| ACQUISITION |
NOTE 2 - ACQUISITION On January 31, 2015, the Company completed its acquisition of Metro and Metro Bank, its wholly-owned bank subsidiary, for an aggregate of $20.9 million in cash and 636,592 shares of Company common stock. The acquisition of Metro was the Company’s entrance into the greater Atlanta, Georgia area and added two banking offices. The following table provides a summary of the assets acquired and liabilities assumed as recorded by Metro, the fair value adjustments necessary to adjust those acquired assets and assumed liabilities to estimated fair value, and the resultant fair values of those assets and liabilities as recorded by the Company. | | | January 31, 2015 | | | | | As recorded by
Metro | | Preliminary
Fair value
adjustment
(1) | | | As recorded by
the Company | | | | | | | | (In Thousands) | | | | | | | Assets acquired: | | | | | | | | | | | | | Cash and cash equivalents | | $ | 8,043 | | $ | - | | | $ | 8,043 | | | Debt securities | | | 29,333 | | | (164) | a | | | 29,169 | | | Equity securities | | | 499 | | | - | | | | 499 | | | Loans | | | 152,869 | | | (3,874) | b | | | 148,995 | | | Allowance for loan losses | | | (1,621) | | | 1,621 | b | | | - | | | Premises and equipment, net | | | 7,606 | | | 831 | c | | | 8,437 | | | Accrued interest receivable | | | 484 | | | - | | | | 484 | | | Deferred taxes | | | 754 | | | (54) | d | | | 700 | | | Other real estate owned | | | 2,373 | | | (25) | e | | | 2,348 | | | Bank owned life insurance contracts | | | 2,685 | | | - | | | | 2,685 | | | Core deposit intangible | | | - | | | 2,090 | f | | | 2,090 | | | Other assets | | | 364 | | | - | | | | 364 | | | Total assets acquired | | $ | 203,389 | | $ | 425 | | | $ | 203,814 | | | Liabilities assumed: | | | | | | | | | | | | | Deposits | | $ | 175,236 | | $ | 518 | g | | $ | 175,754 | | | Federal funds purchased | | | 2,175 | | | - | | | | 2,175 | | | Other borrowings | | | 1,400 | | | (4) | h | | | 1,396 | | | Accrued interest payable | | | 89 | | | - | | | | 89 | | | Other liabilities | | | 268 | | | - | | | | 268 | | | Total liabilities assumed | | $ | 179,168 | | $ | 514 | | | $ | 179,682 | | | Net assets acquired | | $ | 24,221 | | $ | (89) | | | $ | 24,132 | | | Consideration Paid: | | | | | | | | | | | | | Cash | | | | | | | | | $ | (20,926) | | | Stock | | | | | | | | | | (19,356) | | | Total consideration paid | | | | | | | | | | (40,282) | | | Goodwill | | | | | | | | | $ | 16,150 | | | (1) | The Company’s acquisition of Metro Bancshares, Inc. closed on January 31, 2015. Accordingly, each of the fair value adjustments shown are preliminary estimates of the purchase accounting adjustments. Management is continuing to evaluate each of these fair value adjustments and may revise one or more of them in future periods based on this continuing evaluation. During the second quarter of 2015, the fair value of other real estate owned was adjusted down by $280,000 to reflect the price received in an unsolicited offer to buy the property by a third party. During the second quarter of 2015, premises and equipment was written down by $41,000 to reflect the price received from a third party buyer of a piece of unimproved land held by the Company. To the extent that any of the preliminary fair value adjustments are revised in future periods, the resultant fair values and the amount of goodwill recorded by the Company will change. | Explanation of preliminary fair value adjustments: | | a- | Adjustment reflects the fair value adjustment based on the Company’s pricing of the acquired debt securities portfolio. | | | b- | Adjustment reflects the fair value adjustment based on the Company’s evaluation of the acquired loan portfolio and to eliminate the recorded allowance for loan losses. | | | c- | Adjustment reflects the fair value adjustment based on the Company’s evaluation of the premises and equipment acquired. | | | d- | Adjustment reflects the differences in the carrying values of acquired assets and assumed liabilities for financial statement purposes and their basis for federal income tax purposes. | | | e- | Adjustment reflects the fair value adjustment based on the Company’s evaluation of the other real estate owned acquired. | | | f- | Adjustment reflects the fair value adjustment for the core deposit intangible asset recorded as a result of the acquisition. | | g- | Adjustment reflects the fair value adjustment based on the Company’s evaluation of the acquired deposits. | | h- | Adjustment reflects the fair value adjustment based on the Company’s evaluation of the assumed debt.
| The estimated fair value of the purchased credit impaired loans acquired in the Metro transaction on January 31, 2015 was $5.1 million, which amount is immaterial to the Company’s consolidated financial statements. Pro forma financial information is not provided because such amounts are immaterial to the Company’s consolidated financial statements.
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