v3.25.1
Business Combination
 3 Months Ended
Mar. 31, 2025
Business Combination [Abstract]  
BUSINESS COMBINATION

NOTE 3 – BUSINESS COMBINATION

 

Effective January 17, 2025, the Company acquired all of the outstanding common shares of Marblehead Bancorp and its subsidiary The Marblehead Bank of Marblehead, Ohio (collectively, “Marblehead”). Marblehead was headquartered in Marblehead, Ohio and had two retail offices. At closing, Marblehead Bancorp was merged with and into SBFG, with SBFG surviving, and immediately thereafter, The Marblehead Bank was merged with and into State Bank, with State Bank surviving. Under the terms of the merger agreement, shareholders of Marblehead received fixed consideration of $196.31 in cash for each share of Marblehead common stock for total consideration of $5.0 million. The Company accounted for the transaction under the acquisition method of accounting, which means that the acquired assets and liabilities were recorded at fair value at the date of acquisition.

 

In accordance with ASC 805, the Company expensed approximately $0.7 million of direct acquisition costs during the three months ended March 31, 2025. The $0.7 million in merger expense is split between data processing and professional fees expense. As a result of the acquisition, the Company recorded $3.9 million of goodwill and $1.7 million of intangible assets in the first quarter of 2025. Loans acquired with deteriorated credit quality (“PCD loans”) since origination were not material. The acquisition of Marblehead enabled the Company to increase both its deposit and loan base and acquire new households in a new market. It is expected that this transaction will result in business synergies and economies of scale. The acquisition was consistent with the Company’s strategy to expand its presence in Northwest Ohio and to increase profitability by introducing existing products and services to the acquired customer base. The intangible assets are related to core deposits, which are being amortized over 10 years on a straight-line basis. For tax purposes, goodwill is non-deductible but will be evaluated annually for impairment.

The following table summarizes the fair value of the total consideration transferred as part of the acquisition as well as the fair value of identifiable assets and liabilities assumed as of the effective date of the transaction based on assumptions that are subject to change as management continues to evaluate as relevant information becomes available. If, prior to the end of the one-year measurement period for finalizing the purchase price allocation, relevant information becomes available which would indicate adjustments are required to the purchase price allocation, such adjustments will be recorded in the reporting period in which the adjustment amounts are determined. Potential adjustments, if any, will be related to assets that have may have changes to valuation amounts that were not readily determinable at acquisition date.

 

($ in thousands)  January 17,
2025		 
     
Fair value of assets acquired    
     
Cash and cash equivalents  $1,995 
Investment securities   30,123 
Federal Reserve and Federal Home Loan Bank stock   117 
Loans held for investment   18,661 
Premises and equipment   1,036 
Goodwill   3,919 
Core deposit intangible   1,710 
Other assets   1,600 
Total assets acquired  $59,161 
      
Fair value of liabilities assumed     
      
Deposits  $53,088 
Other liabilities   1,064 
Total liabilities assumed   54,152 
Total purchase price (cash)  $5,009 

 

Pro Forma Financial Information

 

The results of operations of Marblehead have been included in the Company’s consolidated financial statements since the acquisition date of January 17, 2025. The following schedule includes the pro forma results for the three months ended March 31, 2025, and 2024, as if the Marblehead acquisition had occurred as of the beginning of the reporting periods presented. The acquisition added less than $0.3 million in revenue to the Company for the three months ended March 31, 2025.

   Three Months Ended 
Summary of Operations ($ in thousands)  Mar. 2025   Mar. 2024 
         
Net interest income  $11,339   $9,529 
Provision for loan losses   387    
-
 
           
Net interest income after provision  $10,952   $9,529 
           
Non interest income   4,111    3,971 
Non interest expense   12,669    10,728 
           
Income before income taxes  $2,394   $2,772 
Income tax expense*   431    481 
           
Net income to common shareholders  $1,963   $2,291 
           
Basic earnings per share  $0.30   $0.34 
Diluted earnngs per share  $0.30   $0.34 

 

*Income tax expense for Marblehead calculated using a 21% statuatory rate