13. BUSINESS COMBINATIONS

In June 2020, Windmark acquired the operating assets of a crop insurance agency in Nebraska for $687 thousand. Fair value of the assets acquired in this transaction as of the closing date are as follows:

Cash paid	$	687

Assets acquired:
Premises and equipment, net	$	24
Customer list		512
Other intangible assets		151
Total assets acquired	$	687

West Texas State Bank

In November 2019, the Company completed its acquisition of West Texas State Bank (“WTSB”). This transaction resulted in six additional branches. The Company paid the shareholders of WTSB $76.1 million in cash, for all outstanding stock of WTSB and resulted in 100% ownership interest.

The Company recognized total goodwill of $19.8 million which is calculated as the excess of both the consideration exchanged and liabilities assumed compared to the fair market value of identifiable assets acquired. None of the goodwill recognized is expected to be deductible for income tax purposes.

The Company incurred expenses related to the acquisition of approximately $955,000 for the year ended December 31, 2019, which are included in noninterest expense in the consolidated statements of comprehensive income.

Non-credit impaired loans had a fair value of $196.2 million at the acquisition date and contractual balance of $198.4 million. As of the acquisition date, the Company expects that an insignificant amount of the contractual balance of these loans will be uncollectible. The difference of $2.2 million will be recognized into interest income as an adjustment to yield over the life of the loans. Purchased credit impaired loans were insignificant.

Fair values of the assets acquired and liabilities assumed in this transaction as of the closing date are as follows:

Cash paid	$	76,100

Assets acquired:
Cash and cash equivalents	$	77,903
Interest-bearing time deposits in banks		52,700
Federal funds purchased		26,468
Securities available for sale		68,398
Loans held for investment		195,228
Bank-owned life insurance		10,932
Premises and equipment, net		4,132
Accrued interest receivable		1,114
Core deposit intangible		6,679
Other assets		2,648
Total assets acquired	$	446,202

Liabilities assumed
Deposits	$	386,176
Accrued interest payable		55
Deferred tax liability		762
Other liabilities		2,884
Total liabilities assumed	$	389,877
Net assets acquired	$	56,325
Goodwill recorded in acquisition	$	19,775

In the first six months of 2020, the Company made measurement period adjustments to reflect facts and circumstances in existence as of the closing date of the acquisition. These adjustments primarily included a $1.2 million increase in goodwill, a $900,000 decrease in loans, and a $300,000 increase in other liabilities. The amount of income recorded in current period earnings that would have been recorded in the previous reporting period had the adjustment been recognized as of the acquisition date is not significant. The Company is still evaluating the fair values of other assets and other liabilities, additional adjustments may be recorded during the measurement period, but no later than one year from the closing date of the transaction. The Company will reflect measurement period adjustments, if any, in the period in which the adjustments are recognized, which may result in further adjustments to the values presented in the above table. The Company expects to finalize these values by the third quarter 2020.