ACQUISITIONS

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 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. The fair values of assets acquired and liabilities assumed are subject to adjustment during the first twelve months after the acquisition date if additional information becomes available to indicate a more accurate or appropriate value for an asset or liability. During the six-month period ended June 30, 2017, the Company determined that a measurement adjustment was appropriate which resulted in an $80,000 increase to goodwill.

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.

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, 2016 after giving effect to certain adjustments. The unaudited pro forma results of operations for the six months ended June 30, 2016 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 2016. 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):



Pro Forma Results of Operations	For the Six Months Ended June 30,
(In thousands, except per share amounts)	2016
Net interest income	$	25,063
(Reversal of) Provision for credit losses	(4,750		)
Non-interest income	5,490
Non-interest expense	21,322
Income before provision for income taxes	13,981
Provision for income taxes	4,271
Net income	$	9,710
Net income available to common shareholders	$	9,710
Basic earnings per common share	$	0.89
Diluted earnings per common share	$	0.88

On April 27, 2017, the Company and Folsom Lake Bank (“Folsom”) jointly announced the execution of a definitive agreement and plan of merger and reorganization whereby Folsom will merge with and into Central Valley Community Bank in a transaction valued at approximately $33.6 million. Shareholders of Folsom will receive a fixed exchange ratio at closing of 0.80 shares of the Company’s common stock for each share of Folsom common stock. Based on the Company’s stock price as of June 30, 2017, total consideration for each Folsom share would have been $17.95. On July 12, 2017, the Company issued a press release announcing that the Company and Central Valley Community Bank, have received regulatory approvals from both the FDIC and the California Department of Business Oversight for the merger of Central Valley Community Bank and Folsom. The transaction is subject to the approval of the shareholders of Folsom. Folsom will hold its special shareholder meeting on August 10, 2017. The transaction is expected to be completed on October 1, 2017 pending shareholder approval and the satisfaction of other customary closing conditions.

Folsom is headquartered in Folsom, California with approximately $205.9 million in assets at June 30, 2017, with three branches located in Folsom, Rancho Cordova and Roseville, California. As of June 30, 2017, on a pro forma consolidated basis, the combined company would have had approximately $1.7 billion in assets.