6.	ACQUIRED SJB ASSETS AND FDIC LOSS SHARING ASSET

FDIC Assisted Acquisition

On October 16, 2009, the Bank acquired San Joaquin Bank (“SJB”) and entered into loss sharing agreements with the Federal Deposit Insurance Corporation (“FDIC”) that is more fully discussed in Note 3—Summary of Significant Accounting Policies, included in our Annual Report on Form 10-K for the year ended December 31, 2016. The acquisition has been accounted for under the purchase method of accounting. The assets and liabilities were recorded at their estimated fair values as of the October 16, 2009 acquisition date. The acquired loans were accounted for as Purchase Credit Impaired (“PCI”) loans.

At September 30, 2017, the remaining discount associated with the PCI loans approximated $758,000. The loss sharing agreement for commercial loans expired October 16, 2014 and will expire for single-family residential loans on October 16, 2019.

The following table provides a summary of PCI loans and lease finance receivables by type and by internal risk ratings (credit quality indicators) for the periods indicated.


	September 30, 2017			December 31, 2016
	(Dollars in thousands)
Commercial and industrial	$	1,002		$	2,309
SBA		1,410			327
Real estate:
Commercial real estate		33,799			67,594
Construction		-			-
SFR mortgage		166			178
Dairy & livestock and agribusiness		335			1,216
Municipal lease finance receivables		-			-
Consumer and other loans		594			1,469

Gross PCI loans		37,306			73,093
Less: Purchase accounting discount		(758	)		(1,508	)

Gross PCI loans, net of discount		36,548			71,585
Less: Allowance for PCI loan losses		(431	)		(1,219	)

Net PCI loans	$	36,117		$	70,366

Credit Quality Indicators

The following table summarizes gross PCI loans by internal risk ratings for the periods indicated.


	September 30, 2017		December 31, 2016
	(Dollars in thousands)
Pass	$	32,309	$	59,409
Special mention		147		1,162
Substandard		4,850		12,522
Doubtful & loss		-		-

Total gross PCI loans	$	37,306	$	73,093