Acquisition

9 Months Ended

Sep. 30, 2019

Business Combinations [Abstract]

Business Combination Disclosure

Acquisition

On November 30, 2017, we acquired 100% of the outstanding stock of Diboll State Bancshares, Inc. and its wholly-owned subsidiary First Bank & Trust East Texas (collectively, “Diboll”) headquartered in Diboll, Texas. Diboll operated 17 banking offices in Diboll and surrounding areas. We acquired Diboll to further expand our presence in the East Texas market. The total merger consideration for the Diboll merger was $224.3 million. The operations of Diboll were merged into the Company as of the date of the acquisition.

The Company acquired loans, investment securities and deposits with fair values of $621.3 million, $234.4 million and $899.3 million, respectively, at the acquisition date. During 2017, the Company recognized goodwill of $109.7 million associated with the Diboll acquisition. As of September 30, 2019, goodwill related to the acquisition was $109.6 million, after recording measurement period adjustments during the third quarter of 2018.  The goodwill resulting from the acquisition represents the value expected from the expansion of our markets into the Southeast Texas region and the enhancement of our operations through customer synergies and efficiencies, thereby providing enhanced customer service. Goodwill associated with this acquisition is not expected to be deductible for tax purposes.  The Company had goodwill of $201.1 million as of September 30, 2019 and December 31, 2018.

We recognized a core deposit intangible of $14.7 million and a trust relationship intangible of $5.4 million, at the date of acquisition, which we are amortizing using an accelerated method over a 9- and 13-year weighted average amortization period, respectively, consistent with expected future cash flows.

The Diboll acquisition was accounted for using the acquisition method of accounting and accordingly, purchased assets, including identifiable intangible assets and assumed liabilities, were recorded at their respective acquisition date fair values.  For more information concerning the fair value of the assets acquired and liabilities assumed in relation to the acquisition of Diboll, see “Note 2 - Acquisition” in our Annual Report on Form 10-K for the year ended December 31, 2018.