Mergers and Acquisitions

6 Months Ended

Jun. 30, 2019

On April 30, 2019, the Company acquired 100 percent of the outstanding common stock of FNB Bancorp and its wholly-owned subsidiary, The First National Bank of Layton, a community bank based in Layton, Utah. FNB provides banking services to individuals and businesses throughout Utah with locations in Layton, Bountiful, Clearfield and Draper. The acquisition expands the Company’s presence in Utah and sets the stage for future growth. The branches of FNB, along with the Bank’s branches operating in Utah, will operate as a new division of the Bank under the name “First Community Bank Utah, division of Glacier Bank.” The preliminary value of the FNB acquisition was $87,157,000 and resulted in the Company issuing 2,046,341 shares of its common stock. 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, 2019 acquisition date. The excess of the preliminary 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 FNB. 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 FNB were recorded on the Company’s consolidated statements of financial condition at their preliminary estimated fair values as of the April 30, 2019 acquisition date and FNB’s results of operations have been included in the Company’s consolidated statements of operations since that date. The following table discloses the preliminary fair value estimates of the consideration transferred, the total identifiable net assets acquired and the resulting goodwill arising from the FNB acquisition. The Company is continuing to obtain information to determine the fair values of the acquired assets and liabilities.



(Dollars in thousands)	FNB April 30, 2019
Fair value of consideration transferred
Fair value of Company shares issued	$	87,153
Cash consideration	4
Total fair value of consideration transferred	87,157
Recognized amounts of identifiable assets acquired and liabilities assumed
Identifiable assets acquired
Cash and cash equivalents	11,311
Debt securities	47,247
Loans receivable	245,485
Core deposit intangible ¹	8,963
Accrued income and other assets	24,848
Total identifiable assets acquired	337,854
Liabilities assumed
Deposits	274,646
Borrowings ²	7,273
Accrued expenses and other liabilities	10,079
Total liabilities assumed	291,998
Total identifiable net assets	45,856
Goodwill recognized	$	41,301

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

² Borrowings assumed with the acquisition include Tier 1 subordinated debentures of $5,864,000.

The preliminary fair values of the FNB assets acquired include loans with preliminary fair values of $245,485,000 and the gross principal and contractual interest due under the FNB contracts was $248,226,000. The Company evaluated the principal and contractual interest due at the acquisition date and determined that an insignificant amount was not expected to be collectible.

The Company incurred $1,283,000 of expenses in connection with the FNB acquisition during the six months ended June 30, 2019. Mergers and acquisition expenses are included in other expense in the Company's consolidated statements of operations and consist of third-party costs and employee retention and severance expenses.

Total income consisting of net interest income and non-interest income of the acquired operations of FNB was approximately $3,259,000 and net income was approximately $696,000 from April 30, 2019 to June 30, 2019. The following unaudited pro forma summary presents consolidated information of the Company as if the FNB acquisition had occurred on January 1, 2018:



	Three Months ended			Six Months ended
(Dollars in thousands)	June 30, 2019		June 30, 2018	June 30, 2019	June 30, 2018
Net interest income and non-interest income	$	152,673	144,649	300,916	270,231
Net income	50,155		45,854	100,896	85,697