Note 23 - Acquisition of Noncontrolling Interest in m2 Lease Funds

12 Months Ended

Dec. 31, 2016

Notes to Financial Statements

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

Note

23.

Acquisition of Noncontrolling Interest in

m2

Lease Funds

On

August

27,

2012,

the Company’s largest subsidiary bank, QCBT, entered into an amendment to the operating agreement of

m2

and purchased the remaining

20%

noncontrolling interest in

m2

for

$4,501,442.

The purchase price and related acquisition costs exceeded the book value by

$2,133,417.

This excess was reflected as a reduction in additional paid in capital on the Company’s consolidated financial statements until the final payout in

2015.

The acquisition was structured in

two

payments with the initial payment of

$1,653,755

made on

September

11,

2012

and the final payment of

$3,307,509

due in

September

2015.

QCBT calculated the present value of this future payment using a discount rate of

5%

and recorded a resulting liability of

$2,847,687.

QCBT accreted the discount of

$459,822

using the effective yield method over the

three

year period to the final payment date. Accretion totaled

$80,820

and

$155,716

for the years ended

December

31,

2015

and

2014,

respectively. The final payment made in

2015

eliminated any further liability.

In conjunction with the purchase agreement, the Company also entered into an agreement with the Chief Executive Officer and former

20%

owner of

m2,

whereby he was provided additional consideration equal to

20%

of the earnings of

m2

for the period from

September

2012

through the earlier of

August

2015

or his separation from service. The payment under this arrangement was also due in

September

2015.

Because the payment was contingent upon future service, QCBT was accruing the liability and related compensation expense over the service period. Expense totaled

$593,611

and

$701,634

for the years ended

December

31,

2015

and

2014,

respectively. The final payment made in

2015

eliminated any further liability.