Acquisition of Bank of Granite Corporation

12 Months Ended

Dec. 31, 2014

Business Combinations [Abstract]

Acquisition of Bank of Granite Corporation

Acquisition of Bank of Granite Corporation

On October 21, 2011, as part of the recapitalization of COB, COB acquired Granite Corp., through the merger of a wholly owned subsidiary of COB merging into Granite Corp. The merger was part of the Company’s recapitalization strategy, a condition to the closing of the investment agreements with our Anchor Investors in the recapitalization, and was a 100% stock exchange transaction. The merger allowed us to improve efficiencies and opened new markets for us. Upon consummation of the merger, each outstanding share of Granite Corp.’s common stock, par value $1.00 per share, other than shares held by COB, Granite Corp.’s and shares owned in a fiduciary capacity or as a result of debts previously contracted, was converted into the right to receive 3.375 shares of COB common stock, resulting in COB issuing approximately 521,595 shares (adjusted for a reverse stock split effective October 31, 2011) of COB common stock to Granite Corp.’s stockholders.

Granite Corp. was a Delaware corporation organized on June 1, 1987, which was registered as a bank holding company due to its ownership of Granite, a North Carolina chartered bank which had been in existence and continuously operating since August 2, 1906. Granite conducted banking business operations from 17 full-service branches located in Burke, Caldwell, Catawba, Forsyth, Iredell, Mecklenburg, Watauga, and Wilkes counties in North Carolina. We completed the merger of the Bank and Granite effective June 8, 2013.

Granite Corp. also owned Granite Mortgage, Inc. (“Granite Mortgage”), a North Carolina corporation which ceased mortgage operations in July 2009, filed for Chapter 11 bankruptcy on February 15, 2012, and was dissolved on May 5, 2014.

The acquisition of Granite Corp. by COB was accounted for under the acquisition method of accounting in accordance with relevant accounting guidance. The purchased assets and assumed liabilities were recorded at their respective acquisition date fair values, and identifiable intangible assets were recorded at fair value. Fair value adjustments were preliminary and were subject to refinement for up to one year after the closing date of the acquisition as additional information relative to closing date fair values became available. During the first quarter of 2012, we recognized $0.3 million in additional goodwill from the Merger. This additional goodwill was due to new valuations received on OREO acquired in the Merger, which had been written down to our best estimate of fair value at October 21, 2011.

None of the goodwill recognized is expected to be deductible for income tax purposes.