On February 1, 2017, the Company completed its acquisition of Reltco, Inc. and National Assurance Title, Inc. (collectively referred to as "Reltco"), two nationwide title agencies under common control based in Tampa, Florida. The acquisition was expected to complement the Company's growth strategy, including vertically integrating with parallel services to deliver a high-quality customer experience with speed.

On the acquisition date, the fair value of Reltco included $5.8 million in assets and $4.7 million in liabilities. The total acquisition gross consideration at the time of the transaction, including earn-out contingent consideration was approximately $15.8 million. The acquisition was valued at $12.7 million after consideration of the applicable fair value adjustments to the earn-out, resulting in the Company paying $7.8 million in cash and issuing 27,724 shares of its common stock at closing in addition to an earn-out of up to 184,012 shares of its stock and $3.8 million in cash, in exchange for all of the outstanding shares of Reltco. The earn-out was recorded as a $4.3 million contingent liability on the acquisition date and is earned proportionally based on the ratio of the new subsidiary's actual future aggregate net income after tax divided by a target net income after tax of approximately $6.0 million over the four year earn-out period. Fair value measurement of the earn-out was calculated using the Monte Carlo Simulation. The Monte Carlo Simulation simulates 100,000 trials to assess the expected market price as of the earn-out measurement date at the end of each of the next four years based on the Cox, Ross & Rubinstein option pricing methodology. The Monte Carlo Simulation utilized various assumptions that include a risk free rate of return through the end of each measurement period equivalent to that of a U.S. Treasury, expected volatility of 30.00% over four years and a dividend yield of 0.40%.

The merger was accounted for in accordance with the acquisition method of accounting, and the identifiable assets acquired and liabilities assumed were recorded at their estimated fair values as of the acquisition date separately from goodwill. The estimated fair values of assets acquired and liabilities assumed are based on the information available at the date of the acquisition. Management continues to evaluate these fair values, which are subject to revision as additional information becomes available. Contingent consideration is recorded at fair value based on the terms of the purchase agreement with subsequent quarterly changes in fair value recorded through earnings. The fair value of contingent consideration upon acquisition was $4.3 million and increased by $350 thousand during the period leading up to the October 31, 2017 impairment assessment date discussed below. During this pre-impairment assessment period fair value was estimated using the Monte Carlo Simulation. The assumptions utilized include a risk-free rate of return through the end of each measurement period equivalent to that of a U.S. Treasury, expected volatility of 30.00% over the remaining 3.25 years and a dividend yield of 0.51%.

The following table summarizes the allocation of the purchase price on the date of acquisition to assets acquired and the liabilities assumed based on their estimated fair values:

Fair value of assets acquired
Cash	$	102
Accounts receivable		159
Intangible assets		5,505
Total assets acquired		5,766
Fair value of liabilities assumed
Contingent consideration		4,300
Accounts payable and other liabilities		381
Total liabilities assumed		4,681
Net assets acquired	$	1,085
Purchase price
Common shares issued		27,724
Purchase price per share of the Company’s common stock	$	20.38
Company common stock issued		565
Cash	$	7,798
Total purchase price		8,363
Goodwill	$	7,268

Goodwill recorded represents future revenues and efficiencies gained through the Reltco acquisition. At the date of acquisition, intangible assets consisted of trade names of $1.2 million, customer relationships of $3.9 million, and non-compete agreements of $405 thousand.

The Company recorded no merger expenses for the years ended December 31, 2019 and 2018, and $766 thousand for the year ended December 31, 2017 related to the Reltco acquisition.

Goodwill and intangible assets are evaluated for potential impairment annually or when circumstances indicate potential impairment may have occurred. Impairment losses, if any, are determined based upon the excess of carrying value over the estimated fair value of the asset.

As of October 31, 2017, the Company determined that its goodwill and certain intangible assets related to the Reltco business combination had indications of impairment. Reltco’s financial performance was significantly lower during the first nine-months of operations and expectations of future profitability for the reporting unit were also lower than originally expected due to a slowing of refinance activity in the mortgage industry. The slowing of refinance activity in the mortgage industry was largely driven by increased levels of market rates during 2017.

In performing the goodwill impairment testing and measurement process to identify possible impairment, the estimated fair value of the Reltco reporting unit was developed using the income and market approaches to value Reltco. The income approach consisted of discounting projected long-term future cash flows, which are derived from internal forecasts and economic expectations for Reltco. The market valuation approach utilized revenue and EBITDA multiples from comparable market transactions.

The results of the impairment test indicated that the estimated fair value of Reltco was less than book value which resulted in a goodwill impairment charge of $7.3 million in accordance with accounting for Intangibles, Goodwill and other under ASC 360. This non-cash goodwill impairment charge to earnings was recorded as a component of impairment expense on goodwill and other intangibles in the consolidated statement of income.

While the intangibles subject to amortization were determined to be recoverable based on an undiscounted cash flow analysis, impairment of $720 thousand was realized for indefinite life tradenames. This non-cash intangible impairment charge to earnings was recorded as a component of impairment expense on goodwill and other intangibles in the consolidated statement of income.

As a result of Reltco’s 2017 results of operations and the direct contractual inclusion of impairment losses in the determination of earn out consideration, the fair value of the contingent consideration decreased by $4.4 million, which is recorded as a component of impairment expense on goodwill and other intangibles in the consolidated statement of income. The Company subsequently modified the acquisition contract in 2017 to change the definition of net income related to the earn-out contingent consideration which resulted in $1.6 million in salaries and employee benefit expense.

Fair value of contingent consideration was estimated using the Monte Carlo Simulation. The assumptions utilized in the determining the impact of the impairment assessment and subsequent purchase contract modification include a risk-free rate of return through the end of each measurement period equivalent to that of a U.S. Treasury, expected volatility of 25.00% over the remaining 3.00 years and a dividend yield of 0.51%.

On August 1, 2018, the Company financed the sale of its entire interest in Reltco for $3.0 million. The Company's divestiture was driven by expectations of future profitability under current market conditions impacting the mortgage industry.

Following is a summary of activity in contingent consideration for the Reltco reporting unit:

Balance, December 31, 2017	$	1,900
Fair value adjustments prior to August 1, 2018 sale		(260	)
Impact of sale on August 1, 2018		(1,640	)
Balance, December 31, 2018	$	—