NOTE

– ACQUISITIONS

November 15, 2019,

the Company completed the acquisition of

four

branch banking centers, certain performing loans, and certain customer deposits from Republic Bank and Trust. The branch banking centers are located in the Kentucky cities of Elizabethtown, Frankfort, and Owensboro. The purchase included approximately

$126.8

million in performing loans and

$1.5

million in premises and equipment, as well as approximately

$131.8

million in customer deposits. This acquisition allows the Bank to further optimize its branch footprint regionally and solidifies its presence and ability to serve customers in Daviess, Hardin, and Franklin counties.

Included in the purchase price was goodwill and a core deposit intangible of

$6.3

million and

$2.5

million, respectively. Goodwill is the excess of the purchase price over the fair value of the identifiable net assets acquired and is the result of expected operational synergies and other factors. This goodwill and core deposit intangible is deductible for tax purposes. The goodwill will

not

be amortized, but will be measured annually for impairment or more frequently if circumstances require. The core deposit intangible will be amortized over an estimated life of

years using an accelerated method. The Company did

not

recognize any core deposit intangible expense during

2019

and is projected for the next

five

years beginning

2020

to be

$256,000

per year with

$1.2

million in total for years after

2024.

The following table summarizes the estimated fair value of the assets acquired, liabilities assumed and consideration transferred in connection with the acquisition (in thousands):

Consideration: Cash	$	6,286
Fair value of total consideration transferred		6,286
Recognized amounts of identifiable assets acquired and liabilities assumed:
Cash and cash equivalents	$	1,006
Loans		126,823
Premises and equipment		1,451
Leased right-of-use asset		1,892
Core deposit intangibles		2,500
Accrued interest receivable and other assets		380
Total assets acquired		134,052
Deposits		131,769
Lease liability		1,892
Accrued interest payable and other liabilities		357
Total liabilities assumed		134,018

Net identifiable assets		34

Goodwill		6,252
	$	6,286

If the Company obtains additional information during the

twelve

months subsequent to the acquisition date, the fair value of the acquired assets and liabilities

may

be adjusted, although such adjustments are

not

excepted to be significant.

The fair value of loans was estimated using discounted contractual cash flows. The book balance of the loans at the time of the acquisition was

$127.3

million. The fair value disclosed above reflects a credit-related adjustment of

$1.4

million offset by an adjustment for other factors of

$924,000.

There were

loans evidencing credit deterioration since origination (purchased credit impaired loans).

Acquisition-related costs to the branch acquisition were expensed as incurred and amounted to

$775,000

for

2019.

These costs were recorded in non-interest expense in the Consolidated Statement of Operations and primarily included integration costs, marketing, legal and consulting fees.