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BRANCH ACQUISITION

12 Months Ended

Dec. 31, 2021

27. BRANCH ACQUISITION

On May 21, 2021, AmeriServ Financial Bank, the Company’s wholly owned banking subsidiary, completed its previously announced acquisition from Citizen’s Neighborhood Bank (CNB), an operating division of Riverview Bank, the branch and deposit customers in Meyersdale, Pennsylvania and the deposit customers in Somerset, Pennsylvania. On this date, the Meyersdale branch continued in operation under the AmeriServ name while the Somerset branch customers were transferred to the full service AmeriServ office at 108 West Main Street. Pursuant with the terms of the purchase and assumption agreement, the related deposits, totaling approximately $42 million on the closing date, were acquired for a 3.71% deposit premium, or $1.6 million.

The acquisition was accounted for under the acquisition method of accounting as prescribed by FASB Accounting Standards Codification 805, Business Combinations, as amended. Accordingly, the acquisition’s results of operations have been included in the Company’s results of operations as of the date of acquisition. Under this method of accounting, the purchase price has been allocated to the respective assets acquired and liabilities assumed based on their

estimated fair values. Management made significant estimates and exercised significant judgment in accounting for the acquisition.

In accordance with the purchase and assumption agreement, the purchase price of the real property (i.e. premise and equipment) was equal to the net book value as of the date of acquisition. The Company determined that the net book value was a reasonable proxy of fair value based on review of appraisals on record at Riverview Bank. The Company engaged a consultant to assist in the valuation of the core deposit intangible asset and fair value of certificates of deposit. Core deposits include demand deposits, interest-bearing checking, money market, and savings accounts. The core deposit intangible value assigned to the acquired deposits was determined using the income approach and represents the future economic benefit of the potential cost savings from acquiring those core deposits compared to the cost of obtaining generally higher cost FHLB borrowings. Certificates of deposit (CDs) are not considered to be core deposits as they typically are less stable and generally do not have an all-in favorable funding advantage to alternative funding sources. The fair value of CDs represents the present value of the certificates’ expected contractual payments discounted by market rates for similar CDs.

The following table reflects the basis of assets acquired and liabilities assumed from Riverview Bank as of the acquisition date (in thousands).


Consideration received
Cash received			$	40,154

Fair value of assets acquired
Cash and cash equivalents	$	258
Loans		36
Premises and equipment		158
Core deposit intangible		177
Other assets		19
				648
Fair value of liabilities assumed
Deposits		(42,432)
Other liabilities		(37)
				(42,469)

Total fair value of identifiable net assets				(41,821)

Goodwill resulting from acquisition			$	1,667

The Company recorded goodwill and other intangibles associated with the acquisition of the Meyersdale and Somerset branches from Riverview Bank totaling $1.8 million. Goodwill is not amortized, but is periodically evaluated for impairment. The Company did not recognize any impairment during the year ended December 31, 2021. The carrying amount of the goodwill at December 31, 2021 related to the Riverview branch acquisition was $1.7 million.

Identifiable intangible assets are amortized to their estimated residual values over their expected useful lives. Such lives are also periodically reassessed to determine if any amortization period adjustments are required. During the year ended December 31, 2021, no such adjustments were recorded. The identifiable intangible assets consist of a core deposit intangible which is being amortized on an accelerated basis over a ten-year useful life. The gross carrying amount of the core deposit intangible at December 31, 2021 was $177,000 with $19,000 accumulated amortization as of that date.

The amount of revenue of the acquired business since the acquisition date, and the pro-forma results of operations, are not material to the financial statements.