BUSINESS COMBINATIONS

12 Months Ended

Dec. 31, 2019

NOTE 2—BUSINESS COMBINATIONS

As of April 1, 2018, Civic Bank & Trust merged with and into the Bank with the Bank continuing as the surviving company. Under the terms of the acquisition, Civic’s common shareholders received a total of 970,390 shares of the FFN's common stock in exchange for the outstanding shares of Civic common stock. With the completion of the acquisition, the Company has its first full service branch office in Nashville, Tennessee located in the Davidson County market. The results of Civic’s operations are included in the Company’s results since April 1, 2018. Acquisition-related costs of $565 are included in other noninterest expense in the Company’s income statement ended December 31, 2018. The fair value of the common shares issued as part of the consideration paid for Civic was determined using the basis of the closing price of the Company’s common shares on the acquisition date.

Goodwill of $9,052 arising from the acquisition consisted largely of synergies resulting from the combining of the operations of the companies. At December 31, 2019, there were no circumstances or significant changes that have occurred in

2019 related to the acquisition of Civic that, in management's assessment, would necessitate recording impairment of goodwill. The fair value of intangible assets related to core deposits was determined to be $558.

The following table summarizes the consideration paid for Civic and the amounts of the assets acquired and liabilities assumed recognized at the acquisition date:


Consideration:
Common stock issued to Civic shareholders	$	31,635
Fair value of stock options issued to Civic option holders	1,539
Fair value of total consideration	$	33,174
Recognized amounts of identifiable assets acquired and liabilities assumed:
Cash and cash equivalents	$	24,660
Certificates of deposit at other financial institutions	500
Securities available for sale	31,734
Loans	96,385
Equity securities	876
Premises and equipment	253
Core deposit intangibles	558
Foreclosed assets	350
Other assets	5,285
Total assets acquired	160,601
Deposits	123,162
Federal Home Loan Bank advances	11,500
Other liabilities	1,817
Total liabilities assumed	136,479
Total net assets acquired	24,122
Goodwill	$	9,052

The fair value of net assets acquired includes fair value adjustments to certain loan receivables that were not considered impaired as of the acquisition date. As such, these receivables were not subject to the guidance relating to purchased credit-impaired loans. Receivables acquired include loans and customer receivables with a fair value and gross contractual amounts receivable of $96,385 and $96,903, respectively, on the date of acquisition.

The following table presents supplemental unaudited pro forma information as if the Civic acquisition had occurred at the beginning and 2017. The unaudited pro forma information includes adjustments for interest income on loans acquired, amortization of intangibles arising from the transaction, interest expense on deposits acquired, and the related income tax effects. The unaudited pro forma financial information is not necessarily indicative of the results of operations that would have occurred had the transactions been effected on the assumed dates. Because the Civic transaction closed on April 1, 2018, and its actual results are included in the Company’s actual operating results for the year ended December 31, 2019, there is no pro forma information for that period.


	For the Year Ended December 31,
Unaudited	2018		2017
Net interest income – pro forma	$	106,765	$	103,055
Net income – pro forma	$	34,606	$	29,368
Earnings per share – pro forma:
Basic	$	2.28	$	2.09
Diluted	$	2.20	$	1.99