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EX-32 - EXHIBIT 32 - PACIFIC PREMIER BANCORP INCppbi-03312016xex32.htm
EX-31.2 - EXHIBIT 31.2 - PACIFIC PREMIER BANCORP INCppbi-03312016xex312.htm
EX-31.1 - EXHIBIT 31.1 - PACIFIC PREMIER BANCORP INCppbi-03312016xex311.htm


UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549 
FORM 10-Q 
(Mark One)
(X)    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2016
OR 
( )    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 0-22193
 
(Exact name of registrant as specified in its charter) 
DELAWARE
33-0743196
(State or other jurisdiction of incorporation or organization)
(I.R.S Employer Identification No.)
 

17901 VON KARMAN AVENUE, SUITE 1200, IRVINE, CALIFORNIA 92614
(Address of principal executive offices and zip code)

(949) 864-8000
(Registrant’s telephone number, including area code)

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 preceding 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 [ X ] No [_]
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 [X] No [_]
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 definition of “accelerated filer”, “large accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act).
Large accelerated filer
[ ]
Accelerated filer
[X]
Non-accelerated filer
(Do not check if a smaller
 reporting company)
[ ]
Smaller reporting company
[  ]
 
Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2).  Yes [ ] No [X]
The number of shares outstanding of the registrant’s common stock as of May 6, 2016 was 27,548,233.

1


PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
FORM 10-Q
INDEX
FOR THE QUARTER ENDED MARCH 31, 2016

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

2


PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements
PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands)

ASSETS
 
March 31,
2016
 
December 31,
2015
 
March 31,
2015
 
 
(Unaudited)
 
(Audited)
 
(Unaudited)
Cash and due from banks
 
$
18,624

 
$
14,935

 
$
91,412

Interest bearing deposits with financial institutions
 
174,890

 
63,482

 
86,959

Cash and cash equivalents
 
193,514

 
78,417

 
178,371

Interest bearing time deposits with financial institutions
 
3,944

 
1,972

 

Investments held to maturity, at amortized cost
 
9,590

 
9,642

 

Investment securities available for sale, at fair value
 
269,711

 
280,273

 
280,461

FHLB, FRB and other stock, at cost
 
25,853

 
22,292

 
30,586

Loans held for sale at lower of cost or market
 
7,281

 
8,565

 

Loans held for investment
 
2,851,432

 
2,254,315

 
2,131,387

Allowance for loan losses
 
(18,455
)
 
(17,317
)
 
(13,646
)
Loans held for investment, net
 
2,832,977

 
2,236,998

 
2,117,741

Accrued interest receivable
 
11,862

 
9,315

 
8,769

Other real estate owned
 
1,161

 
1,161

 
997

Premises and equipment
 
11,817

 
9,248

 
9,591

Deferred income taxes, net
 
17,000

 
11,511

 
12,815

Bank owned life insurance
 
39,535

 
39,245

 
38,377

Intangible assets
 
11,145

 
7,170

 
8,203

Goodwill
 
102,085

 
50,832

 
51,010

Other assets
 
25,610

 
24,005

 
16,079

TOTAL ASSETS
 
$
3,563,085

 
$
2,790,646

 
$
2,753,000

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 

 
 

 
 

LIABILITIES:
 
 

 
 

 
 

Deposit accounts:
 
 

 
 

 
 

Noninterest bearing checking
 
$
1,064,457

 
$
711,771

 
$
619,763

Interest-bearing:
 
 

 
 

 
 

Checking
 
160,707

 
134,999

 
130,869

Money market/savings
 
1,096,334

 
827,378

 
809,408

Retail certificates of deposit
 
455,637

 
365,911

 
406,649

Wholesale/brokered certificates of deposit
 
129,129

 
155,064

 
76,477

Total interest-bearing
 
1,841,807

 
1,483,352

 
1,423,403

Total deposits
 
2,906,264

 
2,195,123

 
2,043,166

FHLB advances and other borrowings
 
124,956

 
196,125

 
343,434

Subordinated debentures
 
70,310

 
70,310

 
70,310

Accrued expenses and other liabilities
 
32,661

 
30,108

 
22,843

TOTAL LIABILITIES
 
3,134,191

 
2,491,666

 
2,479,753

STOCKHOLDERS’ EQUITY:
 
 

 
 

 
 

Common stock, $.01 par value; 50,000,000 shares authorized; 27,537,233 shares at March 31, 2016, 21,570,746 shares at December 31, 2015, and 21,387,818 shares at March 31, 2015 issued and outstanding
 
273

 
215

 
214

Additional paid-in capital
 
341,660

 
221,487

 
218,528

Retained earnings
 
85,500

 
76,946

 
53,220

Accumulated other comprehensive income, net of tax
 
1,461

 
332

 
1,285

TOTAL STOCKHOLDERS’ EQUITY
 
428,894

 
298,980

 
273,247

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
 
$
3,563,085

 
$
2,790,646

 
$
2,753,000

 
 
 
 
 
 
 
Accompanying notes are an integral part of these consolidated financial statements.

3


PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share data)
(unaudited)
 
 
Three Months Ended
 
 
March 31, 2016
 
December 31,
2015
 
March 31, 2015
INTEREST INCOME
 
 
 
 
 
 
Loans
 
$
35,407

 
$
30,181

 
$
25,070

Investment securities and other interest-earning assets
 
2,098

 
1,730

 
1,557

Total interest income
 
37,505

 
31,911

 
26,627

INTEREST EXPENSE
 
 
 
 
 
 
Deposits
 
2,069

 
1,713

 
1,606

FHLB advances and other borrowings
 
325

 
370

 
375

Subordinated debentures
 
910

 
991

 
971

Total interest expense
 
3,304

 
3,074

 
2,952

NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES
 
34,201

 
28,837

 
23,675

PROVISION FOR LOAN LOSSES
 
1,120

 
1,700

 
1,830

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
 
33,081

 
27,137

 
21,845

NONINTEREST INCOME
 
 
 
 
 
 
Loan servicing fees
 
327

 
348

 
344

Deposit fees
 
842

 
686

 
582

Net gain from sales of loans
 
1,906

 
2,705

 

Net gain from sales of investment securities
 
753

 
(4
)
 
116

Other-than-temporary-impairment loss on investment securities
 
(207
)
 

 

Other income
 
1,241

 
482

 
427

Total noninterest income
 
4,862

 
4,217

 
1,469

NONINTEREST EXPENSE
 
 
 
 
 
 
Compensation and benefits
 
12,080

 
10,030

 
9,522

Premises and occupancy
 
2,391

 
2,141

 
1,829

Data processing and communications
 
911

 
715

 
702

Other real estate owned operations, net
 
8

 
7

 
48

FDIC insurance premiums
 
382

 
345

 
314

Legal, audit and professional expense
 
865

 
826

 
521

Marketing expense
 
630

 
519

 
603

Office and postage expense
 
481

 
478

 
499

Loan expense
 
403

 
439

 
193

Deposit expense
 
1,019

 
938

 
805

Merger-related expense
 
3,119

 
407

 
3,992

CDI amortization
 
344

 
345

 
314

Other expense
 
1,014

 
1,349

 
1,127

Total noninterest expense
 
23,647

 
18,539

 
20,469

NET INCOME BEFORE INCOME TAX
 
14,296

 
12,815

 
2,845

INCOME TAX
 
5,742

 
4,750

 
1,056

NET INCOME
 
$
8,554

 
$
8,065

 
$
1,789

EARNINGS PER SHARE
 
 
 
 
 
 
Basic
 
$
0.33

 
$
0.38

 
$
0.09

Diluted
 
0.33

 
0.37

 
0.09

WEIGHTED AVERAGE SHARES OUTSTANDING
 
 
 
 
 
 
Basic
 
25,555,654

 
21,510,746

 
20,091,924

Diluted
 
25,952,184

 
21,941,035

 
20,382,832

 
 
 
 
 
 
 

Accompanying notes are an integral part of these consolidated financial statements.

4


PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(dollars in thousands)
(unaudited)

 
Three Months Ended
 
March 31,
 
December 31,
 
March 31,
 
2016
 
2015
 
2015
Net income
$
8,554

 
$
8,065

 
$
1,789

Other comprehensive income, net of tax:
 
 
 
 
 
Unrealized holding gains on securities arising during the period, net of income taxes (1)
1,565

 
(349
)
 
835

Reclassification adjustment for net gain on sale of securities included in net income, net of income taxes (2)
(436
)
 
2

 
(68
)
Net unrealized gain on securities, net of income taxes
1,129

 
(347
)
 
767

Comprehensive income
$
9,683

 
$
7,718

 
$
2,556

______________________________
(1) Income tax (benefit) on the unrealized gains (losses) on securities was $1.1 million for the three months ended March 31, 2016, $(247,000) for the three months ended December 31, 2015, and $584,000 for the three months ended March 31, 2015.
(2) Income tax (benefit) on the reclassification adjustment for net (gains) losses on sale of securities included in net income was $317,000 for the three months ended March 31, 2016, $(2,000) for the three months ended December 31, 2015, and $48,000 for the three months ended March 31, 2015.

Accompanying notes are an integral part of these consolidated financial statements.


5


PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2016 AND 2015
(dollars in thousands)
(unaudited)

 
Common Stock
Shares
 
Common Stock
 
Additional Paid-in Capital
 
Accumulated Retained
Earnings
 
Accumulated Other Comprehensive Income
 
Total Stockholders’ Equity
Balance at December 31, 2015
21,570,746

 
$
215

 
$
221,487

 
$
76,946

 
$
332

 
$
298,980

Net income

 

 

 
8,554

 

 
8,554

Other comprehensive income

 

 

 

 
1,129

 
1,129

Share-based compensation expense

 

 
461

 

 

 
461

Issuance of restricted stock, net
118,936

 

 

 

 

 

Common stock issued
5,815,051

 
58

 
119,325

 

 

 
119,383

Exercise of stock options
32,500

 

 
387

 

 

 
387

Balance at March 31, 2016
27,537,233

 
$
273

 
$
341,660

 
$
85,500

 
$
1,461

 
$
428,894

 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2014
16,903,884

 
$
169

 
$
147,474

 
$
51,431

 
$
518

 
$
199,592

Net income

 

 

 
1,789

 

 
1,789

Other comprehensive income

 

 

 

 
767

 
767

Share-based compensation expense

 

 
200

 

 

 
200

Common stock issued
4,480,645

 
45

 
70,884

 

 

 
70,929

Warrants exercised
2,456

 

 
15

 

 

 
15

Repurchase of common stock
(5,833
)
 

 
(93
)
 

 

 
(93
)
Exercise of stock options
6,666

 

 
48

 

 

 
48

Balance at March 31, 2015
21,387,818

 
$
214

 
$
218,528

 
$
53,220

 
$
1,285

 
$
273,247


Accompanying notes are an integral part of these consolidated financial statements.


6


PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 
 
Three Months Ended
 
 
March 31,
 
 
2016
 
2015
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
 
Net income
 
$
8,554

 
$
1,789

Adjustments to net income:
 
 

 
 

Depreciation and amortization expense
 
670

 
253

Provision for loan losses
 
1,120

 
1,830

Share-based compensation expense
 
461

 
200

Loss on sale of or write down of other real estate owned
 

 
40

Amortization of premium/(discounts) on securities held for sale, net
 
1,057

 
804

Net accretion of discounts/premiums for loans acquired and deferred loan fees/costs
 
(2,584
)
 
(371
)
Gain on sale of investment securities available for sale
 
(753
)
 
(116
)
Originations of loans held for sale
 
(18,899
)
 

Proceeds from the sales of and principal payments from loans held for sale
 
22,616

 

Gain on sale of loans
 
(1,906
)
 

Deferred income tax benefit
 
(325
)
 

Change in accrued expenses and other liabilities, net
 
(5,499
)
 
1,144

Income from bank owned life insurance, net
 
(290
)
 
(279
)
Amortization of core deposit intangible
 
344

 
314

Change in accrued interest receivable and other assets, net
 
4,925

 
(5,248
)
Net cash provided by operating activities
 
9,491

 
360

CASH FLOWS FROM INVESTING ACTIVITIES
 
 

 
 

Proceeds from sale of loans
 

 
106,409

Increase in loans, net
 
(138,358
)
 
(275,937
)
Principal payments on securities available for sale
 
9,676

 
6,851

Purchase of securities available for sale
 

 
(40,077
)
Proceeds from sale or maturity of securities available for sale
 
192,809

 
8,771

Proceeds from the sale of premises and equipment
 
3,294

 

Purchases of premises and equipment
 
(2,177
)
 
(525
)
(Purchase) redemption of Federal Reserve Bank stock
 
(465
)
 
506

Purchase of Federal Home Loan Bank of San Francisco stock
 
(3,096
)
 
(11,656
)
Cash acquired in acquisitions
 
40,156

 
2,961

Net cash provided by (used in) investing activities
 
101,839

 
(202,697
)
CASH FLOWS FROM FINANCING ACTIVITIES
 
 

 
 

Net increase in deposit accounts
 
74,549

 
76,322

Change in FHLB advances and other borrowings, net
 
(71,169
)
 
193,491

Proceeds from exercise of stock options and warrants
 
387

 
48

Warrants exercised
 

 
15

Repurchase of common stock
 

 
(93
)
Net cash provided by financing activities
 
3,767

 
269,783

Net increase in cash and cash equivalents
 
115,097

 
67,446

Cash and cash equivalents, beginning of year
 
78,417

 
110,925

Cash and cash equivalents, end of year
 
$
193,514

 
$
178,371

 
 
 
 
 
 
 
 
 
 
SUPPLEMENTAL CASH FLOW DISCLOSURES
 
 

 
 

Interest paid
 
$
4,182

 
$
3,853

Income taxes paid
 
136

 
3,700

Assets acquired (liabilities assumed and capital created) in acquisitions (See Note 4):
 
 

 
 

Investment securities
 
190,254

 
53,752

FHLB and Other Stock
 
3,671

 
2,369

Loans
 
456,158

 
332,893

Core deposit intangible
 
4,319

 
2,903

Deferred income tax
 
7,069

 
3,969

Bank owned life insurance
 

 
11,276

Goodwill
 
51,252

 
28,060

Fixed assets
 
4,356

 
2,134

Other assets
 
5,610

 
1,726

Deposits
 
(636,591
)
 
(336,018
)
Other borrowings
 

 
(33,300
)
Other liabilities
 
(8,843
)
 
(1,796
)
Common stock and additional paid-in capital
 
(119,383
)
 
(70,929
)

Accompanying notes are an integral part of these consolidated financial statements.

7


PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2016
(UNAUDITED)
Note 1 - Basis of Presentation
 
The consolidated financial statements include the accounts of Pacific Premier Bancorp, Inc. (the “Corporation”) and its wholly owned subsidiaries, including Pacific Premier Bank (the “Bank”) (collectively, the “Company,” “we,” “our” or “us”). All significant intercompany accounts and transactions have been eliminated in consolidation.
 
In the opinion of management, the consolidated financial statements contain all adjustments (consisting of normal recurring accruals) necessary to present fairly the Company’s financial position as of March 31, 2016, December 31, 2015 and March 31, 2015, the results of its operations and comprehensive income for the three months ended March 31, 2016, December 31, 2015 and March 31, 2015 and the changes in stockholders’ equity and cash flows for the three months ended March 31, 2016 and 2015. Operating results or comprehensive income for the three months ended March 31, 2016 are not necessarily indicative of the results or comprehensive income that may be expected for any other interim period or the full year ending December 31, 2016.
 
Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 (the “2015 Annual Report”).
 
The Company accounts for its investments in its wholly owned special purpose entity, PPBI Trust I, under the equity method whereby the subsidiary’s net earnings are recognized in the Company’s statement of operations.
 
Note 2 – Recently Issued Accounting Pronouncements
 
Accounting Standards Adopted in 2016

In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-03, Intangibles-Goodwill and Other (Topic 350); Business Combinations (Topic 805); Consolidation (Topic 810); Derivatives and Hedging (Topic 815): Effective Date and Transition Guidance. The amendments make the guidance in ASU’s 2014-02, 2014-03, 2014-07 and 2014-08 effective immediately by removing their effective dates. Subsequent changes to an accounting policy election requires justification under Topic 250, Accounting Changes and Error Corrections. The Update became effective immediately and the Company adopted the provisions of ASU 2016-03 immediately. The adoption of this guidance had no impact on the Company’s Consolidated Financial Statements.
 
In April 2015, the FASB issued ASU 2015-03, Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. The amendments change the balance sheet presentation for debt issuance costs. Under the new guidance, debt issuance costs should be reported as a deduction from debt liabilities rather than as a deferred charge classified as an asset. The Update is effective for us in first quarter 2016 with retrospective application. Early adoption is permitted. The Company adopted the provisions of ASU 2015-03 effective January 1, 2016. The adoption of this guidance had no impact on the Company’s Consolidated Financial Statements.


8


Accounting Standards Pending Adoption

In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Accounting. The amendments simplify several aspects of the accounting for share-based payment award transactions, including accounting for excess tax benefits and tax deficiencies, classifying excess tax benefits on the statement of cash flows, accounting for forfeitures, classifying awards that permit share repurchases to satisfy statutory tax-withholding requirements and classifying tax payments on behalf of employees on the statement of cash flows. For public business entities, the amendment is effective for annual periods beginning after December 15, 2016 and interim period within those annual periods. Early adopt is permitted for any organization in any interim or annual period. The Company is currently evaluating the effects of ASU 2016-09 on its financial statements and disclosures.

In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal Versus Agent Considerations (Reporting Revenue Gross Versus Net). The amendments address how an entity should assess whether it is the principal or the agent in contracts that include three or more parties. The ASU clarifies that an entity should evaluate whether it is the principal or the agent for each specified good or service promised in a contract with a customer. The amendments affect the guidance in ASU 2014-09, Revenue from Contracts with Customers, which is not yet effective. The effective date and transition requirements for the amendments in this ASU are the same as the effective date and transition of ASU 2014-09, which will be effective for the Company for reporting periods beginning after December 15, 2017. The Company does not expect these amendments to have a material effect on its financial statements.

In March 2016, the FASB issued ASU 2016-07, Investments-Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting. The amendments eliminate the requirement to retrospectively apply the equity method to an investment that subsequently qualifies for such accounting as a result of an increase in the level of ownership interest or degree of influence. As result, when an investment qualifies for the equity method, the equity method investor will add the cost of acquiring the additional interest in the investee to the current basis of the investor’s previously held interest and adopt the equity method of account as of the date the investment becomes qualified for equity method accounting. The amendments further require unrealized holding gains or losses in accumulated other comprehensive income related to an available-for-sale security that becomes eligible for the equity method to be recognized in earnings as of the date on which the investment qualifies for the equity method. The amendments are effective for all entities for fiscal years and interim periods within those fiscal years, beginning after December 15, 2016. The Company does not expect these amendments to have a material effect on its financial statements.

In March 2016, the FASB issued ASU 2016-06, Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments. The amendments clarify the required steps to be taken when assessing whether the economic characteristics and risks of call/put options are clearly and closely related to those of their debt hosts - which is one of the criteria for bifurcating an embedded derivative. The Update is effective for public business entities for fiscal years beginning after December 31, 2016, including interim periods within those years. The Company does not expect these amendments to have a material effect on its financial statements.

In March 2016, the FASB issued ASU 2016-05, Derivatives and Hedging (Topic 815): Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships. The amendments clarify that a change in the counterparty to a derivative instrument designated as a hedging instrument does not, in and of itself, require dedesignation of that hedging relationship provided that all other hedge accounting criteria remain the same. The Update is effective for public business entities for fiscal years beginning after December 31, 2016, including interim periods within those years. The Company does not expect these amendments to have a material effect on its financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The new standard is being issued to increase the transparency and comparability around lease obligations. Previously unrecorded off-balance sheet obligations will now be brought more prominently to light by presenting lease liabilities on the face of the balance

9


sheet, accompanied by enhanced qualitative and quantitative disclosures in the notes to the financial statements. The Update is generally effective for public business entities in fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the effects of ASU 2016-02 on its financial statements and disclosures.
 
In January 2016, the FASB issued ASU 2016-01, Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. Changes made to the current measurement model primarily affect the accounting for equity securities with readily determinable fair values, where changes in fair value will impact earnings instead of other comprehensive income. The accounting for other financial instruments, such as loans, investments in debt securities, and financial liabilities is largely unchanged. The Update also changes the presentation and disclosure requirements for financial instruments including a requirement that public business entities use exit price when measuring the fair value of financial instruments measured at amortized cost for disclosure purposes. This Update is generally effective for public business entities in fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently evaluating the effects of ASU 2016-01 on its financial statements and disclosures.
            
In August 2015, the FASB deferred the effective date of ASU 2014-09, Revenue from Contracts with Customers (Topic 606). As a result of the deferral, the guidance in ASU 2014-09 will be effective for the Company for reporting periods beginning after December 15, 2017. The Update modifies the guidance companies use to recognize revenue from contracts with customers for transfers of goods or services and transfers of nonfinancial assets, unless those contracts are within the scope of other standards. The guidance also requires new qualitative and quantitative disclosures, including information about contract balances and performance obligations. The Company does not expect these amendments to have a material effect on its financial statements.

Note 3 – Significant Accounting Policies
 
Certain Acquired Loans:  As part of business acquisitions, the Bank acquires certain loans that have shown evidence of credit deterioration since origination. These acquired loans are recorded at the allocated fair value, such that there is no carryover of the seller’s allowance for loan losses. Such acquired loans are accounted for individually. The Bank estimates the amount and timing of expected cash flows for each purchased loan, and the expected cash flows in excess of the allocated fair value 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 (non-accretable 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 through the allowance for loan losses. If the present value of expected cash flows is greater than the carrying amount, it is recognized as part of future interest income.
 
Goodwill and Core Deposit Intangible: Goodwill is generally determined as the excess of the fair value of the consideration transferred, plus the fair value of any noncontrolling interests in the acquiree, over the fair value of the net assets acquired and liabilities assumed as of the acquisition date. Goodwill and intangible assets acquired in a purchase business combination and determined to have an indefinite useful life are not amortized, but tested for impairment at least annually or more frequently if events and circumstances exist that indicate the necessity for such impairment tests to be performed. The Company has selected December 31 as the date to perform the annual impairment test. Intangible assets with definite useful lives are amortized over their estimated useful lives to their estimated residual values. Goodwill is the only intangible asset with an indefinite life on our balance sheet.
 
Core deposit intangible assets arising from whole bank acquisitions are amortized on a straight-line amortization method over their estimated useful lives, which range from 6 to 10 years
 
Use of Estimates:  The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. The allowance for loan losses, the fair value of stock-

10


based compensation awards, the fair values of financial instruments and the status of contingencies are particularly subject to change.
 
Note 4 –  Acquisitions
 
The Company accounted for the following transactions under the acquisition method of accounting which requires purchased assets and liabilities assumed to be recorded at their respective fair values at the date of acquisition. The Company determined the fair value of the core deposit intangible, securities and deposits with the assistance of third party valuations.
 
The estimated fair values in these acquisitions are subject to refinement as additional information relative to the closing date fair values become available through the measurement period, which can extend for up to one year after the closing date of the transaction. While additional significant changes to the closing date fair values are not expected, any information relative to the changes in these fair values will be evaluated to determine if such changes are due to events and circumstances that existed as of the acquisition date. During the measurement period, any such changes will be recorded as part of the closing date fair value.

Security California Bancorp Acquisition

On January 31, 2016, the Company completed its acquisition of Security California Bancorp (“SCAF”) whereby we acquired $714 million in total assets, $456 million in loans and $637 million in total deposits. Under the terms of the merger agreement, each share of Security common stock was converted into the right to receive 0.9629 shares of the Corporation’s common stock. The value of the total deal consideration was $120 million, which includes $788,000 of aggregate cash consideration to the holders of SCAF stock options and the issuance of 5,815,051 shares of the Corporation’s common stock, valued at $119.4 million based on a closing stock price of $20.53 per share on January 29, 2016.

SCAF was the holding company of Security Bank of California, a Riverside, California, based state-chartered bank with six branches located in Riverside County, San Bernardino County and Orange County.

Goodwill in the amount of $51.3 million was recognized in the SCAF acquisition. Goodwill represents the future economic benefits arising from net assets acquired that are not individually identified and separately recognized and is attributable to synergies expected to be derived from the combination of the two entities. Goodwill recognized in this transaction is not deductible for income tax purposes.


11


The following table represents the assets acquired and liabilities assumed of SCAF as of January 31, 2016 and the provisional fair value adjustments and amounts recorded by the Company in 2016 under the acquisition method of accounting: 

 
SCAF
Book Value
 
Fair Value
Adjustments
 
Fair
Value
ASSETS ACQUIRED
(dollars in thousands)
Cash and cash equivalents
$
40,947

 
$

 
$
40,947

Interest bearing deposits with financial institutions
1,972

 

 
1,972

Investment securities
191,881

 
(1,627
)
 
190,254

Loans, gross
467,197

 
(11,039
)
 
456,158

Allowance for loan losses
(7,399
)
 
7,399

 

Fixed assets
5,335

 
(979
)
 
4,356

Core deposit intangible
493

 
3,826

 
4,319

Deferred tax assets
5,618

 
1,451

 
7,069

Other assets
10,589

 
(1,308
)
 
9,281

Total assets acquired
$
716,633

 
$
(2,277
)
 
$
714,356

LIABILITIES ASSUMED
 

 
 

 
 

Deposits
$
636,450

 
$
141

 
$
636,591

Other Liabilities
9,063

 
(220
)
 
8,843

Total liabilities assumed
645,513

 
(79
)
 
645,434

Excess of assets acquired over liabilities assumed
$
71,120

 
$
(2,198
)
 
68,922

Consideration paid
 

 
 

 
120,174

Goodwill recognized
 

 
 

 
$
51,252


Independence Bank Acquisition
 
On January 26, 2015, the Company completed its acquisition of Independence Bank (“IDPK”) in exchange for consideration valued at $79.8 million, which consisted of $6.1 million of cash consideration for IDPK common stockholders, $1.5 million of aggregate cash consideration to the holders of IDPK stock options and warrants, $1.3 million fair market value of warrants assumed and the issuance of 4,480,645 shares of the Corporation’s common stock, which was valued at $70.9 million based on the closing stock price of the Corporation’s common stock on January 26, 2015 of $15.83 per share.
 
IDPK was a Newport Beach, California based state-chartered bank. The acquisition was an opportunity for the Company to strengthen its competitive position as one of the premier community banks headquartered in Southern California. Additionally, the IDPK acquisition enhanced and connected the Company’s footprint in Southern California. 
 
Goodwill in the amount of $27.9 million was recognized in the IDPK acquisition. Goodwill represents the future economic benefits arising from net assets acquired that are not individually identified and separately recognized and is attributable to synergies expected to be derived from the combination of the two entities. Goodwill recognized in this transaction is not deductible for income tax purposes.
 

12



The following table represents the assets acquired and liabilities assumed of IDPK as of January 26, 2015 and the fair value adjustments and amounts recorded by the Company in 2015 under the acquisition method of accounting: 
 
IDPK
Book Value
 
Fair Value
Adjustments
 
Fair
Value
 
(dollars in thousands)
ASSETS ACQUIRED
 
 
 
 
 
Cash and cash equivalents
$
10,486

 
$

 
$
10,486

Investment securities
56,503

 
(382
)
 
56,121

Loans, gross
339,502

 
(6,609
)
 
332,893

Allowance for loan losses
(3,301
)
 
3,301

 

Deferred income taxes
5,266

 
(472
)
 
4,794

Bank owned life insurance
11,276

 

 
11,276

Core deposit intangible
904

 
1,999

 
2,903

Other assets
3,756

 
780

 
4,536

Total assets acquired
$
424,392

 
$
(1,383
)
 
$
423,009

 
 
 
 
 
 
LIABILITIES ASSUMED
 

 
 

 
 

Deposits
$
335,685

 
$
333

 
$
336,018

FHLB advances
33,300

 

 
33,300

Other liabilities
1,916

 
(120
)
 
1,796

Total liabilities assumed
370,901

 
213

 
371,114

Excess of assets acquired over liabilities assumed
$
53,491

 
$
(1,596
)
 
51,895

Consideration paid
 

 
 

 
79,777

Goodwill recognized
 

 
 

 
$
27,882


For loans acquired from SCAF and IDPK, the contractual amounts due, expected cash flows to be collected, interest component and fair value as of the respective acquisition dates were as follows:

 
Acquired Loans
 
SCAF
 
IDPK
 
(dollars in thousands)
Contractual amounts due
$
539,806

 
$
453,987

Cash flows not expected to be collected
2,765

 
3,795

Expected cash flows
537,041

 
450,192

Interest component of expected cash flows
80,883

 
117,299

Fair value of acquired loans
$
456,158

 
$
332,893


In accordance with generally accepted accounting principles, there was no carryover of the allowance for loan losses that had been previously recorded by SCAF or IDPK.








13



 
The operating results of the Company for the three months ending March 31, 2016 include the operating results of SCAF and IDPK since their respective acquisition dates. The operating results of the Company for the three months ending March 31, 2015 include the operating results of IDPK since its acquisition date. The following table presents the net interest and other income, net income and earnings per share as if the acquisitions of SCAF and IDPK were effective as of January 1, 2016 and 2015. There were no material, nonrecurring adjustments to the pro forma net interest and other income, net income and earnings per share presented below:

 
Three Months Ended
 
March 31, 2016
 
December 31, 2015
 
March 31, 2015
Net interest and other income
$
40,090

 
$
38,296

 
$
30,570

Net income
6,583

 
8,612

 
1,993

Basic earnings per share
0.26

 
0.31

 
0.07

Diluted earnings per share
0.25

 
0.31

 
0.07


Note 5 – Investment Securities
 
The amortized cost and estimated fair value of securities were as follows:
 
 
 
March 31, 2016
 
 
Amortized
 Cost
 
Unrealized
Gain
 
Unrealized
Loss
 
Estimated
Fair Value
 
 
(in thousands)
Available-for-sale:
 
 

 
 
 
 
 
 
Municipal bonds
 
$
123,484

 
$
2,426

 
$
(28
)
 
$
125,882

Collateralized mortgage obligation
 
23,805

 
70

 
(9
)
 
23,866

Mortgage-backed securities
 
119,939

 
499

 
(475
)
 
119,963

Total available-for-sale
 
267,228

 
2,995

 
(512
)
 
269,711

Held-to-maturity:
 
 
 
 
 
 
 
 
Mortgage-backed securities
 
8,361

 
22

 

 
8,383

Other
 
1,229

 

 

 
1,229

Total held-to-maturity
 
9,590

 
22

 

 
9,612

Total securities
 
$
276,818

 
$
3,017

 
$
(512
)
 
$
279,323


14



 
 
December 31, 2015
 
 
Amortized
Cost
 
Unrealized
Gain
 
Unrealized
Loss
 
Estimated
Fair Value
 
 
(in thousands)
Available-for-sale:
 
 

 
 
 
 
 
 
Municipal bonds
 
$
128,546

 
$
1,796

 
$
(97
)
 
$
130,245

Collateralized mortgage obligation
 
24,722

 
4

 
(183
)
 
24,543

Mortgage-backed securities
 
126,443

 
153

 
(1,111
)
 
125,485

Total available-for-sale
 
279,711

 
1,953

 
(1,391
)
 
$
280,273

Held-to-maturity:
 
 
 
 
 
 
 
 
Mortgage-backed securities
 
8,400

 

 
(70
)
 
8,330

Other
 
1,242

 

 

 
1,242

Total held-to-maturity
 
9,642

 

 
(70
)
 
9,572

Total securities
 
$
289,353

 
$
1,953

 
$
(1,461
)
 
$
289,845


 
 
March 31, 2015
 
 
Amortized
 Cost
 
Unrealized
Gain
 
Unrealized
Loss
 
Estimated
Fair Value
 
 
(in thousands)
Available-for-sale:
 
 

 
 

 
 

 
 

Municipal bonds
 
$
103,997

 
$
1,718

 
$
(192
)
 
105,523

Collateralized mortgage obligation
 
11,204

 
84

 

 
11,288

Mortgage-backed securities
 
163,077

 
1,013

 
(440
)
 
163,650

Total available-for-sale
 
$
278,278

 
$
2,815

 
$
(632
)
 
$
280,461


At March 31, 2016, mortgage-backed securities (“MBS”) with an estimated par value of $61.6 million and a fair value of $63.8 million were pledged as collateral for the Bank’s three reverse repurchase agreements which totaled $28.5 million and homeowner’s association (“HOA”) reverse repurchase agreements which totaled $16.5 million.

The Company reviews individual securities classified as available-for-sale to determine whether a decline in fair value below the amortized cost basis is other-than-temporary. If it is probable that the Company will be unable to collect all amounts due according to contractual terms of the debt security not impaired at acquisition, an OTTI shall be considered to have occurred. If an OTTI occurs, the cost basis of the security will be written down to its fair value as the new cost basis and the write down accounted for as a realized loss. The Company realized OTTI losses of $207,000 for the three months ended March 31, 2016. The Company did not realize any OTTI losses for the three months ended December 31, 2015 and March 31, 2015.

During the three months ended March 31, 2016, December 31, 2015 and March 31, 2015, the Company recognized gross gains on sales of available-for-sale securities in the amount of $762,000, $1,000 and $117,000, respectively. During the three months ended March 31, 2016, December 31, 2015 and March 31, 2015, the Company recognized gross losses on sales of available-for-sale securities in the amount of $9,000, $5,000 and $1,000, respectively. The Company had net proceeds from the sale of available-for-sale securities of $185 million, $677,000 and $7.2 million during the three months ended March 31, 2016, December 31, 2015 and March 31, 2015, respectively.


15


The table below shows the number, fair value and gross unrealized holding losses of the Company’s investment securities by investment category and length of time that the securities have been in a continuous loss position.
 
March 31, 2016
 
Less than 12 months
 
12 months or Longer
 
Total
 
Number
 
Fair
Value
 
Gross
Unrealized
Holding
Losses
 
Number
 
Fair
Value
 
Gross
Unrealized
Holding
Losses
 
Number
 
Fair
Value
 
Gross
Unrealized
Holding
Losses
 
(dollars in thousands)
Available-for-sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Municipal bonds
12

 
$
6,251

 
$
(28
)
 

 
$

 
$

 
12

 
$
6,251

 
$
(28
)
Collateralized mortgage obligation
2

 
9,318

 
(9
)
 

 

 

 
2

 
9,318

 
(9
)
Mortgage-backed securities
10

 
23,289

 
(140
)
 
7

 
22,444

 
(335
)
 
17

 
45,733

 
(475
)
Total securities available-for-sale
24

 
$
38,858

 
$
(177
)
 
7

 
$
22,444

 
$
(335
)
 
31

 
$
61,302

 
$
(512
)

 
December 31, 2015
 
Less than 12 months
 
12 months or Longer
 
Total
 
Number
 
Fair
Value
 
Gross
Unrealized
Holding
Losses
 
Number
 
Fair
Value
 
Gross
Unrealized
Holding
Losses
 
Number
 
Fair
Value
 
Gross
Unrealized
Holding
Losses
 
(dollars in thousands)
Available-for-sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Municipal bonds
32

 
$
15,516

 
$
(61
)
 
6

 
$
3,349

 
$
(36
)
 
38

 
$
18,865

 
$
(97
)
Collateralized mortgage obligation

5

 
22,771

 
(183
)
 

 

 

 
5

 
22,771

 
(183
)
Mortgage-backed securities
34

 
83,488

 
(679
)
 
3

 
12,935

 
(432
)
 
37

 
96,423

 
(1,111
)
Total securities available-for-sale
71

 
121,775

 
(923
)
 
9

 
16,284

 
(468
)
 
80

 
138,059

 
(1,391
)
Held-to-maturity:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mortgage-backed securities
1

 
8,330

 
(70
)
 

 

 

 
1

 
8,330

 
(70
)
Total securities held-to-maturity
1

 
8,330

 
(70
)
 

 

 

 
1

 
8,330

 
(70
)
Total securities
72

 
$
130,105

 
$
(993
)
 
9

 
$
16,284

 
$
(468
)
 
81

 
$
146,389

 
$
(1,461
)

16


 
March 31, 2015
 
Less than 12 months
 
12 months or Longer
 
Total
 
Number
 
Fair
Value
 
Gross
Unrealized
Holding
Losses
 
Number
 
Fair
Value
 
Gross
Unrealized
Holding
Losses
 
Number
 
Fair
Value
 
Gross
Unrealized
Holding
Losses
 
(dollars in thousands)
Available-for-sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Municipal bonds
48

 
$
20,818

 
$
(179
)
 
3

 
$
1,073

 
$
(13
)
 
51

 
$
21,891

 
$
(192
)
Collateralized mortgage obligation
1

 
4,622

 

 

 

 

 
1

 
4,622

 

Mortgage-backed securities
9

 
17,235

 
(66
)
 
3

 
15,111

 
(374
)
 
12

 
32,346

 
(440
)
Total securities available-for-sale
58

 
$
42,675

 
$
(245
)
 
6

 
$
16,184

 
$
(387
)
 
64

 
$
58,859

 
$
(632
)

The amortized cost and estimated fair value of investment securities available for sale at March 31, 2016, by contractual maturity are shown in the table below.

 
One Year
or Less
 
More than One
Year to Five Years
 
More than Five Years
to Ten Years
 
More than
Ten Years
 
Total
 
Amortized
Cost
 
Fair
Value
 
Amortized
Cost
 
Fair
Value
 
Amortized
Cost
 
Fair
Value
 
Amortized
Cost
 
Fair
Value
 
Amortized
Cost
 
Fair
Value
 
(dollars in thousands)
Available-for-sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Municipal bonds
$
1,422

 
$
1,423

 
$
27,576

 
$
27,886

 
$
43,199

 
$
44,398

 
$
51,287

 
$
52,175

 
$
123,484

 
$
125,882

Collateralized mortgage obligation


 

 

 

 

 

 
23,805

 
23,866

 
23,805

 
23,866

Mortgage-backed securities

 

 

 

 
29,014

 
29,196

 
90,925

 
90,767

 
119,939

 
119,963

Total securities available-for-sale
1,422

 
1,423

 
27,576

 
27,886

 
72,213

 
73,594

 
166,017

 
166,808

 
267,228

 
269,711

Held-to-maturity:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mortgage-backed securities

 

 

 

 

 

 
8,361

 
8,383

 
8,361

 
8,383

Other

 

 

 

 

 

 
1,229

 
1,229

 
1,229

 
1,229

Total securities held-to-maturity

 

 

 

 

 

 
9,590

 
9,612

 
9,590

 
9,612

Total securities
$
1,422

 
$
1,423

 
$
27,576

 
$
27,886

 
$
72,213

 
$
73,594

 
$
175,607

 
$
176,420

 
$
276,818

 
$
279,323


Unrealized gains and losses on investment securities available for sale are recognized in stockholders’ equity as accumulated other comprehensive income or loss. At March 31, 2016, the Company had accumulated other comprehensive income of $2.5 million, or $1.5 million net of tax, compared to accumulated other comprehensive income of $562,000, or $332,000 net of tax, at December 31, 2015.


17


FHLB, FRB and other stock

At March 31, 2016, the Company had $14.4 million in Federal Home Loan Bank (“FHLB”) stock, $7.9 million in Federal Reserve Bank of San Francisco (“FRB”) stock, and $3.6 million in other stock, all carried at cost. During the three months ended March 31, 2016 and December 31, 2015, FHLB did not repurchase any of the Company’s excess FHLB stock through their stock repurchase program. During the three months ended March 31, 2015, FHLB had repurchased $5.9 million of the Company’s excess FHLB stock through their stock repurchase program. The Company evaluates its investments in FHLB and other stock for impairment periodically, including their capital adequacy and overall financial condition. No impairment losses have been recorded through March 31, 2016.
 

 

18



Note 6 – Loans Held for Investment
 
The following table sets forth the composition of our loan portfolio in dollar amounts at the dates indicated:
 
March 31, 2016
 
December 31, 2015
 
March 31, 2015
 
(in thousands)
Business loans:
 
 
 
 
 
Commercial and industrial
$
491,112

 
$
309,741

 
$
276,321

Franchise
371,875

 
328,925

 
216,544

Commercial owner occupied (1)
424,289

 
294,726

 
279,704

SBA
78,350

 
62,256

 
49,855

Warehouse facilities
1,394

 
143,200

 
216,554

Real estate loans:
 

 
 

 
 
Commercial non-owner occupied
522,080

 
421,583

 
452,422

Multi-family
619,485

 
429,003

 
397,130

One-to-four family (2)
106,854

 
80,050

 
116,735

Construction
218,069

 
169,748

 
111,704

Land
18,222

 
18,340

 
7,243

Other loans
6,045

 
5,111

 
6,641

Total gross loans (3)
2,857,775

 
2,262,683

 
2,130,853

Less Loans held for sale, net
7,281

 
8,565

 

   Total gross loans held for investment
2,850,494

 
2,254,118

 
2,130,853

Less:
 
 
 
 
 
   Deferred loan origination costs/(fees) and premiums/(discounts), net
938

 
197

 
534

   Allowance for loan losses
(18,455
)
 
(17,317
)
 
(13,646
)
   Loans held for investment, net
$
2,832,977

 
$
2,236,998

 
$
2,117,741

______________________________
(1) Majority secured by real estate.
(2) Includes second trust deeds.
(3) Total gross loans for March 31, 2016 are net of the unaccreted mark-to-market discounts on Canyon National Bank (“Canyon National“) loans of $121,000, on Palm Desert National Bank (“Palm Desert National”) loans of $877,000, on First Associations Bank (“FAB”) loans of $4,000, on San Diego Trust Bank (“SDTB”) loans of $105,000, on Independence Bank (“IDPK”) loans of $3.3 million and on Security California Bancorp (“SCAF”) loans of $10.7 million.

From time to time, we may purchase or sell loans in order to manage concentrations, maximize interest income, change risk profiles, improve returns and generate liquidity.
 
The Company makes residential and commercial loans held for investment to customers located primarily in California. Consequently, the underlying collateral for our loans and a borrower’s ability to repay may be impacted unfavorably by adverse changes in the economy and real estate market in the region.
 
Under applicable laws and regulations, the Bank may not make secured loans to one borrower in excess of 25% of the Bank’s unimpaired capital plus surplus and likewise in excess of 15% for unsecured loans. These loans-to-one borrower limitations result in a dollar limitation of $125.2 million for secured loans and $75.0 million for unsecured loans at March 31, 2016. At March 31, 2016, the Bank’s largest aggregate outstanding balance of loans to one borrower was $26.4 million of secured credit.
 

19


Purchased Credit Impaired
 
The following table provides a summary of the Company’s investment in purchased credit impaired loans, acquired from Canyon National Bank, IDPK and SCAF as of the period indicated: 

 
March 31, 2016
 
Canyon National
 
IDPK
 
SCAF
 
Total
 
(in thousands)
Business loans:
 
 
 
 
 
 
 
Commercial and industrial
$
89

 
$
183

 
$
4,530

 
$
4,802

Commercial owner occupied
523

 
332

 
1,138

 
1,993

Real estate loans:
 

 
 

 
 

 


Commercial non-owner occupied
894

 
648

 

 
1,542

One-to-four family

 

 
817

 
817

Other loans

 

 
441

 
441

Total purchase credit impaired
$
1,506

 
$
1,163

 
$
6,926

 
$
9,595


On the acquisition date, the amount by which the undiscounted expected cash flows of the purchased credit impaired loans exceed the estimated fair value of the loan is the “accretable yield.” The accretable yield is measured at each financial reporting date and represents the difference between the remaining undiscounted expected cash flows and the current carrying value of the purchased credit impaired loan. At March 31, 2016, the Company had $9.6 million of purchased credit impaired loans, of which $1.8 million were placed on nonaccrual status.

The following table summarizes the accretable yield on the purchased credit impaired loans for the three months ended March 31, 2016:

 
Three Months Ended
 
March 31, 2016
 
Canyon National
 
IDPK
 
SCAF
 
Total
 
(in thousands)
Balance at the beginning of period
$
1,130

 
$
1,596

 
$

 
$
2,726

Accretable yield at acquisition

 

 
788

 
788

Accretion
(49
)
 
(4
)
 
(76
)
 
(129
)
Disposals and other

 
(323
)
 

 
(323