Business Combinations
12 Months Ended
Dec. 31, 2014
Business Combinations [Abstract]  
Business Combinations
Business Combinations
On September 19, 2014, the Company assumed the deposits of six branches of Center State Bank of Florida, N.A. and acquired five of those branches pursuant to a definitive agreement entered into on June 5, 2014. No loans were acquired in the transaction.  Net cash proceeds of approximately $162.0 million were received in the transaction, representing the deposit balances assumed at closing, net of amounts paid for real and personal property acquired and a 1.50% premium on deposits. Customer deposit balances assumed were recorded at $170.9 million, real and personal property was recorded at $7.2 million, core deposit intangible of $1.8 million was recognized, and approximately $100,000 in other accrued liabilities, net were recorded in the transaction. The amount allocated to goodwill was insignificant.
On June 15, 2012, the Company entered into a purchase and assumption agreement with a loss share agreement with the FDIC, as receiver of Security Exchange Bank (“Security Exchange”), to acquire certain assets and assume substantially all of the deposits and certain liabilities in a whole-bank acquisition. The Company received a cash payment from the FDIC of $14.9 million to assume the net liabilities. The estimated fair value of assets acquired, intangible assets and the cash payment received from the FDIC exceeded the estimated fair value of the liabilities assumed, resulting in a pretax gain of $4.2 million for Security Exchange recorded in 2012. This gain resulted from the discount bid on the assets acquired and the impact of the FDIC loss share agreement. This gain was recorded in other noninterest income in the Consolidated Statements of Comprehensive Income.
Under the loss share agreements, the FDIC has agreed to reimburse the Company for 80% of all losses incurred in connection with those covered assets for a period of five years for commercial loans and other real estate and 80% of all losses incurred in connection with covered residential mortgage loans for a period of 10 years. New loans made after the date of the transaction are not covered by the provisions of the loss share agreements. The Company also acquired other assets that are not covered by the loss share agreements, including investment securities purchased at fair market value.
The acquired assets and liabilities for Security Exchange, as well as adjustments to record the assets and liabilities at fair value at the acquisition date, are presented in the following table.
(in thousands)
 
As Recorded by
FDIC/Security
Exchange
 
Fair Value
Adjustments
 
As Recorded
by Fidelity
Assets
 
 
 
 
 
 
Cash and due from banks
 
$
29,717

 
$

 
$
29,717

Investment securities
 
18,579

 

 
18,579

Loans
 
64,358

 
(17,147
)
 
47,211

FDIC indemnification asset
 

 
25,304

 
25,304

Core deposit intangible
 

 
406

 
406

Other real estate
 
45,594

 
(22,860
)
 
22,734

Other assets
 
7,628

 
(987
)
 
6,641

Total assets acquired
 
$
165,876

 
$
(15,284
)
 
$
150,592

Liabilities
 
 
 
 
 
 
Deposits
 
$
146,457

 
$

 
$
146,457

Other liabilities
 
122

 
1,561

 
1,683

Total liabilities assumed
 
$
146,579

 
$
1,561

 
$
148,140

Proforma comparative revenue for the combined Fidelity and Security Exchange was $170.1 million for the year ended, December 31, 2012. Proforma comparative pretax net income for the combined Fidelity and Security Exchange was $34.8 million for the year ended December 31, 2012.
Because the FDIC will reimburse the Company for 80% of losses incurred on the covered assets, an indemnification asset (FDIC indemnification asset) was recorded at fair value at the acquisition date. The FDIC indemnification asset is adjusted quarterly based on changes in expected losses and remittances received.
A summary of activity for the FDIC indemnification asset, included in other assets in the Consolidated Balance Sheets, follows:
 
 
For the Year Ended
(in thousands)
 
December 31, 2014
 
December 31, 2013
Beginning balance
 
$
14,136

 
$
20,074

Adjustments:
 
 
 
 
Accretion income
 
172

 
532

Amortization
 
(992
)
 
(82
)
(Fewer) additional estimated covered losses
 
(1,602
)
 
3,328

Loss share remittances
 
(4,595
)
 
(8,178
)
Loans paid in full/ORE sold
 
(2,108
)
 
(1,538
)
Ending balance
 
$
5,011

 
$
14,136