Acquisitions

12 Months Ended

Dec. 31, 2013

Business Combinations [Abstract]

Acquisitions

Note 2:  Acquisitions

On November 22, 2013, the Company completed the acquisition of the deposit relationships, real estate and fixed assets of the Osgood, Indiana branch office of Old National Bank, a national banking association. Cash proceeds of $6.3 million were received in the transaction, representing the net book value of the real and personal property acquired and a 2% premium on deposits, as reduced by the deposits assumed at closing. Customer deposits acquired in the transaction totaled $6.5 million, and goodwill recognized in the transaction was $124,000. No loans were acquired in this transaction.

The fair value of the assets acquired, liabilities assumed, and the purchase price for the Osgood, Indiana branch acquisition was allocated as follows:

Consideration:  Cash paid	$	129
Fair value of assets acquired:
Cash and cash equivalents		6,379
Property and equipment		73
Core deposit intangible		11
Other assets		1
Total assets acquired		6,464
Fair value of liabilities assumed:
Deposits		6,455
Interest payable		2
Other liabilities		2
Total liabilities assumed		6,459
Goodwill	$	124

On November 9, 2012, the Company completed its acquisition of Dupont State Bank, an Indiana commercial bank wholly owned by Citizens Union Bancorp of Shelbyville, Inc. In conjunction with the acquisition, River Valley Financial Bank (Bank) merged with and into Dupont State Bank, which changed its name to River Valley Financial Bank, effecting the conversion of the Bank from a federally chartered thrift to a state chartered commercial bank. Under the terms of the acquisition, the Bank paid $5,700,000 for the stock of Dupont State Bank with a resulting bargain purchase gain, after application of purchase accounting adjustments, of $988,000. The bargain gain was recorded as other income in the three-month period ended December 31, 2012.

Under the purchase method of accounting for purchases, the total purchase price is allocated to the net tangible and intangible assets based on their current estimated fair values as of the date of acquisition.

Based on independent, third party valuation of the fair value of those assets acquired, and liabilities assumed, the purchase price for the Dupont State Bank acquisition was allocated as follows:

Consideration:  Cash paid	$	5,700
Fair value of assets acquired:
Cash and cash equivalents		14,893
Investment securities available for sale		12,139
Loans		52,125
Property and equipment		3,160
Federal Home Loan Bank stock		369
Real estate, held for sale		334
Core deposit intangible		514
Interest receivable		364
Other assets		1,243
Total assets acquired		85,141
Fair value of liabilities assumed:
Deposits		78,300
Interest payable		69
Other liabilities		84
Total liabilities assumed		78,453
Bargain purchase gain	$	(988	)

At the time of acquisition, the fair value of the assets acquired from Dupont State Bank included loans with a fair value of $52,125,000. The gross principal and contractual interest due under the contracts was $53,982,000, of which $2,960,000 was expected to be uncollectible.

The contributed revenues and net income of the acquired business for the period from November 9, 2012 to December 31, 2012 is not available as separate financial information was not maintained.

The following unaudited pro forma summary presents consolidated information of the Company as if the business combination had occurred on January 1, 2012:

	Pro Forma Year Ended December 31, 2012
Revenue (interest income and other income)	$	25,863
Net income		3,657

The pro forma revenue and net income for the year ended December 31, 2012, excludes the bargain purchase gain of $988,000 recognized in 2012. In addition, the pro forma net income for the year ended December 31, 2012 excludes acquisition expenses of $382,000.

As a result of these two acquisitions, and the addition of three market areas, the Company has an opportunity to expand both lending and deposit services. Cost savings are expected through economies of scale and consolidation of operating centers. For the twelve-month period ended December 31, 2013, the Company had approximately $84,000 in costs relative to the acquisitions. Acquisition expense for the same period ended December 31, 2012, was $382,000.