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Acquisitions | 12 Months Ended
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Dec. 31, 2018
Business Combinations [Abstract] |
Acquisitions | ACQUISITIONS On October 1, 2017, the Company completed the acquisition of Folsom Lake Bank (“FLB”) for an aggregate transaction value of $28,475,000. FLB was merged into the Bank, and the Company issued 1,276,888 shares of common stock to the former shareholders of FLB. The Company also assumed the outstanding FLB stock options. With the FLB acquisition, the Company added two full service branches, located in Folsom, and Rancho Cordova, California. The FLB Roseville branch was consolidated with the Company’s Roseville branch in October 2017. FLB’s assets as of October 1, 2017 totaled approximately $196,148,000. In accordance with GAAP guidance for business combinations, the Company recorded $13,466,000 of goodwill and $1,879,000 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 five 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 $217,000 and $1,828,000 are included in the income statement for the years ended December 31, 2018 and 2017, respectively. 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 expected cost savings resulting from the combined operations. The following table summarizes the consideration paid for FLB and the amounts of the assets acquired and liabilities assumed recognized at the acquisition date (in thousands):
Merger consideration: |
Common stock issued | $ | 28,475 |
Fair Value of Total Consideration Transferred | $ | 28,475 |
Recognized amounts of identifiable assets acquired and liabilities assumed: |
Cash and cash equivalents | $ | 26,279 |
Loans, net | 117,815 |
Investments | 41,280 |
Core deposit intangible | 1,879 |
Premises and equipment | 561 |
Federal Home Loan Bank stock | 1,559 |
Deferred taxes and taxes receivable | 2,186 |
Bank owned life insurance | 3,997 |
Other assets | 592 |
Total assets acquired | 196,148 |
Deposits | 171,948 |
Deposit premium | 132 |
Short-term borrowings - Federal Home Loan Bank | 7,000 |
Other liabilities | 2,059 |
Total liabilities assumed | 181,139 |
Total identifiable net assets | 15,009 |
Goodwill | $ | 13,466 |
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 $117,815,000 and $121,872,000, respectively, on the date of acquisition. See Note 5 for discussion of purchased credit impaired loans. On 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 $155,154,000. 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 1,058,851 shares of its common stock and cash totaling approximately $9,468,000 to the former shareholders of Sierra Vista Bank. In accordance with GAAP guidance for business combinations, the Company recorded $10,314,000 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 five 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 and Folsom Lake Bank since October 1, 2017. The following table presents pro forma results of operations information for the periods presented as if the acquisitions had occurred on January 1, 2016 after giving effect to certain adjustments. The unaudited pro forma results of operations for the years ended December 31, 2017 and 2016 include the historical accounts of the Company, Folsom Lake Bank, 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 acquisitions been completed at the beginning of each respective year. 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,
|  | 2017 |  | 2016
Net interest income |  | $ | 61,059 |  |  | $ | 56,531 |
Provision for (reversal of) credit losses |  | (1,150 | ) |  | (5,800 | )
Non-interest income |  | 11,240 |  |  | 10,205 |
Non-interest expense |  | 51,415 |  |  | 52,131 |
Income before provision for income taxes |  | 22,034 |  |  | 20,405 |
Provision for income taxes |  | 9,168 |  |  | 6,381 |
Net income |  | $ | 12,866 |  |  | $ | 14,024 |
Net income available to common shareholders |  | $ | 12,866 |  |  | $ | 14,024 |
Basic earnings per common share |  | $ | 1.03 |  |  | $ | 1.24 |
Diluted earnings per common share |  | $ | 1.01 |  |  | $ | 1.23 |

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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