Acquisitions (Tables)

9 Months Ended

Sep. 30, 2017

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

The following table summarizes the consideration paid, fair values of the Cascade assets acquired and liabilities assumed, and the resulting goodwill. Due to the recent closing of the transaction, all amounts reported are provisional pending the review of valuations obtained from third parties.



	As Recorded			Fair Value				As Recorded
As of May 30, 2017	by Cascade			Adjustments				by the Company

Assets acquired:
Cash and cash equivalents	$	246,804		$	—			$	246,804
Investment securities	476,733			4,876			(1)	481,609
Loans held for investment	2,112,077			(31,703		)	(2)	2,080,374
Mortgage loans held for sale	10,253			6			(2)	10,259
Allowance for loan loss	(23,974		)	23,974			(3)	—
Premises and equipment	46,554			178			(4)	46,732
Other real estate owned ("OREO")	1,192			—				1,192
Core deposit intangible	—			47,968			(5)	47,968
Deferred tax assets	47,653			(21,661		)	(6)	25,992
Other assets	98,570			1,136			(7)	99,706
Total assets acquired	3,015,862			24,774				3,040,636

Liabilities assumed:
Deposits	2,669,910			(934		)	(8)	2,668,976
Accounts Payable and Accrued Expense	62,150			720			(9)	62,870
Total liabilities assumed	2,732,060			(214		)		2,731,846

Net assets acquired	$	283,802		$	24,988			$	308,790

Consideration paid:
Cash								$	155,029
Class A common stock								385,969
Total consideration paid								540,998

Goodwill								$	232,208



Explanation of fair value adjustments. Note that certain marks have been updated since prior quarter, and certain balances have been reclassified, none of which are material:
(1)	Write up of the book value of investments to their estimated fair values on the date of acquisition based upon quotes obtained from an independent third party pricing service.
(2)	Write down of the book value of loans to their estimated fair values. Shared National Credits (SNC) were recorded at quoted sales prices where available. The fair value of the remaining loans was estimated using cash flow projections based on the remaining maturity and repricing terms, adjusted for estimated future credit losses and prepayments and discounted to present value using a risk-adjusted market rate for similar loans. The fair value of collateral dependent loans acquired with deteriorated credit quality was estimated based on the Company's analysis of the fair value of each loan's underlying collateral, discounted using market-derived rates of return with consideration given to the period of time and costs associated with foreclosure and disposition of the collateral.
(3)	Adjustment to remove the Cascade allowance for loan losses at acquisition date, as the credit risk is accounted for in the fair value adjustment for loans receivable described in (2) above.
(4)	Write up of the book value of premises and equipment to their estimated fair values on the date of acquisition based upon appraisals obtained from an independent third party appraiser or broker's opinion of value.
(5)	Adjustment represents the value of the core deposit base assumed in the acquisition based upon valuation from an independent accounting and advisory firm.
(6)	Adjustment consists of the write-off of pre-existing deferred tax assets as a result of the acquisition.
(7)	Adjustment consists of various other assets recorded as a result of the acquisition, including mortgage servicing rights, SBA servicing rights, and favorable leases offset by reductions to the fair value of other items.
(8)	Decrease in book value of time deposits to their estimated fair values based upon interest rates of similar time deposits with similar terms on the date of acquisition based upon valuation from an independent accounting and advisory firm.
(9)	Increase in fair value due to credit card incentive program, unfavorable leases, write-off of balance sheet reserve, and swap liability offset.

Summary of Pre-tax Merger Related Expenses

These costs are incorporated in non-interest expenses in the Company’s consolidated statements of income and are summarized below.



	Three Months Ended September 30, 2017		Nine Months Ended September 30, 2017
Legal and Professional Fees	$	2,498	$	8,995
Employee Expenses	1,755		5,041
Technology Conversion and Contract Termination	7,090		7,779
Other	1,673		2,039
Total Acquisition Related Expenses	$	13,016	$	23,854

Schedule of Acquired Loans with Credit Impairment

Information regarding acquired credit-impaired loans as of the May 30, 2017 acquisition date is as follows:



Contractually required principal and interest payments	$	48,041
Contractual cash flows not expected to be collected ("non-accretable discount")	23,376
Cash flows expected to be collected	24,665
Interest component of cash flows expected to be collected ("accretable discount")	1,901
Fair value of acquired credit-impaired loans	$	22,764

The following table displays the outstanding unpaid balances and accrual status of loans acquired with credit impairment as of September 30, 2017 and 2016:



As of September 30,	2017		2016

Outstanding balance	$	46,199	$	38,505

Carrying value
Loans on accrual status	30,804		23,665
Total carrying value	$	30,804	$	23,665

The following table summarizes changes in the accretable yield for loans acquired credit impaired for the three and nine months ended September 30, 2017 and 2016:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016

Beginning balance	$	7,650		$	5,905		$	6,803		$	6,713
Additions	167			1,114			2,096			1,114
Accretion income	(858		)	(670		)	(2,131		)	(1,899		)
Reductions due to exit events	(143		)	(595		)	(1,131		)	(900		)
Reclassifications from nonaccretable differences	498			729			1,677			1,455
Ending balance	$	7,314		$	6,483		$	7,314		$	6,483

Schedule of Acquired Loans not Deemed to Have Credit Impairment

Information regarding acquired loans not deemed credit-impaired at the acquisition date is as follows:



Contractually required principal and interest payments	$	2,098,452
Contractual cash flows not expected to be collected due to projected prepayment	23,387
Fair value at acquisition	$	2,067,869

Summary of Pro Forma Information

The following table presents unaudited supplemental pro forma consolidated revenues and net income as if the acquisition had occurred as of January 1, 2016.



	Three months ended September 30,				Nine months ended September 30,
	2017		2016		2017		2016
Interest income	$	108,765	$	99,288	$	312,091	$	289,060
Non-interest income	38,274		39,811		116,171		114,881
Total revenues	$	147,039	$	139,099	$	428,262	$	403,941

Net income	$	34,903	$	28,769	$	94,017	$	44,317

EPS - basic	$	0.52	$	0.52	$	1.55	$	0.79
EPS - diluted	0.51		0.51		1.53		0.79