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Acquisition of Sierra Vista Bank
 12 Months Ended
Dec. 31, 2016
Business Combinations [Abstract]  
Acquisition of Sierra Vista Bank
ACQUISITION OF SIERRA VISTA BANK

Effective October 1, 2016, the Company acquired Sierra Vista Bank, headquartered in Folsom, California, wherein Sierra Vista Bank, with one branch in Folsom, one branch in Fair Oaks, and one branch in Cameron Park, merged with and into Central Valley Community Bancorp’s subsidiary, Central Valley Community Bank, in a combined cash and stock transaction. Sierra Vista Bank’s assets (unaudited) as of October 1, 2016 totaled approximately $155.154 million. 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 1.059 million shares of its common stock and cash totaling approximately $9.469 million to the former shareholders of Sierra Vista Bank.
In accordance with GAAP guidance for business combinations, the Company recorded $10.314 million of goodwill and $508,000 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. Acquisition related costs of $1,782,000 are included in the income statement for the year ended December 31, 2016.
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 Sierra Vista Bank and the amounts of the assets acquired and liabilities assumed recognized at the acquisition date (in thousands):

Merger consideration:
 
Cash
$
9,468

Common stock issued
16,793

Fair Value of Total Consideration Transferred
$
26,261

 
 
Recognized amounts of identifiable assets acquired and liabilities assumed:
 
Cash and cash equivalents
$
22,709

Loans, net
122,533

Core deposit intangible
508

Premises and equipment
586

Federal Home Loan Bank stock
771

Deferred taxes and taxes receivable
4,417

Bank owned life insurance
2,664

Other assets
966

Total assets acquired
155,154

Deposits
138,236

Deposit premium
142

Other liabilities
829

Total liabilities assumed
139,207

Total identifiable net assets
15,947

Goodwill
$
10,314



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. 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 $121,902,000 and $124,396,000, respectively, on the date of acquisition. See Note 5 for discussion of purchased credit impaired loans.

Pro Forma Results of Operations

The accompanying consolidated financial statements include the accounts of Sierra Vista Bank since October 1, 2016. The following table presents pro forma results of operations information for the periods presented as if the acquisition had occurred on January 1, 2015 after giving effect to certain adjustments. The unaudited pro forma results of operations for the years ended December 31, 2016 and 2015 include the historical accounts of the Company and Sierra Vista 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 2015. 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,
 
 
2016
 
2015
Net interest income
 
$
50,491

 
$
46,499

Provision for credit losses
 
(5,750
)
 
645

Non-interest income
 
9,930

 
9,912

Non-interest expense
 
47,350

 
40,971

Income before provision for income taxes
 
18,821

 
14,795

Provision for income taxes
 
5,817

 
3,101

Net income
 
$
13,004

 
$
11,694

Net income available to common shareholders
 
$
13,004

 
$
11,694

Basic earnings per common share
 
$
1.15

 
$
1.07

Diluted earnings per common share
 
$
1.14

 
$
1.06