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Acquisition of Visalia Community Bank
 12 Months Ended
Dec. 31, 2013
Business Combinations [Abstract]  
Acquisition of Visalia Community Bank
ACQUISITION OF VISALIA COMMUNITY BANK

Effective July 1, 2013, the Company acquired Visalia Community Bank, headquartered in Visalia, California, wherein Visalia Community Bank,with three branches in Visalia and one branch in Exeter, merged with and into Central Valley Community Bancorp’s subsidiary, Central Valley Community Bank, in a combined cash and stock transaction. The acquired assets and liabilities were recorded at fair value at the date of acquisition.
Under the terms of the merger agreement, the Company issued an aggregate of approximately 1.263 million shares of its common stock and cash totaling approximately $11.05 million to the former shareholders of Visalia Community Bank. Each Visalia Community Bank common shareholder of record at the effective time of the merger became entitled to receive 2.971 shares of common stock of the Company for each of their shares of Visalia Community Bank common stock.
In accordance with GAAP guidance for business combinations, the Company recorded $6.34 million of goodwill and $1.37 million of other intangible assets on the acquisition date. The other intangible assets are primarily related to core deposits and are being amortized using a straight-line method over a period of ten years with no significant residual value. For tax purposes purchase accounting adjustments, including goodwill are all non-taxable and/or non-deductible.
The acquisition was consistent with the Company’s strategy to build a regional presence in Central California. The acquisition offers the Company the opportunity to increase profitability by introducing existing products and services to the acquired customer base as well as add new customers in the expanded region. Goodwill arising from the acquisition consisted largely of synergies and the cost savings resulting from the combined operations.
The following table summarizes the consideration paid for Visalia Community Bank and the amounts of the assets acquired and liabilities assumed recognized at the acquisition date (in thousands):
Merger consideration:
 
Cash
$
11,050

Common stock issued
12,727

Fair Value of Total Consideration Transferred
$
23,777

 
 
Recognized amounts of identifiable assets acquired and liabilities assumed:
 
Cash and cash equivalents
$
51,985

Loans, net
113,467

Investments
14,818

Core deposit intangible
1,365

Premises and equipment
4,263

Federal Home Loan Bank stock
698

Other real estate owned
263

Deferred taxes and taxes receivable
3,179

Bank owned life insurance
6,786

Other assets
797

Total assets acquired
197,621

Deposits
174,206

Other liabilities
5,978

Total liabilities assumed
180,184

Total identifiable net assets
17,437

Goodwill
$
6,340



The fair value of net assets acquired includes fair value adjustments to certain loans that were not considered impaired as of the acquisition date. The fair value adjustments were determined using discounted contractual cash flows. However, the Company believes that all contractual cash flows related to these financial instruments will be collected. As such, these loans were not considered impaired at the acquisition date and were not subject to the guidance relating to purchased credit impaired loans, which have shown evidence of credit deterioration since origination. Loans acquired that were not subject to these requirements include non-impaired loans and customer receivables with a fair value and gross contractual amounts receivable of $110,891,000 and $113,743,000, respectively, on the date of acquisition. See Note 5 for discussion of purchased credit impaired loans.

Pro Forma Results of Operations


The following table presents pro forma results of operations information for the periods presented as if the acquisition had occurred on January 1, 2012 after giving effect to certain adjustments. The pro forma results of operations for the years ended December 31, 2013 and 2012 include the historical accounts of the Company and Visalia Community Bank and pro forma adjustments as may be required, including the amortization of intangibles with definite lives and the amortization or accretion of any premiums or discounts arising from fair value adjustments for assets acquired and liabilities assumed. The pro forma information is intended for informational purposes only and is not necessarily indicative of the Company’s future operating results or operating results that would have occurred had the acquisition been completed at the beginning of 2012. No assumptions have been applied to the pro forma results of operations regarding possible revenue enhancements, expense efficiencies or asset dispositions. (In thousands, except per share amounts):
 
 
For the Years Ended December 31,
 
 
2013
 
2012
Net interest income
 
$
36,773

 
36,964

Provision for credit losses
 
298

 
1,534

Non-interest income
 
8,576

 
9,394

Non-interest expense
 
36,917

 
35,531

Income before provision for income taxes
 
8,134

 
9,293

Provision for income taxes
 
783

 
1,625

Net income
 
$
7,351

 
$
7,668

Preferred stock dividends and accretion
 
350

 
350

Net income available to common shareholders
 
$
7,001

 
$
7,318

Basic earnings per common share
 
$
0.68

 
$
0.67

Diluted earnings per common share
 
$
0.68

 
$
0.68