| Schedule of Business Acquisitions, by Acquisition [Table Text Block] |
Consideration
paid through Company common stock issued to Legacy ConnectOne shareholders and fair value of stock options acceleration was: $
264,231
| |
|
Legacy |
|
|
|
|
As recorded |
| |
|
ConnectOne |
|
Fair value |
|
|
at |
| |
|
carrying value |
|
adjustments |
|
|
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 non-interest 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 |
|
2013 |
| |
|
(in thousands, except per |
| |
|
share amounts) |
| Net interest income |
|
$ |
107,988 |
|
$ |
95,749 |
| Noninterest income |
|
|
8,244 |
|
|
8,053 |
| Noninterest expense |
|
|
(54,749) |
|
|
(45,827) |
| Net income |
|
|
45,981 |
|
|
35,984 |
| |
| Pro forma earnings per share from continuing operations: |
|
|
|
|
|
|
| Basic |
|
$ |
1.55 |
|
$ |
0.91 |
| Diluted |
|
|
1.53 |
|
|
0.90 |
|