Mergers and Acquisitions

On August 31, 2016, the Company acquired 100 percent of the outstanding common stock of Treasure State Bank, a community bank based in Missoula, Montana. TSB provides banking services to individuals and businesses in the greater Missoula market. TSB has merged into Glacier Bank and has become a part of the First Security Bank of Missoula bank division. The TSB acquisition was valued at $13,940,000 and resulted in the Company issuing 349,545 shares of its common stock and $3,475,000 in cash in exchange for all of TSB’s outstanding common stock shares. The fair value of the Company shares issued was determined on the basis of the closing market price of the Company’s common stock on the August 31, 2016 acquisition date. The excess of the fair value of consideration transferred over total identifiable net assets was recorded as goodwill. The goodwill arising from the acquisition consists largely of the synergies and economies of scale expected from combining the operations of the Company and TSB. None of the goodwill is deductible for income tax purposes as the acquisition was accounted for as a tax-free exchange.

The assets and liabilities of TSB were recorded on the Company’s consolidated statements of financial condition at their estimated fair values as of the August 31, 2016 acquisition date and TSB’s results of operations have been included in the Company’s consolidated statements of operations since that date. The following table discloses the calculation of the fair value of the consideration transferred, the total identifiable net assets acquired and the resulting goodwill arising from the TSB acquisition:



(Dollars in thousands)	August 31, 2016
Fair value of consideration transferred
Fair value of Company shares issued, net of equity issuance costs	$	10,465
Cash consideration for outstanding shares	3,475
Contingent consideration	—
Total fair value of consideration transferred	13,940
Recognized amounts of identifiable assets acquired and liabilities assumed
Identifiable assets acquired
Cash and cash equivalents	10,176
Loans receivable	51,875
Core deposit intangible	762
Accrued income and other assets	6,937
Total identifiable assets acquired	69,750
Liabilities assumed
Deposits	58,364
FHLB advances	3,260
Accrued expenses and other liabilities	601
Total liabilities assumed	62,225
Total identifiable net assets	7,525
Goodwill recognized	$	6,415

The fair value of the TSB assets acquired includes loans with fair values of $51,875,000 and the gross principal and contractual interest due under the TSB contracts is $54,819,000. The Company evaluated the principal and contractual interest due at the acquisition date and determined that an insignificant amount is not expected to be collectible.

Core deposit intangible assets related to the TSB acquisition totaled $762,000 with an estimated life of 10 years.

The Company incurred $302,000 of third-party acquisition-related costs in connection with the TSB acquisition during the nine months ended September 30, 2016. The expenses are included in other expense in the Company's consolidated statements of operations.

Total income consisting of net interest income and non-interest income of the acquired operations of TSB was approximately $336,000 and the net income was approximately $59,000 from August 31, 2016 to September 30, 2016. The following unaudited pro forma summary presents consolidated information of the Company as if the TSB acquisition had occurred on January 1, 2015:



	Three Months ended			Nine Months ended
(Dollars in thousands)	September 30, 2016		September 30, 2015	September 30, 2016	September 30, 2015
Net interest income and non-interest income	$	107,656	99,748	315,683	291,097
Net income	30,606		29,764	89,888	86,943