ACQUISITIONS

6 Months Ended

Jun. 30, 2020

ACQUISITIONS

ACQUISITIONS

NOTE 2 - ACQUISITIONS

On February 10, 2020, the Company entered into a branch purchase and assumption agreement with Simmons, to acquire all of the Simmons’ Colorado locations, including three branches and one loan production office located in

Denver, as well as certain deposits, loans and other assets. The transaction closed on May 15, 2020 with an aggregate purchase price of $61.6 million, including a deposit premium of 6.06%.

Goodwill of $4.5 million was recognized in the transaction and represents expected synergies and cost savings resulting from combining the expanded footprint and expertise of the associates.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed in the May 15, 2020 transaction with Simmons, and reflects all adjustments made to the fair value of the opening balance sheet through June 30, 2020 (in thousands):

	May 15,
Fair value of consideration transferred	2020
Cash consideration	$	61,599
Total fair value of consideration transferred		61,599
Assets acquired
Cash and due from banks		283
Loans, net		119,552
Core deposit intangible		53
Accrued income and other assets		382
Total assets acquired		120,270
Liabilities assumed
Deposits		63,080
Accrued expenses and other liabilities		96
Total liabilities assumed		63,176
Net assets acquired		57,094
Goodwill recognized	$	4,505

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⁽¹⁾ The core deposit intangible was determined to have an estimated life of 10 years.

The fair value of net assets acquired includes fair value adjustments to loans as of the acquisition date. The fair value adjustments were determined using discounted expected cash flows. Loans had a fair value of $119.6 million and a contractual balance of $120.6 million as of May 15, 2020. The discount on the loans acquired in this transaction due to anticipated credit loss, as well as considerations for market interest rates, totaled $1.1 million, representing 0.9% of their contractual balances. No allowance for loan losses related to acquired loans was brought over as a result of the Branch Acquisition. Loans acquired included short-term modifications made on a good faith basis by Simmons, in response to COVID-19. All of the modification were given additional review prior to the closing of the purchase and management determined that loans were performing prior to modification and were not considered impaired at purchase. There were no loans acquired that were considered to be purchased credit impaired (“PCI”) loans.

The composition of the acquired loan portfolio as of May 15, 2020 is detailed in the table below (in thousands):

	May 15,
	2020
Cash, Securities and Other	$	13,457
Construction and Development		40,407
1-4 Family Residential		7,252
Non-Owner Occupied Commercial Real Estate ("CRE")		545
Owner Occupied CRE		321
Commercial and Industrial		58,660
Total gross loans	$	120,642

The Company incurred $0.3 million in expenses related to the acquisition during the three months ended June 30, 2020. Acquisition expenses, including professional fees, are included in the total noninterest expense line item in the condensed consolidated statement of income.