Mergers and Acquisitions

On April 30, 2017, the Company acquired 100 percent of the outstanding common stock of TFB Bancorp, Inc. and its wholly-owned subsidiary, The Foothills Bank, a community bank based in Yuma, Arizona. Foothills provides banking services to individuals and businesses in Arizona, with banking offices located in Yuma, Prescott and Casa Grande, Arizona. The acquisition expands the Company’s market into the state of Arizona and further diversifies the Company’s loan, customer and deposit base. Foothills merged into Glacier Bank and operates as a separate Bank division under its existing name and management team. The Foothills acquisition was valued at $64,015,000 and resulted in the Company issuing 1,381,661 shares of its common stock and $17,342,000 in cash in exchange for all of Foothills’ 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 April 30, 2017 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 Foothills. 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 Foothills were recorded on the Company’s consolidated statements of financial condition at their estimated fair values as of the April 30, 2017 acquisition date and Foothills’ 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 Foothills acquisition:



(Dollars in thousands)	April 30, 2017
Fair value of consideration transferred
Fair value of Company shares issued, net of equity issuance costs	$	46,673
Cash consideration for outstanding shares	17,342
Contingent consideration	—
Total fair value of consideration transferred	64,015
Recognized amounts of identifiable assets acquired and liabilities assumed
Identifiable assets acquired
Cash and cash equivalents	13,251
Investment securities	25,420
Loans receivable	292,529
Core deposit intangible ¹	4,331
Accrued income and other assets	19,699
Total identifiable assets acquired	355,230
Liabilities assumed
Deposits	296,760
FHLB advances	22,800
Accrued expenses and other liabilities	2,264
Total liabilities assumed	321,824
Total identifiable net assets	33,406
Goodwill recognized	$	30,609

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¹ The core deposit intangible for this acquisition was determined to have an estimated life of 10 years.

The fair value of the Foothills assets acquired includes loans with fair values of $292,529,000 and the gross principal and contractual interest due under the Foothills contracts is $303,527,000. 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.

The Company incurred $877,000 of third-party acquisition-related costs in connection with the Foothills acquisition during the nine months ended September 30, 2017. The expenses are primarily 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 Foothills was approximately $8,579,000 and net income was approximately $1,853,000 from April 30, 2017 to September 30, 2017. The following unaudited pro forma summary presents consolidated information of the Company as if the Foothills acquisition had occurred on January 1, 2016:



	Three Months ended			Nine Months ended
(Dollars in thousands)	September 30, 2017		September 30, 2016	September 30, 2017	September 30, 2016
Net interest income and non-interest income	$	119,997	110,969	345,068	324,277
Net income	36,479		32,217	99,231	93,005