Business Combinations (Tables) - Bay Banks [Member]

3 Months Ended

Mar. 31, 2021

Summary of Estimated Fair Value Adjustments of Consideration Paid, Acquired Asset and Assumed Liabilities

The following table presents the consideration paid in the merger and the summary balance sheet of Bay Banks as of the date of the merger inclusive of estimated fair value adjustments and the allocation of consideration paid in the merger to the acquired assets and assumed liabilities. The goodwill resulting from the Bay Banks Merger was $7.2 million.

(Dollars in thousands, except per share data)
Consideration paid:				Reference:
Company's common shares issued		9,951,743		A
Purchase price per share	$	12.55		A, B
Value of common stock issued	$	124,928
Estimated fair value of stock options		472
Cash in lieu of fractional shares		3
Total consideration paid	$	125,403
Effective settlement of subordinated notes		(650	)
Total consideration paid less effective settlement of subordinated notes	$	124,753
Fair value of assets acquired:
Cash and due from banks	$	44,066
Federal funds sold		1,732
Certificates of deposit		1,018
Securities available for sale		79,505
Restricted securities		4,385
Loans held for investment		1,030,433		C
Loans held for sale		3,814
Premises and equipment		15,532		D
Right of use asset		1,864
Other real estate owned		598
Bank owned life insurance		20,259
Mortgage servicing rights		987
Core deposit intangible		6,850		E
Deferred tax asset, net		2,685		F
Other assets		10,855		G
Total assets	$	1,224,583
Fair value of liabilities assumed:
Deposits	$	1,030,888		H
FHLB borrowings		10,124		I
FRB borrowings		24,815
Subordinated notes		31,850		J
Other liabilities		9,359
Total liabilities	$	1,107,036
Net identifiable assets acquired at fair value	$	117,547
Goodwill	$	7,206

Reference:	Explanation of reference:
A	Common shares issued and purchase price per share are presented on a post Stock Split basis, which was effective April 30, 2021.
B	The value of the shares of the Company's common stock exchanged for shares of legacy Bay Banks common stock was based upon the closing price of the Company's common stock at January 29, 2021, the last trading day prior to the date of completion of the merger on January 31, 2021.
C	Reflective of a $17.9 million (or 1.70%) fair value adjustment (discount) to the amortized cost of the loan portfolio acquired.
D	Reflective of a $4.4 million fair value adjustment (premium) over the net book value of premises and equipment acquired.
E	Core deposit intangible asset recorded to reflect the fair value of nonmaturity deposits, except for time deposits over $100,000, assumed by the Company.
F	Reflective of a $2.1 million net deferred tax asset recorded on all fair value adjustments, excluding goodwill, at the statutory federal income tax rate of 21%.
G	Reflective of a $203 thousand fair vale adjustment (premium) on other assets acquired.
H	Reflective of a $5.8 million fair value adjustment (premium) over the book value of time deposits assumed.
I	Reflective of a $124 thousand fair value adjustment (premium) on the $10 million Federal Home Loan Bank of Atlanta ("FHLB") advance assumed.
J	Reflective of a $950 thousand fair value adjustment (premium) over the book value of subordinated notes assumed.

Summary of Purchased Performing and PCI Loans Receivable

The following table presents the purchased performing and PCI loans receivable at the date of the Bay Banks Merger and the fair value adjustments (discounts) recorded immediately following the merger.

	As of January 31, 2021
(dollars in thousands)	Purchased Performing			PCI			Total
Principal payments receivable	$	936,523		$	111,766		$	1,048,289
Fair value adjustment - credit and interest		(2,784	)		(15,072	)		(17,856	)
Fair value of acquired loans	$	933,739		$	96,694		$	1,030,433

Summary of Fair Value Adjustments of Acquired Asset and Assumed Liabilities

The net effect of the amortization and accretion of premiums and discounts associated with the Company’s fair value adjustments to assets acquired and liabilities assumed in the Bay Banks Merger had the following effect on the Company’s consolidated income statement for the three months ended March 31, 2021.

	For the three months ended March 31,
(dollars in thousands)	2021
Loans (1)	$	272
Time deposits (2)		687
FHLB borrowings (3)		2
Subordinated notes (4)		35
CDI (5)		(226	)
Net impact to income before income taxes	$	770

(1) Loan discount accretion is included in the “Interest and fees on loans” section of “Interest Income” in the consolidated income statements.

(2) Time deposit premium amortization is included in the “Interest on deposits” section of “Interest Expense” in the consolidated income statements.

(3) FHLB borrowings premium amortization is included in the “Interest on FHLB and FRB borrowings” section of “Interest Expense” in the consolidated income statements.

(4) Subordinated notes premium amortization is included in the “Interest on subordinated notes” section of “Interest Expense” in the consolidated income statements.

(5) CDI amortization is included in the “Intangible amortization” section of “Noninterest Expense” in the consolidated income statements.

Summary of Business Acquisition, Pro Forma Information

The following table presents the effect of the Bay Banks Merger on the Company on a pro forma basis, as if the merger had occurred at the beginning of the three-month periods ended March 31, 2021 and 2020. There were no merger-related expenses incurred in the first quarter of 2020 related to the Bay Banks Merger. Merger-related expenses of $9.0 million for the three months ended March 31, 2021, which are included in the Company’s consolidated income statements, are not included in the pro forma information below. Merger-related expenses incurred by Bay Banks prior to the completion of the Bay Banks Merger are not included in the Company’s consolidated income statements and are also not included in the pro forma information below. Net income includes pro forma adjustments for the accretion and amortization of estimated fair value adjustments on acquired loans and assumed time deposits and borrowings, as well as amortization of estimated CDI. An income tax rate of 21% was used in determining pro forma net income.

	For the three months ended March 31,
(dollars in thousands, except per share data)	2021		2020
Revenue (net interest income plus noninterest income)	$	39,005	$	24,098
Net income		11,944		3,928
Earnings per common share		0.64		0.21