Acquisitions

Square 1 Financial, Inc. Acquisition

We acquired Square 1 Financial, Inc. ("Square 1") on October 6, 2015. As part of the acquisition, Square 1 Bank, a wholly-owned subsidiary of Square 1, merged with and into Pacific Western. At closing, we formed the Square 1 Bank Division of the Bank which focuses on providing a comprehensive suite of financial services to entrepreneurial businesses and their venture capital and private equity investors nationwide.

We completed this acquisition to increase our core deposits, expand our nationwide lending platform, and increase our presence in the technology and life-sciences credit markets. The Square 1 acquisition has been accounted for under the acquisition method of accounting. We acquired $4.6 billion of assets and assumed $3.8 billion of liabilities upon closing of the acquisition. The assets and liabilities, both tangible and intangible, were recorded at their estimated fair values as of the acquisition date. We made significant estimates and exercised significant judgment in estimating fair values and accounting for such acquired assets and liabilities. Such fair values are preliminary estimates and are subject to adjustment for up to one year after the acquisition date or when additional information relative to the closing date fair values becomes available and such information is considered final, whichever is earlier. The fair value of the acquired net tax assets, once the final tax returns have been filed, may change. The application of the acquisition method of accounting resulted in goodwill of $447.9 million. All of the recognized goodwill is expected to be non-deductible for tax purposes.

Acquisition-Related Charges

The costs shown for the three months ended March 31, 2016 and December 31, 2015 relate to the Square 1 acquisition and ongoing systems integration. The following table presents the components of acquisition, integration and reorganization costs for the periods indicated:



	Three Months Ended
	March 31,		December 31,		March 31,
	2016		2015		2015
	(In thousands)
Acquisition, Integration and Reorganization Costs:
Severance and employee-related	$	—	$	10,500	$	—
System conversion and integration	200		3,802		—
Asset write-downs, lease terminations and
other facilities-related	—		125		—
Investment banking deal costs	—		—		1,050
Other (legal, accounting, insurance, consulting)	—		3,173		950
Total acquisition, integration and
reorganization costs	$	200	$	17,600	$	2,000