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Merger (Tables) | 9 Months Ended
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Sep. 30, 2021
Business Combination and Asset Acquisition [Abstract] |
Schedule of Consideration Paid for AMRB | In addition, merger consideration included cash paid for outstanding stock options and cash paid in lieu of fractional shares, as summarized in the following table.
(in thousands) | Merger Consideration
Value of common stock consideration paid to shareholders (0.575 fixed exchange ratio, stock price $36.15) | $ | 124,401 |
Cash consideration for stock options | 63
Cash paid in lieu of fractional shares | 13
Total merger consideration | $ | 124,477 |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table presents the preliminary fair values of the assets acquired and liabilities assumed, and the resulting goodwill as of August 6, 2021.
(in thousands) |
Total merger consideration | $ | 124,477 |
Assets acquired: |
Cash and cash equivalents | 140,577 |
Investment securities | 297,797 |
Loans | 419,435 |
Bank-owned life insurance | 16,259 |
Operating lease right-of-use assets | 2,376 |
Bank premises and equipment, net | 2,891 |
Core deposit intangible | 3,909 |
Other real estate owned | 800 |
Interest receivable and other assets | 14,377 |
Total assets acquired | 898,421 |
Liabilities assumed: |
Deposits: |
Non-interest bearing | 331,459 |
Interest bearing | 458,563 |
Total deposits | 790,022 |
FHLB borrowings | 13,885 |
Operating lease liabilities | 2,798 |
Interest payable and other liabilities | 9,853 |
Total liabilities assumed | 816,558 |
Fair value of net assets acquired | 81,863 |
Goodwill | $ | 42,614 |
Schedule of Finite-Lived Intangible Assets, Estimated Amortization Expense | The future amortization expense for the CDI arising from the Merger is as follows:
(in thousands) | 2021 | 2022 | 2023 | 2024 | 2025 | Thereafter | Total
Core deposit intangible amortization | $ | 189 |  | $ | 707 |  | $ | 630 |  | $ | 552 |  | $ | 475 |  | $ | 1,227 |  | $ | 3,780 |
Schedule of Unaudited Pro Forma Financial Information | AMRB's unaudited contributions to net interest income and net income from the August 6, 2021 merger date to September 30, 2021 included in the consolidated statements of comprehensive income are presented in the following table.
(in thousands) |
Net interest income 1 | $ | 3,427 |
Net loss 1 | $ | (2,993) |
1 AMRB's net interest income and net loss include merger-related costs incurred from the merger date to September 30, 2021, accretion of the net purchase discount on acquired loans, premises fair value adjustment depreciation, CDI amortization and time deposit premium amortization, as applicable. The pro forma net loss does not include allowance for credit losses adjustments related to acquired loans.
The following table presents certain unaudited pro forma net interest income and net income for illustrative purposes only for the three and nine months ended September 30, 2021 and 2020 as if AMRB was acquired on January 1, 2020. This unaudited pro forma information combines Bancorp's and AMRB's historical results and includes adjustments reflecting the estimated impact of certain fair value adjustments for the respective periods. The pro forma information is not indicative of what would have occurred had the acquisition consummated as of the beginning of the year prior to the acquisition. The unaudited pro forma information does not consider any changes to the provision for credit losses resulting from recording loans at fair value, cost savings, or business synergies. As a result, actual amounts would have differed from the unaudited pro forma information presented, and the differences could be significant.
| Three months ended |  | Nine months ended
(in thousands) | September 30, 2021 | September 30, 2020 |  | September 30, 2021 | September 30, 2020
Net interest income - Pro forma | $ | 30,488 |  | $ | 31,386 |  |  | $ | 91,240 |  | $ | 92,791 |
Net interest income - Actual | $ | 27,753 |  | $ | 24,566 |  |  | $ | 74,318 |  | $ | 73,060 |
Net income - Pro forma 1 | $ | 9,953 |  | $ | 9,182 |  |  | $ | 33,422 |  | $ | 19,638 |
Net income - Actual | $ | 5,282 |  | $ | 7,491 |  |  | $ | 23,514 |  | $ | 22,125 |
1 The 2021 pro forma combined net income was adjusted to exclude merger-related costs of $5.4 million incurred by Bancorp and $3.6 million incurred by AMRB. These merger-related costs were included in the combined net income for the nine months ended September 30, 2020 as if the merger occurred on January 1, 2020.
Schedule of Merger-Related One-Time and Conversion Costs | Merger-related one time and conversion costs are recognized as incurred and continue until all systems have been converted and operational functions are fully integrated. Bancorp's merger-related costs reflected in the consolidated statements of comprehensive income are summarized in the following table.
| Three months ended |  | Nine months ended
(in thousand, unaudited) | September 30, 2021 | September 30, 2020 |  | September 30, 2021 | September 30, 2020
Personnel and severance | $ | 2,668 |  | $ | — |  |  | $ | 2,668 |  | $ | — |
Professional services | 1,778 |  | — |  |  | 1,979 |  | — |
Data processing | 433 |  | — |  |  | 433 |  | — |
Other expense | 263 |  | — |  |  | 279 |  | — |
Total merger-related one-time and conversion costs | $ | 5,142 |  | $ | — |  |  | $ | 5,359 |  | $ | — |

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- Definition Tabular disclosure of the amounts recognized as of the acquisition date for each major class of assets acquired and liabilities assumed. May include but not limited to the following: (a) acquired receivables; (b) contingencies recognized at the acquisition date; and (c) the fair value of noncontrolling interests in the acquiree. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=123413009&loc=d3e4845-128472 + Details
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