On September 21, 2019, the Company completed the acquisition of MidSouth Bancorp, Inc. (“MidSouth”) (NYSE: MSL), parent company of MidSouth Bank, N.A. The transaction provides the Company opportunity for both enhanced growth in several of its current markets, such as MidSouth’s home market of Lafayette, Louisiana, as well as opportunities for expansion into new markets in Louisiana and Texas. The transaction was accounted for as a business combination whereby the Company acquired net assets with an estimated fair value of $124.6 million and recorded goodwill of $69.2 million. In consideration for the net assets acquired, each outstanding share of MidSouth common stock converted to 0.2952 shares of the Company’s common stock. As such, the Company issued approximately 5.0 million shares resulting in a transaction value of $193.8 million. The following table sets forth the preliminary acquisition date fair value of the assets acquired and liabilities assumed, and the resulting goodwill. The goodwill is not deductible for federal income tax purposes.

(in thousands)
ASSETS
Cash and due from banks	$	28,060
Interest bearing bank deposits		318,914
Federal funds sold		3,475
Securities available for sale		272,406
Loans		785,204
Property and equipment		30,164
Other real estate		435
Identifiable intangible assets		35,000
Other assets		56,860
Total identifiable assets		1,530,518
LIABILITIES
Deposit liabilities		1,281,078
Short term borrowings		66,996

Long term debt		13,919
Other liabilities		43,883
Total liabilities		1,405,876
Net assets acquired		124,642
Value of stock-based consideration		193,849
Goodwill	$	69,207

The loans acquired were recorded at an estimated fair value at the acquisition date using a loss adjusted cash flow method, with no carryover of the related allowance for loan losses. Acquired loans are classified as either purchased credit performing or purchased credit impaired based on such factors as past due status, nonaccrual status and internal risk rating. Loans considered to be purchased credit performing were accounted for under Accounting Standards Codification (“ASC”) 310-20. The purchased credit performing loans had a book balance of $686.0 million, of which $17.2 million is not expected to be collected, and an estimated fair value of $667.2 million. Loans considered to be purchased credit impaired were accounted for under ASC 310-30 using the expected cash flow method. The purchased credit impaired loans had a book balance of $140.3 million and an estimated fair value of $118.0 million.

The securities available for sale portfolio consisted primarily of collateralized mortgage obligations and mortgaged backed securities. Approximately $143.3 million of the acquired portfolio was sold prior to September 30, 2019, and the Company intends to sell the remainder of the portfolio during the fourth quarter of 2019.

The core deposit intangible asset of $35 million represents the value of the relationships with deposit customers based on the favorable source of funds method. The core deposit intangible will be amortized using sum of years’ digits over the asset’s estimated life of 15 years.

Short-term borrowings consisted of customer repurchase agreements of $39.5 million and two FHLB advances totaling $27.5 million. The FHLB advances had 30 day maturities with fixed interest rates of 2.16%.

Long-term debt consists of three trust preferred debentures with maturities through 2037; however, each is callable and may be redeemed at the Company’s election. The Company intends to redeem each debenture in full before December 31, 2019.

The results of the acquired business were included in the Company’s consolidated results of operations from the date of acquisition. The results of the acquired business are not material to the Company’s consolidated results of operations and, as such, neither supplemental pro forma information of the combined entity nor revenue and earnings contributed by the acquired business since the date of acquisition are presented.

During the three and nine months ended September 30, 2019, the Company incurred acquisition related costs of approximately $28.8 million. The following table presents the acquisition related costs by component:

(in thousands)
Personnel expense	$	5,002
Net occupancy expense		735
Equipment expense		188
Data processing expense		437
Professional services expense		7,491
Advertising		2,624
Printing and supplies		433
Other expense		11,900
Total acquisition related expenses	$	28,810

Personnel expense includes severance and change in control costs. Professional services expense includes legal and consulting costs, including costs associated with systems conversion. Other expense includes contract and lease termination fees and other transaction-related costs.

On July 13, 2018, the Company acquired the bank-managed high net worth individual and institutional investment management and trust business of Capital One, National Association (“Capital One”). The transaction added assets under management of $4 billion and assets under management and administration of $10.4 billion to the Company’s existing trust and asset management business. In addition, the Company assumed approximately $217 million of customer deposit liabilities. The following table sets forth the acquisition date fair value of the assets acquired and the liabilities assumed, the consideration received, and the resulting goodwill. The goodwill is deductible for federal income tax purposes.

(in thousands)
ASSETS
Accounts receivable	$	2,803
Identifiable intangible assets		27,562
Total identifiable assets		30,365
LIABILITIES
Deposit liabilities		217,432
Other liabilities		151
Total liabilities		217,583
Net liabilities assumed		(187,218	)
Consideration received		140,657
Goodwill	$	46,561

Identifiable intangible assets include customer relationships that are being amortized using an accelerated method based on forecasted cash flows over a useful life of approximately 17 years.

The acquired trust and asset management business added $14.8 million in trust fee revenue and $14.0 million of expense to the Company’s results of operations for the nine months ended September 30, 2019. The results are not material to the Company’s results of operations and, as such, supplemental proforma financial information for the nine months ended September 30, 2018 is not presented. During the nine months ended September 30, 2018, the Company incurred acquisition related costs of approximately $5.7 million.

Goodwill represents the excess of the consideration transferred over the fair value of the net assets acquired or excess of the fair value of net liabilities assumed over the consideration received. It is comprised of estimated future economic benefits arising from the transaction that cannot be individually identified or do not qualify for separate recognition. These benefits include expanded presence in existing markets and entry into new markets, and expected earnings streams and operational efficiencies that the Company believes will result from this business combination. The following table presents the change in the Company’s goodwill during the year ended December 31, 2018 and the nine months ended September 30, 2019.

(in thousands)
Goodwill balance at December 31, 2017	$	745,523
Initial goodwill recorded - acquisition of trust and asset management business		45,634
Measurement period adjustments - acquisition of trust and asset management business		(185	)
Goodwill balance at December 31, 2018	$	790,972
Final settlement of cash consideration - acquisition of trust and asset management business		1,112
Initial goodwill recorded - acquisition of MidSouth		69,207
Goodwill balance at September 30, 2019	$	861,291