Acquisitions Acquisitions (Tables)

9 Months Ended

Sep. 30, 2020

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block]

The following table details the total consideration paid on January 1, 2020 in connection with the acquisition of Cornerstone, the fair values of the assets acquired and liabilities assumed and the resulting preliminary goodwill.


(Dollars in thousands)	As Recorded by Cornerstone		Estimated Fair Value Adjustments		Estimated Fair Values as Recorded by Summit
Cash consideration					$	14,250
Stock consideration					15,441
Total consideration					29,691

Identifiable assets acquired:
Cash and cash equivalents	$	60,284	$	—	$	60,284
Securities available for sale, at fair value	90,075		(47)		90,028
Loans
Purchased performing	37,965		188		38,153
Purchased credit deteriorated	1,877		(569)		1,308
Allowance for loan losses	(312)		312		—
Premises and equipment	806		(142)		664
Property held for sale	10		—		10
Core deposit intangibles	—		717		717
Other assets	4,324		(74)		4,250
Total identifiable assets acquired	$	195,029	$	385	$	195,414

Identifiable liabilities assumed:
Deposits	173,027		239		173,266
Other liabilities	3,286		(7)		3,279
Total identifiable liabilities assumed	$	176,313	$	232	$	176,545

Net identifiable assets acquired	$	18,716	$	153	$	18,869

Preliminary goodwill resulting from acquisition					$	10,822

MVB Bank Branches Acquisition

On April 24, 2020, SCB expanded its presence in the Eastern Panhandle of West Virginia by acquiring three MVB Bank locations in Berkeley County, West Virginia and one MVB Bank location in Jefferson County, West Virginia. Summit assumed certain deposits and loans totaling approximately $195.0 million and $35.3 million, respectively. The purchase price was $50.3 million consisting of (i) the average daily closing balance of the deposits for the thirty (30) day period prior to the closing multiplied by 8.00%, (ii) the aggregate amount of cash on hand as of the closing date, (iii) the aggregate net book value of all assets being assumed (excluding cash on hand, real property and accrued interest with respect to the loans acquired), (iv) the appraised value of the real property acquired, and (v) accrued interest with respect to the loans acquired.

This acquisition was determined to constitute a business combination in accordance with ASC 805, Business Combinations,and accordingly we accounted for the acquisition using the acquisition method of accounting, recording the assets and liabilities of MVB Bank at their acquisition date respective fair values. Determining the fair value of assets and liabilities, particularly related to the loan portfolio, is a complicated process involving significant judgment regarding methods and assumptions used to calculate the estimated fair values. The fair values are preliminary and subject to refinement for up to one year after the acquisition date as additional information relative to the acquisition date fair values becomes available. We recognized preliminary goodwill of $14.67 million in connection with the acquisition (deductible for income tax purposes), which is not amortized for financial reporting purposes, but is subject to annual impairment testing. The core deposit intangible represents the value of long-term deposit relationships acquired in this transaction and will be amortized over an estimated weighted average life of 10 years using an accelerated method which approximates the estimated run-off of the acquired deposits. The following table details the total consideration paid on April 24, 2020 in connection with the acquisition of the MVB Bank branches, the fair values of the assets acquired and liabilities assumed and the resulting preliminary goodwill.


(Dollars in thousands)	As Recorded by MVB		Estimated Fair Value Adjustments		Estimated Fair Values as Recorded by Summit
Cash consideration					$	12,965
Total consideration					12,965

Identifiable assets acquired:
Cash and cash equivalents	$	800	$	—	$	800
Loans
Purchased performing	35,127		(1,185)		33,942
Premises and equipment	2,376		(42)		2,334
Core deposit intangibles	—		125		125
Other assets	114		—		114
Total identifiable assets acquired	$	38,417	$	(1,102)	$	37,315

Identifiable liabilities assumed:
Deposits	188,134		598		188,732
Other liabilities	102		—		102
Total identifiable liabilities assumed	$	188,236	$	598	$	188,834

Net liabilities assumed	$	(149,819)	$	(1,700)	$	(151,519)

Net cash received from MVB					136,854

Preliminary goodwill resulting from acquisition					$	14,665

Financial Effects of Purchase Accounting Adjustments [Table Text Block]

The following presents the financial effects of adjustments recognized in the statements of income for the three and nine months ended September 30, 2020 and 2019 related to business combinations that occurred during 2016, 2017, 2019 and 2020.


	Income increase (decrease)
	Three Months Ended September 30,				Nine Months Ended September 30,
Dollars in thousands	2020		2019		2020		2019
Interest and fees on loans	$	161	$	137	$	680	$	604
Interest expense on deposits	175		77		461		247
Amortization of intangibles	(412)		(404)		(1,251)		(1,234)
Income before income tax expense	$	(76)	$	(190)	$	(110)	$	(383)