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ACQUISITIONS (Tables) | 12 Months Ended
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Dec. 31, 2016
Business Combinations [Abstract] |
Summary of Consideration Assets Acquired and Liabilities Assumed | The following table provides a summary of the assets acquired and liabilities assumed and the associated fair value adjustments as recorded by the Company at acquisition:
|  |  |  | Fair Value |  |  |  | As Recorded by
(in thousands) |  | As Acquired |  | Adjustments |  |  |  | the Company
Consideration Paid: |  |  |  |  |  |  |  |
Company common stock issued to First Choice Bank common and preferred shareholders |  | $ | 151,048 |
Total consideration paid |  |  |  |  |  |  |  | $ | 151,048 |
Recognized amounts of identifiable assets acquired and (liabilities) assumed, at fair value:
Cash and short-term investments |  | $ | 5,935 |  |  | $ | — |  |  |  |  | $ | 5,935 |
Investment securities |  | 447,960 |  |  | (6,009 | ) |  | (a) |  | 441,951 |
Loans held for sale |  | 112,669 |  |  | — |  |  |  |  | 112,669 |
Loans, net |  | 437,832 |  |  | (13,061 | ) |  | (b) |  | 424,771 |
Premises and equipment |  | 6,354 |  |  | (878 | ) |  | (c) |  | 5,476 |
Core deposit intangibles |  | — |  |  | 7,690 |  |  | (d) |  | 7,690 |
Deferred tax assets, net |  | 9,626 |  |  | 8,175 |  |  | (e) |  | 17,801 |
Other assets |  | 42,200 |  |  | (60 | ) |  | (f) |  | 42,140 |
Deposits |  | (889,993 | ) |  | (2,804 | ) |  | (g) |  | (892,797 | )
Borrowings |  | (51,796 | ) |  | 68 |  |  | (h) |  | (51,728 | )
Other liabilities |  | (15,019 | ) |  | (5,877 | ) |  | (i) |  | (20,896 | )
Total identifiable net assets |  | $ | 105,768 |  |  | $ | (12,756 | ) |  |  |  | $ | 93,012 |
Goodwill |  |  |  |  |  |  |  | $ | 58,036 |
________________________________ Explanation of Certain Fair Value Adjustments
(a) | The adjustment represents the write down of the book value of securities to their estimated fair value based on estimates at the date of acquisition.
(b) | The adjustment represents the write-off of the balance of $14.7 million in allowance for loan and lease losses and the write down of the book value of loans to their estimated fair value based on interest rates and expected cash flows as of the acquisition date, which includes an estimate of expected loan loss inherent in the portfolio. Loans with evidence of credit deterioration at acquisition are accounted for under ASC 310-30 and had a book value of $63.8 million and had a fair value of $36.4 million. Non-impaired loans accounted for under ASC 310-20 had a book value of $388.7 million and have a fair value of $388.3 million. ASC 310-30 loans have a $5.4 million fair value adjustment that is accretable in earnings over an estimated three-year life using the effective yield as determined on the date of acquisition. The effective yield is periodically adjusted for changes in expected flows. ASC 310-20 loans have a $5.8 million fair value adjustment premium that is amortized into expense over the remaining term of the loans using the effective interest method, or a straight-line method if the loan is a revolving credit facility.
(c) | The amount represents the adjustment of the book value of furniture, fixtures, and equipment, to their estimated fair value and the immediate expensing of equipment not meeting the thresholds for capitalization in accordance with Company policy. The adjustments will be depreciated over the remaining estimated economic lives of the assets.
(d) | The adjustment represents the value of the core deposit base assumed in the acquisition. The core deposit asset was recorded as an identifiable intangible asset and will be amortized over the estimated useful life of the deposit base (10 years).
(e) | Represents net deferred tax assets resulting from the fair value adjustments related to the acquired assets and liabilities, identifiable intangibles, and other purchase accounting adjustments.
(f) | The amount consists of a $0.5 million write-off of goodwill and intangible assets from a prior First Choice Bank acquisition, a $0.1 million fair value adjustment to write-down other real estate owned based on market report data, and a $0.1 million write-off of prepaid assets due to obsolescence. These adjustments are not accretable into earnings in the statement of income.
(g) | The adjustment is necessary because the weighted average interest rate of deposits exceeded the cost of similar funding at the time of acquisition. The amount will be amortized over the estimated useful life of one year.
(h) | Adjusts borrowings to their estimated fair value, which is calculated based on the expected future cash flow of the borrowings.
(i) | Adjusts the book value of other liabilities to their estimated fair value at the acquisition date. The adjustment consists of a $4.0 million increase for the fair value of the above/below market leases, a $3.4 million establishment of a reserve on certain acquired loans determined to have specific risk at the time of acquisition, a $0.9 million net decrease related to non-level leases, and a $0.6 million write-off of deferred revenue.
The following table provides a summary of the assets acquired and liabilities assumed and the associated fair value adjustments as recorded by the Company at acquisition:
|  |  |  | Fair Value |  |  |  | As Recorded by
(in thousands) |  | As Acquired |  | Adjustments |  |  |  | the Company
Consideration paid: |  |  |  |  |  |  |  |  |  |  |
Company common stock issued to certain 44 Business Capital shareholders (44,840 shares) |  | $ | 1,217 |
Cash paid to 44 Business Capital shareholders and Parke |  |  |  |  |  |  |  | 55,649 |
Total consideration paid |  |  |  |  |  |  |  | $ | 56,866 |
Recognized amounts of identifiable assets acquired and (liabilities) assumed, at fair value:
Cash and short-term investments |  | $ | 107 |  |  | $ | — |  |  |  |  | $ | 107 |
Loans |  | 42,627 |  |  | (5,400 | ) |  | (a) |  | 37,227 |
Premises and equipment |  | 69 |  |  | (36 | ) |  | (b) |  | 33 |
Other assets |  | 3,076 |  |  | 639 |  |  | (c) |  | 3,715 |
Other liabilities |  | (108 | ) |  | — |  |  |  |  | (108 | )
Total identifiable net assets |  | $ | 45,771 |  |  | $ | (4,797 | ) |  |  |  | $ | 40,974 |
Goodwill |  |  |  |  |  |  |  | $ | 15,892 |
________________________________ Explanation of Certain Fair Value Adjustments
(a) | The adjustment represents the write down of the book value of loans to their estimated fair value based on current interest rates and expected cash flows, which includes an estimate of expected loan loss inherent in the portfolio. Loans with evidence of credit deterioration at acquisition are accounted for under ASC 310-30 and had a book value of $6.3 million and have a fair value $2.9 million. Non-impaired loans accounted for under ASC 310-10 had a book value of $36.4 million and have a fair value of $34.3 million. ASC 310-30 loans have a $708 thousand fair value adjustment discount that is accretable in earnings over an average estimated six-year life using the effective yield as determined on the date of acquisition. The effective yield is periodically adjusted for changes in expected cash flows. ASC 310-10 loans have a $2.1 million fair value adjustment discount that is amortized into income over the remaining term of the loans using the effective interest method.
(b) | The fair value of the equipment was assumed to approximate the net carrying value based on overall condition and age. The adjustment represents the immediate expensing of equipment not meeting the thresholds for capitalization in accordance with Company policy. The recorded amount will be depreciated over the remaining estimated economic lives of the assets.
(c) | The adjustment represents the fair value write up of book value of the loan servicing right asset to its estimated fair value based on current interest rates and expected cash flows, which includes an estimate of cost of service and conditional prepayment rates applied to the underlying unpaid loan pool balance over the remaining life of the loans. The balance includes accrued interest of $221 thousand.
Schedule of Acquired Loan Portfolio | Information about the First Choice Bank acquired loan portfolio subject to ASC 310-30 as of December 2, 2016 is as follows (in thousands):
| ASC 310-30 Loans
Gross contractual receivable amounts at acquisition | $ | 63,820 |
Contractual cash flows not expected to be collected (nonaccretable discount) | (21,926 | )
Expected cash flows at acquisition | 41,894 |
Interest component of expected cash flows (accretable discount) | (5,417 | )
Fair value of acquired loans | $ | 36,477 |
Information about the acquired loan portfolio subject to ASC 310-30 as of April 29, 2016 is, as follows (in thousands):
| ASC 310-30 Loans
Gross contractual receivable amounts at acquisition | $ | 6,265 |
Contractual cash flows not expected to be collected (nonaccretable discount) | (2,623 | )
Expected cash flows at acquisition | 3,642 |
Interest component of expected cash flows (accretable discount) | (708 | )
Fair value of acquired loans | $ | 2,934 |
| ASC 310-30 Loans
Gross contractual receivable amounts at acquisition | $ | 6,265 |
Contractual cash flows not expected to be collected (nonaccretable discount) | (2,623 | )
Expected cash flows at acquisition | 3,642 |
Interest component of expected cash flows (accretable discount) | (708 | )
Fair value of acquired loans | $ | 2,934 |
Pro Forma Financial Information | nformation in the following table is shown in thousands, except earnings per share:
|  | Pro Forma (unaudited) Years ended December 31,
|  | 2016 |  | 2015
Net interest income |  | $ | 259,494 |  |  | $ | 249,533 |
Non-interest income |  | 137,395 |  |  | 125,855 |
Net income |  | 79,011 |  |  | 60,852 |
Pro forma earnings per share: |  |  |  |  |  |
Basic |  | $ | 2.25 |  |  | $ | 1.85 |
Diluted |  | $ | 2.24 |  |  | $ | 1.84 |

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- Definition Tabular disclosure of the reconciliation of contractual cash flows to the carrying amount relating to certain loans acquired in a transfer. + References No definition available. + Details
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- Definition Tabular disclosure of the amounts recognized as of the acquisition date for each major class of assets acquired and liabilities assumed. May include but not limited to the following: (a) acquired receivables; (b) contingencies recognized at the acquisition date; and (c) the fair value of noncontrolling interests in the acquiree. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=73530397&loc=d3e4845-128472 + Details
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