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ACQUISITIONS (Tables)
12 Months Ended
Dec. 31, 2017
Business Combinations [Abstract]  
Summary of Consideration Assets Acquired and Liabilities Assumed
The following table provides a summary of the assets acquired and liabilities assumed and the associated fair value adjustments as recorded by the Company at acquisition:
 
 
 
 
Fair Value
 
 
 
As Recorded by
(in thousands)
 
As Acquired
 
Adjustments
 
 
 
the Company
Consideration Paid:
 
 
 
 
 
 
 
 
Company common stock issued to Commerce common shareholders
 
$
188,599

Company preferred stock issued to certain Commerce shareholders
 
 
 
 
 
 
 
40,633

Cash in lieu paid to Commerce shareholders
 
 
 
 
 
 
 
1

Total consideration paid
 
 
 
 
 
 
 
$
229,233

Recognized amounts of identifiable assets acquired and (liabilities) assumed, at fair value:
Cash and short-term investments
 
$
374,611

 
$

 
 
 
$
374,611

Investment securities
 
115,274

 
(1,427
)
 
(a)
 
113,847

Loans, net
 
1,327,256

 
(86,505
)
 
(b)
 
1,240,751

Premises and equipment
 
8,931

 
5,346

 
(c)
 
14,277

Core deposit intangibles
 

 
22,400

 
(d)
 
22,400

Deferred tax assets, net
 
7,956

 
26,580

 
(e)
 
34,536

Goodwill and other intangibles
 
11,233

 
(11,233
)
 
(f)
 

Other assets
 
52,709

 
(3,664
)
 
(g)
 
49,045

Deposits
 
(1,710,872
)
 
(1,180
)
 
(h)
 
(1,712,052
)
Borrowings
 
(19,542
)
 

 

 
(19,542
)
Other liabilities
 
(5,086
)
 
265

 

 
(4,821
)
Total identifiable net assets
 
$
162,470

 
$
(49,418
)
 
 
 
$
113,052

 
 
 
 
 
 
 
 
 
Goodwill
 
 
 
 
 
 
 
$
116,181

________________________________
Explanation of Certain Fair Value Adjustments
(a)
The adjustment represents the write down of the book value of securities to their estimated fair value at the date of acquisition.
(b)
The adjustment represents the write-off of $15.0 million in allowance for loan and lease losses and the write down of the book value of loans to their estimated fair value based on interest rates and expected cash flows as of the acquisition date, which includes an estimate of expected loan loss inherent in the portfolio. The valuation of the loans is provisional. Loans with evidence of credit deterioration at acquisition are accounted for under ASC 310-30 and had a book value of $163.1 million and had a fair value of $71.1 million. Non-impaired loans accounted for under ASC 310-20 had a book value of $1.18 billion and have a fair value of $1.17 billion. ASC 310-30 loans have a $10.8 million fair value adjustment that is accretable in earnings. ASC 310-20 loans have a $4.0 million fair value adjustment premium that is amortized over the remaining term of the loans using the effective interest method, or a straight-line method if the loan is a revolving credit facility.
(c)
The adjustment represents an increased fair value based on the appraised value of Commerce’s owned branches and headquarters comprised of $5.7 million for buildings and $0.7 million for land. This was offset by a $1.0 million reduction of the book value of furniture, fixtures, and equipment, to their estimated fair value and the immediate expensing of equipment not meeting the thresholds for capitalization in accordance with Company policy. The adjustments will be depreciated over the remaining estimated economic lives of the assets.
(d)
The adjustment represents the value of the core deposit base assumed in the acquisition. The core deposit asset was recorded as an identifiable intangible asset and will be amortized over the estimated useful life of the deposit base (10 years).
(e)
Represents net deferred tax assets resulting from the fair value adjustments related to the acquired assets and liabilities, identifiable intangibles, and other purchase accounting adjustments.
(f)
Represents the write-off of goodwill and intangible assets from a prior Commerce acquisition.
(g)
The adjustment includes a $3.5 million write-down of repossessed assets based on market report data.
(h)
The adjustment is necessary because the weighted average interest rate of time deposits exceeded the cost of similar funding at the time of acquisition. The amount will be amortized over the estimated useful life of nine months.
Schedule of Acquired Loan Portfolio
nformation about the Commerce Bank acquired loan portfolio subject to ASC 310-30 as of October 13, 2017 is as follows (in thousands):
 
ASC 310-30 Loans
Gross contractual receivable amounts at acquisition
$
163,125

Contractual cash flows not expected to be collected (nonaccretable discount)
(81,205
)
Expected cash flows at acquisition
81,920

Interest component of expected cash flows (accretable discount)
(10,815
)
Fair value of acquired loans
$
71,105

Pro Forma Financial Information
Information in the following table is shown in thousands, except earnings per share:
 
 
Pro Forma (unaudited)
Years ended December 31,
 
 
2017
 
2016
Net interest income
 
$
344,797

 
$
302,012

Non-interest income
 
134,818

 
77,192

Income available to common shareholders
 
77,340

 
78,859