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Note 2 - Business Combination and Pending Acquisition | 3 Months Ended
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Mar. 31, 2020
Notes to Financial Statements |
Business Combination Disclosure [Text Block] | 2. BUSINESS COMBINATION AND PENDING ACQUISITION Business Combination – Acquisition of Monument Bancorp, Inc. On April 1, 2019, the Corporation completed its acquisition of 100% of the common stock of Monument Bancorp, Inc.(“Monument.”) Monument was the parent company of Monument Bank, a commercial bank which operated two community bank offices and one lending office in Bucks County, Pennsylvania. Pursuant to the merger, Monument was merged into Citizens & Northern Corporation and Monument Bank was merged into C&N Bank. Total purchase consideration was $42.7 million, including cash paid to former Monument shareholders totaling $9.6 million and 1,279,825 shares of Corporation common stock issued with a value of $33.1 million, net of costs directly related to stock issuance of $181,000. In connection with the transaction, the Corporation recorded goodwill of $16.4 million and a core deposit intangible asset of $1.5 million. Total loans acquired on April 1, 2019 were valued at $259.3 million, while total deposits assumed were valued at $223.3 million, borrowings were valued at $111.6 million and subordinated debt was valued at $12.4 million. The subordinated debt included an instrument with a fair value of $5.4 million that was redeemed on April 1, 2019 with no realized gain or loss. The Corporation acquired available-for-sale debt securities valued at $94.6 million and sold the securities in early April for approximately no realized gain or loss. The assets purchased and liabilities assumed in the merger were recorded at their estimated fair values at the time of closing, subject to refinement for up to one year after the closing date. There were no adjustments to the fair value measurements of assets or liabilities in the first quarter 2020. Merger-related expenses, including legal and professional expenses and conversion of Monument’s customer accounting data into C&N’s core system, were $311,000 in the first quarter 2019. Pending Acquisition of Covenant Financial, Inc. In December 2019, the Corporation announced a plan of merger to acquire Covenant Financial, Inc. (“Covenant”). Covenant is the holding company for Covenant Bank, which operates banking offices in Bucks and Chester Counties of PA. At March 31, 2020, Covenant reported total assets of $522 million, liabilities of $479 million and stockholders’ equity of $43 million. Under the terms of the definitive agreement, the Corporation will pay cash for 25% of the Covenant shares and will convert 75% of Covenant shares to the Corporation’s common stock. The transaction was valued on December 18, 2019 at approximately $77 million. Based on the average closing price of the Corporation’s common stock in the final 10 trading days of March 2020 of $18.87 per share, the value of the transaction would be $60 million. The value used to record the stock-based portion of the merger consideration will be based on the average of the high and low trading price of the Corporation’s common stock on the closing date. The merger is subject to satisfaction of customary closing conditions, including receipt of regulatory approvals and approval of Covenant’s shareholders. The merger is expected to close in the third quarter 2020. In the first quarter 2020, the Corporation incurred merger-related expenses related to the planned acquisition of Covenant totaling $141,000, In the year ending December 31, 2020, management expects the Corporation to incur significant additional merger-related expenses, including severance and similar expenses, costs associated with termination of data processing contracts, conversion of Covenant’s customer accounting data, legal and professional fees and various other costs. Management estimates pre-tax merger-related expenses associated with the Covenant acquisition will total approximately $7.4 million ( $6.0 million, net of tax), with most of the expenses expected to be incurred in the third quarter 2020.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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