Acquisition

On December 20, 2017, LCNB and Columbus First Bancorp, Inc. (“CFB”) entered into an Agreement and Plan of Merger (“Merger Agreement”) pursuant to which CFB merged with and into LCNB on May 31, 2018. Immediately following the merger of CFB into LCNB, Columbus First Bank, a wholly-owned subsidiary of CFB, merged into the Bank. Columbus First Bank operated from one full-service office located in Worthington, Ohio. That office became a branch of the Bank after the merger.

Under the terms of the Merger Agreement, the shareholders of CFB received two shares of LCNB common stock for each outstanding CFB common share. Unexercised stock options of CFB were canceled in exchange for a cash payment.

The merger with CFB was accounted for using the acquisition method of accounting and, accordingly, assets acquired, liabilities assumed, and consideration paid were recorded at their estimated fair values as of the merger date. The estimated fair values reported in LCNB's Form 10-Q for the quarterly period ended June 30, 2018 were preliminary, as the pricing study had not been finalized at that time.

The following table summarizes the preliminary balances at June 30, 2018, revisions to the preliminary balances, and the balances at December 31, 2018 (in thousands):



	June 30, 2018		Fair Value Adjustments		December 31, 2018
Consideration Paid:
Common shares issued (3,253,060 shares issued at $19.55 per share)	$	63,598	—		63,598
Cash paid to cancel share based payment awards	783		—		783
	64,381		—		64,381

Identifiable Assets Acquired:
Cash and cash equivalents	13,679		—		13,679
Interest-bearing time deposits	10,350		—		10,350
Federal Home Loan Bank stock	1,207		—		1,207
Loans, net	282,748		(615	)	282,133
Loans held for sale, net	1,819		—		1,819
Premises and equipment	102		—		102
Core deposit intangible	2,089		88		2,177
Other real estate owned	35		—		35
Deferred income taxes	—		352		352
Other assets	2,022		(658	)	1,364
Total identifiable assets acquired	314,051		(833	)	313,218

Liabilities Assumed:
Deposits	245,036		(606	)	244,430
Short-term borrowings	10,000		—		10,000
Long-term debt	22,920		23		22,943
Deferred income taxes	200		(200	)	—
Other liabilities	491		11		502
Total liabilities assumed	278,647		(772	)	277,875

Total Identifiable Net Assets Acquired	35,404		(61	)	35,343

Goodwill resulting from merger	$	28,977	61		29,038

As permitted by ASC 805-10-25, Business Combinations, the above estimated amounts could be adjusted up to one year after the closing date of the acquisition to reflect any new information obtained about facts and circumstances existing at the acquisition date. Any changes in the estimated fair values were recognized in the period the adjustment was identified. This adjustment period closed on May 31, 2019. There were no revisions during 2019.

The amount of goodwill recorded reflects LCNB's expansion in the Columbus market and related synergies that are expected to result from the acquisition and represents the excess purchase price over the estimated fair value of the net assets acquired. The goodwill will not be amortizable on LCNB's financial records and will not be deductible for tax purposes. Goodwill will be subject to an annual test for impairment and the amount impaired, if any, will be charged to expense at the time of impairment. The core deposit intangible is being amortized over the estimated weighted average economic life of the various core deposit types, which is approximately seven years.

Direct costs related to the acquisition were expensed as incurred and are recorded as a merger-related expense in the consolidated condensed statements of income.

CFB's results of operations are included in the consolidated condensed statements of income from May 31, 2018, the effective date of the merger.