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Merger (Tables)

9 Months Ended

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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