Business Combinations

12 Months Ended

Dec. 31, 2021

Business Combinations [Abstract]

Business Combinations

BUSINESS COMBINATIONS

Each business combination is accounted for under the acquisition method of accounting and, accordingly, assets acquired and liabilities assumed are recorded at their estimated fair values on the acquisition date. Fair values are subject to refinement for up to one year after the closing date of the acquisition as additional information regarding closing date fair value becomes available.

As part of the accounting for each acquisition, BancShares performs an analysis of the acquired bank’s loan portfolio and based on such credit factors as past due status, nonaccrual status, life-to-date charge-offs and other quantitative and qualitative considerations segregate the acquired loans into PCD loans and non-PCD loans. Additionally, BancShares performs an analysis of the acquired bank’s portfolio of debt securities to determine if any debt securities should be designated PCD.

CIT Group Inc.

On January 3, 2022, BancShares completed the CIT Merger. Refer to Note W, Subsequent Events, for further information.

Community Financial Holding Company, Inc.

On February 1, 2020, BancShares completed the merger of Duluth, Georgia-based Community Financial Holding Company, Inc. (“Community Financial”) and its bank subsidiary, Gwinnett Community Bank. BancShares concluded the completed business combination of Community Financial was not material to BancShares’ consolidated financial statements, individually or in aggregate, and therefore, pro forma financial data has not been included. The transaction was accounted for under the acquisition method of accounting and, accordingly, assets acquired and liabilities assumed were recorded at their estimated fair values on the acquisition date. Fair values were subject to refinement for up to one year after the closing date of the acquisition. The measurement period ended on December 30, 2020.

The fair value of the assets acquired was $221.4 million, including $110.6 million in non-PCD loans, $23.4 million in PCD loans, net of an ACL of $1.2 million, and $536 thousand in a core deposit intangible. No debt securities purchased in the transaction were designated PCD. Liabilities assumed were $219.8 million, of which $209.3 million were deposits. As a result of the transaction, BancShares recorded $686 thousand of goodwill. The amount of goodwill represents the excess purchase price over the estimated fair value of the net assets acquired. The premium paid reflects the increased market share and related synergies expected to result from the acquisition. None of the goodwill was deductible for income tax purposes as the merger was accounted for as a qualified stock purchase.

The Community Financial transaction resulted in merger-related expenses of $3.5 million for the year ended December 31, 2020. Additionally, loan-related interest income generated was approximately $5.3 million from the acquisition date through December 31, 2020. The ongoing contribution of this transaction to BancShares’ financial statements is not considered material, and therefore pro forma financial data is not included.