MERGERS AND ACQUISITIONS

12 Months Ended

Dec. 31, 2015

MERGERS AND ACQUISITIONS

MERGERS AND ACQUISITIONS

NOTE 22. MERGERS AND ACQUISITIONS

On July 29, 2014 the Company and its subsidiary, the Bank, had entered into an amended Purchase and Assumption Agreement (“Agreement”) with CFG Community Bank (“CFG Bank”) and its parent, Capital Funding Bancorp, Inc., and affiliates, Capital Finance, LLC and Capital Funding, LLC. The Agreement was subsequently terminated on October 31, 2014 by a Mutual Termination Agreement (“Mutual Termination Agreement”) among the parties. 

The Agreement and Agreement Amendment provided that the Bank, subject to regulatory approvals, would purchase certain assets and assume certain liabilities of CFG Bank and its subsidiaries for $30 million in consideration, consisting of $26 million in cash and $4 million in shares of Company common stock, subject to certain adjustments; however, under the Mutual Termination Agreement, the Company, CFG Bank, Capital Funding Bancorp, Inc. and the other affiliates of CFG Bank have mutually agreed to terminate the Agreement and Agreement Amendment without any future obligation or liability between or among the parties under the Agreement or Agreement Amendment.  The Bank and CFG Bank, as well as other CFG Bank affiliates, intend to continue a working relationship and may, from time to time, engage in loan transactions and, if applicable, servicing arrangements.

On May 1, 2015, MVB Bank, Inc. (MVB Bank), a wholly-owned subsidiary of MVB Financial Corp. (MVB Financial or the Company), issued a joint news release with BB&T Corporation (BB&T) and Susquehanna Bancshares, Inc. (Susquehanna) announcing the signing of a definitive agreement, subject to customary closing conditions including regulatory approvals, through which MVB Bank will acquire two branch locations of Susquehanna Bank in Berkeley County, West Virginia and will assume approximately $69 million of deposits and $17 million of loans. The two Susquehanna Bank branch locations are slated for divestiture under BB&T’s agreement with the United States Department of Justice and commitments to the Board of Governors of the Federal Reserve System in connection with BB&T’s pending acquisition of Susquehanna. On July 22, 2015, regulatory approvals for the acquisition of the two Susquehanna Bank branch locations were received and the acquisition closed August 28, 2015.

The acquisition was accounted for under the acquisition method of accounting in accordance with ASC 805. The assets and liabilities were recorded at their estimated fair values as of the August 28, 2015 acquisition date.

The following is a summary of net liabilities assumed:

(in thousands)
Net assets acquired:
Cash received in transaction	$	47,962
Cash on hand		330
Loans		18,200
Bank premises, furniture and equipment		609
Accrued interest receivable and other assets		62
Core deposit intangible		878
		68,041
Deposits		68,697
Accrued interest payable and other liabilities		45
		68,742
Net liabilities assumed		(701)
Goodwill		701
	$	—

A valuation of the acquired loans and core deposit intangible was performed with the assistance of a third-party valuation consultant. The unpaid principal balance and fair value of performing loans was $18.7 million and $18.2 million, respectively. The discount of $458 thousand will be accreted through interest income over the life of the loans in accordance with Accounting Standards Codification (ASC) topic 310-20. No nonperforming loans were acquired in this transaction. The core deposit intangible will be amortized over 10 years using a double declining balance amortization method.

Merger costs related to the branch acquisitions were $722thousand, consisting primarily of legal, consulting and data processing expenses. Goodwill was recorded in the amount of $701thousand which is the difference between the total purchase price and the net liabilities assumed and is not deductible for income tax purposes. 

The following acquisition related costs are included in the consolidated statements of income for the periods indicated (in thousands):

	Year ended		Year ended		Year ended
	December 31, 2015		December 31, 2014		December 31, 2013
Professional fees	$	471	$	183	$	230
Marketing		29		4		2
Printing, postage and supplies		71		9		1
Equipment depreciation and maintenance		—		26		—
Travel and entertainment		50		88		55
Data processing and communications		76		—		—
Other operating expense		25		—		—
Total	$	722	$	310	$	288