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Acquisitions (Tables) | 9 Months Ended
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Sep. 30, 2019
Business Combinations [Abstract] |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table summarizes the consideration paid, fair values of the Northwest assets acquired and liabilities assumed, and the resulting goodwill. All amounts reported were finalized in the second quarter of 2019.
| As Recorded | Fair Value |  | As Recorded
As of August 16, 2018 | by Northwest | Adjustments |  | by the Company
Assets acquired: |  |  |  |
Cash and cash equivalents | $ | 31.2 |  | $ | — |  |  | $ | 31.2 |
Investment securities | 3.1 |  | — |  |  | 3.1 |
Loans held for investment | 727.9 |  | (14.8 | ) | (1) | 713.1 |
Allowance for loan loss | (8.0 | ) | 8.0 |  | (2) | — |
Premises and equipment | 14.5 |  | — |  |  | 14.5 |
Other real estate owned (“OREO”) | 0.3 |  | 0.3 |  |  | 0.6 |
Core deposit intangible assets | 2.4 |  | 13.3 |  | (3) | 15.7 |
Other assets | 29.3 |  | (10.0 | ) | (4) | 19.3 |
Total assets acquired | 800.7 |  | (3.2 | ) |  | 797.5 |
Liabilities assumed: |  |  |  |
Deposits | 696.1 |  | 0.2 |  | (5) | 696.3 |
Accounts payable and accrued expense | 8.1 |  | (0.4 | ) | (6) | 7.7 |
Long term debt | 13.0 |  | 0.1 |  |  | 13.1 |
Trust preferred securities | 5.2 |  | (0.8 | ) | (7) | 4.4 |
Deferred tax liability, net | (1.2 | ) | 1.6 |  | (8) | 0.4 |
Total liabilities assumed | 721.2 |  | 0.7 |  |  | 721.9 |
Net assets acquired | $ | 79.5 |  | $ | (3.9 | ) |  | $ | 75.6 |
Consideration paid: |  |  |  |
Cash |  |  |  | $ | 3.0 |
Class A common stock |  |  |  | 173.3 |
Total consideration paid |  |  |  | 176.3 |
Goodwill |  |  |  | $ | 100.7 |
Explanation of fair value adjustments and the removal of previously recorded fair value marks recorded by Northwest:
(1) | Write down of the book value of loans to their estimated fair values. The fair value of the loans was estimated using cash flow projections based on the remaining maturity and repricing terms, adjusted for estimated future credit losses and prepayments and discounted to present value using a risk-adjusted market rate for similar loans. The fair value of collateral dependent loans acquired with deteriorated credit quality was estimated based on the Company’s analysis of the fair value of each loan’s underlying collateral, discounted using market-derived rates of return with consideration given to the period of time and costs associated with foreclosure and disposition of the collateral.
(2) | Adjustment to remove the Northwest allowance for loan losses at acquisition date, as the credit risk is included in the fair value adjustment for loans receivable described in (1) above.
(3) | Adjustment represents the value of the core deposit base assumed in the acquisition based upon valuation from an independent accounting and advisory firm.
(4) | Adjustment consists of reductions to the fair value of other items, including the removal of Northwest previously recorded goodwill.
(5) | Increase in book value of time deposits to their estimated fair values based upon interest rates of similar time deposits with similar terms on the date of acquisition based upon valuation from an independent accounting and advisory firm.
(6) | Decrease due to the write-off of off balance sheet reserves.
(7) | Write down of the book value of debt to the estimated fair values on the date of acquisition based upon favorable interest rates in the market.
(8) | Adjustment consists of the write-off of pre-existing deferred tax assets and purchase accounting adjustments as a result of the acquisition.
The following table summarizes the consideration paid, fair values of the IIBK assets acquired and liabilities assumed, and the resulting goodwill. Due to the recent closing of the transaction, all amounts reported are provisional pending the review of valuations obtained from third parties.
| As Recorded | Fair Value |  | As Recorded
As of April 8, 2019 | by IIBK | Adjustments |  | by the Company
Assets acquired: |  |  |  |
Cash and cash equivalents | $ | 270.7 |  | $ | — |  |  | $ | 270.7 |
Investment securities | 62.7 |  | 0.5 |  | (1) | 63.2 |
Loans held for investment | 347.6 |  | (9.8 | ) | (2) | 337.8 |
Mortgage loans held for sale | 0.5 |  | — |  |  | 0.5 |
Allowance for loan loss | (6.3 | ) | 6.3 |  | (3) | — |
Premises and equipment | 16.5 |  | 7.0 |  | (4) | 23.5 |
Other real estate owned (“OREO”) | 0.4 |  | 2.0 |  | (5) | 2.4 |
Company owned life insurance | 15.2 |  | — |  |  | 15.2 |
Core deposit intangible assets | — |  | 13.6 |  | (6) | 13.6 |
Deferred tax assets, net | 3.2 |  | (3.2 | ) | (7) | — |
Other assets | 8.6 |  | (0.8 | ) | (8) | 7.8 |
Total assets acquired | 719.1 |  | 15.6 |  |  | 734.7 |
Liabilities assumed: |  |  |  |
Deposits | 596.5 |  | 0.1 |  | (9) | 596.6 |
Accounts payable and accrued expense | 15.2 |  | 5.2 |  | (10) | 20.4 |
Other borrowed funds | 4.0 |  | 0.1 |  | (11) | 4.1 |
Securities sold under repurchase agreements | 30.4 |  | — |  |  | 30.4 |
Total liabilities assumed | 646.1 |  | 5.4 |  |  | 651.5 |
Net assets acquired | $ | 73.0 |  | $ | 10.2 |  |  | $ | 83.2 |
Consideration paid: |  |  |  |
Class A common stock |  |  |  | $ | 157.3 |
Total consideration paid |  |  |  | $ | 157.3 |
Goodwill |  |  |  | $ | 74.1 |
Adjustments to the fair value marks for premises and equipment, deferred tax assets, accounts payable and accrued expenses were made since the prior quarter, none of which were material. The adjustments had no impact on 2019 earnings and a net decrease to goodwill of $0.6 million from the second quarter reported balances. Explanation of fair value adjustments and the removal of previously recorded fair value marks recorded by IIBK:
(1) | Write up of the book value of investments to their estimated fair values on the date of acquisition based upon quotes obtained from an independent third party pricing service.
(2) | Write down of the book value of loans to their estimated fair values. The fair value of the loans was estimated using cash flow projections based on the remaining maturity and repricing terms, adjusted for estimated future credit losses and prepayments and discounted to present value using a risk-adjusted market rate for similar loans. The fair value of collateral dependent loans acquired with deteriorated credit quality was estimated based on the Company’s analysis of the fair value of each loan’s underlying collateral, discounted using market-derived rates of return with consideration given to the period of time and costs associated with foreclosure and disposition of the collateral.
(3) | Adjustment to remove the IIBK allowance for loan losses at acquisition date, as the credit risk is included in the fair value adjustment for loans receivable described in (2) above.
(4) | Write up of the book value of premises and equipment to their estimated fair values on the date of acquisition based upon broker’s opinion of value.
(5) | Adjustment to the book value of other real estate owned to their estimated fair values on the date of acquisition based on appraisal value.
(6) | Adjustment represents the value of the core deposit base assumed in the acquisition based upon valuation from an independent accounting and advisory firm.
(7) | Adjustment consists of the write-off of pre-existing deferred tax assets and purchase accounting adjustments as a result of the acquisition.
(8) | Adjustment consists of reductions to the fair value of other items.
(9) | Increase in book value of time deposits to their estimated fair values based upon interest rates of similar time deposits with similar terms on the date of acquisition based upon valuation from an independent accounting and advisory firm.
(10) | Adjustment to the liability for the nonqualified retirement plan.
(11) | Adjustment of the book value of debt to the estimated fair values on the date of acquisition based upon interest rates in the market.
Schedule of Acquired Loans with Credit Impairment | Information regarding Northwest loans acquired deemed credit-impaired as of the August 16, 2018 acquisition date are as follows:
Contractually required principal and interest payments | $ | 27.5 |
Contractual cash flows not expected to be collected (“non-accretable discount”) | 4.4 |
Cash flows expected to be collected | 23.1 |
Interest component of cash flows expected to be collected (“accretable discount”) | 3.2 |
Fair value of acquired credit-impaired loans | $ | 19.9 |
Information regarding IIBK loans acquired deemed credit-impaired as of the April 8, 2019 acquisition date are as follows:
Contractually required principal and interest payments | $ | 24.1 |
Contractual cash flows not expected to be collected (“non-accretable discount”) | 3.9 |
Cash flows expected to be collected | 20.2 |
Interest component of cash flows expected to be collected (“accretable discount”) | 3.4 |
Fair value of acquired credit-impaired loans | $ | 16.8 |
The following table displays the outstanding unpaid balances and accrual status of loans acquired with credit impairment as of the dates indicated:
| September 30, 2019 |  | December 31, 2018
Outstanding balance | $ | 52.8 |  |  | $ | 43.4 |
Carrying value |  |  |
Loans on accrual status | 39.9 |  |  | 30.2 |
Total carrying value | $ | 39.9 |  |  | $ | 30.2 |
The following table summarizes changes in the accretable yield for loans acquired deemed credit impaired for the three and nine month periods ended September 30, 2019 and 2018:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2019 | 2018 |  | 2019 | 2018
Beginning balance | $ | 10.8 |  | $ | 6.5 |  |  | $ | 8.9 |  | $ | 7.3 |
Acquisitions | — |  | 3.2 |  |  | 3.4 |  | 3.2 |
Additions | — |  | — |  |  | — |  | 0.4 |
Accretion income | (0.8 | ) | (0.7 | ) |  | (2.5 | ) | (2.4 | )
Reductions due to exit events | (0.2 | ) | (0.1 | ) |  | (1.3 | ) | (0.6 | )
Reclassifications from non-accretable differences | 0.2 |  | 0.6 |  |  | 1.5 |  | 1.6 |
Ending balance | $ | 10.0 |  | $ | 9.5 |  |  | $ | 10.0 |  | $ | 9.5 |
Schedule of Acquired Loans not Deemed to Have Credit Impairment | Information regarding Northwest acquired loans not deemed credit-impaired at the August 16, 2018 acquisition date are as follows:
Contractually required principal and interest payments | $ | 894.8 |
Contractual cash flows not expected to be collected | 26.1 |
Fair value at acquisition | $ | 693.2 |
Information regarding IIBK acquired loans not deemed credit-impaired at the April 8, 2019 acquisition date are as follows:
Contractually required principal and interest payments | $ | 398.7 |
Contractual cash flows not expected to be collected | 15.2 |
Fair value at acquisition | $ | 321.5 |
Summary of Pre-tax Merger Related Expenses |
| Three Months Ended September 30, 2019 |  | Three Months Ended September 30, 2018 |  | Nine Months Ended September 30, 2019 |  | Nine Months Ended September 30, 2018
Legal and Professional Fees | $ | 0.1 |  |  | $ | 2.4 |  |  | $ | 0.8 |  |  | $ | 3.0 |
Employee Expenses | 1.4 |  |  | — |  |  | 8.2 |  |  | 0.1 |
Technology Conversion and Contract Termination | 1.5 |  |  | 0.5 |  |  | 8.7 |  |  | 2.0 |
Other | 0.8 |  |  | 0.2 |  |  | 1.9 |  |  | 0.3 |
Total Acquisition Related Expenses | $ | 3.8 |  |  | $ | 3.1 |  |  | $ | 19.6 |  |  | $ | 5.4 |

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- Definition Tabular disclosure of the reconciliation of contractual cash flows to the carrying amount relating to certain loans acquired in a transfer. + References No definition available. + Details
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- Definition Tabular disclosure of the amounts recognized as of the acquisition date for each major class of assets acquired and liabilities assumed. May include but not limited to the following: (a) acquired receivables; (b) contingencies recognized at the acquisition date; and (c) the fair value of noncontrolling interests in the acquiree. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=116869197&loc=d3e4845-128472 + Details
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