3.	Acquisitions

Intervest

On February 10, 2015, the Company completed its previously announced acquisition of Intervest and its wholly-owned bank subsidiary Intervest National Bank, for an aggregate of 6,637,243 shares of its common stock (plus cash in lieu of fractional shares) in a transaction valued at approximately $238.5 million. The acquisition of Intervest provided the Company with a banking office in New York City and expanded its service area in Florida by adding five banking offices in Clearwater, Florida and one office in South Pasadena, Florida.

During the second quarter of 2015, management revised its initial estimates and assumptions regarding the recovery of certain acquired loans and acquired deferred tax assets. Because such revision occurred during the first 12 months following the date of acquisition and was not the result of a change in circumstances, management has recast the first quarter 2015 consolidated financial statements to decrease the goodwill recorded in the Intervest acquisition by $2.7 million to reflect this change in estimate.

The following table provides a summary of the assets acquired and liabilities assumed as recorded by Intervest, the estimates of the fair value adjustments necessary to adjust those acquired assets and assumed liabilities to estimated fair value, the recast adjustment described above and the estimates of the resultant fair values of those assets and liabilities as recorded by the Company. As provided for under GAAP, management has up to 12 months following the date of acquisition to finalize the fair values of the acquired assets and assumed liabilities. Once management has finalized the fair values of acquired assets and assumed liabilities within this 12-month period, management considers such values to be the day 1 fair values (“Day 1 Fair Values”). The fair value adjustments and the resultant fair values shown in the following table continue to be evaluated by management and may be subject to further adjustment.


	February 10, 2015
	As Recorded by Intervest			Fair Value Adjustments⁽¹⁾			Recast Adjustment			As Recorded by the Company⁽¹⁾
	(Dollars in thousands)
Assets acquired:
Cash, due from banks and interest earning deposits	$	274,343		$	0		$	0		$	274,343
Investment securities		21,495			321	a		0			21,816
Loans		1,108,439			(33,868	) b		4,393			1,078,964
Allowance for loan losses		(25,208	)		25,208	b		0			0
Premises and equipment		4,357			2,256	c		0			6,613
Foreclosed assets		2,350			(1,710	) d		0			640
Accrued interest receivable and other assets		34,076			(4,091	) e		(689	)		29,296
Core deposit intangible asset		0			4,595	f		0			4,595
Deferred income taxes		11,758			8,082	g		(985	)		18,855

Total assets acquired		1,431,610			793			2,719			1,435,122


Liabilities assumed:
Deposits		1,162,437			22,211	h		0			1,184,648
Subordinated debentures		56,702			(4,463	) i		0			52,239
Accrued interest payable and other liabilities		3,608			358	j		0			3,966

Total liabilities assumed		1,222,747			18,106			0			1,240,853

Net assets acquired	$	208,863		$	(17,313	)	$	2,719			194,269

Consideration paid:
Cash in lieu of fractional shares											(7	)
Stock											(238,476	)

Total consideration paid											(238,483	)

Goodwill										$	44,214

⁽¹⁾

Management is continuing to evaluate each of these fair value adjustments and may revise one or more of such fair value adjustments in future periods. To the extent that any of these fair value adjustments are revised in future periods, the resultant fair values and the amount of goodwill may be subject to further adjustment.

Explanation of preliminary fair value adjustments

a-	Adjustment reflects the fair value adjustment based on the pricing of the acquired investment securities portfolio.

b-	Adjustment reflects the fair value adjustment based on the 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 evaluation of the premises and equipment acquired.

d-	Adjustment reflects the fair value adjustment based on the evaluation of the acquired foreclosed assets.

e-	Adjustment reflects the fair value adjustment based on the evaluation of accrued interest receivable and other assets.

f-	Adjustment reflects the fair value adjustment for the core deposit intangible asset recorded as a result of the acquisition.

g-	This adjustment reflects the differences in the carrying values of acquired assets and assumed liabilities for financial reporting purposes and their basis for federal income tax purposes.

h-	Adjustment reflects the fair value adjustment based on the evaluation of the acquired deposits.

i-	Adjustment reflects the fair value adjustment of these assumed liabilities based on a valuation of such instruments by an independent, third party valuation firm.

j-	Adjustment reflects the amount needed to adjust other liabilities to estimated fair value and to record certain liabilities directly attributable to the Intervest acquisition.

As a result of the recast adjustment described above, certain amounts previously reported in the Company’s consolidated financial statements as of March 31, 2015 have been recast. The following is a summary of those financial statement captions that have been impacted by the recast adjustment.


	As Previously Reported		Recast Adjustment			As Recast
	(Dollars in thousands)

Purchased loans	$	2,042,164	$	4,393		$	2,046,557
Net deferred tax asset		63,483		(985	)		62,498
Goodwill		125,603		(2,719	)		122,884
Income taxes receivable		689		(689	)		0

Goodwill of $44.2 million, which is the excess of the merger consideration over the fair value of net assets acquired, was recorded in the Intervest acquisition and is the result of expected operational synergies, expansion of full service banking in New York City and other factors. This goodwill is not expected to be deductible for tax purposes. To the extent that management further revises any of the above fair value adjustments as a result of its continuing evaluation, the amount of goodwill recorded in the Intervest acquisition may be subject to further adjustment.

The Company’s consolidated results of operations include the operating results of Intervest beginning February 11, 2015 through the end of the reporting period. For the three months ended June 30, 2015, Intervest contributed $14.9 million of net interest income and $8.6 million of net income to the Company’s operating results. For the six months ended June 30, 2015, Intervest contributed $23.8 million of net interest income and $13.5 million of net income to the Company’s operating results.

The following unaudited supplemental pro forma information is presented to show the estimated results assuming Intervest was acquired as of the beginning of the earliest period presented, adjusted for estimated potential costs savings. These unaudited pro forma results are not necessarily indicative of the operating results that the Company would have achieved had it completed the acquisition as of January 1, 2014 or 2015 and should not be considered as representative of future operating results.


	Six Months Ended
	June 30,
	2015		2014
	(Dollars in thousands, except per share amounts)

Net interest income – pro forma (unaudited)	$	186,428	$	143,484
Net income – pro forma (unaudited)	$	88,745	$	62,949
Diluted earnings per common share – pro forma (unaudited)	$	1.01	$	0.76

Summit Bancorp, Inc.

On May 16, 2014, the Company completed the acquisition of Summit Bancorp, Inc. (“Summit”) and Summit Bank, its wholly-owned bank subsidiary, for an aggregate of $42.5 million in cash and 5,765,846 shares of its common stock. The acquisition of Summit expanded its service area in Central, South and Western Arkansas by adding 23 banking locations and one loan production office in nine Arkansas counties. During the second quarter of 2014, the Company closed one of the banking offices and the one loan production office acquired in the Summit acquisition. During the fourth quarter of 2014 and the second quarter of 2015, the Company closed eight additional banking offices, including six that were acquired from Summit, in markets where the Company had excess branches as a result of the Summit acquisition. Goodwill of $73.4 million, which is the excess of the merger consideration over the fair value of net assets acquired, was recorded in the Summit acquisition and is the result of expected operational synergies and other factors. This goodwill is not expected to be deductible for tax purposes.

Bancshares, Inc.

On March 5, 2014, the Company completed its acquisition of Bancshares, Inc. (“Bancshares”) and OMNIBANK, N.A., its wholly-owned bank subsidiary, for an aggregate of $21.5 million in cash. The Company recognized a bargain purchase gain of $4.7 million during the first quarter of 2014 as a result of the Bancshares acquisition. The acquisition of Bancshares expanded the Company’s service area in South Texas by adding three offices in Houston and one office each in Austin, Cedar Park, Lockhart, and San Antonio.