Acquisition

9 Months Ended

Sep. 30, 2020

Business Combinations [Abstract]

Acquisition

Acquisition

On September 1, 2020, the Company completed the acquisition of Magnolia Financial, Inc., a business financing company headquartered in Spartanburg, South Carolina, that makes loans throughout the southeastern United States. In the transaction, the Company acquired $14.6 million in loans and $0.5 million of other assets, and assumed $11.7 million in borrowings, substantially all of which was paid off subsequent to the closing. The transaction value was approximately $10.0 million with the Company paying $9.5 million in cash and issuing 24,096 shares of its common stock, which had a value of approximately $0.5 million.

This acquisition was accounted for using the purchase method of accounting for business combinations, and accordingly, the assets and liabilities of the financing company were recorded based on estimates of fair values, which according to applicable accounting guidance, are subject to change for twelve months following the acquisition. In connection with this transaction, the Company recorded an intangible asset of $6.6 million, which is deductible for tax purposes over 15 years and has initially been recorded as goodwill. The Company is currently performing valuation studies of this intangible asset and may reclassify a portion of this amount from goodwill to other types of intangible assets at the next reporting date. Any such reclassification is not expected to be material. See Note 8 for additional information.