Note 17 - Branch Acquisition

6 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Business Combination Disclosure [Text Block]

NOTE 17. BRANCH ACQUISITION

On March 11, 2016, we completed the purchase of five Bank of America branches located in northern California. The acquired branches are located in Colusa, Willows, Orland, Corning, and Yreka. The Bank also acquired three offsite ATM locations in Williams, Orland and Corning. The Bank paid cash consideration of $6.7 million and acquired $155.2 million in assets, primarily cash and premises. The Bank assumed $149.2 million in liabilities, primarily deposits.

The transaction provided a new source of low cost core deposits and allowed us to execute our plan to reconfigure our Balance Sheet. On March 14, 2016, we utilized a portion of that new liquidity to reduce our reliance on wholesale funding sources repaying $75.0 million of Federal Home Loan Bank of San Francisco hedged term debt

and redeeming $17.5 million of brokered time deposits.

The transaction provided a new source of low cost core deposits and allowed us to execute our plan to reconfigure our Balance Sheet. On March 14, 2016, we utilized a portion of that new liquidity to reduce our reliance on wholesale funding sources repaying $75.0 million to the Federal Home Loan Bank of San Francisco and redeeming $17.5 million of brokered time deposits.

The transaction was accounted for using the acquisition method of accounting and, accordingly, assets acquired, liabilities assumed, and consideration exchanged were recorded at estimated fair values on the acquisition date. The Bank engaged third party specialists to assist in valuing certain assets, including the real estate and the core deposit intangible that resulted from the acquisition.

The contribution of the acquired operations of the five former Bank of America offices was immaterial. Therefore, disclosure of supplemental pro forma financial information, especially prior period comparison is deemed neither practical nor meaningful. Additionally, the acquired operation was not considered a “significant business combination” as defined by the Securities and Exchange Commission.

During the second quarter of 2016, we received the final settlement statement from Bank of America which resulted in an immaterial adjustment to the total goodwill of $52 thousand. The following table provides an assessment of the consideration transferred, assets purchased, and the liabilities assumed.

			Fair Value and
	As Recorded by		Other Merger
	Bank of		Related		As Recorded by
(Amounts in thousands)	America		Adjustments		the Company
Consideration paid:
Cash paid					$	6,656
Total consideration					$	6,656
Assets acquired:
Cash and cash equivalents	$	149,067	$	—	$	149,067
Premises and equipment, net		1,835		2,355		4,190
Other assets		201		—		201
Core deposit intangibles		—		1,772		1,772
Total assets acquired	$	151,103	$	4,127	$	155,230
Liabilities assumed:
Deposits	$	149,047	$	—	$	149,047
Other liabilities		20		172		192
Total liabilities assumed	$	149,067	$	172	$	149,239
Net identifiable assets acquired over liabilities assumed	$	2,036	$	3,955	$	5,991
Goodwill					$	665