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SIERRA BANCORP AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
116
21.
BUSINESS COMBINATION
On November 14, 2014, the Company acquired 100% of the outstanding common and preferred shares of
Santa Clara Valley Bank (SCVB) in exchange for $15,300,000. Under the terms of the acquisition, SCVB
common shareholders received $12,300,000 or $6.00 per share and SCVB preferred shareholders received
$3,000,000 to retire outstanding preferred stock and associated warrants. Included in the $12,300,000 was
$700,000 which the Company paid to cash out existing in-the-money warrants. SCVB results of operations
were included in the Company’s results beginning November 14, 2014. Acquisition related costs of
$101,000 and $2,070,000 are included in other operating expense in the Company’s income statement for
the years ended December 31, 2015 and 2014.
In accordance with GAAP, the Company recorded $1,364,000 of goodwill and $1,075,000 of core deposit
intangibles. Goodwill represents the excess of the consideration transferred (cash) at the acquisition date
over the fair values of the identifiable net assets acquired. The core deposit intangible is being amortized
using a straight line basis over eight years. For tax purposes goodwill and core deposit intangibles are both
non-deductible.
The acquisition has provided the Company an opportunity to expand its market presence further south into
the Santa Clara Valley. Synergies and cost savings resulting from the combined operations along with the
introduction of the Company’s existing products and services into the new region have provided growth
opportunities and the potential to increase profitability.
The following table summarizes the consideration paid for SCVB and the amounts of the assets acquired
and liabilities assumed recognized at the acquisition date (dollars in thousands):
Consideration
Cash
15,338
$
Equity Instruments
-
Contingent Consideration
-
Fair value of total consideration transferred
15,338
$
Recognized amounts of identifiable assets acquired and liabilities assumed
Cash and cash equivalents
15,852
$
Securities
44,187
Federal Home Loan Bank stock
860
Loans
61,573
Premises and equipment
1,188
Core deposit intangibles
1,075
Other assets
5,719
Total assets acquired
130,454
Deposits
108,272
Federal Home Loan Bank advances
8,000
Other liabilities
208
Total liabilities assumed
116,480
Total identifiable net assets
13,974
Goodwill
1,364
15,338
$