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Business Combinations | 9 Months Ended
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Sep. 30, 2023
Business Combinations [Abstract] |
Business Combinations | Note 2 – Business Combinations On May 19, 2023, the Company completed its acquisition of Noan Bank, a Pennsylvania chartered state bank headquartered in Elkins Park, Pennsylvania that primarily served the Philadelphia, North New Jersey and New York City markets. On that date the Company acquired 100% of the outstanding common stock of Noah Bank and Noah Bank was merged with and into the Bank. In accordance with the terms of the acquisition agreement, the Company paid $6.00 per share of Noah’s common stock outstanding on the closing date. The acquisition of Noah Bank was accounted for as a business combination using the acquisition method of accounting, and accordingly, the assets acquired, the liabilities assumed, and consideration transferred were recorded at their estimated fair value as of the acquisition. The $9.7 million below was recorded as a “Bargain Purchase” in non-interest income on the Consolidated Statement of Income. This item was not taxable for the recording of income taxes on the Consolidated Statement of Income. The following table summarizes the purchase price calculation and bargain purchase gain resulting from acquisition:
|  | Fair Value |
(Dollars in thousands except per share data) |  |  |  |
Purchase Price Consideration in Cash for Noah Bank’s Outstanding Shares |  |  |  |
Noah Bank number of common shares outstanding |  |  | 4,235,666 |
Purchase price per share assigned to cash consideration |  | $ | 6.00 |
Cash consideration |  | $ | 25,414 |
Assets Acquired: |  |  |  |
Cash and cash equivalents |  | $ | 23,181 |
Securities available-for-sale |  |  | 6,454 |
Loans receivable, net of allowance |  |  | 185,891 |
Core deposit intangible |  |  | 99 |
Premises and equipment |  |  | 2,495 |
Operating leases right-of-use |  |  | 10,523 |
Deferred tax assets |  |  | 4,308 |
Other assets |  |  | 6,500 |
Fair value of assets acquired |  |  | 239,451 |
Liabilities Assumed: |  |  |  |
Deposits |  |  | 191,700 |
Operating lease liability |  |  | 10,523 |
Other liabilities assumed |  |  | 2,118 |
Fair value of liabilities assumed |  |  | 204,341 |
Total identifiable net assets |  |  | 35,110 |
Bargain purchase gain |  | $ | (9,696 | )
The Company recorded merger-related expenses of $5.6 million, consisting of $2.5 million for termination of a branch lease, $1.7 million related to termination of data processing contract, $287 thousand for legal related expenses, $243 thousand for investment banker services, $184 thousand in severance payments, $115 thousand in professional services provided and $619 thousand in other miscellaneous related expenses. In addition, the Company recorded a $1.7 million provision for the non-purchase credit deteriorated loans in connection with the acquisition. While the valuation of the acquired assets and liabilities is substantially complete, fair value estimates related to the assets and liabilities from Noah Bank are subject to adjustment for up to one year after the closing date of the acquisition as additional information becomes available. Valuations subject to adjustment include, but are not limited to, investments, loans and deposits as management continues to review the estimated fair value and evaluate the assumed tax position. When the valuation is final, any changes to the preliminary valuation could result in adjustments of bargain purchase recorded. The following is a description of the fair value methodologies used to estimate the fair values of major categories of assets acquired. Cash and due from banks: The estimated fair values of cash and due from banks approximated their state value. Investment securities: The acquired portfolio had a fair value of $6.5 million, primarily consisting of mortgage-backed securities and small business administration securities. Loans: The Company recorded $185.9 million of acquired loans that were recorded at their estimated fair values as of the date of the acquisition. Fair values for loans were based on a discounted cash flow methodology that considered credit loss and prepayment expectations, market interest rates and other market factors, such as liquidity, from the perspective of a market participant. Loan cash flows were generated on an individual loan basis. The probability of default (“PD”), loss given default (“LGD”), exposure of default and prepayment assumptions are the key factors driving credit losses that are embedded in the estimated cash flows. The Company determined that $37.3 million of the acquired loans were purchased credit deteriorated (“PCD”) of which $34.5 million were performing and $2.6 million were non-performing at the time of the acquisition. Allowance for credit losses : The acquisition resulted in the addition of $2.3 million in the allowance for credit losses, including $537 thousand identified for purchase credit deteriorated loans. Other assets : The Company acquired $2.5 million of premises and equipment and $10.5 million of operating lease right-of-use assets and recorded the assets at fair value. Time deposits: Time deposits were valued at the account level based on their remaining maturity dates and comparing the contractual cost of the portfolio to similar instruments. The valuation adjustment of $407 thousand will be accreted to expense over a five-year period.

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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://www.xbrl.org/2003/role/disclosureRef -Topic 805 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479907/805-20-50-5 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//805/tableOfContent + Details
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