represents the fair value of certificates of deposit acquired based on current interest rates for similar instruments. The adjustment will be recognized using a level yield amortization method based on maturities of the deposit liabilities.
(g) The adjustment is to record the fair value of FHLB advances acquired at various terms and maturities based on market rates at the acquisition date. The adjustment will be recognized using a level yield amortization method based on maturities of the borrowings.

The following pro forma information for the nine months ended September 30, 2011 and 2010 reflects the Company's estimated consolidated results of operations as if the acquisition of GSFC occurred at January 1, 2010, unadjusted for potential cost savings.

 

(dollars in thousands except per share information)

   2011      2010  

Net interest income

    $ 28,273       $ 28,461   

Noninterest income

      5,208         3,900   

Noninterest expense

      27,876         24,290   

Net income

      2,708         3,697   

Earnings per share — basic

    $ 0.38       $ 0.49   

Earnings per share — diluted

      0.37         0.48