Federally Assisted Acquisition of San Joaquin Bank

3 Months Ended

Mar. 31, 2013

Business Combinations [Abstract]

Federally Assisted Acquisition of San Joaquin Bank

4. FEDERALLY ASSISTED ACQUISITION OF SAN JOAQUIN BANK

On October 16, 2009, the Bank acquired SJB and entered into a loss sharing agreement with the FDIC that is more fully discussed in the Significant Accounting Policies (Note3) included herein.

Loans acquired from the SJB acquisition have performed better than originally expected. At March 31, 2013, the remaining discount associated with the SJB loans approximated $20.9 million. Based on the Company’s regular re-forecast of expected cash flows from these loans, approximately $13.2 million of the related discount is expected to accrete into interest income over the remaining average lives of the respective pools and individual loans, which approximates 4.9 years and 0.9 year, respectively. Due to the decrease in estimated losses to be incurred in the remaining portfolio, the expected reimbursement from the FDIC under the loss sharing agreement decreased. The FDIC loss sharing asset of $14.2 million at March 31, 2013 will continue to be reduced by reimbursements of loss claims submitted to the FDIC with the remaining balance amortized on the same basis as the discount on the related loans, not to exceed its remaining contract life of approximately 1.5 years.