ACQUISITIONS

The Company completed two acquisitions for the fiscal year ended September 30, 2015. The two purchase transactions are detailed below.

AFS/IBEX

On December 2, 2014, the Company, through its wholly-owned subsidiary, MetaBank, purchased substantially all of the commercial loan portfolio and related assets of AFS/IBEX Financial Services, Inc. (“AFS/IBEX”), an insurance premium finance company based in Dallas, Texas. Following the acquisition, MetaBank established its AFS/IBEX division, which provides short-term, collateralized financing to facilitate the purchase of insurance for commercial property, casualty, and liability risk through a network of over 1,300 independent insurance agencies throughout the United States. In addition to its operations at the Bank’s main office, the AFS/IBEX division has two agency offices, one in Dallas, Texas, and one in southern California.

Under the terms of the purchase agreement, the aggregate purchase price, which was based upon the December 2, 2014 tangible book value of AFS/IBEX, was approximately $99.3 million, all of which was paid in cash. The Company acquired assets with approximate fair values of $6.9 million for cash and cash equivalents, $74.1 million net loans receivable, $0.7 million other assets, $8.2 million intangible assets including customer relationships, trademark, and non-compete agreements, and $11.6 million goodwill. The Company also assumed liabilities of $2.2 million consisting of accrued expenses and other liabilities. All amounts are at estimated fair market values.

The following table represents the approximate fair value of assets acquired and liabilities assumed of AFS/IBEX on the consolidated balance sheet as of December 2, 2014:



	As of December 2, 2014
	(Dollars in Thousands)
Fair value of consideration paid
Cash	$	99,255
Total consideration paid	99,255

Fair value of assets acquired
Cash and cash equivalents	6,947
Loans receivable, net	74,120
Prepaid assets	156
Furniture and equipment, net	449
Intangible assets	8,213
Other assets	6
Total assets	89,891
Fair value of liabilities assumed
Accrued expenses and other liabilities	2,214
Total liabilities assumed	2,214
Fair value of net assets acquired	87,677
Goodwill resulting from acquisition	$	11,578

The AFS/IBEX transaction has been accounted for under the acquisition method of accounting. The assets and liabilities, both tangible and intangible, were recorded at their estimated fair values as of the transaction date. The Company made significant estimates and exercised judgment in estimating fair values and accounting for such acquired assets and liabilities.

The Company recognized goodwill of $11.6 million, which is calculated as the excess of both the consideration exchanged and the liabilities assumed as compared to the fair value of identifiable assets acquired. Goodwill resulted from expected operational synergies, an enhanced market area, and expanded product lines and is expected to be deductible for tax purposes. The intangible assets consist primarily of customer relationships that will be amortized over 30 years and will be deductible for tax purposes. See Note 20 to the Consolidated Financial Statements for further information on goodwill.

Acquired loans were recorded at fair value based on a discounted cash flow valuation which considered default rates, loss given defaults, and recovery rates, among other things. No allowance for credit losses was carried over on December 2, 2014. The Company recorded $7.6 million in revenue and $0.8 million in net income for AFS/IBEX during fiscal 2015. In addition, the Company incurred transaction costs of approximately $0.6 million in 2015 in connection with the acquisition, which are included in legal and consulting and other expenses on our consolidated statement of operations for the year ended September 30, 2015.

This acquisition is not deemed significant to the overall Company’s financial statements.

REFUND ADVANTAGE

On September 8, 2015, the Company, through its wholly-owned subsidiary, MetaBank, purchased substantially all the assets and related liabilities of Fort Knox Financial Services Corporation and its subsidiary, Tax Product Services LLC (together “Refund Advantage”). Refund Advantage is a provider of integrated tax refund processing services.

Under the terms of the purchase agreement, the aggregate purchase price was approximately $50.4 million, of which $26.1 million was paid in cash and $24.3 million was issued in Meta common stock. The Company acquired assets with approximate fair values of $2.8 million for cash and cash equivalents, $0.5 million other assets, $24.1 million intangible assets including customer relationships, trademark, and non-compete agreements, and $25.4 million goodwill. The Company also assumed liabilities of $2.5 million consisting of accrued expenses and other liabilities. All amounts are at estimated fair market values.

The following table represents the approximate fair value of assets acquired and liabilities assumed of Refund Advantage on the consolidated balance sheet as of September 8, 2015:



	As of September 8, 2015
	(Dollars in Thousands)
Fair value of consideration paid
Cash	$	26,060
Stock issued	$	24,303
Total consideration paid	50,363

Fair value of assets acquired
Cash and cash equivalents	2,821
Prepaid assets	23
Furniture and equipment, net	55
Intangible assets	24,119
Other assets	457
Total assets	27,475
Fair value of liabilities assumed
Accrued expenses and other liabilities	2,463
Total liabilities assumed	2,463
Fair value of net assets acquired	25,012
Goodwill resulting from acquisition	$	25,351

The Refund Advantage transaction has been accounted for under the acquisition method of accounting. The assets and liabilities, both tangible and intangible, were recorded at their estimated fair values as of the transaction date. The Company made significant estimates and exercised judgment in estimating fair values and accounting for such acquired assets and liabilities.

The Company recognized goodwill of $25.4 million, which is calculated as the excess of both the consideration exchanged and the liabilities assumed as compared to the fair value of identifiable assets acquired. Goodwill resulted from expected operational synergies, an enhanced market area, and expanded product lines and is expected to be deductible for tax purposes. The intangible assets consist primarily of customer relationships that will be amortized over between 12 and 20 years and the Refund Advantage trademark, which will be amortized over 15 years and will be deductible for tax purposes. See Note 20 to the Consolidated Financial Statements for further information on goodwill.

We incurred transaction costs of approximately $0.9 million in connection with the acquisition, which are included in legal and consulting and other expenses on our consolidated statement of operations for the year ended September 30, 2015.