UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q

(Mark One)

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED September 30, 2015

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM                        TO

COMMISSION FILE NUMBER: 000—31977

CENTRAL VALLEY COMMUNITY BANCORP

(Exact name of registrant as specified in its charter)

California	77-0539125
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

7100 N. Financial Dr., Suite 101, Fresno, California	93720
(Address of principal executive offices)	(Zip code)

Registrant’s telephone number (559) 298-1775

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  ý  No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  ý  No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o	Accelerated filer ý
Non-accelerated filer o	Small reporting company o
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  o No  ý

As of November 2, 2015 there were 10,993,463 shares of the registrant’s common stock outstanding.

1

CENTRAL VALLEY COMMUNITY BANCORP AND SUBSIDIARY

2015 QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS

PART 1	FINANCIAL INFORMATION	2
ITEM 1	FINANCIAL STATEMENTS	3
ITEM 2	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	31
ITEM 4	CONTROLS AND PROCEDURES	59
PART II	OTHER INFORMATION	60
ITEM 1	LEGAL PROCEEDINGS	60
ITEM 1A	RISK FACTORS	60
ITEM 2	CHANGES IN SECURITIES AND USE OF PROCEEDS	60
ITEM 3	DEFAULTS UPON SENIOR SECURITIES	60
ITEM 4	MINE SAFETY DISCLOSURES	60
ITEM 5	OTHER INFORMATION	60
ITEM 6	EXHIBITS	61
SIGNATURES		61

2

PART 1: FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS

CENTRAL VALLEY COMMUNITY BANCORP AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)	September 30, 2015		December 31, 2014
	(Unaudited)
ASSETS
Cash and due from banks	$	27,148	$	21,316
Interest-earning deposits in other banks	47,872		55,646
Federal funds sold	266		366
Total cash and cash equivalents	75,286		77,328
Available-for-sale investment securities (Amortized cost of $444,728 at September 30, 2015 and $423,639 at December 31, 2014)	452,842		432,535
Held-to-maturity investment securities (Fair value of $35,256 at September 30, 2015 and $35,096 at December 31, 2014)	32,367		31,964
Loans, less allowance for credit losses of $9,093 at September 30, 2015 and $8,308 at December 31, 2014	590,197		564,280
Bank premises and equipment, net	9,494		9,949
Bank owned life insurance	20,557		20,957
Federal Home Loan Bank stock	4,823		4,791
Goodwill	29,917		29,917
Core deposit intangibles	1,091		1,344
Accrued interest receivable and other assets	17,421		19,118
Total assets	$	1,233,995	$	1,192,183
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Non-interest bearing	$	386,408	$	376,402
Interest bearing	688,446		662,750
Total deposits	1,074,854		1,039,152
Junior subordinated deferrable interest debentures	5,155		5,155
Accrued interest payable and other liabilities	16,533		16,831
Total liabilities	1,096,542		1,061,138
Commitments and contingencies (Note 8)
Shareholders’ equity:
Preferred stock, no par value, $1,000 per share liquidation preference; 10,000,000 shares authorized, none issued and outstanding	—		—
Common stock, no par value; 80,000,000 shares authorized; issued and outstanding: 10,993,463 at September 30, 2015 and 10,980,440 at December 31, 2014	54,345		54,216
Retained earnings	78,195		71,452
Accumulated other comprehensive income, net of tax	4,913		5,377
Total shareholders’ equity	137,453		131,045
Total liabilities and shareholders’ equity	$	1,233,995	$	1,192,183

See notes to unaudited consolidated financial statements.

3

CENTRAL VALLEY COMMUNITY BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
(In thousands, except share and per share amounts)	2015		2014		2015		2014
INTEREST INCOME:
Interest and fees on loans	$	7,747	$	7,301	$	22,677	$	22,197
Interest on deposits in other banks	49		37		147		134
Interest on Federal funds sold	—		—		—		1
Interest and dividends on investment securities:
Taxable	1,234		1,341		3,477		4,127
Exempt from Federal income taxes	1,593		1,469		4,627		4,305
Total interest income	10,623		10,148		30,928		30,764
INTEREST EXPENSE:
Interest on deposits	246		249		718		813
Interest on junior subordinated deferrable interest debentures	25		23		73		72
Total interest expense	271		272		791		885
Net interest income before provision for credit losses	10,352		9,876		30,137		29,879
PROVISION FOR CREDIT LOSSES	100		—		600		(400		)
Net interest income after provision for credit losses	10,252		9,876		29,537		30,279
NON-INTEREST INCOME:
Service charges	700		811		2,321		2,441
Appreciation in cash surrender value of bank owned life insurance	142		156		451		459
Interchange fees	297		295		881		924
Net gain on disposal of other real estate owned	—		—		11		63
Net realized gains on sales of investment securities	—		240		1,459		573
Federal Home Loan Bank dividends	120		86		474		237
Loan placement fees	241		212		794		401
Other income	222		261		1,117		983
Total non-interest income	1,722		2,061		7,508		6,081
NON-INTEREST EXPENSES:
Salaries and employee benefits	5,254		5,076		15,472		14,833
Occupancy and equipment	1,204		1,222		3,522		3,671
Professional services	395		375		1,212		886
Data processing	287		448		862		1,362
Regulatory assessments	223		177		821		569
ATM/Debit card expenses	145		166		411		476
License and maintenance contracts	123		128		392		384
Advertising	157		155		474		462
Internet banking expense	167		134		541		359
Amortization of core deposit intangibles	85		84		253		252
Other	988		1,086		3,053		3,266
Total non-interest expenses	9,028		9,051		27,013		26,520
Income before provision for income taxes	2,946		2,886		10,032		9,840
Provision for income taxes	429		535		1,971		2,180
Net income available to common shareholders	$	2,517	$	2,351	$	8,061	$	7,660
Earnings per common share:
Basic earnings per share	$	0.23	$	0.22	$	0.74	$	0.70
Weighted average common shares used in basic computation	10,938,160		10,919,630		10,928,780		10,917,892
Diluted earnings per share	$	0.23	$	0.21	$	0.73	$	0.70
Weighted average common shares used in diluted computation	11,024,954		11,014,907		11,012,024		11,005,553
Cash dividend per common share	$	0.06	$	0.05	$	0.12	$	0.15

See notes to unaudited consolidated financial statements.

4

CENTRAL VALLEY COMMUNITY BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
(In thousands)	2015			2014			2015			2014
Net income	$	2,517		$	2,351		$	8,061		$	7,660
Other Comprehensive Income (Loss):
Unrealized gains on securities:
Unrealized holdings gains arising and transferred during the period	3,946			619			677			12,060
Less: reclassification for net gains included in net income	—			240			1,459			573
Amortization of net unrealized gains transferred	(2		)	(2		)	(4		)	(20		)
Other comprehensive income (loss), before tax	3,944			377			(786		)	11,467
Tax (expense) benefit related to items of other comprehensive income	(1,624		)	(156		)	322			(4,660		)
Total other comprehensive income (loss)	2,320			221			(464		)	6,807
Comprehensive income	$	4,837		$	2,572		$	7,597		$	14,467

See notes to unaudited consolidated financial statements.

5

CENTRAL VALLEY COMMUNITY BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	For the Nine Months Ended September 30,
(In thousands)	2015			2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	8,061		$	7,660
Adjustments to reconcile net income to net cash provided by operating activities:
Net decrease in deferred loan fees	(111		)	(336		)
Depreciation	1,043			1,019
Accretion	(881		)	(730		)
Amortization	5,995			5,841
Stock-based compensation	184			93
Tax benefit from exercise of stock options	(4		)	(6		)
Provision for credit losses	600			(400		)
Net realized gains on sales of available-for-sale investment securities	(1,459		)	(573		)
Net loss on disposal of premises and equipment	6			191
Net gain on sale of other real estate owned	(11		)	(63		)
Increase in bank owned life insurance, net of expenses	(451		)	(459		)
Net gain on bank owned life insurance	(345		)	—
Net decrease (increase) in accrued interest receivable and other assets	2,079			(505		)
Net decrease in accrued interest payable and other liabilities	(421		)	(409		)
Provision for deferred income taxes	6			1,201
Net cash provided by operating activities	14,291			12,524
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of available-for-sale investment securities	(156,905		)	(137,360		)
Proceeds from sales or calls of available-for-sale investment securities	92,647			73,982
Proceeds from maturity and principal repayments of available-for-sale investment securities	39,359			36,133
Net increase in loans	(26,633		)	(43,598		)
Proceeds from sale of other real estate owned	359			488
Purchases of premises and equipment	(594		)	(1,112		)
Purchases of bank owned life insurance	(325		)	(900		)
FHLB stock purchased	(32		)	(292		)
Proceeds from bank owned life insurance	1,365			—
Proceeds from sale of premises and equipment	—			1
Net cash used in investing activities	(50,759		)	(72,658		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in demand, interest bearing and savings deposits	40,301			12,745
Net decrease in time deposits	(4,599		)	(8,025		)
Proceeds from exercise of stock options	38			45
Excess tax benefit from exercise of stock options	4			6
Cash dividend payments on common stock	(1,318		)	(1,641		)
Net cash provided by financing activities	34,426			3,130
Decrease in cash and cash equivalents	(2,042		)	(57,004		)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	77,328			112,052
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	75,286		$	55,048

	For the Nine Months Ended September 30,
(In thousands)	2015		2014
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Cash paid during the period for:
Interest	$	798	$	904
Income taxes	$	845	$	1,030
Non-cash investing and financing activities:
Foreclosure of loan collateral and recognition of other real estate owned	$	227	$	235
Assumption of other real estate owned liabilities	$	121	$	—
Transfer of securities from available-for-sale to held-to-maturity	$	—	$	31,346
Unrealized gain on transfer of securities from available-for-sale to held-to-maturity	$	—	$	163
Purchases of available-for-sale investment securities, not yet settled	$	—	$	1,203

See notes to unaudited consolidated financial statements.

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Note 1.  Basis of Presentation

The interim unaudited condensed consolidated financial statements of Central Valley Community Bancorp and subsidiary have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the SEC). These interim condensed consolidated financial statements include the accounts of Central Valley Community Bancorp and its wholly owned subsidiary Central Valley Community Bank (the Bank) (collectively, the Company). All significant intercompany accounts and transactions have been eliminated in consolidation.  Certain information and footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) have been omitted. The Company believes that the disclosures are adequate to make the information presented not misleading. These interim unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s 2014 Annual Report to Shareholders on Form 10-K. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the Company’s financial position at September 30, 2015, and the results of its operations and its cash flows for the three and nine month interim periods ended September 30, 2015 and 2014 have been included. Certain reclassifications have been made to prior year amounts to conform to the 2015 presentation. Reclassifications had no effect on prior period net income or shareholders’ equity. The results of operations for interim periods are not necessarily indicative of results for the full year.

The preparation of these interim unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

    Management has determined that since all of the banking products and services offered by the Company are available in each branch of the Bank, all branches are located within the same economic environment, and management does not allocate resources based on the performance of different lending or transaction activities, it is appropriate to aggregate the Bank branches and report them as a single operating segment. No customer accounts for more than 10 percent of revenues for the Company or the Bank.

The Company terminated its interest in Central Valley Community Insurance Service, LLC (CVCIS) at the beginning of the third quarter of 2015. The Bank’s interest in CVCIS was originally established in 2006 for the purpose of providing health, commercial property and casualty insurance products and services primarily to business customers. The termination of this entity did not have a material impact on the Company’s financial statements.

Note 2.  Fair Value Measurements

Fair Value Hierarchy

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. In accordance with applicable guidance, the Company groups its assets and liabilities measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value.  Valuations within these levels are based upon:

Level 1 — Quoted market prices (unadjusted) for identical instruments traded in active exchange markets that the Company has the ability to access as of the measurement date.

Level 2 — Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable or can be corroborated by observable market data.

Level 3 — Model-based techniques that use at least one significant assumption not observable in the market.  These unobservable assumptions reflect the Company’s estimates of assumptions that market participants would use on pricing the asset or liability.  Valuation techniques include management judgment and estimation which may be significant.

Management monitors the availability of observable market data to assess the appropriate classification of financial instruments within the fair value hierarchy. Changes in economic conditions or model-based valuation techniques may require the transfer of financial instruments from one fair value level to another. In such instances, we report the transfer at the beginning of the reporting period. The estimated carrying and fair values of the Company’s financial instruments are as follows (in thousands):

7

	September 30, 2015
	Carrying Amount		Fair Value
(In thousands)			Level 1		Level 2		Level 3		Total
Financial assets:
Cash and due from banks	$	27,148	$	27,148	$	—	$	—	$	27,148
Interest-earning deposits in other banks	47,872		47,872		—		—		47,872
Federal funds sold	266		266		—		—		266
Available-for-sale investment securities	452,842		7,641		445,201		—		452,842
Held-to-maturity investment securities	32,367		—		35,256		—		35,256
Loans, net	590,197		—		—		587,752		587,752
Federal Home Loan Bank stock	4,823		N/A		N/A		N/A		N/A
Accrued interest receivable	5,592		24		2,968		2,600		5,592
Financial liabilities:
Deposits	1,074,854		925,902		148,783		—		1,074,685
Junior subordinated deferrable interest debentures	5,155		—		—		3,019		3,019
Accrued interest payable	108		—		83		25		108

	December 31, 2014
	Carrying Amount		Fair Value
(In thousands)			Level 1		Level 2		Level 3		Total
Financial assets:
Cash and due from banks	$	21,316	$	21,316	$	—	$	—	$	21,316
Interest-earning deposits in other banks	55,646		55,646		—		—		55,646
Federal funds sold	366		366		—		—		366
Available-for-sale investment securities	432,535		7,585		424,950		—		432,535
Held-to-maturity investment securities	31,964		—		35,096		—		35,096
Loans, net	564,280		—		—		564,667		564,667
Federal Home Loan Bank stock	4,791		N/A		N/A		N/A		N/A
Accrued interest receivable	5,793		25		3,212		2,556		5,793
Financial liabilities:
Deposits	1,039,152		885,704		153,475		—		1,039,179
Junior subordinated deferrable interest debentures	5,155		—		—		3,119		3,119
Accrued interest payable	114		—		90		24		114

These estimates do not reflect any premium or discount that could result from offering the Company’s entire holdings of a particular financial instrument for sale at one time, nor do they attempt to estimate the value of anticipated future business related to the instruments.  In addition, the tax ramifications related to the realization of unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in any of these estimates.

These estimates are made at a specific point in time based on relevant market data and information about the financial instruments.  Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding current economic conditions, risk characteristics of various financial instruments and other factors.  These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision.  Changes in assumptions could significantly affect the fair values presented.

The methods and assumptions used to estimate fair values are described as follows:

(a) Cash and Cash Equivalents— The carrying amounts of cash and due from banks, interest-earning deposits in other banks, and Federal funds sold approximate fair values and are classified as Level 1.

(b) Investment Securities — Investment securities in Level 1 are mutual funds and fair values are based on quoted market prices for identical instruments traded in active markets. Fair values for investment securities classified in Level 2 are based on

8

quoted market prices for similar securities in active markets. For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators.

(c) Loans — Fair values of loans are estimated as follows: For variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values resulting in a Level 3 classification. Purchased credit impaired (PCI) loans are measured at estimated fair value on the date of acquisition. Carrying value is calculated as the present value of expected cash flows and approximates fair value. Fair values for other loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality resulting in a Level 3 classification. Impaired loans are initially valued at the lower of cost or fair value. Impaired loans carried at fair value generally receive specific allocations of the allowance for credit losses. For collateral dependent loans, fair value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management's historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business, resulting in a Level 3 fair value classification. Impaired loans are evaluated on a quarterly basis for additional impairment and adjusted accordingly. The methods utilized to estimate the fair value of loans do not necessarily represent an exit price.

(d) FHLB Stock — It is not practicable to determine the fair value of FHLB stock due to restrictions placed on its transferability.

(e) Other real estate owned — OREO is measured at fair value less estimated costs to sell when acquired, establishing a new cost basis. Fair value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process to adjust for differences between the comparable sales and income data available. The Company records OREO as non-recurring with level 3 measurement inputs.

(f) Deposits — Fair value of demand deposit, savings, and money market accounts are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amount), resulting in a Level 1 classification. Fair value for fixed and variable rate certificates of deposit are estimated using discounted cash flow analyses using interest rates offered at each reporting date by the Company for certificates with similar remaining maturities resulting in a Level 2 classification.

(g) Short-Term Borrowings — The fair values of the Company's federal funds purchased, borrowings under repurchase agreements, and other short-term borrowings, generally maturing within ninety days, are based on the market rates for similar types of borrowing arrangements resulting in a Level 2 classification.

(h) Other Borrowings — The fair values of the Company’s long-term borrowings are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 2 classification.

The fair values of the Company’s Subordinated Debentures are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 3 classification.

(i) Accrued Interest Receivable/Payable — The fair value of accrued interest receivable and payable is based on the fair value hierarchy of the related asset or liability.

(j) Off-Balance Sheet Instruments — Fair values for off-balance sheet, credit-related financial instruments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing. The fair value of commitments is not considered significant for financial reporting purposes.

Assets Recorded at Fair Value

The following tables present information about the Company’s assets and liabilities measured at fair value on a recurring and non-recurring basis as of September 30, 2015:

9

Recurring Basis

The Company is required or permitted to record the following assets at fair value on a recurring basis as of September 30, 2015 (in thousands). 

Description	Fair Value		Level 1		Level 2		Level 3
Available-for-sale securities
Debt Securities:
U.S. Government agencies	$	51,914	$	—	$	51,914	$	—
Obligations of states and political subdivisions	178,999		—		178,999		—
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations	210,543		—		210,543		—
Private label residential mortgage backed securities	3,745		—		3,745		—
Other equity securities	7,641		7,641		—		—
Total assets measured at fair value on a recurring basis	$	452,842	$	7,641	$	445,201	$	—

Securities in Level 1 are mutual funds and fair values are based on quoted market prices for identical instruments traded in active markets.  Fair values for available-for-sale investment securities in Level 2 are based on quoted market prices for similar securities in active markets. For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators.

Management evaluates the significance of transfers between levels based upon the nature of the financial instrument and size of the transfer relative to total assets, total liabilities or total earnings. During the nine months ended September 30, 2015, no transfers between levels occurred.

There were no Level 3 assets measured at fair value on a recurring basis at or during the nine month period ended September 30, 2015. Also there were no liabilities measured at fair value on a recurring basis at September 30, 2015.

Non-recurring Basis

The Company may be required, from time to time, to measure certain assets and liabilities at fair value on a non-recurring basis. These include assets and liabilities that are measured at the lower of cost or fair value that were recognized at fair value which was below cost at September 30, 2015 (in thousands).

Description	Fair Value		Level 1		Level 2		Level 3
Assets:
Impaired loans:
Commercial:
Commercial and industrial	$	9	$	—	$	—	$	9
Total commercial	9		—		—		9
Consumer:
Equity loans and lines of credit	$	142	$	—	$	—	$	142
Total impaired loans	151		—		—		151
Other real estate owned	—		—		—		—
Total assets measured at fair value on a non-recurring basis	$	151	$	—	$	—	$	151

At the time a loan is considered impaired, it is valued at the lower of cost or fair value. Impaired loans carried at fair value generally receive specific allocations of the allowance for credit losses. For collateral dependent loans, fair value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business, resulting in a Level 3 fair value classification. The fair value of impaired loans is based on the fair value of the collateral. Impaired loans were determined to be collateral dependent and categorized as Level 3 due to ongoing real estate market conditions resulting in inactive market data, which in turn required the use of unobservable inputs and assumptions in fair value measurements. Impaired loans evaluated under the

10

discounted cash flow method are excluded from the table above. The discounted cash flow methods as prescribed by ASC Topic 310 is not a fair value measurement since the discount rate utilized is the loan’s effective interest rate which is not a market rate. There were no changes in valuation techniques used during the nine month period ended September 30, 2015.

Appraisals for collateral-dependent impaired loans are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Company. Once received, the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value is compared with independent data sources such as recent market data or industry-wide statistics.    

Impaired loans that are measured for impairment using the fair value of the collateral for collateral dependent loans, had a principal balance of $184,000 with a valuation allowance of $33,000 at September 30, 2015, resulting in fair value of $151,000.  The valuation allowance represents specific allocations for the allowance for credit losses for impaired loans.

When present, certain residential real estate properties classified as other real estate owned (OREO) are measured at fair value, less costs to sell. Fair values are based on recent real estate appraisals and/or evaluations. These appraisals and/or evaluations may use a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process to adjust for differences between the comparable sales and income data available. As of September 30, 2015, the adjustments made by appraisers or management in arriving at the fair value of financial instruments measured on a non-recurring basis were not considered significant for financial reporting purposes.

During the three and nine months ended September 30, 2015, provisions for credit losses and charge-offs related to loans carried at fair value were not considered significant for financial reporting purposes.

During the three and nine months ended September 30, 2014 there was no provision for credit losses related to loans carried at fair value. During the three months ended September 30, 2014 there was a net recovery of $131,000, and for the nine months then ended, there were net charge-offs of $177,000 related to loans carried at fair value.

There were no liabilities measured at fair value on a non-recurring basis at September 30, 2015.

The following tables present information about the Company’s assets and liabilities measured at fair value on a recurring and nonrecurring basis as of December 31, 2014:

Recurring Basis

The Company is required or permitted to record the following assets at fair value on a recurring basis as of December 31, 2014 (in thousands).

Description	Fair Value		Level 1		Level 2		Level 3
Available-for-sale securities
Debt Securities:
U.S. Government agencies	$	33,090	$	—	$	33,090	$	—
Obligations of states and political subdivisions	149,295		—		149,295		—
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations	237,872		—		237,872		—
Private label residential mortgage backed securities	4,693		—		4,693		—
Other equity securities	7,585		7,585		—		—
Total assets measured at fair value on a recurring basis	$	432,535	$	7,585	$	424,950	$	—

Securities in Level 1 are mutual funds and fair values are based on quoted market prices for identical instruments traded in active markets.  Fair values for available-for-sale investment securities in Level 2 are based on quoted market prices for similar securities in active markets. For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators.

     Management evaluates the significance of transfers between levels based upon the nature of the financial instrument and size of the transfer relative to total assets, total liabilities or total earnings. During the year ended December 31, 2014, no transfers between levels occurred.

There were no Level 3 assets measured at fair value on a recurring basis at or during the year ended December 31, 2014. Also there were no liabilities measured at fair value on a recurring basis at December 31, 2014.

11

Non-recurring Basis

The Company may be required, from time to time, to measure certain assets and liabilities at fair value on a non-recurring basis.  These include assets and liabilities that are measured at the lower of cost or fair value that were recognized at fair value which was below cost at December 31, 2014 (in thousands).

Description	Fair Value		Level 1		Level 2		Level 3
Impaired loans:
Commercial:
Commercial and industrial	$	7,019	$	—	$	—	$	7,019
Total commercial	7,019		—		—		7,019
Consumer:
Equity loans and lines of credit	$	777	$	—	$	—	$	777
Total consumer	777		—		—		777
Total impaired loans	7,796		—		—		7,796
Total assets measured at fair value on a non-recurring basis	$	7,796	$	—	$	—	$	7,796

The following table presents quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at December 31, 2014 (dollars in thousands):

Description	Fair Value		Valuation Technique(s)	Significant Unobservable Input(s)	Range (Weighted Average)
Commercial and industrial	$	7,019	Sales comparison	Appraiser adjustments on sales comparable data	0.00%-6.00%
			Management estimates	Management adjustments for depreciation in values depending on property types	8.00%-25.00%
Equity loans and lines of credit	$	777	Sales comparison	Appraiser adjustments on sales comparable data	0.00%-3.50%
			Management estimates	Management adjustments for depreciation in values depending on property types	11.00%

At the time a loan is considered impaired, it is valued at the lower of cost or fair value. Impaired loans carried at fair value generally receive specific allocations of the allowance for credit losses. For collateral dependent loans, fair value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business, resulting in a Level 3 fair value classification. The fair value of impaired loans is based on the fair value of the collateral. Impaired loans were determined to be collateral dependent and categorized as Level 3 due to ongoing real estate market conditions resulting in inactive market data, which in turn required the use of unobservable inputs and assumptions in fair value measurements. Impaired loans evaluated under the discounted cash flow method are excluded from the table above. The discounted cash flow method as prescribed by ASC Topic 310 is not a fair value measurement since the discount rate utilized is the loan’s effective interest rate which is not a market rate. There were no changes in valuation techniques used during the year ended December 31, 2014.

Appraisals for collateral-dependent impaired loans are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Company. Once received, the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value is compared with independent data sources such as recent market data or industry-wide statistics.    

Impaired loans that are measured for impairment using the fair value of the collateral for collateral dependent loans, had a principal balance of $8,239,000 with a valuation allowance of $443,000 at December 31, 2014, resulting in fair value of $7,796,000. The valuation allowance represents specific allocations for the allowance for credit losses for impaired loans.

During the year ended December 31, 2014, there was $3,921,000 provision for credit losses related to loans carried at fair value. During the year ended December 31, 2014, there was $3,539,000 net charge-offs related to loans carried at fair value.

12

There were no liabilities measured at fair value on a non-recurring basis at December 31, 2014.

Note 3.  Investments

The investment portfolio consists primarily of U.S. Government sponsored entity and agency securities collateralized by residential mortgage obligations, private label residential mortgage backed securities (PLRMBS), and obligations of states and political subdivisions securities.  As of September 30, 2015, $126,238,000 of these securities were held as collateral for borrowing arrangements, public funds, and for other purposes.

     The fair value of the available-for-sale investment portfolio reflected a net unrealized gain of $8,114,000 at September 30, 2015 compared to an unrealized gain of $8,896,000 at December 31, 2014. The unrealized gain recorded is net of $3,339,000 and $3,661,000 in tax liabilities as accumulated other comprehensive income within shareholders’ equity at September 30, 2015 and December 31, 2014, respectively.

     The following table sets forth the carrying values and estimated fair values of our investment securities portfolio at the dates indicated (in thousands): 

	September 30, 2015
Available-for-Sale Securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Debt securities:
U.S. Government agencies	$	51,679	$	377	$	(142	)	$	51,914
Obligations of states and political subdivisions	174,758		5,358		(1,117		)	178,999
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations	208,318		2,633		(408		)	210,543
Private label residential mortgage backed securities	2,473		1,272		—			3,745
Other equity securities	7,500		141		—			7,641
Total available-for-sale	$	444,728	$	9,781	$	(1,667	)	$	452,842

	September 30, 2015
Held-to-Maturity Securities	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses			Estimated Fair Value
Debt securities:
Obligations of states and political subdivisions	$	32,367	$	2,900	$	(11	)	$	35,256

	December 31, 2014
Available-for-Sale Securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Debt securities:
U.S. Government agencies	$	33,088	$	245	$	(243	)	$	33,090
Obligations of states and political subdivisions	143,343		6,266		(314		)	149,295
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations	236,629		2,033		(790		)	237,872
Private label residential mortgage backed securities	3,079		1,614		—			4,693
Other equity securities	7,500		85		—			7,585
Total available-for-sale	$	423,639	$	10,243	$	(1,347	)	$	432,535

	December 31, 2014
Held-to-Maturity Securities	Amortized Cost	Gross Unrecognized Gains	Gross Unrecognized Losses		Estimated Fair Value
Debt securities:
Obligations of states and political subdivisions	31,964	3,138	(6	)	$	35,096

13

Proceeds and gross realized gains (losses) from the sales or calls of investment securities for the periods ended September 30, 2015 and 2014 are shown below (in thousands):

	For the Three Months Ended September 30,					For the Nine Months Ended September 30,
Available-for-Sale Securities	2015		2014			2015			2014
Proceeds from sales or calls	$	—	$	21,741		$	92,647		$	73,982
Gross realized gains from sales or calls	—		271			1,692			1,423
Gross realized losses from sales or calls	—		(31		)	(233		)	(850		)

Losses recognized in 2015 and 2014 were incurred in order to reposition the investment securities portfolio based on the current rate environment.  The securities which were sold at a loss were acquired when the rate environment was not as volatile.  The securities which were sold were primarily purchased several years ago to serve a purpose in the rate environment in which the securities were purchased.  The Company is addressing risks in the security portfolio by selling these securities and using proceeds to purchase securities that fit with the Company’s current risk profile.

The provision for income taxes includes $601,000 and $236,000 income tax impact from the reclassification of unrealized net gains on available-for-sale securities to realized net gains on available-for-sale securities for the nine months endedSeptember 30, 2015 and 2014, respectively. The provision for income taxes includes $0 and $99,000 income tax impact from the reclassification of unrealized net gains on available-for-sale securities to realized net gains on available-for-sale securities for the three months ended September 30, 2015 and 2014, respectively.

Investment securities, aggregated by investment category, with unrealized losses as of the dates indicated are summarized and classified according to the duration of the loss period as follows (in thousands): 

	September 30, 2015
	Less than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
Available-for-Sale Securities	Value		Losses			Value		Losses			Value		Losses
Debt securities:
U.S. Government agencies	$	14,470	$	(27	)	$	4,797	$	(115	)	$	19,267	$	(142	)
Obligations of states and political subdivisions	67,406		(1,117		)	—		—			67,406		(1,117		)
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations	24,951		(139		)	18,440		(269		)	43,391		(408		)
Total available-for-sale	$	106,827	$	(1,283	)	$	23,237	$	(384	)	$	130,064	$	(1,667	)

	September 30, 2015
	Less than 12 Months					12 Months or More				Total
	Fair		Unrecognized			Fair		Unrecognized		Fair		Unrecognized
Held-to-Maturity Securities	Value		Losses			Value		Losses		Value		Losses
Debt securities:
Obligations of states and political subdivisions	$	1,048	$	(11	)	$	—	$	—	$	1,048	$	(11	)

	December 31, 2014
	Less than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
Available-for-Sale Securities	Value		Losses			Value		Losses			Value		Losses
Debt securities:
U.S. Government agencies	$	10,950	$	(193	)	$	1,737	$	(50	)	$	12,687	$	(243	)
Obligations of states and political subdivisions	16,776		(89		)	15,290		(225		)	32,066		(314		)
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations	52,905		(420		)	31,000		(370		)	83,905		(790		)
Total available-for-sale	$	80,631	$	(702	)	$	48,027	$	(645	)	$	128,658	$	(1,347	)

14

	December 31, 2014
	Less than 12 Months					12 Months or More				Total
	Fair		Unrecognized			Fair		Unrecognized		Fair		Unrecognized
Held-to-Maturity Securities	Value		Losses			Value		Losses		Value		Losses
Debt securities:
Obligations of states and political subdivisions	$	1,067	$	(6	)	$	—	$	—	$	1,067	$	(6	)

We periodically evaluate each investment security for other-than-temporary impairment, relying primarily on industry analyst reports, observation of market conditions and interest rate fluctuations.  The portion of the impairment that is attributable to a shortage in the present value of expected future cash flows relative to the amortized cost should be recorded as a current period charge to earnings.  The discount rate in this analysis is the original yield expected at time of purchase.

As of September 30, 2015, the Company performed an analysis of the investment portfolio to determine whether any of the investments held in the portfolio had an other-than-temporary impairment (OTTI). Management evaluated all individual available-for-sale investment securities with an unrealized loss at September 30, 2015 and identified those that had an unrealized loss for at least a consecutive 12 month period, which had an unrealized loss at September 30, 2015 greater than 10% of the recorded book value on that date, or which had an unrealized loss of more than $10,000.  Management also analyzed any securities that may have been downgraded by credit rating agencies. 

For those bonds that met the evaluation criteria, management obtained and reviewed the most recently published national credit ratings for those bonds.  For those bonds that were municipal debt securities with an investment grade rating by the rating agencies, management also evaluated the financial condition of the municipality and any applicable municipal bond insurance provider and concluded that no credit related impairment existed.

U.S. Government Agencies

At September 30, 2015, the Company held 15 U.S. Government agency securities, of which four were in a loss position for less than 12 months and one was in a loss position or had been in a loss position for 12 months or more. The unrealized losses on the Company’s investments in direct obligations of U.S. government agencies were caused by interest rate changes. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized costs of the investment. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company has the ability and intent to hold, and it is more likely than not that it will not be required to sell, those investments until a recovery of fair value, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at September 30, 2015.

Obligations of States and Political Subdivisions

At September 30, 2015, the Company held 150 obligations of states and political subdivision securities of which 25 were in a loss position for less than 12 months and none were in a loss position or had been in a loss position for 12 months or more. The unrealized losses on the Company’s investments in obligations of states and political subdivision securities were caused by interest rate changes. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company has the ability to hold and does not intend to sell, and it is more likely than not that it will not be required to sell those investments until a recovery of fair value, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at September 30, 2015.

U.S. Government Sponsored Entities and Agencies Collateralized by Residential Mortgage Obligations

At September 30, 2015, the Company held 180 U.S. Government sponsored entity and agency securities collateralized by residential mortgage obligations of which 15 were in a loss position for less than 12 months and 11 have been in a loss position for more than 12 months. The unrealized losses on the Company’s investments in U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations were caused by interest rate changes. The contractual cash flows of those investments are guaranteed by an agency or sponsored entity of the U.S. Government. Accordingly, it is expected that the securities would not be settled at a price less than the amortized cost of the Company’s investment. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company has the ability to hold and does not intend to sell, and it is more likely than not that it will not be required to sell those investments until a recovery of fair value, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at September 30, 2015.

15

Private Label Residential Mortgage Backed Securities

At September 30, 2015, the Company had a total of 17 PLRMBS with a remaining principal balance of $2,473,000 and a net unrealized gain of approximately $1,272,000.  None of these securities was recorded with an unrealized loss at September 30, 2015.  Nine of these PLRMBS with a remaining principal balance of $2,155,000 had credit ratings below investment grade.  The Company continues to monitor these securities for indications that declines in value, if any, may be other-than-temporary.

Other Equity Securities

At September 30, 2015, the Company had one mutual fund equity investment. The equity investment was not recorded with an unrealized loss at September 30, 2015.

The following tables provide a roll forward for the three and nine month periods ended September 30, 2015 and 2014 of investment securities credit losses recorded in earnings. The beginning balance represents the credit loss component for which OTTI occurred on debt securities in prior periods.  Additions represent the first time a debt security was credit impaired or when subsequent credit impairments have occurred on securities for which OTTI credit losses have been previously recognized. 

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
(In thousands)	2015		2014		2015		2014
Beginning balance	$	747	$	800	$	747	$	800
Amounts related to credit loss for which an OTTI charge was not previously recognized	—		—		—		—
Increases to the amount related to credit loss for which OTTI was previously recognized	—		—		—		—
Realized losses for securities sold	—		—		—		—
Ending balance	$	747	$	800	$	747	$	800

The amortized cost and estimated fair value of available-for-sale and held-to-maturity investment securities at September 30, 2015 by contractual maturity is shown below (in thousands).  Expected maturities will differ from contractual maturities because the issuers of the securities may have the right to call or prepay obligations with or without call or prepayment penalties.

	September 30, 2015
Available-for-Sale Securities	Amortized Cost		Estimated Fair Value
Within one year	$	—	$	—
After one year through five years	11,621		12,010
After five years through ten years	30,472		31,322
After ten years	132,665		135,667
	174,758		178,999
Investment securities not due at a single maturity date:
U.S. Government agencies	51,679		51,914
U.S. Government sponsored entities and agencies collateralized by residential mortgage obligations	208,318		210,543
Private label residential mortgage backed securities	2,473		3,745
Other equity securities	7,500		7,641
Total available-for-sale	$	444,728	$	452,842

	September 30, 2015
Held-to-Maturity Securities	Amortized Cost		Estimated Fair Value
After ten years	$	32,367	$	35,256

16

During 2014, to better manage our interest rate risk, the Company transferred from available-for-sale to held-to-maturity selected municipal securities in our portfolio having a book value of approximately $31 million, a market value of approximately $32 million, and a net unrecognized gain of approximately $163,000.  This transfer was completed after careful consideration of our intent and ability to hold these securities to maturity. There were no transfers or reclassifications of securities in or out of held-to-maturity during the three or nine months ended September 30, 2015. At September 30, 2015 and December 31, 2014 the remaining unaccreted balance of these securities included in accumulated other comprehensive income was $138,000 and $142,000, respectively.

Note 4.  Loans and Allowance for Credit Losses

Outstanding loans are summarized as follows:

Loan Type (Dollars in thousands)	September 30, 2015			% of Total Loans		December 31, 2014			% of Total Loans
Commercial:
Commercial and industrial	$	104,567		17.5	%	$	89,007		15.5	%
Agricultural land and production	41,544			6.9	%	39,140			6.8	%
Total commercial	146,111			24.4	%	128,147			22.3	%
Real estate:
Owner occupied	170,377			28.5	%	176,804			30.9	%
Real estate construction and other land loans	36,210			6.0	%	38,923			6.8	%
Commercial real estate	116,931			19.5	%	106,788			18.7	%
Agricultural real estate	70,485			11.8	%	57,501			10.0	%
Other real estate	7,732			1.3	%	6,611			1.2	%
Total real estate	401,735			67.1	%	386,627			67.6	%
Consumer:
Equity loans and lines of credit	41,398			6.9	%	47,575			8.3	%
Consumer and installment	9,789			1.6	%	10,093			1.8	%
Total consumer	51,187			8.5	%	57,668			10.1	%
Net deferred origination costs	257					146
Total gross loans	599,290			100.0	%	572,588			100.0	%
Allowance for credit losses	(9,093		)			(8,308		)
Total loans	$	590,197				$	564,280

The table above includes loans acquired at fair value on July 1, 2013 when the Company acquired Visalia Community Bank (VCB), in a combined cash and stock transaction. The acquired VCB assets and liabilities were recorded at fair value at the date of acquisition. Loans acquired in the VCB acquisition had outstanding balances of $66,572,000 and $77,882,000 as of September 30, 2015 and December 31, 2014, respectively.

At September 30, 2015 and December 31, 2014, loans originated under Small Business Administration (SBA) programs totaling $11,516,000 and $8,782,000, respectively, were included in the real estate and commercial categories.

Purchased Credit Impaired Loans

At December 31, 2013, the Company had loans that were acquired in an acquisition, for which there was, at acquisition, evidence of deterioration of credit quality since origination and for which it was probable, at acquisition, that all contractually required payments would not be collected. There were no such loans outstanding at September 30, 2015 or December 31, 2014.

These purchased credit impaired loans are recorded at the amount paid, such that there is no carryover of the seller’s allowance for loan losses. After acquisition, losses are recognized by an increase in the allowance for loan losses. The Company estimates the amount and timing of expected cash flows for each loan and the expected cash flows in excess of amount paid is recorded as interest income over the remaining life of the loan (accretable yield). The excess of the loan’s contractual principal and interest over expected cash flows is not recorded (nonaccretable difference). Over the life of the loan, expected cash flows continue to be estimated. If the present value of expected cash flows is less than the carrying amount, a loss is recorded. If the present value of expected cash flows is greater than the carrying amount, it is recognized as part of future interest income.

17

Accretable yield, or income expected to be collected for the nine months ended September 30, 2015 and 2014 is as follows (in thousands):

	For the Nine Months Ended September 30,
	2015		2014
Balance at beginning of period	$	—	$	94
Additions	—		—
Accretion	—		(907		)
Reclassification from non-accretable difference	—		813
Disposals	—		—
Balance at end of period	$	—	$	—

The allowance for credit losses (the “Allowance”) is a valuation allowance for probable incurred credit losses in the Company’s loan portfolio. The Allowance is established through a provision for credit losses which is charged to expense. Additions to the Allowance are expected to maintain the adequacy of the total Allowance after credit losses and loan growth. Credit exposures determined to be uncollectible are charged against the Allowance. Cash received on previously charged off credits is recorded as a recovery to the Allowance. The overall Allowance consists of two primary components, specific reserves related to impaired loans and general reserves for probable incurred losses related to loans that are not impaired.

For all portfolio segments, the determination of the general reserve for loans that are not impaired is based on estimates made by management, including but not limited to, consideration of historical losses by portfolio segment (and in certain cases peer data) over the most recent 20 quarters, and qualitative factors including economic trends in the Company’s service areas, industry experience and trends, geographic concentrations, estimated collateral values, the Company’s underwriting policies, the character of the loan portfolio, and probable losses inherent in the portfolio taken as a whole.

The following table shows the summary of activities for the Allowance as of and for the three months ended September 30, 2015 and 2014 by portfolio segment (in thousands):

	Commercial			Real Estate			Consumer			Unallocated			Total
Allowance for credit losses:
Beginning balance, July 1, 2015	$	3,553		$	4,429		$	732		$	—		$	8,714
Provision charged to operations	(186		)	154			27			105			100
Losses charged to allowance	(11		)	—			(22		)	—			(33		)
Recoveries	267			8			37			—			312
Ending balance, September 30, 2015	$	3,623		$	4,591		$	774		$	105		$	9,093
Allowance for credit losses:
Beginning balance, July 1, 2014	$	1,874		$	4,157		$	981		$	295		$	7,307
Provision charged to operations	243			(121		)	(85		)	(37		)	—
Losses charged to allowance	(1		)	—			(57		)	—			(58		)
Recoveries	41