NOTE 3. BUSINESS COMBINATIONS First Beeville Financial Corporation On April 2, 2019 Spirit completed its acquisition of First Beeville Financial Corporation and its subsidiary, The First National Bank of Beeville (together, Beeville). This transaction resulted in three additional branches and two loan production offices in the South Texas region. The Company issued 1,579,191 shares of its common stock as well as a net cash payment to Beeville shareholders of $32.4 million, for a total consideration of $65.9 million, for all outstanding stock of Beeville and resulted in 100% ownership interest. The Company has recognized total goodwill of $25.8 million which is calculated as the excess of both the consideration exchanged and liabilities assumed compared to the fair market value of identifiable assets acquired. The fair value of the consideration exchanged related to the Companys common stock was calculated based upon the closing market price of the Companys common stock as of April 2, 2019. None of the goodwill recognized is expected to be deductible for income tax purposes. The Company did not incur any expenses related to the acquisition for the three months ended March 31, 2020. The Company incurred $504 thousand of expenses related to the acquisition during the three months ended March 31, 2019. The Company did not identify any loans deemed purchased credit impaired at the acquisition date. Non-credit impaired loans had a fair value of $296.4 million at the acquisition date and contractual balance of $298.9 million. As of the acquisition date, the Company expects that an insignificant amount of the contractual balance of these loans will be uncollectible. The difference of $2.5 million will be recognized into interest income as an adjustment to yield over the life of the loans. Estimated fair values of the assets acquired and liabilities assumed in this transaction as of the closing date are as follows: Assets of acquired bank (Dollars in thousands): Cash and cash equivalents $ 60,491 Securities available for sale 57,206 Loans held for investment 296,397 Premises and equipment 5,184 Other real estate owned 1,359 Goodwill 25,848 Core deposit intangible 5,695 Other assets 12,618 Total assets acquired $ 464,798 Liabilities of acquired bank: Deposits $ 398,427 Other liabilities 515 Total liabilities assumed $ 398,942 Common stock issued at $21.20 per share $ 33,479 Cash paid $ 32,377 As of March 31, 2020, management has completed evaluating the fair values of all assets acquired and liabilities assumed in the Beeville acquisition. There were no measurement period adjustments during 2020. Chandler Bancorp Inc. On November 5, 2019, the Company completed its acquisition of Chandler Bancorp Inc. and its subsidiary, Citizens State Bank (together, Citizens). This transaction resulted in adding 7 additional branches in the Northeast Texas region. The Company issued 2,100,000 shares of its common stock as well as a net cash payment to Citizens shareholders of $17.9 million, for total consideration of $62.5 million for all outstanding stock of Citizens. The Company has recognized total goodwill of $22.4 million which is calculated as the excess of both the consideration exchanged and liabilities assumed compared to the fair market value of identifiable assets acquired. The fair value of the consideration exchanged related to the Companys common stock was calculated based upon the closing market price of the Companys common stock as of November 5, 2019. None of the goodwill recognized is expected to be deductible for income tax purposes. The Company incurred expenses related to the Citizens acquisition of approximately $1.2 million for the three months ended March 31, 2020 which are included in noninterest expense in the consolidated statements of income. The Company did not incur any expenses related to the acquisition for the three months ended March 31, 2019. The Company reviewed the Citizens loan portfolio for potential impairment and identified loans with a contractual balance of $3.2 million that were deemed purchased credit impaired. Non-credit impaired loans had a preliminary fair value of $248.8 million at the acquisition date and contractual balance of $253.1 million. As of the acquisition date, the Company expects that an insignificant amount of the contractual balance of these loans will be uncollectible. The difference of $1.1 million will be recognized into interest income as an adjustment to yield over the life of the loans. Estimated fair values of the assets acquired and liabilities assumed in the Citizens acquisition as of the closing date are as follows: Assets of acquired bank (Dollars in thousands): Cash and cash equivalents $ 84,240 Loans held for investment 252,037 Premises and equipment 10,849 Goodwill 22,409 Core deposit intangible 850 Other assets 3,247 Total assets acquired $ 373,632 Liabilities of acquired bank: Deposits $ 271,742 FHLB Borrowings $ 38,242 Other liabilities 1,142 Total liabilities assumed $ 311,126 Common stock issued at $21.20 per share $ 44,604 Cash paid $ 17,902 As of March 31, 2020, management is still evaluating the fair values of other assets and other liabilities shown in the table above. Measurement period adjustments recorded during the three months ended March 31, 2020 include a $1.7 million adjustment to the loan discount, $262 thousand adjustment to premises and equipment, $296 thousand adjustment to other assets, and $217 thousand adjustment to other liabilities. Revenues and earnings of Citizens for the three months ended March 31, 2020 were $3.9 million and $2.2 million, respectively. Simmons Branch Acquisition On February 28, 2020, the Company completed its acquisition of certain assets and assumption of certain liabilities associated with five branch offices of Simmons Bank (the Simmons acquisition). The offices are located in Austin, San Antonio and Tilden, Texas. The Company paid total cash for the purchase of $131.6 million. The Company has recognized total goodwill of $12.5 million which is calculated as the excess of both the consideration exchanged and liabilities assumed compared to the fair market value of identifiable assets acquired. Goodwill recognized is expected to be deductible for income tax purposes and will be amortized over 15 years. The Company incurred expenses related to the Simmons branch acquisition of approximately $441 thousand for the three months ended March 31, 2020 which are included in noninterest expense in the consolidated statements of income. The Company did not incur any expenses related to the acquisition for the three months ended March 31, 2019. The Company did not identify any loans deemed purchased credit impaired at the acquisition date. Non-credit impaired loans had a preliminary fair value of $255.5 million at the acquisition date and contractual balance of $260.3 million. As of the acquisition date, the Company expects that an insignificant amount of the contractual balance of these loans will be uncollectible. The difference of $4.8 million will be recognized into interest income as an adjustment to yield over the life of the loans. Estimated fair values of the assets acquired and liabilities assumed in the Simmons acquisition as of the closing date are as follows: Assets of acquired bank (Dollars in thousands): Cash and cash equivalents $ 418 Loans held for investment 255,455 Premises and equipment 2,195 Goodwill 12,499 Core deposit intangible 10 Other assets 713 Total assets acquired $ 271,290 Liabilities of acquired bank: Deposits $ 139,672 Other liabilities 47 Total liabilities assumed $ 139,719 Cash paid $ 131,571 As of March 31, 2020, management is still evaluating the fair values of all assets and liabilities shown in the table above. Management is working with third parties to finalize the fair value of loans, appraised value of acquired properties, valuation of core deposit intangibles, and time deposit premium. Additionally, management is evaluating other assets and other liabilities and related deferred tax adjustments based on the completion of other fair value adjustments. Revenues and earnings of the Simmons branches since the acquisition date have not been disclosed as these branches were merged into the Company during 2020.