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Business Combinations and Divestitures | 6 Months Ended
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Jun. 30, 2017
Business Combinations [Abstract] |
Business Combinations and Divestitures | NOTE 2 – Business combinations AND DIVESTITURES Independent Bank Colorado Branches On June 23, 2017, the Company entered into an agreement to acquire 9 branch locations in Colorado from Independent Bank Group, Inc.’s banking subsidiary Independent Bank. TBK Bank will purchase approximately $100,000,000 in loans and assume approximately $168,000,000 in deposits associated with the branches for an estimated aggregate deposit premium of $7,000,000 or 4.17%. The actual premium will be based on a 30 day average of deposit balances at the time the transaction closes. The transaction is expected to close during the fourth quarter of 2017 and is subject to certain closing conditions, including receipt of regulatory approval and other customary closing conditions. Triumph Capital Advisors, LLC On March 31, 2017, the Company sold its wholly owned asset management subsidiary, Triumph Capital Advisors, LLC, to an unrelated third party. The transaction was completed to enhance shareholder value and provide a platform for TCA to operate without the impact of regulations intended for depository institutions and their holding companies. A summary of the consideration received and the gain on sale is as follows
(Dollars in thousands) |  |  |  |
Consideration received (fair value): |  |  |  |
Cash |  | $ | 10,554 |
Loan receivable |  |  | 10,500 |
Revenue share |  |  | 1,623 |
Total consideration received |  |  | 22,677 |
Carrying value of TCA membership interest |  |  | 1,417 |
Gain on sale of subsidiary |  |  | 21,260 |
Transaction costs |  |  | 400 |
Gain on sale of subsidiary, net of transaction costs |  | $ | 20,860 |
The Company financed a portion of the consideration received with a $10,500,000 term credit facility. Terms of the floating rate credit facility provide for quarterly principal and interest payments with an interest rate floor of 5.50%, maturing on March 31, 2023. The Company received a $25,000 origination fee associated with the term credit facility that was deferred and is being accreted over the contractual life of the loan as a yield adjustment. In addition, the Company is entitled to receive an annual earn-out payment representing 3% of TCA’s future annual gross revenue, with a total maximum earn-out amount of $2,500,000. The revenue share earn-out was considered contingent consideration which the Company recorded as an asset at its estimated fair value of $1,623,000 on the date of sale. The Company incurred pre-tax expenses related to the transaction, including professional fees and other direct transaction costs, totaling $400,000 which were netted against the gain on sale of subsidiary in the consolidated statements of income. Southern Transportation Insurance Agency On September 1, 2016, the Company acquired Southern Transportation Insurance Agency, Ltd. in an all-cash transaction for $2,150,000. The purpose of the acquisition was to expand the Company’s product offerings for clients in the transportation industry. The Company recognized an intangible asset of $1,580,000 and goodwill of $570,000, which were allocated to the Company’s Banking segment. Goodwill resulted from expected enhanced product offerings and is being amortized for tax purposes. ColoEast Bankshares, Inc. On August 1, 2016, the Company acquired 100% of the outstanding common stock of ColoEast Bankshares, Inc. (“ColoEast”) and its community banking subsidiary, Colorado East Bank & Trust, in an all-cash transaction for $70,000,000. The Company also assumed $10,500,000 of ColoEast preferred stock issued in conjunction with the U.S. Government’s Treasury Asset Relief Program (“TARP Preferred Stock”). Colorado East Bank & Trust, which was merged into TBK Bank upon closing, offered personal checking, savings, CD, money market, HSA, IRA, NOW and business accounts, as well as commercial and consumer loans from 18 branches and one loan production office located throughout Colorado and far western Kansas. The acquisition expanded the Company’s market into Colorado and Kansas and further diversified the Company’s loan, customer, and deposit base. A summary of the fair values of assets acquired, liabilities assumed, consideration transferred, and the resulting goodwill is as follows:
|  | Initial Values |  |  | Measurement |  |  |  |  |
|  | Recorded at |  |  | Period |  |  | Adjusted |
(Dollars in thousands) |  | Acquisition Date |  |  | Adjustments |  |  | Values |
Assets acquired: |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 57,671 |  |  | $ | — |  |  | $ | 57,671 |
Securities |  |  | 161,693 |  |  |  | — |  |  |  | 161,693 |
Loans |  |  | 460,775 |  |  |  | — |  |  |  | 460,775 |
FHLB and Federal Reserve Bank stock |  |  | 550 |  |  |  | — |  |  |  | 550 |
Premises and equipment |  |  | 23,940 |  |  |  | — |  |  |  | 23,940 |
Other real estate owned |  |  | 3,105 |  |  |  | (143 | ) |  |  | 2,962 |
Intangible assets |  |  | 7,238 |  |  |  | — |  |  |  | 7,238 |
Bank-owned life insurance |  |  | 6,400 |  |  |  | — |  |  |  | 6,400 |
Deferred income taxes |  |  | 4,511 |  |  |  | (70 | ) |  |  | 4,441 |
Other assets |  |  | 10,022 |  |  |  | — |  |  |  | 10,022 |
|  |  | 735,905 |  |  |  | (213 | ) |  |  | 735,692 |
Liabilities assumed: |  |  |  |  |  |  |  |  |  |  |  |
Deposits |  |  | 652,952 |  |  |  | — |  |  |  | 652,952 |
Junior subordinated debentures |  |  | 7,728 |  |  |  | — |  |  |  | 7,728 |
Other liabilities |  |  | 6,784 |  |  |  | — |  |  |  | 6,784 |
|  |  | 667,464 |  |  |  | — |  |  |  | 667,464 |
Fair value of net assets acquired |  |  | 68,441 |  |  |  | (213 | ) |  |  | 68,228 |
Cash paid |  |  | 70,000 |  |  |  | — |  |  |  | 70,000 |
TARP Preferred Stock assumed |  |  | 10,500 |  |  |  | — |  |  |  | 10,500 |
Consideration transferred |  |  | 80,500 |  |  |  | — |  |  |  | 80,500 |
Goodwill |  | $ | 12,059 |  |  | $ | 213 |  |  | $ | 12,272 |
The consideration transferred was comprised of a combination of cash and the assumption of ColoEast’s TARP Preferred Stock. The Company recognized goodwill of $12,272,000, which included measurement period adjustments related to the final valuation of other real estate owned acquired in the transaction and the finalization of income taxes associated with the transaction. Goodwill was calculated as the excess of both the consideration exchanged and liabilities assumed as compared to the fair value of identifiable net assets acquired and was allocated to the Company’s Banking segment. The goodwill in this acquisition resulted from expected synergies and expansion into the Colorado and Kansas markets. The goodwill is not being amortized for tax purposes. The TARP Preferred Stock assumed in the acquisition was redeemed by the Company at par on August 31, 2016. In connection with the ColoEast acquisition, the Company acquired loans both with and without evidence of credit quality deterioration since origination. The acquired loans were initially recorded at fair value with no carryover of any allowance for loan losses. Acquired loans were segregated between those considered to be purchased credit impaired (“PCI”) loans and those without credit impairment at acquisition. The following table presents details on acquired loans at the acquisition date:
|  | Loans, Excluding |  |  | PCI |  |  | Total |
(Dollars in thousands) |  | PCI Loans |  |  | Loans |  |  | Loans |
Commercial real estate |  | $ | 86,569 |  |  | $ | 10,907 |  |  | $ | 97,476 |
Construction, land development, land |  |  | 58,718 |  |  |  | 2,933 |  |  |  | 61,651 |
1-4 family residential properties |  |  | 36,412 |  |  |  | 91 |  |  |  | 36,503 |
Farmland |  |  | 100,977 |  |  |  | 233 |  |  |  | 101,210 |
Commercial |  |  | 151,605 |  |  |  | 5,129 |  |  |  | 156,734 |
Factored receivables |  |  | 694 |  |  |  | — |  |  |  | 694 |
Consumer |  |  | 6,507 |  |  |  | — |  |  |  | 6,507 |
|  | $ | 441,482 |  |  | $ | 19,293 |  |  | $ | 460,775 |
The operations of ColoEast are included in the Company’s operating results beginning August 1, 2016. Expenses related to the acquisition, including professional fees and integration costs, totaling $1,618,000 were recorded in noninterest expense in the consolidated statements of income during the three months ended September 30, 2016.

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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