XML 47 R26.htm IDEA: XBRL DOCUMENT v3.7.0.1
Business Combinations, Intangible Assets and Goodwill
 12 Months Ended
Dec. 31, 2016
Business Combinations [Abstract]  
Acquisition

Business Combinations

In October 2016, National Investors Holdings, LLC ("NIH"), a subsidiary of the Company, acquired all of the outstanding shares of University Title Company (“University”), a title insurance agency doing business in the State of Texas. NIH paid $10 million plus a $918,000 adjustment for University’s net cash position at closing to the shareholders of University. The acquisition was partially financed with loan proceeds from a Business/Commercial Loan Agreement and related Promissory Note (collectively, the “Loan Agreement”) with a bank, pursuant to which the bank loaned the Company the principal amount of $6 million. The Company paid off all amounts due under the Loan Agreement in December 2016, and therefore has no liabilities related to the Loan Agreement at December 31, 2016.

In April 2012, ITIC purchased a 70% ownership interest in United Title Agency Co., LLC (“United”) for a purchase price of $1,041,250. In May 2014, ITIC purchased the remaining 30% interest in United for an additional $515,275, making United a wholly owned subsidiary of ITIC. United is a title insurance agency doing business in the State of Michigan.

Intangible Assets

The Company recognized the required identifiable intangible assets of University and United.  The fair values of intangible assets, all Level 3 inputs, are principally based on values obtained from a third party valuation service. In accordance with ASC 350, Intangibles – Goodwill and Other, management determined that no events or changes in circumstances occurred that would indicate the carrying amounts may not be recoverable, and therefore determined that no identifiable intangible assets were impaired at December 31, 2016.

Identifiable intangible assets consist of the following as of December 31:
Year Ended:
2016
2015
Referral relationships
$
6,416,215

$
836,215

Non-complete agreements
1,405,685

645,685

Tradename
560,000

—

Total
8,381,900

1,481,900

Accumulated amortization
(475,110
)
(261,315
)
Identifiable intangible assets, net
$
7,906,790

$
1,220,585



The following table provides the estimated aggregate amortization expense for each of the five succeeding fiscal years:
Year Ended:
 
2017
$
963,920

2018
642,253

2019
568,920

2020
568,920

2021
561,587

Thereafter
4,601,190

Total
$
7,906,790



Goodwill and Title Plant

The Company recognized $4,349,851 in goodwill and $690,000 in a title plant as the result of the University acquisition.  The fair values of goodwill and the title plant, both Level 3 inputs, are principally based on values obtained from a third party valuation service. In accordance with ASC 350, Intangibles – Goodwill and Other, management determined that no events or changes in circumstances occurred that would indicate the carrying amounts may not be recoverable, and therefore determined that goodwill and the title plant were not impaired at December 31, 2016.