Business Combinations

9 Months Ended

Sep. 30, 2020

Business Combinations:

On January 7, 2020, the Company completed the acquisition of Maple Leaf Financial, Inc. (“Maple Leaf”), the parent company of Geauga Savings Bank, with branches located in Cuyahoga and Geauga Counties in Ohio. The Company expects the acquisition to increase synergies and cost savings resulting from the combining of the two companies. The transaction involved both cash and 1,398,229 shares of stock totaling $43.0 million. Pursuant to the terms of the Merger Agreement, common shareholders of Maple Leaf had the right to receive $640.00 in cash or 45.5948 common shares, without par value, of the Company. Holders of outstanding and unexercised warrants to purchase Maple Leaf Common Shares received an amount in cash equal to the excess of $640.00 over $370.00, the exercise price of such warrants.

Goodwill of $9.2 million, which is recorded on the balance sheet, arising from the acquisition consisted largely of synergies and the cost savings resulting from the combining of the entities. The goodwill was determined not to be deductible for income tax purposes.

The following table summarizes the consideration paid for Maple Leaf and the amounts of the assets acquired and liabilities assumed on the closing date of the acquisition.

(In Thousands of Dollars)
Consideration
Cash	$	20,423
Stock		22,554
Fair value of total consideration transferred	$	42,977
Fair value of assets acquired
Cash and due from financial institutions	$	12,287
Securities available for sale		28,038
Loans		181,280
Premises and equipment		229
Core deposit intangible		725
Other assets		6,398
Total assets		228,957
Fair value of liabilities assumed
Deposits		183,251
Long-term borrowings		7,946
Accrued interest payable and other liabilities		4,015
Total liabilities	$	195,212
Net assets acquired		33,745
Goodwill created		9,232
Total net assets acquired	$	42,977

The following table presents pro forma information as if the Maple Leaf acquisition that occurred during January 2020 actually took place at the beginning of 2019. The pro forma information includes adjustments for merger related costs, amortization of intangibles arising from the transaction and the related income tax effects. The pro forma financial information is not necessarily indicative of the results of operations that would have occurred had the transactions been effective on the assumed date.

	For Three Months Ended Sept. 30,				For Nine Months Ended Sept. 30,
(In thousands of dollars except per share results)	2020		2019		2020		2019
Net interest income	$	24,165	$	22,912	$	70,568	$	67,677
Net income	$	10,869	$	9,390	$	30,539	$	26,794
Basic earnings per share	$	0.39	$	0.34	$	1.08	$	0.97
Diluted earnings per share	$	0.38	$	0.34	$	1.07	$	0.96