10-Q 1 a13-18824_110q.htm 10-Q

Table of Contents

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

FORM 10-Q

 

x

Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the quarterly period ended September 30, 2013

 

or

 

o

Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Commission File Number: 0-24649

 

 

REPUBLIC BANCORP, INC.

(Exact name of registrant as specified in its charter)

 

Kentucky

 

61-0862051

(State of other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)

 

601 West Market Street, Louisville, Kentucky

 

40202

(Address of principal executive offices)

 

(Zip Code)

 

(502) 584-3600

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  x Yes   o No

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  x Yes  o No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer o

 

Accelerated filer x

 

Non-accelerated filer o

 

Smaller reporting company o

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  o Yes  x No

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

 

The number of shares outstanding of the registrant’s Class A Common Stock and Class B Common Stock, as of October 31, 2013, was 18,533,502 and 2,259,926 respectively.

 

 

 




Table of Contents

 

PART I — FINANCIAL INFORMATION

 

Item 1.  Financial Statements.

 

CONSOLIDATED BALANCE SHEETS (in thousands) (unaudited)

 

 

 

September 30,

 

December 31,

 

 

 

2013

 

2012

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

141,585

 

$

137,691

 

Securities available for sale

 

481,624

 

438,246

 

Securities to be held to maturity (fair value of $52,408 in 2013 and $46,416 in 2012)

 

52,057

 

46,010

 

Mortgage loans held for sale

 

9,803

 

10,614

 

Loans

 

2,553,435

 

2,650,197

 

Allowance for loan losses

 

(23,492

)

(23,729

)

Loans, net

 

2,529,943

 

2,626,468

 

Federal Home Loan Bank stock, at cost

 

28,342

 

28,377

 

Premises and equipment, net

 

32,626

 

33,197

 

Goodwill

 

10,168

 

10,168

 

Other real estate owned

 

15,247

 

26,203

 

Other assets and accrued interest receivable

 

30,486

 

37,425

 

 

 

 

 

 

 

TOTAL ASSETS

 

$

3,331,881

 

$

3,394,399

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

Non interest-bearing

 

$

492,126

 

$

479,046

 

Interest-bearing

 

1,527,659

 

1,503,882

 

Total deposits

 

2,019,785

 

1,982,928

 

 

 

 

 

 

 

Securities sold under agreements to repurchase and other short-term borrowings

 

106,373

 

250,884

 

Federal Home Loan Bank advances

 

587,020

 

542,600

 

Subordinated note

 

41,240

 

41,240

 

Other liabilities and accrued interest payable

 

31,953

 

40,045

 

 

 

 

 

 

 

Total liabilities

 

2,786,371

 

2,857,697

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

Preferred stock, no par value

 

 

 

Class A Common Stock and Class B Common Stock, no par value

 

4,893

 

4,932

 

Additional paid in capital

 

132,728

 

132,686

 

Retained earnings

 

404,060

 

393,472

 

Accumulated other comprehensive income

 

3,829

 

5,612

 

 

 

 

 

 

 

Total stockholders’ equity

 

545,510

 

536,702

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

3,331,881

 

$

3,394,399

 

 

See accompanying footnotes to consolidated financial statements.

 

3



Table of Contents

 

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(in thousands, except per share data)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30,

 

September 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

INTEREST INCOME:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, including fees

 

$

31,619

 

$

31,292

 

$

95,268

 

$

137,118

 

Taxable investment securities

 

1,984

 

2,483

 

6,000

 

8,654

 

Federal Home Loan Bank stock and other

 

406

 

353

 

1,261

 

1,757

 

Total interest income

 

34,009

 

34,128

 

102,529

 

147,529

 

 

 

 

 

 

 

 

 

 

 

INTEREST EXPENSE:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

1,043

 

1,197

 

3,073

 

3,949

 

Securities sold under agreements to repurchase and other short-term borrowings

 

11

 

110

 

53

 

340

 

Federal Home Loan Bank advances

 

3,788

 

3,619

 

11,081

 

11,245

 

Subordinated note

 

628

 

630

 

1,886

 

1,891

 

Total interest expense

 

5,470

 

5,556

 

16,093

 

17,425

 

 

 

 

 

 

 

 

 

 

 

NET INTEREST INCOME

 

28,539

 

28,572

 

86,436

 

130,104

 

 

 

 

 

 

 

 

 

 

 

Provision for loan losses

 

2,200

 

2,083

 

2,480

 

13,719

 

 

 

 

 

 

 

 

 

 

 

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES

 

26,339

 

26,489

 

83,956

 

116,385

 

 

 

 

 

 

 

 

 

 

 

NON-INTEREST INCOME:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service charges on deposit accounts

 

3,676

 

3,438

 

10,384

 

10,027

 

Net refund transfer fees

 

152

 

231

 

13,849

 

78,127

 

Mortgage banking income

 

1,026

 

2,274

 

6,480

 

5,591

 

Debit card interchange fee income

 

1,519

 

1,390

 

4,986

 

4,387

 

Bargain purchase gain - Tennessee Commerce Bank

 

 

(189

)

 

27,614

 

Bargain purchase gain - First Commercial Bank

 

 

27,112

 

1,324

 

27,112

 

Gain on sale of securities available for sale

 

 

 

 

56

 

Other

 

1,166

 

589

 

3,824

 

2,826

 

Total non-interest income

 

7,539

 

34,845

 

40,847

 

155,740

 

 

 

 

 

 

 

 

 

 

 

NON-INTEREST EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

12,226

 

14,921

 

43,426

 

46,205

 

Occupancy and equipment, net

 

5,462

 

5,718

 

16,354

 

16,936

 

Communication and transportation

 

990

 

1,045

 

3,011

 

4,667

 

Marketing and development

 

785

 

828

 

2,567

 

2,670

 

FDIC insurance expense

 

419

 

287

 

1,234

 

1,008

 

Bank franchise tax expense

 

707

 

729

 

3,279

 

3,363

 

Data processing

 

934

 

1,030

 

2,442

 

3,446

 

Debit card processing expense

 

655

 

648

 

2,216

 

1,909

 

Supplies

 

228

 

270

 

800

 

1,748

 

Other real estate owned expense

 

497

 

1,328

 

2,331

 

2,488

 

Charitable contributions

 

225

 

232

 

688

 

3,110

 

Legal expense

 

1,343

 

388

 

3,111

 

1,283

 

FHLB advance prepayment expense

 

 

 

 

2,436

 

Other

 

1,854

 

2,338

 

5,867

 

7,097

 

Total non-interest expenses

 

26,325

 

29,762

 

87,326

 

98,366

 

 

 

 

 

 

 

 

 

 

 

INCOME BEFORE INCOME TAX EXPENSE

 

7,553

 

31,572

 

37,477

 

173,759

 

INCOME TAX EXPENSE

 

2,950

 

10,904

 

13,399

 

61,041

 

NET INCOME

 

$

4,603

 

$

20,668

 

$

24,078

 

$

112,718

 

 

 

 

 

 

 

 

 

 

 

BASIC EARNINGS PER SHARE:

 

 

 

 

 

 

 

 

 

Class A Common Stock

 

$

0.22

 

$

0.99

 

$

1.16

 

$

5.38

 

Class B Common Stock

 

$

0.21

 

$

0.97

 

$

1.12

 

$

5.34

 

 

 

 

 

 

 

 

 

 

 

DILUTED EARNINGS PER SHARE:

 

 

 

 

 

 

 

 

 

Class A Common Stock

 

$

0.22

 

$

0.98

 

$

1.16

 

$

5.36

 

Class B Common Stock

 

$

0.21

 

$

0.97

 

$

1.11

 

$

5.32

 

 

 

 

 

 

 

 

 

 

 

DIVIDENDS DECLARED PER COMMON SHARE:

 

 

 

 

 

 

 

 

 

Class A Common Stock

 

$

0.176

 

$

0.165

 

$

0.517

 

$

0.484

 

Class B Common Stock

 

$

0.160

 

$

0.150

 

$

0.470

 

$

0.440

 

 

See accompanying footnotes to consolidated financial statements.

 

4



Table of Contents

 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(in thousands)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30,

 

September 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

4,603

 

$

20,668

 

$

24,078

 

$

112,718

 

 

 

 

 

 

 

 

 

 

 

OTHER COMPREHENSIVE INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain (loss) on securities available for sale

 

(198

)

649

 

(3,163

)

2,324

 

Change in unrealized loss on available for sale security for which a portion of an other-than-temporary impairment has been recognized in earnings

 

(4

)

374

 

418

 

412

 

Reclassification adjustment for gains recognized in earnings

 

 

 

 

(56

)

Net unrealized gains (losses)

 

(202

)

1,023

 

(2,745

)

2,680

 

Tax effect

 

71

 

(358

)

962

 

(938

)

Net of tax

 

(131

)

665

 

(1,783

)

1,742

 

 

 

 

 

 

 

 

 

 

 

COMPREHENSIVE INCOME

 

$

4,472

 

$

21,333

 

$

22,295

 

$

114,460

 

 

See accompanying footnotes to consolidated financial statements.

 

5



Table of Contents

 

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (UNAUDITED)

NINE MONTHS ENDED SEPTEMBER 30, 2013

 

 

 

Common Stock

 

 

 

 

 

Accumulated

 

 

 

 

 

Class A

 

Class B

 

 

 

Additional

 

 

 

Other

 

Total

 

 

 

Shares

 

Shares

 

 

 

Paid In

 

Retained

 

Comprehensive

 

Stockholders’

 

(in thousands, except per share data)

 

Outstanding

 

Outstanding

 

Amount

 

Capital

 

Earnings

 

Income

 

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, January 1, 2013

 

18,694

 

2,271

 

$

4,932

 

$

132,686

 

$

393,472

 

$

5,612

 

$

536,702

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

 

 

24,078

 

 

24,078

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net change in accumulated other comprehensive income

 

 

 

 

 

 

(1,783

)

(1,783

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividend declared Common Stock:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Class A ($0.517 per share)

 

 

 

 

 

(9,459

)

 

(9,459

)

Class B ($0.470 per share)

 

 

 

 

 

(1,062

)

 

(1,062

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock options exercised, net of shares redeemed

 

17

 

 

4

 

438

 

(147

)

 

295

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Repurchase of Class A Common Stock

 

(193

)

 

(43

)

(1,230

)

(2,822

)

 

(4,095

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Conversion of Class B Common Stock to Class A Common Stock

 

11

 

(11

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net change in notes receivable on Common Stock

 

 

 

 

281

 

 

 

281

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred director compensation expense - Company Stock

 

5

 

 

 

152

 

 

 

152

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock based compensation expense - restricted stock

 

 

 

 

224

 

 

 

224

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock based compensation expense - options

 

 

 

 

177

 

 

 

177

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, September 30, 2013

 

18,534

 

2,260

 

$

4,893

 

$

132,728

 

$

404,060

 

$

3,829

 

$

545,510

 

 

See accompanying footnotes to consolidated financial statements.

 

6



Table of Contents

 

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

NINE MONTHS ENDED SEPTEMBER 30, 2013 AND 2012 (in thousands)

 

 

 

2013

 

2012

 

OPERATING ACTIVITIES:

 

 

 

 

 

Net income

 

$

24,078

 

$

112,718

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

Depreciation, amortization and accretion, net

 

929

 

7,348

 

Provision for loan losses

 

2,480

 

13,719

 

Net gain on sale of mortgage loans held for sale

 

(6,340

)

(6,541

)

Origination of mortgage loans held for sale

 

(263,411

)

(172,305

)

Proceeds from sale of mortgage loans held for sale

 

270,562

 

179,853

 

Net realized impairment (recovery) of mortgage servicing rights

 

(345

)

129

 

Net realized gain on sales, calls and impairment of securities

 

 

(56

)

Net gain on sale of other real estate owned

 

(1,714

)

(381

)

Writedowns of other real estate owned

 

1,074

 

1,207

 

Deferred director compensation expense - Company Stock

 

152

 

140

 

Stock based compensation expense

 

401

 

655

 

Bargain purchase gains on acquisitions

 

(1,324

)

(54,726

)

Net change in other assets and liabilities:

 

 

 

 

 

Accrued interest receivable

 

1,115

 

(409

)

Accrued interest payable

 

32

 

(228

)

Other assets

 

4,137

 

5,864

 

Other liabilities

 

(7,447

)

16,347

 

Net cash provided by operating activities

 

24,379

 

103,334

 

 

 

 

 

 

 

INVESTING ACTIVITIES:

 

 

 

 

 

Net cash received in FDIC-assisted transactions

 

 

921,161

 

Purchases of securities available for sale

 

(175,275

)

(61,716

)

Purchases of securities to be held to maturity

 

(15,000

)

(23,115

)

Proceeds from calls, maturities and paydowns of securities available for sale

 

129,041

 

193,403

 

Proceeds from calls, maturities and paydowns of securities to be held to maturity

 

8,900

 

3,354

 

Proceeds from sales of securities available for sale

 

 

38,724

 

Proceeds from sales of Federal Home Loan Bank stock

 

35

 

62

 

Proceeds from sales of other real estate owned

 

19,642

 

21,688

 

Net change in loans

 

92,881

 

(184,454

)

Net purchases of premises and equipment

 

(3,275

)

(2,499

)

Net cash provided by investing activities

 

56,949

 

906,608

 

 

 

 

 

 

 

FINANCING ACTIVITIES:

 

 

 

 

 

Net change in deposits

 

36,857

 

(822,074

)

Net change in securities sold under agreements to repurchase and other short-term borrowings

 

(144,511

)

(60,392

)

Payments of Federal Home Loan Bank advances

 

(25,580

)

(589,208

)

Proceeds from Federal Home Loan Bank advances

 

70,000

 

205,000

 

Repurchase of Common Stock

 

(4,095

)

(386

)

Net proceeds from Common Stock options exercised

 

295

 

147

 

Cash dividends paid

 

(10,400

)

(9,813

)

Net cash used in financing activities

 

(77,434

)

(1,276,726

)

 

 

 

 

 

 

NET CHANGE IN CASH AND CASH EQUIVALENTS

 

3,894

 

(266,784

)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

 

137,691

 

362,971

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

 

$

141,585

 

$

96,187

 

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

Interest

 

$

16,061

 

$

17,653

 

Income taxes

 

26,674

 

68,603

 

 

 

 

 

 

 

SUPPLEMENTAL NONCASH DISCLOSURES

 

 

 

 

 

Transfers from loans to real estate acquired in settlement of loans

 

$

8,690

 

$

16,018

 

Loans provided for sales of other real estate owned

 

644

 

591

 

 

See accompanying footnotes to consolidated financial statements.

 

7



Table of Contents

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — SEPTEMBER 30, 2013 AND 2012 (UNAUDITED) AND DECEMBER 31, 2012

 

1.                                            BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation — The consolidated financial statements include the accounts of Republic Bancorp, Inc. (the “Parent Company”) and its wholly-owned subsidiaries: Republic Bank & Trust Company (“RB&T”) and Republic Bank (“RB”) (collectively referred together as the “Bank”). Republic Invest Co., a former subsidiary of RB&T, and its subsidiary, Republic Capital LLC, were dissolved in April 2013 in connection with the full repayment by RB&T of intragroup subordinated debentures issued by Republic Capital LLC in a 2004 intragroup trust preferred transaction. All companies are collectively referred to as “Republic” or the “Company.” All significant intercompany balances and transactions are eliminated in consolidation.

 

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, the financial statements do not include all of the information and footnotes required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included. Operating results for the three and nine months ended September 30, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013. For further information, refer to the consolidated financial statements and footnotes thereto included in Republic’s Form 10-K for the year ended December 31, 2012.

 

As of September 30, 2013, the Company was divided into three distinct business operating segments: Traditional Banking, Mortgage Banking and Republic Processing Group (“RPG”). During the second quarter of 2012, the Company realigned the previously reported Tax Refund Solutions (“TRS”) segment as a division of the RPG segment. Along with the TRS division, Republic Payment Solutions (“RPS”) and Republic Credit Solutions (“RCS”) also operate as divisions of the RPG segment.

 

Traditional Banking and Mortgage Banking (collectively “Core Banking”)

 

As of September 30, 2013, in addition to an Internet delivery channel, Republic had 45 full-service banking centers with locations as follows:

 

·                  Kentucky — 34

·                  Metropolitan Louisville — 20

·                  Central Kentucky — 11

·                  Elizabethtown — 1

·                  Frankfort — 1

·                  Georgetown — 1

·                  Lexington — 5

·                  Owensboro — 2

·                  Shelbyville — 1

·                  Northern Kentucky — 3

·                  Covington — 1

·                  Florence — 1

·                  Independence — 1

·                  Southern Indiana — 3

·                  Floyds Knobs — 1

·                  Jeffersonville — 1

·                  New Albany — 1

·                  Metropolitan Tampa, Florida — 4

·                  Metropolitan Cincinnati, Ohio — 1

·                  Metropolitan Nashville, Tennessee — 2

·                  Metropolitan Minneapolis, Minnesota — 1

 

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Table of Contents

 

In October 2013, Republic gave the required 90-day regulatory notice of its intentions to close its sole banking center in Palm Harbor, Florida. This location is expected to close in January 2014 with the lease for the premises expiring in February 2014.

 

In October 2013, Republic gave the required 90-day regulatory notice of its intentions to close its sole banking center in Minneapolis, Minnesota, which it acquired in connection with the First Commercial Bank (“FCB”) acquisition in September 2012.  The Bank is currently under a lease for this location which is set to expire in April 2015. The Bank intends to repurpose the location as a support office until the expiration of its lease or until such time that it is able to negotiate with the landlord a buy-out of its future lease obligations. The banking center is expected to stop transacting business at the Minnesota location with deposit customers in January 2014.

 

Core Banking results of operations are primarily dependent upon net interest income, which represents the difference between the interest income and fees on interest-earning assets and the interest expense on interest-bearing liabilities. Principal interest-earning Core Banking assets represent investment securities and real estate, commercial and consumer loans. Interest-bearing liabilities primarily consist of interest-bearing deposit accounts, securities sold under agreements to repurchase, as well as short-term and long-term borrowing sources. The Bank also provides short-term, revolving credit facilities to mortgage bankers across the nation through warehouse lines of credit. These credit facilities are secured by single family, first lien residential real estate loans.

 

Other sources of Core Banking income include service charges on deposit accounts, debit card interchange fee income, title insurance commissions, fees charged to customers for trust services and revenue generated from Mortgage Banking activities. Mortgage Banking activities represent both the origination and sale of loans in the secondary market and the servicing of loans for others, primarily the Federal Home Loan Mortgage Corporation (“Freddie Mac” or “FHLMC”).

 

Core Banking operating expenses consist primarily of salaries and employee benefits, occupancy and equipment expenses, communication and transportation costs, data processing, debit card interchange expenses, marketing and development expenses, FDIC insurance expense, and various general and administrative costs. Core Banking results of operations are significantly impacted by general economic and competitive conditions, particularly changes in market interest rates, government laws and policies and actions of regulatory agencies.

 

Republic Processing Group

 

Nationally, through RB&T, RPG facilitates the receipt and payment of federal and state tax refunds under the TRS division, primarily through refund transfers (“RT”s). RTs are products whereby a tax refund is issued to the taxpayer after RB&T has received the refund from the federal or state government. There is no credit risk or borrowing costs associated with these products, because they are only delivered to the taxpayer upon receipt of the tax refund directly from the governmental paying authority.  Fees earned on RTs, net of rebates, are the primary source of revenue for the TRS division and the RPG segment, and are reported as non-interest income under the line item “Net refund transfer fees.”

 

The TRS division historically originated and obtained a significant source of revenue from Refund Anticipation Loans (“RAL”s), but terminated this product effective April 30, 2012. RALs were short-term consumer loans offered to taxpayers that were secured by the customer’s anticipated tax refund, which represented the sole source of repayment. The fees earned on RALs for the applicable reporting period in 2012 were reported as interest income under the line item “Loans, including fees.”

 

Through RB, the RPS division is an issuing bank offering general purpose reloadable prepaid debit cards through third party program managers. Through RB&T, the RCS division is piloting short-term consumer credit products.

 

Reclassifications and recasts — Certain amounts presented in prior periods have been reclassified to conform to the current period presentation. These reclassifications had no impact on previously reported prior periods’ net income. Additionally, as discussed in Footnote 2 “2012 FDIC-Assisted Acquisitions of Failed Banks,” during the first quarter of 2013 the Bank posted adjustments to the First Commercial Bank (“FCB”) acquired assets in the determination of acquisition day (“day-one”) fair values, which resulted in a $1.3 million increase to the bargain purchase gain presented.

 

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Table of Contents

 

2.                                      2012 FDIC-ASSISTED ACQUISITIONS OF FAILED BANKS

 

OVERVIEW

 

During 2012, the Bank acquired two failed institutions in FDIC-assisted transactions. The Bank did not raise capital to complete either of these acquisitions.

 

The Bank determined that the acquisitions of these failed banks constituted “business acquisitions” as defined by Accounting Standards Codification (“ASC”) Topic 805, Business Combinations. Accordingly, the assets acquired and liabilities assumed have been presented at their estimated fair values, as required. Fair values were determined over a measurement period based on the requirements of ASC Topic 820, Fair Value Measurements and Disclosures. The measurement period for day-one fair values begins on the acquisition date and ends the earlier of: (a) the day management believes it has all the information necessary to determine day-one fair values; or (b) one year following the acquisition date. In many cases, the determination of these day-one fair values requires management to make material estimates about discount rates, future expected cash flows, market conditions and other future events that are highly subjective in nature and subject to recast adjustments, which are retrospective adjustments to reflect new information existing at the acquisition date affecting day-one fair values. More specifically, recast adjustments for loans and other real estate owned were made as market value data, such as appraisals, were received by the Bank. Increases or decreases to day-one fair values have been reflected with a corresponding increase or decrease to bargain purchase gain.

 

Tennessee Commerce Bank (“TCB”)

 

On January 27, 2012, the Bank acquired specific assets and assumed substantially all of the deposits and specific other liabilities of TCB, headquartered in Franklin, Tennessee from the FDIC, as receiver for TCB, pursuant to the terms of a Purchase and Assumption Agreement (“P&A”) — Whole Bank; All Deposits entered into among RB&T, the FDIC as receiver of TCB and the FDIC. On January 30, 2012, TCB’s sole location re-opened as a division of RB&T.

 

The Bank acquired approximately $221 million in notional assets from the FDIC as receiver for TCB. In addition, the Bank recorded a receivable from the FDIC for approximately $785 million, which represented the net difference between the assets acquired and the liabilities assumed, adjusted for the discount the Bank received for the acquisition. The FDIC paid approximately $771 million of this receivable on January 30, 2012 with the remaining $14 million paid on February 15, 2012.

 

During the first quarter of 2012, the Bank recorded an initial bargain purchase gain of $27.9 million as a result of the TCB acquisition. The bargain purchase gain was realized because the overall price paid by the Bank was substantially less than the fair value of the TCB assets acquired and liabilities assumed in the acquisition. In the second and third quarters of 2012, the Bank posted adjustments to the acquired assets for its FDIC-assisted acquisition in the determination of day-one fair values and recorded a net decrease to the bargain purchase gain of $285,000, as additional information relative to the day-one fair values became available.

 

Information obtained subsequent to January 27, 2012 and through September 30, 2012 was considered in forming TCB estimates of cash flows and collateral values as of the January 27, 2012 acquisition date, i.e., TCB’s day-one fair values. Day-one fair values for TCB were considered final as of September 30, 2012, which was the date the Bank believed it had received all the information necessary to determine TCB’s day-one fair values.

 

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Table of Contents

 

A summary of the assets acquired and liabilities assumed in the TCB acquisition follows:

 

Tennessee Commerce Bank

 

 

 

January 27, 2012

 

 

 

As Previously Reported

 

As Recasted

 

 

 

Contractual

 

Fair Value

 

2012 Recast

 

Fair

 

(in thousands)

 

Amount

 

Adjustments

 

Adjustments

 

Value

 

Assets acquired:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

61,943

 

$

(89

)

$

(2

)

$

61,852

 

Securities available for sale

 

42,646

 

 

 

42,646

 

Loans to be repurchased by the FDIC, net of discount

 

19,800

 

(2,797

)

 

17,003

 

Loans

 

79,112

 

(22,666

)

830

 

57,276

 

Federal Home Loan Bank stock, at cost

 

2,491

 

 

 

2,491

 

Other real estate owned

 

14,189

 

(3,359

)

(1,113

)

9,717

 

Core deposit intangible

 

 

64

 

 

64

 

Discount

 

(56,970

)

56,970

 

 

 

FDIC settlement receivable

 

784,545

 

 

 

784,545

 

Other assets and accrued interest receivable

 

945

 

(60

)

 

885

 

Total assets acquired

 

$

948,701

 

$

28,063

 

$

(285

)

$

976,479

 

 

 

 

 

 

 

 

 

 

 

Liabilities assumed:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

Non interest-bearing

 

$

19,754

 

$

 

$

 

$

19,754

 

Interest-bearing

 

927,641

 

54

 

 

927,695

 

Total deposits

 

947,395

 

54

 

 

947,449

 

 

 

 

 

 

 

 

 

 

 

Accrued income taxes payable

 

 

9,988

 

(100

)

9,888

 

Other liabilities and accrued interest payable

 

1,306

 

110

 

 

1,416

 

 

 

 

 

 

 

 

 

 

 

Total liabilities assumed

 

$

948,701

 

$

10,152

 

$

(100

)

$

958,753

 

 

 

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bargain purchase gain, net of taxes

 

 

17,911

 

(185

)

17,726

 

 

 

 

 

 

 

 

 

 

 

Total liabilities assumed and equity

 

$

948,701

 

$

28,063

 

$

(285

)

$

976,479

 

 

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Table of Contents

 

A summary of the net assets acquired from the FDIC and the estimated fair value adjustments as of the TCB acquisition date follows:

 

Tennessee Commerce Bank

 

 

 

January 27, 2012

 

 

 

 

 

Second Quarter

 

Third Quarter

 

 

 

 

 

As Previously

 

2012 Recast

 

2012 Recast

 

As

 

(in thousands)

 

Reported

 

Adjustments

 

Adjustments

 

Recasted

 

 

 

 

 

 

 

 

 

 

 

Assets acquired, at contractual amount

 

$

221,126

 

$

 

$

 

$

221,126

 

Liabilities assumed, at contractual amount

 

(948,701

)

 

 

(948,701

)

Net liabilities assumed per the P&A Agreement

 

(727,575

)

 

 

(727,575

)

 

 

 

 

 

 

 

 

 

 

Contractual discount

 

(56,970

)

 

 

(56,970

)

Net receivable from the FDIC

 

$

(784,545

)

$

 

$

 

$

(784,545

)

 

 

 

 

 

 

 

 

 

 

Fair value adjustments:

 

 

 

 

 

 

 

 

 

Loans

 

$

(22,666

)

$

919

 

$

(89

)

$

(21,836

)

Discount for loans to be repurchased by the FDIC

 

(2,797

)

 

 

(2,797

)

Other real estate owned

 

(3,359

)

(1,000

)

(113

)

(4,472

)

Core deposit intangible

 

64

 

 

 

64

 

Deposits

 

(54

)

 

 

(54

)

Other assets and accrued interest receivable

 

(60

)

 

 

(60

)

All other

 

(199

)

(15

)

13

 

(201

)

Total fair value adjustments

 

(29,071

)

(96

)

(189

)

(29,356

)

 

 

 

 

 

 

 

 

 

 

Discount

 

56,970

 

 

 

56,970

 

Bargain purchase gain, pre-tax

 

$

27,899

 

$

(96

)

$

(189

)

$

27,614

 

 

On January 27, 2012, the Bank did not immediately acquire the TCB banking facility, including outstanding lease agreements and furniture, fixtures and equipment. During the third quarter of 2012, the Bank renegotiated a new lease with the landlord related to the sole banking facility and acquired all related data processing equipment and fixed assets totaling approximately $573,000.

 

First Commercial Bank

 

On September 7, 2012, the Bank acquired specific assets and assumed substantially all of the liabilities of FCB, headquartered in Bloomington, Minnesota from the FDIC, as receiver for FCB, pursuant to the terms of a P&A Agreement — Whole Bank; All Deposits, entered into among RB&T, the FDIC as receiver of FCB and the FDIC. On September 10, 2012, FCB’s sole location re-opened as a division of RB&T.

 

The Bank acquired approximately $215 million in notional assets from the FDIC as receiver for FCB. In addition, the Bank also recorded a receivable from the FDIC for approximately $64 million, which represented the net difference between the assets acquired and the liabilities assumed adjusted for the discount the Bank received for the acquisition. The FDIC paid substantially all of this receivable to the Bank on September 10, 2012.

 

During the third quarter of 2012, the Bank recorded an initial bargain purchase gain of $27.1 million as a result of the FCB acquisition. The bargain purchase gain was realized because the overall price paid by the Bank was substantially less than the fair value of the FCB assets acquired and liabilities assumed in the acquisition. During the fourth quarter of 2012, the Bank posted adjustments to the acquired assets for its FDIC-assisted acquisition in the determination of day-one fair values and recorded a net increase to the bargain purchase gain of $712,000, as additional information relative to the day-one fair values became available. During the first quarter of 2013, the Bank posted its final recast adjustment which resulted in an increase of $1.3 million to the bargain purchase gain.

 

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Table of Contents

 

Information obtained subsequent to September 7, 2012 and through March 31, 2013 was considered in forming FCB estimates of cash flows and collateral values as of the September 7, 2012 acquisition date, i.e., FCB’s day-one fair values. Day-one fair values for FCB were considered final as of March 31, 2013, which was the date the Bank believed it had received all the information necessary to determine FCB’s day-one fair values.

 

A summary of the assets acquired and liabilities assumed in the FCB acquisition, including recast adjustments, follows:

 

First Commercial Bank

 

 

 

September 7, 2012

 

 

 

As Previously Reported

 

As Recasted

 

 

 

 

 

 

 

2012 & 2013

 

 

 

 

 

Contractual

 

Fair Value

 

Recast

 

Fair

 

(in thousands)

 

Amount

 

Adjustments

 

Adjustments

 

Value

 

Assets acquired :

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

10,524

 

$

 

$

 

$

10,524

 

Securities available for sale

 

12,002

 

 

 

12,002

 

Loans

 

171,744

 

(44,214

)

2,821

 

130,351

 

Federal Home Loan Bank stock, at cost

 

407

 

 

 

407

 

Other real estate owned

 

19,360

 

(8,389

)

(785

)

10,186

 

Core deposit intangible

 

 

559

 

 

559

 

Discount

 

(79,412

)

79,412

 

 

 

FDIC settlement receivable

 

64,326

 

 

 

64,326

 

Other assets and accrued interest receivable

 

829

 

(95

)

 

734

 

Total assets acquired

 

$

199,780

 

$

27,273

 

$

2,036

 

$

229,089

 

 

 

 

 

 

 

 

 

 

 

Liabilities assumed:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

Non interest-bearing

 

$

7,197

 

$

 

$

 

$

7,197

 

Interest-bearing

 

189,057

 

(3

)

 

189,054

 

Total deposits

 

196,254

 

(3

)

 

196,251

 

 

 

 

 

 

 

 

 

 

 

Federal Home Loan Bank advances

 

3,002

 

63

 

 

3,065

 

Accrued income taxes payable

 

 

9,706

 

712

 

10,418

 

Other liabilities and accrued interest payable

 

524

 

101

 

 

625

 

 

 

 

 

 

 

 

 

 

 

Total liabilities assumed

 

$

199,780

 

$

9,867

 

$

712

 

$

210,359

 

 

 

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bargain purchase gain, net of taxes

 

 

17,406

 

1,324

 

18,730

 

 

 

 

 

 

 

 

 

 

 

Total liabilities assumed and equity

 

$

199,780

 

$

27,273

 

$

2,036

 

$

229,089

 

 

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Table of Contents

 

A summary of the net assets acquired from the FDIC and the estimated fair value adjustments as of the FCB acquisition date follows:

 

First Commercial Bank

 

 

 

September 7, 2012

 

 

 

 

 

Fourth Quarter

 

First Quarter

 

 

 

 

 

As Previously

 

2012 Recast

 

2013 Recast

 

As

 

(in thousands)

 

Reported

 

Adjustments

 

Adjustments

 

Recasted

 

 

 

 

 

 

 

 

 

 

 

Assets acquired, at contractual amount

 

$

214,866

 

$

 

$

 

$

214,866

 

Liabilities assumed, at contractual amount

 

(199,780

)

 

 

(199,780

)

Net liabilities assumed per the P&A Agreement

 

15,086

 

 

 

15,086

 

 

 

 

 

 

 

 

 

 

 

Contractual discount

 

(79,412

)

 

 

(79,412

)

Net receivable from the FDIC

 

$

(64,326

)

$

 

$

 

$

(64,326

)

 

 

 

 

 

 

 

 

 

 

Fair value adjustments:

 

 

 

 

 

 

 

 

 

Loans

 

$

(44,214

)

$

423

 

$

2,398

 

$

(41,393

)

Other real estate owned

 

(8,389

)

289

 

(1,074

)

(9,174

)

Core deposit intangible

 

559

 

 

 

559

 

Deposits

 

3

 

 

 

3

 

Federal Home Loan Bank advances

 

(63

)

 

 

(63

)

Other assets and accrued interest receivable

 

(95

)

 

 

(95

)

All other

 

(101

)

 

 

(101

)

Total fair value adjustments

 

(52,300

)

712

 

1,324

 

(50,264

)

 

 

 

 

 

 

 

 

 

 

Discount

 

79,412

 

 

 

79,412

 

Bargain purchase gain, pre-tax

 

$

27,112

 

$

712

 

$

1,324

 

$

29,148

 

 

On September 7, 2012, the Bank did not immediately acquire the FCB banking facility, including outstanding lease agreements and furniture, fixtures and equipment. The Bank acquired all data processing equipment and fixed assets totaling approximately $328,000 during the fourth quarter of 2012. During the first quarter of 2013, the Bank renegotiated a new lease with the landlord related to the sole banking facility and acquired all related data processing equipment and fixed assets totaling approximately $233,000.

 

In October 2013, Republic gave the required 90-day regulatory notice of its intentions to close its sole banking center location in Minneapolis, Minnesota, which it acquired in connection with the FCB acquisition in September 2012.  The Bank is currently under a lease for this location which is set to expire in April 2015. The Bank intends to repurpose the location as a support office until the expiration of its lease or until such time that it is able to negotiate with the landlord a buy-out of its future lease obligations. The banking center is expected to stop transacting business at the Minnesota location with deposit customers in January 2014. The core deposit intangible asset associated with the FCB acquisition totaled $289,000 at September 30, 2013. The Bank intends to accelerate the amortization of this asset in connection with its notice to repurpose the former FCB banking center.

 

FAIR VALUE METHODS ASSOCIATED WITH THE 2012 FDIC-ASSISTED ACQUISITIONS OF FAILED BANKS

 

The following is a description of the methods used to determine the fair values of significant assets and liabilities at the respective acquisition dates as presented throughout:

 

Cash and Due from Banks and Interest-bearing Deposits in Banks — The carrying amount of these assets, adjusted for any cash items deemed uncollectible by management, was determined to be a reasonable estimate of fair value based on their short-term nature.

 

Investment Securities — Investment securities were acquired at fair value from the FDIC. The fair values provided by the FDIC were reviewed and considered reasonable based on management’s understanding of the marketplace. Federal Home

 

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Table of Contents

 

Loan Bank (“FHLB”) stock was acquired at cost, as it is not practicable to determine its fair value given restrictions on its marketability.

 

With the TCB acquisition, the Bank acquired $43 million in securities at fair value. The majority of the securities acquired were subsequently sold or called during the first quarter of 2012, with the Bank realizing a net gain on the corresponding transactions of approximately $56,000. The Bank sold these securities because management determined that the acquired securities did not fit within the Bank’s traditional investment strategies.

 

With the FCB acquisition, the Bank acquired $12 million in securities at fair value. The nature of these securities acquired was consistent with the Bank’s existing investment portfolio and the Bank elected to retain these securities.

 

Loans — Fair values for loans were based on a discounted cash flow methodology that considered factors including the type of loan and related collateral, classification status, interest rate, term of loan and whether or not the loan was amortizing, and a discount rate reflecting current market rates for new originations of comparable loans adjusted for the risk inherent in the cash flow estimates.

 

Certain loans that were deemed to be collateral dependent were valued based on the fair value of the underlying collateral. These estimates were based on the most recently available real estate appraisals with certain adjustments made based on the type of property, age of appraisal, current status of the property and other related factors to estimate the current value of the collateral.

 

With the TCB acquisition, the Bank purchased approximately $99 million in loans with a recasted fair value of approximately $74 million. During 2012, the FDIC repurchased approximately $20 million of TCB loans at a price of par less the original discount of $3 million that the Bank received when it purchased the loans. Loans repurchased by the FDIC were valued at the contractual amount reduced by the applicable discount.

 

With the FCB acquisition, the Bank purchased approximately $172 million in loans with a recasted fair value of approximately $130 million.

 

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Table of Contents

 

The composition of acquired loans as of the respective acquisition dates follows:

 

Tennessee Commerce Bank

 

 

 

 

January 27, 2012

 

 

 

As Previously Reported

 

As Recasted

 

 

 

Contractual

 

Fair Value

 

2012 Recast

 

Fair

 

(in thousands)

 

Amount

 

Adjustments

 

Adjustments

 

Value

 

 

 

 

 

 

 

 

 

 

 

Residential real estate

 

$

22,693

 

$

(4,076

)

$

243

 

$

18,860

 

Commercial real estate

 

18,646

 

(6,971

)

1,988

 

13,663

 

Construction & Land Development

 

14,877

 

(2,681

)

(1,972

)

10,224

 

Commercial

 

13,224

 

(6,939

)

496

 

6,781

 

Home equity

 

6,220

 

(606

)

24

 

5,638

 

Consumer:

 

 

 

 

 

 

 

 

 

Credit cards

 

608

 

(22

)

 

586

 

Overdrafts

 

672

 

(621

)

 

51

 

Other consumer

 

2,172

 

(750

)

51

 

1,473

 

Total loans

 

$

79,112

 

$

(22,666

)

$

830

 

$

57,276

 

 

First Commercial Bank

 

 

 

September 7, 2012

 

 

 

As Previously Reported

 

As Recasted

 

 

 

 

 

 

 

2012 & 2013

 

 

 

 

 

Contractual

 

Fair Value

 

Recast

 

Fair

 

(in thousands)

 

Amount

 

Adjustments

 

Adjustments

 

Value

 

 

 

 

 

 

 

 

 

 

 

Residential real estate

 

$

48,409

 

$

(9,634

)

$

180

 

$

38,955

 

Commercial real estate

 

82,161

 

(12,330

)

(1,746

)

68,085

 

Construction & Land Development

 

14,918

 

(6,182

)

316

 

9,052

 

Commercial

 

25,475

 

(16,060

)

4,120

 

13,535

 

Home equity

 

404

 

(3

)

 

401

 

Consumer:

 

 

 

 

 

 

 

 

 

Credit cards

 

 

 

 

 

Overdrafts

 

6

 

 

 

6

 

Other consumer

 

371

 

(5

)

(49

)

317

 

Total loans

 

$

171,744

 

$

(44,214

)

$

2,821

 

$

130,351

 

 

The following tables present the purchased loans that are included within the scope of ASC Topic 310-30, Accounting for Purchased Loans with Deteriorated Credit Quality, at the respective acquisition dates:

 

Tennessee Commerce Bank

 

 

 

January 27, 2012

 

 

 

As Previously

 

2012 Recast

 

As

 

(in thousands)

 

Reported

 

Adjustments

 

Recasted

 

 

 

 

 

 

 

 

 

Contractually-required principal and interest payments

 

$

52,278

 

$

 

$

52,278

 

Non-accretable difference

 

(21,308

)

903

 

(20,405

)

Cash flows expected to be collected

 

30,970

 

903

 

31,873

 

Accretable difference

 

(425

)

(73

)

(498

)

Fair value of loans

 

$

30,545

 

$

830

 

$

31,375

 

 

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Table of Contents

 

First Commercial Bank

 

 

 

September 7, 2012

 

 

 

 

 

2012 & 2013

 

 

 

 

 

As Previously

 

Recast

 

As

 

(in thousands)

 

Reported

 

Adjustments

 

Recasted

 

 

 

 

 

 

 

 

 

Contractually-required principal and interest payments

 

$

116,940

 

$

4,213

 

$

121,153

 

Non-accretable difference

 

(33,523

)

4,640

 

(28,883

)

Cash flows expected to be collected

 

83,417

 

8,853

 

92,270

 

Accretable difference

 

(2,827

)

(1,819

)

(4,646

)

Fair value of loans

 

$

80,590

 

$

7,034

 

$

87,624

 

 

Core Deposit Intangible — In its assumption of the deposit liabilities for the 2012 FDIC-assisted acquisitions, the Bank believed that the customer relationships associated with these deposits had intangible value, although this value was anticipated to be modest given the nature of the deposit accounts and the anticipated rapid account run-off since acquired. The Bank recorded core deposit intangible assets of $64,000 and $559,000 related to the TCB and FCB acquisitions. The fair value of these intangible assets were estimated based on a discounted cash flow methodology that gave appropriate consideration to type of deposit, deposit retention, cost of the deposit base and net maintenance cost attributable to customer deposits.

 

Other Real Estate Owned (“OREO”) — OREO is presented at fair value, which is the estimated value that management expects to receive when the property is sold, net of related costs to sell. These estimates were based on the most recently available real estate appraisals, with certain adjustments made based on the type of property, age of appraisal, current status of the property and other related factors to estimate the current value of the property.

 

The Bank acquired $14 million in OREO related to the TCB acquisition, which was initially reduced by a $3 million fair value adjustment as of January 27, 2012. Subsequent to the first quarter, the Bank posted a net negative recast adjustment of $1 million to OREO to mark several properties to market based on appraisals received.

 

The Bank acquired $19 million in OREO related to the FCB acquisition, which was initially reduced by an $8 million fair value adjustment as of September 7, 2012. During the fourth quarter of 2012 and the first quarter of 2013, the Bank posted  a net negative recast adjustment of $785,000 to OREO to mark several properties to market based on appraisals received.

 

FHLB Advances — The Bank acquired $3 million in FHLB advances related to the FCB acquisition. The advances were marked to market as of the acquisition date based on early prepayment payoffs (including penalties) received from the FHLB.
The Bank paid off the advances during the third quarter of 2012 at no additional loss beyond the fair value adjustment as of their date of acquisition.

 

Deposits — The fair values used for the demand and savings deposits that comprise the acquisition accounts acquired, by definition, equal the amount payable on demand at the acquisition date. The fair values for time deposits are estimated using a discounted cash flow calculation that applies interest rates currently being offered to the interest rates embedded on such time deposits.

 

The Bank assumed $947 million in deposits at estimated fair value in connection with the TCB acquisition. As permitted by the FDIC, within seven days of the acquisition date, RB&T had the option to disclose to TCB’s deposit customers that it was repricing the acquired deposit portfolios. In addition, depositors had the option to withdraw funds without penalty. The Bank chose to reprice all of the acquired TCB interest-bearing deposits, including transaction, time and brokered deposits with an effective date of January 28, 2012. This re-pricing triggered significant time and brokered deposit run-off consistent with management’s expectations.

 

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Table of Contents

 

The Bank assumed $196 million in deposits at estimated fair value in connection with the FCB acquisition. The Bank chose to re-price all of the acquired FCB time deposits with an effective date of October 1, 2012. This re-pricing triggered certificate of deposit run-off consistent with management’s expectations.

 

The composition of deposits assumed at fair value as of the respective acquisition dates follows:

 

Tennessee Commerce Bank

 

 

 

January 27, 2012

 

 

 

Contractual

 

Fair Value

 

Recast

 

Fair

 

(in thousands)

 

Amount

 

Adjustments

 

Adjustments

 

Value

 

 

 

 

 

 

 

 

 

 

 

Demand

 

$

3,190

 

$

 

$

 

$

3,190

 

Money market accounts

 

11,338

 

 

 

11,338

 

Savings

 

91,859

 

 

 

91,859

 

Individual retirement accounts*

 

15,486

 

 

 

15,486

 

Time deposits, $100,000 and over*

 

278,825

 

 

 

278,825