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SALE OF SUBSIDIARY
12 Months Ended
Dec. 31, 2018
SALE OF SUBSIDIARY [Abstract]  
Discontinued Operations



NOTE 2. SALE OF SUBSIDIARY



Avon-Dixon Agency Sale



On December 31, 2018, the Company completed the sale of specific assets and activities related to its Insurance Agency, Avon Dixon, LLC (“Avon”) to Alera Group Agency, LLC (“Alera”). Also, on this date the Company discontinued its operations of its Premium Finance Company, Mubell Finance, LLC (“Mubell”). Together, these companies are referred to as the “Insurance Subsidiaries”. The Insurance subsidiaries represented the Company's insurance products and services segment, the activities of which related to originating, servicing and underwriting retail insurance policies. Assets sold to Alera included various intangible assets and a 40% interest in a segregated portfolio of Eastern Re. Ltd., a specialty reinsurance company. The Mubell Company, along with certain other assets and liabilities that will be sold or settled separately within one year, is classified as discontinued operations in the accompanying Consolidated Balance Sheets and Consolidated Statements of Income.



The specific assets acquired by Alera include, among other things, the insurance origination offices, insurance expirations, workforce and system procedures, trade names and goodwill. Alera has assumed certain obligations and liabilities of the Company under the acquired leases, and with respect to the employment of transferred employees. The Company received $25.2 million cash payment, upon the closing of the transaction.



The following table summarizes the calculation of the net gain on disposal of discontinued operations:











 

 

 

($ in thousands)

 

Year Ended December 31, 2018

Proceeds from the transaction

 

$

29,276 

Compensation expense related to the transaction

 

 

2,588 

Broker fees

 

 

935 

Other transaction costs

 

 

594 

 Net cash proceeds

 

 

25,159 

Net assets sold

 

 

(12,423)

   Net gain on disposal

 

$

12,736 





The following tables present the financial information of discontinued operations as of the dates and for the periods indicated:



Balance Sheets of Discontinued Operations













 

 

 

 

 

 



 

December 31,

($ in thousands)

 

 

2018

 

 

2017

ASSETS

 

 

 

 

 

 

Premises and equipment, net

 

$

 -

 

$

424 

Goodwill

 

 

 

 

10,100 

Other assets

 

 

625 

 

 

717 

Assets of discontinued operations

 

$

633 

 

$

11,241 



 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 



 

 

 

 

 

 

Accrued expenses and other liabilities

 

$

3,323 

 

$

1,065 

Liabilities of discontinued operations

 

$

3,323 

 

$

1,065 





Statements of Income of Discontinued Operations











 

 

 

 

 

 



 

For the Years Ended



 

December 31,

($ in thousands)

 

 

2018

 

 

2017

Noninterest income

 

 

 

 

 

 

   Net gain on disposal

 

$

12,736 

 

$

 -

   Insurance agency commissions

 

 

9,006 

 

 

8,837 

   All other income

 

 

335 

 

 

551 

      Total noninterest income

 

 

22,077 

 

 

9,388 

Noninterest expense

 

 

 

 

 

 

   Salaries and wages

 

 

5,156 

 

 

4,931 

   Employee benefits

 

 

1,173 

 

 

1,094 

   Occupancy expense

 

 

428 

 

 

361 

   Amortization of intangible assets

 

 

47 

 

 

84 

   Legal and professional fees

 

 

77 

 

 

54 

   Other noninterest expenses

 

 

1,039 

 

 

1,038 

   Total noninterest expense

 

 

7,920 

 

 

7,562 

Income from discontinued operations before income taxes

 

 

14,157 

 

 

1,826 

Income tax expense (benefit)

 

 

4,923 

 

 

(211)

      Income from discontinued operations

 

$

9,234 

 

$

2,037 







Statements of Cash Flows of Discontinued Operations



















 

 

 

 

 

 



 

For the Years Ended



 

December 31,

($ in thousands)

 

 

2018

 

 

2017

Cash flows from operating activities:

 

 

 

 

 

 

   Net income

 

$

9,234 

 

$

2,037 

   Adjustments to reconcile net income to cash

 

 

 

 

 

 

     provided by operating activities:

 

 

 

 

 

 

     Depreciation and amortization

 

 

107 

 

 

142 

     Stock-based compensation expense

 

 

 -

 

 

12 

     Net decrease (increase) in other assets

 

 

(1,919)

 

 

(1,844)

     Net increase in other liabilities

 

 

2,258 

 

 

404 

     Losses on disposal of premises and equipment

 

 

 -

 

 

     Net (gain) on sale of insurance agency

 

 

(12,736)

 

 

 -

      Net cash (used in) operating activities

 

 

(3,056)

 

 

753 

Cash flows from investing activities:

 

 

 

 

 

 

   Purchases of premises and equipment

 

 

 

 

(345)

   Proceeds from sale of insurance agency

 

 

25,159 

 

 

 -

      Net cash provided by (used in) investing activities

 

 

25,162 

 

 

(345)

      Net cash provided by discontinued operations

 

$

22,106 

 

$

408