Note 13: Business Combinations

6 Months Ended

Dec. 31, 2013

Notes

Note 13: Business Combinations

Note 13: Business Combinations

On October 4, 2013, the Company acquired 100% of the outstanding stock of Ozarks Legacy Community Financial, Inc. (OLCF), and its subsidiary, the Bank of Thayer, headquartered in Thayer, Missouri.  The Bank of Thayer was merged into the Company’s existing bank subsidiary, Southern Bank, on that date.  The Company acquired OLCF primarily for the purpose of conducting commercial banking activities in markets where it believes the Company’s business model will perform well, and for the long-term value of its core deposit franchise.  Through December 31, 2013, the Company incurred $688,000 of third-party acquisition-related costs.  The expenses are included in noninterest expense  in the Company’s consolidated statement of income for the period ended December 31, 2013.  The goodwill of $1,474,000 arising from the acquisition consists largely of synergies and economies of scale expected from combining the operations of the Company and OLCF.  Total goodwill was assigned to the acquisition of the bank holding company.

The following table summarized the consideration paid for OLCF and its subsidiary, the Bank of Thayer and the amounts of assets acquired and liabilities assumed recognized at the acquisition date:

Fair Value of Consideration Transferred	October 4, 2013
Cash	$6,279,694
Contingent consideration	-
Total consideration	$6,279,694
Recognized amounts of identifiable assets acquired
and liabilities assumed
Cash and Cash equivalents	$2,234,980
Investment Securities	34,271,743
Loans	39,368,508
Premises and equipment	1,155,297
Identifiable intangible assets	1,432,645
Miscellaneous other assets	1,285,870
Deposits	(68,234,600)
Securities sold under agreements to repurchase	(1,099,675)
Advances from FHLB	(1,095,928)
Subordinated debt	(2,490,890)
Miscellaneous other liabilities	(2,022,076)
Liability arising from a contingency	-
Total identifiable net assets	4,805,874
Goodwill	$1,473,820

On November 7, 2013, the Company announced that it has entered into a definitive stock purchase agreement whereby it will acquire Citizens State Bankshares of Bald Knob, Inc. (Citizens), headquartered in Bald Knob, Arkansas, in an all-cash transaction valued at approximately $5.9 million, subject to certain adjustments for transaction expenses and Citizens’ equity at closing.  Citizens’ wholly-owned bank subsidiary, Citizens State Bank, will be merged with and into Southern Bank immediately upon closing, which the Company now anticipates will occur in February, 2014.  At December 31, 2013, Citizens held assets of $70.2 million, loans, net, of $11.6 million, and deposits of $62.3 million.  The Company will recognize all acquisition-related costs as an expense.  The Company’s acquisition-related costs were $57,000 through December 31, 2013, and are reflected in legal and professional fees.