On July 1, 2022, CBI completed the acquisition by merger of Comunibanc Corp. in a stock and cash transaction for aggregate consideration of approximately $46,090. As a result of the acquisition, the Company issued 984,723 common shares and paid approximately $24,968 in cash to the former shareholders of Comunibanc Corp. The Company and Comunibanc Corp. had first announced that they had entered into an agreement to merge in January of 2022. Immediately following the merger, Comunibanc Corp.’s banking subsidiary, The Henry County Bank (HCB), was merged into CBI’s banking subsidiary, Civista Bank.

The assets and liabilities of Comunibanc Corp. were recorded on the Company’s Balance Sheet at their preliminary estimated fair values as of July 1, 2022, the acquisition date, and Comunibanc Corp.’s results of operations have been included in the Company’s Consolidated Statements of Operations since that date. Due to the timing of the acquisition relative to the end of the reporting period, the fair values for certain assets and liabilities acquired from Comunibanc Corp on July 1, 2022 represent preliminary estimates. Based on a preliminary purchase price allocation, the Company recorded $24,801 in goodwill and $4,426 in core deposit intangibles, representing the principal change in goodwill and intangibles from December 31, 2021. None of the purchase price is deductible for tax purposes.

At the time of the merger, Comunibanc Corp had total consolidated assets of $315,083, including $175,500 in loans, and $271,081 in deposits. The transaction was recorded as a purchase and, accordingly, the operating results of Comunibanc Corp. and HCB have been included in the Company’s Consolidated Financial Statements since the close of business on July 1, 2022.

Identifiable intangibles are amortized to their estimated residual values over the expected useful lives. Such lives are also periodically reassessed to determine if any amortization period adjustments are required. The identifiable intangible assets consist of core deposit intangible which is being amortized over the estimated useful life. The gross carrying amount of the core deposit intangible at September 30, 2022 was $4,426.

In 2022, the Company has incurred additional third-party acquisition-related costs of $1.9 million. These expenses are comprised of employee benefits of $16.6 thousand, occupancy and equipment expenses of $51.6 thousand, software expense of $14.0 thousand, consulting and other professional fees of $839.4 thousand, data processing costs of $558.3 thousand and other operating expenses of $373.0 thousand in the Company’s consolidated statement of operations for the nine-month period ended September 30, 2022.

As of September 30, 2022, the current year and estimated future amortization expense for the core deposit intangible is as follows:

	Core deposit intangibles
2022	$	427
2023		739
2024		684
2025		604
2026		523
Thereafter		1,449
	$	4,426

The following table presents financial information for the former Comunibanc Corp. included in the Consolidated Statements of Operations from the date of acquisition through September 30, 2022.

The following table presents pro forma information for the three- and nine-month periods ended September 30, 2022 and 2021 as if the acquisition of Comunibanc Corp. had occurred on January 1, 2021. This table has been prepared for comparative purposes only and is not indicative of the actual results that would have been attained had the acquisition occurred as of the beginning of the periods presented, nor is it indicative of future results. Furthermore, the unaudited pro forma information does not reflect management’s estimate of any revenue-enhancing opportunities nor anticipated cost savings as a result of the integration and consolidation of the acquisition.

	Pro Formas				Pro Formas
	Three months ended September 30,				Nine months ended September 30,
	2022		2021		2022		2021
Net interest income after provision for loan losses	$	30,405	$	26,891	$	82,100	$	78,452
Noninterest income		5,734		6,693		19,387		25,486
Net income		11,176		10,100		26,914		31,015
Pro forma earnings per share:
Basic	$	0.74	$	0.63	$	1.80	$	1.88
Diluted	$	0.74	$	0.63	$	1.80	$	1.88

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition for Comunibanc Corp. Core deposit intangibles will be amortized over periods of between ten years using an accelerated method. Goodwill will not be amortized, but instead will be evaluated for impairment.

Cash paid				$	24,968
Common Shares issued (984,723 shares)					21,122
Total				$	46,090


Net assets acquired:
Cash and due from financial institutions	$	3,098
Securities available for sale		120,399
Time deposits		742
Loans, net		169,202
Other securities		1,553
Premises and equipment		6,073
Accrued interest receivable		670
Core deposit intangible		4,426
Bank owned life insurance		5,918
Other assets		3,767
Noninterest-bearing deposits		(122,642	)
Interest-bearing deposits		(148,552	)
Other borrowings		(21,706	)
Other liabilities		(1,659	)
					21,289
Goodwill resulting from Comunibanc Corp. acquisition				$	24,801

Loans purchased with evidence of credit deterioration since origination and for which it was probable that all contractually required payments would not be collected were considered to be credit impaired. Evidence of credit quality deterioration as of the purchase date included information such as past-due and nonaccrual status, borrower credit scores and recent loan to value percentages. Purchased credit-impaired loans were accounted for under the accounting guidance for loans and debt securities acquired with deteriorated credit quality (ASC 310-30) and initially measured at fair value, which included estimated future credit losses expected to be incurred over the life of the loan. Accordingly, an allowance for credit losses related to these loans was not carried over and recorded at the acquisition date. Management estimated the cash flows expected to be collected at acquisition using our internal risk models, which incorporated the estimate of the current assumptions, such as default rates, severity and prepayment speeds.

The following table presents additional information regarding loans acquired and accounted for in accordance with ASC 310-30:

The gross principal due under the contract for acquired receivables not subject to ASC 310-30 is $171.1 million. The fair value adjustment is $2.1 million and the contractual cash flows not expected to be collected is $5.7 million.

The acquired assets and liabilities were measured at estimated fair values. Management made certain estimates and exercised judgment in accounting for the acquisition.

The amount of goodwill recorded reflects a strategic opportunity to expand into new markets that, while similar to existing markets, are projected to be more vibrant in population growth and business opportunity growth. The goodwill represents the excess purchase price over the estimated fair value of the net assets acquired. Additionally, the acquisition will provide exposure to suburbs of larger urban areas without the commitment of operating inside large metropolitan areas dominated by regional and national financial organizations. The acquisition is also expected to create synergies on the operational side of the Company by allowing noninterest expenses to be spread over a larger operating base.