8-K

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): December 5, 2012

PACIFIC PREMIER BANCORP, INC.
(Exact name of registrant as specified in its charter)

DELAWARE (State or other jurisdiction of incorporation)	0-22193 (Commission File Number)	33-0743196 (I.R.S. Employer Identification No.)
17901 Von Karman Ave, Suite 1200, Irvine, California (Address of principal executive offices)		92614 (Zip Code)

Registrant's telephone number, including area code (714) 431-4000

1600 Sunflower Ave, Second Floor, Costa Mesa, CA 92626
(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 8.01    OTHER EVENTS.

        On October 15, 2012, Pacific Premier Bancorp, Inc., a Delaware corporation ("Pacific Premier"), and its wholly-owned subsidiary, Pacific Premier Bank, a California-chartered bank, entered into an Agreement and Plan of Reorganization with First Associations Bank, a Texas-chartered bank ("FAB"), pursuant to which Pacific Premier Bank will acquire FAB (the "Merger"). Pacific Premier has received regulatory approval from the Federal Reserve Bank of San Francisco, the California Department of Financial Institutions and the Texas Department of Banking for the Merger. The consummation of the Merger remains subject to the approval of the FAB shareholders and the satisfaction of the other closing conditions.

        In connection with the Merger, Pacific Premier filed a Registration Statement on Form S-4 with the Securities and Exchange Commission on November 9, 2012, which included the following historical financial statements, and the notes related thereto, of FAB, the report of FAB auditors and the pro forma financial data relating to the Merger, all of which are attached as exhibits to this Current Report on Form 8-K and are incorporated herein by reference:

•

Audited Balance Sheets as of December 31, 2011 and 2010;

•

Audited Statements of Income for the Years Ended December 31, 2011 and 2010;

•

Audited Statements of Changes in Stockholders' Equity for the Years Ended December 31, 2011 and 2010;

•

Audited Statements of Cash Flows for the Years Ended December 31, 2011 and 2010;

•

The report of the Independent Registered Public Accounting Firm relating to the audited financial statements referred to above;

•

Unaudited financial statements as of September 30, 2012 and for the nine-month periods ended September 30, 2012 and 2011; and

•

Unaudited pro forma condensed combined statement of financial condition giving effect to the completion of the Merger on September 30, 2012 and the unaudited pro forma condensed combined statements of operations for the nine months ended September 30, 2012 and the year ended December 31, 2011 giving effect to the Merger as if the Merger had become effective at the beginning of the periods presented.

ITEM 9.01    FINANCIAL STATEMENTS AND EXHIBITS.

(d)

Exhibits

Exhibit Number
23.1	Consent of JonesBaggett LLP
99.1	Audited financial statements of First Associations Bank as of December 31, 2011 and 2010 and for each of the years in the two-year period ended December 31, 2011, and the Report of Independent Registered Public Accounting Firm
99.2	Unaudited financial statements of First Associations Bank as of September 30, 2012 and for the nine-month periods ended September 30, 2012 and 2011
99.3	Unaudited pro forma condensed combined statement of financial condition giving effect to the completion of the Merger on September 30, 2012 and the unaudited pro forma condensed combined statements of operations for the nine months ended September 30, 2012 and the year ended December 31, 2011 giving effect to the Merger as if the Merger had become effective at the beginning of the periods presented.

SIGNATURES

        Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	PACIFIC PREMIER BANCORP, INC.
Dated: December 5, 2012	By:	/s/ STEVEN R. GARDNER Steven R. Gardner President and Chief Executive Officer

EXHIBIT INDEX

Exhibit Number
23.1	Consent of JonesBaggett LLP
99.1	Audited consolidated financial statements of First Associations Bank as of December 31, 2011 and 2010 and for each of the years in the two-year period ended December 31, 2011, and the Report of Independent Registered Public Accounting Firm
99.2	Unaudited financial statements of First Associations Bank as of September 30, 2012 and for the nine-month periods ended September 30, 2012 and 2011
99.3	Unaudited pro forma condensed combined statement of financial condition giving effect to the completion of the Merger on September 30, 2012 and the unaudited pro forma condensed combined statements of operations for the nine months ended September 30, 2012 and the year ended December 31, 2011 giving effect to the Merger as if the Merger had become effective at the beginning of the periods presented.

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ITEM 8.01 OTHER EVENTS.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.

SIGNATURES
EXHIBIT INDEX

EX-23.1

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Exhibit 23.1

Consent of Independent Public Accounting Firm

        We consent to the incorporation by reference in the registration statement No. 333-185142 on Form S-8 and the registration statement No. 333-182499 on Form S-3 (the "Form S-3 Registration Statement") of Pacific Premier Bancorp, Inc. of our report dated January 26, 2012, with respect to balance sheets of First Associations Bank as of December 31, 2011 and 2010, the related statements of income, changes in stockholders' equity, and cash flows for the years then ended, which report appears in this Current Report on Form 8-K of Pacific Premier Bancorp, Inc. dated December 5, 2012, and to the reference to our firm under the heading "Experts" included in the Form S-3 Registration Statement.

Dallas, Texas
December 5, 2012

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Exhibit 23.1

Consent of Independent Public Accounting Firm

EX-99.1

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Exhibit 99.1

FIRST ASSOCIATIONS BANK

Financial Statements

December 31, 2011 and 2010

(With Independent Auditors' Report Thereon)

1

Independent Auditors' Report

The Board of Directors
of First Associations Bank
Dallas, Texas

        We have audited the accompanying balance sheets of First Associations Bank (the Bank) as of December 31, 2011 and 2010, and the related statements of income, changes in stockholders' equity and cash flows for the years then ended. These financial statements are the responsibility of the Bank's management. Our responsibility is to express an opinion on these financial statements based on our audits.

        We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

        In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of First Associations Bank at December 31, 2011 and 2010 and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

Dallas, Texas
January 26, 2012

17330 Preston Road -- Building B, Suite 240 -- Dallas, Texas 75252 -- Office: 972.404.1226 -- Fax: 972.404.1227 -- www.jonesbaggett.com

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FIRST ASSOCIATIONS BANK

Balance Sheets

December 31, 2011 and 2010

	2011		2010
ASSETS
Cash and cash equivalents	$	2,106,380	$	2,047,762
Interest bearing deposits in other banks		10,618,407		13,358,318
Total cash and cash equivalents		12,724,787		15,406,080
Securities available for sale		179,088,610		128,238,426
Securities held to maturity		111,392,942		96,157,896
Loans, net		11,224,933		6,441,510
Bank premises and equipment, net		78,352		84,724
Bank owned life insurance		3,929,197		3,795,682
Accrued interest receivable		2,124,112		1,722,145
Prepaid expenses		292,530		568,501
Other assets		1,024,993		662,118
Total assets	$	321,880,456	$	253,077,082
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Noninterest bearing	$	78,574,809	$	16,073,127
Interest bearing		198,874,862		204,503,129
Total deposits		277,449,671		220,576,256
Repurchase agreements		884,140		209,199
Accrued interest payable		99,169		92,665
Other liabilities		1,194,097		678,874
Commitments and contingencies		—		—
Stockholders' equity:
Common stock-voting, $5 par value; 1,980,229 shares authorized, issued and outstanding at December 31, 2011 and December 31, 2010		9,901,145		9,901,145
Additional paid in capital		11,090,169		11,055,389
Retained earnings		13,537,148		9,267,330
Accumulated other comprehensive income		7,724,917		1,296,224
Total stockholders' equity		42,253,379		31,520,088
Total liabilities and stockholders' equity	$	321,880,456	$	253,077,082

See accompanying notes to financial statements.

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FIRST ASSOCIATIONS BANK

Statements of Income

For the Years Ended December 31, 2011 and 2010

	2011		2010
Interest income:
Interest and fees on loans	$	549,880	$	348,770
Interest on investment securities		8,893,271		8,227,926
Interest on federal funds sold		—		236
Interest on interest bearing deposits in other banks		86,993		81,589
Other		20,462		12,925
Total interest income		9,550,606		8,671,446
Interest expense:
Interest on deposit accounts		1,109,545		1,531,818
Interest on federal funds purchased and other borrowings		2,804		1,082
Total interest expense		1,112,349		1,532,900
Net interest income		8,438,257		7,138,546
Provision for loan losses		216,000		—
Net interest income after provision		8,222,257		7,138,546
Noninterest income:
Service charges on deposit accounts		6,245		6,815
Net gains on sales of securities available for sale		1,214,595		777,673
Earnings on bank owned life insurance		133,515		105,541
Other		1,147		50,384
Total noninterest income		1,355,502		940,413
Noninterest expense:
Salaries and employee benefits		2,268,788		1,758,230
Occupancy of bank premises		148,651		132,096
Lockbox and outsourced support fees		978,000		657,000
Marketing and customer relations		171,766		83,317
Data processing		251,765		240,090
Professional fees		284,261		280,136
FDIC insurance		296,355		396,205
Other		314,286		209,142
Total noninterest expense		4,713,872		3,756,216
Net income	$	4,863,887	$	4,322,743

See accompanying notes to financial statements.

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FIRST ASSOCIATIONS BANK

Statements of Changes in Stockholders' Equity

For the Years Ended December 31, 2011 and 2010

	Common Stock		Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Income			Total
Balance at January 1, 2010	$	9,901,145	$	11,011,751	$	4,944,587		$	2,687,479		$	28,544,962
Stock based compensation		—		43,638		—			—			43,638
Net income		—		—		4,322,743			—			4,322,743
Change in unrealized gains on securities available for sale		—		—		—			(1,391,255	)		(1,391,255	)
Total comprehensive income		—		—		—			—			2,931,488
Balance at December 31, 2010		9,901,145		11,055,389		9,267,330			1,296,224			31,520,088
Stock based compensation		—		34,780		—			—			34,780
Net income		—		—		4,863,887			—			4,863,887
Change in unrealized gains on securities available for sale		—		—		—			6,428,693			6,428,693
Total comprehensive income		—		—		—			—			11,292,580
Dividends paid to shareholders		—		—		(594,069	)		—			(594,069	)
Balance at December 31, 2011	$	9,901,145	$	11,090,169	$	13,537,148		$	7,724,917		$	42,253,379

See accompanying notes to financial statements.

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FIRST ASSOCIATIONS BANK

Statements of Cash Flows

For the Years Ended December 31, 2011 and 2010

	2011			2010
Cash flows from operating activities:
Net income	$	4,863,887		$	4,322,743
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and net accretion		2,006,196			1,777,583
Provision for loan losses		216,000			—
Stock based compensation		34,780			43,638
Gain on sales of investment securities		(1,214,595	)		(777,673	)
Earnings on bank owned life insurance		(133,515	)		(105,541	)
Increase in accrued interest, prepaid expenses and other assets		(488,871	)		(86,593	)
Increase in accrued expenses and other liabilities		521,727			60,622
Net cash provided by operating activities		5,805,609			5,234,779
Cash flows from investing activities:
Activity in available for sale securities:
Purchases		(91,809,647	)		(54,828,878	)
Proceeds from sales, maturities, principal paydowns and called securities		47,379,076			36,081,031
Activity in held to maturity securities:
Purchases		(37,351,907	)		(25,583,621	)
Proceeds from maturities, principal paydowns and called securities		21,377,955			28,515,034
Purchase of bank owned life insurance		—			(1,500,000	)
Net originations of loans		(4,999,423	)		(1,478,718	)
Additions to bank premises and equipment		(37,243	)		(24,408	)
Net cash used in investing activities		(65,441,189	)		(18,819,560	)
Cash flows from financing activities:
Net increase in deposits		56,873,415			23,171,274
Net decrease in federal funds purchased		—			(4,000,000	)
Proceeds from FHLB advances		16,100,000			—
Repayments of FHLB advances		(16,100,000	)		—
Net increase in repurchase agreements		674,941			209,199
Dividend payments to shareholders		(594,069	)		—
Net cash provided by financing activities		56,954,287			19,380,473
Net (decrease) increase in cash and cash equivalents		(2,681,293	)		5,795,692
Cash and cash equivalents at beginning of year		15,406,080			9,610,388
Cash and cash equivalents at end of year	$	12,724,787		$	15,406,080
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest	$	1,105,845		$	1,630,308
Retirement of bank premises and equipment	$	16,479		$	—
Cash paid for income taxes	$	—		$	—

See accompanying notes to financial statements.

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FIRST ASSOCIATIONS BANK

Notes to Financial Statements

December 31, 2011 and 2010

1. Summary of Significant Accounting Policies

        A summary of significant accounting policies of First Associations Bank (the Bank) applied in the preparation of the accompanying financial statements follows. The accounting principles followed by the Bank and the methods of applying them are in conformity with both U.S. generally accepted accounting principles and prevailing practices of the banking industry.

Business

        The Bank, a state bank located in Dallas, Texas, began operations in 2007. The Bank was created to serve the unique needs of community association management companies and is committed to those services beneficial to such companies and their community associations. The Bank is subject to the regulations of certain state and federal agencies and will undergo periodic examinations by those regulatory authorities.

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 values of financial instruments and the status of contingencies are particularly susceptible to significant change in the near term.

Cash and Cash Equivalents

        Cash equivalents, for the purposes of reporting cash flows, include cash on hand, amounts due from banks, other short-term investments and federal funds sold. Federal funds are normally sold for one-day periods.

Investment Securities

        The Bank uses the specific identification method to determine the basis for computing realized gain or loss. The Bank accounts for investment securities as follows:

        Held to Maturity ("HTM").    Debt investment securities that management has the positive intent and ability to hold until maturity are classified as held to maturity and are carried at their remaining unpaid principal balance, net of unamortized premiums or unaccreted discounts. Premiums are amortized and discounts are accreted using the interest method over the period remaining until maturity.

        Available for Sale ("AFS").    Investment securities that will be held for indefinite periods of time, including securities that may be sold in response to changes in market interest or prepayment rates, need for liquidity, and changes in the availability of and the yield of alternative investments, are classified as available for sale. These assets are carried at estimated fair value. Unrealized gains and losses are reported as other comprehensive income. Gains and losses on the sale of available for sale securities are recorded on the trade date and determined using the specific identification method.

        Trading.    No investment securities were designated as trading at December 31, 2011 and 2010.

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FIRST ASSOCIATIONS BANK

Notes to Financial Statements (Continued)

December 31, 2011 and 2010

1. Summary of Significant Accounting Policies (Continued)

        Declines in the fair value of individual held to maturity and available for sale securities below their cost that are other than temporary are recognized by write-downs of the individual securities to their fair value. Such write-downs would be included in earnings as realized losses.

Loans and Allowance for Loan Losses

        Loans are stated at the amount of unpaid principal reduced by an allowance for loan losses. Interest on loans is calculated by using the simple interest method on daily balances of the principal amounts outstanding. The allowance for loan losses is established through a provision for loan losses charged to expense. Loans are charged against the allowance for loan losses when management believes the collectability of the principal is unlikely.

        The allowance is an amount management believes will be adequate to absorb estimated inherent losses on existing loans that are deemed uncollectible based upon management's review and evaluation of the loan portfolio. The allowance for loan losses is comprised of three elements: (i) specific reserves determined in accordance with current authoritative accounting guidance based on probable losses on specific classified loans; (ii) general reserve determined in accordance with current authoritative accounting guidance that consider historical loss rates; and (iii) qualitative reserves determined in accordance with current authoritative accounting guidance based upon general economic conditions and other qualitative risk factors both internal and external to the Bank. The allowance for loan losses is increased by charges to income and decreased by charge-offs (net of recoveries). Management's periodic evaluation of the adequacy of the allowance is based on general economic conditions, the financial condition of borrowers, the value and liquidity of collateral, delinquency, prior loan loss experience, and the results of periodic reviews of the portfolio. For purposes of determining the general reserve, the loan portfolio, less cash secured loans and classified loans, if any, is multiplied by the Bank's historical loss rate or a factor using the Bank's peer group's historical loss rate. The Bank's methodology is constructed so that specific allocations are increased in accordance with deterioration in credit quality and a corresponding increase in risk of loss. In addition, the Bank adjusts the allowance for qualitative factors such as current local economic conditions and trends, including unemployment, changes in lending staff, policies and procedures, changes in credit concentrations, changes in the trends and severity of problem loans and changes in trends in volume and terms of loans. This additional allocation based on qualitative factors serves to compensate for additional areas of uncertainty inherent in the portfolio that are not reflected in the Bank's historic loss factors.

        Accrual of interest is discontinued on a loan and payments applied to principal when management believes, after considering economic and business conditions and collection efforts, the borrower's financial condition is such that collection of interest is doubtful. Generally all loans past due greater than 90 days, based on contractual terms, are placed on non-accrual. For certain loans in the portfolio, facts and circumstances are evaluated in making charge-off decisions. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

        Loans are considered impaired when, based on current information and events, it is probable the Bank will be unable to collect all amounts due in accordance with the original contractual terms of the loan agreement, including scheduled principal and interest payments. If a loan is impaired, a specific valuation allowance is allocated, if necessary. Interest payments on impaired loans are typically applied

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FIRST ASSOCIATIONS BANK

Notes to Financial Statements (Continued)

December 31, 2011 and 2010

1. Summary of Significant Accounting Policies (Continued)

to principal unless collectability of the principal amount is reasonably assured, in which case interest is recognized on a cash basis. Impaired loans, or portions thereof, are charged off when deemed uncollectible.

        The Bank's policy requires measurement of the allowance for an impaired collateral dependent loan based on the fair value of the collateral. Other loan impairments are measured based on the present value of expected future cash flows or the loan's observable market price. At December 31, 2011, all significant impaired loans have been determined to be collateral dependent and the allowance for loss has been measured utilizing the estimated fair value of the collateral.

        From time to time, the Bank may modify its loan agreement with a borrower. A modified loan is considered a troubled debt restructuring when two conditions are met: (i) the borrower is experiencing financial difficulty and (ii) concessions are made by the Bank that would not otherwise be considered for a borrower with similar credit risk characteristics. Modifications to loan terms may include a lower interest rate, a reduction of principal, or a longer term to maturity. Each of these loans is evaluated for impairment and a specific reserve is recorded based on probable losses, taking into consideration the related collateral and modified loan terms and cash flow. As of December 31, 2011 and 2010, the Bank has no troubled debt restructured loans recorded.

        The Bank has certain lending policies and procedures in place that are designed to maximize loan income with an acceptable level of risk. Management reviews and approves these policies and procedures on a regular basis and makes changes as appropriate. Management receives frequent reports related to loan originations, quality, concentrations, delinquencies, non-performing and potential problem loans. Diversification in the loan portfolio is a means of managing risk associated with fluctuations in economic conditions, both by type of loan and geography.

        Loans to community associations are underwritten after evaluating and understanding the borrower's ability to operate profitably and effectively. Underwriting standards are designed to determine whether the borrower possesses sound business ethics and practices and to evaluate current and projected cash flows to determine the ability of the borrower to repay their obligations as agreed. Community association loans are primarily made based on the identified cash flows of the borrower. Therefore, most community association loans are secured by the association's assessment income stream.

Fees and Costs Associated with Originating Loans

        Fees and costs associated with originating loans are recognized as income or expense generally in the period in which the fees were received and/or costs were incurred. Under generally accepted accounting principles such fees and costs generally are deferred and recognized over the life of the loan as an adjustment of yield. For the years ended December 31, 2011 and 2010, management believes that not deferring such fees and costs and amortizing them over the life of the related loans does not materially affect the financial position or results of operations of the Bank.

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FIRST ASSOCIATIONS BANK

Notes to Financial Statements (Continued)

December 31, 2011 and 2010

1. Summary of Significant Accounting Policies (Continued)

Bank Premises and Equipment

        Leasehold improvements and furniture and equipment are stated at cost, less accumulated depreciation. Depreciation is provided on a straight-line basis over the estimated useful lives of the assets as follows:

Leasehold improvements	term of lease
Furniture, fixtures and equipment	2 - 7 years

Repurchase Agreements

        The Bank sells certain securities under agreements to repurchase. The agreements are treated as financing, and the obligations to repurchase securities sold are reflected as a liability in the Balance Sheets. The dollar amount of investment securities underlying the agreements remain in the asset accounts.

Income Taxes

        The Bank with the consent of its stockholders elected to be an S corporation under the Internal Revenue Code (Code). Earnings and losses of the Bank are included in the personal income tax returns of the stockholders and taxed depending on their personal tax strategies. Because the Bank's stockholders are obligated to pay federal income taxes on the earnings of the Bank, the Bank generally expects to declare cash dividends (to the extent permitted by bank regulations) sufficient to fund stockholders' tax payments as they come due.

Stock Based Compensation

        The Bank accounts for its stock awards to eligible employees, officers and directors in accordance with authoritative guidance which requires the Bank to recognize in the Statement of Income, the grant-date fair value of stock awards issued over the vesting period. The Bank recorded stock option expense totaling approximately $35,000 and $44,000 for the years ended December 31, 2011 and 2010, respectively.

Fair Values of Financial Instruments

        Fair values of financial instruments are estimated using relevant market information and other assumptions. Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments and other factors, especially in the absence of broad markets for particular items. Changes in assumptions or in market conditions could significantly affect the estimates. The fair value estimates of existing on- and off-balance sheet financial instruments do not include the value of anticipated future business or the value of assets and liabilities not considered financial instruments.

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FIRST ASSOCIATIONS BANK

Notes to Financial Statements (Continued)

December 31, 2011 and 2010

1. Summary of Significant Accounting Policies (Continued)

Comprehensive Income

        Comprehensive income is included in the Statements of Changes in Stockholders' Equity and reported for all periods. Comprehensive income includes both net income and other comprehensive income, which includes the change in unrealized gains and losses on securities available for sale.

Subsequent Events

        Subsequent events have been evaluated through January 26, 2012, which was the date the financial statements were available to be issued.

Reclassification

        Certain amounts previously reported may have been reclassified to conform to the current format.

2. Recently Issued Authoritative Accounting Guidance

        In 2010, the Financial Accounting Standards Board (FASB) issued authoritative guidance expanding disclosures related to fair value measurements including (i) the amounts of significant transfers of assets or liabilities between Levels 1 and 2 of the fair value hierarchy and the reasons for the transfers, (ii) the reasons for transfers of assets or liabilities in or out of Level 3 of the fair value hierarchy, with significant transfers disclosed separately, (iii) the policy for determining when transfers between levels of the fair value hierarchy are recognized and (iv) for recurring fair value measurements of assets and liabilities in Level 3 of the fair value hierarchy, a gross presentation of information about purchases, sales, issuances and settlements. The new guidance further clarifies that (i) fair value measurement disclosures should be provided for each class of assets and liabilities (rather than major category), which would generally be a subset of assets or liabilities within a line item in the Balance Sheets and (ii) disclosures should be provided about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements for each class of assets and liabilities included in Levels 2 and 3 of the fair value hierarchy. The disclosures related to the gross presentation of purchases, sales, issuances and settlements of assets and liabilities included in Level 3 of the fair value hierarchy were required beginning January 1, 2011. The remaining disclosure requirements and clarifications made by the new guidance became effective on January 1, 2010 and did not have a significant impact on the Bank's financial statements.

        In 2010, the FASB issued authoritative guidance that requires entities to provide enhanced disclosures in the financial statements about their loans including credit risk exposures and the allowance for loan losses. Included in the new guidance are credit quality information, impaired loan information, loan modification information and nonaccrual and past due information. The new disclosures were effective for the Bank on December 15, 2011.

        In 2011, the FASB issued authoritative guidance to provide additional guidance and clarification in determining whether a creditor has granted a concession and whether a debtor is experiencing financial difficulties for purposes of determining whether a restructuring constitutes a troubled debt restructuring. The new guidance includes examples illustrating whether a restructuring constitutes a troubled debt restructuring. The authoritative guidance is effective for annual periods ending on or

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FIRST ASSOCIATIONS BANK

Notes to Financial Statements (Continued)

December 31, 2011 and 2010

2. Recently Issued Authoritative Accounting Guidance (Continued)

after December 15, 2012. Adoption of this new guidance will not have a significant impact on the Bank's financial statements.

        In 2011, the FASB issued authoritative guidance requiring most entities to present items of net income and other comprehensive income either in one continuous statement—referred to as the Statement of Comprehensive Income—or in two separate, but consecutive, statements of net income and other comprehensive income. The new disclosures will be effective for the Bank beginning December 15, 2012. The Bank does not expect the adoption of this authoritative guidance to have a significant effect on the financial condition and results of operations.

3. Investment Securities

        Investment securities have been classified in the accompanying balance sheets according to management's intent. The carrying amount of securities and their approximate fair values are as follows:

	December 31, 2011
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available for Sale
Mortgage-backed securities	$	59,376,896	$	713,427	$	15,275	$	60,075,048
Collateralized mortgage obligations		38,665,401		1,337,310		—		40,002,711
Municipal obligations		73,321,396		5,703,601		14,146		79,010,851
	$	171,363,693	$	7,754,338	$	29,421	$	179,088,610
Held to Maturity
Mortgage-backed securities	$	51,581,246	$	2,337,732	$	—	$	53,918,978
Collateralized mortgage obligations		16,480,306		323,565		—		16,803,871
Municipal obligations		43,331,390		3,185,041		27,917		46,488,514
	$	111,392,942	$	5,846,338	$	27,917	$	117,211,363

12

FIRST ASSOCIATIONS BANK

Notes to Financial Statements (Continued)

December 31, 2011 and 2010

3. Investment Securities (Continued)

	December 31, 2010
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available for Sale
Mortgage-backed securities	$	51,646,678	$	1,020,051	$	97,724	$	52,569,005
Collateralized mortgage obligations		15,707,761		304,245		—		16,012,006
Municipal obligations		59,587,763		654,528		584,876		59,657,415
	$	126,942,202	$	1,978,824	$	682,600	$	128,238,426
Held to Maturity
Mortgage-backed securities	$	43,971,639	$	1,775,861	$	—	$	45,747,500
Collateralized mortgage obligations		20,863,313		462,675		156,692		21,169,296
Municipal obligations		31,322,944		146,683		595,776		30,873,851
	$	96,157,896	$	2,385,219	$	752,468	$	97,790,647

        The following tables disclose the Bank's investment securities that have been in a continuous unrealized loss position for less than 12 months and those that have been in a continuous unrealized loss position for 12 or more months:

	December 31, 2011
	Less than 12 Months				12 Months or More				Totals
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Available for Sale
Mortgage-backed securities	$	10,478,202	$	15,275	$	—	$	—	$	10,478,202	$	15,275
Municipal obligations		1,278,275		14,146		—		—		1,278,275		14,146
	$	11,756,477	$	29,421	$	—	$	—	$	11,756,477	$	29,421
Held to Maturity
Municipal obligations	$	918,103	$	16,372	$	626,630	$	11,545	$	1,544,733	$	27,917

13

FIRST ASSOCIATIONS BANK

Notes to Financial Statements (Continued)

December 31, 2011 and 2010

3. Investment Securities (Continued)

	December 31, 2010
	Less than 12 Months				12 Months or More				Totals
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Available for Sale
Mortgage-backed securities	$	6,574,161	$	97,724	$	—	$	—	$	6,574,161	$	97,724
Municipal obligations		24,119,284		584,876		—		—		24,119,284		584,876
	$	30,693,445	$	682,600	$	—	$	—	$	30,693,445	$	682,600
Held to Maturity
Mortgage-backed securities	$	3,078,532	$	156,692	$	—	$	—	$	3,078,532	$	156,692
Municipal obligations		18,409,915		595,776		—		—		18,409,915		595,776
	$	21,488,447	$	752,468	$	—	$	—	$	21,488,447	$	752,468

        The number of investment positions in this unrealized loss position totaled 7 at December 31, 2011. The Bank does not believe these unrealized losses are "other than temporary" as (i) the Bank does not have the intent to sell investment securities prior to recovery and (ii) it is more likely than not that the Bank will not have to sell these securities prior to recovery. The unrealized losses noted are interest rate related due to the level of interest rates at December 31, 2011. The Bank has reviewed the ratings of the issuers and has not identified any issues related to the ultimate repayment of principal as a result of credit concerns on these securities.

        The amortized costs and estimated fair values of securities are presented below by contractual maturity. Contractual maturities of mortgage-backed securities and collateralized mortgage obligations will differ from expected maturities because issuers may have the right to call or prepay obligations. Therefore, these securities are not included in the maturity categories below.

	December 31, 2011
	Available for Sale				Held to Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	—	$	—	$	—	$	—
Due from one year to five years		3,314,908		3,485,157		—		—
Due from five years to ten years		43,340,714		47,365,920		7,538,375		8,267,710
Due after ten years		26,665,774		28,159,774		35,793,015		38,220,804
		73,321,396		79,010,851		43,331,390		46,488,514
Mortgage-backed securities and collateralized mortgage obligations		98,042,297		100,077,759		68,061,552		70,722,849
	$	171,363,693	$	179,088,610	$	111,392,942	$	117,211,363

        Gross proceeds from sales of securities were approximately $31,212,000 and $18,278,000 in 2011 and 2010, respectively. Gross realized gains and losses on sales of securities were approximately $1,228,000 and $13,000, respectively, for the year ended December 31, 2011. Gross realized gains on sales of securities were approximately $778,000 for the year ended December 31, 2010. There were no losses recognized as a result of sales in 2010.

14

FIRST ASSOCIATIONS BANK

Notes to Financial Statements (Continued)

December 31, 2011 and 2010

3. Investment Securities (Continued)

        Included in the securities sold during 2011 were two securities which were designated by the Bank as held to maturity. In accordance with authoritative literature, the securities were sold after the Bank had collected in excess of 85% of the original principal amount. The carrying values of held to maturity securities sold during 2011 were approximately $401,000 and the gains recognized from those sales were approximately $14,000.

        Certain investment securities were pledged to secure repurchase agreements at December 31, 2011 and 2010. Although approximately $12,134,000 and $13,390,000 of investments securities are available for pledging at December 31, 2011 and 2010, respectively, the pledged securities were limited to approximately $972,000 and $230,000, respectively.

4. Loans and Allowance for Loan Losses

        Loans in the accompanying balance sheets consisted of the following:

	December 31,
	2011			2010
Loans to community associations	$	11,502,068		$	6,503,510
Overdrafts		865			—
		11,502,933			6,503,510
Allowance for loan losses		(278,000	)		(62,000	)
	$	11,224,933		$	6,441,510

        The Bank extends credit solely to community associations throughout the nation.

Non-Accrual and Past Due Loans

        Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Loans are placed on non-accrual status when, in management's opinion, the borrower may be unable to meet payment obligations as they become due, as well as when required by regulatory provisions. Loans may be placed on non-accrual status regardless of whether or not such loans are considered past due. When interest accrual is discontinued, all unpaid accrued interest is reversed. Interest income is subsequently recognized only to the extent cash payments are received in excess of principal due. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

        Non-accrual loans, as of December 31, 2011 and 2010, consisted of the following:

	2011		2010
Loans to community associations	$	146,318	$	—

        Had non-accrual loans performed in accordance with their original contract terms, the Company would have recognized additional interest income of approximately $3,500 in 2011.

15

FIRST ASSOCIATIONS BANK

Notes to Financial Statements (Continued)

December 31, 2011 and 2010

4. Loans and Allowance for Loan Losses (Continued)

        An age analysis of past due loans, aggregated by class of loans, as of December 31, 2011 are as follows:

	30 to 59 Days		60 to 89 Days		90 Days or Greater		Total Past Due		Total Current		Total 90 Days Past Due and Still Accruing
Loans to community associations	$	—	$	—	$	146,318	$	146,318	$	11,356,615	$	—

Impaired Loans

        Loans are considered impaired when, based on current information and events, it is probable the Bank will be unable to collect all amounts due in accordance with the original contractual terms of the loan agreement, including scheduled principal and interest payments. Impairment is evaluated in total for smaller-balance loans of a similar nature and on an individual loan basis for other loans. If a loan is impaired, a specific valuation allowance is allocated, if necessary, so that the loan is reported net, at the present value of estimated future cash flows using the loan's existing rate or at the fair value of collateral if repayment is expected solely from the collateral. Interest payments on impaired loans are typically applied to principal unless collectability of the principal amount is reasonably assured, in which case interest is recognized on a cash basis. Impaired loans, or portions thereof, are charged off when deemed uncollectible.

        Impaired loans at December 31, 2011 are summarized in the following table. No interest was recognized on impaired loans subsequent to their classification as impaired.

	Unpaid Contractual Principal Balance		Recorded Investment with No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance		Average Recorded Investment During Year
Loans to community associations	$	146,318	$	—	$	146,318	$	146,318	$	146,318	$	147,000

        There were no impaired loans recorded by the Bank at December 31, 2010.

        Interest payments received on impaired loans are recorded as interest income unless collections of the remaining recorded investment are doubtful, at which time payments received are recorded as reductions of principal. The impaired loan recorded at December 31, 2011, is also on nonaccrual and therefore, the Bank did not recognized interest income on impaired loans during the year ended December 31, 2011. If interest on impaired loans had been recognized on a full accrual basis during the year ended December 31, 2011, such income would have been approximately $3,500.

Credit Quality Indicators

        From a credit risk standpoint, the Bank classifies its loans in one of four categories: (i) pass, (ii) special mention, (iii) substandard or (iv) doubtful. Loans classified as loss are charged-off.

16

FIRST ASSOCIATIONS BANK

Notes to Financial Statements (Continued)

December 31, 2011 and 2010

4. Loans and Allowance for Loan Losses (Continued)

        The classifications of loans reflect a judgment about the risks of default and loss associated with the loan. The Bank reviews the ratings on credits quarterly. Ratings are adjusted to reflect the degree of risk and loss that is felt to be inherent in each credit as of each quarterly reporting period. The methodology is structured so that specific allocations are increased in accordance with deterioration in credit quality (and a corresponding increase in risk and loss) or decreased in accordance with improvement in credit quality (and a corresponding decrease in risk and loss).

        Credits rated special mention show clear signs of financial weaknesses or deterioration in credit worthiness, however, such concerns are not so pronounced that the Bank generally expects to experience significant loss within the short-term. Such credits typically maintain the ability to perform within standard credit terms and credit exposure is not as prominent as credits rated more harshly.

        Credits rated substandard are those in which the normal repayment of principal and interest may be, or has been, jeopardized by reason of adverse trends or developments of a financial, managerial, economic or political nature, or important weaknesses which exist in collateral. A protracted workout on these credits is a distinct possibility. Prompt corrective action is therefore required to strengthen the Bank's position, and/or to reduce exposure and to assure that adequate remedial measures are taken by the borrower. Credit exposure becomes more likely in such credits and a serious evaluation of the secondary support to the credit is performed.

        Credits rated doubtful are those in which full collection of principal appears highly questionable, and which some degree of loss is anticipated, even though the ultimate amount of loss may not yet be certain and/or other factors exist which could affect collection of debt. Based upon available information, positive action by the Bank is required to avert or minimize loss. Credits rated doubtful are generally also placed on nonaccrual.

        At December 31, 2011, the following summarizes the Bank's internal ratings of its loans:

	Pass		Special Mention		Substandard		Doubtful		Total
Loans to community associations	$	11,356,615	$	—	$	—	$	146,318	$	11,502,933

        An analysis of the allowance for loan losses is as follows:

	Year Ended December 31,
	2011		2010
Balance at beginning of year	$	62,000	$	62,000
Provision charged to earnings		216,000		—
Losses charged to the account allowance		—		—
Recoveries on loans previously charged-off		—		—
Net charge-offs		—		—
Balance at end of year	$	278,000	$	62,000

17

FIRST ASSOCIATIONS BANK

Notes to Financial Statements (Continued)

December 31, 2011 and 2010

4. Loans and Allowance for Loan Losses (Continued)

        All of the activity included in the analysis of the allowance for loan losses is attributable to loans to community associations. The following table summarizes the allocation of the allowance for loan losses for the year ended December 31, 2011:

Period-end amount allocated to:
Loans individually evaluated for impairment	$	146,318
Loans collectively evaluated for impairment		131,682
Ending balance	$	278,000

        The Bank's recorded investment in loans as of December 31, 2011 related to the balance in the allowance for loan losses on the basis of the Bank's impairment methodology is as follows:

	Loans to Community Associations
Loans individually evaluated for impairment	$	146,318
Loans collectively evaluated for impairment		11,356,615
Total	$	11,502,933

5. Bank Premises and Equipment

        Bank premises and equipment in the accompanying balance sheets consisted of the following:

	December 31,
	2011		2010
Leasehold improvements	$	8,994	$	8,994
Furniture and equipment		270,377		249,613
		279,371		258,607
Less accumulated depreciation		201,019		173,883
Bank premises and equipment, net	$	78,352	$	84,724

        Depreciation expense amounted to approximately $44,000 for both of the periods ending December 31, 2011 and 2010.

18

FIRST ASSOCIATIONS BANK

Notes to Financial Statements (Continued)

December 31, 2011 and 2010

6. Deposits

        Deposits in the accompanying balance sheets consisted of the following:

	December 31,
	2011		2010
Noninterest bearing demand deposits	$	78,574,809	$	16,073,127
Interest bearing demand deposits		60,534,741		102,149,216
Limited access money market accounts		118,399,506		87,090,925
Certificates of deposit, $100,000 and greater		7,726,591		4,325,182
Certificates of deposit, less than $100,000		12,214,024		10,937,806
Total deposits	$	277,449,671	$	220,576,256

        The scheduled maturities of certificates of deposit at December 31, 2011 are as follows:

Year	Amount
2012	$	14,065,415
2013		3,425,391
2014		2,309,141
2015		109,918
2016		30,750
	$	19,940,615

7. Repurchase Agreements

        Securities sold under agreement to repurchase represent overnight borrowings by the Bank and are collateralized by investment securities with fair values of approximately $972,000 and $230,000 at December 31, 2011 and 2010, respectively. Repurchase agreements at December 31, 2011 and 2010, amount to approximately $884,000 and $209,000, respectively.

8. Income Taxes

        As discussed in Note 1, the Bank with the consent of its stockholders elected to be an S corporation under the Internal Revenue Code. The Bank will generally report no federal income tax expense or benefit in its financial statements.

        There are no deferred income tax assets or liabilities as of December 31, 2011 or 2010.

9. Federal Funds Purchased

        At December 31, 2011, the Bank maintained two credit facilities with local banks which provide federal funds credit extensions with an ability to borrow up to an aggregate amount of approximately $20,000,000. At December 31, 2011 and 2010, there were no outstanding balances due on the credit facilities.

10. Financial Instruments With Off Balance Sheet Risk

        The Bank is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments

19

FIRST ASSOCIATIONS BANK

Notes to Financial Statements (Continued)

December 31, 2011 and 2010

10. Financial Instruments With Off Balance Sheet Risk (Continued)

to extend credit. Those instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized on the balance sheet. The Bank's exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit is represented by the contractual amount of those instruments. The Bank uses the same credit policies in making commitments and conditional obligations as it does for on balance sheet instruments.

        Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Management evaluates each customer's credit-worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Bank upon extension of credit, is based on management's credit evaluation of the borrower.

        The contractual amounts of credit related financial instruments such as commitments to extend credit represents the amounts of potential accounting loss should the contract be fully drawn upon, the customer default, and the value of any existing collateral become worthless. Although the maximum exposure to loss is the amount of such commitments, management currently anticipates no material losses from such activities.

        At December 31, 2011 and 2010, the following financial instruments were outstanding whose contract amounts represent credit risk:

	2011		2010
Commitments to extend credit	$	2,739,000	$	945,000

11. Commitments and Contingencies

Operating Leases

        The Bank leases an automobile, its office facility in Dallas, Texas and an office in Connecticut under non-cancelable operating leases. Rent expense during the years ending December 31, 2011 and 2010, was approximately $80,000 and $69,000, respectively. The Bank's current lease for its Dallas office facility expires in May 2012. The Bank fully anticipates executing a new lease for this facility and is in negotiations with the lessor. The Bank's current lease for its Connecticut office is a one year lease with the option to renew for an additional year. The Connecticut lease expires in August 2012. Rent expense specific to the office leases for the years ending December 31, 2011 and 2010 was approximately $57,000 and $53,000, respectively.

        Minimum future rental payments under these non-cancelable operating leases for each year through 2014 and in the aggregate are as follows:

Year	Amount
2012	$	43,000
2013		16,000
2014		9,000
	$	68,000

20

FIRST ASSOCIATIONS BANK

Notes to Financial Statements (Continued)

December 31, 2011 and 2010

11. Commitments and Contingencies (Continued)

Litigation

        The Bank may from time to time be involved in certain legal actions arising from normal business activities. Management believes that these actions are without merit or that any ultimate liability resulting from them will not materially affect the financial position or results of operations of the Bank.

        The Bank does not anticipate any material losses as a result of these commitments and contingent liabilities.

12. Fair Value Measurements

        The authoritative guidance for fair value measurements defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. The price in the principal (or most advantageous) market used to measure the fair value of the asset or liability shall not be adjusted for transaction costs. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets and liabilities; it is not a forced transaction. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact and (iv) willing to transact.

        The authoritative guidance requires the use of valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets and liabilities. The income approach uses valuation techniques to convert future amounts, such as cash flows or earnings, to a single present amount on a discounted basis. The cost approach is based on the amount that currently would be required to replace the service capacity of an asset (replacement costs). Valuation techniques should be consistently applied. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable, meaning those that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources, or unobservable, meaning those that reflect the reporting entity's own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. In that regard, the authoritative guidance establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.

21

FIRST ASSOCIATIONS BANK

Notes to Financial Statements (Continued)

December 31, 2011 and 2010

12. Fair Value Measurements (Continued)

        The fair value hierarchy is as follows:

Level 1 Inputs.    Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

Level 2 Inputs.    Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (for example, interest rates, volatilities, prepayment speeds, loss severities, credit risks and default rates) or inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 2 investments consist primarily of obligations of U.S. government sponsored enterprises and agencies, obligations of state and municipal subdivisions, corporate bonds and mortgage backed securities.

Level 3 Inputs.    Significant unobservable inputs that reflect an entity's own assumptions that market participants would use in pricing the assets or liabilities.

        In general, fair value is based upon quoted market prices, where available. If such quoted market prices are not available, fair value is based upon internally developed models that primarily use, as inputs, observable market-based parameters. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. While management believes the Bank's valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.

        A description of the valuation methodologies used for assets and liabilities measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below.

Financial Assets and Financial Liabilities

        Financial assets and financial liabilities measured at fair value on a recurring basis include the following:

Investment Securities Available for Sale:    Securities classified as available-for-sale are reported at fair value utilizing Level 2 inputs. For these securities, the Bank obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the United States Treasury (the "Treasury") yield curve, live trading levels, trade execution data, market consensus prepayments speeds, credit information and the security's terms and conditions, among other things.

        There were no transfers between Level 2 and Level 3 during the years ended December 31, 2011 and 2010.

22

FIRST ASSOCIATIONS BANK

Notes to Financial Statements (Continued)

December 31, 2011 and 2010

12. Fair Value Measurements (Continued)

        The following table summarizes financial assets and financial liabilities measured at fair value on a recurring basis as of December 31, 2011 and 2010, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

	Fair Value Measurements Using
	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs
December 31, 2011:
Investment securities available for sale	$	—	$	179,088,610	$	—
December 31, 2010:
Investment securities available for sale	$	—	$	128,238,426	$	—

        Certain financial assets and financial liabilities are measured at fair value on a nonrecurring basis, that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). Financial assets and financial liabilities measured at fair value on a non-recurring basis during the years ending December 31, 2011 and 2010 include the following:

Impaired Loans.    Impaired loans are reported at the fair value of the underlying collateral if repayment is expected solely from the collateral. Collateral values are estimated using Level 2 inputs based on observable market data or Level 3 input based on customized discounting criteria. The following table presents impaired loans that were remeasured and reported at fair value through a specific valuation allowance allocation of the allowance for loan losses:

	2011			2010
Carrying value of impaired loans	$	146,318		$	—
Specific valuation allowance allocations		(146,318	)		—
Fair value of impaired loans	$	—		$	—

        There were no non-financial assets and liabilities measured at fair value on a non-recurring basis during the years ending December 31, 2011 and 2010.

        The Bank is required under current authoritative guidance to disclose the estimated fair value of their financial instrument assets and liabilities including those subject to the requirements discussed above. For the Bank, as for most financial institutions, substantially all of its assets and liabilities are considered financial instruments, as defined. Many of the Bank's financial instruments, however, lack an available trading market as characterized by a willing buyer and willing seller engaging in an exchange transaction.

        The estimated fair value amounts of financial instruments have been determined by the Bank using available market information and appropriate valuation methodologies. However, considerable judgment is required to interpret data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Bank could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. In addition, reasonable comparability between financial institutions may not be likely due to the wide range of permitted valuation techniques and

23

FIRST ASSOCIATIONS BANK

Notes to Financial Statements (Continued)

December 31, 2011 and 2010

12. Fair Value Measurements (Continued)

numerous estimates that must be made given the absence of active secondary markets for many of the financial instruments. This lack of uniform valuation methodologies also introduces a greater degree of subjectivity to these estimated fair values.

        Financial instruments with stated maturities have been valued using a present value discounted cash flow with a discount rate approximating current market for similar assets and liabilities. Financial instrument assets with variable rates and financial instrument liabilities with no stated maturities have an estimated fair value equal to both the amount payable on demand and the carrying value.

        The carrying value and the estimated fair value of the Bank's contractual off-balance-sheet commitments to extend credit, which are generally priced at market at the time of funding, are not material to the Bank's financial statements.

        The estimated fair values and carrying values of all financial instruments under current authoritative guidance at December 31, 2011 and 2010 were as follows:

	December 31, 2011				December 31, 2010
	Book Value		Fair Value		Book Value		Fair Value
Financial assets:
Cash and cash equivalents	$	12,725,000	$	12,725,000	$	15,406,000	$	15,406,000
Securities available for sale	$	179,089,000	$	179,089,000	$	123,238,000	$	128,238,000
Securities held to maturity	$	111,393,000	$	117,211,000	$	96,158,000	$	97,791,000
Loans, net(1)	$	11,225,000	$	11,343,000	$	6,442,000	$	6,293,000
Investment in life insurance policies	$	3,929,000	$	3,929,000	$	3,796,000	$	3,796,000
Accrued interest receivable	$	2,124,000	$	2,124,000	$	1,722,000	$	1,722,000
Financial liabilities:
Deposits	$	277,450,000	$	277,556,000	$	220,576,000	$	220,632,000
Repurchase agreements	$	884,000	$	884,000	$	209,000	$	209,000
Accrued interest payable	$	99,000	$	99,000	$	93,000	$	93,000

(1)

Presented net of allowance for loan losses

13. Significant Group Concentrations of Credit Risk

        Most of the Bank's business activity is with community associations through their management companies, as agent. In addition, the Bank holds a substantial amount of municipal obligations and mortgage-backed securities, which are issued by GNMA, FNMA or FHLMC.

        There were uninsured deposits at other financial institutions totaling approximately $1,756,000 and $3,749,000 at December 31, 2011 and 2010, respectively.

14. Stock Option Plan

        During November 2006, the Bank created a stock option plan (Plan) applicable to 150,000 shares of the Bank's common stock. Under the Plan, options can be granted to eligible directors and key employees of the Bank. The Plan is administered by the Compensation Committee of the Board of

24

FIRST ASSOCIATIONS BANK

Notes to Financial Statements (Continued)

December 31, 2011 and 2010

14. Stock Option Plan (Continued)

Directors. The option price per share of the options under the Plan shall not be less than the fair market value per share at the time the option is granted. The initial grant of options to opening day employees vest at 20% on the day the Bank opened and 20% for each year thereafter. Any subsequent grants generally vest 20% per year. Options granted under the Plan are exercisable for a period not to exceed ten years from the options grant date.

        The fair value of each option award is estimated on the grant date using the Black-Scholes option pricing model with the following assumptions:

	December 31,
	2011	2010
Dividend yield	0.00%	0.00%
Expected life	7 years	7 years
Expected volatility	15.00%	15.00%
Risk-free interest rate	3.35% to 3.53%	3.50%

        The term of 7 years was based on a simplified method calculation using the contractual terms. Compensation expense is recognized on a straight-line basis over the vesting period. The compensation cost that has been charged against income for the Plan was approximately $35,000 and $44,000 for the years ending December 31, 2011 and 2010, respectively. As of December 31, 2011, the Bank has approximately $86,000 in unrecognized compensation expense related to non-vested option awards that are expected to be recognized over the remaining non-vested periods of the options granted. There were 73,200 shares vested and exercisable as of December 31, 2011.

        A summary of option transactions during the periods ended December 31, 2011 and 2010 is as follows:

	2011									2010
	Shares Underlying Options			Weighted Average Exercise Price			Weighted Average Remaining Contract Term			Shares Underlying Options		Weighted Average Exercise Price		Weighted Average Remaining Contract Term
Outstanding at beginning of year		78,000		$	10.41			5.43			74,000	$	10.11		6.43
Granted during the year		20,000			17.00			9.11			4,000		16.00		9.38
Forefeited during the year		(2,000	)		(16.00	)		(8.38	)		—
Exercised during the year		—									—
Outstanding at the end of year		96,000		$	11.67			7.31			78,000	$	10.41		5.63
Options exercisable at end of year		73,200						4.92			70,833				5.43
Weighted-average grant date fair value of options granted during the year				$	4.63							$	4.40

25

FIRST ASSOCIATIONS BANK

Notes to Financial Statements (Continued)

December 31, 2011 and 2010

14. Stock Option Plan (Continued)

        A summary of options outstanding as of December 31, 2011 is as follows:

Options Outstanding						Options Exercisable
Exercise Prices		Number of Options Outstanding		Weighted Average Remaining Contractual Life		Number of Options Exercisable		Weighted Average Exercise Price
$	10.00 - $17.00		96,000		7.31 years		73,200	$	10.02

        A summary of options outstanding as of December 31, 2010 is as follows:

Options Outstanding						Options Exercisable
Exercise Prices		Number of Options Outstanding		Weighted Average Remaining Contractual Life		Number of Options Exercisable		Weighted Average Exercise Price
$	10.00 - $16.00		78,000		5.63 years		70,833	$	10.06

        A summary of nonvested option shares transactions during the periods ending December 31, 2011 and 2010 is as follows:

	December 31, 2011					December 31, 2010
	Weighted Average					Weighted Average
	Number of Options			Fair Value		Number of Options			Fair Value
Nonvested at January 1		7,167		$	3.90		15,500		$	2.96
Granted during the year		20,000			4.63		—			—
Vested during the year		(2,367	)		2.96		(8,333	)		2.91
Forfeited during the year		(2,000	)		—		—			—
Nonvested at at December 31		22,800		$	4.52		7,167		$	3.90

15. Stock Warrants

        In connection with the organization of the Bank, the Bank's organizers advanced funds for organizational and other pre-opening expenses. As consideration for the advances, each organizer received between 10,000 and 13,641 warrants to purchase one share of common stock. A total of 64,564 warrants were issued. These warrants are exercisable at a price of $10.00 per share and may be exercised within ten years or before January 1, 2017. The weighted average remaining contractual life of warrants outstanding at December 31, 2011 was approximately 5.01 years. There were no warrants granted or exercised during 2011 and 2010.

16. Deferred Compensation

        The Bank entered into an executive deferred compensation agreement (Agreement) with two of its executive officers. The Agreement is indirectly funded by the Bank's purchase of corporate-owned life insurance contracts. The benefits payable under the Agreement commence on the date of retirement,

26

FIRST ASSOCIATIONS BANK

Notes to Financial Statements (Continued)

December 31, 2011 and 2010

16. Deferred Compensation (Continued)

or death if earlier, and continue monthly over defined periods. The benefits payable are accrued monthly in an amount whereby the accrual at the date of the participant's retirement will equal the present value of the future benefits payable. At December 31, 2011 and 2010, and for the years then ended, assets, liabilities and expenses related to the plans were as follows:

	2011		2010
Approximate cash surrender value of life insurance policies associated with the plans	$	3,929,000	$	3,796,000
Accrued benefits in connection with the plans (included as a component of other liabilities)	$	646,000	$	451,000
Benefit expense in connection with the plans (included as a component of salaries and employee benefits)	$	71,000	$	45,000

17. Related Party Transactions

        Most of the Bank's deposits obtained from community associations are managed by an entity or related entities that are owned by a shareholder and director of the Bank. For the year ended December 31, 2011, marketing and support fees of approximately $310,000, were accrued to be paid to or in support of the aforementioned entities and are included in other liabilities in the accompanying balance sheets. There were no marketing and support fees paid to or in support of the aforementioned parties during the year ended December 31, 2010.

18. Restrictions on Undivided Profits

        Under banking law there are legal restrictions limiting the amount of dividends the Bank can declare. Approval of the regulatory authorities is required if the effect of the dividends declared would cause regulatory capital of the Bank to fall below specified minimum levels.

19. Stockholders' Equity and Regulatory Matters

        The Bank is subject to various regulatory capital requirements administered by bank regulatory agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Bank's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank's assets, liabilities, and certain off balance sheet items as calculated under regulatory accounting practices. The Bank's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

        Quantitative measures established by regulations to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the table below) of total and Tier I capital (as defined in the regulations) to risk weighted assets (as defined), and Tier I capital (as defined) to average assets (as defined). Management believes, as of December 31, 2011 and 2010, that the Bank meets all capital adequacy requirements to which it is subject.

27

FIRST ASSOCIATIONS BANK

Notes to Financial Statements (Continued)

December 31, 2011 and 2010

19. Stockholders' Equity and Regulatory Matters (Continued)

        As of December 31, 2011 and 2010, the Bank's capital ratios exceeded those levels necessary to be categorized as "well capitalized" under the regulatory framework for prompt corrective action. To be categorized as "well capitalized" the Bank must maintain minimum total risk-based, Tier I risk-based and Tier I leverage ratios as set forth in the table. There are no conditions or events since December 31, 2011 that management believes have changed the Bank's category.

        A comparison of the Bank's actual capital amounts and ratios to required capital amounts and ratios is presented in the following table (in thousands):

	Actual						For Capital Adequacy Purposes							To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio				Amount			Ratio				Amount			Ratio
As of December 31, 2011
Total capital (to weighted assets)	$	34,806		47.1	%	³	$	5,906	³		8.0	%	³	$	7,383	³		10.0	%
Tier I capital (to weighted assets)	$	34,528		46.8	%	³	$	2,953	³		4.0	%	³	$	4,430	³		6.0	%
Tier I capital (to average assets)	$	34,528		11.4	%	³	$	12,129	³		4.0	%	³	$	15,161	³		5.0	%
As of December 31, 2010
Total capital (to weighted assets)	$	30,286		54.9	%	³	$	4,410	³		8.0	%	³	$	5,512	³		10.0	%
Tier I capital (to weighted assets)	$	30,224		54.8	%	³	$	2,205	³		4.0	%	³	$	3,307	³		6.0	%
Tier I capital (to average assets)	$	30,224		12.3	%	³	$	9,871	³		4.0	%	³	$	12,339	³		5.0	%

28

QuickLinks

Exhibit 99.1

FIRST ASSOCIATIONS BANK Financial Statements December 31, 2011 and 2010 (With Independent Auditors' Report Thereon)
Independent Auditors' Report
FIRST ASSOCIATIONS BANK Balance Sheets December 31, 2011 and 2010
FIRST ASSOCIATIONS BANK Statements of Income For the Years Ended December 31, 2011 and 2010
FIRST ASSOCIATIONS BANK Statements of Changes in Stockholders' Equity For the Years Ended December 31, 2011 and 2010
FIRST ASSOCIATIONS BANK Statements of Cash Flows For the Years Ended December 31, 2011 and 2010
FIRST ASSOCIATIONS BANK Notes to Financial Statements December 31, 2011 and 2010

EX-99.2

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Exhibit 99.2

FIRST ASSOCIATIONS BANK

Balance Sheets

(Unaudited)

	September 30, 2012		December 31, 2011
	(In thousands of dollars)
ASSETS
Cash and cash equivalents	$	1,404	$	2,107
Interest bearing deposits in other banks		15,960		10,618
Total cash and cash equivalents		17,364		12,725
Securities available for sale		204,351		179,089
Securities held to maturity		109,506		111,393
Loans, net		18,606		11,225
Bank premises and equipment, net		65		78
Bank owned life insurance		4,028		3,929
Accrued interest receivable		1,406		2,124
Prepaid expenses		181		292
Other assets		669		1,025
Total assets	$	356,176	$	321,880
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Noninterest bearing	$	80,917	$	78,575
Interest bearing		224,558		198,875
Total deposits		305,475		277,450
Repurchase agreements		2,851		884
Accrued interest payable		87		99
Other liabilities		1,909		1,194
Commitments and contingencies		—		—
Stockholders' equity:
Common stock-voting, $5 par value; 1,980,229 shares authorized, issued and outstanding at September 30, 2012 and December 31, 2011		9,901		9,901
Additional paid in capital		11,108		11,090
Retained earnings		16,707		13,537
Accumulated other comprehensive income		8,138		7,725
Total stockholders' equity		45,854		42,253
Total liabilities and stockholders' equity	$	356,176	$	321,880

See accompanying notes to unaudited financial statements.

1

FIRST ASSOCIATIONS BANK

Statements of Comprehensive Income

For the Nine Months Ended September 30, 2012 and 2011

(Unaudited)

	2012			2011
	(In thousands of dollars)
Interest income:
Interest and fees on loans	$	670		$	383
Interest on investment securities		6,644			6,752
Interest on interest bearing deposits in other banks and other investments		81			81
Total interest income		7,395			7,216
Interest expense:
Interest on deposit accounts		608			898
Interest on federal funds purchased and other borrowings		4			2
Total interest expense		612			900
Net interest income		6,783			6,316
(Credit) Provision for loan losses		(76	)		60
Net interest income after provision		6,859			6,256
Noninterest income:
Service charges on deposit accounts		9			4
Net gains on sales of securities available for sale		1,395			925
Earnings on bank owned life insurance		98			99
Other		1			—
Total noninterest income		1,503			1,028
Noninterest expense:
Salaries and employee benefits		1,848			1,713
Occupancy of bank premises		103			106
Lockbox and outsourced support fees		1,676			497
Marketing and customer relations		120			191
Data processing		241			183
Professional fees		224			212
FDIC insurance		168			231
Other		218			237
Total noninterest expense		4,598			3,370
Net income		3,764			3,914
Other comprehensive income:
Net unrealized holding gains on securities arising during the period		413			6,285
Comprehensive income	$	4,177		$	10,199
Earnings per share:
Basic	$	1.90		$	1.98
Diluted	$	1.84		$	1.92

See accompanying notes to unaudited financial statements.

2

FIRST ASSOCIATIONS BANK

Statements of Changes in Stockholders' Equity

For the Year Ended December 31, 2011 and the Nine Months Ended September 30, 2012

(Unaudited)

	Common Stock		Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Income		Total
	(In thousands of dollars)
Balance at January 1, 2011	$	9,901	$	11,056	$	9,267		$	1,296	$	31,520
Stock based compensation		—		34		—			—		34
Net income		—		—		4,864			—		4,864
Change in unrealized gains		—		—		—			6,429		6,429
Dividends		—		—		(594	)		—		(594	)
Balance at December 31, 2011		9,901		11,090		13,537			7,725		42,253
Stock based compensation		—		18		—			—		18
Net income		—		—		3,764			—		3,764
Change in unrealized gains		—		—		—			413		413
Dividends		—		—		(594	)		—		(594	)
Balance at September 30, 2012	$	9,901	$	11,108	$	16,707		$	8,138	$	45,854

See accompanying notes to unaudited financial statements.

3

FIRST ASSOCIATIONS BANK

Statements of Cash Flows

For the Nine Months Ended September 30, 2012 and 2011

(Unaudited)

	2012			2011
	(In thousands of dollars)
Cash flows from operating activities:
Net income	$	3,764		$	3,914
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and net accretion		2,632			1,417
(Credit) provision for loan losses		(76	)		60
Stock based compensation		18			26
Gain on sales of investment securities		(1,395	)		(925	)
Earnings on bank owned life insurance		(98	)		(99	)
Decrease in accrued interest, prepaid expenses and other assets		1,186			614
Increase in accrued expenses and other liabilities		703			674
Net cash provided by operating activities		6,734			5,681
Cash flows from investing activities:
Activity in available for sale securities:
Purchases		(83,341	)		(55,423	)
Proceeds from sales, maturities, principal paydowns and called securities		64,351			39,156
Activity in held to maturity securities:
Purchases		(21,401	)		(29,774	)
Proceeds from maturities, principal paydowns and called securities		16,223			12,427
Net originations of loans		(7,305	)		(3,365	)
Additions to bank premises and equipment		(20	)		(32	)
Net cash used in investing activities		(31,493	)		(37,011	)
Cash flows from financing activities:
Net increase in deposits		28,025			32,951
Net increase in repurchase agreements		1,967			447
Dividend payments to shareholders		(594	)		(594	)
Net cash provided by financing activities		29,398			32,804
Net increase in cash and cash equivalents		4,639			1,474
Cash and cash equivalents at beginning of period		12,725			15,406
Cash and cash equivalents at end of period	$	17,364		$	16,880
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest	$	624		$	884
Cash paid for income taxes	$	—		$	—

See accompanying notes to unaudited financial statements.

4

FIRST ASSOCIATIONS BANK

Notes to Financial Statements

September 30, 2012

(Unaudited)

1. Summary of Significant Accounting Policies

        A summary of significant accounting policies of First Associations Bank (the Bank) applied in the preparation of the accompanying financial statements follows. The accounting principles followed by the Bank and the methods of applying them are in conformity with both U.S. generally accepted accounting principles and prevailing practices of the banking industry.

Business

        The Bank, a state bank located in Dallas, Texas, began operations in 2007. The Bank was created to serve the unique needs of community association management companies and is committed to those services beneficial to such companies and their community associations. The Bank is subject to the regulations of certain state and federal agencies and will undergo periodic examinations by those regulatory authorities.

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 values of financial instruments and the status of contingencies are particularly susceptible to significant change in the near term.

Cash and Cash Equivalents

        Cash equivalents, for the purposes of reporting cash flows, include cash on hand, amounts due from banks, other short-term investments and federal funds sold. Federal funds are normally sold for one-day periods.

Investment Securities

        The Bank uses the specific identification method to determine the basis for computing realized gain or loss. The Bank accounts for investment securities as follows:

        Held to Maturity ("HTM").    Debt investment securities that management has the positive intent and ability to hold until maturity are classified as held to maturity and are carried at their remaining unpaid principal balance, net of unamortized premiums or unaccreted discounts. Premiums are amortized and discounts are accreted using the interest method over the period remaining until maturity.

        Available for Sale ("AFS").    Investment securities that will be held for indefinite periods of time, including securities that may be sold in response to changes in market interest or prepayment rates, need for liquidity, and changes in the availability of and the yield of alternative investments, are classified as available for sale. These assets are carried at estimated fair value. Unrealized gains and losses are reported as other comprehensive income. Gains and losses on the sale of available for sale securities are recorded on the trade date and determined using the specific identification method.

5

FIRST ASSOCIATIONS BANK

Notes to Financial Statements (Continued)

September 30, 2012

(Unaudited)

1. Summary of Significant Accounting Policies (Continued)

        Trading.    No investment securities were designated as trading at September 30, 2012.

        Declines in the fair value of individual held to maturity and available for sale securities below their cost that are other than temporary are recognized by write-downs of the individual securities to their fair value. Such write-downs would be included in earnings as realized losses.

Loans and Allowance for Loan Losses

        Loans are stated at the amount of unpaid principal reduced by an allowance for loan losses. Interest on loans is calculated by using the simple interest method on daily balances of the principal amounts outstanding. The allowance for loan losses is established through a provision for loan losses charged to expense. Loans are charged against the allowance for loan losses when management believes the collectability of the principal is unlikely.

        The allowance is an amount management believes will be adequate to absorb estimated inherent losses on existing loans that are deemed uncollectible based upon management's review and evaluation of the loan portfolio. The allowance for loan losses is comprised of three elements: (i) specific reserves determined in accordance with current authoritative accounting guidance based on probable losses on specific classified loans; (ii) general reserve determined in accordance with current authoritative accounting guidance that consider historical loss rates; and (iii) qualitative reserves determined in accordance with current authoritative accounting guidance based upon general economic conditions and other qualitative risk factors both internal and external to the Bank. The allowance for loan losses is increased by charges to income and decreased by charge-offs (net of recoveries). Management's periodic evaluation of the adequacy of the allowance is based on general economic conditions, the financial condition of borrowers, the value and liquidity of collateral, delinquency, prior loan loss experience, and the results of periodic reviews of the portfolio. For purposes of determining the general reserve, the loan portfolio, less cash secured loans and classified loans, if any, is multiplied by the Bank's historical loss rate or a factor using the Bank's peer group's historical loss rate. The Bank's methodology is constructed so that specific allocations are increased in accordance with deterioration in credit quality and a corresponding increase in risk of loss. In addition, the Bank adjusts the allowance for qualitative factors such as current local economic conditions and trends, including unemployment, changes in lending staff, policies and procedures, changes in credit concentrations, changes in the trends and severity of problem loans and changes in trends in volume and terms of loans. This additional allocation based on qualitative factors serves to compensate for additional areas of uncertainty inherent in the portfolio that are not reflected in the Bank's historic loss factors.

        Accrual of interest is discontinued on a loan and payments applied to principal when management believes, after considering economic and business conditions and collection efforts, the borrower's financial condition is such that collection of interest is doubtful. Generally all loans past due greater than 90 days, based on contractual terms, are placed on non-accrual. For certain loans in the portfolio, facts and circumstances are evaluated in making charge-off decisions. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

6

FIRST ASSOCIATIONS BANK

Notes to Financial Statements (Continued)

September 30, 2012

(Unaudited)

1. Summary of Significant Accounting Policies (Continued)

        Loans are considered impaired when, based on current information and events, it is probable the Bank will be unable to collect all amounts due in accordance with the original contractual terms of the loan agreement, including scheduled principal and interest payments. If a loan is impaired, a specific valuation allowance is allocated, if necessary. Interest payments on impaired loans are typically applied to principal unless collectability of the principal amount is reasonably assured, in which case interest is recognized on a cash basis. Impaired loans, or portions thereof, are charged off when deemed uncollectible.

        The Bank's policy requires measurement of the allowance for an impaired collateral dependent loan based on the fair value of the collateral. Other loan impairments are measured based on the present value of expected future cash flows or the loan's observable market price. At September 30, 2012, there were no impaired loans recorded by the Bank.

        From time to time, the Bank may modify its loan agreement with a borrower. A modified loan is considered a troubled debt restructuring when two conditions are met: (i) the borrower is experiencing financial difficulty and (ii) concessions are made by the Bank that would not otherwise be considered for a borrower with similar credit risk characteristics. Modifications to loan terms may include a lower interest rate, a reduction of principal, or a longer term to maturity. Each of these loans is evaluated for impairment and a specific reserve is recorded based on probable losses, taking into consideration the related collateral and modified loan terms and cash flow. As of September 30, 2012, the Bank has no troubled debt restructured loans recorded.

        The Bank has certain lending policies and procedures in place that are designed to maximize loan income with an acceptable level of risk. Management reviews and approves these policies and procedures on a regular basis and makes changes as appropriate. Management receives frequent reports related to loan originations, quality, concentrations, delinquencies, non-performing and potential problem loans. Diversification in the loan portfolio is a means of managing risk associated with fluctuations in economic conditions, both by type of loan and geography.

        Loans to community associations are underwritten after evaluating and understanding the borrower's ability to operate profitably and effectively. Underwriting standards are designed to determine whether the borrower possesses sound business ethics and practices and to evaluate current and projected cash flows to determine the ability of the borrower to repay their obligations as agreed. Community association loans are primarily made based on the identified cash flows of the borrower. Therefore, most community association loans are secured by the association's assessment income stream.

Fees and Costs Associated with Originating Loans

        Fees and costs associated with originating loans are recognized as income or expense generally in the period in which the fees were received and/or costs were incurred. Under generally accepted accounting principles such fees and costs generally are deferred and recognized over the life of the loan as an adjustment of yield. For the nine months ended September 30, 2012, management believes that not deferring such fees and costs and amortizing them over the life of the related loans does not materially affect the financial position or results of operations of the Bank.

7

FIRST ASSOCIATIONS BANK

Notes to Financial Statements (Continued)

September 30, 2012

(Unaudited)

1. Summary of Significant Accounting Policies (Continued)

Bank Premises and Equipment

        Leasehold improvements and furniture and equipment are stated at cost, less accumulated depreciation. Depreciation is provided on a straight-line basis over the estimated useful lives of the assets as follows:

Leasehold improvements	term of lease
Furniture, fixtures and equipment	2 - 7 years

Repurchase Agreements

        The Bank sells certain securities under agreements to repurchase. The agreements are treated as financing, and the obligations to repurchase securities sold are reflected as a liability in the Balance Sheets. The dollar amount of investment securities underlying the agreements remain in the asset accounts.

Income Taxes

        The Bank with the consent of its stockholders elected to be an S corporation under the Internal Revenue Code (Code). Earnings and losses of the Bank are included in the personal income tax returns of the stockholders and taxed depending on their personal tax strategies. Because the Bank's stockholders are obligated to pay federal income taxes on the earnings of the Bank, the Bank generally expects to declare cash dividends (to the extent permitted by bank regulations) sufficient to fund stockholders' tax payments as they come due.

Stock Based Compensation

        The Bank accounts for its stock awards to eligible employees, officers and directors in accordance with authoritative guidance which requires the Bank to recognize in the Statement of Comprehensive Income, the grant-date fair value of stock awards issued over the vesting period. The Bank recorded stock option expense totaling approximately $18,000 and $26,000 for the nine months ended September 30, 2012 and 2011, respectively.

Fair Values of Financial Instruments

        Fair values of financial instruments are estimated using relevant market information and other assumptions. Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments and other factors, especially in the absence of broad markets for particular items. Changes in assumptions or in market conditions could significantly affect the estimates. The fair value estimates of existing on- and off-balance sheet financial instruments do not include the value of anticipated future business or the value of assets and liabilities not considered financial instruments.

8

FIRST ASSOCIATIONS BANK

Notes to Financial Statements (Continued)

September 30, 2012

(Unaudited)

1. Summary of Significant Accounting Policies (Continued)

Reclassification

        Certain amounts previously reported may have been reclassified to conform to the current format.

2. Recently Issued Authoritative Accounting Guidance

        In 2011, the FASB issued authoritative guidance to provide additional guidance and clarification in determining whether a creditor has granted a concession and whether a debtor is experiencing financial difficulties for purposes of determining whether a restructuring constitutes a troubled debt restructuring. The new guidance includes examples illustrating whether a restructuring constitutes a troubled debt restructuring. The authoritative guidance is effective for annual periods ending on or after December 15, 2012. Adoption of this new guidance did not have a significant impact on the Bank's financial statements.

        In 2011, the FASB issued authoritative guidance requiring most entities to present items of net income and other comprehensive income either in one continuous statement—referred to as the Statement of Comprehensive Income—or in two separate, but consecutive, statements of net income and other comprehensive income. The new disclosures will be effective for the Bank beginning December 15, 2012. Adoption of this new guidance did not have a significant impact on the Bank's financial statements.

9

FIRST ASSOCIATIONS BANK

Notes to Financial Statements (Continued)

September 30, 2012

(Unaudited)

3. Investment Securities

        Investment securities have been classified in the accompanying balance sheets according to management's intent. The carrying amount of securities and their approximate fair values are as follows:

	September 30, 2012
	(In thousands of dollars)
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available for Sale
Mortgage-backed securities	$	85,424	$	1,977	$	—	$	87,401
Collateralized mortgage obligations		34,194		697		—		34,891
Municipal obligations		76,596		5,515		52		82,059
	$	196,214	$	8,189	$	52	$	204,351
Held to Maturity
Mortgage-backed securities	$	48,786	$	2,443	$	—	$	51,229
Collateralized mortgage obligations		14,006		307		9		14,304
Municipal obligations		46,714		3,534		45		50,203
	$	109,506	$	6,284	$	54	$	115,736

        The following tables disclose the Bank's investment securities that have been in a continuous unrealized loss position for less than 12 months and those that have been in a continuous unrealized loss position for 12 or more months:

	September 30, 2012
	Less than 12 Months				12 Months or More				Totals
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
	(In thousands of dollars)
Available for Sale
Municipal obligations	$	3,505	$	52	$	—	$	—	$	3,505	$	52
Held to Maturity
Mortgage-backed securities	$	4,278	$	9	$	—	$	—	$	4,278	$	9
Municipal obligations		3,179		28		643		17		3,822		45
	$	7,457	$	37	$	643	$	17	$	8,100	$	54

        The number of investment positions in this unrealized loss position totaled 15 at September 30, 2012. The Bank does not believe these unrealized losses are "other than temporary" as (i) the Bank does not have the intent to sell investment securities prior to recovery and (ii) it is more likely than not that the Bank will not have to sell these securities prior to recovery. The unrealized losses noted are interest rate related due to the level of interest rates at September 30, 2012. The Bank has reviewed

10

FIRST ASSOCIATIONS BANK

Notes to Financial Statements (Continued)

September 30, 2012

(Unaudited)

3. Investment Securities (Continued)

the ratings of the issuers and have not identified any issues related to the ultimate repayment of principal as a result of credit concerns on these securities.

        The amortized costs and estimated fair values of securities are presented below by contractual maturity. Contractual maturities of mortgage-backed securities and collateralized mortgage obligations will differ from expected maturities because issuers may have the right to call or prepay obligations. Therefore, these securities are not included in the maturity categories below.

	September 30, 2012
	Available for Sale				Held to Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(In thousands of dollars)
Due in one year or less	$	—	$	—	$	—	$	—
Due from one year to five years		6,104		6,499		—		—
Due from five years to ten years		48,578		52,670		15,149		16,491
Due after ten years		21,914		22,890		31,565		33,712
		76,596		82,059		46,714		50,203
Mortgage-backed securities and collateralized mortgage obligations		119,618		122,292		62,792		65,533
	$	196,214	$	204,351	$	109,506	$	115,736

        Gross proceeds from sales of securities were approximately $40,678,000 and $27,890,000 for the nine months ended September 30, 2012 and 2011, respectively. Gross realized gains on sales of securities were approximately $1,395,000 and $938,000, respectively, for the nine months ended September 30, 2012 and 2011. Gross realized losses on sales of securities were approximately $13,000 for the nine months ended September 30, 2011. There were no losses recognized as a result of sales for the nine months ended September 30, 2012.

        Included in the securities sold during the nine months ended September 30, 2012, there were two securities which were designated by the Bank as held to maturity. In accordance with authoritative literature, the securities were sold after the Bank had collected in excess of 85% of the original principal amount. The carrying values of held to maturity securities sold during the nine months ended September 30, 2012 were approximately $1,321,000 and the gains recognized from those sales were approximately $7,000.

        Certain investment securities were pledged to secure repurchase agreements at September 30, 2012. Although approximately $8,264,000 and $12,938,000 of investments securities are available for pledging at September 30, 2012 and 2011, respectively, the pledged securities were limited to approximately $3,136,000.

11

FIRST ASSOCIATIONS BANK

Notes to Financial Statements (Continued)

September 30, 2012

(Unaudited)

4. Loans and Allowance for Loan Losses

        Loans in the accompanying balance sheets consisted of the following as of September 30, 2012:

	2012
	(In thousands of dollars)
Loans to community associations	$	18,807
Overdrafts		1
		18,808
Allowance for loan losses		(202	)
	$	18,606

        The Bank extends credit solely to community associations throughout the nation.

Non-Accrual and Past Due Loans

        Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Loans are placed on non-accrual status when, in management's opinion, the borrower may be unable to meet payment obligations as they become due, as well as when required by regulatory provisions. Loans may be placed on non-accrual status regardless of whether or not such loans are considered past due. When interest accrual is discontinued, all unpaid accrued interest is reversed. Interest income is subsequently recognized only to the extent cash payments are received in excess of principal due. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

        There were no non-accrual loans recorded by the Bank as of September 30, 2012.

        An age analysis of past due loans, aggregated by class of loans, as of September 30, 2012 is as follows:

	30 to 59 Days		60 to 89 Days		90 Days or Greater		Total Past Due		Total Current		Total 90 Days Past Due and Still Accruing
	(In thousands of dollars)
Loans to community associations	$	—	$	—	$	—	$	—	$	18,808	$	—

Impaired Loans

        Loans are considered impaired when, based on current information and events, it is probable the Bank will be unable to collect all amounts due in accordance with the original contractual terms of the loan agreement, including scheduled principal and interest payments. Impairment is evaluated in total for smaller-balance loans of a similar nature and on an individual loan basis for other loans. If a loan is impaired, a specific valuation allowance is allocated, if necessary, so that the loan is reported net, at

12

FIRST ASSOCIATIONS BANK

Notes to Financial Statements (Continued)

September 30, 2012

(Unaudited)

4. Loans and Allowance for Loan Losses (Continued)

the present value of estimated future cash flows using the loan's existing rate or at the fair value of collateral if repayment is expected solely from the collateral. Interest payments on impaired loans are typically applied to principal unless collectability of the principal amount is reasonably assured, in which case interest is recognized on a cash basis. Impaired loans, or portions thereof, are charged off when deemed uncollectible.

        There were no impaired loans recorded by the Bank as of September 30, 2012.

Credit Quality Indicators

        From a credit risk standpoint, the Bank classifies its loans in one of four categories: (i) pass, (ii) special mention, (iii) substandard or (iv) doubtful. Loans classified as loss are charged-off.

        The classifications of loans reflect a judgment about the risks of default and loss associated with the loan. The Bank reviews the ratings on credits quarterly. Ratings are adjusted to reflect the degree of risk and loss that is felt to be inherent in each credit as of each quarterly reporting period. The methodology is structured so that specific allocations are increased in accordance with deterioration in credit quality (and a corresponding increase in risk and loss) or decreased in accordance with improvement in credit quality (and a corresponding decrease in risk and loss).

        Credits rated special mention show clear signs of financial weaknesses or deterioration in credit worthiness, however, such concerns are not so pronounced that the Bank generally expects to experience significant loss within the short-term. Such credits typically maintain the ability to perform within standard credit terms and credit exposure is not as prominent as credits rated more harshly.

        Credits rated substandard are those in which the normal repayment of principal and interest may be, or has been, jeopardized by reason of adverse trends or developments of a financial, managerial, economic or political nature, or important weaknesses which exist in collateral. A protracted workout on these credits is a distinct possibility. Prompt corrective action is therefore required to strengthen the Bank's position, and/or to reduce exposure and to assure that adequate remedial measures are taken by the borrower. Credit exposure becomes more likely in such credits and a serious evaluation of the secondary support to the credit is performed.

        Credits rated doubtful are those in which full collection of principal appears highly questionable, and which some degree of loss is anticipated, even though the ultimate amount of loss may not yet be certain and/or other factors exist which could affect collection of debt. Based upon available information, positive action by the Bank is required to avert or minimize loss. Credits rated doubtful are generally also placed on nonaccrual.

        At September 30, 2012, the following summarizes the Bank's internal ratings of its loans:

	Pass		Special Mention		Substandard		Doubtful		Total
	(In thousands of dollars)
Loans to community associations	$	18,808	$	—	$	—	$	—	$	18,808

13

FIRST ASSOCIATIONS BANK

Notes to Financial Statements (Continued)

September 30, 2012

(Unaudited)

4. Loans and Allowance for Loan Losses (Continued)

        An analysis of the allowance for loan losses is as follows as of September 30, 2012:

	2012
	(In thousands of dollars)
Balance at beginning of period	$	278
Provision (credit) charged to earnings		(76	)
Losses charged to the allowance account		—
Recoveries on loans previously charged-off		—
Net charge-offs		—
Balance at end of period	$	202

        All of the activity included in the analysis of the allowance for loan losses is attributable to loans to community associations. The following table summarizes the allocation of the allowance for loan losses for the nine months ended September 30, 2012:

	2012
	(In thousands of dollars)
Period-end amount allocated to:
Loans individually evaluated for impairment	$	—
Loans collectively evaluated for impairment		202
Ending balance	$	202

        The Bank's recorded investment in loans as of September 30, 2012 related to the balance in the allowance for loan losses on the basis of the Bank's impairment methodology is as follows:

	2012
	(In thousands of dollars)
Loans individually evaluated for impairment	$	—
Loans collectively evaluated for impairment		18,808
Total	$	18,808

14

FIRST ASSOCIATIONS BANK

Notes to Financial Statements (Continued)

September 30, 2012

(Unaudited)

5. Bank Premises and Equipment

        Bank premises and equipment in the accompanying balance sheets consisted of the following as of September 30, 2012:

	2012
	(In thousands of dollars)
Leasehold improvements	$	9
Furniture and equipment		289
		298
Less accumulated depreciation		233
Balance at end of period	$	65

        Depreciation expense amounted to approximately $32,000 for both the nine months ended September 30, 2012 and 2011.

6. Deposits

        Deposits in the accompanying balance sheets consisted of the following as of September 30, 2012:

	2012
	(In thousands of dollars)
Noninterest bearing demand deposits	$	80,917
Interest bearing demand deposits		67,137
Limited access money market accounts		135,712
Certificates of deposit, $1000,000 and greater		7,875
Certificates of deposit, less than $100,000		13,834
Total deposits	$	305,475

        The scheduled maturities of certificates of deposit at September 30, 2012 are as follows:

Year	Amount
	(In thousands of dollars)
2012	$	4,091
2013		11,962
2014		4,391
2015		1,145
2016		70
Thereafter		50
	$	21,709

15

FIRST ASSOCIATIONS BANK

Notes to Financial Statements (Continued)

September 30, 2012

(Unaudited)

7. Repurchase Agreements

        Securities sold under agreement to repurchase represent overnight borrowings by the Bank and are collateralized by investment securities with fair values of approximately $3,136,000 at September 30, 2012. Repurchase agreements at September 30, 2012, amount to approximately $2,851,000.

8. Income Taxes

        As discussed in Note 1, the Bank with the consent of its stockholders elected to be an S corporation under the Internal Revenue Code. The Bank will generally report no federal income tax expense or benefit in its financial statements.

        There are no deferred income tax assets or liabilities as of September 30, 2012.

9. Federal Funds Purchased

        At September 30, 2012, the Bank maintained one credit facility with local a bank which provides federal funds credit extensions with an ability to borrow up to an aggregate amount of approximately $15,000,000. At September 30, 2012, there were no outstanding balances due on the credit facility.

10. Financial Instruments With Off Balance Sheet Risk

        The Bank is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit. Those instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized on the balance sheet. The Bank's exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit is represented by the contractual amount of those instruments. The Bank uses the same credit policies in making commitments and conditional obligations as it does for on balance sheet instruments.

        Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Management evaluates each customer's credit-worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Bank upon extension of credit, is based on management's credit evaluation of the borrower.

        The contractual amounts of credit related financial instruments such as commitments to extend credit represents the amounts of potential accounting loss should the contract be fully drawn upon, the customer default, and the value of any existing collateral become worthless. Although the maximum exposure to loss is the amount of such commitments, management currently anticipates no material losses from such activities.

16

FIRST ASSOCIATIONS BANK

Notes to Financial Statements (Continued)

September 30, 2012

(Unaudited)

10. Financial Instruments With Off Balance Sheet Risk (Continued)

        At September 30, 2012, the following financial instruments were outstanding whose contract amounts represent credit risk:

	2012
	(In thousands of dollars)
Commitments to extend credit	$	4,678

11. Commitments and Contingencies

Operating Leases

        The Bank leases an automobile, its office facility in Dallas, Texas and an office in Connecticut under non-cancelable operating leases. Rent expense during the nine months ended September 30, 2012, was approximately $45,000. The Bank's current lease for its Dallas office facility expires in August 2017. The Bank's current lease for its Connecticut office is a one year lease with the option to renew for an additional year. The Connecticut lease expires in August 2013. Rent expense specific to the office leases for the nine months ended September 30, 2012 was approximately $32,000.

        Minimum future rental payments under these non-cancelable operating leases for each year through 2016 and thereafter and in the aggregate are as follows:

Year	Amount
	(In thousands of dollars)
2012	$	22
2013		84
2014		74
2015		67
2016		71
Thereafter		50
	$	368

Litigation

        The Bank may from time to time be involved in certain legal actions arising from normal business activities. Management believes that these actions are without merit or that any ultimate liability resulting from them will not materially affect the financial position or results of operations of the Bank.

        The Bank does not anticipate any material losses as a result of these commitments and contingent liabilities.

17

FIRST ASSOCIATIONS BANK

Notes to Financial Statements (Continued)

September 30, 2012

(Unaudited)

12. Fair Value Measurements

        The authoritative guidance for fair value measurements defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. The price in the principal (or most advantageous) market used to measure the fair value of the asset or liability shall not be adjusted for transaction costs. An orderly transaction is a transaction that assumes exposure to the market for a period prior to the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets and liabilities; it is not a forced transaction. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact and (iv) willing to transact.

        The authoritative guidance requires the use of valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets and liabilities. The income approach uses valuation techniques to convert future amounts, such as cash flows or earnings, to a single present amount on a discounted basis. The cost approach is based on the amount that currently would be required to replace the service capacity of an asset (replacement costs). Valuation techniques should be consistently applied. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable, meaning those that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources, or unobservable, meaning those that reflect the reporting entity's own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. In that regard, the authoritative guidance establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.

        The fair value hierarchy is as follows:

Level 1 Inputs.    Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

Level 2 Inputs.    Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (for example, interest rates, volatilities, prepayment speeds, loss severities, credit risks and default rates) or inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 2 investments consist primarily of obligations of U.S. government sponsored enterprises and agencies, obligations of state and municipal subdivisions, corporate bonds and mortgage backed securities.

Level 3 Inputs.    Significant unobservable inputs that reflect an entity's own assumptions that market participants would use in pricing the assets or liabilities.

18

FIRST ASSOCIATIONS BANK

Notes to Financial Statements (Continued)

September 30, 2012

(Unaudited)

12. Fair Value Measurements (Continued)

        In general, fair value is based upon quoted market prices, where available. If such quoted market prices are not available, fair value is based upon internally developed models that primarily use, as inputs, observable market-based parameters. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. While management believes the Bank's valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.

        A description of the valuation methodologies used for assets and liabilities measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below.

Financial Assets and Financial Liabilities

        Financial assets and financial liabilities measured at fair value on a recurring basis include the following:

Investment Securities Available for Sale:    Securities classified as available-for-sale are reported at fair value utilizing Level 2 inputs. For these securities, the Bank obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the United States Treasury (the "Treasury") yield curve, live trading levels, trade execution data, market consensus prepayments speeds, credit information and the security's terms and conditions, among other things.

        There were no transfers between Level 2 and Level 3 during the nine months ended September 30, 2012.

        The following table summarizes financial assets and financial liabilities measured at fair value on a recurring basis as of September 30, 2012, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

	Fair Value Measurements Using
	Level 1 Inputs		Level 2 Inputs		Level 3 Imputs
	(In thousands of dollars)
September 30, 2012:
Investment securities available for sale	$	—	$	204,351	$	—

        Certain financial assets and financial liabilities are measured at fair value on a nonrecurring basis, that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). Financial assets and financial liabilities measured at fair value on a non-recurring basis during the nine months ended September 30, 2012 include the following:

Impaired Loans.    Impaired loans are reported at the fair value of the underlying collateral if repayment is expected solely from the collateral. Collateral values are estimated using Level 2

19

FIRST ASSOCIATIONS BANK

Notes to Financial Statements (Continued)

September 30, 2012

(Unaudited)

12. Fair Value Measurements (Continued)

inputs based on observable market data or Level 3 input based on customized discounting criteria. There were no impaired loans recorded at September 30, 2012.

        There were no non-financial assets and liabilities measured at fair value on a non-recurring basis during the nine months ended September 30, 2012.

        The Bank is required under current authoritative guidance to disclose the estimated fair value of their financial instrument assets and liabilities including those subject to the requirements discussed above. For the Bank, as for most financial institutions, substantially all of its assets and liabilities are considered financial instruments, as defined. Many of the Bank's financial instruments, however, lack an available trading market as characterized by a willing buyer and willing seller engaging in an exchange transaction.

        The estimated fair value amounts of financial instruments have been determined by the Bank using available market information and appropriate valuation methodologies. However, considerable judgment is required to interpret data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Bank could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. In addition, reasonable comparability between financial institutions may not be likely due to the wide range of permitted valuation techniques and numerous estimates that must be made given the absence of active secondary markets for many of the financial instruments. This lack of uniform valuation methodologies also introduces a greater degree of subjectivity to these estimated fair values.

        Financial instruments with stated maturities have been valued using a present value discounted cash flow with a discount rate approximating current market for similar assets and liabilities. Financial instrument assets with variable rates and financial instrument liabilities with no stated maturities have an estimated fair value equal to both the amount payable on demand and the carrying value.

        The carrying value and the estimated fair value of the Bank's contractual off-balance-sheet commitments to extend credit, which are generally priced at market at the time of funding, are not material to the Bank's financial statements.

20

FIRST ASSOCIATIONS BANK

Notes to Financial Statements (Continued)

September 30, 2012

(Unaudited)

12. Fair Value Measurements (Continued)

        The estimated fair values and carrying values of all financial instruments under current authoritative guidance at September 30, 2012 were as follows:

	2012
	Book Value		Fair Value
	(In thousands of dollars)
Financial assets:
Cash and cash equivalents	$	17,364	$	17,364
Securities available for sale	$	204,351	$	204,351
Securities held to maturity	$	109,506	$	115,736
Loans, net(1)	$	18,606	$	19,300
Investment in life insurance policies	$	4,028	$	4,028
Accrued interest receivable	$	1,406	$	1,406
Financial liabilities:
Deposits	$	305,475	$	305,400
Repurchase agreements	$	2,851	$	2,851
Accrued interest payable	$	87	$	87

(1)

Presented net of allowance for loan losses

13. Significant Group Concentrations of Credit Risk

        Most of the Bank's business activity is with community associations through their management companies, as agent. In addition, the Bank holds a substantial amount of municipal obligations and mortgage-backed securities, which are issued by GNMA, FNMA or FHLMC.

14. Stock Option Plan

        During November 2006, the Bank created a stock option plan (Plan) applicable to 150,000 shares of the Bank's common stock. Under the Plan, options can be granted to eligible directors and key employees of the Bank. The Plan is administered by the Compensation Committee of the Board of Directors. The option price per share of the options under the Plan shall not be less than the fair market value per share at the time the option is granted. The initial grant of options to opening day employees vest at 20% on the day the Bank opened and 20% for each year thereafter. Any subsequent grants generally vest 20% per year. Options granted under the Plan are exercisable for a period not to exceed ten years from the options grant date.

        There were no options awarded during the nine months ended September 30, 2012.

        The term of 7 years was based on a simplified method calculation using the contractual terms. Compensation expense is recognized on a straight-line basis over the vesting period. The compensation cost that has been charged against income for the Plan was approximately $18,000 for the nine months ended September 30, 2012. As of September 30, 2012, the Bank has approximately $69,000 in unrecognized compensation expense related to non-vested option awards that are expected to be

21

FIRST ASSOCIATIONS BANK

Notes to Financial Statements (Continued)

September 30, 2012

(Unaudited)

14. Stock Option Plan (Continued)

recognized over the remaining non-vested periods of the options granted. There were 77,100 shares vested and exercisable as of September 30, 2012.

        A summary of option transactions during the periods ended September 30, 2012 is as follows:

	Shares Underlying Options		Weighted Average Exercise Price		Weighted Average Remaining Contract Term
Outstanding at December 31,		96,000	$	11.67		7.31
Granted during the period		—		—		—
Forfeited during the period		—		—		—
Exercised during the period		—		—
Outstanding at September 30,		96,000	$	11.67		6.56
Options exercisable at end of year		77,100				4.17
Weighted-average grant date fair value of options granted during the year			$	—

        A summary of options outstanding as of September 30, 2012 is as follows:

Options Outstanding					Options Exercisable
Exercise Prices	Number of Options Outstanding		Weighted Average Remaining Contractual Life		Number of Options Exercisable		Weighted Average Exercise Price
$10.00 - $17.00		96,000		6.56 years		77,100	$	9.99

        A summary of nonvested option shares transactions during the periods ending September 30, 2012 is as follows:

	Weighted Average
	Number of Options			Fair Value
Nonvested at January 1		22,800		$	4.52
Granted during the period		—			—
Vested during the period		(3,900	)		4.43
Forfeited during the period		—			—
Nonvested at September 30		18,900		$	3.62

22

FIRST ASSOCIATIONS BANK

Notes to Financial Statements (Continued)

September 30, 2012

(Unaudited)

15. Stock Warrants

        In connection with the organization of the Bank, the Bank's organizers advanced funds for organizational and other pre-opening expenses. As consideration for the advances, each organizer received between 10,000 and 13,641 warrants to purchase one share of common stock. A total of 64,564 warrants were issued. These warrants are exercisable at a price of $10.00 per share and may be exercised within ten years or before January 1, 2017. The weighted average remaining contractual life of warrants outstanding at September 30, 2012 was approximately 4.26 years. There were no warrants granted or exercised during the nine months ended September 2012.

16. Deferred Compensation

        The Bank entered into an executive deferred compensation agreement (Agreement) with two of its executive officers. The Agreement is indirectly funded by the Bank's purchase of corporate-owned life insurance contracts. The benefits payable under the Agreement commence on the date of retirement, or death if earlier, and continue monthly over defined periods. The benefits payable are accrued monthly in an amount whereby the accrual at the date of the participant's retirement will equal the present value of the future benefits payable. At September 30, 2012, and for the year then ended, assets, liabilities and expenses related to the plans were as follows:

	2012
	(In thousands of dollars)
Approximate cash surrender value of life insurance associated with the plans	$	4,028
Accrued benefits in connection with the plans (included as a component of other liabilities)	$	777
Benefit expense in connection with the plans (included as a component of salaries and employee benefits)	$	130

17. Related Party Transactions

        Most of the Bank's deposits obtained from community associations are managed by an entity or related entities that are owned by a shareholder and director of the Bank. For the nine months ended September 30, 2012, marketing and support fees of approximately $378,000, were accrued to be paid to or in support of the aforementioned entities and are included in other liabilities in the accompanying balance sheets.

18. Restrictions on Undivided Profits

        Under banking law there are legal restrictions limiting the amount of dividends the Bank can declare. Approval of the regulatory authorities is required if the effect of the dividends declared would cause regulatory capital of the Bank to fall below specified minimum levels.

23

FIRST ASSOCIATIONS BANK

Notes to Financial Statements (Continued)

September 30, 2012

(Unaudited)

19. Stockholders' Equity and Regulatory Matters

        The Bank is subject to various regulatory capital requirements administered by bank regulatory agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Bank's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank's assets, liabilities, and certain off balance sheet items as calculated under regulatory accounting practices. The Bank's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

        Quantitative measures established by regulations to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the table below) of total and Tier I capital (as defined in the regulations) to risk weighted assets (as defined), and Tier I capital (as defined) to average assets (as defined). Management believes, as of September 30, 2012, that the Bank meets all capital adequacy requirements to which it is subject.

        As of September 30, 2012, the Bank's capital ratios exceeded those levels necessary to be categorized as "well capitalized" under the regulatory framework for prompt corrective action. To be categorized as "well capitalized" the Bank must maintain minimum total risk-based, Tier I risk-based and Tier I leverage ratios as set forth in the table. There are no conditions or events since September 30, 2012 that management believes have changed the Bank's category.

        A comparison of the Bank's actual capital amounts and ratios to required capital amounts and ratios is presented in the following table (in thousands of dollars):

	Actual					For Capital Adequacy Purposes					To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of September 30, 2012
Total capital (to weighted assets)	$	37,918		45.03	%	$	6,736		8.00	%	$	8,421		10.00	%
Tier I capital (to weighted assets)	$	37,716		44.79	%	$	3,368		4.00	%	$	5,052		6.00	%
Tier I capital (to average assets)	$	37,716		10.51	%	$	14,360		4.00	%	$	17,951		5.00	%

24

QuickLinks

Exhibit 99.2

FIRST ASSOCIATIONS BANK Balance Sheets (Unaudited)
FIRST ASSOCIATIONS BANK Statements of Comprehensive Income For the Nine Months Ended September 30, 2012 and 2011 (Unaudited)
FIRST ASSOCIATIONS BANK Statements of Changes in Stockholders' Equity For the Year Ended December 31, 2011 and the Nine Months Ended September 30, 2012 (Unaudited)
FIRST ASSOCIATIONS BANK Statements of Cash Flows For the Nine Months Ended September 30, 2012 and 2011 (Unaudited)
FIRST ASSOCIATIONS BANK Notes to Financial Statements September 30, 2012 (Unaudited)

EX-99.3

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Exhibit 99.3

UNAUDITED PRO FORMA COMBINED CONSOLIDATED FINANCIAL DATA

        The following Unaudited Pro Forma Condensed Combined Statement of Financial Condition combines the historical Consolidated Statement of Financial Condition of Pacific Premier Bancorp, Inc. ("Pacific Premier") and the historical Statement of Financial Condition of First Associations Bank ("FAB") giving effect to the completion of the merger on September 30, 2012, using the purchase method of accounting and giving effect to the related pro forma adjustments described in the accompanying Notes to the Unaudited Pro Forma Condensed Combined Financial Statements. The following Unaudited Pro Forma Condensed Combined Statements of Operations for the nine months ended September 30, 2012 and the year ended December 31, 2011, combine the historical Consolidated Statements of Operations of Pacific Premier and the historical Statements of Operations of FAB giving effect to the merger as if the merger had become effective at the beginning of the periods presented, using the purchase method of accounting and giving effect to the related pro forma adjustments described in the accompanying Notes to Unaudited Pro Forma Condensed Combined Financial Statements.

        Although pro forma financial information is not a measurement of performance calculated in accordance with GAAP, Pacific Premier and FAB believe that pro forma financial information is important because it gives effect to the merger as if the merger had become effective at the beginning of the periods presented. The manner in which Pacific Premier and FAB calculate pro forma financial information may differ from similarly titled measures reported by other companies.

        The unaudited pro forma combined financial information included in this Current Report on Form 8-K are presented for informational purposes only. This information includes various estimates and may not necessarily be indicative of the financial condition or results of operations that would have occurred if the merger had been completed on the dates or at the beginning of the periods indicated or which may be obtained in the future. The unaudited pro forma combined financial information has been derived from and should be read in conjunction with the respective period's historical consolidated financial statements and the related notes of (i) Pacific Premier included in its Annual Report on Form 10-K for the year ended December 31, 2010 and its quarterly report on Form 10-Q for the quarter ended September 30, 2012, and (ii) FAB included in Exhibits 99.1 and 99.2 to the Current Report on Form 8-K of Pacific Premier to which this Exhibit 99.3 is attached.

        The pro forma information, while helpful in illustrating the financial characteristics of the combined company under one set of assumptions, does not reflect the opportunities to earn additional revenue and does not include certain assumptions as to cost savings and, accordingly, does not attempt to predict or suggest future results. It also does not necessarily reflect what the historical results of the combined company would have been had the companies been combined during these periods.

        The unaudited pro forma combined stockholders' equity and net income are qualified by the statements set forth under this caption and should not be considered indicative of the market value of Pacific Premier's common stock or the actual or future results of operations of Pacific Premier for any period. Actual results may be materially different than the pro forma information presented.

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	At September 30, 2012
	Historical Pacific Premier			Historical FAB			Pro Forma Adjustments			Footnote Reference			Pro Forma Combined
	(Dollars in thousands)
Assets
Cash and due from banks	$	58,216		$	17,364		$	(46,210	)		(1	)	$	29,370
Federal funds sold		27			—			—						27
Investment securities available for sale		114,250			204,351			—						318,601
Investment securities held to maturity		—			109,506			5,626			(2	)		115,132
FHLB sotck/Federal reserve Bank stock, at cost		12,191			132			—						12,323
Loans held for sale, net		4,728			—			—						4,728
Loans held for investment		859,373			18,808			(376	)		(3	)		877,805
Allowance for loan losses		(7,658	)		(202	)		202			(4	)		(7,658	)
Loans held for investment, net		851,715			18,606			(174	)					870,147
Premises and equipment		10,067			65			—						10,132
Goodwill		—			—			3,609			(5	)		3,609
Core deposit intangibles		2,703			—			1,527			(6	)		4,230
Other assets		35,439			6,152			(751	)		(7	)		40,840
Total assets	$	1,089,336		$	356,176		$	(36,373	)				$	1,409,139
Liabilities
Deposits	$	895,870		$	305,475		$	—					$	1,201,345
Short term borrowings		47,000			2,851			—						49,851
Long term debt		38,810			—			—						38,810
Other liabilities		7,770			1,996			—						9,766
Total liabilities		989,450			310,322			—						1,299,772
Stockholders' equity
Preferred stock		—			—			—						—
Common stock		103			9,901			(9,901	)		(8	)		103
Additional paid in capital		76,414			11,108			(1,627	)		(9	)		85,895
Retained earnings		22,011			16,707			(16,707	)		(8	)		22,011
Accumulated other comprehensive income		1,358			8,138			(8,138	)		(8	)		1,358
Total stockholders' equity		99,886			45,854			(36,373	)					109,367
Total liabilities and stockholders' equity	$	1,089,336		$	356,176		$	(36,373	)				$	1,409,139

The accompanying Notes are an integral part of the Unaudited Pro Forma
Condensed Combined Financial Information.

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	For the nine months ended September 30, 2012
	Historical Pacific Premier		Historical FAB			Pro Forma Adjustments			Footnote Reference			Pro Forma Combined
	(Dollars in thousands, except per share data)
Interest income	$	38,788	$	7,395		$	(1,027	)		(10	)	$	45,156
Interest expense		5,611		612			—						6,223
Net interest income		33,177		6,783			(1,027	)					38,933
Provision for loan losses		145		(76	)		—						69
Net interest income after provision for loan losses		33,032		6,859			(1,027	)					38,864
Noninterest income		9,378		1,503			—			(11	)		10,881
Noninterest expense		22,877		4,598			115			(12	)		27,590
Income before income tax expense		19,533		3,764			(1,141	)					22,156
Income tax expense		7,568		—			1,049			(13	)		8,617
Net income	$	11,965	$	3,764		$	(2,190	)				$	13,539
Per Common share
Net income—basic	$	1.16	$	1.90								$	1.17
Net income—diluted		1.12		1.84									1.13
Average common shares
Basic		10,332,223		1,980,229			(701,001	)		(14	)		11,611,451
Diluted		10,709,822		2,048,092			(768,864	)		(14	)		11,989,050

The accompanying Notes are an integral part of the Unaudited Pro Forma
Condensed Combined Financial Information.

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	For the year ended December 31, 2011
	Historical Pacific Premier		Historical FAB		Pro Forma Adjustments			Footnote Reference			Pro Forma Combined
	(Dollars in thousands, except per share data)
Interest income	$	50,225	$	9,550	$	(1,369	)		(10	)	$	58,406
Interest expense		9,596		1,112		—						10,708
Net interest income		40,629		8,438		(1,369	)					47,698
Provision for loan losses		3,255		216		—						3,471
Net interest income after provision for loan losses		37,374		8,222		(1,369	)					44,227
Noninterest income		6,513		1,356		—			(11	)		7,869
Noninterest expense		26,904		4,714		153			(12	)		31,771
Income before income tax expense		16,983		4,864		(1,522	)					20,325
Income tax expense		6,411		—		1,489			(13	)		7,900
Net income	$	10,572	$	4,864	$	(3,011	)				$	12,425
Per Common share
Net income—basic	$	1.05	$	2.46							$	1.09
Net income—diluted		0.99		2.38								1.04
Average common shares
Basic		10,092,181		1,980,229		(701,001	)		(14	)		11,371,409
Diluted		10,630,720		2,039,534		(760,306	)		(14	)		11,909,948

The accompanying Notes are an integral part of the Unaudited Pro Forma
Condensed Combined Financial Information.

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Notes to Unaudited Pro Forma Condensed Combined Financial Statements

Note A—Basis of Presentation

        The unaudited pro forma combined condensed consolidated financial information and explanatory notes show the impact on the historical financial condition and results of operations of Pacific Premier resulting from the merger under the purchase method of accounting. Under the purchase method of accounting, the assets and liabilities of FAB are recorded by Pacific Premier at their respective fair values as of the date the transaction is completed. The unaudited pro forma combined condensed consolidated statement of financial condition combines the historical financial information of Pacific Premier and FAB as of September 30, 2012, and assumes that the merger was completed on that date. The unaudited pro forma combined condensed consolidated statements of operations for the nine month period ended September 30, 2012 and the twelve month period ended December 31, 2011 give effect to the merger as if the transaction had been completed on January 1, 2012 and January 1, 2011, respectively.

        Since the merger is recorded using the purchase method of accounting, all loans are recorded at fair value, including adjustments for credit quality, and no allowance for credit losses is carried over to Pacific Premier's balance sheet. In addition, certain anticipated nonrecurring costs associated with the merger such as professional fees, legal fees and conversion-related expenditures are not reflected in the pro forma statements of operations.

        While the recording of the acquired loans at their fair value will impact the prospective determination of the provision for credit losses and the allowance for credit losses, for purposes of the unaudited pro forma combined condensed consolidated statement of operations for the nine months ended September 30, 2012 and the year ended December 31, 2011, Pacific Premier assumed no adjustments to the historical amount of FAB's provision for credit losses. If such adjustments were estimated, there could be a reduction to the historical amounts FAB's provision for credit losses presented.

Note B—Accounting Policies and Financial Statement Classifications

        The accounting policies of FAB are in the process of being reviewed in detail by Pacific Premier. Upon completion of such review, conforming adjustments or financial statement reclassifications may be determined.

Note C—Merger and Acquisition Integration Costs

        In connection with the merger, the plan to integrate Pacific Premier's and FAB's operations is still being developed. The specific details of this plan will continue to be refined over the next several months, and will include assessing personnel, benefit plans, premises, equipment, and service contracts to determine where they may take advantage of redundancies. Certain decisions arising from these assessments may involve involuntary termination of employees, vacating leased premises, changing information systems, canceling contracts with certain service providers, selling or otherwise disposing of certain furniture and equipment. Pacific Premier also expects to incur merger-related costs including professional fees, legal fees, system conversion costs and costs related to communications with customers and others. To the extent there are costs associated with these actions, the costs will be recorded based on the nature of the cost and in the period incurred.

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Notes to Unaudited Pro Forma Condensed Combined Financial Statements (Continued)

Note D—Estimated Annual Cost Savings

        Pacific Premier expects to realize revenue enhancements and cost savings following the merger. These revenue enhancements and cost savings are not reflected in the pro forma financial information and there can be no assurance they will be achieved in the amount or manner currently contemplated.

Note E—Pro Forma Adjustments

        The following pro forma adjustments have been reflected in the unaudited pro forma combined condensed consolidated financial information. All adjustments are based on current assumptions and valuations, which are subject to change.

(1)

Payment of the aggregate per share cash consideration in the amount of $37.6 million to FAB shareholders, which amount assumes no adjustments to the cash portion of the merger consideration are made, $3.5 million to holders of FAB stock options and FAB warrants and the $5.1 million for estimated transaction costs.



(2)

Adjustment made to reflect the preliminary estimated market value of FAB's investment securities held to maturity.



(3)

Adjustment made to reflect the preliminary estimated market value of FAB's loans held for investment, which includes an estimate of lifetime credit losses. Loans held for investment include net deferred costs and unearned discounts.



(4)

Purchase accounting reversal of FAB's allowance for loan losses, which cannot be carried over.



(5)

Represents the recognition of goodwill resulting from the difference between the consideration paid to FAB shareholders less the net fair value of the acquired assets and assumed liabilities.

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Notes to Unaudited Pro Forma Condensed Combined Financial Statements (Continued)

Note E—Pro Forma Adjustments (Continued)

Goodwill can be summarized as follows (dollars in thousands, except share and per share data):

Total FAB shares outstanding at merger announcement				1,980,229
Multiplied by share exchange ratio (portion of Pacific Premier shares for each FAB share)				0.646
Estimated Pacific Premier shares issued to FAB shareholders				1,279,228
Pacific Premier issue price per share			$	9.80
Value of stock consideration paid to FAB common shareholders				12,536
Cash consideration to FAB common shareholders				37,627
Cash consideration for option and warrant holders				3,488
Total pro forma merger consideration paid			$	53,651
Carrying value of FAB net assets at September 30, 2012			$	45,854
Fair value adjustment to assets and liabilities (debit / credit):
Investment securities held to maturity	5,626
Loans held for investment, net	(174	)
Core deposit intangible	1,527
Deferred tax effect of adjustments, excluding transaction costs (40%)	(2,791	)
Total fair value adjustments				4,188
Fair value of net assets acquired on September 30, 2012				50,042
Excess of fair value of net assets acquired over consideration paid			$	3,609

(6)

Purchase accounting adjustment in recognition of the fair value of core deposit intangible assets, which is assumed to be 0.50% of core deposits.



(7)

A net deferred tax liability resulting from the fair value adjustments related to the acquired assets and assumed liabilities.



(8)

Purchase accounting reversal of FAB's common equity accounts.



(9)

Adjustment to additional paid in capital includes consideration paid, transaction costs, fair market value adjustments, tax adjustments and goodwill created.



(10)

The amortization/accretion of fair value adjustments related to loans and investment securities over the estimated lives of the related asset. Interest income does not reflect revenue enhancement opportunities.



(11)

Noninterest income does not reflect revenue enhancement opportunities.



(12)

Amortization of core deposit intangibles over a ten year life. FAB acquisition costs for professional, legal and conversion related expenditures are not reflected as they are nonrecurring expenses. These costs will be expensed by Pacific Premier as required by GAAP. Noninterest expense does not reflect anticipated cost savings.



(13)

Reflects the tax impact of the pro forma transaction adjustments at a tax rate of 40%.

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Notes to Unaudited Pro Forma Condensed Combined Financial Statements (Continued)

Note E—Pro Forma Adjustments (Continued)

(14)

Adjustment reflects the elimination of FAB's weighted average shares outstanding, offset by the issuance of 0.646 times of a share of Pacific Premier common stock for each outstanding share of FAB common stock to be issued in connection with the merger.

Note F—Effect of Hypothetical Adjustments on FAB's Historical Financial Statements

        The unaudited pro forma combined condensed consolidated statements of operations for the nine months ended September 30, 2012 and the twelve months ended December 31, 2011 present the pro forma results assuming the merger occurred on January 1, 2012 and January 1, 2011, respectively. The pro forma financial statements for the nine months ended September 30, 2012 and for the year ended December 31, 2011 do not reflect any adjustments to eliminate FAB's historical provision for loan losses.

        FAB's provision for loan losses for the periods presented related to loans that Pacific Premier is required to initially record at fair value. Such fair value adjustments include a component related to the expected lifetime credit losses on those loan portfolios. Pacific Premier believes that these same historical provisions would not have been recorded in Pacific Premier combined consolidated financial statements for the periods presented had the transactions been completed on January 1, 2012 or January 1, 2011.

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Exhibit 99.3

UNAUDITED PRO FORMA COMBINED CONSOLIDATED FINANCIAL DATA
Notes to Unaudited Pro Forma Condensed Combined Financial Statements