On the Company completed its acquisition of Reunion Bank of Florida (“Reunion”), a Florida banking corporation headquartered in Tavares, Florida. At acquisition, Reunion was merged with and into NBC. Reunion had a total of full-service banking locations and loan production offices located in counties in central and northeast Florida. Reunion’s common shareholders were entitled to receive either shares of the Company’s common stock, in cash, or a combination of stock and cash for each share of Reunion’s common stock, subject to certain allocation limitations and proration procedures set forth in the merger agreement. Specifically, of the shares of Reunion common stock, or shares, were converted into newly issued shares of the Company’s common stock, and the remaining of the shares of outstanding Reunion common stock, or shares, were converted into the right to receive cash. The Company paid cash for cash elections and in lieu of fractional shares totaling and issued shares of the Company’s common stock. The aggregate estimated value of the consideration given was The Company recorded of goodwill, which is nondeductible for tax purposes, as this acquisition was a nontaxable transaction. Approximately of direct stock issuance costs for the acquisition were incurred and charged against additional paid-in capital, and other acquisition expenses of approximately were charged directly to other noninterest expense.

 

The acquisition of Reunion was accounted for using the purchase method of accounting in accordance with ASC . Assets acquired, liabilities assumed, and consideration exchanged were recorded at their respective acquisition date fair values. Determining the fair value of assets and liabilities is a complicated process involving significant judgment regarding the methods and assumptions to be used. Fair values are preliminary and subject to refinement for up to year after the closing date of the acquisition as additional information regarding the closing date fair values becomes available.

The following table presents the assets acquired and liabilities assumed of Reunion as of at their initial fair value estimates:

Explanation of fair value adjustments

The discounts on loans will be accreted to interest income over the estimated average life of the loans using the level yield method. The core deposit intangible asset is being amortized over a -year life on an accelerated basis.

 

On NBC acquired of the outstanding units of CBI Holding Company, LLC (“CBI”), which owns Corporate Billing, LLC (“Corporate Billing”), a receivables factoring business headquartered in Decatur, Alabama. CBI now operates as a subsidiary of NBC. We have an option to purchase the remaining interest for a price based on a multiple of CBI’s earnings that is exercisable at any time beginning on and expires on NBC paid million in cash for its interest in CBI. Our consolidated financial statements include all of the assets and liabilities of CBI, as well as a minority interest, representing the that we have not purchased. As a result, at acquisition, we recorded million of goodwill and a non-controlling interest of million. We marked the assets acquired and liabilities assumed to fair value based on information available at the time of the acquisition. Given an average life for CBI’s receivables of to days, the assets and liabilities of CBI are very short-term in nature, and the book value was deemed to be the fair value, with the exception of a thousand discount on the purchased factored receivables, which was accreted into income during in accordance with the average life of the related receivables.

 

 

On we completed our acquisition of United Group Banking Company of Florida, Inc. (“United”), a bank holding company headquartered in Longwood, Florida. United’s wholly-owned banking subsidiary, United Legacy Bank (“ULB”), merged with and into NBC on Since the merger, NBC has operated in the Orlando, Florida market under the trade name “United Legacy Bank, a division of National Bank of Commerce.” In connection with the merger, we paid cash for cash elections and in lieu of fractional shares totaling and issued shares of our common stock. The aggregate estimated value of the consideration was million. We recorded million of goodwill and a core deposit intangible asset of million.

The following unaudited supplemental pro forma information is presented to show estimated results assuming CBI, United and Reunion were acquired as of the beginning of each period presented. These unaudited pro forma results are not necessarily indicative of the operating results that the Company would have achieved had it completed the acquisitions as of or and should not be considered as representative of future operating results. The results include a loss on sale of securities of recorded by Reunion prior to the acquisition. Pro forma information for is not necessary because each acquired company was included in the Company’s results for the entire year.

 

 

In many cases, determining the fair value of acquired assets and assumed liabilities requires the Company to estimate cash flows expected to result from those assets and liabilities and to discount those cash flows at appropriate rates of interest. The most significant of those determinations is related to the fair value of acquired loans. Acquired loans are initially recorded at their acquisition date fair values. The carryover of the allowance for loan losses is prohibited, as any credit losses in the loans are included in the determination of the fair value of the loans at the acquisition date. Fair values for acquired loans are based on a discounted cash flow methodology that involves assumptions including the remaining life of the acquired loans, estimated prepayments, estimated value of the underlying collateral, and net present value of cash flows expected to be collected. Acquired loans that have evidence of deterioration in credit quality since origination and for which it is probable, at acquisition, that the acquirer will be unable to collect all contractually required payments are specifically identified and analyzed. The excess of cash flows expected at acquisition over the estimated fair value is referred to as the accretable discount and is recognized into interest income over the remaining life of the loan. The difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition is referred to as the non-accretable discount. The non-accretable discount represents estimated future credit losses expected to be incurred over the life of the loan.

Loans at the acquisition date for Reunion (which was acquired during  and United (which was acquired during are presented in the following tables.

 

 

The following table presents information about the purchased credit-impaired loans at acquisition for Reunion and United.

 

 

 

The following table presents changes in the carrying amount of the accretable yield on acquired loans for the years ended and The Company had no acquisitions prior to the year ended