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Business Combinations | 12 Months Ended
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Dec. 31, 2018
Business Combinations [Abstract] |
Business Combinations | BUSINESS COMBINATIONS FCB has evaluated the financial statement significance for all business combinations that were completed during 2018 and 2017. FCB has concluded that the completed business combinations noted below are not material to Bancshares' financial statements, individually or in aggregate, and therefore, pro forma financial data has not been not included. First South Bancorp, Inc. On January 10, 2019, FCB and First South Bancorp, Inc. (First South Bancorp) entered into a definitive merger agreement for the acquisition by FCB of Spartanburg, South Carolina-based First South Bancorp and its bank subsidiary, First South Bank. Under the terms of the agreement, cash consideration of $1.15 per share will be paid to the shareholders of First South Bancorp for each share of common stock totaling approximately $37.5 million. The total consideration assumes the conversion of all Series A preferred shares into common stock. The transaction is anticipated to close during the second quarter of 2019, subject to the receipt of regulatory approvals and the approval of First South Bancorp's shareholders, and will be accounted for under the acquisition method of accounting. The merger will allow FCB to expand its presence and enhance banking efforts in South Carolina. As of December 31, 2018, First South Bancorp reported $238.5 million in consolidated assets, $180.9 million in loans and $204.1 million in deposits. Biscayne Bancshares, Inc. On November 15, 2018, FCB and Biscayne Bancshares, Inc. (Biscayne Bancshares) entered into a definitive merger agreement for the acquisition by FCB of Coconut Grove, Florida-based Biscayne Bancshares and its bank subsidiary, Biscayne Bank. Under the terms of the agreement, cash consideration of $25.05 per share will be paid to the shareholders of Biscayne Bancshares for each share of common stock, totaling approximately $118.7 million. The transaction is expected to close during the second quarter of 2019, subject to the receipt of regulatory approvals, and will be accounted for under the acquisition method of accounting. The merger will allow FCB to expand its presence in Florida and enhance banking efforts in South Florida. As of December 31, 2018, Biscayne Bancshares reported $1.01 billion in consolidated assets, $850.3 million in loans and $746.4 million in deposits. Palmetto Heritage Bancshares, Inc. On November 1, 2018, FCB completed the merger of Pawleys Island, South Carolina-based Palmetto Heritage Bancshares, Inc. (Palmetto Heritage) and its subsidiary, Palmetto Heritage Bank & Trust, into FCB. Under the terms of the agreement, cash consideration of $135.00 per share was paid to the shareholders of Palmetto Heritage for each share of Palmetto Heritage's common stock, with total consideration paid of $30.4 million. The merger allowed FCB to expand its presence and enhance banking efforts in the South Carolina coastal markets. The Palmetto Heritage transaction was accounted for under the acquisition method of accounting and, accordingly, assets acquired and liabilities assumed were recorded at their estimated fair values on the acquisition date. Fair values are preliminary and subject to refinement for up to one year after the closing date of the acquisition as additional information regarding closing date fair values becomes available. As of December 31, 2018, there have been no refinements to the fair value of these assets acquired and liabilities assumed. The fair value of the assets acquired was $162.2 million, including $131.3 million in non-PCI loans, $3.9 million in PCI loans and $1.7 million in a core deposit intangible. Liabilities assumed were $149.3 million, of which $124.9 million were deposits. As a result of the transaction, FCB recorded $17.5 million of goodwill. The amount of goodwill represents the excess purchase price over the estimated fair value of the net assets acquired. The premium paid reflects the increased market share and related synergies that are expected to result from the acquisition. None of the goodwill is deductible for income tax purposes as the merger is accounted for as a qualified stock purchase. Based on such credit factors as past due status, nonaccrual status, life-to-date charge-offs and other quantitative and qualitative considerations, the acquired loans were separated into loans with evidence of credit deterioration, which are accounted for under ASC 310-30 (PCI loans), and loans that do not meet this criteria, which are accounted for under ASC 310-20 (non-PCI loans). The following table provides the purchase price as of the acquisition date and the identifiable assets acquired and liabilities assumed at their estimated fair values.
(Dollars in thousands) |  | As recorded by FCB
Purchase Price |  |  |  | $ | 30,426 |
Assets |  |  |  |
Cash and due from banks |  | $ | 6,418 |  |  |
Investment securities |  | 4,549 |  |  |
Loans |  | 135,146 |  |  |
Premises and equipment |  | 5,369 |  |  |
Other real estate owned |  | 2,319 |  |  |
Income earned not collected |  | 531 |  |  |
Intangible assets |  | 1,706 |  |  |
Other assets |  | 6,210 |  |  |
Fair value of assets acquired |  | 162,248 |  |  |
Liabilities |  |  |  |
Deposits |  | 124,892 |  |  |
Accrued interest payable |  | 177 |  |  |
Borrowings |  | 24,000 |  |  |
Other liabilities |  | 203 |  |  |
Fair value of liabilities assumed |  | $ | 149,272 |  |  |
Fair value of net assets assumed |  |  |  | 12,976 |
Goodwill recorded for Palmetto Heritage |  |  |  | $ | 17,450 |
Merger-related expenses of $546 thousand from the Palmetto Heritage transaction were recorded in the Consolidated Statements of Income for the year ended December 31, 2018. Loan-related interest income generated from Palmetto Heritage was approximately $1.2 million since the acquisition date. Capital Commerce Bancorp, Inc. On October 2, 2018, FCB completed the merger of Milwaukee, Wisconsin-based Capital Commerce Bancorp, Inc. (Capital Commerce) and its subsidiary, Securant Bank & Trust, into FCB. Under the terms of the merger agreement, cash consideration of $4.75 per share was paid to the shareholders of Capital Commerce for each share of Capital Commerce's common stock with total consideration paid of $28.1 million. The merger allowed FCB to expand its presence and enhance banking efforts in the Milwaukee market. The Capital Commerce transaction was accounted for under the acquisition method of accounting and, accordingly, assets acquired and liabilities assumed were recorded at their estimated fair values on the acquisition date. Fair values are preliminary and subject to refinement for up to one year after the closing date of the acquisition as additional information regarding closing date fair values becomes available. As of December 31, 2018, there have been no refinements to the fair value of these assets acquired and liabilities assumed. The fair value of the assets acquired was $221.9 million, including $173.4 million in non-PCI loans, $10.8 million in PCI loans and $2.7 million in a core deposit intangible. Liabilities assumed were $204.5 million, of which $172.4 million were deposits. As a result of the transaction, FCB recorded $10.7 million of goodwill. The amount of goodwill represents the excess purchase price over the estimated fair value of the net assets acquired. The premium paid reflects the increased market share and related synergies that are expected to result from the acquisition. None of the goodwill is deductible for income tax purposes as the merger is accounted for as a qualified stock purchase. Based on such credit factors as past due status, nonaccrual status, life-to-date charge-offs and other quantitative and qualitative considerations, the acquired loans were separated into loans with evidence of credit deterioration, which are accounted for under ASC 310-30 (PCI loans), and loans that do not meet this criteria, which are accounted for under ASC 310-20 (non-PCI loans). The following table provides the purchase price as of the acquisition date and the identifiable assets acquired and liabilities assumed at their estimated fair values.
(Dollars in thousands) |  | As recorded by FCB
Purchase Price |  |  |  | $ | 28,063 |
Assets |  |  |  |
Cash and due from banks |  | $ | 3,244 |  |  |
Overnight investments |  | 1,065 |  |  |
Investment securities |  | 17,865 |  |  |
Loans |  | 184,126 |  |  |
Premises and equipment |  | 3,773 |  |  |
Income earned not collected |  | 621 |  |  |
Intangible assets |  | 2,680 |  |  |
Other assets |  | 8,513 |  |  |
Fair value of assets acquired |  | 221,887 |  |  |
Liabilities |  |  |  |
Deposits |  | 172,387 |  |  |
Accrued interest payable |  | 263 |  |  |
Borrowings |  | 30,624 |  |  |
Other liabilities |  | 1,230 |  |  |
Fair value of liabilities assumed |  | $ | 204,504 |  |  |
Fair value of net assets assumed |  |  |  | 17,383 |
Goodwill recorded for Capital Commerce |  |  |  | $ | 10,680 |
Merger-related expenses of $1.2 million from the Capital Commerce transaction were recorded in the Consolidated Statements of Income for the year ended December 31, 2018. Loan-related interest income generated from Capital Commerce was approximately $3.2 million since the acquisition date. HomeBancorp, Inc. On May 1, 2018, FCB completed the merger of Tampa, Florida-based HomeBancorp, Inc. (HomeBancorp) and its subsidiary, HomeBanc, into FCB. Under the terms of the merger agreement, cash consideration of $15.03 per share was paid to the shareholders of HomeBancorp for each share of HomeBancorp's common stock, with total consideration paid of $112.7 million. The merger allowed FCB to expand its footprint in Florida by entering into two new markets in Tampa and Orlando. The HomeBancorp transaction was accounted for under the acquisition method of accounting and, accordingly, assets acquired and liabilities assumed were recorded at their estimated fair values on the acquisition date. Fair values are preliminary and subject to refinement for up to one year after the closing date of the acquisition as additional information regarding closing date fair values becomes available. As of December 31, 2018, there have been no refinements to the fair value of these assets acquired and liabilities assumed. The fair value of the assets acquired was $842.7 million, including $550.6 million in non-PCI loans, $15.6 million in PCI loans and $9.9 million in a core deposit intangible. Liabilities assumed were $787.7 million, of which $619.6 million were deposits. As a result of the transaction, FCB recorded $57.6 million of goodwill. The amount of goodwill represents the excess purchase price over the estimated fair value of the net assets acquired. The premium paid reflects the increased market share and related synergies that are expected to result from the acquisition. None of the goodwill is deductible for income tax purposes as the merger is accounted for as a qualified stock purchase. Based on such credit factors as past due status, nonaccrual status, loan-to-value, credit scores and other quantitative and qualitative considerations, the acquired loans were separated into loans with evidence of credit deterioration, which are accounted for under ASC 310-30 (PCI loans), and loans that do not meet this criteria, which are accounted for under ASC 310-20 (non-PCI loans). The following table provides the purchase price as of the acquisition date and the identifiable assets acquired and liabilities assumed at their estimated fair values.
(Dollars in thousands) |  | As recorded by FCB
Purchase Price |  |  |  | $ | 112,657 |
Assets |  |  |  |
Cash and due from banks |  | $ | 6,359 |  |  |
Overnight investments |  | 10,393 |  |  |
Investment securities |  | 200,918 |  |  |
Loans held for sale |  | 791 |  |  |
Loans |  | 566,173 |  |  |
Premises and equipment |  | 6,542 |  |  |
Other real estate owned |  | 2,135 |  |  |
Income earned not collected |  | 2,717 |  |  |
Intangible assets |  | 13,206 |  |  |
Other assets |  | 33,459 |  |  |
Fair value of assets acquired |  | 842,693 |  |  |
Liabilities |  |  |  |
Deposits |  | 619,589 |  |  |
Accrued interest payable |  | 1,020 |  |  |
Borrowings |  | 161,917 |  |  |
Other liabilities |  | 5,126 |  |  |
Fair value of liabilities assumed |  | $ | 787,652 |  |  |
Fair value of net assets assumed |  |  |  | 55,041 |
Goodwill recorded for HomeBancorp |  |  |  | $ | 57,616 |
Merger-related expenses of $2.3 million from the HomeBancorp transaction were recorded in the Consolidated Statements of Income for the year ended December 31, 2018. Loan-related interest income generated from HomeBancorp was approximately $17.4 million since the acquisition date. Guaranty Bank On May 5, 2017, FCB entered into an agreement with the FDIC, as Receiver, to purchase certain assets and assume certain liabilities of Guaranty Bank (Guaranty) of Milwaukee, Wisconsin. The Guaranty transaction was accounted for under the acquisition method of accounting and, accordingly, assets acquired and liabilities assumed were recorded at their estimated fair values on the acquisition date. These fair values were subject to refinement for up to one year after the closing date of the acquisition. The measurement period ended on May 4, 2018, with no material changes to the original calculated fair values. The fair value of the assets acquired was $875.1 million, including $574.6 million in non-PCI loans, $114.5 million in PCI loans and $9.9 million in a core deposit intangible. Liabilities assumed were $982.7 million, of which $982.3 million were deposits. The total gain on the transaction was $122.7 million, which is included in noninterest income in the Consolidated Statements of Income.
Merger-related expenses of $2.3 million and $7.4 million were recorded in the Consolidated Statements of Income for the years ended December 31, 2018, and December 31, 2017, respectively. Loan-related interest income generated from Guaranty was approximately $17.3 million and $20.5 million for the years ended December 31, 2018, and December 31, 2017, respectively. While the acquisition gain of $122.7 million was significant for 2017, the ongoing contributions of this transaction to BancShares' financial statements is not considered material and therefore pro forma financial data is not included. Based on such credit factors as past due status, nonaccrual status, loan-to-value, credit scores, and other quantitative and qualitative considerations, the acquired loans were separated into loans with evidence of credit deterioration, which are accounted for under ASC 310-30 (PCI loans), and loans that do not meet this criteria, which are accounted for under ASC 310-20 (non-PCI loans). Harvest Community Bank On January 13, 2017, FCB entered into an agreement with the FDIC, as Receiver, to purchase certain assets and assume certain liabilities of Harvest Community Bank (HCB) of Pennsville, New Jersey. The HCB transaction was accounted for under the acquisition method of accounting and, accordingly, assets acquired and liabilities assumed were recorded at their estimated fair values on the acquisition date. These fair values were subject to refinement for up to one year after the closing date of the acquisition. The measurement period ended on January 12, 2018, with no material changes to the original calculated fair values. The fair value of the assets acquired was $111.6 million, including $85.1 million in PCI loans and $850 thousand in a core deposit intangible. Liabilities assumed were $121.8 million, of which the majority were deposits. The total gain on the transaction was $12.0 million, which is included in noninterest income in the Consolidated Statements of Income.
There were no merger-related expenses recorded for the year ended December 31, 2018, and $1.2 million were recorded in the Consolidated Statements of Income for the year ended December 31, 2017. Loan-related interest income generated from HCB was approximately $3.7 million and $3.8 million for the years ended December 31, 2018 and December 31, 2017, respectively. All loans resulting from the HCB transaction were recorded at the acquisition date with a discount attributable, at least in part, to credit quality deterioration, and are therefore accounted for as PCI under ASC 310-30.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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