| Schedule of Business Acquisitions, by Acquisition [Table Text Block] |
The table below summarizes the amounts recognized as of the Merger date for each major class of assets acquired and
liabilities assumed, the estimated fair value adjustments and the amounts recorded in the Company’s financial statements
at fair value at the Merger date (in thousands):
| Consideration paid through Company common stock issued to Legacy ConnectOne shareholders and fair value of stock options acceleration was: |
$
264,231 |
| | |
Legacy
ConnectOne
carrying value | | |
Fair value
adjustments | | |
As recorded
at
acquisition | |
| | |
| | |
| | |
| |
| Cash and cash equivalents | |
$ | 70,318 | | |
$ | - | | |
$ | 70,318 | |
| Investment securities | |
| 28,436 | | |
| 16 | (a) | |
| 28,452 | |
| Restricted investments | |
| 13,646 | | |
| - | | |
| 13,646 | |
| Loans held-for-sale | |
| 190 | | |
| - | | |
| 190 | |
| Loans | |
| 1,304,600 | | |
| (5,316) | (b) | |
| 1,299,284 | |
| Bank owned life insurance | |
| 15,481 | | |
| - | | |
| 15,481 | |
| | |
| | | |
| | | |
| | |
| Premises and equipment, net | |
| 7,380 | | |
| (905) | (c) | |
| 6,475 | |
| Accrued interest receivable | |
| 4,470 | | |
| - | | |
| 4,470 | |
| Core deposit intangible | |
| - | | |
| 5,308 | (d) | |
| 5,308 | |
| Other real estate owned | |
| 2,455 | | |
| - | | |
| 2,455 | |
| Other assets | |
| 10,636 | | |
| 3,650 | (e) | |
| 14,286 | |
| Deposits | |
| (1,049,666) | | |
| (1,676) | (f) | |
| (1,051,342) | |
| Borrowings | |
| (262,046) | | |
| (1,324) | (g) | |
| (263,370) | |
| Other liabilities | |
| (10,527) | | |
| - | | |
| (10,527) | |
| | |
| | | |
| | | |
| | |
| Total identifiable net assets | |
$ | 135,373 | | |
$ | (247) | | |
$ | 135,126 | |
| Goodwill recorded in the Merger | |
| | | |
| | | |
$ | 129,105 | |
The following provides an explanation
of certain fair value adjustments presented in the above table:
| a) | Represents the fair value adjustment on investment securities held-to-maturity. |
| b) | Represents the elimination of Legacy ConnectOne’s allowance for loan and lease losses, deferred fees, deferred costs
and an adjustment of the amortized cost of loans to estimated fair value, which includes an interest rate mark and credit mark. |
| c) | Represent an adjustment to reflect the fair value of above-market rent on leased premises. The above-market rent adjustment
will be amortized on a straight-line basis over the remaining term of the respective leases. |
| d) | Represents intangible assets recorded to reflect the fair value of core deposits. The core deposit asset was recorded as an
identifiable intangible asset and will be amortized on an accelerated basis over the estimated average life of the deposit base. |
| e) | Consist primarily of adjustments in net deferred tax assets resulting from the fair value adjustments related to acquired assets,
liabilities assumed and identifiable intangibles recorded. |
| f) | Represents fair value adjustment on time deposits as the weighted average interest rates of time deposits assumed exceeded
the costs of similar funding available in the market at the time of the Merger, as well as the elimination of fees paid on brokered
time deposits. |
| g) | Represents the fair value adjustment on FHLB borrowings as the weighted average interest rate of FHLB borrowings assumed exceeded
the cost of similar funding available in the market at the time of the Merger. |
|
| Schedule of Accountable Loans for Business Combinations in Accordance with FASB ASC 310-30 [Table Text Block] |
The acquired loan portfolio subject to purchased
credit impairment accounting guidance (ASC 310-30) as of July 1, 2014 was comprised of collateral dependent loans with deteriorated
credit quality as follows:
| | |
ASC 310-30
Loans | |
| | |
| |
| Contractual principal and accrued interest at acquisition | |
$ | 23,284 | |
| Principal not expected to be collected (nonaccretable discount) | |
| (6,942) | |
| Expected cash flows at acquisition | |
| 16,342 | |
| Interest component of expected cash flows (accretable discount) | |
| (5,013) | |
| Fair value of acquired loans | |
$ | 11,329 | |
|
| Schedule of Operating Results Attributable to Business Combinations [Table Text Block] |
The unaudited pro forma information set forth below reflects the adjustments related to (a) purchase accounting fair value adjustments; (b) amortization of core deposit and other intangibles; and (c) adjustments to interest income and expense due to amortization of premiums and accretion discounts. In the table below, merger-related expenses of $12.4 million were excluded from pro forma noninterest expenses for the year ended December 31, 2014. Income taxes were also adjusted to exclude income tax benefits of $5.6 million related to the merger expenses for the year ended December 31, 2014.
| | |
2014 | |
| | |
| |
| Net interest income | |
$ | 107,988 | |
| Noninterest income | |
| 8,244 | |
| Noninterest expense | |
| (54,749) | |
| Net income | |
| 45,981 | |
| | |
| | |
| Pro forma earnings per share from continuing operations: | |
| | |
| Basic | |
$ | 1.55 | |
| Diluted | |
| 1.53 | |
|