10-Q

UNITED STATES

SECURITIES & EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark one)

x Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended September 30, 2016.

OR

¨ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from                      to                     .

COMMISSION FILE NUMBER: 0-30106

PACIFIC CONTINENTAL CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

OREGON	93-1269184
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No)
111 West 7th Avenue Eugene, Oregon	97401
(Address of principal executive offices)	(Zip Code)

(541) 686-8685

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Act. (Check one)

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨	Smaller Reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

The number of shares of common stock outstanding as of November 1, 2016 was 22,603,651.

PACIFIC CONTINENTAL CORPORATION

FORM 10-Q

QUARTERLY REPORT

TABLE OF CONTENTS

PART I	FINANCIAL INFORMATION	3
ITEM 1	Financial Statements	3
	Consolidated Balance Sheets	3
	Consolidated Statements of Income	4
	Consolidated Statements of Comprehensive Income	5
	Consolidated Statements of Changes in Shareholders’ Equity	6
	Consolidated Statements of Cash Flows	7
	Notes to Consolidated Financial Statements	8
ITEM 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	47
ITEM 3	Quantitative and Qualitative Disclosures about Market Risk	71
ITEM 4	Controls and Procedures	71
PART II	OTHER INFORMATION	72
ITEM 1	Legal Proceedings	72
ITEM 1A	Risk Factors	73
ITEM 2	Unregistered Sales of Equity Securities and Use of Proceeds	76
ITEM 3	Defaults upon Senior Securities	76
ITEM 4	Mine Safety Disclosures	76
ITEM 5	Other Information	76
ITEM 6	Exhibits	76

2

PART I FINANCIAL INFORMATION

ITEM 1 Financial Statements

Pacific Continental Corporation and Subsidiary

Consolidated Balance Sheets

(In thousands, except share amounts)

(Unaudited)

	September 30, 2016			December 31, 2015
ASSETS
Cash and due from banks	$	35,819		$	23,819
Interest-bearing deposits with banks		71,353			12,856
Total cash and cash equivalents		107,172			36,675
Securities available-for-sale		482,408			366,598
Loans, net of deferred fees		1,806,736			1,404,482
Allowance for loan losses		(20,531	)		(17,301	)
Net loans		1,786,205			1,387,181
Interest receivable		5,957			5,721
Federal Home Loan Bank stock		4,643			5,208
Property and equipment, net of accumulated depreciation		19,656			18,014
Goodwill and intangible assets		70,684			43,159
Deferred tax asset		7,380			5,670
Other real estate owned		13,066			11,747
Bank-owned life insurance		34,927			22,884
Other assets		6,962			6,621
Total assets	$	2,539,060		$	1,909,478
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits
Noninterest-bearing demand	$	901,290		$	568,688
Savings and interest-bearing checking		1,082,202			889,802
Core time deposits		65,860			75,452
Total core deposits		2,049,352			1,533,942
Other deposits		113,281			63,151
Total deposits		2,162,633			1,597,093
Repurchase agreements		1,107			71
Federal Home Loan Bank borrowings		45,500			77,500
Subordinated debentures		34,072			—
Junior subordinated debentures		11,272			8,248
Accrued interest and other payables		8,005			8,075
Total liabilities		2,262,589			1,690,987
Shareholders’ equity
Common stock, shares authorized: 50,000,000; shares issued and outstanding: 22,603,421 at September 30, 2016, and 19,604,182 at December 31, 2015		205,120			156,099
Retained earnings		66,112			59,693
Accumulated other comprehensive income		5,239			2,699
		276,471			218,491
Total liabilities and shareholders’ equity	$	2,539,060		$	1,909,478

See accompanying notes.

3

Pacific Continental Corporation and Subsidiary

Consolidated Statements of Income

(In thousands, except share and per share amounts)

(Unaudited)

	Three months ended September 30,					Nine months ended September 30,
	2016			2015		2016			2015
Interest and dividend income
Loans	$	20,145		$	17,240	$	55,810		$	48,020
Taxable securities		1,995			1,713		5,551			4,825
Tax-exempt securities		482			490		1,435			1,491
Interest-bearing deposits with banks		40			7		104			23
		22,662			19,450		62,900			54,359
Interest expense
Deposits		984			854		2,678			2,509
Federal Home Loan Bank borrowings		286			227		758			694
Subordinated debentures		553			—		553			—
Junior subordinated debentures		66			57		179			169
Federal funds purchased		2			4		6			10
		1,891			1,142		4,174			3,382
Net interest income		20,771			18,308		58,726			50,977
Provision for loan losses		1,380			625		3,575			1,175
Net interest income after provision for loan losses		19,391			17,683		55,151			49,802
Noninterest income
Service charges on deposit accounts		717			703		2,099			1,939
Bankcard income		314			276		899			687
Bank-owned life insurance income		172			156		463			435
Net gain on sale of investment securities		—			143		309			336
Impairment losses on investment securities (OTTI)		(2	)		—		(19	)		(13	)
Other noninterest income		718			436		1,726			1,234
		1,919			1,714		5,477			4,618
Noninterest expense
Salaries and employee benefits		7,520			6,822		23,084			20,223
Property and equipment		1,202			1,148		3,404			3,221
Data processing		924			838		2,682			2,343
Legal and professional services		569			496		2,321			1,386
Business development		460			369		1,492			1,134
FDIC insurance assessment		273			283		848			769
Other real estate (income) expense, net		71			122		(32	)		303
Merger related expense		1,767			—		3,745			1,836
Other noninterest expense		1,039			1,104		3,222			2,971
		13,825			11,182		40,766			34,186
Income before provision for income taxes		7,485			8,215		19,862			20,234
Provision for income taxes		2,634			2,890		6,946			7,012
Net income	$	4,851		$	5,325	$	12,916		$	13,222
Earnings per share
Basic	$	0.24		$	0.27	$	0.65		$	0.69
Diluted	$	0.23		$	0.27	$	0.64		$	0.68
Weighted average shares outstanding
Basic		20,511,392			19,591,666		19,940,709			19,133,682
Common stock equivalents attributable to stock-based awards		165,572			225,104		154,813			224,308
Diluted		20,676,964			19,816,770		20,095,522			19,357,990

See accompanying notes.

4

Pacific Continental Corporation and Subsidiary

Consolidated Statements of Comprehensive Income

(In thousands)

(Unaudited)

	Three months ended						Nine months ended
	September 30,						September 30,
	2016			2015			2016			2015
Net income	$	4,851		$	5,325		$	12,916		$	13,222
Other comprehensive income:
Available-for-sale securities:
Unrealized (loss) gain arising during the period		(1,929	)		2,133			5,397			1,943
Reclassification adjustment for gains realized in net income		—			(143	)		(309	)		(336	)
Other than temporary impairment		2			—			19			13
Income tax effects		751			(776	)		(1,991	)		(632	)
Derivative agreements—cash flow hedge
Unrealized gain (loss) gain arising during the period		160			(154	)		(944	)		(212	)
Income tax effects		(62	)		60			368			83
Total other comprehensive (loss) income , net of tax		(1,078	)		1,120			2,540			859
Total comprehensive income	$	3,773		$	6,445		$	15,456		$	14,081

See accompanying notes.

5

Pacific Continental Corporation and Subsidiary

Consolidated Statements of Changes in Shareholders’ Equity

(In thousands, except share, and per share amounts)

(Unaudited)

	Number of Shares		Common Stock			Retained Earnings			Accumulated Other Comprehensive Income			Total
Balance, December 31, 2014		17,717,676	$	131,375		$	48,984		$	3,802		$	184,161
Net income							18,751						18,751
Other comprehensive loss, net of tax										(1,103	)		(1,103	)
Comprehensive income													17,648
Stock issuance and related tax benefit		108,404		95									95
Stock issued through acquisition		1,778,102		23,578									23,578
Share-based compensation expense				1,700									1,700
Vested employee RSUs and SARs surrendered to cover tax consequences				(649	)								(649	)
Cash dividends ($0.42 per share)							(8,042	)					(8,042	)
Balance, December 31, 2015		19,604,182	$	156,099		$	59,693		$	2,699		$	218,491
Net income							12,916						12,916
Other comprehensive income, net of tax										2,540			2,540
Comprehensive income													15,456
Stock issuance and related tax benefit		145,877		661									661
Stock issued through acquisition		2,853,362		47,794									47,794
Share-based compensation expense				1,427									1,427
Vested employee RSUs and SARs surrendered to cover tax consequences				(861	)								(861	)
Cash dividends ($0.33 per share)							(6,497	)					(6,497	)
Balance, September 30, 2016		22,603,421	$	205,120		$	66,112		$	5,239		$	276,471

See accompanying notes.

6

Pacific Continental Corporation and Subsidiary

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Nine months ended
	September 30,
	2016			2015
Cash flows from operating activities:
Net income	$	12,916		$	13,222
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization, net of accretion		4,919			5,476
Deferred income taxes		3			—
Bank-owned life insurance income		(469	)		(435	)
Share-based compensation		1,427			1,178
Provision for loan losses		3,575			1,175
Gain on sale of investment securities		(309	)		(336	)
Valuation adjustment on foreclosed assets		162			125
Gain on sale of foreclosed assets		(302	)		12
Other than temporary impairment on investment securities		19			13
Change in:
Interest receivable		698			(368	)
Deferred loan fees		381			249
Accrued interest payable and other liabilities		(1,991	)		(1,321	)
Income tax receivable		—			69
Other assets		(1,073	)		1,376
Net cash provided by operating activities		19,956			20,435
Cash flows from investing activities:
Proceeds from maturities and sales of available-for-sale investment securities		135,319			75,718
Purchase of available-for-sale investment securities		(160,943	)		(87,025	)
Net loan principal originations		(133,405	)		(107,951	)
Proceeds from sale of foreclosed assets		1,371			2,350
Net purchase of property and equipment		(2,196	)		(739	)
Redemption of Federal Home Loan Bank stock		1,097			3,878
Cash consideration received (paid), net of cash acquired in merger		43,855			(3,249	)
Net cash used by investing activities		(114,902	)		(117,018	)
Cash flows from financing activities:
Change in deposits		169,032			87,894
Change in repurchase agreements		1,036			209
Change in federal funds purchased and Federal Home Loan Bank short-term borrowings		(44,500	)		25,500
FHLB term advances originated		12,500			—
Proceeds from stock options exercised		620			13
Excess tax benefit from stock options exercised		41			—
Redemption of Capital Pacific Bell State Bank Debt		—			(3,344	)
Proceeds from subordinated debenture issuance		34,072			—
Dividends paid		(6,497	)		(5,886	)
Vested employee RSUs and SARs surrendered to cover tax consequences		(861	)		(599	)
Net cash provided by financing activities		165,443			103,787
Net change in cash and cash equivalents		70,497			7,204
Cash and cash equivalents, beginning of period		36,675			25,787
Cash and cash equivalents, end of period	$	107,172		$	32,991
Supplemental information:
Noncash investing and financing activities:
Transfer of loans to other real estate owned	$	958		$	967
Change in fair value of securities, net of deferred income taxes	$	3,116		$	988
Change in fair value of cash flow hedge, net of deferred income taxes	$	(576	)	$	(129	)
Acquisitions:
Assets acquired	$	450,040		$	257,924
Liabilities assumed	$	402,246		$	232,698
Cash paid during the period for:
Income taxes	$	7,667		$	4,878
Interest	$	3,653		$	3,429

See accompanying notes.

7

Pacific Continental Corporation and Subsidiary

Notes to Consolidated Financial Statements

(Unaudited)

A complete set of Notes to Consolidated Financial Statements is a part of the Company’s 2015 Form 10-K filed March 14, 2016. The notes below are included due to material changes in the consolidated financial statements or to provide the reader with additional information not otherwise available. In preparing these consolidated financial statements, the Company has evaluated subsequent events and transactions for potential recognition or disclosure in the consolidated financial statements. All dollar amounts in the following notes are expressed in thousands, except share and per share amounts or where otherwise indicated.

Certain amounts contained in the prior period consolidated financial statements have been reclassified where appropriate to conform to the financial statement presentation used in the current period. These reclassifications had no effect on previously reported net income, earnings per share or retained earnings.

NOTE 1 - BASIS OF PRESENTATION

The accompanying interim consolidated financial statements include the accounts of Pacific Continental Corporation (the “Company”), a bank holding company, and its wholly owned subsidiary, Pacific Continental Bank (the “Bank”), and the Bank’s wholly owned subsidiaries, PCB Services Corporation and PCB Loan Services Corporation (both of which are presently inactive). All significant intercompany accounts and transactions have been eliminated in consolidation.

The accompanying consolidated financial statements have been prepared by the Company without audit and in conformity with generally accepted accounting principles in the United States of America for interim financial information. The consolidated financial statements include all adjustments and normal accruals, which the Company considers necessary for a fair presentation of the results of operations for such interim periods. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, as of the date of the balance sheets and income and expenses for the periods. Areas including allowance for loan losses, goodwill and intangibles and other real estate owned are particularly susceptible to change, and actual results could differ from those estimates.

The balance sheet data as of December 31, 2015, was derived from audited consolidated financial statements, but does not include all disclosures contained in the Company’s 2015 Form 10-K. The interim consolidated financial statements should be read in conjunction with the December 31, 2015, consolidated financial statements, including the notes thereto, included in the Company’s 2015 Form 10-K.

8

NOTE 2 – BUSINESS COMBINATIONS

On September 6, 2016, the Company completed its acquisition of all of the common stock of Foundation Bancorp, Inc. (Foundation Bancorp) and its wholly-owned subsidiary, Foundation Bank, of Bellevue, Washington (the “Merger”). The acquisition of Foundation Bank reflects the Company’s overall banking expansion strategy, and expanded the combined Bank’s presence in the greater Puget Sound market.

The transaction has been accounted for under the acquisition method of accounting. The assets and liabilities were recorded at their estimated fair values as of the acquisition dates, however some valuations related to some other real estate owned properties are pending and could cause goodwill to change. The application of the acquisition method resulted in the recognition of preliminary goodwill of $21,407 which is all attributable to the value of Foundation Bank’s lending and deposit gathering banking activities. None of the goodwill is deductible for income tax purposes as the Merger was accounted for as a tax-free exchange.

A summary of the net assets acquired and the estimated fair value adjustments of Foundation Bancorp are presented below:

	September 6, 2016
Cost basis net assets	$	90,993
Less:
Cash payment to shareholders		(19,337	)
Stock issued		(47,794	)
Fair value adjustments:
Loans, net		(11,257	)
Core deposit intangible		5,762
Junior subordinated debentures		3,173
Deferred tax asset adjustment		(2,948	)
Securities		1,541
Other		1,274
Goodwill	$	21,407

Pursuant to the terms of the merger agreement, former Foundation Bancorp shareholders received either $12.50 per share in cash or 0.7911 shares of Pacific Continental common stock for each share of Foundation Bancorp common stock, or a combination of 30.0% in the form of cash and 70.0% in the form of Pacific Continental common stock. Pursuant to the merger agreement, the maximum aggregate cash component of the merger consideration was $19,337 and the aggregate stock component of the merger consideration was 2,853,361 shares of Pacific Continental common stock, the value of which was calculated based on a closing stock price of $16.75 per share. The cash election was oversubscribed; therefore shareholders electing all cash received $8.72 in cash and 0.23915 shares of Pacific Continental common stock for each share of Foundation Bancorp common stock. Former Foundation Bancorp shareholders making a valid mixed election received $3.75 in cash and 0.55377 shares of Pacific Continental common stock for each share of Foundation Bancorp common stock.

The operations of Foundation Bank are included in the operating results beginning September 6, 2016. Foundation Bank’s results of operations prior to the acquisition are not included in the operating results. Revenue information for Foundation Bank related revenue and expense cannot be practically separated from Pacific Continental, therefore proforma revenue disclosures have not been included. Merger-related expense of $1,767 were recorded during the quarter ended September 30, 2016, and were $3,745 for the nine months ended September 30, 2016 and are included within the merger-related expense line item on the Consolidated Statements of Income.

9

The statement of assets acquired and liabilities assumed at their fair values are presented below as of the transaction closing date:

FOUNDATION BANCORP, INC.

Opening balance sheet

(in thousands)

unaudited

	September 6, 2016
ASSETS
Cash and due from banks, net of consideration paid	$	43,855
Securities available-for-sale		88,331
Gross loans		281,790
Fair value adjustments
Credit quality-related		(8,884	)
Interest rate-related		(2,373	)
Net Loans		270,533
Interest receivable		934
Federal Home Loan Bank stock		532
Property and equipment		408
Goodwill		21,407
Core deposit intangible		5,762
Deferred tax asset		3,894
Other real estate owned		1,592
Bank-owned life insurance		11,574
Other asset		1,218
Total Assets	$	450,040
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits	$	396,509
Other liabilities		2,724
Junior subordinated debentures		3,013
Total liabilities		402,246
Common stock issued to Foundation Bancorp shareholders		47,794
Total liabilities and shareholders’ equity	$	450,040

Acquired loans at the acquisition date and as of September 30, 2016, are presented below:

	September 6, 2016			September 30, 2016
Contractually required principal payments	$	281,790		$	277,683
Purchase adjustment for credit and interest rate		(11,257	)		(10,748	)
Balance of acquired loans	$	270,533		$	266,935

Purchased credit impaired loans accounted for under ASC 310-30 acquired through the acquisition have a contractually required payments receivable on the acquisition date of $21,575.

10

The acquisition of Foundation Bancorp and it wholly-owned subsidiary Foundation Bank is not considered significant to the Company’s consolidated financial statements and, therefore, pro forma financial information is not presented.

11

NOTE 3 – SECURITIES AVAILABLE-FOR-SALE

The amortized cost and estimated fair values of securities available-for-sale at September 30, 2016, were as follows:

			Gross		Gross			Estimated		Percentage
	Amortized		Unrealized		Unrealized			Fair		of
	Cost		Gains		Losses			Value		Portfolio
Unrealized Loss Positions
Private-label mortgage-backed securities		249		—		(24	)		225		0	%
Mortgage-backed securities		83,009		—		(328	)		82,681		17	%
SBA pools		19,261		—		(95	)		19,166		4	%
Obligations of states and political subdivisions		13,236		—		(60	)		13,176		3	%
Corporate securities		899		—		(13	)		886		0	%
	$	116,654	$	—	$	(520	)	$	116,134		24	%
Unrealized Gain Positions
Obligations of U.S. government agencies	$	25,290	$	1,262	$	—		$	26,552		6	%
Obligations of states and political subdivisions		97,705		4,629		—			102,334		21	%
Private-label mortgage-backed securities		1,728		157		—			1,885		0	%
Mortgage-backed securities		206,376		3,678		—			210,054		44	%
SBA pools		25,205		245		—			25,449		5	%
	$	356,304	$	9,971	$	—		$	366,274		76	%
	$	472,958	$	9,971	$	(520	)	$	482,408		100	%

At September 30, 2016, the Bank held 484 investment securities, of which 61 were in unrealized loss positions. Unrealized losses existed on certain securities classified as obligations of US government agencies, private-label mortgage-backed securities, mortgage-backed securities, SBA pools obligations of states and political subdivisions, and corporate securities. The unrealized losses on all securities are deemed to be temporary, as these securities retain strong credit ratings, continue to perform adequately, and are backed by various government sponsored enterprises. These decreases in fair value are associated with the changes in market interest rates or the widening of market spreads subsequent to the initial purchase of the securities, and not due to concerns regarding the underlying credit of the issuers or the underlying collateral. The decline in value of these securities has resulted from changes in interest rates relative to where these investments fall within the yield curve and their individual characteristics. Because the Company does not currently intend to sell these securities nor does the Company consider it more likely than not that it will be required to sell these securities before the recovery of amortized cost basis, which may be upon maturity, the Company does not consider these investments to be other-than-temporarily impaired at September 30, 2016.

12

The following table presents a summary of securities in a continuous unrealized loss position at September 30, 2016:

	Securities in Continuous Unrealized Loss Position for Less Than 12 Months		Gross Unrealized Loss on Securities in Loss Position for Less Than 12 Months			Securities in Continuous Unrealized Loss Position for 12 Months or Longer		Gross Unrealized Loss on Securities in Loss Position for 12 Months or Longer
Private-label mortgage-backed securities	$	—	$	—		$	225	$	(24	)
Mortgage-backed securities		79,207		(282	)		3,474		(46	)
SBA pools		15,240		(72	)		3,926		(23	)
Obligations of states and political subdivisions		13,176		(60	)		—		—
Corporate securities		—		—			886		(13	)
	$	107,623	$	(414	)	$	8,511	$	(106	)

On a monthly basis, management reviews all private-label mortgage-backed securities for the presence of other than temporary impairment (“OTTI”) and recorded $2 and $0 during the three months ended September 30, 2016 and 2015, respectively. Management’s evaluation included the use of independently-generated third-party credit surveillance reports that analyze the loans underlying each security. These reports include estimates of default rates and severities, life collateral loss rates and static voluntary prepayment assumptions to generate estimated cash flows at the individual security level. Additionally, management considered factors such as downgraded credit ratings, severity and duration of the impairments, the stability of the issuers and any discounts paid when the securities were purchased. Management has considered all available information related to the collectability of the impaired investment securities and believes that the estimated credit loss is appropriate.

Following is a tabular roll-forward of the aggregate amount of credit-related OTTI at the beginning and end of the periods presented along with the amounts recognized in earnings during the three and nine months ended September 30, 2016, and 2015:

	Three months ended				Nine months ended
	September 30,				September 30,
	2016		2015		2016		2015
Balance, beginning of period:	$	266	$	241	$	249	$	227
Additions:
Initial OTTI credit loss		2		—		19		14
Balance, end of period:	$	268	$	241	$	268	$	241

At September 30, 2016, ten of the Company’s private-label mortgage-backed securities, with an amortized cost of $1,440, were classified as substandard as their underlying credit was considered impaired. At December 31, 2015, six securities with an amortized cost of $1,506 were classified as substandard.

At September 30, 2016, and December 31, 2015, the projected average life of the securities portfolio was 4.72 years and 4.21 years, respectively.

13

The amortized cost and estimated fair values of securities available-for-sale at December 31, 2015, were as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value		Percentage of Portfolio
Unrealized Loss Positions
Obligations of U.S. government agencies	$	14,491	$	—	$	(119	)	$	14,372		3.92	%
Obligations of states and political subdivisions		13,438		—		(149	)		13,289		3.62	%
Private-label mortgage-backed securities		663		—		(33	)		630		0.17	%
Mortgage-backed securities		95,040		—		(856	)		94,184		25.69	%
SBA pools		17,225		—		(101	)		17,124		4.67	%
Corporate securities		899		—		(5	)		893		0.25	%
	$	141,756	$	—	$	(1,263	)	$	140,492		38.32	%
Unrealized Gain Positions
Obligations of U.S. government agencies	$	29,669	$	582	$	—		$	30,251		8.25	%
Obligations of states and political subdivisions		80,119		3,743		—			83,862		22.88	%
Private-label mortgage-backed securities		2,028		131		—			2,159		0.59	%
Mortgage-backed securities		90,126		1,060		—			91,186		24.87	%
SBA pools		18,560		88		—			18,648		5.09	%
	$	220,502	$	5,604	$	—		$	226,106		61.68	%
	$	362,258	$	5,604	$	(1,263	)	$	366,598		100.00	%

At December 31, 2015, the Bank held 432 investment securities, of which 92 were in unrealized loss positions. The following table presents a summary of securities in a continuous unrealized loss position at December 31, 2015:

	Securities in Continuous Unrealized Loss Position for Less Than 12 Months		Gross Unrealized Loss on Securities in Loss Position for Less Than 12 Months			Securities in Continuous Unrealized Loss Position for 12 Months or Longer		Gross Unrealized Loss on Securities in Loss Position for 12 Months or Longer
Obligations of U.S. government agencies	$	14,372	$	(119	)	$	—	$	—
Obligations of states and political subdivisions		12,761		(145	)		528		(4	)
Private-label mortgage-backed securities		240		(4	)		390		(29	)
Mortgage-backed securities		87,896		(711	)		6,288		(145	)
SBA pools		13,539		(78	)		3,585		(23	)
Corporate securities		893		(5	)		—		—
	$	129,701	$	(1,062	)	$	10,791	$	(201	)

14

The amortized cost and estimated fair value of securities at September 30, 2016, by maturity, are shown below. Obligations of U.S. government agencies, states and political subdivisions and corporate securities are shown by contractual maturity. Mortgage-backed securities and SBA variable pools are shown by projected average life.

	September 30, 2016
	Amortized Cost		Estimated Fair Value
Due in one year or less	$	8,466	$	8,523
Due after one year through 5 years		240,116		243,481
Due after 5 years through 10 years		180,377		185,187
Due after 10 years		43,999		45,217
	$	472,958	$	482,408

During the quarter ended September 30, 2016, 30 investment securities were sold resulting in proceeds of $54,426. The sales generated no gain or loss as they related to sales of securities acquired from Foundation Bank, which were sold at their acquisition date fair value. During the nine months ended September 30, 2016, 60 investment securities were sold resulting in proceeds of $98,309. The sales generated a gross gain of $552 and a gross loss of $243, totaling a net gain of $309. The specific identification method was used to determine the cost of the securities sold.

During the quarter ended September 30, 2015, 19 investment securities were sold resulting in proceeds of $21,069. The sales generated a gross gain of $143 and a gross loss of $0, totaling a net gain of $143. During the nine months ended September 30, 2015, 41 investment securities were sold resulting in proceeds of $35,216. The sales generated a gross gain of $585 and a gross loss of $249, totaling a net gain of $336. The specific identification method was used to determine the cost of the securities sold.

The following table presents investment securities which were pledged to secure public deposits and repurchase agreements as permitted or required by law:

	September 30, 2016				December 31, 2015
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Pledged to secure public deposits	$	24,435	$	26,677	$	27,938	$	29,052
Pledged to secure repurchase agreements		1,637		1,714		3,985		4,111
	$	26,072	$	28,391	$	31,923	$	33,163

At September 30, 2016, and December 31, 2015, there was an outstanding balance for repurchase agreements of $1,107, and $71, respectively.

15

NOTE 4 - LOANS, ALLOWANCE FOR LOAN LOSSES, AND CREDIT QUALITY INDICATORS

Loans are stated at the amount of unpaid principal net of loan premiums or discounts for purchased loans, net of deferred loan origination fees, discounts associated with retained portions of loans sold, and an allowance for loan losses. Interest on loans is calculated using the simple-interest method on daily balances of the principal amount outstanding. Loan origination fees, net of origination costs and discounts, are amortized over the lives of the loans as adjustments to yield.

Major classifications of period-end loans are as follows:

	September 30,			% of Gross			December 31,			% of Gross
	2016			Loans			2015			Loans
Real estate loans
Multi-family residential	$	79,126			4.37	%	$	66,445			4.73	%
Residential 1-4 family		61,498			3.40	%		53,776			3.82	%
Owner-occupied commercial		425,879			23.55	%		364,742			25.94	%
Nonowner-occupied commercial		431,119			23.84	%		300,774			21.39	%
Total permanent real estate loans		997,622			55.16	%		785,737			55.88	%
Construction loans
Multi-family residential		24,567			1.36	%		7,027			0.50	%
Residential 1-4 family		42,130			2.33	%		30,856			2.19	%
Commercial real estate		78,369			4.33	%		42,680			3.04	%
Commercial bare land and acquisition & development		19,050			1.05	%		20,537			1.46	%
Residential bare land and acquisition & development		8,852			0.49	%		7,268			0.52	%
Total construction real estate loans		172,968			9.56	%		108,368			7.71	%
Total real estate loans		1,170,590			64.72	%		894,105			63.59	%
Commercial loans		630,091			34.84	%		501,976			35.70	%
Consumer loans		3,201			0.18	%		3,351			0.24	%
Other loans		4,764			0.26	%		6,580			0.47	%
Gross loans		1,808,646			100.00	%		1,406,012			100.00	%
Deferred loan origination fees		(1,910	)					(1,530	)
		1,806,736						1,404,482
Allowance for loan losses		(20,531	)					(17,301	)
Total loans, net of allowance for loan losses and net deferred fees	$	1,786,205					$	1,387,181

At September 30, 2016, outstanding loans to dental professionals totaled $370,135 and represented 20.46% of total outstanding loan principal balances compared to dental professional loans of $340,162 or 24.19% of total outstanding loan principal balance at December 31, 2015. Additional information about the Company’s dental portfolio can be found in Note 5. There are no other industry concentrations in excess of 10% of the total loan portfolio. However, as of September 30, 2016, 64.72% of the Company’s loan portfolio was collateralized by real estate and is, therefore, susceptible to changes in local market conditions. While appropriate action is taken to manage identified concentration risks, management believes that the loan portfolio is well diversified by geographic location and among industry groups.

16

Purchased Credit Impaired Loans

The following table represents the contractually required principal balance of purchased credit impaired loans and the carrying balance at September 30, 2016 and December 31, 2015:

	September 30,			December 31,
	2016			2015
Contractually required principal payments for purchase credit impaired loans	$	27,668		$	11,528
Accretable yield		(1,696	)		(1,070	)
Nonaccretable yield		(919	)		(378	)
Balance of purchased credit impaired loans	$	25,053		$	10,080

The following tables summarize the changes in the accretable yield for purchased credit impaired loans for the periods ended September 30, 2016 and 2015:

	Three months ended September 30,
	2016												2015
	Century			Capital Pacific			Foundation			Total			Century			Capital Pacific			Total
Balance, beginning of period	$	—		$	860		$	—		$	860		$	96		$	1,364		$	1,460
Additions		—			—			908			908			—			—			—
Accretion to interest income		—			(49	)		(22	)		(71	)		(28	)		(114	)		(142	)
Balance, end of period	$	—		$	811		$	886		$	1,697		$	68		$	1,250		$	1,318
	Nine months ended September 30,
	2016												2015
	Century			Capital Pacific			Foundation			Total			Century			Capital Pacific			Total
Balance, beginning of period	$	39		$	1,031		$	—		$	1,070		$	151		$	—		$	151
Additions		—			—			908			908			—			1,569			1,569
Accretion to interest income		(39	)		(220	)		(22	)		(281	)		(83	)		(319	)		(402	)
Balance, end of period	$	—		$	811		$	886		$	1,697		$	68		$	1,250		$	1,318

17

Allowance for Loan Losses

The allowance for loan losses is established as an amount that management considers adequate to absorb possible losses on existing loans within the portfolio. The allowance consists of general, specific and unallocated components. The general component is based upon all loans collectively evaluated for impairment. The specific component is based upon all loans individually evaluated for impairment. The unallocated component represents credit losses inherent in the loan portfolio that may not have been contemplated in the general risk factors or the specific allowance analysis. Loans are charged against the allowance when management believes the collection of principal and interest is unlikely.

The Company performs regular credit reviews of the loan portfolio to determine the credit quality and adherence to underwriting standards. When loans are originated, they are assigned a risk rating that is reassessed periodically during the term of the loan through the credit review process. The Company’s internal risk rating methodology assigns risk ratings ranging from one to ten, where a higher rating represents higher risk. The ten-point risk rating categories are a primary factor in determining an appropriate amount for the allowance for loan losses.

Estimated credit losses reflect consideration of all significant factors that affect the collectability of the loan portfolio. The historical loss rate for each group of loans with similar risk characteristics is determined based on the Company’s own loss experience in that group. Historical loss experience and recent trends in losses provide a reasonable starting point for analysis, however, they do not by themselves form a sufficient basis to determine the appropriate level for the allowance for loan losses. Qualitative or environmental factors that are likely to cause estimated credit losses to differ from historical losses are also considered, including but not limited to:

• Changes in international, regional and local economic and business conditions and developments that affect the collectability of the portfolio, including the condition of various market segments,

• Changes in the nature and volume of the portfolio and in the terms of loans,

• Changes in the volume and severity of past due loans, the volume of nonaccrual loans and the volume and severity of adversely classified or graded loans,

• Changes in the quality of the institution’s loan review system,

• Changes in the value of underlying collateral for collateral-dependent loans,

• The existence and effect of any concentrations of credit, and changes in the level of such concentrations,

• The effect of other external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in the institution’s existing portfolio,

• Changes in lending policies and procedures, including changes in underwriting standards and collection, charge-off, and recovery practices not considered elsewhere in estimating credit losses, and

• Changes in the current and future U.S. political environment, including debt ceiling negotiations, government shutdown and healthcare reform that may affect national, regional and local economic conditions, taxation, or disruption of national or global financial markets.

The adequacy of the allowance for loan losses and the reserve for unfunded commitments is determined using a consistent, systematic methodology and is monitored regularly based on management’s evaluation of numerous factors. For each portfolio segment, these factors include:

• The quality of the current loan portfolio,

• The trend in the migration of the loan portfolio’s risk ratings,

• The velocity of migration of losses and potential losses,

• Current economic conditions,

• Loan concentrations,

• Loan growth rates,

• Past-due and nonperforming trends,

• Evaluation of specific loss estimates for all significant problem loans,

• Recovery experience, and

• Peer comparison loss rates.

18

A summary of the activity in the allowance for loan losses by major loan classification follows:

	For the three months ended September 30, 2016
	Commercial and Other			Real Estate		Construction		Consumer			Unallocated			Total
Beginning balance	$	7,391		$	9,137	$	1,341	$	46		$	1,212		$	19,127
Charge-offs		(43	)		—		—		(1	)		—			(44	)
Recoveries		57			9		1		1			—			68
Provision (reclassification)		896			339		312		(4	)		(163	)		1,380
Ending balance	$	8,301		$	9,485	$	1,654	$	42		$	1,049		$	20,531
	For the nine months ended September 30, 2016
	Commercial and Other			Real Estate		Construction		Consumer			Unallocated			Total
Beginning balance	$	6,349		$	8,297	$	1,258	$	46		$	1,351		$	17,301
Charge-offs		(708	)		—		—		(4	)		—			(712	)
Recoveries		159			44		162		2			—			367
Provision (reclassification)		2,501			1,144		234		(2	)		(302	)		3,575
Ending balance	$	8,301		$	9,485	$	1,654	$	42		$	1,049		$	20,531

At September 30, 2016, the allowance for loan losses on dental loans was $4,798, compared to $4,022 at December 31, 2015. See Note 5 for additional information on the dental loan portfolio.

19

The following table presents the allowance and recorded investment in loans by major loan classification at September 30, 2016 and December 31, 2015:

	Balances as of September 30, 2016
	Commercial and Other		Real Estate		Construction		Consumer		Unallocated		Total
Ending allowance: collectively evaluated for impairment	$	7,567	$	9,481	$	1,654	$	42	$	1,049	$	19,793
Ending allowance: individually evaluated for impairment		734		4		—		—		—		738
Ending allowance: loans acquired with deteriorated credit quality		—		—		—		—		—		—
Total ending allowance	$	8,301	$	9,485	$	1,654	$	42	$	1,049	$	20,531
Ending loan balance: collectively evaluated for impairment	$	620,997	$	978,030	$	170,816	$	3,201	$	—	$	1,773,044
Ending loan balance: individually evaluated for impairment		4,463		3,934		2,152				—		10,549
Ending loan balance: loans acquired with deteriorated credit quality		9,395		15,658		—		—		—		25,053
Total ending loan balance	$	634,855	$	997,622	$	172,968	$	3,201	$	—	$	1,808,646
	Balances as of December 31, 2015
	Commercial and Other		Real Estate		Construction		Consumer		Unallocated		Total
Ending allowance: collectively evaluated for impairment	$	6,303	$	8,267	$	1,159	$	46	$	1,351	$	17,126
Ending allowance: individually evaluated for impairment		46		30		99		—		—		175
Ending allowance: loans acquired with deteriorated credit quality		—		—		—		—		—		—
Total ending allowance	$	6,349	$	8,297	$	1,258	$	46	$	1,351	$	17,301
Ending loan balance: collectively evaluated for impairment	$	504,261	$	771,543	$	107,977	$	3,351	$	—	$	1,387,132
Ending loan balance: individually evaluated for impairment		2,627		5,782		391		—		—		8,800
Ending loan balance: loans acquired with deteriorated credit quality		1,668		8,412		—		—		—		10,080
Total ending loan balance	$	508,556	$	785,737	$	108,368	$	3,351	$	—	$	1,406,012

The September 30, 2016, ending allowance includes $738 in specific allowance for $10,549 of impaired loans ($9,551 net of government guarantees). At December 31, 2015, the Company had $8,800 of impaired loans ($7,527 net of government guarantees) with a specific allowance of $175 assigned.

Management believes that the allowance for loan losses was adequate as of September 30, 2016. However, future loan losses may exceed the levels provided for in the allowance for loan losses and could possibly result in additional charges to the provision for loan losses.

20

Credit Quality Indicators

The Company uses the following loan grades, which are also often used by regulators when assessing the credit quality of a loan portfolio.

Pass – Credit exposure in this category range between the highest credit quality to average credit quality. Primary repayment sources generate satisfactory debt service coverage under normal conditions. Cash flow from recurring sources is expected to continue to produce adequate debt service capacity. There are many levels of credit quality contained in the Pass definition, but none of the loans contained in this category rise to the level of Special Mention. This category includes loans with an internal risk rating of 1-6.

Special Mention – A Special Mention asset has potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the institution’s credit position at some future date. Special Mention assets are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification. The Bank strictly and carefully employs the FDIC definition in assessing assets that may apply to this category. It is apparent that, in many cases, asset weaknesses relevant to this definition either (1) better fit a definition of a “well-defined weakness,” or (2) in management’s experience, ultimately migrate to worse risk grade categories, such as Substandard and Doubtful. Consequently, management elects to downgrade most potential Special Mention credits to Substandard or Doubtful, and therefore adopts a conservative risk grade process in the use of the Special Mention risk grade. This category includes loans with an internal risk rating of 7.

Substandard – A Substandard asset is inadequately protected by the current sound worth and paying capacity of the borrower or of the collateral pledged, if any. Assets so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. Loans in this category are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Loss potential, while existing in the aggregate amount of substandard assets, does not have to exist in individual assets classified Substandard. This category includes loans with an internal risk rating of 8.

Doubtful – An asset classified as Doubtful has all the weaknesses inherent in one classified Substandard, with the added characteristic that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions, and values, highly questionable and improbable. This category includes loans with an internal risk rating of 9.

Management strives to consistently apply these definitions when allocating its loans by loan grade. The loan portfolio is continuously monitored for changes in credit quality and management takes appropriate action to update the loan risk ratings accordingly. Management has not changed the Company’s policy towards its use of credit quality indicators during the periods reported.

21

The following tables present the Company’s loan portfolio information by loan type and credit grade at September 30, 2016 and December 31, 2015:

Credit Quality Indicators

As of September 30, 2016

	Loan Grade
	Pass			Special Mention			Substandard			Doubtful			Totals
Real estate loans
Multi-family residential	$	79,126		$	—		$	—		$	—		$	79,126
Residential 1-4 family		57,629			—			3,869			—			61,498
Owner-occupied commercial		413,835			—			12,044			—			425,879
Nonowner-occupied commercial		424,397			—			6,722			—			431,119
Total real estate loans		974,987			—			22,635			—			997,622
Construction
Multi-family residential		24,567			—			—			—			24,567
Residential 1-4 family		42,130			—			—			—			42,130
Commercial real estate		78,369			—			—			—			78,369
Commercial bare land and acquisition & development		19,050			—			—			—			19,050
Residential bare land and acquisition & development		6,630			—			2,222			—			8,852
Total construction loans		170,746			—			2,222			—			172,968
Commercial and other		613,144						20,050			1,661			634,855
Consumer		3,201			—			—			—			3,201
Totals	$	1,762,078		$	—		$	44,907		$	1,661		$	1,808,646
Percentage of portfolio		97.43	%		0.00	%		2.48	%		0.09	%		100.00	%
Credit Quality Indicators
As of December 31, 2015
	Loan Grade
	Pass			Special Mention			Substandard			Doubtful			Totals
Real estate loans
Multi-family residential	$	66,208		$	—		$	237		$	—		$	66,445
Residential 1-4 family		49,077			—			4,699			—			53,776
Owner-occupied commercial		353,249			—			11,493			—			364,742
Nonowner-occupied commercial		296,528			—			4,246			—			300,774
Total real estate loans		765,062			—			20,675			—			785,737
Construction
Multi-family residential		7,027			—			—			—			7,027
Residential 1-4 family		30,803			—			53			—			30,856
Commercial real estate		42,580			—			100			—			42,680
Commercial bare land and acquisition & development		20,265			—			272			—			20,537
Residential bare land and acquisition & development		4,969			—			2,299			—			7,268
Total construction loans		105,644			—			2,724			—			108,368
Commercial and other		494,267			—			14,289			—			508,556
Consumer		3,350			—			1			—			3,351
Totals	$	1,368,323		$	—		$	37,689		$	—		$	1,406,012
Percentage of portfolio		97.32	%		0.00	%		2.68	%		0.00	%		100.00	%

At September 30, 2016 and December 31, 2015, the Company had $3,370, and $360, respectively, in unfunded commitments on its classified loans, which amounts are included in the calculation of our classified asset ratio.

22

Past Due and Nonaccrual Loans

The Company uses the terms “past due” and “delinquent” interchangeably. Amortizing loans are considered past due or delinquent based upon the number of contractually required payments not made. Delinquency status for all contractually matured loans, commercial and commercial real estate loans with non-monthly amortization, and all other extensions of credit is determined based upon the number of calendar months past due.

The following tables present an aging analysis of past due and nonaccrual loans at September 30, 2016 and December 31, 2015:

Age Analysis of Loans Receivable

As of September 30, 2016

	30-59 Days Past Due Still Accruing			60-89 Days Past Due Still Accruing			Greater Than 90 days Past Due Still Accruing			Nonaccrual			Total Past Due and Nonaccrual			Total Current			Total Loans Receivable
Real estate loans
Multi-family residential	$	—		$	—		$	—		$	—		$	—		$	79,126		$	79,126
Residential 1-4 family		23			—			—			162			185			58,634			58,819
Owner-occupied commercial		—			—			—			—			—			416,118			416,118
Nonowner-occupied commercial		—			—			—			663			663			427,238			427,901
Total real estate loans		23			—			—			825			848			981,116			981,964
Construction
Multi-family residential		—			—			—			—			—			24,567			24,567
Residential 1-4 family		—			—			—			—			—			42,130			42,130
Commercial real estate		—			—			—			—			—			78,369			78,369
Commercial bare land and acquisition & development		—			—			—			—			—			19,050			19,050
Residential bare land and acquisition & development		—			—			—			—			—			8,852			8,852
Total construction loans		—			—			—			—			—			172,968			172,968
Commercial and other		149			—			—			2,847			2,996			622,464			625,460
Consumer		—			—			—			—			—			3,201			3,201
Total	$	172		$	—		$	—		$	3,672		$	3,844		$	1,779,749		$	1,783,593
Percentage of portfolio		0.01	%		0.00	%		0.00	%		0.21	%		0.22	%		99.78	%		100.00	%

Age Analysis of Loans Receivable

As of December 31, 2015

	30-59 Days Past Due Still Accruing			60-89 Days Past Due Still Accruing			Greater Than 90 days Past Due Still Accruing			Nonaccrual			Total Past Due and Nonaccrual			Total Current			Total Loans Receivable
Real estate loans
Multi-family residential	$	—		$	—		$	—		$	—		$	—		$	66,445		$	66,445
Residential 1-4 family		—			—			—			374			374			51,578			51,952
Owner-occupied commercial		—			—			—			—			—			359,065			359,065
Nonowner-occupied commercial		—			—			—			750			750			299,486			300,236
Total real estate loans		—			—			—			1,124			1,124			776,574			777,698
Construction
Multi-family residential		—			—			—			—			—			7,027			7,027
Residential 1-4 family		480			—			—			53			533			30,323			30,856
Commercial real estate		—			—			—			—			—			42,580			42,580
Commercial bare land and acquisition & development		—			—			—			—			—			20,265			20,265
Residential bare land and acquisition & development		—			—			—			—			—			7,268			7,268
Total construction loans		480			—			—			53			533			107,463			107,996
Commercial and other		—			—			—			1,495			1,495			505,392			506,887
Consumer		1			3			—			—			4			3,347			3,351
Total	$	481		$	3		$	—		$	2,672		$	3,156		$	1,392,776		$	1,395,932
Percentage of portfolio		0.03	%		0.00	%		0.00	%		0.19	%		0.23	%		99.77	%		100.00	%

23

Impaired Loans

Regular credit reviews of the portfolio are performed to identify loans that are considered potentially impaired. Potentially impaired loans are referred to the Asset-Liability Committee “ALCO” for review and are included in the specific calculation of allowance for loan losses. A loan is considered impaired when, based on current information and events, the Company is unlikely to collect all principal and interest due according to the terms of the loan agreement. When the amount of the impairment represents a confirmed loss, it is charged off against the allowance for loan losses. Impaired loans are often reported net of government guarantees to the extent that the guarantees are expected to be collected. Impaired loans generally include all loans classified as nonaccrual and troubled debt restructurings.

Accrual of interest is discontinued on impaired loans when management believes that, after considering economic and business conditions and collection efforts, the borrower’s financial condition is such that collection of principal or interest is doubtful. Accrued, but uncollected, interest is generally reversed when loans are placed on nonaccrual status. Interest income is subsequently recognized only to the extent cash payments are received satisfying all delinquent principal and interest amounts, and the prospects for future payments in accordance with the loan agreement appear relatively certain. In accordance with GAAP, payments received on nonaccrual loans are applied to the principal balance and no interest income is recognized. Interest income may be recognized on impaired loans that are not on nonaccrual status.

24

The following tables display an analysis of the Company’s impaired loans at September 30, 2016, and December 31, 2015:

Impaired Loan Analysis

As of September 30, 2016

	Recorded Investment With No Specific Allowance Valuation		Recorded Investment With Specific Allowance Valuation		Total Recorded Investment		Unpaid Principal Balance		Average Recorded Investment		Related Specific Allowance Valuation
Real estate
Multi-family residential	$	—	$	—	$	—	$	—	$	—	$	—
Residential 1-4 family		461		303		764		785		606		3
Owner-occupied commercial		104		874		978		978		1,192		1
Nonowner-occupied commercial		2,192		—		2,192		2,254		2,249		—
Total real estate loans		2,757		1,177		3,934		4,017		4,047		4
Construction
Multi-family residential		—		—		—		—		—		—
Residential 1-4 family		—		—		—		—		50		—
Commercial real estate		—		—		—		—		—		—
Commercial bare land and acquisition & development		—		—		—		—		—		—
Residential bare land and acquisition & development		2,152		—		2,152		2,151		1,764		—
Total construction loans		2,152		—		2,152		2,151		1,814		—
Commercial and other		2,305		2,158		4,463		4,834		3,215		734
Consumer		—		—		—		—		—		—
Total impaired loans	$	7,214	$	3,335	$	10,549	$	11,002	$	9,076	$	738

Impaired Loan Analysis

As of December 31, 2015

	Recorded Investment With No Specific Allowance Valuation		Recorded Investment With Specific Allowance Valuation		Total Recorded Investment		Unpaid Principal Balance		Average Recorded Investment		Related Specific Allowance Valuation
Real estate
Multi-family residential	$	—	$	—	$	—	$	—	$	—	$	—
Residential 1-4 family		374		308		682		911		766		5
Owner-occupied commercial		2,788		—		2,788		2,788		1,177		—
Nonowner-occupied commercial		2,287		25		2,312		2,374		2,395		25
Total real estate loans		5,449		333		5,782		6,073		4,338		30
Construction
Multi-family residential		—		—		—		—		—		—
Residential 1-4 family		53		—		53		72		32		—
Commercial real estate		—		—		—		—		—		—
Commercial bare land and acquisition & development		—		—		—		—		—		—
Residential bare land and acquisition & development		—		338		338		338		347		99
Total construction loans		53		338		391		410		379		99
Commercial and other		2,091		536		2,627		3,018		2,404		46
Consumer		—		—		—		—		—		—
Total impaired loans	$	7,593	$	1,207	$	8,800	$	9,501	$	7,121	$	175

The impaired balances reported above are not adjusted for government guarantees of $998, and $1,273 at September 30, 2016 and December 31, 2015, respectively. The recorded investment in impaired loans, net of government guarantees, totaled $9,551 and $7,527 at September 30, 2016, and December 31, 2015, respectively.

25

Troubled Debt Restructurings

In the normal course of business, the Company may modify the terms of certain loans, attempting to protect as much of its investment as possible. Management evaluates the circumstances surrounding each modification to determine whether it is a troubled debt restructuring (“TDR”). TDRs exist when 1) the restructuring constitutes a concession, and 2) the debtor is experiencing financial difficulties.

The following table displays the Company’s TDRs by class at September 30, 2016 and December 31, 2015:

	Troubled Debt Restructurings as of
	September 30, 2016				December 31, 2015
	Number of Contracts		Post-Modification Outstanding Recorded Investment		Number of Contracts		Post-Modification Outstanding Recorded Investment
Real estate
Multifamily residential		—	$	—		—	$	—
Residential 1-4 family		4		764		6		682
Owner-occupied commercial		3		1,421		3		2,788
Non owner-occupied commercial		6		2,192		7		2,312
Total real estate loans		13		4,377		16		5,782
Construction
Multifamily residential		—		—		—		—
Residential 1-4 family		—		—		—		—
Commercial real estate		—		—		—		—
Commercial bare land and acquisition & development		—		—		—		—
Residential bare land and acquisition & development		2		1,827		—		—
Total construction loans		2		1,827		—		—
Commercial and other		14		2,883		11		2,170
Consumer		—		—		—		—
Total		29	$	9,087		27	$	7,952

The recorded investment in TDRs on nonaccrual status totaled $2,228, and $1,807 at September 30, 2016 and December 31, 2015, respectively. The Company’s policy is that loans placed on nonaccrual will typically remain on nonaccrual status until all principal and interest payments are brought current and the prospect for future payment in accordance with the loan agreement appears relatively certain. The Company’s policy generally refers to a minimum of six months of payment performance as sufficient to warrant a return to accrual status.

For the nine months ended September 30, 2016, the Company restructured 9 loans into TDRs for which impairment was previously measured under the Company’s general loan loss allowance methodology.

The types of modifications offered can generally be described in the following categories:

• Rate Modification - A modification in which the interest rate is modified.

• Term Modification - A modification in which the maturity date, timing of payments, or frequency of payments is changed.

• Interest-only Modification - A modification in which the loan is converted to interest-only payments for a period of time.

• Combination Modification - Any other type of modification, including the use of multiple types of modifications.

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Below is a table of the newly restructured loans identified in the nine months ended September 30, 2016.

	Troubled Debt Restructurings Identified During
	the nine months ended September 30, 2016
	Rate Modification		Term Modification		Interest-only Modification		Combination Modification
Real estate
Multi-family residential	$	—	$	—	$	—	$	—
Residential 1-4 family		—		—		—		299
Owner-occupied commercial		—		—		444		—
Nonowner-occupied commercial		—		—		—		—
Total real estate loans		—		—		444		299
Construction
Multi-family residential		—		—		—		—
Residential 1-4 family		—		—		—		—
Commercial real estate		—		—		—		—
Commercial bare land and acquisition & development		—		—		—		—
Residential bare land and acquisition & development		—		—		—		1,827
Total construction loans		—		—		—		1,827
Commercial and other		—		—		363		673
Consumer		—		—		—		—
Total	$	—	$	—	$	807	$	2,799

Subsequent to a loan being classified as a TDR, a borrower may become unwilling or unable to abide by the terms of the modified agreement. In such cases of default, the Company takes appropriate action to recover principal and interest payments including the use of foreclosure proceedings. The following table represents loans receivable modified as TDRs that subsequently defaulted within the first twelve months of restructure during the period.

27

	Troubled Debt Restructurings
	that Subsequently Defaulted During
	the nine months ended September 30,
	2016				2015
	Number of Contracts		Recorded Investment		Number of Contracts		Recorded Investment
Real estate
Multi-family residential		—	$	—		—	$	—
Residential 1-4 family		—		—		—		—
Owner-occupied commercial		1		444		—		—
Nonowner-occupied commercial		—		—		—		—
Total real estate loans		1		444		—		—
Construction
Multi-family residential		—		—		—		—
Residential 1-4 family		—		—		—		—
Commercial real estate		—		—		—		—
Commercial bare land and acquisition & development		—		—		—		—
Residential bare land and acquisition & development		—		—		—		—
Total construction loans		—		—		—		—
Commercial and other		—		—		—		—
Consumer		—		—		—		—
Total	$	1	$	444	$	—	$	—

No TDRs subsequently defaulted during the three months ended September 30, 2016 and 2015.

At September 30, 2016 and December 31, 2015, the Company had no commitments to lend additional funds on loans restructured as TDRs.

28

NOTE 5 – DENTAL LOAN PORTFOLIO

Dental lending is not operated as a business segment, and dental loans are made in the normal course of commercial lending activities throughout the Company. However, to assist in understanding the concentrations and risks associated with the Company’s loan portfolio, the following Note has been included to provide additional information relating to the Company’s dental loan portfolio. At September 30, 2016 and December 31, 2015, loans to dental professionals totaled $370,135, and $340,162, respectively, and represented 20.46%, and 24.19% in principal amount of total outstanding loans, respectively. As of September 30, 2016 and December 31, 2015, dental loans were supported by government guarantees totaling $6,852 and $9,027, respectively. These guarantees represented 1.85%, and 2.65% in principal amount of the outstanding dental loan balances as of such respective dates. The Company defines a “dental loan” as a loan to dental professionals for the purpose of practice expansion, acquisition or other purpose supported by the cash flows of a dental practice.

Loan Classification

Major classifications of dental loans at September 30, 2016 and December 31, 2015, were as follows:

	September 30, 2016		December 31, 2015
Real estate secured loans:
Owner-occupied commercial	$	59,323	$	56,145
Other dental real estate loans		893		2,198
Total permanent real estate loans		60,216		58,343
Dental construction loans		3,149		4,334
Total real estate loans		63,365		62,677
Commercial loans		306,770		277,485
Gross loans	$	370,135	$	340,162

Market Area

The Bank’s principal “market area” is within the States of Oregon and Washington west of the Cascade Mountain Range. This area is serviced by branch locations in Eugene, Portland and Puget Sound. The Company also makes national dental loans throughout the United States, and currently has dental loans in 43 states. National loan relationships are maintained and serviced by Bank personnel primarily located in Portland.

The following table summarizes the Company’s dental lending by borrower location:

	September 30, 2016		December 31, 2015
Local	$	150,898	$	145,817
National		219,237		194,345
Total	$	370,135	$	340,162

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Allowance

The allowance for loan losses identified for the dental loan portfolio is established as an amount that management considers adequate to absorb possible losses on existing loans within the dental portfolio. The allowance related to the dental loan portfolio consists of general and specific components. The general component is based upon all dental loans collectively evaluated for impairment, including qualitative conditions associated with: loan type, out-of-market location, start-up financing, practice acquisition financing, and specialty practice financing. The specific component is based upon dental loans individually evaluated for impairment.

	Three months ended September 30,						Nine months ended September 30,
	2016			2015			2016			2015
Balance, beginning of period	$	4,151		$	4,080		$	4,022		$	4,141
Reclassification		601			189			704			158
Charge-offs		(9	)		(36	)		(9	)		(78	)
Recoveries		55			9			81			21
Balance, end of period	$	4,798		$	4,242		$	4,798		$	4,242

Credit Quality

Please refer to Note 4 for additional information on the definitions of the credit quality indicators.

The following tables present the Company’s dental loan portfolio by market and credit grade at September 30, 2016 and December 31, 2015:

As of September 30, 2016

	Loan Grade
	Pass		Special Mention		Substandard		Doubtful		Totals
Local	$	148,834	$	—	$	2,064	$	—	$	150,898
National		216,464		—		1,112		1,661		219,237
Total	$	365,298	$	—	$	3,176	$	1,661	$	370,135
As of December 31, 2015
	Loan Grade
	Pass		Special Mention		Substandard		Doubtful		Totals
Local	$	143,541	$	—	$	2,276	$	—	$	145,817
National		191,574		—		2,771		—		194,345
Total	$	335,115	$	—	$	5,047	$	—	$	340,162

30

Past Due and Nonaccrual Loans

Please refer to Note 4 for additional information on the definitions of “past due.”

The following tables present an aged analysis of the dental loan portfolio by market, including nonaccrual loans, as of September 30, 2016 and December 31, 2015:

As of September 30, 2016

	30-59 Days Past Due Still Accruing		60-89 Days Past Due Still Accruing		Greater Than 90 Days Past Due Still Accruing		Nonaccrual		Total Past Due and Nonaccrual		Total Current		Total Loans Receivable
Local	$	—	$	—	$	—	$	465	$	465	$	150,433	$	150,898
National		—		—		—		1,661		1,661		217,576		219,237
Total	$	—	$	—	$	—	$	2,126	$	2,126	$	368,009	$	370,135
As of December 31, 2015
	30-59 Days Past Due Still Accruing		60-89 Days Past Due Still Accruing		Greater Than 90 Days Past Due Still Accruing		Nonaccrual		Total Past Due and Nonaccrual		Total Current		Total Loans Receivable
Local	$	—	$	—	$	—	$	513	$	513	$	145,304	$	145,817
National		—		—		—		—		—		194,345		194,345
Total	$	—	$	—	$	—	$	513	$	513	$	339,649	$	340,162

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NOTE 6 – FEDERAL FUNDS AND OVERNIGHT FUNDS PURCHASED

The Company had unsecured federal funds borrowing lines with various correspondent banks totaling $129,000 at both September 30, 2016 and December 31, 2015. The terms of the lines are subject to change with interest payable at the then stated rate. At September 30, 2016 and December 31, 2015, there were no borrowings outstanding on these lines.

The Company also had a secured overnight borrowing line available from the Federal Reserve Bank that totaled $81,915 and $76,912 at September 30, 2016 and December 31, 2015, respectively. The Federal Reserve Bank borrowing line is secured through the pledging of $144,242 and $140,801 at September 30, 2016 and December 31, 2015, respectively, of commercial loans under the Company’s Borrower-In-Custody program. At September 30, 2016 and December 31, 2015, there were no outstanding borrowings on this line. The terms of the lines are subject to change with interest payable at the then stated rate.

NOTE 7 – FEDERAL HOME LOAN BANK BORROWINGS

The Company has a borrowing limit with the Federal Home Loan Bank of Des Moines (“FHLB”) equal to 35% of total assets, subject to the value of discounted collateral pledged and stock holdings.

At September 30, 2016, the maximum borrowing line was $888,671; however, the FHLB borrowing line was limited by the discounted value of collateral pledged. At September 30, 2016, the Company had pledged $827,300 in real estate loans to the FHLB that had a discounted collateral value of $602,715. There was $45,500 borrowed on this line at September 30, 2016.

At December 31, 2015, the maximum borrowing line was $657,086; however, the FHLB borrowing line was limited by the discounted value of collateral pledged. At December 31, 2015, the Company had pledged $666,297 in real estate loans to the FHLB that had a discounted collateral value of $414,044. There was $77,500 borrowed on this line at December 31, 2015.

Below is a summary of outstanding FHLB borrowings by maturity.

	Current Rates			September 30, 2016
Cash management advance		NA		$	15,000
2016		0.57-1.86	%		22,500
2017		2.28	%		3,000
2018		1.55	%		3,000
2019		—			—
2020		—			—
Thereafter		3.85	%		2,000
				$	45,500

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NOTE 8 – BORROWED FUNDS

Subordinated Debentures

In June 2016, the Company issued $35,000 in aggregate principal amount of fixed-to-floating rate subordinated debentures (the “Notes”) in a public offering. The Notes are callable at par after five years, have a stated maturity of September 30, 2026 and bear interest at a fixed annual rate of 5.875% per year, from and including June 27, 2016, but excluding September 30, 2021. From and including September 30, 2021 to the maturity date or early redemption date, the interest rate will reset quarterly to an annual interest rate equal to the then-current three-month LIBOR plus 471.5 basis points.

The Notes are included in Tier 2 capital (with certain limitations applicable) under current regulatory guidelines and interpretations.

Junior Subordinated Debentures

In November 2005, the Company completed the private placement of $8,000 in aggregate liquidation amount of trust preferred securities (the “TPS”), through its subsidiary, Pacific Continental Capital Trust I. The interest rate on the TPS was 6.265% until January 2011, after which it was converted to a floating rate of three-month LIBOR plus 135 basis points. The TPS mature in 2035, but are callable by the Company at par any time after January 7, 2011. The Company issued $8,248 of junior subordinated debentures (the “Debentures”) to the trust in exchange for ownership of all of the common security of the trust and the proceeds of the preferred securities sold by the trust. In accordance with current accounting guidance, the trust is not consolidated in the Company’s financial statements, but rather the Foundation Debentures are shown as a liability. The interest rate on the Debentures was 6.265% until January 2011, after which it was converted to a floating rate of three-month LIBOR plus 135 basis points. The Debentures have the same prepayment provisions as the TPS.

On September 6, 2016, the Company completed the acquisition of Foundation Bancorp. At that time, the Company assumed ownership of Foundation Statutory Trust I, which had previously issued $6,000 in aggregate liquidation amount of trust preferred securities. The interest rate on the these trust preferred securities is a floating rate of three-month LIBOR plus 173 basis points. The Company also acquired $6,148 of junior subordinated debentures (the “Foundation Debentures”) to the trust in exchange for ownership of all of the common security of the trust and the proceeds of the preferred securities sold by the trust. In accordance with current accounting guidance, the trust is not consolidated in the Company’s financial statements, but rather the Foundation Debentures are shown as a liability, and acquired at an acquisition date fair value of $3,013.

The Debentures and the Foundation Debentures are included in the Company’s Tier I capital (with certain limitations applicable) under current regulatory guidelines and interpretations.

NOTE 9 – SHARE-BASED COMPENSATION

The Company’s 2006 Stock Option and Equity Compensation Plan (the “2006 SOEC Plan”) authorizes the award of up to 1,550,000 shares in stock-based awards. The awards granted under this plan are service-based and are subject to vesting. The Compensation Committee of the Board of Directors may impose any terms or conditions on the vesting of an award that it determines to be appropriate. Awards granted generally vest over four years and have a maximum life of ten years. Awards may be granted at exercise prices of not less than 100.00% of the fair market value of the Company’s common stock at the grant date.

Pursuant to the 2006 SOEC Plan, incentive stock options (“ISOs”), nonqualified stock options, restricted stock, restricted stock units (“RSUs”), or stock appreciation rights (“SARs”) may be awarded to attract and retain the best available personnel to the Corporation and its subsidiary. SARs may be settled in common stock or cash as determined at the date of issuance. Liability-based awards (including all cash-settled SARs) have no impact on the number of shares available to be issued within the plan. Additionally, non-qualified option awards and restricted stock awards may be granted to directors under the terms of this plan.

33

The following table identifies the compensation expense recorded and tax benefits received by the Company on its share-based compensation plans for the three and nine months ended September 30, 2016, and 2015:

	Three months ended September 30,
	2016				2015
	Compensation Expense		Tax Benefit		Compensation Expense/ (Income)			Tax Benefit (Expense)
Equity-based awards:
Employee RSUs	$	397	$	151	$	372		$	141
Liability-based awards:
Employee cash SARs		—		—		(100	)		(38	)
	$	397	$	151	$	272		$	103
	Nine months ended September 30,
	2016				2015
	Compensation Expense		Tax Benefit		Compensation Expense/ (Income)			Tax Benefit (Expense)
Equity-based awards:
Director restricted stock	$	240	$	91	$	248		$	94
Employee RSUs		1,187		451		1,080			410
Liability-based awards:
Employee cash SARs		—		—		(150	)		(57	)
	$	1,427	$	542	$	1,178		$	447

34

The following table identifies stock options, employee stock SARs, and employee cash SARs exercised during the three and nine months ended September 30, 2016 and 2015:

	Three months ended
	September 30, 2016
	Number Exercised		Weighted Average Exercise Price		Intrinsic Value		Number of Shares Issued		Net Cash Payment to Employees
Stock options		30,074	$	16.54	$	9		9,832		NA
Employee stock SARs		41,237	$	15.83	$	5		1,768		NA
Employee cash SARs		27,521	$	15.95		NA		NA	$	45
		98,832			$	14		11,600	$	45
	Nine months ended
	September 30, 2016
	Number Exercised		Weighted Average Exercise Price		Intrinsic Value		Number of Shares Issued		Net Cash Payment to Employees
Stock options		65,034	$	13.86	$	117		44,792		NA
Employee stock SARs		79,806	$	14.54	$	26		6,634		NA
Employee cash SARs		47,644	$	15.11		NA		NA	$	73
		192,484			$	143		51,426	$	73
	Three months ended
	September 30, 2015
	Number Exercised		Weighted Average Exercise Price		Intrinsic Value		Number of Shares Issued		Net Cash Payment to Employees
Stock options		—	$	—	$	—		—		NA
Employee stock SARs		2,204	$	11.61	$	2		171		NA
Employee cash SARs		1,271	$	12.07		NA		NA	$	1
		3,475				2		171		1
	Nine months ended
	September 30, 2015
	Number Exercised		Weighted Average Exercise Price		Intrinsic Value		Number of Shares Issued		Net Cash Payment to Employees
Stock options		1,102	$	12.25	$	2		1,102		NA
Employee stock SARs		3,417	$	11.57	$	4		265		NA
Employee cash SARs		1,479	$	12.07		NA		NA	$	1
		5,998				6		1,367		1

35

At September 30, 2016, the Company had estimated unrecognized compensation expense of approximately $3,811 for unvested RSUs. This amount is based on a historical forfeiture rate of 13.00% for all RSUs granted to employees. The weighted-average period of time the unrecognized compensation expense will be recognized for the unvested RSUs was approximately 2.75 years as of September 30, 2016.

NOTE 10 – DERIVATIVE INSTRUMENTS

The Bank purchases derivative instruments as a way to help mitigate interest rate risk. During the first quarter 2013, the Company entered into an interest rate swap agreement with an $8,000 notional amount to convert its variable-rate Debentures debt into a fixed rate for a term of seven years at a rate of 2.73%. The derivative is designated as a cash flow hedge. The cash flow hedge meets the definition of highly effective and the Company expects the hedge to be highly effective throughout the remaining term of the swap. The fair value of the derivative instrument at September 30, 2016, was an $82 unrealized loss, which is recorded in accrued interest and other payables on the consolidated balance sheet. The Company pledged $400 under collateral arrangements to satisfy collateral requirements associated with the interest rate swap contract.

The Bank maintains two interest rate swaps with commercial banking customers tied to loans on the consolidated balance sheet. Those interest rate swaps are simultaneously hedged by offsetting the interest rate swaps that the Bank executes with a third party, such that the Bank minimizes its net risk exposure. As of September 30, 2016 and December 31, 2015, the Bank had non-hedge designated interest rate swaps with an aggregate notional amount of approximately $8,600 and $8,774, respectively, related to this program. The Bank does not require separately pledged collateral to secure its interest rate swaps with customers. However, it does make a practice of cross-collateralizing the interest rate swaps with collateral on the underlying loan. The Bank has minimum collateral posting thresholds with certain of its derivative counterparties, and has posted collateral totaling $250 consisting of cash held on deposit for the benefit of the counterparty against its obligations under these agreements as of September 30, 2016 and December 31, 2015.

The Bank entered into a swap with a third party to serve as a hedge to an equal amount of fixed rate loans. As of September 30, 2016 and December 31, 2015, the Bank had one swap designated a hedging instrument with a notional amount of $1,500 and $1,525 respective, hedging a 10-year fixed rate note bearing interest at 5.71% and maturing August 2023. The notional amount does not represent direct credit exposure. Direct credit exposure is limited to the net difference between the calculated amount to be received and paid. As the Bank has designated the swap a fair value hedge, the underlying hedged loan is carried at fair value on the consolidated balance sheet and included in loans, net of deferred fees.

During third quarter 2016, the Bank entered into forward-starting interest rate swaps, to convert certain existing and future short-term borrowings to fixed rate payments. The primary purpose of these hedges is to mitigate the risk of rising interest rates, specifically LIBOR rates, which are a benchmark for the short term borrowings. The hedging program qualifies as a cash flow hedge under FASB ASC 815, which provides for matching of the recognition of gains and losses of the interest rate swaps and the hedged items. The hedged item is the LIBOR portion of the series of existing or future short-term fixed rate borrowings over the term of the interest rate swap. The change in the fair value of the interest rate swaps is recorded in other comprehensive income. The Bank had notional amounts of $26,500 subject to interest rate swaps to hedge anticipated future borrowings as of September 30, 2016. The unrealized loss, gross of the related tax benefit, on these interest rate swaps as of September 30, 2016 was $475. The Company pledged cash totaling $1,250 under collateral arrangements to satisfy collateral requirements associated with the interest rate swap contract.

The following tables present quantitative information pertaining to the commercial loan related interest rate swaps as of September 30, 2016 and December 31, 2015:

	September 30, 2016						December 31, 2015
	Hedge- Designated			Not-Hedge- Designated			Hedge- Designated			Not-Hedge- Designated
Notional amount	$	1,500		$	8,600		$	1,525		$	8,774
Weighted average pay rate		5.71	%		4.85	%		5.71	%		4.85	%
Weighted average receive rate		3.52	%		3.61	%		3.20	%		3.28	%
Weighted average maturity in years		6.9			5.7			7.6			6.5

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The following table presents the fair values of derivative instruments and their locations in the consolidated balance sheets as of September 30, 2016 and December 31, 2015:

		Asset Derivatives				Liability Derivatives
Derivative	Balance sheet location	September 30, 2016		December 31, 2015		September 30, 2016		December 31, 2015
Cash flow hedge—trust preferred	Other assets or other payables	$	—	$	82	$	82	$	—
Cash flow hedge—long term borrowing	Other assets or other payables		—		—		780		—
Interest rate swap designated as hedging instrument	Other assets or other payables		114		66		147		93
Interest rate swap not designated as hedging instrument	Other assets or other payables		162		24		162		24
		$	276	$	172	$	1,171	$	117

The following table presents the income statement impact of the derivative instruments for the three and nine months ended September 30, 2016 and 2015:

		Three months ended						Nine months ended
	Income statement location	September 30,						September 30,
Derivative		2016			2015			2016			2015
Interest rate swap designated as hedging instrument	Other noninterest income	$	(2	)	$	(10	)	$	(6	)	$	(9	)
		$	(2	)	$	(10	)	$	(6	)	$	(9	)

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NOTE 11 – FAIR VALUE

The following disclosures about fair value of financial instruments are made in accordance with provisions of ASC 825 “Financial Instruments.” The use of different assumptions and estimation methods could have a significant effect on fair value amounts. Accordingly, the estimates of fair value herein are not necessarily indicative of the amounts that might be realized in a current market exchange.

The estimated fair values of the financial instruments at September 30, 2016 and December 31, 2015:

	September 30, 2016				December 31, 2015
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets:
Cash and cash equivalents	$	107,173	$	107,173	$	36,675	$	36,675
Securities available-for-sale		482,408		482,408		366,598		366,598
Loans, net of deferred fees		1,806,736		1,796,152		1,404,482		1,389,562
Interest receivable		5,957		5,957		5,721		5,721
Federal Home Loan Bank stock		4,643		4,643		5,208		5,208
Bank-owned life insurance		34,927		34,927		22,884		22,884
Interest rate swaps		275		275		172		172
Financial liabilities:
Deposits	$	2,162,633	$	2,162,127	$	1,597,093	$	1,597,280
Federal Home Loan Bank borrowings		45,500		45,613		77,500		77,651
Subordinated debenture		34,072		34,072		—		—
Junior subordinated debentures		11,272		6,706		8,248		2,741
Interest payable		711		711		138		138
Interest rate swaps		1,171		1,171		117		117

Cash and cash equivalents – The carrying amount approximates fair value.

Securities available-for-sale – Fair value is based on quoted market prices. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities.

Loans – For variable rate loans that reprice frequently and have no significant change in credit risk, fair value is based on carrying values. Fair value of fixed rate loans is estimated by discounting the future cash flows using current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. Fair values for impaired loans are estimated using discounted cash flow analyses or underlying collateral values, where applicable, and consider credit risk. The Company uses an independent third-party to establish the fair value of loans.

Federal Home Loan Bank stock – The carrying amount represents the fair value and value at which FHLB of Des Moines would redeem the stock.

Interest receivable and payable – The carrying amounts of accrued interest receivable and payable approximate their fair value.

Bank-owned life insurance – The carrying amount is based on cash surrender value which approximates fair value.

Interest rate swaps – Fair value is based on quoted market prices.

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Deposits – Fair value of demand, interest bearing demand and savings deposits is the amount payable on demand at the reporting date. Fair value of time deposits is estimated using the interest rates currently offered for deposits of similar remaining maturities. The Company uses an independent third-party to establish the fair value of time deposits.

Federal Home Loan Bank borrowings – Fair value of FHLB borrowings is estimated by discounting future cash flows at rates currently available for debt with similar terms and remaining maturities.

Subordinated debentures – Fair value of subordinated debentures is estimated by discounting future cash flows at rates currently available for debt with similar credit risk, terms and remaining maturities.

Junior subordinated debentures – Fair value of junior subordinated debentures is estimated by discounting future cash flows at rates currently available for debt with similar credit risk, terms and remaining maturities.

Off-balance sheet financial instruments – The carrying amount and fair value are based on fees charged for similar commitments and are not material.

The Company also adheres to the FASB guidance with regards to ASC 820, “Fair Value Measures.” This guidance defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. The statement requires fair value measurement disclosure of all assets and liabilities that are carried at fair value on either a recurring or nonrecurring basis. The Company determines fair value based upon quoted prices when available or through the use of alternative approaches, such as matrix or model pricing, when market quotes are not readily accessible or available. The valuation techniques used are based on observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. These two types of inputs create the following fair value hierarchy:

• Level 1 – Quoted prices for identical instruments in active markets.

• Level 2 – Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active or model-derived valuations whose inputs are observable or whose significant value drivers are observable.

• Level 3 – Unobservable inputs are used to measure fair value to the extent that observable inputs are not available. The Company’s own data used to develop unobservable inputs is adjusted for market consideration when reasonably available.

Financial instruments, measured at fair value, are broken down in the tables below by recurring or nonrecurring measurement status. Recurring assets are initially measured at fair value and are required to be remeasured at fair value in the financial statements at each reporting date. Assets measured on a nonrecurring basis are assets that, due to an event or circumstance, were required to be remeasured at fair value after initial recognition in the financial statements at some time during the reporting period.

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The following table presents information about the level in the fair value hierarchy for the Company’s assets and liabilities not measured and carried at fair value as of September 30, 2016 and December 31, 2015:

	Carrying Amount		Fair Value at September 30, 2016
			Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	107,173	$	107,173	$	—	$	—
Loans, net of deferred fees		1,806,736		—		—		1,796,152
Interest receivable		5,957		5,957		—		—
Federal Home Loan Bank stock		4,643		4,643		—		—
Interest rate swaps		275		275		—		—
Financial liabilities:
Deposits	$	2,162,633	$	1,983,492	$	178,635	$	—
Federal Home Loan Bank borrowings		45,500		—		45,613		—
Subordinated debentures		34,072		—		34,072		—
Junior subordinated debentures		11,272		—		6,706		—
Interest payable		711		711		—		—
Interest rate swaps		1,171		1,171		—		—
	Carrying Amount		Fair Value at December 31, 2015
			Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	36,675	$	36,675	$	—	$	—
Loans		1,404,482		—		—		1,389,562
Interest receivable		5,721		5,721		—		—
Federal Home Loan Bank stock		5,208		5,208		—		—
Interest rate swaps		172		172		—		—
Financial liabilities:
Deposits	$	1,597,093	$	1,458,490	$	138,790	$	—
Federal Home Loan Bank borrowings		77,500		—		77,651		—
Junior subordinated debentures		8,248		—		2,741		—
Accrued interest payable		138		138		—		—
Interest rate swaps		117		117		—		—

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The tables below show assets and liabilities measured at fair value on a recurring basis as of September 30, 2016 and December 31, 2015:

	Carrying Value		Fair Value at September 30, 2016
			Level 1		Level 2		Level 3
Financial Assets
Available-for-sale securities
Obligations of U.S. government agencies	$	26,552	$	—	$	26,552	$	—
Obligations of states and political subdivisions		115,509		—		115,509		—
Agency mortgage-backed securities		292,735		—		292,735		—
Private-label mortgage-backed securities		2,110		—		656		1,454
SBA pools		44,616		—		44,616		—
Corporate securities		886		—		886		—
Interest rate swaps		275		275		—		—
Total assets measured on a recurring basis	$	482,683	$	275	$	480,954	$	1,454
Financial Liabilities
Interest rate swap liabilities measured on a recurring basis	$	1,171	$	1,171	$	—	$	—
	Carrying Value		Fair Value at December 31, 2015
			Level 1		Level 2		Level 3
Available-for-sale securities
Obligations of U.S. government agencies	$	44,623	$	—	$	44,623	$	—
Obligations of states and political subdivisions		97,151		—		97,151		—
Agency mortgage-backed securities		185,370		—		185,370		—
Private-label mortgage-backed securities		2,790		—		1,204		1,586
SBA pools		35,771		—		35,771		—
Corporate securities		893		—		893		—
Interest rate swaps		172		172		—		—
Total assets measured on a recurring basis	$	366,770	$	172	$	365,012	$	1,586
Financial Liabilities
Interest rate swap liabilities measured on a recurring basis	$	117	$	117	$	—	$	—

No transfers to or from Levels 1 and 2 occurred on assets and liabilities measured at fair value on a recurring basis during the nine months ended September 30, 2016, or during the year ended December 31, 2015.

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The following is a description of the inputs and valuation methodologies used for assets and liabilities recorded at fair value on a recurring basis. Fair value for all classes of available-for-sale securities and derivative instruments are estimated by obtaining quoted market prices for identical assets, where available. If such prices are not available, fair value is based on independent asset pricing services and models, the inputs of which are market-based or independently sourced market parameters, including, but not limited to, yield curves, interest rates, prepayments, defaults, cumulative loss projections and cash flows. There have been no significant changes in the valuation techniques during the periods reported.

The following table provides a reconciliation of private-label mortgage-backed securities measured at fair value on a recurring basis using unobservable inputs (Level 3) for the three and nine months ended September 30, 2016 and 2015:

	Three months ended September 30,						Nine months ended September 30,
	2016			2015			2016			2015
Beginning balance	$	1,399		$	1,782		$	1,586		$	1,568
Transfers into level 3		70			—			70			300
Transfers out of Level 3		—			—			—			—
Total gains or losses
Included in earnings		(2	)		—			(14	)		(13	)
Included in other comprehensive income		64			(2	)		45			65
Paydowns		(77	)		(85	)		(233	)		(225	)
Purchases, issuances, sales and settlements
Purchases		—			—			—			—
Issuances		—			—			—			—
Sales		—			—			—			—
Settlements		—			—			—			—
Ending balance	$	1,454		$	1,695		$	1,454		$	1,695

Fair value for all classes of available-for-sale securities is estimated by obtaining quoted market prices for identical assets, where available. If such prices are not available, fair value is based on quoted prices for similar instruments or model-derived valuations whose inputs are observable or whose significant value drivers are observable. In instances where quoted prices for identical or similar instruments and observable inputs are not available, unobservable inputs, including the Company’s own data, are used.

The Company utilizes FTN Financial as an independent third-party asset pricing service to estimate fair value on all of its available-for-sale securities. The inputs used to value all securities include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data including market research, market indicators, and industry and economic trends. Additional inputs specific to each asset type are as follows:

• Obligations of U.S. government agencies – TRACE reported trades.

• Obligations of states and political subdivisions – MSRB reported trades, material event notices, and Municipal Market Data (MMD) benchmark yields.

• Private-label mortgage-backed securities – new issue data, monthly payment information, and collateral performance (whole loan collateral).

• Mortgage-backed securities – TBA prices and monthly payment information.

• SBA variable pools – TBA prices and monthly payment information.

• Corporate securities – TRACE reported trades.

Inputs may be prioritized differently on any given day for any security and not all inputs listed are available for use in the evaluation process on any given day for each security evaluation.

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The valuation methodology used by asset type includes:

• Obligations of U.S. government agencies – security characteristics, defined sector break-down, benchmark yields, applied base spread, yield to maturity (bullet structures), corporate action adjustment, and evaluations based on T+3 settlement.

• Obligations of states and political subdivisions – security characteristics, benchmark yields, applied base spread, yield to worst or market convention, ratings updates, prepayment schedules (housing bonds), material event notice adjustments, and evaluations based on T+3 settlement.

• Private-label mortgage-backed securities – security characteristics, prepayment speeds, cash flows, TBA, Treasury and swap curves, IO/PO strips or floating indexes, applied base spread, spread adjustments, yield to worst or market convention, ratings updates (whole-loan collateral), and evaluations based on T+0 settlement.

• Mortgage-backed securities – security characteristics, TBA, Treasury, or floating index benchmarks, spread to TBA levels, prepayment speeds, applied spreads, and evaluations based on T+0 settlement.

• SBA pools – security characteristics, TBA, Treasury, or floating index benchmarks, spread to TBA levels, prepayment speeds, applied spreads, and evaluations based on T+0 settlement.

• Corporate securities – security characteristics, defined sector break-down, benchmark yields, applied based spread, yield to maturity (bullet structures), corporate action adjustment, and evaluations based on T+3 settlement.

The third-party pricing service follows multiple review processes to assess the available market, credit and deal-level information to support its valuation estimates. If sufficient objectively verifiable information is not available to support a security’s valuation, an alternate independent evaluation source will be used.

The Company’s securities portfolio was valued through its independent third-party pricing service using evaluated pricing models and quoted prices based on market data. For further assurance, the Company’s estimate of fair value was compared to an additional independent third-party estimate at June 30, 2016, and the Company obtained key inputs for a sample of securities across sectors and evaluated those inputs for reasonableness. This analysis was performed at the individual security level and no material variances were noted.

There have been no significant changes in the valuation techniques during the periods reported.

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The tables below show assets measured at fair value on a nonrecurring basis as of September 30, 2016 and December 31, 2015:

	Carrying Value		Fair Value
September 30, 2016			Level 1		Level 2		Level 3
Other real estate owned		9,966		—		—		9,966
Total	$	9,966	$	—	$	—	$	9,966
	Carrying Value		Fair Value
December 31, 2015			Level 1		Level 2		Level 3
Loans measured for impairment (net of government guarantees and specific reserves)	$	53	$	—	$	—	$	53
Other real estate owned		10,147		—		—		10,147
Total	$	10,200	$	—	$	—	$	10,200

The following is a description of the inputs and valuation methodologies used for assets recorded at fair value on a nonrecurring basis.

Loans measured for impairment (net of government guarantees and specific reserves) include the estimated fair value of collateral-dependent loans, less collectible government guarantees, as well as certain noncollateral-dependent loans measured for impairment with an allocated specific reserve. When a collateral-dependent loan is identified as impaired, the value of the loan is measured using the current fair value of the collateral less selling costs. The fair value of collateral is generally estimated by obtaining external appraisals which are usually updated every 6 to 12 months based on the nature of the impaired loans. Certain noncollateral-dependent loans measured for impairment with an allocated specific reserve are valued based upon the estimated net realizable value of the loan. If the estimated fair value of the impaired loan, less collectible government guarantees, is less than the recorded investment in the loan, impairment is recognized as a charge-off through the allowance for loan losses. The carrying value of the loan is adjusted to the estimated fair value. The carrying value of loans fully charged off is zero.

Other real estate owned represents real estate which the Company has taken control of in partial or full satisfaction of loans. At the time of foreclosure, other real estate owned is recorded at the lower of the carrying amount of the loan or fair value less costs to sell, which becomes the property’s new basis. Any write downs based on the asset’s fair value at the date of acquisition are charged to the allowance for loan losses. After foreclosure, management periodically orders appraisals or performs valuations to ensure that the real estate is carried at the lower of its new cost basis or fair value, net of estimated costs to sell. Appraisals are generally updated every 6 to 12 months on other real estate owned. Fair value adjustments on other real estate owned are recognized within net loss on real estate owned. The loss represents impairments on other real estate owned for fair value adjustments based on the fair value of the real estate.

There have been no significant changes in the valuation techniques during the periods reported.

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NOTE 12 – REGULATORY MATTERS

The Company and the Bank are subject to the regulations of certain federal and state agencies and receive periodic examinations by those regulatory authorities. In addition, they are subject to various regulatory capital requirements administered by federal banking 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 consolidated 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 Company and 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 regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios of Total capital, Tier 1 capital, common equity Tier 1 to risk-weighted assets and, Tier 1 capital to leverage assets. Management believes that, as of September 30, 2016, the Company and the Bank met all capital adequacy requirements to which they were subject.

As of September 30, 2016, and according to Federal Reserve and FDIC guidelines, the Bank was considered to be well-capitalized. To be categorized as well-capitalized, the Bank must maintain minimum Total capital, Tier 1 capital, common equity Tier 1 to risk-weighted assets and, Tier 1 capital to leverage assets ratios as set forth in the following table.

45

	Actual					For Capital Adequacy Purposes					To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of September 30, 2016:
Total capital (to risk weighted assets)
Bank:	$	256,454		11.90	%	$	172,432		8.00	%	$	215,540		10.00	%
Company:	$	270,622		12.55	%		NA					NA
Tier 1 capital (to risk weighted assets)
Bank:	$	235,375		10.92	%	$	129,324		6.00	%	$	172,432		8.00	%
Company:	$	215,471		9.99	%		NA					NA
Common Equity Tier 1 (to risk weighted assets)
Bank:	$	235,375		10.92	%	$	96,993		4.50	%	$	140,101		6.50	%
Company:	$	203,359		9.43	%		NA					NA
Tier 1 capital (to leverage assets)
Bank:	$	235,375		11.26	%	$	83,578		4.00	%	$	107,770		5.00	%
Company:	$	215,471		10.33	%		NA					NA
As of December 31, 2015:
Total capital (to risk weighted assets)
Bank:	$	200,236		12.52	%	$	127,990		8.00	%	$	159,988		10.00	%
Company:	$	201,261		12.58	%		NA					NA
Tier 1 capital (to risk weighted assets)
Bank:	$	182,575		11.41	%	$	95,993		6.00	%	$	127,990		8.00	%
Company:	$	183,600		11.47	%		NA					NA
Common Equity Tier 1 (to risk weighted assets)
Bank:	$	182,575		11.41	%	$	71,995		4.50	%	$	103,992		6.50	%
Company:	$	175,600		10.97	%		NA					NA
Tier 1 capital (to leverage assets)
Bank:	$	182,575		9.88	%	$	73,939		4.00	%	$	92,422		5.00	%
Company:	$	183,600		9.93	%		NA					NA

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ITEM 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion is intended to provide a more comprehensive review of the Company’s operating results and financial condition than can be obtained from reading the Consolidated Financial Statements alone. The discussion should be read in conjunction with the consolidated financial statements and the notes included in this report. Please refer also to our Consolidated Financial Statements and Notes to the Consolidated Financial Statements included in the Company’s 2015 Form 10-K. All dollar amounts, except share and per share data, are expressed in thousands of dollars.

In addition to historical information, this report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements regarding projected results, the expected interest rate environment and its impact on our business, loan yields and expected prepayments, the adequacy of the allowance for loan losses, net interest margin, expectations regarding nonperforming assets, loan growth, earning asset mix, expected cash flows from the securities portfolio and merger related expense, expectations regarding the Company’s securities portfolio, the structure and volatility of the securities portfolio and the purchase and sale of securities, their value and yields, growth in core deposits and cost, capital levels, liquidity and dividends, expectations regarding certain large depositor relationships and the expected loss of certain large temporary deposits, the outcome of legal proceedings, loan rates and expectations regarding the impact and compression of the net interest margin, the impact of recent accounting pronouncements, management’s plans, objectives, expectations and intentions that are not historical facts, and other statements identified by words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “should,” “projects,” “seeks,” “estimates” or words of similar meaning. These forward-looking statements are based on current beliefs and expectations of management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the Company’s control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations in the forward-looking statements, including those set forth in this report, and our other reports filed with the SEC:

• Local and national economic conditions could be less favorable than expected or could have a more direct and pronounced effect on us than expected and adversely affect our ability to continue internal growth at historical rates and maintain the quality of our earning assets.

• The local housing or real estate market could decline.

• The risks presented by an economic recession, which could adversely affect credit quality, collateral values, including real estate collateral, investment values, liquidity and loan originations, and loan portfolio delinquency rates.

• Our concentration in loans to dental professionals exposes us to the risks affecting dental practices in general.

• Interest rate changes could significantly reduce net interest income and negatively affect funding sources.

• Projected business increases following any future or pending strategic expansion or opening of new branches could be lower than expected.

• Competition among financial institutions could increase significantly.

• The goodwill we have recorded in connection with acquisitions could become impaired, which may have an adverse impact on our earnings.

• The reputation of the financial services industry could deteriorate, which could adversely affect our ability to access markets for funding and to acquire and retain customers.

• The efficiencies we may expect to receive from any investments in personnel, acquisitions, and infrastructure may not be realized.

• The level of nonperforming assets and charge-offs or changes in the estimates of future reserve requirements based upon the periodic review thereof under relevant regulatory and accounting requirements may increase.

• Changes in laws and regulations (including laws and regulations concerning taxes, banking, securities, executive compensation, and insurance) could have a material adverse effect on our business, financial condition and results of operations.

• Acts of war or terrorism, or natural disasters, may adversely impact our business.

• The timely development and acceptance of new banking products and services and perceived overall value of these products and services by users may adversely impact our ability to increase market share and control expenses.

• Changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting standard setters, may impact the results of our operations.

47

• The costs and effects of legal, regulatory and compliance developments, including the resolution of legal proceedings or regulatory or other governmental inquiries and the results of regulatory examinations or reviews, may adversely impact our ability to increase market share and control expenses, or may result in substantial uninsured liabilities, which could adversely affect our business, prospects, results of operations and financial condition.

• Our success at managing the risks involved in the foregoing items will have a significant impact on our results of operations and future prospects.

Additional factors that could cause actual results to differ materially from those expressed in the forward-looking statements are discussed in Part I, Item 1A “Risk Factors” in the Company’s 2015 Form 10-K and Part II, Item 1A, “Risk Factors” in this report and elsewhere in this report or in our other reports with the SEC, and include risks and uncertainties described or referred to in Part I, Item 1 “Business” under the captions “Competition” and “Supervision and Regulation” in the Company’s 2015 Form 10-K and Part I, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this report. Please take into account that forward-looking statements speak only as of the date of this report. The Company does not undertake any obligation to publicly correct or update any forward-looking statement whether as a result of new information, future events or otherwise.

SUMMARY OF CRITICAL ACCOUNTING POLICIES

We follow accounting standards set by the Financial Accounting Standards Board, commonly referred to as the “FASB.” The FASB sets generally accepted accounting principles (“GAAP”) that we follow to ensure we consistently report our financial condition, results of operations, and cash flows. References to GAAP issued by the FASB in this report are to the “FASB Accounting Standards Codification,” sometimes referred to as the “Codification” or “ASC.”

The SEC defines “critical accounting policies” as those that require the application of management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in future periods. Significant accounting policies are described in Note 1 of the Notes to Consolidated Financial Statements in the Company’s 2015 Form 10-K. Management believes that the following policies and those disclosed in the Notes to Consolidated Financial Statements in the Company’s 2015 Form 10-K should be considered critical under the SEC definition:

Nonaccrual Loans

Accrual of interest is discontinued on contractually delinquent loans when management believes that, after considering economic and business conditions and collection efforts, the borrower’s financial condition is such that collection of principal or interest is doubtful. At a minimum, loans that are past due as to maturity or payment of principal or interest by 90 days or more are placed on nonaccrual status, unless such loans are well-secured and in the process of collection. Interest income is subsequently recognized only to the extent cash payments are received satisfying all delinquent principal and interest amounts, and the prospects for future payments in accordance with the loan agreement appear relatively certain. In accordance with GAAP, payments received on nonaccrual loans are applied to the principal balance and no interest income is recognized.

Allowance for Loan Losses and Reserve for Unfunded Commitments

The allowance for loan losses on outstanding loans is classified as a contra-asset account offsetting outstanding loans, and the allowance for unfunded commitments is classified as an “other” liability on the balance sheet. The allowance for loan losses is established through a provision for loan losses charged against earnings. The balances of the allowance for loan losses for outstanding loans and unfunded commitments are maintained at an amount management believes will be adequate to absorb known and inherent losses in the loan portfolio and commitments to loan funds. The appropriate balance of the allowance for loan losses is determined by applying loss factors to the credit exposure from outstanding loans and unfunded loan commitments. Estimated loss factors are based on subjective measurements including management’s assessment of the internal risk classifications, changes in the nature of the loan portfolios, industry concentrations, and the impact of current local, regional, and national economic factors on the quality of the loan portfolio. Changes in these estimates and assumptions are reasonably possible and may have a material impact on the Company’s consolidated financial statements, results of operations or liquidity.

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Troubled Debt Restructurings

In the normal course of business, the Company may modify the terms of certain loans, attempting to protect as much of its investment as possible. Management evaluates the circumstances surrounding each modification to determine whether it is a troubled debt restructuring (“TDR”). TDRs exist when 1) the restructuring constitutes a concession, and 2) the debtor is experiencing financial difficulties. Additional information regarding the Company’s TDRs can be found in Note 4 of the Notes to Consolidated Financial Statements in Item 1 of Part I of this report.

Goodwill and Intangible Assets

At September 30, 2016, the Company had $70,684 in goodwill and other intangible assets. In accordance with financial accounting standards, assets with indefinite lives are periodically tested for impairment. Management performs an impairment analysis of its goodwill and intangible assets with indefinite lives at least annually and has determined that there was no impairment as of December 31, 2015, the date the most recent analysis was performed.

Share-based Compensation

In accordance with FASB ASC 718, “Stock Compensation,” we recognize expense in the income statement for the grant-date fair value of stock options and other equity-based forms of compensation issued to employees over the employees’ requisite service period (generally the vesting period). The requisite service period may be subject to performance conditions. The fair value of each grant is estimated as of the grant date using the Black-Scholes option-pricing model. Management assumptions utilized at the time of grant impact the fair value of the option calculated under the Black-Scholes methodology, and ultimately, the expense that will be recognized over the expected service period. Additional information is included in Note 9 of the Notes to Consolidated Financial Statements in Item 1 of Part I of this report.

Fair Value Measurements

GAAP 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 at the measurement date. FASB ASC 820, “Fair Value Measurements,” establishes a three-level hierarchy for disclosure of assets and liabilities recorded at fair value. The classification of assets and liabilities within the hierarchy is based on whether the inputs to the valuation methodology used for measurement are observable or unobservable. Observable inputs reflect market-derived or market-based information obtained from independent sources, while unobservable inputs reflect our estimates about market data. In general, fair values determined by Level 1 inputs utilize quoted prices for identical assets or liabilities traded in active markets that the Company has the ability to access. Fair values determined by Level 2 inputs utilize inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability and include situations where there is little, if any, market activity for the asset or liability. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability. Additional information regarding the Company’s fair value measurements can be found in Note 11 of the Notes to Consolidated Financial Statements in Item 1 of Part I of this report.

Recent Accounting Pronouncements

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), with an original effective date for annual reporting periods beginning after December 15, 2016. The core principle of this Topic is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In general, the new guidance requires companies to use more judgment and make more estimates than under current guidance, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606), which deferred the effective date of ASU 2014-09 to annual periods beginning after December 15, 2017. The adoption of ASU No. 2014-09 is not expected to have a material impact on the Company’s consolidated financial statements.

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In August 2014, the FASB issued ASU No. 2014-14, Classification of Certain Government-Guaranteed Mortgage Loans upon Foreclosure. ASU 2014-14 requires that a mortgage loan be derecognized and that a separate other receivable be recognized upon foreclosure if the following conditions are met (1) the loan has a government guarantee that is not separable from the loan before foreclosure; (2) at the time of foreclosure, the creditor has the intent to convey the real estate property to the guarantor and make a claim on the guarantee, and the creditor has the ability to recover under that claim; and (3) at the time of foreclosure, any amount of the claim that is determined on the basis of the fair value of the real estate is fixed. Upon foreclosure, the separate other receivable should be measured based on the amount of the loan balance (principal and interest) expected to be recovered from the guarantor. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Early adoption is permitted. The adoption of ASU No. 2014-14 is not expected to have a material impact on the Company’s consolidated financial statements.

In September 2015, the FASB issued ASU No. 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments. ASU 2015-16 requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The amendments in this Update require that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. The amendments in this Update require an entity to present separately on the face of the income statement or disclose in the notes the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. The new standard is effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. The adoption of ASU No. 2015-16 is not expected to have a material impact on the Company’s consolidated financial statements.

In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The new guidance is intended to improve the recognition and measurement of financial instruments. This ASU requires equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. In addition, the amendment requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes and requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e., securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements. This ASU also eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet. The amendment also requires a reporting organization to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument specific credit risk (also referred to as “own credit”) when the organization has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. ASU No. 2016-01 is effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted for certain provisions. The Company is currently evaluating the impact of this ASU on the Company’s consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The FASB is issuing this Update to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The core principle of Topic 842 is that a lessee should recognize the assets and liabilities that arise from leases. All leases create an asset and a liability for the lessee in accordance with FASB Concepts Statement No. 6, Elements of Financial Statements, and, therefore, recognition of those lease assets and lease liabilities represents an improvement over previous GAAP, which did not require lease assets and lease liabilities to be recognized for most leases. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the impact of this ASU on the Company’s consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-05, Derivatives and Hedging (Topic 815); Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships. The amendments in this Update clarify that a change in the counterparty to a derivative instrument that has been designated as the hedging instrument under Topic 815 does not, in and of

50

itself, require designation of that hedging relationship provided that all other hedge accounting criteria (including those in paragraphs 815-20-35-14 through 35-18) continue to be met. ASU 2016-05 is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The Company is currently evaluating the impact of this ASU on the Company’s consolidated financial statements.

In March 2016-06, the FASB issued ASU No. 2016-06, Derivatives and Hedging (Topic 815); Contingent Put and Call Options in Debt Instruments. The amendments in this Update clarify the requirements for assessing whether contingent call (put) options that can accelerate the payment of principal on debt instruments are clearly and closely related to their debt hosts. An entity performing the assessment under the amendments in this Update is required to assess the embedded call (put) options solely in accordance with the four-step decision sequence. The amendments in this Update clarify what steps are required when assessing whether the economic characteristics and risks of call (put) options are clearly and closely related to the economic characteristics and risks of their debt hosts, which is one of the criteria for bifurcating an embedded derivative. Consequently, when a call (put) option is contingently exercisable, an entity does not have to assess whether the event that triggers the ability to exercise a call (put) option is related to interest rates or credit risks. The amendments are an improvement to GAAP because they eliminate diversity in practice in assessing embedded contingent call (put) options in debt instruments. ASU 2016-06 is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The Company is currently evaluating the impact of this ASU on the Company’s consolidated financial statements.

In March 2016, the FASB issued ASU No 2016-07, Investments – Equity Method and Joint Ventures (Topic 323); Simplifying the Transition to the Equity method of accounting. The amendments in this Update eliminate the requirement that when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, an investor must adjust the investment, results of operations, and retained earnings retroactively on a step-by-step basis as if the equity method had been in effect during all previous periods that the investment had been held. The amendments require that the equity method investor add the cost of acquiring the additional interest in the investee to the current basis of the investor’s previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting. Therefore, upon qualifying for the equity method of accounting, no retroactive adjustment of the investment is required. The amendments in this Update require that an entity that has an available-for-sale equity security that becomes qualified for the equity method of accounting recognize through earnings the unrealized holding gain or loss in accumulated other comprehensive income at the date the investment becomes qualified for use of the equity method. ASU 2016-07 is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The Company is currently evaluating the impact of this ASU on the Company’s consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606); Principal versus agent considerations (reporting revenue gross versus net). The core principle of the guidance in Topic 606 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The amendments in this Update do not change the core principle of the guidance. The amendments clarify the implementation guidance on principal versus agent considerations. When another party is involved in providing goods or services to a customer, an entity is required to determine whether the nature of its promise is to provide the specified good or service itself (that is, the entity is a principal) or to arrange for that good or service to be provided by the other party (that is, the entity is an agent). When (or as) an entity that is a principal satisfies a performance obligation, the entity recognizes revenue in the gross amount of consideration to which it expects to be entitled in exchange for the specified good or service transferred to the customer. When (or as) an entity that is an agent satisfies a performance obligation, the entity recognizes revenue in the amount of any fee or commission to which it expects to be entitled in exchange for arranging for the specified good or service to be provided by the other party. ASU 2016-08 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently evaluating the impact of this ASU on the Company’s consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation (Topic 718); Improvements to employee share-based payment accounting. The areas for simplification in this Update involve several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. Some of the specific changes associated with the update include all excess tax benefits and tax deficiencies (including tax benefits of dividends on share-based payment awards) being recognized as income tax expense or benefit in the income statement. The tax effects of exercised or vested awards should be treated as discrete items in the reporting period in which they occur. An entity also should recognize excess tax benefits regardless of whether the benefit reduces taxes payable in the current period. An entity can make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest (current GAAP) or account for forfeitures when they occur. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The Company is currently evaluating the impact of this ASU on the Company’s consolidated financial statements.

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In March 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. The core principle of the guidance in this update is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The amendments in this Update do not change the core principle of the guidance in Topic 606. Rather, the amendments in this Update clarify the following two aspects of Topic 606: identifying performance obligations and the licensing implementation guidance, while retaining the related principles for those areas. ASU 2016-10 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently evaluating the impact of this ASU on the Company’s consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The amendments in this Update require a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset. The income statement reflects the measurement of credit losses for newly recognized financial assets, as well as the expected increases or decreases of expected credit losses that have taken place during the period. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company is currently evaluating the impact of this ASU on the Company’s consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payment. The main purpose of this update is to address the diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows under Topic 230, Statement of Cash Flows, and other Topics. This Update addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently evaluating the impact of this ASU on the Company’s consolidated financial statements, but anticipates an immaterial impact.

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Financial Highlights

	For the three months ended									For the nine months ended
	September 30,									September 30,
	2016			2015			$ Change			2016			2015			$ Change
Net interest income	$	20,771		$	18,308		$	2,463		$	58,726		$	50,977		$	7,749
Noninteret income		1,919			1,714			205			5,477			4,618			859
Operating revenue (1)		22,690			20,022			2,668			64,203			55,595			8,608
Provision for loan losses		1,380			625			755			3,575			1,175			2,400
Noninterest expense		13,825			11,182			2,643			40,766			34,186			6,580
Provision for income taxes		2,634			2,890			(256	)		6,946			7,012			(66	)
Net income	$	4,851		$	5,325		$	(474	)	$	12,916		$	13,222		$	(306	)
Earnings per share
Basic	$	0.24		$	0.27		$	(0.03	)	$	0.65		$	0.69		$	(0.04	)
Diluted	$	0.23		$	0.27		$	(0.04	)	$	0.64		$	0.68		$	(0.04	)
Assets, period-end	$	2,539,060		$	1,878,283		$	660,777
Gross loans, period-end	$	1,808,646		$	1,357,045		$	451,601
Core deposits, period end (2)	$	2,049,352		$	1,465,547		$	583,805
Deposits, period-end	$	2,162,633		$	1,524,954		$	637,679
Return on average assets (3)		0.89	%		1.14	%					0.85	%		1.01	%
Return on average equity (3)		8.05	%		9.91	%					7.55	%		8.60	%
Return on average tangible equity (3) (4)		10.14	%		12.42	%					9.43	%		10.62	%

⁽¹⁾  Operating revenue is defined as net interest income plus noninterest income.

⁽²⁾  Defined by the Company as demand, interest checking, money market, savings, and local nonpublic time deposits, including local nonpublic time deposits in excess of $100.

⁽³⁾  Amounts annualized.

⁽⁴⁾  Tangible equity excludes goodwill and core deposit intangibles related to acquisitions, see non-GAAP disclosure below.

On September 6, 2016, the Company completed the acquisition of Foundation Bank. Subsequent to the end of the reporting period, during October 2016, the Company successfully converted the Foundation Bank core systems to the Company’s core operating system. A summary of the assets and liabilities acquired through this transaction is provided in Note 2 of the Notes to Consolidated Financial Statements in Item 1 of Part I of this report.

The Company earned $4,851, or $0.23 per diluted share, in third quarter 2016, compared to $5,325, or $0.27 per diluted share, in third quarter 2015. Included in third quarter income was $1,767 of merger related expense associated with the acquisition, which lowered third quarter 2016 net income by $1,149, or approximately $0.06 per share.

The Company recognized provision for loan losses of $1,380 in the third quarter 2016, representing an increase of $755 over third quarter 2015. The Company also saw net interest income grow $2,463 to $20,771 in the third quarter 2016, up from $18,308 in the third quarter 2015. Income growth was primarily attributable to growth in the loan portfolio associated with the acquired loans and organic loan growth experienced during the quarter.

During the third quarter 2016, the Company continued to experience growth in outstanding loans. Outstanding loans at September 30, 2016, were $1,808,646, up $402,634 over December 31, 2015, outstanding loans. Included in the growth was $270,533 in net loans acquired through the Foundation Bank acquisition. Excluding the acquired loans, the Company grew organic loans $132,101 since the prior year end, representing an annualized growth rate of 12.55% and expansion in all core lending segments, including construction loans, real estate loans and commercial loans.

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Outstanding core deposits at September 30, 2016, were $2,049,352, which represented growth of $515,410, since December 31, 2015. Included in the growth was $396,509 of deposits acquired through the Foundation Bank acquisition. Excluding acquired deposits, the Company experienced organic deposit growth of $118,901 since the prior year end, representing an annualized growth rate of 10.35%. Included in period end core deposits was a large temporary deposit of approximately $60,000, which was deposited toward the end of the quarter in conjunction with the sale of a client. The funds are temporary in nature and are expected to leave prior to the end of 2016.

Reconciliation of Non-GAAP financial information

Management utilizes certain non-GAAP financial measures to monitor the Company’s performance. While we believe the presentation of non-GAAP financial measures provides additional insight into our operating performance, readers of this report are urged to review the GAAP results as presented in the Financial Statements in Item 1 of Part I of this report.

The Company presents a computation of tangible equity along with tangible book value and return on average tangible equity. The Company defines tangible equity as total shareholders’ equity before goodwill and core deposit intangible assets. Tangible book value is calculated as tangible equity divided by total shares outstanding. Return on average tangible equity is calculated as net income divided by average tangible equity. We believe that tangible equity and certain tangible equity ratios are meaningful measures of capital adequacy which may be used when making period-to-period and company-to-company comparisons. Tangible equity and tangible equity ratios are considered to be non-GAAP financial measures and should be viewed in conjunction with total shareholders’ equity, book value and return on average equity. The following table presents a reconciliation of total shareholders’ equity to tangible equity.

	September 30,			June 30,			September 30,
	2016			2016			2015
Total shareholders’ equity	$	276,471		$	226,426		$	216,676
Subtract:
Goodwill		(61,436	)		(40,027	)		(39,075	)
Core deposit intangible assets		(9,248	)		(3,657	)		(4,027	)
Tangible shareholders’ equity (non-GAAP)	$	205,787		$	182,742		$	173,574
Book value per share	$	12.23		$	11.48		$	11.06
Tangible book value per share (non-GAAP)	$	9.10		$	9.26		$	8.86
Year-to-date return on average equity		7.55	%		7.28	%		8.60	%
Year-to-date return on average tangible equity (non-GAAP)		9.43	%		9.05	%		10.62	%

The Company presents a computation of core net interest margin and adjusted net interest income, which exclude prepayment penalties on loans, prepayment penalties on brokered deposits, and accretion of fair value marks, for third quarter 2016, second quarter 2016, and third quarter 2015. Core net interest margin and adjusted net interest income are considered non-GAAP financial measures and should be viewed in conjunction with the consolidated statement of income and average balance analysis of net interest income. The following table presents a reconciliation of net interest margin to core net interest margin.

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Reconciliation of Adjusted Net Interest Income to Net Interest Income

	Three months ended
	September 30,			June 30,			September 30,
	2016			2016			2015
Tax equivalent net interest income (1)	$	21,354		$	19,665		$	18,745
Subtract
Century Bank accretion		68			16			84
Capital Pacific Bank accretion		300			140			532
Foundation Bank accretion		509			—			—
Prepayment penalties on loans		276			166			33
Prepayment penalties on brokered deposits		—			—			(54	)
Total adjustments		1,153			322			595
Adjusted net interest income (non-GAAP)	$	20,201		$	19,343		$	18,150
Average earnings assets	$	2,014,889		$	1,852,130		$	1,726,201
Net interest margin		4.22	%		4.27	%		4.31	%
Core net interest margin (non-GAAP)		3.99	%		4.20	%		4.17	%

⁽¹⁾ Tax-exempt income has been adjusted to a tax-equivalent basis at a 35% tax rate. The amount of such adjustment was an addition to recorded income of $582, $518, and $264 for the three months ended September 30, 2016, June 30, 2016, and September 30, 2015, respectively.

Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied, and are not audited. Although we believe these non-GAAP financial measures are frequently used by stakeholders in the evaluation of a company, they have limitations as analytical tools, and should not be considered in isolation or as a substitute for analyses of results as reported under GAAP.

RESULTS OF OPERATIONS

Net Interest Income

Net interest income is the primary source of the Company’s revenue. Net interest income is the difference between interest income derived from earning assets, principally loans, and interest expense associated with interest-bearing liabilities, principally deposits. The volume and mix of earning assets and funding sources, market rates of interest, demand for loans, and the availability of deposits affect net interest income.

Net interest margin as a percentage of average earning assets for third quarter 2016 was 4.22%, representing reductions of 5 basis points and 9 basis points from second quarter 2016 and third quarter 2015, respectively. The linked-quarter margin contracted primarily due to the higher cost of interest bearing wholesale funding, reflecting the increased interest expense on the subordinated debentures issued at the end of June 2016. During third quarter 2016, accretion of loan fair value discounts and other items was $1,153 and added 23 basis points to the net interest margin, compared to loan fair value accretion and other nonrecurring items of $322 in second quarter 2016 that added 7 basis points to the net interest margin. The increase in accretion income is primarily attributable to the acquisition of Foundation Bank, which was completed on September 6, 2016.

The Company also saw a reduction in yields on the taxable portion of the loan portfolio, as new loans were being booked at rates below the current portfolio yield, which are expected to continue to place downward pressure on the net interest margin.

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The decrease in the year-over-year net interest margin of 9 basis point was primarily due to a reduction in nonrecurring interest items, primarily accretion income booked on the acquired loan portfolios and the increase in interest expense on the Notes. Prior to issuance of the Notes in the second quarter, the core net interest margin, which removes the effect of fair value accretion and nonrecurring items, remained relatively stable due to a continued shift in earning asset mix as higher yielding loans represented a larger proportion of total earning assets versus the lower yielding securities portfolio. With the increase in the additional interest expense on the Notes, the core margin is expected to experience some margin compression in future quarters. Core net interest margin is considered to be a non-GAAP financial measure. See “Reconciliation of non-GAAP financial information” above.

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The following table presents condensed balance sheet information, together with interest income and yields on average interest earning assets, and interest expense and rates on interest-bearing liabilities, for the quarter ended September 30, 2016, compared to the quarter ended September 30, 2015:

Table I

Average Balance Analysis of Net Interest Income

(dollars in thousands)

	Three months ended September 30, 2016								Three months ended September 30, 2015
	Average Balance		Interest Income or (Expense)			Average Yields or Rates			Average Balance		Interest Income or (Expense)			Average Yields or Rates
Interest earning assets
Federal funds sold and interest-bearing deposits	$	28,811	$	40			0.55	%	$	12,793	$	7			0.22	%
Federal Home Loan Bank stock		6,975		46			2.62	%		5,348		11			0.82	%
Securities available-for-sale:
Taxable		346,658		1,949			2.24	%		316,412		1,702			2.13	%
Tax-exempt(1)		74,427		742			3.96	%		72,026		754			4.15	%
Loans, net of deferred fees and allowance(2)
Taxable		1,502,108		19,545			5.18	%		1,286,716		16,920			5.22	%
Tax-exempt(3)		55,910		923			6.57	%		32,906		494			5.96	%
Total interest-earning assets		2,014,889		23,245			4.59	%		1,726,201		19,888			4.57	%
Non earning assets
Cash and due from banks		28,300								22,395
Property and equipment		19,380								17,810
Goodwill and intangible assets		49,517								43,168
Interest receivable and other assets		51,901								49,844
Total nonearning assets		149,098								133,217
Total assets	$	2,163,987							$	1,859,418
Interest-bearing liabilities
Money market and NOW accounts	$	825,800	$	(553	)		-0.27	%	$	794,266	$	(508	)		-0.25	%
Savings deposits		75,344		(23	)		-0.12	%		61,309		(18	)		-0.12	%
Time deposits - core (4)		59,830		(59	)		-0.39	%		88,641		(80	)		-0.36	%
Total interest-bearing core deposits		960,974		(635	)		-0.26	%		944,216		(606	)		-0.25	%
Time deposits - noncore		107,753		(349	)		-1.29	%		62,481		(249	)		-1.58	%
Interest-bearing repurchase agreements		780		—			0.00	%		—		—			0.00	%
Federal funds purchased		909		(2	)		-0.88	%		2,392		(4	)		-0.66	%
FHLB borrowings		117,277		(286	)		-0.97	%		82,571		(227	)		-1.09	%
Subordinated debenture		34,079		(553	)		-6.46	%		—		—			0.00	%
Junior subordinated debenture		9,034		(66	)		-2.91	%		8,248		(57	)		-2.74	%
Total interest-bearing wholesale funding		269,832		(1,256	)		-1.85	%		155,692		(537	)		-1.37	%
Total interest-bearing liabilities		1,230,806		(1,891	)		-0.61	%		1,099,908		(1,143	)		-0.41	%
Noninterest-bearing liabilities
Demand deposits		687,803								538,768
Interest payable and other		5,594								7,512
Total noninterest liabilities		693,397								546,280
Total liabilities		1,924,203								1,646,188
Shareholders’ equity		239,784								213,230
Total liabilities and shareholders’ equity	$	2,163,987							$	1,859,418
Net interest income			$	21,354							$	18,745
Net interest margin(1)				4.22	%							4.31	%

⁽¹⁾  Tax-exempt securities income has been adjusted to a tax-equivalent basis at a 35% tax rate. The amount of such adjustment was an addition to recorded income of approximately $260 and $264 for the three months ended September 30, 2016, and September 30, 2015, respectively. Net interest margin was positively impacted by 5 and 6 basis points for the three months ended September 30, 2016, and September 30, 2015, respectively.

⁽²⁾  Interest income includes recognized loan origination fees of $340 and $231 for the three months ended September 30, 2016, and September 30, 2015, respectively.

⁽³⁾  Tax-exempt loan income has been adjusted to a tax-equivalent basis at a 35% tax rate. The amount of such adjustment was an addition to recorded income of approximately $323 and $173 for the three months ended September 30, 2016, and September 30, 2015, respectively. Net interest margin was positively impacted by 6 and 4 basis points for the three months ended September 30, 2016, and September 30, 2015, respectively.

⁽⁴⁾  Core deposits include demand, interest checking, money market, savings, and local time deposits, including local nonpublic time deposits in excess of $100.

57

Table I shows that earning asset yields in third quarter 2016 were 4.59%, down 2 basis points from the 4.57% recorded in third quarter 2015. The Bank experienced a decrease in yield on the taxable loan portfolio of 4 basis points when compared to the prior period. New loans continued to be booked at rates lower than the average portfolio rate, which continued to slowly reduce the overall portfolio yield; however, an increase in accretion income attributable to the acquired loan portfolios partially offseting that decline. The increase in the yield on the taxable portion of the securities portfolio reflected more recent purchases, which were longer in nature, resulting in an increase in yield.

The cost of interest-bearing liabilities increased by 20 basis points from 0.41% in third quarter 2015 compared to 0.61% in third quarter 2016. The increase in the cost of interest-bearing liabilities was primarily due to the issuance of the Debentures in the second quarter, which have a stated coupon rate of 5.875%. The rates paid on interest-bearing core deposits increased by 1 basis point, due to a change in the depositor composition of the core deposits.

58

The following table sets forth a summary of changes in net interest income due to changes in average asset and liability balances (volume) and changes in average rates (rate) for the three months ended September 30, 2016, compared to the three months ended September 30, 2015.

Table II

Analysis of Changes in Interest Income and Interest Expense

(dollars in thousands)

	Three months ended September 30, 2016 compared to September 30, 2015 Increase (decrease) due to
	Volume			Rate			Net
Interest earned on:
Federal funds sold and interest-bearing deposits	$	9		$	24		$	33
Federal Home Loan Bank stock		3			32			35
Securities available-for-sale:
Taxable		157			90			247
Tax-exempt(1)		23			(35	)		(12	)
Loans, net of deferred fees and allowance
Taxable		2,779			(154	)		2,625
Tax-exempt(2)		342			86			428
Total interest-earning assets		3,313			43			3,356
Interest paid on:
Money market and NOW accounts		19			26			45
Savings deposits		4			1			5
Time deposits - core (3)		(26	)		5			(21	)
Total interest-bearing core deposits		(3	)		32			29
Time deposits - noncore		179			(79	)		100
Federal funds purchased		(2	)		—			(2	)
FHLB and FRB borrowings		95			(36	)		59
Subordinated debenture		(2	)		555			553
Junior subordinated debenture		5			4			9
Total interest-bearing wholesale funding		834			(115	)		719
Total interest-bearing liabilities		831			(83	)		748
Net interest income(1)	$	2,482		$	126		$	2,608

⁽¹⁾  Tax-exempt securities income has been adjusted to a tax-equivalent basis at a 35% tax rate. The amount of such adjustment was an addition to recorded income of approximately $260 and $264 for the three months ended September 30, 2016, and September 30, 2015, respectively. Net interest margin was positively impacted by 5 and 6 basis points for the three months ended September 30, 2016, and September 30, 2015, respectively.

⁽²⁾  Tax-exempt loan income has been adjusted to a tax-equivalent basis at a 35% tax rate. The amount of such adjustment was an addition to recorded income of approximately $323 and $173 for the three months ended September 30, 2016, and September 30, 2015, respectively. Net interest margin was positively impacted by 6 and 4 basis points for the three months ended September 30, 2016, and September 30, 2015, respectively.

⁽³⁾  Core deposits include demand, interest checking, money market, savings, and local time deposits, including local nonpublic time deposits in excess of $100.

The third quarter 2016 rate/volume analysis shows that net interest income increased by $2,608 over third quarter 2015. Interest income increased $3,356, while interest expense increased $748. The increase in interest income was primarily due to higher volumes, which generated an additional $3,313 in interest income, which was partially offset by a decline in interest income of $43 due to lower rates.

59

Table III

Average Balance Analysis of Net Interest Income

(dollars in thousands)

	Nine months ended September 30, 2016								Nine months ended September 30, 2015
	Average Balance		Interest Income or (Expense)			Average Yields or Rates			Average Balance		Interest Income or (Expense)			Average Yields or Rates
Interest earning assets
Federal funds sold and interest-bearing deposits	$	26,539	$	104			0.52	%	$	12,916	$	23			0.24	%
Federal Home Loan Bank stock		6,016		94			2.09	%		8,060		18			0.30	%
Securities available-for-sale:
Taxable		322,679		5,456			2.26	%		304,945		4,807			2.11	%
Tax-exempt(1)		72,703		2,208			4.06	%		73,057		2,294			4.20	%
Loans, net of deferred fees and allowance(2)
Taxable		1,418,191		54,244			5.11	%		1,191,869		47,250			5.30	%
Tax-exempt(3)		50,831		2,411			6.34	%		27,249		1,185			5.81	%
Total interest earning assets		1,896,959		64,516			4.54	%		1,618,096		55,577			4.59	%
Non earning assets
Cash and due from banks		25,809								22,094
Property and equipment		18,970								17,823
Goodwill and intangible assets		45,641								39,217
Interest receivable and other assets		49,548								48,387
Total non earning assets		139,968								127,521
Total assets	$	2,036,927							$	1,745,617
Interest-bearing liabilities
Money market and NOW accounts	$	820,173	$	(1,615	)		-0.26	%	$	731,198	$	(1,440	)		-0.26	%
Savings deposits		70,843		(65	)		-0.12	%		58,816		(55	)		-0.13	%
Time deposits - core (4)		66,022		(182	)		-0.37	%		79,535		(235	)		-0.40	%
Total interest-bearing core deposits		957,038		(1,862	)		-0.26	%		869,549		(1,730	)		-0.27	%
Time deposits - non-core		80,092		(816	)		-1.36	%		72,903		(779	)		-1.43	%
Interest-bearing repurchase agreements		493		—			0.00	%		—		—			0.00	%
Federal funds purchased		872		(6	)		-0.92	%		1,839		(10	)		-0.73	%
FHLB borrowings		95,356		(758	)		-1.06	%		84,924		(694	)		-1.09	%
Subordinated debenture		11,940		(553	)		-6.19	%		—		—			0.00	%
Junior subordinated debenture		8,512		(179	)		-2.81	%		8,248		(169	)		-2.74	%
Total interest-bearing wholesale funding		197,265		(2,312	)		-1.57	%		167,914		(1,652	)		-1.32	%
Total interest-bearing liabilities		1,154,303		(4,174	)		-0.48	%		1,037,463		(3,382	)		-0.44	%
Noninterest-bearing liabilities
Demand deposits		647,967								495,965
Interest payable and other		6,065								6,585
Total noninterest liabilities		654,032								502,550
Total liabilities		1,808,335								1,540,013
Shareholders’ equity		228,592								205,604
Total liabilities and shareholders’ equity	$	2,036,927							$	1,745,617
Net interest income			$	60,342										$	52,195
Net interest margin(1)				4.25	%										4.31	%

⁽¹⁾  Tax-exempt securities income has been adjusted to a tax-equivalent basis at a 35% tax rate. The amount of such adjustment was an addition to recorded income of approximately $773 and $803 for the YTD period ended September 30, 2016, and September 30, 2015, respectively. Net interest margin was positively impacted by 5 and 7 basis points for the YTD period ended September 30, 2016, and September 30, 2015, respectively.

⁽²⁾  Interest income includes recognized loan origination fees of $776 and $478 for the YTD period ended September 30, 2016, and September 30, 2015, respectively.

⁽³⁾  Tax-exempt loan income has been adjusted to a tax-equivalent basis at a 35% tax rate. The amount of such adjustment was an addition to recorded income of approximately $844 and $415 for the YTD period ended September 30, 2016, and September 30, 2015, respectively. Net interest margin was positively impacted by 6 and 3 basis points for the YTD period ended September 30, 2016, and September 30, 2015, respectively.

⁽⁴⁾  Core deposits include demand, interest checking, money market, savings, and local time deposits, including local nonpublic time deposits in excess of $100 .

60

Table IV

Analysis of Changes in Interest Income and Interest Expense

(dollars in thousands)

	Nine months ended September 30, 2016 Compared to nine months ended September 30, 2015 Increase (decrease) due to
	Volume			Rate			Days		Net
Interest earned on:
Federal funds sold and interest-bearing deposits	$	24		$	57		$	—	$	81
Federal Home Loan Bank stock		(5	)		80			1		76
Securities available-for-sale:
Taxable		280			364			5		649
Tax-exempt(1)		(11	)		(77	)		2		(86	)
Loans, net of deferred fees and allowance
Taxable		8,980			(2,028	)		42		6,994
Tax-exempt(2)		1,026			198			2		1,226
Total interest earning assets		10,294			(1,406	)		52		8,940
Interest paid on:
Money market and NOW accounts		175			(2	)		2		175
Savings deposits		11			(1	)		—		10
Time deposits - core (3)		(40	)		(13	)		—		(53	)
Total interest-bearing core deposits		146			(16	)		2		132
Time deposits - noncore		77			(41	)		2		38
Federal funds purchased		(5	)		1			—		(4	)
FHLB borrowings		85			(22	)		1		64
Subordinated debenture		—			552			1		553
Junior subordinated debenture		5			4			1		10
Total interest-bearing wholesale funding		162			494			5		661
Total interest-bearing liabilities		308			478			7		793
Net interest income(1)	$	9,986		$	(1,884	)	$	45	$	8,147

⁽¹⁾  Tax-exempt securities income has been adjusted to a tax-equivalent basis at a 35% tax rate. The amount of such adjustment was an addition to recorded income of approximately $773 and $803 for the YTD period ended September 30, 2016, and September 30, 2015, respectively. Net interest margin was positively impacted by 5 and 7 basis points for the YTD period ended September 30, 2016, and September 30, 2015, respectively.

⁽²⁾  Tax-exempt loan income has been adjusted to a tax-equivalent basis at a 35% tax rate. The amount of such adjustment was an addition to recorded income of approximately $844 and $415 for the YTD period ended September 30, 2016, and September 30, 2015, respectively. Net interest margin was positively impacted by 6 and 3 basis points for the YTD period ended September 30, 2016, and September 30, 2015, respectively.

⁽³⁾  Core deposits include demand, interest checking, money market, savings, and local time deposits, including local nonpublic time deposits in excess of $100.

61

Loan Loss Provision and Allowance

Below is a summary of the Company’s allowance for loan losses for the three and nine months ended September 30, 2016, and 2015:

	Three months ended September 30,						Nine months ended September 30,
	2016			2015			2016			2015
Balance, beginning of period	$	19,127		$	16,013		$	17,301		$	15,637
Provision charged to income		1,380			625			3,575			1,175
Loans charged against allowance		(44	)		(104	)		(712	)		(631	)
Recoveries credited to allowance		68			78			367			431
Balance, end of period	$	20,531		$	16,612		$	20,531		$	16,612

The Company recorded $1,380 in provision for loan losses during the third quarter 2016, which was attributable to growth in the loan portfolio and the downgrade of a dental loan relationship totaling $1,661. The Company’s classified assets at September 30, 2016, were 23.80% of regulatory capital, compared to 23.03% and 25.14% of regulatory capital at December 31, 2015 and September 30, 2015, respectively. Classified assets totaled $56,166, at September 30, 2016, up $13,337 from June 30, 2016. The increase was primarily attributable to the acquisition of Foundation Bank, which as of September 30, 2016, added $19,233 to the classified assets totals.

For the nine months ended September 30, 2016, the Company recorded net charge offs of $369, or annualized 0.05% of average outstanding loans, compared to net charge offs of $200, or 0.03% of average loans, for the same period in 2015. The allowance for loan losses for outstanding loans at September 30, 2016, was $20,531, or 1.14% of outstanding loans, compared to 1.23% and 1.23% of outstanding loans at December 31, 2015, and September 30, 2015, respectively. The decrease in the allowance as a percentage of total loans was primarily attributable to loans acquired through acquisition, which were booked net of their credit related fair value adjustment and were only included in the allowance for loan losses to the extent their credit impairment exceeded the remaining credit related fair value discount. As these loans mature or are refinanced into the non-acquired loan portfolio, they are included in the allowance for loan losses, therefore increasing the allowance as a percentage of total loans. At September 30, 2016, the Company had a total of $9,999 of credit related fair value adjustment assigned to acquired loans. The balance of these acquired loans totaled $439,178, before the credit and interest rate fair value adjustments. When acquired loans with an assigned credit fair value mark are excluded from outstanding loans, the allowance for loan losses of $20,531 as a percentage of organic loans outstanding was 1.48% as of September 30, 2016. The allowance as a percentage of nonperforming loans, net of government guarantees, was 210.23% at September 30, 2016, compared to 636.30% and 744.60% at December 31, 2015, and September 30, 2015, respectively.

At September 30, 2016, $9,551 of loans (net of government guarantees) were classified as impaired. A specific allowance of $738 (included in the ending allowance at September 30, 2016) was assigned to these loans. That compares to impaired loans of $7,527 (net of government guarantees) and a specific allowance assigned of $175 at December 31, 2015.

Total nonperforming assets, net of government guarantees, were $22,832, or 0.90% of total assets, at September 30, 2016, up $8,366 from December 31, 2015, primarily due to the acquisition of Foundation Bank. At September 30, 2016, nonperforming assets consisted of $9,766 in nonaccrual loans (net of government guarantees), no loans were 90 days past due and still accruing interest, and there was $13,066 of other real estate owned.

62

The following table shows a summary of nonaccrual loans, loans past due 90 days or more, and other real estate owned for the periods covered in this report:

Nonperforming Assets and Asset Quality Ratios

	September 30, 2016			December 31, 2015			September 30, 2015
NONPERFORMING ASSETS
Nonaccrual loans
Real estate loans
Multi-family residential	$	—		$	—		$	—
Residential 1-4 family		1,465			733			569
Owner-occupied commercial		1,634			2,369			2,371
Nonowner-occupied commercial		3,475			790			829
Total permanent real estate loans		6,574			3,892			3,769
Construction loans
Multi-family residential		—			—			—
Residential 1-4 family		—			53			53
Commercial real estate		—			—			—
Commercial bare land and acquisition & development		—			—			—
Residential bare land and acquisition & development		—			—			—
Total construction real estate loans		—			53			53
Total real estate loans		6,574			3,945			3,822
Commercial loans		5,619			1,564			983
Total nonaccrual loans		12,193			5,509			4,805
90-days past due and accruing interest		—			—			—
Total nonperforming loans		12,193			5,509			4,805
Nonperforming loans guaranteed by government		(2,427	)		(2,790	)		(2,574	)
Net nonperforming loans		9,766			2,719			2,231
Other real estate owned		13,066			11,747			11,854
Total nonperforming assets, net of guaranteed loans	$	22,832		$	14,466		$	14,085
ASSET QUALITY RATIOS
Allowance for loan losses as a percentage of total loans outstanding		1.14	%		1.23	%		1.23	%
Allowance for loan losses as a percentage of total nonperforming loans, net of government guarantees		210.23	%		636.30	%		744.60	%
Net loan charge offs (recovery) as a percentage of average loans, annualized		0.03	%		-0.02	%		0.00	%
Net nonperforming loans as a percentage of total loans		0.54	%		0.19	%		0.16	%
Nonperforming assets as a percentage of total assets		0.90	%		0.76	%		0.75	%
Consolidated classified asset ratio(1)		23.80	%		23.03	%		25.14	%

⁽¹⁾  Consolidated classified asset ratio is defined as the sum of all loan-related contingent liabilities and loans internally graded substandard or worse (net of government guarantees), adversely classified securities, and other real estate owned, divided by total consolidated Tier 1 capital plus the allowance for loan losses.

Other real estate owned at September 30, 2016, consisted of ten properties. One of the properties, a commercial land development project valued at $9,839, comprised 75.30% of the total other real estate owned category. The Company has been actively marketing this property; however, the location and nature of the commercial land development property make it susceptible to possible future valuation write-downs as it is appraised on an annual basis.

63

Noninterest Income

	Noninterest Income Summary
	Three months ended								Nine months ended
	September 30,			September 30,		Change			September 30,			September 30,			Change
	2016			2015		$			2016			2015			$
Service charges on deposit accounts	$	717		$	703	$	14		$	2,099		$	1,939		$	160
Bankcard income		314			276		38			899			687			212
Bank-owned life insurance income		172			156		16			463			435			28
Net gain on sale of investment securities		—			143		(143	)		309			336			(27	)
Impairment losses on investment securities (OTTI)		(2	)		—		(2	)		(19	)		(13	)		(6	)
Other noninterest income		718			436		282			1,726			1,234			492
	$	1,919		$	1,714	$	205		$	5,477		$	4,618		$	859

For the three months ended September 30, 2016, noninterest income was $1,919, up $205 from the same period last year. The increase in the quarter to date noninterest income through September 30, 2016, when compared to the same period last year, was primarily due to a one-time payment of $160 from the SBA for reimbursement of legal and collection fees incurred by Capital Pacific Bank, prior to that acquisition.

Noninterest Expense

	Noninterest Expense Summary
	Three months ended							Nine months ended
	September 30,		September 30,		Change			September 30,			September 30,		Change
	2016		2015		$			2016			2015		$
Salaries and employee benefits	$	7,520	$	6,822	$	698		$	23,084		$	20,223	$	2,861
Property and equipment		1,202		1,148		54			3,404			3,221		183
Data processing		924		838		86			2,682			2,343		339
Legal and professional services		569		496		73			2,321			1,386		935
Business development		460		369		91			1,492			1,134		358
FDIC insurance assessment		273		283		(10	)		848			769		79
Other real estate (income) expense		71		122		(51	)		(32	)		303		(335	)
Merger related expense		1,767		—		1,767			3,745			1,836		1,909
Other noninterest expense		1,039		1,104		(65	)		3,222			2,971		251
	$	13,825	$	11,182	$	2,643		$	40,766		$	34,186	$	6,580

For the three months ended September 30, 2016, noninterest expense was $13,825, representing an increase of $2,643 or 23.64% over the prior year. Included in the current period total is merger expense related to the acquisition of Foundation Bank, totaling $1,767. Excluding merger related expenses, non-interest expense increased $876, or 7.83%. After merger related expense, the next largest increase was related to salaries and employee benefits expense, which increased $698 or 10.23%. The increase was due to the full year of salary expense from the Capital Pacific acquisition, which closed in March 2015, salary expense related to the retained Foundation Bank employees, which was included in Pacific Continental’s salary expense beginning September 7, 2016, and overall performance increases.

In fourth quarter 2016, the Company anticipates additional merger related expenses due to the core systems conversion and associated retention bonuses and severance payments not occurring until October 2016.

64

BALANCE SHEET

Loans

A summary of outstanding loans by market at September 30, 2016, June 30, 2016, December 31, 2015, and September 30, 2015, follows:

	Period Ended
	September 30,		June 30,		December 31,		September 30,
	2016		2016		2015		2015
Eugene market gross loans, period-end	$	404,858	$	396,260	$	379,048	$	368,666
Portland market gross loans, period-end		728,749		697,664		667,995		647,527
Puget Sound market gross loans, period-end		423,581		141,788		142,104		137,830
National healthcare gross loans, period-end		251,458		250,391		216,865		203,022
Total gross loans, period-end	$	1,808,646	$	1,486,103	$	1,406,012	$	1,357,045

The Bank recorded loan growth of $322,543 during the third quarter 2016, which included loans acquired in the Foundation Bank acquisition of $270,533, which are reflected in the Puget Sound Market totals. Portland lending accelerated in third quarter 2016, increasing $31,085 from June 30, 2016. The Company’s overall loan growth during the third quarter 2016 occurred across several loan types, including owner-occupied commercial real estate, non-owner occupied commercial real estate, and commercial and industrial loans.

Outstanding loans to dental professionals, which are comprised of both local and national loans, at September 30, 2016, totaled $370,135 or 20.46% of the loan portfolio, compared to $340,162 or 24.19% of the loan portfolio at December 31, 2015. The Company’s national dental loans increased by $24,892 from December 31, 2015 and were represented in 43 states by the end of the third quarter 2016. In addition to national growth, the Company saw growth in the local dental market, with the portfolio growing $5,081 from year-end 2015, which was primarily due to a slowdown of prepayments and an increase in production in the Company’s Portland market local lending. At September 30, 2016, $6,852 or 1.85% of the outstanding dental loans were supported by government guarantees. Loans to dental professionals include loans for such purposes as starting up a practice, acquisition of a practice, equipment financing, financing owner-occupied facilities, and working capital. National dental loans are limited only to acquisition of a seasoned practice by experienced dental professionals, practice refinances and owner-occupied real estate loans. Additional data on the Company’s dental loan portfolio and the credit quality of this portfolio can be found in Note 5 of the Notes to Consolidated Financial Statements in this report.

All loans to related parties were made in the ordinary course of business and on substantially the same terms, including interest rate and collateral, as those prevailing at the time for comparable loans with persons not related to the Company.

Detailed credit quality data on the entire loan portfolio can be found in Note 4 of the Notes to Consolidated Financial Statements in this report.

Securities

At September 30, 2016, the balance of securities available-for-sale was $482,408, up $115,810 over December 31, 2015. The growth in the portfolio was partially attributable to securities acquired in the Foundation Bank acquisition of $88,331. At September 30, 2016, the portfolio had an unrealized pre-tax gain of $9,450, compared to an unrealized pre-tax gain of $4,341, at December 31, 2015. The average life and duration of the portfolio at September 30, 2016, was 4.7 years and 4.3 years, respectively. At September 30, 2016, $28,391 of the securities portfolio was pledged as collateral for public deposits in Oregon and Washington and for repurchase agreements.

During the third quarter 2016, the Company sold approximately $55,000 in securities acquired from Foundation Bank, and replaced the securities with new purchases. This transaction had minimal impact on the average life of the portfolio, however, the sold securities had a weighted average yield of approximately 1.64% and were replaced with securities yielding 1.98%. The Company expects to benefit from the increased yield in future quarters.

65

The Company continued to structure the portfolio to provide consistent cash flow and reduce the market value volatility of the portfolio in a rising rate environment in light of the Company’s current liability sensitive position. The portfolio is structured to generate sufficient cash flow to allow reinvestment at higher rates should interest rates move up or to fund loan growth in future periods. In a stable rate environment, approximately $56,395 in cash flow from the securities portfolio is anticipated over the next twelve months. Going forward, purchases will be dependent upon core deposit growth, loan growth, and the Company’s interest rate risk position, with the Company targeting securities between 19% and 20% of total assets.

At September 30, 2016, $2,110, or 0.44% of the total securities portfolio, was composed of private-label mortgage-backed securities. Management previously booked OTTI on this portion of the portfolio totaling $266, with $2 of additional OTTI booked in third quarter 2016. On a monthly basis, Management reviews all available information, including current and projected default rates and current and projected loss severities, related to the collectability of its potentially impaired investment securities to determine if an additional OTTI is required. Recognition of additional OTTI on the private-label mortgage-backed portion of the portfolio is possible in future quarters depending upon economic conditions, default rates on home mortgages, loss severities on foreclosed homes, unemployment levels, and home values.

In management’s opinion, the remaining securities in the portfolio in an unrealized loss position were considered only temporarily impaired at the quarter ended September 30, 2016. At September 30, 2016, the Company had no intent, nor was it more likely than not that it would be required, to sell its impaired securities before their recovery. The impairment was due to changes in market interest rates or the widening of market spreads subsequent to the initial purchase of the securities, and not due to concerns regarding the underlying credit of the issuers or the underlying collateral. The decline in value of these securities resulted from current economic conditions. Although yields on these securities may be below market rates during the period, no loss of principal was expected at September 30, 2016.

Goodwill and Intangible Assets

At September 30, 2016, the Company had the following goodwill and core deposit intangibles (“CDI”) associated with prior bank acquisitions:

	September 30, 2016
	Foundation Bank		Capital Pacific Bank		Century Bank		Northwest Business Bank		Total
Goodwill	$	21,407	$	17,145	$	851	$	22,031	$	61,434
CDI		5,716		3,132		402		—		9,250
	$	27,123	$	20,277	$	1,253	$	22,031	$	70,684

The Company periodically tests goodwill for impairment. Management performs an impairment analysis of the intangible assets with indefinite lives at least annually, but more frequently if an impairment triggering event is deemed to have occurred. The last impairment test was performed at December 31, 2015, at which time no impairment was determined to exist.

The CDI for Foundation Bank was determined to have an expected life of 10 years, and is being amortized over that period using a straight-line method and will be fully amortized in August 2026. The CDI for Capital Pacific Bank was determined to have an expected life of ten years, and is being amortized over that period using the straight-line method and will be fully amortized in February 2025. The CDI for Century Bank was determined to have an expected life of seven years, and is being amortized over that period using the straight-line method and will be fully amortized in January 2020.

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Deposits

Core deposits, which are defined by the Company as demand, interest checking, money market, savings, and nonpublic local time deposits, including nonpublic local time deposits in excess of $100, were $2,049,352 and represented 94.76% of total deposits at September 30, 2016. During the third quarter the Company experienced growth in core deposits of $541,333. The increase, was partially attributable to the Foundation Bank acquisition of $396,509 and the remaining increase was due to organic deposit growth of $144,924.

A key component of core deposits is noninterest-bearing demand deposits, which totaled $901,290 and represented 43.98% of core deposits at September 30, 2016. The weighted average cost of core deposits, when factoring in non-interest bearing core deposits, for the third quarter 2016 was 0.15%.

A summary of outstanding core deposits and average core deposits by market and wholesale funding classified as non-core deposits at September 30, 2016, June 30, 2016, and September 30, 2015, follows:

	Period Ended
	September 30,		June 30,		September 30,
	2016		2016		2015
Eugene market core deposits, period-end(1)	$	785,053	$	712,061	$	747,298
Portland market core deposits, period-end(1)		671,747		590,880		549,113
Puget Sound market core deposits, period-end(1)		592,552		205,078		169,136
Total core deposits, period-end(1)		2,049,352		1,508,019		1,465,547
Non-core deposits, period-end		113,281		92,113		59,407
Total deposits, period-end	$	2,162,633	$	1,600,132	$	1,524,954
	Three Months Ended
	September 30, 2016		June 30, 2016		September 30, 2015
Eugene market core deposits, average(1)	$	721,271	$	738,435	$	776,755
Portland market core deposits, average(1)		631,440		624,490		537,911
Puget Sound market core deposits, average(1)		296,066		196,281		168,318
Total core deposits, average(1)		1,648,777		1,559,206		1,482,984
Non-core deposits, average				68,536		62,481
Total deposits, average	$	1,648,777	$	1,627,742	$	1,545,465

⁽¹⁾  Core deposits include all demand, savings, money market, interest checking accounts, plus all nonpublic local time deposits including local time deposits in excess of $100.

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Other Deposits

The Company uses public and brokered deposits to provide short-term and long-term funding sources. The Company defines short-term as having a contractual maturity of less than one year. The Company uses brokered deposits to help mitigate interest rate risk in a rising rate environment.

Below is a schedule detailing public and brokered deposits by type, including weighted average rate and weighted average maturity.

Non-Core Deposit Summary

	September 30, 2016							September 30, 2015
	Balance		Weighted average rate			Weighted average maturity		Balance		Weighted average rate			Weighted average maturity
	(dollars in thousands)							(dollars in thousands)
<3 Months	$	30,375		0.79	%		57 Days	$	26,474		0.26	%		37 Days
3-6 Months		—		—			—		—		—			—
6-12 Months		1,744		0.87	%		335 Days		309		0.35	%		204 Days
>12 Months		81,162		1.27	%		3.42 Years		32,624		1.93	%		5.58 Years
	$	113,281						$	59,407

Borrowings

The Company has both secured and unsecured borrowing lines with the FHLB, FRB and various correspondent banks. The Federal Reserve and correspondent borrowings are generally short-term, with a maturity of less than 30 days. The FHLB borrowings can be either short-term or long-term in nature. See Note 7 of the Notes to Consolidated Financial Statements in Part I, Item 1 of this report for a full maturity and interest rate schedule for the FHLB borrowings.

At September 30, 2016, the Company held $4,653 of stock in the FHLB of Des Moines, which included $532 in FHLB stock acquired through the Foundation Bank acquisition. The FHLB stock is broken into two classes: membership and activity. The membership class is based on asset size and the holder is required to be a member of the FHLB. The amount of membership stock held at September 30, 2016 was $2,823 and is updated in the first quarter of each year. The activity stock outstanding at September 30, 2016 totaled $1,820; however, it is subject to fluctuation on a daily basis based on outstanding borrowings. At September 30, 2016, membership stock paid dividends at 0.50% annually and activity stock paid dividends at 3.50% annually. Both classes of FHLB stock are listed in the asset section of the Company’s balance sheet.

Subordinated Debentures

In June 2016, the Company issued $35,000 in aggregate principal amount of fixed-to-floating rate subordinated debentures (the “Notes”). The Notes have a fixed annual rate for a five-year period at 5.875%. After five years, the interest rate will reset quarterly to an annual interest rate equal to the then-current three-month LIBOR plus 471.5 basis points. The Notes are included in Tier 2 capital under current regulatory guidelines and interpretations.

Junior Subordinated Debentures

On September 6, 2016, the Company completed the acquisition of Foundation Bancorp. At that time, the Company assumed $6,148 of junior subordinated debentures (the “Foundation Debentures”), with a fair value on acquisition date of $3,013. The interest rate on the Foundation Debentures is a floating rate of three-month LIBOR plus 173 basis points. The $6,000 of the Foundation Debentures qualifies as Tier 1 capital under regulatory capital guidelines.

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The Company had $8,248 in Debentures outstanding at September 30, 2016, which were issued in conjunction with the 2005 acquisition of Northwest Business Bank. The Debentures had an interest rate of 6.265% that was fixed until January 2011, after which the rate changed to three-month LIBOR plus 135 basis points. On April 22, 2013, the Bank entered into a cash flow hedge on $8,000 of the TPS, swapping the variable interest rate for a fixed rate of 2.73% for approximately seven years. At September 30, 2016, the fair value of the interest rate swap on the Company’s Debentures was ($82). The $8,000 of junior subordinated debentures qualifies as Tier 1 capital under regulatory capital guidelines.

In July 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) was signed into law which, among other things, limits the ability of certain bank holding companies to treat trust preferred security debt issuances, such as the Company’s junior subordinated debentures, as Tier 1 capital. Under final rules adopted by the Federal Reserve and the other U.S. Federal banking agencies, our trust preferred securities will remain as Tier 1 capital since total assets of the Company are less than $15 billion. Additional information regarding these final capital rules is included in Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Capital Resources” of this report and in Part II, Item 1A “Risk Factors” of our 2015 Form 10-K under the heading “We operate in a highly regulated environment and the effects of recent and pending federal legislation or of changes in, or supervisory enforcement of, banking or other laws and regulations could adversely affect us.”

Additional information regarding the terms of the cash flow hedge is included in Note 10 of the Notes to Consolidated Financial Statements in Part I, Item 1 of this report.

Capital Resources

Capital is the shareholders’ investment in the Company. Capital grows through the retention of earnings and the issuance of new stock or other equity securities whether through stock offerings or through the exercise of equity awards. Capital formation allows the Company to grow assets and provides flexibility in times of adversity. Shareholders’ equity at September 30, 2016, was $276,471, up $57,980 from December 31, 2015. The increase in shareholders’ equity was primarily due to stock issued through the Foundation Bank acquisition of $47,794, in addition to an increase in the unrealized gain on the investment portion combined with retention of a portion of income earned during 2016.

In June 2016, the Company issued $35,000 in aggregate principal amount of fixed-to-floating rate subordinated debentures (the “Notes”). The Notes are included in Tier 2 capital under current regulatory guidelines and interpretations. In third quarter 2016, the Company made a capital investment in the Bank totaling $20,000, which qualifies as Tier 1 capital under current regulatory guidelines and interpretations.

The Federal Reserve and the FDIC have in place guidelines for risk-based capital requirements applicable to U.S. bank holding companies and banks. In July 2013, the Federal Reserve Board and the other U.S. federal banking agencies adopted final rules making significant changes to the U.S. regulatory capital framework for U.S. banking organizations and to conform this framework to the Basel Committee’s current international regulatory capital accord (Basel III). These rules were effective January 1, 2015 and replaced the federal banking agencies’ general risk-based capital rules, advanced approaches rule, market-risk rule, and leverage rules, in accordance with certain transition provisions. The rules establish more restrictive capital definitions, create additional categories and higher risk-weightings for certain asset classes and off-balance sheet exposures, higher leverage ratios and a capital conservation buffer that will be added to the minimum capital requirements and must be met for banking organizations to avoid being subject to certain limitations on dividends and discretionary bonus payments to executive officers. The rules also implement higher minimum capital requirements, include a new common equity Tier 1 capital requirement, and establish criteria that instruments must meet in order to be considered common equity Tier 1 capital, additional Tier 1 capital, or Tier 2 capital. When fully phased in, the final rules will provide for increased minimum capital ratios as follows: (a) a common equity Tier 1 capital ratio of 4.50%; (b) a Tier 1 capital ratio of 6.00% (an increase from 4.00%); (c) a total capital ratio of 8.00%; and (d) a Tier 1 leverage ratio to average consolidated assets of 4.00%. The new rules permit depository institution holding companies with less than $15 billion in total consolidated assets as of December 31, 2009, such as the Company, to include trust preferred securities in Tier 1 capital. Under the new rules, in order to avoid limitations on capital distributions, including dividend payments and certain discretionary bonus payments to executive officers, a banking organization must hold a capital conservation buffer composed of common equity Tier 1 capital above its minimum risk-based capital requirements (equal to 2.50% of total risk-weighted assets). The phase-in of the capital conservation buffer began January 1, 2016, and will be completed by January 1, 2019. The new rules also provide for various adjustments and deductions to the definitions of regulatory capital that will phase in from January 1, 2014, to December 31, 2017. The new rules made it optional for banks and bank holding companies to include accumulated other comprehensive income in their calculations of Tier 1 capital. The Company’s accumulated other comprehensive income consists primarily of the unrealized gain or loss on the securities portfolio as a result of marking securities available-for-sale to market. The Company opted to exclude accumulated other comprehensive income from its calculation of Tier 1 capital. Overall, the new rules did not materially impact the Company’s reported capital ratios. The Company will continue to evaluate the impact of the rules as they are phased in over the next few years.

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The Company’s common equity Tier 1 capital ratio, Tier 1 risk based capital ratio, total risk based capital ratio, and Tier 1 leverage capital ratio were 9.43%, 9.99%, 12.55% and 10.33%, respectively, at September 30, 2016, with all capital ratios for the Company above the minimum regulatory designations. For additional information regarding the Company’s regulatory capital levels, see Note 12 in Notes to Consolidated Financial Statements in Part I, Item I of this report.

The Company has regularly paid cash dividends on a quarterly basis, typically in February, May, August and November of each year. The Board of Directors considers the dividend amount quarterly and takes a broad perspective in its dividend deliberations including a review of recent operating performance, capital levels, concentrations of loans as a percentage of capital, and growth projections. The Board also considers dividend payout ratios, dividend yield, and other financial metrics in setting the quarterly dividend. There can be no assurance that dividends will be paid in the future.

On July 20, 2016, the Board of Directors approved a regular third quarter cash dividend of $0.11 that was paid on August 18, 2016. Subsequent to the end of the third quarter 2016, on October 18, 2016, the Board of Directors declared a regular quarterly cash dividend of $0.11 per share payable to shareholders on November 23, 2016.

OFF-BALANCE SHEET ARRANGEMENTS AND COMMITMENTS

In the normal course of business, the Company commits to extensions of credit and issues letters of credit. The Company uses the same credit policies in making commitments to lend funds and conditional obligations as it does for other credit products. In the event of nonperformance by the customer, the Company’s exposure to credit loss is represented by the contractual amount of the instruments. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established by the contract. Since some commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. At September 30, 2016, the Company had $408,639 in commitments to extend credit, up from $256,156 at December 31, 2015.

Letters of credit written are conditional commitments issued by the Company to guarantee performance of a customer to a third party. The credit risk involved is essentially the same as that involved in extending loan facilities to customers. At September 30, 2016, the Company had $1,393 in letters of credit and financial guarantees outstanding.

LIQUIDITY AND CASH FLOWS

Liquidity is the term used to define the Company’s ability to meet its financial commitments. The Company maintains sufficient liquidity to ensure funds are available for both lending needs and the withdrawal of deposit funds. The Company derives liquidity through core deposit growth, maturity of investment securities, and loan payments. Core deposits include demand, interest checking, money market, savings, and local time deposits, including local nonpublic time deposits in excess of $100. Additional liquidity and funding sources are provided through the sale of loans, sales of securities, access to national CD markets, and both secured and unsecured borrowings. The Company uses a number of measurements to monitor its liquidity position on a daily, weekly, and monthly basis, which includes its ability to meet both short-term and long-term obligations, and requires the Company to maintain a certain amount of liquidity on the asset side of its balance sheet. The Company also prepares projections of its liquidity position. In addition, the Company has a Liquidity Funding Policy (“LFP”) that is reviewed and approved annually by the Company’s Asset and Liability Committee and the Board of Directors. Included in the LFP is a contingency funding plan based on both a short-term and long-term cash flow analysis, which are reviewed periodically by ALCO.

Core deposits at September 30, 2016, were $2,049,352 and represented 94.76% of total deposits. Core deposits at September 30, 2016, were up $515,410 from December 31, 2015. During the same time period, the Company experienced an increase in outstanding loans of $402,634. The liability growth was partially offset by a decrease in FHLB borrowing. It is anticipated that cash flows from the securities portfolio and additional non-core funding sources will provide an additional portion of the funding during the remainder of 2016, as loans are expected to continue to increase. The securities portfolio represented 19.00% of total assets at September 30, 2016. At September 30, 2016, $28,391 of the securities portfolio was pledged to support public deposits and repurchase agreements, leaving $454,017 of the securities portfolio unencumbered and available-for-sale. In addition, at September 30, 2016, the Company had $26,619 of government guaranteed loans that could be sold in the secondary market to support the Company’s liquidity position.

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Due to its strategic focus to market to specific segments, the Company has been successful in developing deposit relationships with several large clients, which are generally defined as deposit relationships of $2,000 or more, which are closely monitored by management. The loss of any such deposit relationship or other large deposit relationships could cause an adverse effect on short-term liquidity. The Company uses a 10-point risk-rating system to evaluate each of its large depositors in order to assist management in its daily monitoring of the volatility of this portion of its core deposit base. The risk-rating system attempts to determine the stability of the deposits of each large depositor, evaluating, among other things, the length of time the depositor has been with the Company and the likelihood of loss of individual large depositor relationships. Risk ratings on large depositors are reviewed at least quarterly and adjusted if necessary. Company management maintain close relationships and hold regular meetings with its large depositors to assist in management of these relationships.

During the quarter, the Company experienced an increase in core deposits, attributed to the Foundation Bank acquisition, and growth in the organic core deposit base. At September 30, 2016, in addition to the temporary deposit of $60,000 mentioned previously, the Bank had approximately $66,000 in additional risk rated 10 deposits, the highest risk rating. Currently, the Company anticipates that these funds will leave the Bank by December 31, 2016. The Company continues to review and implement its funding strategy to offset deposit reductions. The Company currently maintains sufficient short-term liquidity to cover any potential volatility in the large depositor base. However, there can be no assurance that any of our other large depositor relationships will be maintained or that the loss of one or more of these clients will not adversely affect the Company’s liquidity.

At September 30, 2016, the Company had secured borrowing lines with the FHLB of Des Moines and the FRB, along with unsecured borrowing lines with various correspondent banks, totaling $813,630. The Company’s secured lines with the FHLB and FRB were limited by the amount of collateral pledged. At September 30, 2016, the Company had pledged $602,715 in discounted collateral value in commercial real estate loans, first and third lien single-family residential loans, multi-family loans, and securities to the FHLB. Additionally, certain commercial and commercial real estate loans with a discounted value of $81,915 were pledged to the FRB under the Company’s Borrower-In-Custody program. The Company’s unsecured correspondent bank lines totaled $129,000. At September 30, 2016, the Company had $45,500 in borrowings outstanding from the FHLB, no borrowings outstanding with the FRB, and no borrowings on its overnight correspondent bank lines, leaving a total of $768,130 available on its secured and unsecured borrowing lines as of such date.

Net cash provided by operating activities was $19,957 during the nine months ended September 30, 2016. During the same period, cash of $114,903 was used in investing activities, consisting principally of a net loan principal increase of $133,405 and net purchases of securities of $25,624. Cash provided by financing activities during the first nine months of 2016 was $165,443 and primarily consisted of an increase in borrowings and cash related to the Notes issuance. Additional information on the Company cash flows can be reviewed in the Consolidated Statement of Cash Flows in Part I, Item 1 of this report.

ITEM 3 Quantitative and Qualitative Disclosures about Market Risk

There has been no material change in the Company’s exposure to market risk. Readers are referred to the Company’s 2015 Form 10-K and the Annual Report to Shareholders for the year ended December 31, 2015, for additional information.

ITEM 4 Controls and Procedures

Evaluation of disclosure controls and procedures. We maintain “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer and Principal Financial and Accounting Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Our disclosure controls and procedures have been designed to meet reasonable assurance standards. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

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Based on their evaluation as of the end of the period covered by this Quarterly Report on Form 10-Q, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in internal control over financial reporting. There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) for the quarter ended September 30, 2016, that materially affected or are reasonably likely to materially affect our internal control over financial reporting.

PART II OTHER INFORMATION

ITEM 1 Legal Proceedings

On August 23, 2013, a putative class action lawsuit (“Class Action”) was filed in the Circuit Court of the State of Oregon for the County of Multnomah on behalf of individuals who placed money with Berjac of Oregon and Berjac of Portland (collectively, “Berjac”). The Berjac entities merged and the surviving company, Berjac of Oregon, is currently in Chapter 7 bankruptcy. The Class Action complaint, which has been amended several times, currently asserts three claims against Pacific Continental Bank, Fred “Jack” W. Holcomb, Holcomb Family Limited Partnership, Jones & Roth, P.C., and Umpqua Bank, as defendants. The lawsuit asserts that the Bank is jointly and severally liable for materially aiding or participating in Berjac’s sales of securities in violation of the Oregon Securities Law. Claimants seek the return of the money placed with Berjac of Oregon and Berjac of Portland, plus interest, and costs and attorneys’ fees. The current version of the complaint seeks $100 million in damages from all defendants.

On August 28, 2014, the court-appointed bankruptcy trustee for Berjac of Oregon filed an adversary complaint (Trustee’s Lawsuit) in the U.S. Bankruptcy Court for the District of Oregon alleging that the Company, the Bank, Umpqua Bank, Century Bank and Summit Bank provided lines of credit that enabled continuation of the alleged Ponzi scheme operated by Berjac of Oregon and the two partners of the pre-existing Berjac general partnerships, Michael Holcomb and Gary Holcomb. The Company acquired Century Bank on February 1, 2013. The Trustee’s Lawsuit was transferred from the U.S. Bankruptcy Court to the U.S. District Court for the District of Oregon (Eugene Division), where it is currently pending.

In addition to seeking an award of punitive damages, the trustee is asserting fraudulent transfer law and unjust enrichment in an effort to recover payments made by Berjac to Century Bank and the Bank. Among other claims for relief, the trustee is seeking the disgorgement of monies advanced to the Holcomb Family Limited Partnership by Century Bank and returned to the estate by court order following the post-petition cash collateral hearing, and of monies received by the Bank from the proceeds of the sale of stock held by the Holcomb Family Limited Partnership and securing one of the lines of credit previously held by Century Bank. The trustee also asserts a claim for alleged aiding and abetting of breaches of duties owed to Berjac. The complaint in the Trustee’s Lawsuit indicates the range of damages sought by the trustee which include, among other claims for relief, an award of punitive damages not to exceed $10 million, recovery of payments associated with allegedly fraudulent transfers totaling up to approximately $55.3 million, including up to $20.7 million from Century Bank and up to $7.7 million from the Bank. This case is not currently set for trial.

On November 16, 2015, the U.S. District Court judge stayed all deadlines in the Trustee’s Lawsuit and all parties were ordered to participate in a judicial settlement conference. The judicial settlement conference sessions were held on February 18, 2016 and April 20, 2016. At the April 20, 2016, settlement conference, the Bank reached a tentative settlement of the Class Action and the Trustee’s Lawsuit. The settlement of the Class Action will require approval of the Circuit Court judge. The settlement is not expected to have a material adverse effect on the Company’s financial condition.

We may from time to time be involved in claims, proceedings and litigation arising from our business and property ownership. Based on currently available information, the Company does not expect that the results of such proceedings, including the above-described proceeding, in the aggregate, to have a material adverse effect on our financial condition.

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ITEM 1A Risk Factors

For a discussion of risk factors relating to our business, please refer to Item 1A of Part I of our 2015 Form 10-K, which is incorporated by reference herein, in addition to the following information:

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Industry Factors

Fluctuating interest rates could adversely affect our profitability.

As is the case with many banks, our profitability is dependent to a large extent upon our net interest income, which is the difference between the interest earned on loans, securities and other interest-earning assets and interest paid on deposits, borrowings, and other interest-bearing liabilities. Because of the differences in maturities and repricing characteristics of our interest-earning assets and interest-bearing liabilities, changes in interest rates do not produce equivalent changes in interest income earned on interest-earning assets and interest paid on interest-bearing liabilities. Accordingly, fluctuations in interest rates could adversely affect, and has in past years, impacted, our net interest margin, and, in turn, our profitability. This impact could result in a decrease in our interest income relative to interest expense. Increases in interest rates may also adversely impact the value of our securities investment portfolio. At September 30, 2016, our balance sheet was liability sensitive, and an increase in interest rates could cause our net interest margin and our net interest income to decline. Since the financial crisis of 2008, the banking industry has operated in an extremely low interest rate environment relative to historical averages, and the Federal Reserve has pursued highly accommodative monetary policies (including a very low Federal funds rate and substantial purchases of long-term U.S. Treasury and agency securities) in an effort to facilitate growth in the U.S. economy and a reduction in levels of unemployment. This environment has placed downward pressure on the net interest margins of U.S. banks, including the Bank. In December 2015, the Federal Reserve raised the target range for the federal funds rate from 1/4 to 1/2 percent. The Federal Reserve further indicated future policy actions to normalize interest rates will depend upon progress towards its objectives of maximum employment and two percent inflation, although the stance of monetary policy remains accommodative, and, even after employment and inflation are near its objectives, economic conditions may warrant for some time keeping the target federal funds rate below longer-term normal levels. The Federal Reserve also indicated that it intended to continue its policy of holding longer-term agency and Treasury securities at sizeable levels to help maintain accommodative financial conditions. In September 2016, the Federal Reserve decided to keep the target range for the federal funds rate at  ¹⁄₄ to  ¹⁄₂ percent, noting that, while the case for an increase in the federal funds rate has strengthened, it decided to wait for further evidence of continued progress towards its objectives. The degree to which the Federal Reserve will continue its accommodative monetary policies, and the timing of any easing of those policies, will depend upon the Federal Reserve’s judgments regarding labor market conditions and the overall economic outlook, and are, therefore, subject to continuing uncertainty.

Company Factors

We have a significant concentration in loans to dental professionals, and loan concentrations within one industry may create additional risk.

Bank regulatory authorities and investors generally view significant loan concentrations within any particular industry as carrying higher inherent risk than a loan portfolio without any significant concentration in one industry. We have a significant concentration of loans to dental professionals which represented 20.46% in principal amount of our total loan portfolio at September 30, 2016 (see Note 5 in the Notes to Consolidated Financial Statements included in this Form 10-Q). While we apply credit practices which we believe to be prudent to these loans as well as all the other loans in our portfolio, due to our concentration in dental lending, we are exposed to the general risks of industry concentration, which include adverse market factors impacting that industry alone or disproportionately to other industries. In addition, bank regulatory authorities may in the future require us to limit additional lending in the dental industry if they have concerns that our concentration in that industry creates significant risks, which in turn could limit our ability to pursue new loans in an area where we believe we currently have a competitive advantage.

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Nonperforming assets take significant time to resolve and adversely affect our results of operations and financial condition.

At September 30, 2016, our nonperforming loans (which include all nonaccrual loans, net of government guarantees) were 0.54% of the loan portfolio. At September 30, 2016, our nonperforming assets (which include foreclosed real estate) were 0.90% of total assets. Nonperforming loans and assets adversely affect our net income in various ways. Until economic and market conditions improve, we expect to continue to incur losses relating to nonperforming assets. We generally do not record interest income on nonperforming loans or other real estate owned, thereby adversely affecting our income and increasing our loan administration costs. When we take collateral in foreclosures and similar proceedings, we are required to mark the related asset to the then fair market value of the collateral, less estimated selling expenses, which may ultimately result in a loss. An increase in the level of nonperforming assets increases our risk profile and may impact the capital levels our regulators believe are appropriate in light of the ensuing risk profile. While we reduce problem assets through loan sales, workouts, and restructurings and otherwise, decreases in the value of the underlying collateral, or in these borrowers’ performance or financial condition, whether or not due to economic and market conditions beyond our control, could adversely affect our business, results of operations and financial condition, perhaps materially. In addition, the resolution of nonperforming assets requires significant commitments of time from management and our directors, which can be detrimental to the performance of their other responsibilities. Any significant future increase in nonperforming assets could have a material adverse effect on our business, financial condition and results of operations.

We may not have the ability to continue paying dividends on our common stock at current or historic levels.

On October 26, 2016, we announced a quarterly cash dividend of $0.11 per share, payable to shareholders on November 23, 2016. Our ability to pay dividends on our common stock depends on a variety of factors. It is possible in the future that we may not be able to continue paying quarterly dividends commensurate with historic levels, if at all. As a holding company, a substantial portion of our cash flow typically comes from dividends our bank subsidiary pays to us. Cash dividends will depend on sufficient earnings to support them and adherence to bank regulatory requirements. If the Bank is not able to pay dividends to the Company, the Company may not be able to pay dividends on its common stock. Consequently, the inability to receive dividends from the Bank could adversely affect the Company’s financial condition, results of operations and prospects.

We may be required, in the future, to recognize impairment with respect to investment securities, including the FHLB stock we hold.

Our securities portfolio contains whole loan private mortgage-backed securities and municipal securities and currently includes securities with unrecognized losses. We may continue to observe volatility in the fair market value of these securities. We evaluate the securities portfolio for any other than temporary impairment (“OTTI”) each reporting period, as required by GAAP. Future evaluations of the securities portfolio could require us to recognize impairment charges. The credit quality of securities issued by certain municipalities has deteriorated in recent quarters. Although management does not believe the credit quality of the Company’s municipal securities has similarly deteriorated, such deterioration could occur in the future. For example, it is possible that government-sponsored programs to allow mortgages to be refinanced to lower rates could materially adversely impact the yield on our portfolio of mortgage-backed securities, since a significant portion of our investment portfolio is composed of such securities.

In addition, as a condition to membership in the FHLB, we are required to purchase and hold a certain amount of FHLB stock, based on our asset size, which is assessed annually. In addition to asset based stock holding, stock is also held to support the outstanding principal balance of advances from the FHLB. At September 30, 2016, we had stock in the FHLB totaling $4,643. The FHLB stock held by us is carried at cost and is subject to recoverability testing under applicable accounting standards. As of September 30, 2016, we did not recognize an impairment charge related to our FHLB stock holdings. Future negative changes to the financial condition of the FHLB could require us to recognize an impairment charge with respect to such holdings.

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If the goodwill we have recorded in connection with acquisitions becomes impaired, it could have an adverse impact on our reported earnings.

At September 30, 2016, we had $61,434 of goodwill on our consolidated balance sheet. In accordance with GAAP, our goodwill is not amortized but rather evaluated for impairment on an annual basis or more frequently if events or circumstances indicate that a potential impairment exists. Such evaluation is based on a variety of qualitative and quantitative factors, including macroeconomic conditions, industry and market conditions, cost factors, overall financial performance, and other relevant entity-specific events. The last impairment test was performed at December 31, 2015. At December 31, 2015, we did not recognize an impairment charge related to our goodwill. Future evaluations of goodwill may result.

ITEM 2 Unregistered Sales of Equity Securities and Use of Proceeds

Not applicable

ITEM 3 Defaults upon Senior Securities

None

ITEM 4 Mine Safety Disclosures

Not applicable

ITEM 5 Other Information

None

ITEM 6 Exhibits

3.1	Second Amended and Restated Articles of Incorporation, as amended on August 16, 2016.
10.1	First Amendment to the Amended and Restated Employment Agreement for Roger Busse dated July 19, 2016
10.2	First Amendment to the Amended and Restated Employment Agreement for Casey Hogan dated July 19, 2016
31.1	Rule 13a-14(a)/15d-14(a) Certification of the Chief Executive Officer of the Registrant
31.2	Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer of the Registrant
32*	Furnished statements of the Chief Executive Officer and Chief Financial Officer under 18 U.S.C Section 1350
101	The following financial information from Pacific Continental Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016, is formatted in XBRL; (i) the unaudited Consolidated Balance Sheets, (ii) the Unaudited Consolidated Statements of Income, (iii) the Unaudited Consolidated Statements of Comprehensive Income , (iv) the Unaudited Consolidated Statements of Changes in Shareholders’ Equity, (v) the Unaudited Consolidated Statements of Cash Flows, and (vi) the Notes to Unaudited Consolidated Financial Statements.

* In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release No. 34-47986, the certifications furnished in Exhibit 32 hereto are deemed to accompany this Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Exchange Act. Such certifications will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act.

76

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 thereunto duly authorized.

		PACIFIC CONTINENTAL CORPORATION
		(Registrant)
Dated	November 8, 2016	/s/ Roger Busse
		Roger Busse
		President and Chief Executive Officer
		(Duly Authorized Officer; Principal Executive Officer)
Dated	November 8, 2016	/s/ Richard R. Sawyer
		Richard R. Sawyer
		Executive Vice President and Chief Financial Officer (Duly Authorized Officer; Principal Financial and Accounting Officer)

77

EX-3.1

Exhibit 3.1

Articles of Incorporation – Second Amended and Restated

NAME

The name of this corporation is PACIFIC CONTINENTAL CORPORATION.

REGISTERED OFFICE

The registered office and the principal place of business of the corporation is 111 West 7^th Street, Eugene, Lane County, Oregon 97401. The name of the registered agent is Shannon Coffin.

DURATION

The duration of this corporation will be perpetual.

PURPOSE

The purpose for which this corporation is formed is to engage in any business activity now or hereafter permissible by the laws of the State of Oregon and the United States.

CAPITALIZATION

The aggregate number of shares which this corporation will have authority to issue is Fifty Million (50,000,000) shares of no par value per share common stock and twenty thousand (20,000) shares of no par value per share preferred stock.

A. The preferred stock will have the following preferences, rights and limitations:

1. Each share of preferred stock will be entitled to a dividend from funds legally available for the payment thereof which will have priority to the payment of dividends on common stock.

2. The dividend on preferred shares will be cumulative on a daily basis from the date of issue of such shares. So long as there are any accrued but unpaid dividends on the preferred shares, there will be no distribution to or on behalf of the common shares, either by way of dividend, purchase thereof by the corporation, or otherwise.

3. Upon the dissolution of the corporation, each share of preferred stock will receive out of the assets of the corporation the amount determined by the Board of Directors for the applicable series and no more in priority to payment on the common shares.

4. Preferred shares will be convertible into shares of common stock but only if authorized by the Board of Directors of the corporation for the applicable series and upon the terms and conditions adopted by the Board of Directors.

5. Preferred shares will have no vote on any matter except on those matters which by law a vote cannot be denied.

6. The holders of preferred shares will have no preemptive rights as to preferred or common shares.

B. The common stock will have the following preferences, rights and limitations:

1. The common shares will have full voting rights. each share to entitle the holder thereof to one vote.

2. After all cumulative but unpaid dividends on preferred shares have been paid or set apart for payment, the holders of the common shares will be entitled to receive dividends from funds legally available for the payment thereof, but only when and as such dividends will be declared by the Board of Directors.

3. Upon the dissolution of the corporation, after payment in full to the holders of preferred shares of the sums which such holders are entitled to receive, the holders of common shares will receive and be paid all remaining assets of the corporation.

4. The common shares will have no preemptive rights as to either the preferred shares, or as to the common shares into which the preferred shares may be convertible, or any other common shares or options for common shares

C. The preferred shares may be divided into and issued in series. Each series will be so designated by the Board of Directors as to distinguish the shares thereof from the shares of all other series and classes. All preferred shares will be identical, except as to the following relative rights and preferences, as to which there may be variations between different series:

1. The rate of dividend.

2. Whether shares can be redeemed, and if so, the redemption price and the terms and conditions of redemption.

3. The amount payable upon shares in event of voluntary or involuntary liquidation.

4. Sinking fund provisions, if any, for the redemption or purchase of shares.

5. The terms and conditions, if any, on which shares may be converted.

Authority is expressly vested in the Board of Directors to divide any or all of preferred shares into series and within the limitations set forth by law and in these Articles of Incorporation, fix and determine the relative rights and preferences of the shares of any series so established by resolution or resolutions setting forth the designation of the series and fixing and determining the relative rights and preferences thereof. Any such resolution or resolutions will be adopted by the Board of Directors before any shares of that series are issued. The Board of Directors may, from time to time, increase the number of preferred shares of any then existing series by making all unissued preferred shares a part of such series. The Board of Directors may decrease (but not below the number of such shares then outstanding) the number of preferred shares of any then existing series by requiring that all unissued shares previously assigned to such series will no longer constitute a part thereof. The Board of Directors is hereby empowered to classify or reclassify any unissued preferred shares by fixing or altering the terms thereof in respect of the above mentioned particulars and by assigning the same to an existing newly created series from time to time before the issuance of such shares.

INDEMNIFICATION AND DIRECTOR LIABILITY

– Definitions. As used in this Article:

The term “Egregious Conduct” by a person will mean acts or omissions that involve intentional misconduct or a knowing violation of law, participation in any transaction from which the person will personally receive a benefit in money, property, or services to which the person is not legally entitled, an unlawful distribution under the Oregon Bank Act, and conduct for which the person is adjudged liable to the corporation.

The term “Finally Adjudged” will mean stated in a judgment by a court having jurisdiction, from which there is no further right to appeal.

The term “Director” will mean any person who is a director of the corporation and any person who, while a director of the corporation, is serving at the request of the corporation as a director, officer, manager, partner, trustee, employee, or agent of another foreign or domestic corporation, limited liability company, partnership, joint venture, trust, or other enterprise, or is a fiduciary or party in interest in relation to any employee benefit plan covering any employee of the corporation or of any employer in which it has an ownership interest; and “conduct as a Director” will include conduct while a Director is acting in any of such capacities.

The term “Officer-Director” will mean any person who is simultaneously both an officer and director of the corporation and any person who, while simultaneously both an officer and director of the corporation, is serving at the request of the corporation as a director, officer, manager, partner, trustee, employee, or agent of another foreign or domestic corporation, limited liability company, partnership, joint venture, trust, or other enterprise, or is a fiduciary or party in interest in relation to any employee benefit plan covering any employee of the corporation or of any employer in which it has an ownership interest; and “conduct as an Officer-Director” will include conduct while such a person is acting as an officer of the corporation or in any of such other capacities.

The term “Subsidiary Corporation” will mean any corporation or limited liability company at least eighty percent of the voting interests of which is held beneficially by this corporation.

The term “Subsidiary Outside Director” will mean any person who, while not principally employed by this corporation or any Subsidiary Corporation, is a director or manager of a Subsidiary Corporation and any such person who, while a director or manager of a Subsidiary Corporation, is serving at the request of such corporation as a director, officer, manager, partner, trustee, employee, or agent of another foreign or domestic corporation, limited liability company, partnership, joint venture, trust, or other enterprise, or is a fiduciary or party in interest in relation to any employee benefit plan covering any employee of such corporation or of any employer in which it has an ownership interest; and “conduct as a Subsidiary Outside Director” will include conduct while such a person is acting in any of such capacities.

– Liability of Directors. No Director, Officer-Director, former Director or former Officer-Director will be personally liable to the corporation or its shareholders for monetary damages for conduct as a Director or Officer-Director occurring after the effective date of this Article unless the conduct is Finally Adjudged to have been Egregious Conduct.

– Liability of Subsidiary Outside Directors. No Subsidiary Outside Director or former Subsidiary Outside Director will be personally liable in any action brought directly by this corporation as a shareholder of the Subsidiary Corporation or derivatively on behalf of the Subsidiary Corporation (or by any shareholder of this corporation double-derivatively on behalf of this corporation and the Subsidiary Corporation) for monetary damages for conduct as a Subsidiary Outside Director occurring after the effective date of this Article unless the conduct is Finally Adjudged to have been Egregious Conduct.

– Mandatory Indemnification of Directors. Subject to Sections 7 and 8 of this Article, the corporation will indemnify any person who is, or is threatened to be made, a party to any action, suit, or proceeding, whether civil, criminal, administrative, or investigative, and whether formal or informal, and whether by or in the right of the corporation or its shareholders or by any other party, by reason of the fact that the person is or was a Director, Officer-Director, or Subsidiary

Outside Director against judgments, penalties or penalty taxes, fines, settlements (even if paid or payable to the corporation or its shareholders or to a Subsidiary Corporation) and reasonable expenses, including attorneys’ fees, actually incurred in connection with such action, suit or proceeding unless the liability and expenses were on account of conduct Finally Adjudged to be Egregious Conduct.

– Advancing Expenses. Except as prohibited by Sections 7 and 8 of this Article, the reasonable expenses, including attorneys’ fees, of a Director, Officer-Director, Subsidiary Outside Director, or person formerly serving in any such capacities, incurred in connection with an action, suit or proceeding in which the individual is entitled to indemnification under Section 4 will be paid or reimbursed by the corporation, upon request of such person, in advance of the final disposition of such action, suit or proceeding upon receipt by the corporation of a written, unsecured promise by the person to repay such amount if it will be Finally Adjudged that the person is not eligible for indemnification. All expenses incurred by such person in connection with such action, suit or proceeding will be considered reasonable unless Finally Adjudged to be unreasonable.

– Procedure. Except as required by Sections 7 and 8 of this Article, no action by the Board of Directors, the shareholders, independent counsel, or any other person or persons will be necessary or appropriate to the determination of the corporation’s indemnification obligation under this Article in any specific case, to the determination of the reasonableness of any expenses incurred by a person entitled to indemnification under this Article, nor to the authorization of indemnification in any specific case.

– Exception for Internal Claims. Notwithstanding anything else in these Articles, the corporation will not be obligated to indemnify any person for any expenses, including attorneys’ fees, incurred to assert any claim against the corporation (except a claim to enforce rights to indemnification) or any person related to or associated with it, including any person who would be entitled hereby to indemnification in connection with the claim.

– Exception for State Law. Notwithstanding anything else in these Articles, the corporation will not be obligated to indemnify any person for any expenses, including attorneys’ fees, incurred as a result of any action listed in ORS §60.047 (2)(d).

– Exception for Regulatory Claims.

Regulatory Proceedings Generally. Notwithstanding anything else in these Articles, indemnification of any Director, Officer-Director or Subsidiary Outside Director, or any person formerly serving in any such capacities, and advancement of expenses in connection with either an administrative proceeding or a civil action instituted by a federal banking agency (“Regulatory Proceedings”) will be governed by this Section.

Banking Regulations Defined. The term “Banking Regulations” will mean any state or federal laws or regulations applicable to the corporation, or any formal policies adopted by a regulatory agency having jurisdiction over the corporation.

Indemnification in Regulatory Proceedings. The corporation will provide indemnification and advancement of expenses in connection with Regulatory Proceedings to the extent permitted, and in the manner prescribed by Banking Regulations. Insurance and other means to ensure payment of costs and expenses in Regulatory Proceedings may be obtained or provided to the extent permitted and in the manner prescribed by Banking Regulations.

– Enforcement of Rights. The corporation will indemnify any person granted indemnification rights under this Article against any reasonable expenses incurred by the person to enforce such rights.

– Set-off of Claims. Any person granted indemnification rights herein may directly assert such rights in set-off of any claim raised against the person by or in the right of the corporation and will be entitled to have the same tribunal which adjudicates the corporation’s claim adjudicate the person’s entitlement to indemnification by the corporation.

– Continuation of Rights. The indemnification rights provided in this Article will continue as to a person who has ceased to be a Director, Officer-Director, or Subsidiary Outside Director and will inure to the benefit of the heirs, executors, and administrators of such person.

– Effect of Amendment or Repeal. Any amendment or repeal of this Article will not adversely affect any right or protection of a Director, Officer-Director, or Subsidiary Outside Director or person formerly serving in any of such capacities existing at the time of such amendment or repeal with respect to acts or omissions occurring prior to such amendment or repeal.

– Severability of Provisions. Each of the substantive provisions of this Article is separate and independent of the others, so that if any provision hereof will be held to be invalid or unenforceable for any reason, such invalidity or unenforceability will not affect the validity or enforceability of the other provisions.

FAIR PRICE PROVISION

. For purposes of this Article:

An interested shareholder transaction means any transaction between a corporation, or any subsidiary thereof, and an interested shareholder of such corporation or an affiliated person to an interested shareholder, that must be authorized pursuant to applicable law by a vote of the shareholders.

An interested shareholder:

Includes any person or group of affiliated persons who beneficially own twenty percent or more of the outstanding voting shares of a corporation. An affiliated person is any person who either acts jointly or in concert with, or directly or indirectly controls, is controlled by, or is under common control with another person; and

Excludes any person who, in good faith and not for the purpose of circumventing this Article, is an agent, custodial bank, broker, nominee, or trustee for another person, if such other person is not an interested shareholder under Section 1(b)(1) of this Article.

. Except as provided in Section 3 of this Article, an interested shareholder transaction must be approved by the affirmative vote of the holders of two-thirds of the shares entitled to be counted under this Section 2, or if any class of shares is entitled to vote thereon as a class, then by the affirmative vote of two-thirds of the shares of each class entitled to be counted under this Section 2 and of the total shares entitled to be counted under this Section 2. All outstanding shares entitled to vote under applicable law or the Articles of Incorporation will be entitled to be counted under this Section 2, except shares owned by or voted under the control of an interested shareholder may not be counted to determine whether shareholders have approved a transaction for purposes of this Section 2. The vote of the shares owned by or voted under the control of an interested shareholder, however, will be counted in determining whether a transaction is approved under other provisions of applicable law and for purposes of determining a quorum.

. This Article will not apply to a transaction:

Approved by a majority vote of the board of directors. For such purpose, the vote of directors whose votes are otherwise entitled to be counted under the Articles of Incorporation and applicable law who are directors or officers of, or have a material financial interest in, an interested shareholder, or who were nominated for election as a director as a result of an arrangement with an interested shareholder and first elected as a director within twenty-four months of the proposed transaction, will not be counted in determining whether the transaction is approved by such directors; or

In which a majority of directors whose votes are entitled to be counted under Section 3(a) determines that the fair market value of the consideration to be received by noninterested shareholders for shares of any class of which shares are owned by any interested shareholder is not less than the highest fair market value of the consideration paid by any interested shareholder in acquiring shares of the same class within twenty-four months of the proposed transaction.

. This Article may be amended or repealed only by the affirmative vote of the holders of two-thirds of the shares entitled to be counted under this Section 4. All outstanding shares entitled to vote under applicable law or the Articles of Incorporation will be entitled to be counted under this Section 4, except shares owned by or voted under the control of an interested shareholder may not be counted to determine whether shareholders have voted to approve the amendment or repeal. The vote of the shares owned by or voted under the control of an interested shareholder, however, will be counted in determining whether the amendment or repeal is approved under other provisions of applicable law and for purposes of determining a quorum.

. The requirements imposed by this Article are to be in addition to, and not in lieu of, requirements imposed on any transaction by any provision of applicable law, or any other provision of the Articles of Incorporation, or the Bylaws or otherwise.

CONSIDERATION OF NON-MONETARY FACTORS

The Board of Directors of the corporation, when evaluating any offer of another party to (a) make a tender or exchange offer for any equity security of the corporation, (b) merge or consolidate the corporation with another corporation, or (c) purchase or otherwise acquire all or substantially all of the properties and assets of the corporation, will, in connection with the exercise of its judgment in determining what is in the best interests of the corporation and its stockholders, give due consideration to all relevant factors, including without limitation the social and economic effects on the employees, customers, suppliers, and other constituents of the corporation and its subsidiaries and on the communities in which the corporation and its subsidiaries operate or are located.

BOARD OF DIRECTORS

. The Board of Directors will consist of not fewer than six individuals. The exact number will be fixed by the Bylaws and may be changed from time to time in the manner provided in the Bylaws.

Section 2. Until the annual meeting of shareholders to be held in 2008, The Board of Directors will be divided into three classes: Class 1, Class 2, and Class 3. Each such Class will consist, as nearly as possible, of one-third of the total number of directors constituting the entire Board of Directors. Until the annual meeting of shareholders to be held in 2008, each director will serve for a term ending on the date of the third annual meeting of shareholders following the annual meeting at which such director was elected. The terms of office of all directors who are in office immediately prior to the closing of the polls for the election of directors at the 2008 annual meeting of shareholders of the Company shall expire at such time. At each annual meeting of shareholders beginning with the 2008 annual meeting of shareholders of the Company, directors shall not have staggered terms, and the directors shall be elected to hold office until the next annual meeting of shareholders and until their successors shall have been duly elected and qualified, subject, however, to prior resignation, retirement, disqualification or removal from office.

Section 3. In the event of an increase or decrease in the authorized number of directors prior to the 2008 annual meeting, (a) each director then serving as such will nevertheless continue as a director of the Class in which he or she is a member until the 2008 annual meeting, or his or her earlier resignation, removal from office or death, and (b) the newly created or eliminated directorships resulting from such increase or decrease will be apportioned by the Board of Directors among the three Classes of directors so as to maintain such Classes as nearly equal as possible until the 2008 annual meeting.

. No director may be removed from office without cause except by a vote of two-thirds of the shares then entitled to vote at an election of directors. Except as otherwise provided by law, cause for removal will exist only if the Board of Directors has reasonable grounds to believe that the corporation has suffered or will suffer substantial injury as a result of the gross negligence or dishonesty of the director whose removal is proposed.

AMENDMENT TO ARTICLES

. The corporation reserves the right to amend, alter, change or repeal any provision of its Articles of Incorporation to the extent permitted by the laws of the State of Oregon. All rights of shareholders are granted subject to this reservation.

. The Board of Directors will have full power to adopt, alter, amend or repeal the Bylaws of the corporation or to adopt new Bylaws. Nothing herein, however, will deny the concurrent power of the shareholders to adopt, alter, amend or repeal the Bylaws.

* * * * *

I, the undersigned, declare under the penalties of perjury that I have examined the foregoing and to the best of my knowledge and belief, it is true, correct and complete.

Approved by the shareholders on April 19, 2010.

DATED this 27th day of April 2010.
	PACIFIC CONTINENTAL CORPORATION
	By	/s/ Hal Brown
		Hal Brown, CEO
	By	/s/ Shannon Coffin
		Shannon Coffin, Secretary

PACIFIC CONTINENTAL CORPORATION

ARTICLES OF AMENDMENT

Pursuant to the provisions of the Oregon Business Corporation Act, the undersigned officer of Pacific Continental Corporation, an Oregon corporation, hereby submits these Articles of Amendment for filing:

FIRST: The name of the corporation is Pacific Continental Corporation (the “Corporation”)

SECOND: The Corporation’s Second Amended and Restated Articles of Incorporation were amended to cause a new Article XI to be added as follows:

“ARTICLE XI

Except with respect to the election of directors, the shareholders shall take action at a meeting of shareholders by the affirmative vote of a majority of the voting power of the shares present and entitled to vote or such larger proportion or number as is required by law or these Articles of Incorporation. Each director shall be elected at a meeting of shareholders by the vote of the majority of the votes cast with respect to the director, provided that directors shall be elected by a plurality of the votes present and entitled to vote on the election of directors at any such meeting for which the number of nominees (other than nominees withdrawn on or prior to the day preceding the date the corporation first mails its notice for such meeting to the shareholders) exceeds the number of directors to be elected. For purposes of this Article XI, action at a meeting shall mean action at a meeting which satisfies the notice and quorum requirements imposed by the Bylaws of the corporation, or as otherwise provided by law, and a majority of the votes cast means that the votes entitled to be cast by the holders of all then outstanding shares of capital stock of the corporation with respect to the election of a director nominee that are voted “for” such nominee must exceed the votes that are voted “against” that director by the holders of outstanding shares of the corporation’s capital stock entitled to cast a vote with respect to the election of such director nominee.”;

THIRD: The foregoing amendment to the Second Amended and Restated Articles of Incorporation (the “Amendment”) was adopted on April 25, 2016.

FOURTH: The Amendment was approved by the shareholders of the Corporation on April 25, 2016. As of February 29, 2016, the record date for determining the shareholders of the Corporation entitled to vote on the Amendment, there were 19,604,780 shares of common stock, no par value per share, of the Corporation (“Common Stock”), which constituted all of the votes entitled to be cast on the Amendment. 13,943,963 shares of Common Stock voted in favor of the Amendment, 97,212 shares of Common Stock voted against the Amendment, and 393,597 shares of Common Stock abstained from voting.

IN WITNESS WHEREOF, I have subscribed my name as of August 16, 2016.

/s/ Roger S. Busse

Roger S. Busse

Chief Executive Officer

EX-10.1

Exhibit 10.1

FIRST AMENDMENT TO THE

AMENDED & RESTATED EMPLOYMENT AGREEMENT OF JANUARY 2012

This First Amendment to the Employment Agreement among Pacific Continental Bank, Pacific Continental Corporation and Roger S. Busse, as amended and restated as of January 31, 2012 (the “Agreement”) is made and entered into this 19th day of July, 2016.

In consideration of the mutual covenants and promises contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby expressly acknowledged, the parties agree to amend the Agreement as follows, effective as of the date hereof:

1. The first sentence of Section 9(b) of the Agreement is hereby amended to read as follows:

“If, during the Term, the Bank or Corporation terminates Executive’s employment without Cause, or Executive terminates his employment for Good Reason (defined below), the Bank will pay Executive:

(1) the base salary he would have been entitled to if his employment had not terminated for a period of twelve months, and

(2) the greater of (a) $102,000 and (b) the amount of Executive’s most recent annual cash incentive compensation payout pursuant to Section 6, in either case payable on the 90th day following termination of employment, and

(3) if Executive timely elects to continue Executive’s medical, dental and vision benefits under COBRA (including, if applicable, continuation of coverage for Executive’s spouse and dependents), then the entire amount of the monthly premium under COBRA under the Bank’s group plans for active employees and their dependents, if applicable, as along as Executive (or his spouse and dependents, if applicable) remains eligible for COBRA, but not beyond twelve months following termination of employment,

(collectively, the “Termination Payments”), provided that Executive shall be entitled to the payment and benefits described above if and only if, within ninety (90) days after such termination of employment, Executive has executed and delivered to the Bank and Corporation the General Release substantially in form and substance as set forth in Exhibit A attached hereto and the General Release has become effective, and only so long as Executive has not breached the provisions of the General Release or breached the provisions of Sections 11 or 12 below, and any statutory or other rights that Executive may have to revoke the General Release has expired prior to the end of the 90-day period.”

2. Except as expressly modified herein, the Agreement shall remain in full force and effect.

[Signature page follows]

IN WITNESS WHEREOF, the parties hereto have duly executed this First Amendment to the Agreement in counterparts on the date first above written.

EXECUTIVE:

/s/ Roger S. Busse

Roger S. Busse

PACIFIC CONTINENTAL BANK:

/s/ Robert A. Ballin

By: Robert A. Ballin

Chairman of the Board

PACIFIC CONTINENTAL CORPORATION:

/s/ Robert A. Ballin

By: Robert A. Ballin

Chairman of the Board

EX-10.2

Exhibit 10.2

FIRST AMENDMENT TO THE

AMENDED & RESTATED EMPLOYMENT AGREEMENT OF JANUARY 2012

This First Amendment to the Employment Agreement among Pacific Continental Bank, Pacific Continental Corporation and Casey Hogan, as amended and restated as of January 31, 2012 (the “Agreement”) is made and entered into this 19th day of July, 2016.

In consideration of the mutual covenants and promises contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby expressly acknowledged, the parties agree to amend the Agreement as follows, effective as of the date hereof:

1. The first sentence of Section 9(b) of the Agreement is hereby amended to read as follows:

“If, during the Term, the Bank or Corporation terminates Executive’s employment without Cause, or Executive terminates his employment for Good Reason (defined below), the Bank will pay Executive:

(1) the base salary he would have been entitled to if his employment had not terminated for a period of twelve months, and

(2) the greater of (a) $55,000 and (b) the amount of Executive’s most recent annual cash incentive compensation payout pursuant to Section 6, in either case payable on the 90th day following termination of employment, and

(3) if Executive timely elects to continue Executive’s medical, dental and vision benefits under COBRA (including, if applicable, continuation of coverage for Executive’s spouse and dependents), then the entire amount of the monthly premium under COBRA under the Bank’s group plans for active employees and their dependents, if applicable, as along as Executive (or his spouse and dependents, if applicable) remains eligible for COBRA, but not beyond twelve months following termination of employment,

(collectively, the “Termination Payments”), provided that Executive shall be entitled to the payment and benefits described above if and only if, within ninety (90) days after such termination of employment, Executive has executed and delivered to the Bank and Corporation the General Release substantially in form and substance as set forth in Exhibit A attached hereto and the General Release has become effective, and only so long as Executive has not breached the provisions of the General Release or breached the provisions of Sections 11 or 12 below, and any statutory or other rights that Executive may have to revoke the General Release has expired prior to the end of the 90-day period.”

2. Except as expressly modified herein, the Agreement shall remain in full force and effect.

[Signature page follows]

IN WITNESS WHEREOF, the parties hereto have duly executed this First Amendment to the Agreement in counterparts on the date first above written.

EXECUTIVE:

/s/ Casey Hogan

Casey Hogan

PACIFIC CONTINENTAL BANK:

/s/ Robert A. Ballin

By: Robert A. Ballin

Chairman of the Board

PACIFIC CONTINENTAL CORPORATION:

/s/ Robert A. Ballin

By: Robert A. Ballin

Chairman of the Board

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Roger Busse, certify that:

1. I have reviewed this Form 10-Q of Pacific Continental Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 8, 2016

/s/ Roger Busse

Roger Busse

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Richard R. Sawyer, certify that:

1. I have reviewed this Form 10-Q of Pacific Continental Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 8, 2016

/s/ Richard R. Sawyer

Richard R. Sawyer

Executive Vice President and Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Pacific Continental Corporation (the “Company”) on Form 10-Q for the period ended September 30, 2016, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, Roger Busse, Chief Executive Officer, and Richard R. Sawyer, Executive Vice President and Chief Financial Officer, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 8, 2016

/s/ Roger Busse	/s/ Richard R. Sawyer
Roger Busse	Richard R. Sawyer
Chief Executive Officer	Executive Vice President and Chief Financial Officer

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Nov. 01, 2016
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q3
Trading Symbol	PCBK
Entity Registrant Name	PACIFIC CONTINENTAL CORP
Entity Central Index Key	0001084717
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		22,603,651

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
ASSETS
Cash and due from banks	$ 35,819	$ 23,819
Interest-bearing deposits with banks	71,353	12,856
Total cash and cash equivalents	107,172	36,675
Securities available-for-sale	482,408	366,598
Loans, net of deferred fees	1,806,736	1,404,482
Allowance for loan losses	(20,531)	(17,301)
Net loans	1,786,205	1,387,181
Interest receivable	5,957	5,721
Federal Home Loan Bank stock	4,643	5,208
Property and equipment, net of accumulated depreciation	19,656	18,014
Goodwill and intangible assets	70,684	43,159
Deferred tax asset	7,380	5,670
Other real estate owned	13,066	11,747
Bank-owned life insurance	34,927	22,884
Other assets	6,962	6,621
Total assets	2,539,060	1,909,478
Deposits
Noninterest-bearing demand	901,290	568,688
Savings and interest-bearing checking	1,082,202	889,802
Core time deposits	65,860	75,452
Total core deposits	2,049,352	1,533,942
Other deposits	113,281	63,151
Total deposits	2,162,633	1,597,093
Repurchase agreements	1,107	71
Federal Home Loan Bank borrowings	45,500	77,500
Subordinated debentures	34,072
Junior subordinated debentures	11,272	8,248
Accrued interest and other payables	8,005	8,075
Total liabilities	2,262,589	1,690,987
Shareholders' equity
Common stock, shares authorized: 50,000,000; shares issued and outstanding: 22,603,421 at September 30, 2016, and 19,604,182 at December 31, 2015	205,120	156,099
Retained earnings	66,112	59,693
Accumulated other comprehensive income	5,239	2,699
Total shareholders' equity	276,471	218,491
Total liabilities and shareholders' equity	$ 2,539,060	$ 1,909,478

XML

Consolidated Balance Sheets (Parenthetical) - shares	Sep. 30, 2016	Dec. 31, 2015
Statement of Financial Position [Abstract]
Common stock, shares authorized	50,000,000	50,000,000
Common stock, shares issued	22,603,421	19,604,182
Common stock, shares outstanding	22,603,421	19,604,182

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Consolidated Statements of Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Interest and dividend income
Loans	$ 20,145	$ 17,240	$ 55,810	$ 48,020
Taxable securities	1,995	1,713	5,551	4,825
Tax-exempt securities	482	490	1,435	1,491
Interest-bearing deposits with banks	40	7	104	23
Total interest and dividend income	22,662	19,450	62,900	54,359
Interest expense
Deposits	984	854	2,678	2,509
Federal Home Loan Bank borrowings	286	227	758	694
Subordinated debentures	553		553
Junior subordinated debentures	66	57	179	169
Federal funds purchased	2	4	6	10
Total interest expense	1,891	1,142	4,174	3,382
Net interest income	20,771	18,308	58,726	50,977
Provision for loan losses	1,380	625	3,575	1,175
Net interest income after provision for loan losses	19,391	17,683	55,151	49,802
Noninterest income
Service charges on deposit accounts	717	703	2,099	1,939
Bankcard income	314	276	899	687
Bank-owned life insurance income	172	156	463	435
Net gain on sale of investment securities		143	309	336
Impairment losses on investment securities (OTTI)	(2)		(19)	(13)
Other noninterest income	718	436	1,726	1,234
Total noninterest income	1,919	1,714	5,477	4,618
Noninterest expense
Salaries and employee benefits	7,520	6,822	23,084	20,223
Property and equipment	1,202	1,148	3,404	3,221
Data processing	924	838	2,682	2,343
Legal and professional services	569	496	2,321	1,386
Business development	460	369	1,492	1,134
FDIC insurance assessment	273	283	848	769
Other real estate (income) expense, net	71	122	(32)	303
Merger related expense	1,767		3,745	1,836
Other noninterest expense	1,039	1,104	3,222	2,971
Total noninterest expense	13,825	11,182	40,766	34,186
Income before provision for income taxes	7,485	8,215	19,862	20,234
Provision for income taxes	2,634	2,890	6,946	7,012
Net income	$ 4,851	$ 5,325	$ 12,916	$ 13,222
Earnings per share
Basic	$ 0.24	$ 0.27	$ 0.65	$ 0.69
Diluted	$ 0.23	$ 0.27	$ 0.64	$ 0.68
Weighted average shares outstanding
Basic	20,511,392	19,591,666	19,940,709	19,133,682
Common stock equivalents attributable to stock-based awards	165,572	225,104	154,813	224,308
Diluted	20,676,964	19,816,770	20,095,522	19,357,990

XML

Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Statement of Comprehensive Income [Abstract]
Net income	$ 4,851	$ 5,325	$ 12,916	$ 13,222
Available-for-sale securities:
Unrealized (loss) gain arising during the period	(1,929)	2,133	5,397	1,943
Reclassification adjustment for gains realized in net income		(143)	(309)	(336)
Other than temporary impairment	2		19	13
Income tax effects	751	(776)	(1,991)	(632)
Derivative agreements-cash flow hedge
Unrealized gain (loss) gain arising during the period	160	(154)	(944)	(212)
Income tax effects	(62)	60	368	83
Total other comprehensive (loss) income , net of tax	(1,078)	1,120	2,540	859
Total comprehensive income	$ 3,773	$ 6,445	$ 15,456	$ 14,081

XML

Consolidated Statements of Changes in Shareholders' Equity - USD ($) $ in Thousands	Total	Common Stock [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income [Member]
Balance at Dec. 31, 2014	$ 184,161	$ 131,375	$ 48,984	$ 3,802
Balance, shares at Dec. 31, 2014		17,717,676
Net income	18,751		18,751
Other comprehensive income (loss), net of tax	(1,103)			(1,103)
Comprehensive income	17,648
Stock issuance and related tax benefit	95	$ 95
Stock issuance and related tax benefit, shares		108,404
Stock issued through acquisition	23,578	$ 23,578
Stock issued through acquisition, shares		1,778,102
Share-based compensation expense	1,700	$ 1,700
Vested employee RSUs and SARs surrendered to cover tax consequences	(649)	(649)
Cash dividends	(8,042)		(8,042)
Balance at Dec. 31, 2015	218,491	$ 156,099	59,693	2,699
Balance, shares at Dec. 31, 2015		19,604,182
Net income	12,916		12,916
Other comprehensive income (loss), net of tax	2,540			2,540
Comprehensive income	15,456
Stock issuance and related tax benefit	661	$ 661
Stock issuance and related tax benefit, shares		145,877
Stock issued through acquisition	47,794	$ 47,794
Stock issued through acquisition, shares		2,853,362
Share-based compensation expense	1,427	$ 1,427
Vested employee RSUs and SARs surrendered to cover tax consequences	(861)	(861)
Cash dividends	(6,497)		(6,497)
Balance at Sep. 30, 2016	$ 276,471	$ 205,120	$ 66,112	$ 5,239
Balance, shares at Sep. 30, 2016		22,603,421

XML

Consolidated Statements of Changes in Shareholders' Equity (Parenthetical) - $ / shares	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Cash dividends per share	$ 0.33	$ 0.42
Retained Earnings [Member]
Cash dividends per share	$ 0.33	$ 0.42

XML

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Cash flows from operating activities:
Net income	$ 12,916	$ 13,222
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization, net of accretion	4,919	5,476
Deferred income taxes	3
Bank-owned life insurance income	(469)	(435)
Share-based compensation	1,427	1,178
Provision for loan losses	3,575	1,175
Gain on sale of investment securities	(309)	(336)
Valuation adjustment on foreclosed assets	162	125
Gain on sale of foreclosed assets	(302)	12
Other than temporary impairment on investment securities	19	13
Change in:
Interest receivable	698	(368)
Deferred loan fees	381	249
Accrued interest payable and other liabilities	(1,991)	(1,321)
Income tax receivable		69
Other assets	(1,073)	1,376
Net cash provided by operating activities	19,956	20,435
Cash flows from investing activities:
Proceeds from maturities and sales of available-for-sale investment securities	135,319	75,718
Purchase of available-for-sale investment securities	(160,943)	(87,025)
Net loan principal originations	(133,405)	(107,951)
Proceeds from sale of foreclosed assets	1,371	2,350
Net purchase of property and equipment	(2,196)	(739)
Redemption of Federal Home Loan Bank stock	1,097	3,878
Cash consideration received (paid), net of cash acquired in merger	43,855	(3,249)
Net cash used by investing activities	(114,902)	(117,018)
Cash flows from financing activities:
Change in deposits	169,032	87,894
Change in repurchase agreements	1,036	209
Change in federal funds purchased and Federal Home Loan Bank short-term borrowings	(44,500)	25,500
FHLB term advances originated	12,500
Proceeds from stock options exercised	620	13
Excess tax benefit from stock options exercised	41
Redemption of Capital Pacific Bell State Bank Debt		(3,344)
Proceeds from subordinated debenture issuance	34,072
Dividends paid	(6,497)	(5,886)
Vested employee RSUs and SARs surrendered to cover tax consequences	(861)	(599)
Net cash provided by financing activities	165,443	103,787
Net change in cash and cash equivalents	70,497	7,204
Cash and cash equivalents, beginning of period	36,675	25,787
Cash and cash equivalents, end of period	107,172	32,991
Noncash investing and financing activities:
Transfer of loans to other real estate owned	958	967
Change in fair value of securities, net of deferred income taxes	3,116	988
Change in fair value of cash flow hedge, net of deferred income taxes	(576)	(129)
Acquisitions:
Assets acquired	450,040	257,924
Liabilities assumed	402,246	232,698
Cash paid during the period for:
Income taxes	7,667	4,878
Interest	$ 3,653	$ 3,429

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Basis of Presentation

9 Months Ended

Sep. 30, 2016

Accounting Policies Abstract

Basis of Presentation

NOTE 1 - BASIS OF PRESENTATION

The accompanying interim consolidated financial statements include the accounts of Pacific Continental Corporation (the “Company”), a bank holding company, and its wholly owned subsidiary, Pacific Continental Bank (the “Bank”), and the Bank’s wholly owned subsidiaries, PCB Services Corporation and PCB Loan Services Corporation (both of which are presently inactive). All significant intercompany accounts and transactions have been eliminated in consolidation.

The accompanying consolidated financial statements have been prepared by the Company without audit and in conformity with generally accepted accounting principles in the United States of America for interim financial information. The consolidated financial statements include all adjustments and normal accruals, which the Company considers necessary for a fair presentation of the results of operations for such interim periods. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, as of the date of the balance sheets and income and expenses for the periods. Areas including allowance for loan losses, goodwill and intangibles and other real estate owned are particularly susceptible to change, and actual results could differ from those estimates.

The balance sheet data as of December 31, 2015, was derived from audited consolidated financial statements, but does not include all disclosures contained in the Company’s 2015 Form 10-K. The interim consolidated financial statements should be read in conjunction with the December 31, 2015, consolidated financial statements, including the notes thereto, included in the Company’s 2015 Form 10-K.

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Business Combinations

9 Months Ended

Sep. 30, 2016

Business Combinations [Abstract]

Business Combinations

NOTE 2 – BUSINESS COMBINATIONS

On September 6, 2016, the Company completed its acquisition of all of the common stock of Foundation Bancorp, Inc. (Foundation Bancorp) and its wholly-owned subsidiary, Foundation Bank, of Bellevue, Washington (the “Merger”). The acquisition of Foundation Bank reflects the Company’s overall banking expansion strategy, and expanded the combined Bank’s presence in the greater Puget Sound market.

The transaction has been accounted for under the acquisition method of accounting. The assets and liabilities were recorded at their estimated fair values as of the acquisition dates, however some valuations related to some other real estate owned properties are pending and could cause goodwill to change. The application of the acquisition method resulted in the recognition of preliminary goodwill of $21,407 which is all attributable to the value of Foundation Bank’s lending and deposit gathering banking activities. None of the goodwill is deductible for income tax purposes as the Merger was accounted for as a tax-free exchange.

A summary of the net assets acquired and the estimated fair value adjustments of Foundation Bancorp are presented below:

	September 6, 2016
Cost basis net assets	$	90,993
Less:
Cash payment to shareholders		(19,337	)
Stock issued		(47,794	)
Fair value adjustments:
Loans, net		(11,257	)
Core deposit intangible		5,762
Junior subordinated debentures		3,173
Deferred tax asset adjustment		(2,948	)
Securities		1,541
Other		1,274
Goodwill	$	21,407

Pursuant to the terms of the merger agreement, former Foundation Bancorp shareholders received either $12.50 per share in cash or 0.7911 shares of Pacific Continental common stock for each share of Foundation Bancorp common stock, or a combination of 30.0% in the form of cash and 70.0% in the form of Pacific Continental common stock. Pursuant to the merger agreement, the maximum aggregate cash component of the merger consideration was $19,337 and the aggregate stock component of the merger consideration was 2,853,361 shares of Pacific Continental common stock, the value of which was calculated based on a closing stock price of $16.75 per share. The cash election was oversubscribed; therefore shareholders electing all cash received $8.72 in cash and 0.23915 shares of Pacific Continental common stock for each share of Foundation Bancorp common stock. Former Foundation Bancorp shareholders making a valid mixed election received $3.75 in cash and 0.55377 shares of Pacific Continental common stock for each share of Foundation Bancorp common stock.

The operations of Foundation Bank are included in the operating results beginning September 6, 2016. Foundation Bank’s results of operations prior to the acquisition are not included in the operating results. Revenue information for Foundation Bank related revenue and expense cannot be practically separated from Pacific Continental, therefore proforma revenue disclosures have not been included. Merger-related expense of $1,767 were recorded during the quarter ended September 30, 2016, and were $3,745 for the nine months ended September 30, 2016 and are included within the merger-related expense line item on the Consolidated Statements of Income.

The statement of assets acquired and liabilities assumed at their fair values are presented below as of the transaction closing date:

FOUNDATION BANCORP, INC.

Opening balance sheet

(in thousands)

unaudited

	September 6, 2016
ASSETS
Cash and due from banks, net of consideration paid	$	43,855
Securities available-for-sale		88,331
Gross loans		281,790
Fair value adjustments
Credit quality-related		(8,884	)
Interest rate-related		(2,373	)
Net Loans		270,533
Interest receivable		934
Federal Home Loan Bank stock		532
Property and equipment		408
Goodwill		21,407
Core deposit intangible		5,762
Deferred tax asset		3,894
Other real estate owned		1,592
Bank-owned life insurance		11,574
Other asset		1,218
Total Assets	$	450,040
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits	$	396,509
Other liabilities		2,724
Junior subordinated debentures		3,013
Total liabilities		402,246
Common stock issued to Foundation Bancorp shareholders		47,794
Total liabilities and shareholders’ equity	$	450,040

Acquired loans at the acquisition date and as of September 30, 2016, are presented below:

	September 6, 2016			September 30, 2016
Contractually required principal payments	$	281,790		$	277,683
Purchase adjustment for credit and interest rate		(11,257	)		(10,748	)
Balance of acquired loans	$	270,533		$	266,935

Purchased credit impaired loans accounted for under ASC 310-30 acquired through the acquisition have a contractually required payments receivable on the acquisition date of $21,575.

The acquisition of Foundation Bancorp and it wholly-owned subsidiary Foundation Bank is not considered significant to the Company’s consolidated financial statements and, therefore, pro forma financial information is not presented.

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Securities Available-for-Sale

9 Months Ended

Sep. 30, 2016

Investments, Debt and Equity Securities [Abstract]

Securities Available-for-Sale

NOTE 3 – SECURITIES AVAILABLE-FOR-SALE

The amortized cost and estimated fair values of securities available-for-sale at September 30, 2016, were as follows:

			Gross		Gross			Estimated		Percentage
	Amortized		Unrealized		Unrealized			Fair		of
	Cost		Gains		Losses			Value		Portfolio
Unrealized Loss Positions
Private-label mortgage-backed securities		249		—		(24	)		225		0	%
Mortgage-backed securities		83,009		—		(328	)		82,681		17	%
SBA pools		19,261		—		(95	)		19,166		4	%
Obligations of states and political subdivisions		13,236		—		(60	)		13,176		3	%
Corporate securities		899		—		(13	)		886		0	%
	$	116,654	$	—	$	(520	)	$	116,134		24	%
Unrealized Gain Positions
Obligations of U.S. government agencies	$	25,290	$	1,262	$	—		$	26,552		6	%
Obligations of states and political subdivisions		97,705		4,629		—			102,334		21	%
Private-label mortgage-backed securities		1,728		157		—			1,885		0	%
Mortgage-backed securities		206,376		3,678		—			210,054		44	%
SBA pools		25,205		245		—			25,449		5	%
	$	356,304	$	9,971	$	—		$	366,274		76	%
	$	472,958	$	9,971	$	(520	)	$	482,408		100	%

At September 30, 2016, the Bank held 484 investment securities, of which 61 were in unrealized loss positions. Unrealized losses existed on certain securities classified as obligations of US government agencies, private-label mortgage-backed securities, mortgage-backed securities, SBA pools obligations of states and political subdivisions, and corporate securities. The unrealized losses on all securities are deemed to be temporary, as these securities retain strong credit ratings, continue to perform adequately, and are backed by various government sponsored enterprises. These decreases in fair value are associated with the changes in market interest rates or the widening of market spreads subsequent to the initial purchase of the securities, and not due to concerns regarding the underlying credit of the issuers or the underlying collateral. The decline in value of these securities has resulted from changes in interest rates relative to where these investments fall within the yield curve and their individual characteristics. Because the Company does not currently intend to sell these securities nor does the Company consider it more likely than not that it will be required to sell these securities before the recovery of amortized cost basis, which may be upon maturity, the Company does not consider these investments to be other-than-temporarily impaired at September 30, 2016.

The following table presents a summary of securities in a continuous unrealized loss position at September 30, 2016:

	Securities in Continuous Unrealized Loss Position for Less Than 12 Months		Gross Unrealized Loss on Securities in Loss Position for Less Than 12 Months			Securities in Continuous Unrealized Loss Position for 12 Months or Longer		Gross Unrealized Loss on Securities in Loss Position for 12 Months or Longer
Private-label mortgage-backed securities	$	—	$	—		$	225	$	(24	)
Mortgage-backed securities		79,207		(282	)		3,474		(46	)
SBA pools		15,240		(72	)		3,926		(23	)
Obligations of states and political subdivisions		13,176		(60	)		—		—
Corporate securities		—		—			886		(13	)
	$	107,623	$	(414	)	$	8,511	$	(106	)

On a monthly basis, management reviews all private-label mortgage-backed securities for the presence of other than temporary impairment (“OTTI”) and recorded $2 and $0 during the three months ended September 30, 2016 and 2015, respectively. Management’s evaluation included the use of independently-generated third-party credit surveillance reports that analyze the loans underlying each security. These reports include estimates of default rates and severities, life collateral loss rates and static voluntary prepayment assumptions to generate estimated cash flows at the individual security level. Additionally, management considered factors such as downgraded credit ratings, severity and duration of the impairments, the stability of the issuers and any discounts paid when the securities were purchased. Management has considered all available information related to the collectability of the impaired investment securities and believes that the estimated credit loss is appropriate.

Following is a tabular roll-forward of the aggregate amount of credit-related OTTI at the beginning and end of the periods presented along with the amounts recognized in earnings during the three and nine months ended September 30, 2016, and 2015:

	Three months ended				Nine months ended
	September 30,				September 30,
	2016		2015		2016		2015
Balance, beginning of period:	$	266	$	241	$	249	$	227
Additions:
Initial OTTI credit loss		2		—		19		14
Balance, end of period:	$	268	$	241	$	268	$	241

At September 30, 2016, ten of the Company’s private-label mortgage-backed securities, with an amortized cost of $1,440, were classified as substandard as their underlying credit was considered impaired. At December 31, 2015, six securities with an amortized cost of $1,506 were classified as substandard.

At September 30, 2016, and December 31, 2015, the projected average life of the securities portfolio was 4.72 years and 4.21 years, respectively.

The amortized cost and estimated fair values of securities available-for-sale at December 31, 2015, were as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value		Percentage of Portfolio
Unrealized Loss Positions
Obligations of U.S. government agencies	$	14,491	$	—	$	(119	)	$	14,372		3.92	%
Obligations of states and political subdivisions		13,438		—		(149	)		13,289		3.62	%
Private-label mortgage-backed securities		663		—		(33	)		630		0.17	%
Mortgage-backed securities		95,040		—		(856	)		94,184		25.69	%
SBA pools		17,225		—		(101	)		17,124		4.67	%
Corporate securities		899		—		(5	)		893		0.25	%
	$	141,756	$	—	$	(1,263	)	$	140,492		38.32	%
Unrealized Gain Positions
Obligations of U.S. government agencies	$	29,669	$	582	$	—		$	30,251		8.25	%
Obligations of states and political subdivisions		80,119		3,743		—			83,862		22.88	%
Private-label mortgage-backed securities		2,028		131		—			2,159		0.59	%
Mortgage-backed securities		90,126		1,060		—			91,186		24.87	%
SBA pools		18,560		88		—			18,648		5.09	%
	$	220,502	$	5,604	$	—		$	226,106		61.68	%
	$	362,258	$	5,604	$	(1,263	)	$	366,598		100.00	%

At December 31, 2015, the Bank held 432 investment securities, of which 92 were in unrealized loss positions. The following table presents a summary of securities in a continuous unrealized loss position at December 31, 2015:

	Securities in Continuous Unrealized Loss Position for Less Than 12 Months		Gross Unrealized Loss on Securities in Loss Position for Less Than 12 Months			Securities in Continuous Unrealized Loss Position for 12 Months or Longer		Gross Unrealized Loss on Securities in Loss Position for 12 Months or Longer
Obligations of U.S. government agencies	$	14,372	$	(119	)	$	—	$	—
Obligations of states and political subdivisions		12,761		(145	)		528		(4	)
Private-label mortgage-backed securities		240		(4	)		390		(29	)
Mortgage-backed securities		87,896		(711	)		6,288		(145	)
SBA pools		13,539		(78	)		3,585		(23	)
Corporate securities		893		(5	)		—		—
	$	129,701	$	(1,062	)	$	10,791	$	(201	)

The amortized cost and estimated fair value of securities at September 30, 2016, by maturity, are shown below. Obligations of U.S. government agencies, states and political subdivisions and corporate securities are shown by contractual maturity. Mortgage-backed securities and SBA variable pools are shown by projected average life.

	September 30, 2016
	Amortized Cost		Estimated Fair Value
Due in one year or less	$	8,466	$	8,523
Due after one year through 5 years		240,116		243,481
Due after 5 years through 10 years		180,377		185,187
Due after 10 years		43,999		45,217
	$	472,958	$	482,408

During the quarter ended September 30, 2016, 30 investment securities were sold resulting in proceeds of $54,426. The sales generated no gain or loss as they related to sales of securities acquired from Foundation Bank, which were sold at their acquisition date fair value. During the nine months ended September 30, 2016, 60 investment securities were sold resulting in proceeds of $98,309. The sales generated a gross gain of $552 and a gross loss of $243, totaling a net gain of $309. The specific identification method was used to determine the cost of the securities sold.

During the quarter ended September 30, 2015, 19 investment securities were sold resulting in proceeds of $21,069. The sales generated a gross gain of $143 and a gross loss of $0, totaling a net gain of $143. During the nine months ended September 30, 2015, 41 investment securities were sold resulting in proceeds of $35,216. The sales generated a gross gain of $585 and a gross loss of $249, totaling a net gain of $336. The specific identification method was used to determine the cost of the securities sold.

The following table presents investment securities which were pledged to secure public deposits and repurchase agreements as permitted or required by law:

	September 30, 2016				December 31, 2015
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Pledged to secure public deposits	$	24,435	$	26,677	$	27,938	$	29,052
Pledged to secure repurchase agreements		1,637		1,714		3,985		4,111
	$	26,072	$	28,391	$	31,923	$	33,163

At September 30, 2016, and December 31, 2015, there was an outstanding balance for repurchase agreements of $1,107, and $71, respectively.

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Loans, Allowance for Loan Losses, and Credit Quality Indicators

9 Months Ended

Sep. 30, 2016

Receivables [Abstract]

Loans, Allowance for Loan Losses, and Credit Quality Indicators

NOTE 4 - LOANS, ALLOWANCE FOR LOAN LOSSES, AND CREDIT QUALITY INDICATORS

Loans are stated at the amount of unpaid principal net of loan premiums or discounts for purchased loans, net of deferred loan origination fees, discounts associated with retained portions of loans sold, and an allowance for loan losses. Interest on loans is calculated using the simple-interest method on daily balances of the principal amount outstanding. Loan origination fees, net of origination costs and discounts, are amortized over the lives of the loans as adjustments to yield.

Major classifications of period-end loans are as follows:

	September 30,			% of Gross			December 31,			% of Gross
	2016			Loans			2015			Loans
Real estate loans
Multi-family residential	$	79,126			4.37	%	$	66,445			4.73	%
Residential 1-4 family		61,498			3.40	%		53,776			3.82	%
Owner-occupied commercial		425,879			23.55	%		364,742			25.94	%
Nonowner-occupied commercial		431,119			23.84	%		300,774			21.39	%
Total permanent real estate loans		997,622			55.16	%		785,737			55.88	%
Construction loans
Multi-family residential		24,567			1.36	%		7,027			0.50	%
Residential 1-4 family		42,130			2.33	%		30,856			2.19	%
Commercial real estate		78,369			4.33	%		42,680			3.04	%
Commercial bare land and acquisition & development		19,050			1.05	%		20,537			1.46	%
Residential bare land and acquisition & development		8,852			0.49	%		7,268			0.52	%
Total construction real estate loans		172,968			9.56	%		108,368			7.71	%
Total real estate loans		1,170,590			64.72	%		894,105			63.59	%
Commercial loans		630,091			34.84	%		501,976			35.70	%
Consumer loans		3,201			0.18	%		3,351			0.24	%
Other loans		4,764			0.26	%		6,580			0.47	%
Gross loans		1,808,646			100.00	%		1,406,012			100.00	%
Deferred loan origination fees		(1,910	)					(1,530	)
		1,806,736						1,404,482
Allowance for loan losses		(20,531	)					(17,301	)
Total loans, net of allowance for loan losses and net deferred fees	$	1,786,205					$	1,387,181

At September 30, 2016, outstanding loans to dental professionals totaled $370,135 and represented 20.46% of total outstanding loan principal balances compared to dental professional loans of $340,162 or 24.19% of total outstanding loan principal balance at December 31, 2015. Additional information about the Company’s dental portfolio can be found in Note 5. There are no other industry concentrations in excess of 10% of the total loan portfolio. However, as of September 30, 2016, 64.72% of the Company’s loan portfolio was collateralized by real estate and is, therefore, susceptible to changes in local market conditions. While appropriate action is taken to manage identified concentration risks, management believes that the loan portfolio is well diversified by geographic location and among industry groups.

Purchased Credit Impaired Loans

The following table represents the contractually required principal balance of purchased credit impaired loans and the carrying balance at September 30, 2016 and December 31, 2015:

	September 30,			December 31,
	2016			2015
Contractually required principal payments for purchase credit impaired loans	$	27,668		$	11,528
Accretable yield		(1,696	)		(1,070	)
Nonaccretable yield		(919	)		(378	)
Balance of purchased credit impaired loans	$	25,053		$	10,080

The following tables summarize the changes in the accretable yield for purchased credit impaired loans for the periods ended September 30, 2016 and 2015:

	Three months ended September 30,
	2016												2015
	Century			Capital Pacific			Foundation			Total			Century			Capital Pacific			Total
Balance, beginning of period	$	—		$	860		$	—		$	860		$	96		$	1,364		$	1,460
Additions		—			—			908			908			—			—			—
Accretion to interest income		—			(49	)		(22	)		(71	)		(28	)		(114	)		(142	)
Balance, end of period	$	—		$	811		$	886		$	1,697		$	68		$	1,250		$	1,318
	Nine months ended September 30,
	2016												2015
	Century			Capital Pacific			Foundation			Total			Century			Capital Pacific			Total
Balance, beginning of period	$	39		$	1,031		$	—		$	1,070		$	151		$	—		$	151
Additions		—			—			908			908			—			1,569			1,569
Accretion to interest income		(39	)		(220	)		(22	)		(281	)		(83	)		(319	)		(402	)
Balance, end of period	$	—		$	811		$	886		$	1,697		$	68		$	1,250		$	1,318

Allowance for Loan Losses

The allowance for loan losses is established as an amount that management considers adequate to absorb possible losses on existing loans within the portfolio. The allowance consists of general, specific and unallocated components. The general component is based upon all loans collectively evaluated for impairment. The specific component is based upon all loans individually evaluated for impairment. The unallocated component represents credit losses inherent in the loan portfolio that may not have been contemplated in the general risk factors or the specific allowance analysis. Loans are charged against the allowance when management believes the collection of principal and interest is unlikely.

The Company performs regular credit reviews of the loan portfolio to determine the credit quality and adherence to underwriting standards. When loans are originated, they are assigned a risk rating that is reassessed periodically during the term of the loan through the credit review process. The Company’s internal risk rating methodology assigns risk ratings ranging from one to ten, where a higher rating represents higher risk. The ten-point risk rating categories are a primary factor in determining an appropriate amount for the allowance for loan losses.

Estimated credit losses reflect consideration of all significant factors that affect the collectability of the loan portfolio. The historical loss rate for each group of loans with similar risk characteristics is determined based on the Company’s own loss experience in that group. Historical loss experience and recent trends in losses provide a reasonable starting point for analysis, however, they do not by themselves form a sufficient basis to determine the appropriate level for the allowance for loan losses. Qualitative or environmental factors that are likely to cause estimated credit losses to differ from historical losses are also considered, including but not limited to:

• Changes in international, regional and local economic and business conditions and developments that affect the collectability of the portfolio, including the condition of various market segments,

• Changes in the nature and volume of the portfolio and in the terms of loans,

• Changes in the volume and severity of past due loans, the volume of nonaccrual loans and the volume and severity of adversely classified or graded loans,

• Changes in the quality of the institution’s loan review system,

• Changes in the value of underlying collateral for collateral-dependent loans,

• The existence and effect of any concentrations of credit, and changes in the level of such concentrations,

• The effect of other external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in the institution’s existing portfolio,

• Changes in lending policies and procedures, including changes in underwriting standards and collection, charge-off, and recovery practices not considered elsewhere in estimating credit losses, and

• Changes in the current and future U.S. political environment, including debt ceiling negotiations, government shutdown and healthcare reform that may affect national, regional and local economic conditions, taxation, or disruption of national or global financial markets.

The adequacy of the allowance for loan losses and the reserve for unfunded commitments is determined using a consistent, systematic methodology and is monitored regularly based on management’s evaluation of numerous factors. For each portfolio segment, these factors include:

• The quality of the current loan portfolio,

• The trend in the migration of the loan portfolio’s risk ratings,

• The velocity of migration of losses and potential losses,

• Current economic conditions,

• Loan concentrations,

• Loan growth rates,

• Past-due and nonperforming trends,

• Evaluation of specific loss estimates for all significant problem loans,

• Recovery experience, and

• Peer comparison loss rates.

A summary of the activity in the allowance for loan losses by major loan classification follows:

	For the three months ended September 30, 2016
	Commercial and Other			Real Estate		Construction		Consumer			Unallocated			Total
Beginning balance	$	7,391		$	9,137	$	1,341	$	46		$	1,212		$	19,127
Charge-offs		(43	)		—		—		(1	)		—			(44	)
Recoveries		57			9		1		1			—			68
Provision (reclassification)		896			339		312		(4	)		(163	)		1,380
Ending balance	$	8,301		$	9,485	$	1,654	$	42		$	1,049		$	20,531
	For the nine months ended September 30, 2016
	Commercial and Other			Real Estate		Construction		Consumer			Unallocated			Total
Beginning balance	$	6,349		$	8,297	$	1,258	$	46		$	1,351		$	17,301
Charge-offs		(708	)		—		—		(4	)		—			(712	)
Recoveries		159			44		162		2			—			367
Provision (reclassification)		2,501			1,144		234		(2	)		(302	)		3,575
Ending balance	$	8,301		$	9,485	$	1,654	$	42		$	1,049		$	20,531

At September 30, 2016, the allowance for loan losses on dental loans was $4,798, compared to $4,022 at December 31, 2015. See Note 5 for additional information on the dental loan portfolio.

The following table presents the allowance and recorded investment in loans by major loan classification at September 30, 2016 and December 31, 2015:

	Balances as of September 30, 2016
	Commercial and Other		Real Estate		Construction		Consumer		Unallocated		Total
Ending allowance: collectively evaluated for impairment	$	7,567	$	9,481	$	1,654	$	42	$	1,049	$	19,793
Ending allowance: individually evaluated for impairment		734		4		—		—		—		738
Ending allowance: loans acquired with deteriorated credit quality		—		—		—		—		—		—
Total ending allowance	$	8,301	$	9,485	$	1,654	$	42	$	1,049	$	20,531
Ending loan balance: collectively evaluated for impairment	$	620,997	$	978,030	$	170,816	$	3,201	$	—	$	1,773,044
Ending loan balance: individually evaluated for impairment		4,463		3,934		2,152				—		10,549
Ending loan balance: loans acquired with deteriorated credit quality		9,395		15,658		—		—		—		25,053
Total ending loan balance	$	634,855	$	997,622	$	172,968	$	3,201	$	—	$	1,808,646
	Balances as of December 31, 2015
	Commercial and Other		Real Estate		Construction		Consumer		Unallocated		Total
Ending allowance: collectively evaluated for impairment	$	6,303	$	8,267	$	1,159	$	46	$	1,351	$	17,126
Ending allowance: individually evaluated for impairment		46		30		99		—		—		175
Ending allowance: loans acquired with deteriorated credit quality		—		—		—		—		—		—
Total ending allowance	$	6,349	$	8,297	$	1,258	$	46	$	1,351	$	17,301
Ending loan balance: collectively evaluated for impairment	$	504,261	$	771,543	$	107,977	$	3,351	$	—	$	1,387,132
Ending loan balance: individually evaluated for impairment		2,627		5,782		391		—		—		8,800
Ending loan balance: loans acquired with deteriorated credit quality		1,668		8,412		—		—		—		10,080
Total ending loan balance	$	508,556	$	785,737	$	108,368	$	3,351	$	—	$	1,406,012

The September 30, 2016, ending allowance includes $738 in specific allowance for $10,549 of impaired loans ($9,551 net of government guarantees). At December 31, 2015, the Company had $8,800 of impaired loans ($7,527 net of government guarantees) with a specific allowance of $175 assigned.

Management believes that the allowance for loan losses was adequate as of September 30, 2016. However, future loan losses may exceed the levels provided for in the allowance for loan losses and could possibly result in additional charges to the provision for loan losses.

Credit Quality Indicators

The Company uses the following loan grades, which are also often used by regulators when assessing the credit quality of a loan portfolio.

Pass – Credit exposure in this category range between the highest credit quality to average credit quality. Primary repayment sources generate satisfactory debt service coverage under normal conditions. Cash flow from recurring sources is expected to continue to produce adequate debt service capacity. There are many levels of credit quality contained in the Pass definition, but none of the loans contained in this category rise to the level of Special Mention. This category includes loans with an internal risk rating of 1-6.

Special Mention – A Special Mention asset has potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the institution’s credit position at some future date. Special Mention assets are not adversely classified and do not expose an institution to sufficient risk to warrant adverse classification. The Bank strictly and carefully employs the FDIC definition in assessing assets that may apply to this category. It is apparent that, in many cases, asset weaknesses relevant to this definition either (1) better fit a definition of a “well-defined weakness,” or (2) in management’s experience, ultimately migrate to worse risk grade categories, such as Substandard and Doubtful. Consequently, management elects to downgrade most potential Special Mention credits to Substandard or Doubtful, and therefore adopts a conservative risk grade process in the use of the Special Mention risk grade. This category includes loans with an internal risk rating of 7.

Substandard – A Substandard asset is inadequately protected by the current sound worth and paying capacity of the borrower or of the collateral pledged, if any. Assets so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. Loans in this category are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. Loss potential, while existing in the aggregate amount of substandard assets, does not have to exist in individual assets classified Substandard. This category includes loans with an internal risk rating of 8.

Doubtful – An asset classified as Doubtful has all the weaknesses inherent in one classified Substandard, with the added characteristic that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions, and values, highly questionable and improbable. This category includes loans with an internal risk rating of 9.

Management strives to consistently apply these definitions when allocating its loans by loan grade. The loan portfolio is continuously monitored for changes in credit quality and management takes appropriate action to update the loan risk ratings accordingly. Management has not changed the Company’s policy towards its use of credit quality indicators during the periods reported.

The following tables present the Company’s loan portfolio information by loan type and credit grade at September 30, 2016 and December 31, 2015:

Credit Quality Indicators

As of September 30, 2016

	Loan Grade
	Pass			Special Mention			Substandard			Doubtful			Totals
Real estate loans
Multi-family residential	$	79,126		$	—		$	—		$	—		$	79,126
Residential 1-4 family		57,629			—			3,869			—			61,498
Owner-occupied commercial		413,835			—			12,044			—			425,879
Nonowner-occupied commercial		424,397			—			6,722			—			431,119
Total real estate loans		974,987			—			22,635			—			997,622
Construction
Multi-family residential		24,567			—			—			—			24,567
Residential 1-4 family		42,130			—			—			—			42,130
Commercial real estate		78,369			—			—			—			78,369
Commercial bare land and acquisition & development		19,050			—			—			—			19,050
Residential bare land and acquisition & development		6,630			—			2,222			—			8,852
Total construction loans		170,746			—			2,222			—			172,968
Commercial and other		613,144						20,050			1,661			634,855
Consumer		3,201			—			—			—			3,201
Totals	$	1,762,078		$	—		$	44,907		$	1,661		$	1,808,646
Percentage of portfolio		97.43	%		0.00	%		2.48	%		0.09	%		100.00	%
Credit Quality Indicators
As of December 31, 2015
	Loan Grade
	Pass			Special Mention			Substandard			Doubtful			Totals
Real estate loans
Multi-family residential	$	66,208		$	—		$	237		$	—		$	66,445
Residential 1-4 family		49,077			—			4,699			—			53,776
Owner-occupied commercial		353,249			—			11,493			—			364,742
Nonowner-occupied commercial		296,528			—			4,246			—			300,774
Total real estate loans		765,062			—			20,675			—			785,737
Construction
Multi-family residential		7,027			—			—			—			7,027
Residential 1-4 family		30,803			—			53			—			30,856
Commercial real estate		42,580			—			100			—			42,680
Commercial bare land and acquisition & development		20,265			—			272			—			20,537
Residential bare land and acquisition & development		4,969			—			2,299			—			7,268
Total construction loans		105,644			—			2,724			—			108,368
Commercial and other		494,267			—			14,289			—			508,556
Consumer		3,350			—			1			—			3,351
Totals	$	1,368,323		$	—		$	37,689		$	—		$	1,406,012
Percentage of portfolio		97.32	%		0.00	%		2.68	%		0.00	%		100.00	%

At September 30, 2016 and December 31, 2015, the Company had $3,370, and $360, respectively, in unfunded commitments on its classified loans, which amounts are included in the calculation of our classified asset ratio.

Past Due and Nonaccrual Loans

The Company uses the terms “past due” and “delinquent” interchangeably. Amortizing loans are considered past due or delinquent based upon the number of contractually required payments not made. Delinquency status for all contractually matured loans, commercial and commercial real estate loans with non-monthly amortization, and all other extensions of credit is determined based upon the number of calendar months past due.

The following tables present an aging analysis of past due and nonaccrual loans at September 30, 2016 and December 31, 2015:

Age Analysis of Loans Receivable

As of September 30, 2016

	30-59 Days Past Due Still Accruing			60-89 Days Past Due Still Accruing			Greater Than 90 days Past Due Still Accruing			Nonaccrual			Total Past Due and Nonaccrual			Total Current			Total Loans Receivable
Real estate loans
Multi-family residential	$	—		$	—		$	—		$	—		$	—		$	79,126		$	79,126
Residential 1-4 family		23			—			—			162			185			58,634			58,819
Owner-occupied commercial		—			—			—			—			—			416,118			416,118
Nonowner-occupied commercial		—			—			—			663			663			427,238			427,901
Total real estate loans		23			—			—			825			848			981,116			981,964
Construction
Multi-family residential		—			—			—			—			—			24,567			24,567
Residential 1-4 family		—			—			—			—			—			42,130			42,130
Commercial real estate		—			—			—			—			—			78,369			78,369
Commercial bare land and acquisition & development		—			—			—			—			—			19,050			19,050
Residential bare land and acquisition & development		—			—			—			—			—			8,852			8,852
Total construction loans		—			—			—			—			—			172,968			172,968
Commercial and other		149			—			—			2,847			2,996			622,464			625,460
Consumer		—			—			—			—			—			3,201			3,201
Total	$	172		$	—		$	—		$	3,672		$	3,844		$	1,779,749		$	1,783,593
Percentage of portfolio		0.01	%		0.00	%		0.00	%		0.21	%		0.22	%		99.78	%		100.00	%

Age Analysis of Loans Receivable

As of December 31, 2015

	30-59 Days Past Due Still Accruing			60-89 Days Past Due Still Accruing			Greater Than 90 days Past Due Still Accruing			Nonaccrual			Total Past Due and Nonaccrual			Total Current			Total Loans Receivable
Real estate loans
Multi-family residential	$	—		$	—		$	—		$	—		$	—		$	66,445		$	66,445
Residential 1-4 family		—			—			—			374			374			51,578			51,952
Owner-occupied commercial		—			—			—			—			—			359,065			359,065
Nonowner-occupied commercial		—			—			—			750			750			299,486			300,236
Total real estate loans		—			—			—			1,124			1,124			776,574			777,698
Construction
Multi-family residential		—			—			—			—			—			7,027			7,027
Residential 1-4 family		480			—			—			53			533			30,323			30,856
Commercial real estate		—			—			—			—			—			42,580			42,580
Commercial bare land and acquisition & development		—			—			—			—			—			20,265			20,265
Residential bare land and acquisition & development		—			—			—			—			—			7,268			7,268
Total construction loans		480			—			—			53			533			107,463			107,996
Commercial and other		—			—			—			1,495			1,495			505,392			506,887
Consumer		1			3			—			—			4			3,347			3,351
Total	$	481		$	3		$	—		$	2,672		$	3,156		$	1,392,776		$	1,395,932
Percentage of portfolio		0.03	%		0.00	%		0.00	%		0.19	%		0.23	%		99.77	%		100.00	%

Impaired Loans

Regular credit reviews of the portfolio are performed to identify loans that are considered potentially impaired. Potentially impaired loans are referred to the Asset-Liability Committee “ALCO” for review and are included in the specific calculation of allowance for loan losses. A loan is considered impaired when, based on current information and events, the Company is unlikely to collect all principal and interest due according to the terms of the loan agreement. When the amount of the impairment represents a confirmed loss, it is charged off against the allowance for loan losses. Impaired loans are often reported net of government guarantees to the extent that the guarantees are expected to be collected. Impaired loans generally include all loans classified as nonaccrual and troubled debt restructurings.

Accrual of interest is discontinued on impaired loans when management believes that, after considering economic and business conditions and collection efforts, the borrower’s financial condition is such that collection of principal or interest is doubtful. Accrued, but uncollected, interest is generally reversed when loans are placed on nonaccrual status. Interest income is subsequently recognized only to the extent cash payments are received satisfying all delinquent principal and interest amounts, and the prospects for future payments in accordance with the loan agreement appear relatively certain. In accordance with GAAP, payments received on nonaccrual loans are applied to the principal balance and no interest income is recognized. Interest income may be recognized on impaired loans that are not on nonaccrual status.

The following tables display an analysis of the Company’s impaired loans at September 30, 2016, and December 31, 2015:

Impaired Loan Analysis

As of September 30, 2016

	Recorded Investment With No Specific Allowance Valuation		Recorded Investment With Specific Allowance Valuation		Total Recorded Investment		Unpaid Principal Balance		Average Recorded Investment		Related Specific Allowance Valuation
Real estate
Multi-family residential	$	—	$	—	$	—	$	—	$	—	$	—
Residential 1-4 family		461		303		764		785		606		3
Owner-occupied commercial		104		874		978		978		1,192		1
Nonowner-occupied commercial		2,192		—		2,192		2,254		2,249		—
Total real estate loans		2,757		1,177		3,934		4,017		4,047		4
Construction
Multi-family residential		—		—		—		—		—		—
Residential 1-4 family		—		—		—		—		50		—
Commercial real estate		—		—		—		—		—		—
Commercial bare land and acquisition & development		—		—		—		—		—		—
Residential bare land and acquisition & development		2,152		—		2,152		2,151		1,764		—
Total construction loans		2,152		—		2,152		2,151		1,814		—
Commercial and other		2,305		2,158		4,463		4,834		3,215		734
Consumer		—		—		—		—		—		—
Total impaired loans	$	7,214	$	3,335	$	10,549	$	11,002	$	9,076	$	738

Impaired Loan Analysis

As of December 31, 2015

	Recorded Investment With No Specific Allowance Valuation		Recorded Investment With Specific Allowance Valuation		Total Recorded Investment		Unpaid Principal Balance		Average Recorded Investment		Related Specific Allowance Valuation
Real estate
Multi-family residential	$	—	$	—	$	—	$	—	$	—	$	—
Residential 1-4 family		374		308		682		911		766		5
Owner-occupied commercial		2,788		—		2,788		2,788		1,177		—
Nonowner-occupied commercial		2,287		25		2,312		2,374		2,395		25
Total real estate loans		5,449		333		5,782		6,073		4,338		30
Construction
Multi-family residential		—		—		—		—		—		—
Residential 1-4 family		53		—		53		72		32		—
Commercial real estate		—		—		—		—		—		—
Commercial bare land and acquisition & development		—		—		—		—		—		—
Residential bare land and acquisition & development		—		338		338		338		347		99
Total construction loans		53		338		391		410		379		99
Commercial and other		2,091		536		2,627		3,018		2,404		46
Consumer		—		—		—		—		—		—
Total impaired loans	$	7,593	$	1,207	$	8,800	$	9,501	$	7,121	$	175

The impaired balances reported above are not adjusted for government guarantees of $998, and $1,273 at September 30, 2016 and December 31, 2015, respectively. The recorded investment in impaired loans, net of government guarantees, totaled $9,551 and $7,527 at September 30, 2016, and December 31, 2015, respectively.

Troubled Debt Restructurings

In the normal course of business, the Company may modify the terms of certain loans, attempting to protect as much of its investment as possible. Management evaluates the circumstances surrounding each modification to determine whether it is a troubled debt restructuring (“TDR”). TDRs exist when 1) the restructuring constitutes a concession, and 2) the debtor is experiencing financial difficulties.

The following table displays the Company’s TDRs by class at September 30, 2016 and December 31, 2015:

	Troubled Debt Restructurings as of
	September 30, 2016				December 31, 2015
	Number of Contracts		Post-Modification Outstanding Recorded Investment		Number of Contracts		Post-Modification Outstanding Recorded Investment
Real estate
Multifamily residential		—	$	—		—	$	—
Residential 1-4 family		4		764		6		682
Owner-occupied commercial		3		1,421		3		2,788
Non owner-occupied commercial		6		2,192		7		2,312
Total real estate loans		13		4,377		16		5,782
Construction
Multifamily residential		—		—		—		—
Residential 1-4 family		—		—		—		—
Commercial real estate		—		—		—		—
Commercial bare land and acquisition & development		—		—		—		—
Residential bare land and acquisition & development		2		1,827		—		—
Total construction loans		2		1,827		—		—
Commercial and other		14		2,883		11		2,170
Consumer		—		—		—		—
Total		29	$	9,087		27	$	7,952

The recorded investment in TDRs on nonaccrual status totaled $2,228, and $1,807 at September 30, 2016 and December 31, 2015, respectively. The Company’s policy is that loans placed on nonaccrual will typically remain on nonaccrual status until all principal and interest payments are brought current and the prospect for future payment in accordance with the loan agreement appears relatively certain. The Company’s policy generally refers to a minimum of six months of payment performance as sufficient to warrant a return to accrual status.

For the nine months ended September 30, 2016, the Company restructured 9 loans into TDRs for which impairment was previously measured under the Company’s general loan loss allowance methodology.

The types of modifications offered can generally be described in the following categories:

• Rate Modification - A modification in which the interest rate is modified.

• Term Modification - A modification in which the maturity date, timing of payments, or frequency of payments is changed.

• Interest-only Modification - A modification in which the loan is converted to interest-only payments for a period of time.

• Combination Modification - Any other type of modification, including the use of multiple types of modifications.

Below is a table of the newly restructured loans identified in the nine months ended September 30, 2016.

	Troubled Debt Restructurings Identified During
	the nine months ended September 30, 2016
	Rate Modification		Term Modification		Interest-only Modification		Combination Modification
Real estate
Multi-family residential	$	—	$	—	$	—	$	—
Residential 1-4 family		—		—		—		299
Owner-occupied commercial		—		—		444		—
Nonowner-occupied commercial		—		—		—		—
Total real estate loans		—		—		444		299
Construction
Multi-family residential		—		—		—		—
Residential 1-4 family		—		—		—		—
Commercial real estate		—		—		—		—
Commercial bare land and acquisition & development		—		—		—		—
Residential bare land and acquisition & development		—		—		—		1,827
Total construction loans		—		—		—		1,827
Commercial and other		—		—		363		673
Consumer		—		—		—		—
Total	$	—	$	—	$	807	$	2,799

Subsequent to a loan being classified as a TDR, a borrower may become unwilling or unable to abide by the terms of the modified agreement. In such cases of default, the Company takes appropriate action to recover principal and interest payments including the use of foreclosure proceedings. The following table represents loans receivable modified as TDRs that subsequently defaulted within the first twelve months of restructure during the period.

	Troubled Debt Restructurings
	that Subsequently Defaulted During
	the nine months ended September 30,
	2016				2015
	Number of Contracts		Recorded Investment		Number of Contracts		Recorded Investment
Real estate
Multi-family residential		—	$	—		—	$	—
Residential 1-4 family		—		—		—		—
Owner-occupied commercial		1		444		—		—
Nonowner-occupied commercial		—		—		—		—
Total real estate loans		1		444		—		—
Construction
Multi-family residential		—		—		—		—
Residential 1-4 family		—		—		—		—
Commercial real estate		—		—		—		—
Commercial bare land and acquisition & development		—		—		—		—
Residential bare land and acquisition & development		—		—		—		—
Total construction loans		—		—		—		—
Commercial and other		—		—		—		—
Consumer		—		—		—		—
Total	$	1	$	444	$	—	$	—

No TDRs subsequently defaulted during the three months ended September 30, 2016 and 2015.

At September 30, 2016 and December 31, 2015, the Company had no commitments to lend additional funds on loans restructured as TDRs.

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Dental Loan Portfolio

9 Months Ended

Sep. 30, 2016

Text Block [Abstract]

Dental Loan Portfolio

NOTE 5 – DENTAL LOAN PORTFOLIO

Dental lending is not operated as a business segment, and dental loans are made in the normal course of commercial lending activities throughout the Company. However, to assist in understanding the concentrations and risks associated with the Company’s loan portfolio, the following Note has been included to provide additional information relating to the Company’s dental loan portfolio. At September 30, 2016 and December 31, 2015, loans to dental professionals totaled $370,135, and $340,162, respectively, and represented 20.46%, and 24.19% in principal amount of total outstanding loans, respectively. As of September 30, 2016 and December 31, 2015, dental loans were supported by government guarantees totaling $6,852 and $9,027, respectively. These guarantees represented 1.85%, and 2.65% in principal amount of the outstanding dental loan balances as of such respective dates. The Company defines a “dental loan” as a loan to dental professionals for the purpose of practice expansion, acquisition or other purpose supported by the cash flows of a dental practice.

Loan Classification

Major classifications of dental loans at September 30, 2016 and December 31, 2015, were as follows:

	September 30, 2016		December 31, 2015
Real estate secured loans:
Owner-occupied commercial	$	59,323	$	56,145
Other dental real estate loans		893		2,198
Total permanent real estate loans		60,216		58,343
Dental construction loans		3,149		4,334
Total real estate loans		63,365		62,677
Commercial loans		306,770		277,485
Gross loans	$	370,135	$	340,162

Market Area

The Bank’s principal “market area” is within the States of Oregon and Washington west of the Cascade Mountain Range. This area is serviced by branch locations in Eugene, Portland and Puget Sound. The Company also makes national dental loans throughout the United States, and currently has dental loans in 43 states. National loan relationships are maintained and serviced by Bank personnel primarily located in Portland.

The following table summarizes the Company’s dental lending by borrower location:

	September 30, 2016		December 31, 2015
Local	$	150,898	$	145,817
National		219,237		194,345
Total	$	370,135	$	340,162

Allowance

The allowance for loan losses identified for the dental loan portfolio is established as an amount that management considers adequate to absorb possible losses on existing loans within the dental portfolio. The allowance related to the dental loan portfolio consists of general and specific components. The general component is based upon all dental loans collectively evaluated for impairment, including qualitative conditions associated with: loan type, out-of-market location, start-up financing, practice acquisition financing, and specialty practice financing. The specific component is based upon dental loans individually evaluated for impairment.

	Three months ended September 30,						Nine months ended September 30,
	2016			2015			2016			2015
Balance, beginning of period	$	4,151		$	4,080		$	4,022		$	4,141
Reclassification		601			189			704			158
Charge-offs		(9	)		(36	)		(9	)		(78	)
Recoveries		55			9			81			21
Balance, end of period	$	4,798		$	4,242		$	4,798		$	4,242

Credit Quality

Please refer to Note 4 for additional information on the definitions of the credit quality indicators.

The following tables present the Company’s dental loan portfolio by market and credit grade at September 30, 2016 and December 31, 2015:

As of September 30, 2016

	Loan Grade
	Pass		Special Mention		Substandard		Doubtful		Totals
Local	$	148,834	$	—	$	2,064	$	—	$	150,898
National		216,464		—		1,112		1,661		219,237
Total	$	365,298	$	—	$	3,176	$	1,661	$	370,135
As of December 31, 2015
	Loan Grade
	Pass		Special Mention		Substandard		Doubtful		Totals
Local	$	143,541	$	—	$	2,276	$	—	$	145,817
National		191,574		—		2,771		—		194,345
Total	$	335,115	$	—	$	5,047	$	—	$	340,162

Past Due and Nonaccrual Loans

Please refer to Note 4 for additional information on the definitions of “past due.”

The following tables present an aged analysis of the dental loan portfolio by market, including nonaccrual loans, as of September 30, 2016 and December 31, 2015:

As of September 30, 2016

	30-59 Days Past Due Still Accruing		60-89 Days Past Due Still Accruing		Greater Than 90 Days Past Due Still Accruing		Nonaccrual		Total Past Due and Nonaccrual		Total Current		Total Loans Receivable
Local	$	—	$	—	$	—	$	465	$	465	$	150,433	$	150,898
National		—		—		—		1,661		1,661		217,576		219,237
Total	$	—	$	—	$	—	$	2,126	$	2,126	$	368,009	$	370,135
As of December 31, 2015
	30-59 Days Past Due Still Accruing		60-89 Days Past Due Still Accruing		Greater Than 90 Days Past Due Still Accruing		Nonaccrual		Total Past Due and Nonaccrual		Total Current		Total Loans Receivable
Local	$	—	$	—	$	—	$	513	$	513	$	145,304	$	145,817
National		—		—		—		—		—		194,345		194,345
Total	$	—	$	—	$	—	$	513	$	513	$	339,649	$	340,162

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Federal Funds and Overnight Funds Purchased

9 Months Ended

Sep. 30, 2016

Text Block [Abstract]

Federal Funds and Overnight Funds Purchased

NOTE 6 – FEDERAL FUNDS AND OVERNIGHT FUNDS PURCHASED

The Company had unsecured federal funds borrowing lines with various correspondent banks totaling $129,000 at both September 30, 2016 and December 31, 2015. The terms of the lines are subject to change with interest payable at the then stated rate. At September 30, 2016 and December 31, 2015, there were no borrowings outstanding on these lines.

The Company also had a secured overnight borrowing line available from the Federal Reserve Bank that totaled $81,915 and $76,912 at September 30, 2016 and December 31, 2015, respectively. The Federal Reserve Bank borrowing line is secured through the pledging of $144,242 and $140,801 at September 30, 2016 and December 31, 2015, respectively, of commercial loans under the Company’s Borrower-In-Custody program. At September 30, 2016 and December 31, 2015, there were no outstanding borrowings on this line. The terms of the lines are subject to change with interest payable at the then stated rate.

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Federal Home Loan Bank Borrowings

9 Months Ended

Sep. 30, 2016

Banking and Thrift [Abstract]

Federal Home Loan Bank Borrowings

NOTE 7 – FEDERAL HOME LOAN BANK BORROWINGS

The Company has a borrowing limit with the Federal Home Loan Bank of Des Moines (“FHLB”) equal to 35% of total assets, subject to the value of discounted collateral pledged and stock holdings.

At September 30, 2016, the maximum borrowing line was $888,671; however, the FHLB borrowing line was limited by the discounted value of collateral pledged. At September 30, 2016, the Company had pledged $827,300 in real estate loans to the FHLB that had a discounted collateral value of $602,715. There was $45,500 borrowed on this line at September 30, 2016.

At December 31, 2015, the maximum borrowing line was $657,086; however, the FHLB borrowing line was limited by the discounted value of collateral pledged. At December 31, 2015, the Company had pledged $666,297 in real estate loans to the FHLB that had a discounted collateral value of $414,044. There was $77,500 borrowed on this line at December 31, 2015.

Below is a summary of outstanding FHLB borrowings by maturity.

	Current Rates			September 30, 2016
Cash management advance		NA		$	15,000
2016		0.57-1.86	%		22,500
2017		2.28	%		3,000
2018		1.55	%		3,000
2019		—			—
2020		—			—
Thereafter		3.85	%		2,000
				$	45,500

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Borrowed Funds

9 Months Ended

Sep. 30, 2016

Debt Disclosure [Abstract]

Borrowed Funds

NOTE 8 – BORROWED FUNDS

Subordinated Debentures

In June 2016, the Company issued $35,000 in aggregate principal amount of fixed-to-floating rate subordinated debentures (the “Notes”) in a public offering. The Notes are callable at par after five years, have a stated maturity of September 30, 2026 and bear interest at a fixed annual rate of 5.875% per year, from and including June 27, 2016, but excluding September 30, 2021. From and including September 30, 2021 to the maturity date or early redemption date, the interest rate will reset quarterly to an annual interest rate equal to the then-current three-month LIBOR plus 471.5 basis points.

The Notes are included in Tier 2 capital (with certain limitations applicable) under current regulatory guidelines and interpretations.

Junior Subordinated Debentures

In November 2005, the Company completed the private placement of $8,000 in aggregate liquidation amount of trust preferred securities (the “TPS”), through its subsidiary, Pacific Continental Capital Trust I. The interest rate on the TPS was 6.265% until January 2011, after which it was converted to a floating rate of three-month LIBOR plus 135 basis points. The TPS mature in 2035, but are callable by the Company at par any time after January 7, 2011. The Company issued $8,248 of junior subordinated debentures (the “Debentures”) to the trust in exchange for ownership of all of the common security of the trust and the proceeds of the preferred securities sold by the trust. In accordance with current accounting guidance, the trust is not consolidated in the Company’s financial statements, but rather the Foundation Debentures are shown as a liability. The interest rate on the Debentures was 6.265% until January 2011, after which it was converted to a floating rate of three-month LIBOR plus 135 basis points. The Debentures have the same prepayment provisions as the TPS.

On September 6, 2016, the Company completed the acquisition of Foundation Bancorp. At that time, the Company assumed ownership of Foundation Statutory Trust I, which had previously issued $6,000 in aggregate liquidation amount of trust preferred securities. The interest rate on the these trust preferred securities is a floating rate of three-month LIBOR plus 173 basis points. The Company also acquired $6,148 of junior subordinated debentures (the “Foundation Debentures”) to the trust in exchange for ownership of all of the common security of the trust and the proceeds of the preferred securities sold by the trust. In accordance with current accounting guidance, the trust is not consolidated in the Company’s financial statements, but rather the Foundation Debentures are shown as a liability, and acquired at an acquisition date fair value of $3,013.

The Debentures and the Foundation Debentures are included in the Company’s Tier I capital (with certain limitations applicable) under current regulatory guidelines and interpretations.

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Share-Based Compensation

9 Months Ended

Sep. 30, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Compensation

NOTE 9 – SHARE-BASED COMPENSATION

The Company’s 2006 Stock Option and Equity Compensation Plan (the “2006 SOEC Plan”) authorizes the award of up to 1,550,000 shares in stock-based awards. The awards granted under this plan are service-based and are subject to vesting. The Compensation Committee of the Board of Directors may impose any terms or conditions on the vesting of an award that it determines to be appropriate. Awards granted generally vest over four years and have a maximum life of ten years. Awards may be granted at exercise prices of not less than 100.00% of the fair market value of the Company’s common stock at the grant date.

Pursuant to the 2006 SOEC Plan, incentive stock options (“ISOs”), nonqualified stock options, restricted stock, restricted stock units (“RSUs”), or stock appreciation rights (“SARs”) may be awarded to attract and retain the best available personnel to the Corporation and its subsidiary. SARs may be settled in common stock or cash as determined at the date of issuance. Liability-based awards (including all cash-settled SARs) have no impact on the number of shares available to be issued within the plan. Additionally, non-qualified option awards and restricted stock awards may be granted to directors under the terms of this plan.

The following table identifies the compensation expense recorded and tax benefits received by the Company on its share-based compensation plans for the three and nine months ended September 30, 2016, and 2015:

	Three months ended September 30,
	2016				2015
	Compensation Expense		Tax Benefit		Compensation Expense/ (Income)			Tax Benefit (Expense)
Equity-based awards:
Employee RSUs	$	397	$	151	$	372		$	141
Liability-based awards:
Employee cash SARs		—		—		(100	)		(38	)
	$	397	$	151	$	272		$	103
	Nine months ended September 30,
	2016				2015
	Compensation Expense		Tax Benefit		Compensation Expense/ (Income)			Tax Benefit (Expense)
Equity-based awards:
Director restricted stock	$	240	$	91	$	248		$	94
Employee RSUs		1,187		451		1,080			410
Liability-based awards:
Employee cash SARs		—		—		(150	)		(57	)
	$	1,427	$	542	$	1,178		$	447

The following table identifies stock options, employee stock SARs, and employee cash SARs exercised during the three and nine months ended September 30, 2016 and 2015:

	Three months ended
	September 30, 2016
	Number Exercised		Weighted Average Exercise Price		Intrinsic Value		Number of Shares Issued		Net Cash Payment to Employees
Stock options		30,074	$	16.54	$	9		9,832		NA
Employee stock SARs		41,237	$	15.83	$	5		1,768		NA
Employee cash SARs		27,521	$	15.95		NA		NA	$	45
		98,832			$	14		11,600	$	45
	Nine months ended
	September 30, 2016
	Number Exercised		Weighted Average Exercise Price		Intrinsic Value		Number of Shares Issued		Net Cash Payment to Employees
Stock options		65,034	$	13.86	$	117		44,792		NA
Employee stock SARs		79,806	$	14.54	$	26		6,634		NA
Employee cash SARs		47,644	$	15.11		NA		NA	$	73
		192,484			$	143		51,426	$	73
	Three months ended
	September 30, 2015
	Number Exercised		Weighted Average Exercise Price		Intrinsic Value		Number of Shares Issued		Net Cash Payment to Employees
Stock options		—	$	—	$	—		—		NA
Employee stock SARs		2,204	$	11.61	$	2		171		NA
Employee cash SARs		1,271	$	12.07		NA		NA	$	1
		3,475				2		171		1
	Nine months ended
	September 30, 2015
	Number Exercised		Weighted Average Exercise Price		Intrinsic Value		Number of Shares Issued		Net Cash Payment to Employees
Stock options		1,102	$	12.25	$	2		1,102		NA
Employee stock SARs		3,417	$	11.57	$	4		265		NA
Employee cash SARs		1,479	$	12.07		NA		NA	$	1
		5,998				6		1,367		1

At September 30, 2016, the Company had estimated unrecognized compensation expense of approximately $3,811 for unvested RSUs. This amount is based on a historical forfeiture rate of 13.00% for all RSUs granted to employees. The weighted-average period of time the unrecognized compensation expense will be recognized for the unvested RSUs was approximately 2.75 years as of September 30, 2016.

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Derivative Instruments

9 Months Ended

Sep. 30, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

NOTE 10 – DERIVATIVE INSTRUMENTS

The Bank purchases derivative instruments as a way to help mitigate interest rate risk. During the first quarter 2013, the Company entered into an interest rate swap agreement with an $8,000 notional amount to convert its variable-rate Debentures debt into a fixed rate for a term of seven years at a rate of 2.73%. The derivative is designated as a cash flow hedge. The cash flow hedge meets the definition of highly effective and the Company expects the hedge to be highly effective throughout the remaining term of the swap. The fair value of the derivative instrument at September 30, 2016, was an $82 unrealized loss, which is recorded in accrued interest and other payables on the consolidated balance sheet. The Company pledged $400 under collateral arrangements to satisfy collateral requirements associated with the interest rate swap contract.

The Bank maintains two interest rate swaps with commercial banking customers tied to loans on the consolidated balance sheet. Those interest rate swaps are simultaneously hedged by offsetting the interest rate swaps that the Bank executes with a third party, such that the Bank minimizes its net risk exposure. As of September 30, 2016 and December 31, 2015, the Bank had non-hedge designated interest rate swaps with an aggregate notional amount of approximately $8,600 and $8,774, respectively, related to this program. The Bank does not require separately pledged collateral to secure its interest rate swaps with customers. However, it does make a practice of cross-collateralizing the interest rate swaps with collateral on the underlying loan. The Bank has minimum collateral posting thresholds with certain of its derivative counterparties, and has posted collateral totaling $250 consisting of cash held on deposit for the benefit of the counterparty against its obligations under these agreements as of September 30, 2016 and December 31, 2015.

The Bank entered into a swap with a third party to serve as a hedge to an equal amount of fixed rate loans. As of September 30, 2016 and December 31, 2015, the Bank had one swap designated a hedging instrument with a notional amount of $1,500 and $1,525 respective, hedging a 10-year fixed rate note bearing interest at 5.71% and maturing August 2023. The notional amount does not represent direct credit exposure. Direct credit exposure is limited to the net difference between the calculated amount to be received and paid. As the Bank has designated the swap a fair value hedge, the underlying hedged loan is carried at fair value on the consolidated balance sheet and included in loans, net of deferred fees.

During third quarter 2016, the Bank entered into forward-starting interest rate swaps, to convert certain existing and future short-term borrowings to fixed rate payments. The primary purpose of these hedges is to mitigate the risk of rising interest rates, specifically LIBOR rates, which are a benchmark for the short term borrowings. The hedging program qualifies as a cash flow hedge under FASB ASC 815, which provides for matching of the recognition of gains and losses of the interest rate swaps and the hedged items. The hedged item is the LIBOR portion of the series of existing or future short-term fixed rate borrowings over the term of the interest rate swap. The change in the fair value of the interest rate swaps is recorded in other comprehensive income. The Bank had notional amounts of $26,500 subject to interest rate swaps to hedge anticipated future borrowings as of September 30, 2016. The unrealized loss, gross of the related tax benefit, on these interest rate swaps as of September 30, 2016 was $475. The Company pledged cash totaling $1,250 under collateral arrangements to satisfy collateral requirements associated with the interest rate swap contract.

The following tables present quantitative information pertaining to the commercial loan related interest rate swaps as of September 30, 2016 and December 31, 2015:

	September 30, 2016						December 31, 2015
	Hedge- Designated			Not-Hedge- Designated			Hedge- Designated			Not-Hedge- Designated
Notional amount	$	1,500		$	8,600		$	1,525		$	8,774
Weighted average pay rate		5.71	%		4.85	%		5.71	%		4.85	%
Weighted average receive rate		3.52	%		3.61	%		3.20	%		3.28	%
Weighted average maturity in years		6.9			5.7			7.6			6.5

The following table presents the fair values of derivative instruments and their locations in the consolidated balance sheets as of September 30, 2016 and December 31, 2015:

		Asset Derivatives				Liability Derivatives
Derivative	Balance sheet location	September 30, 2016		December 31, 2015		September 30, 2016		December 31, 2015
Cash flow hedge—trust preferred	Other assets or other payables	$	—	$	82	$	82	$	—
Cash flow hedge—long term borrowing	Other assets or other payables		—		—		780		—
Interest rate swap designated as hedging instrument	Other assets or other payables		114		66		147		93
Interest rate swap not designated as hedging instrument	Other assets or other payables		162		24		162		24
		$	276	$	172	$	1,171	$	117

The following table presents the income statement impact of the derivative instruments for the three and nine months ended September 30, 2016 and 2015:

		Three months ended						Nine months ended
	Income statement location	September 30,						September 30,
Derivative		2016			2015			2016			2015
Interest rate swap designated as hedging instrument	Other noninterest income	$	(2	)	$	(10	)	$	(6	)	$	(9	)
		$	(2	)	$	(10	)	$	(6	)	$	(9	)

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Fair Value

9 Months Ended

Sep. 30, 2016

Fair Value Disclosures [Abstract]

Fair Value

NOTE 11 – FAIR VALUE

The following disclosures about fair value of financial instruments are made in accordance with provisions of ASC 825 “Financial Instruments.” The use of different assumptions and estimation methods could have a significant effect on fair value amounts. Accordingly, the estimates of fair value herein are not necessarily indicative of the amounts that might be realized in a current market exchange.

The estimated fair values of the financial instruments at September 30, 2016 and December 31, 2015:

	September 30, 2016				December 31, 2015
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets:
Cash and cash equivalents	$	107,173	$	107,173	$	36,675	$	36,675
Securities available-for-sale		482,408		482,408		366,598		366,598
Loans, net of deferred fees		1,806,736		1,796,152		1,404,482		1,389,562
Interest receivable		5,957		5,957		5,721		5,721
Federal Home Loan Bank stock		4,643		4,643		5,208		5,208
Bank-owned life insurance		34,927		34,927		22,884		22,884
Interest rate swaps		275		275		172		172
Financial liabilities:
Deposits	$	2,162,633	$	2,162,127	$	1,597,093	$	1,597,280
Federal Home Loan Bank borrowings		45,500		45,613		77,500		77,651
Subordinated debenture		34,072		34,072		—		—
Junior subordinated debentures		11,272		6,706		8,248		2,741
Interest payable		711		711		138		138
Interest rate swaps		1,171		1,171		117		117

Cash and cash equivalents – The carrying amount approximates fair value.

Securities available-for-sale – Fair value is based on quoted market prices. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities.

Loans – For variable rate loans that reprice frequently and have no significant change in credit risk, fair value is based on carrying values. Fair value of fixed rate loans is estimated by discounting the future cash flows using current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. Fair values for impaired loans are estimated using discounted cash flow analyses or underlying collateral values, where applicable, and consider credit risk. The Company uses an independent third-party to establish the fair value of loans.

Federal Home Loan Bank stock – The carrying amount represents the fair value and value at which FHLB of Des Moines would redeem the stock.

Interest receivable and payable – The carrying amounts of accrued interest receivable and payable approximate their fair value.

Bank-owned life insurance – The carrying amount is based on cash surrender value which approximates fair value.

Interest rate swaps – Fair value is based on quoted market prices.

Deposits – Fair value of demand, interest bearing demand and savings deposits is the amount payable on demand at the reporting date. Fair value of time deposits is estimated using the interest rates currently offered for deposits of similar remaining maturities. The Company uses an independent third-party to establish the fair value of time deposits.

Federal Home Loan Bank borrowings – Fair value of FHLB borrowings is estimated by discounting future cash flows at rates currently available for debt with similar terms and remaining maturities.

Subordinated debentures – Fair value of subordinated debentures is estimated by discounting future cash flows at rates currently available for debt with similar credit risk, terms and remaining maturities.

Junior subordinated debentures – Fair value of junior subordinated debentures is estimated by discounting future cash flows at rates currently available for debt with similar credit risk, terms and remaining maturities.

Off-balance sheet financial instruments – The carrying amount and fair value are based on fees charged for similar commitments and are not material.

The Company also adheres to the FASB guidance with regards to ASC 820, “Fair Value Measures.” This guidance defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. The statement requires fair value measurement disclosure of all assets and liabilities that are carried at fair value on either a recurring or nonrecurring basis. The Company determines fair value based upon quoted prices when available or through the use of alternative approaches, such as matrix or model pricing, when market quotes are not readily accessible or available. The valuation techniques used are based on observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. These two types of inputs create the following fair value hierarchy:

• Level 1 – Quoted prices for identical instruments in active markets.

• Level 2 – Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active or model-derived valuations whose inputs are observable or whose significant value drivers are observable.

• Level 3 – Unobservable inputs are used to measure fair value to the extent that observable inputs are not available. The Company’s own data used to develop unobservable inputs is adjusted for market consideration when reasonably available.

Financial instruments, measured at fair value, are broken down in the tables below by recurring or nonrecurring measurement status. Recurring assets are initially measured at fair value and are required to be remeasured at fair value in the financial statements at each reporting date. Assets measured on a nonrecurring basis are assets that, due to an event or circumstance, were required to be remeasured at fair value after initial recognition in the financial statements at some time during the reporting period.

The following table presents information about the level in the fair value hierarchy for the Company’s assets and liabilities not measured and carried at fair value as of September 30, 2016 and December 31, 2015:

	Carrying Amount		Fair Value at September 30, 2016
			Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	107,173	$	107,173	$	—	$	—
Loans, net of deferred fees		1,806,736		—		—		1,796,152
Interest receivable		5,957		5,957		—		—
Federal Home Loan Bank stock		4,643		4,643		—		—
Interest rate swaps		275		275		—		—
Financial liabilities:
Deposits	$	2,162,633	$	1,983,492	$	178,635	$	—
Federal Home Loan Bank borrowings		45,500		—		45,613		—
Subordinated debentures		34,072		—		34,072		—
Junior subordinated debentures		11,272		—		6,706		—
Interest payable		711		711		—		—
Interest rate swaps		1,171		1,171		—		—
	Carrying Amount		Fair Value at December 31, 2015
			Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	36,675	$	36,675	$	—	$	—
Loans		1,404,482		—		—		1,389,562
Interest receivable		5,721		5,721		—		—
Federal Home Loan Bank stock		5,208		5,208		—		—
Interest rate swaps		172		172		—		—
Financial liabilities:
Deposits	$	1,597,093	$	1,458,490	$	138,790	$	—
Federal Home Loan Bank borrowings		77,500		—		77,651		—
Junior subordinated debentures		8,248		—		2,741		—
Accrued interest payable		138		138		—		—
Interest rate swaps		117		117		—		—

The tables below show assets and liabilities measured at fair value on a recurring basis as of September 30, 2016 and December 31, 2015:

	Carrying Value		Fair Value at September 30, 2016
			Level 1		Level 2		Level 3
Financial Assets
Available-for-sale securities
Obligations of U.S. government agencies	$	26,552	$	—	$	26,552	$	—
Obligations of states and political subdivisions		115,509		—		115,509		—
Agency mortgage-backed securities		292,735		—		292,735		—
Private-label mortgage-backed securities		2,110		—		656		1,454
SBA pools		44,616		—		44,616		—
Corporate securities		886		—		886		—
Interest rate swaps		275		275		—		—
Total assets measured on a recurring basis	$	482,683	$	275	$	480,954	$	1,454
Financial Liabilities
Interest rate swap liabilities measured on a recurring basis	$	1,171	$	1,171	$	—	$	—
	Carrying Value		Fair Value at December 31, 2015
			Level 1		Level 2		Level 3
Available-for-sale securities
Obligations of U.S. government agencies	$	44,623	$	—	$	44,623	$	—
Obligations of states and political subdivisions		97,151		—		97,151		—
Agency mortgage-backed securities		185,370		—		185,370		—
Private-label mortgage-backed securities		2,790		—		1,204		1,586
SBA pools		35,771		—		35,771		—
Corporate securities		893		—		893		—
Interest rate swaps		172		172		—		—
Total assets measured on a recurring basis	$	366,770	$	172	$	365,012	$	1,586
Financial Liabilities
Interest rate swap liabilities measured on a recurring basis	$	117	$	117	$	—	$	—

No transfers to or from Levels 1 and 2 occurred on assets and liabilities measured at fair value on a recurring basis during the nine months ended September 30, 2016, or during the year ended December 31, 2015.

The following is a description of the inputs and valuation methodologies used for assets and liabilities recorded at fair value on a recurring basis. Fair value for all classes of available-for-sale securities and derivative instruments are estimated by obtaining quoted market prices for identical assets, where available. If such prices are not available, fair value is based on independent asset pricing services and models, the inputs of which are market-based or independently sourced market parameters, including, but not limited to, yield curves, interest rates, prepayments, defaults, cumulative loss projections and cash flows. There have been no significant changes in the valuation techniques during the periods reported.

The following table provides a reconciliation of private-label mortgage-backed securities measured at fair value on a recurring basis using unobservable inputs (Level 3) for the three and nine months ended September 30, 2016 and 2015:

	Three months ended September 30,						Nine months ended September 30,
	2016			2015			2016			2015
Beginning balance	$	1,399		$	1,782		$	1,586		$	1,568
Transfers into level 3		70			—			70			300
Transfers out of Level 3		—			—			—			—
Total gains or losses
Included in earnings		(2	)		—			(14	)		(13	)
Included in other comprehensive income		64			(2	)		45			65
Paydowns		(77	)		(85	)		(233	)		(225	)
Purchases, issuances, sales and settlements
Purchases		—			—			—			—
Issuances		—			—			—			—
Sales		—			—			—			—
Settlements		—			—			—			—
Ending balance	$	1,454		$	1,695		$	1,454		$	1,695

Fair value for all classes of available-for-sale securities is estimated by obtaining quoted market prices for identical assets, where available. If such prices are not available, fair value is based on quoted prices for similar instruments or model-derived valuations whose inputs are observable or whose significant value drivers are observable. In instances where quoted prices for identical or similar instruments and observable inputs are not available, unobservable inputs, including the Company’s own data, are used.

The Company utilizes FTN Financial as an independent third-party asset pricing service to estimate fair value on all of its available-for-sale securities. The inputs used to value all securities include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data including market research, market indicators, and industry and economic trends. Additional inputs specific to each asset type are as follows:

• Obligations of U.S. government agencies – TRACE reported trades.

• Obligations of states and political subdivisions – MSRB reported trades, material event notices, and Municipal Market Data (MMD) benchmark yields.

• Private-label mortgage-backed securities – new issue data, monthly payment information, and collateral performance (whole loan collateral).

• Mortgage-backed securities – TBA prices and monthly payment information.

• SBA variable pools – TBA prices and monthly payment information.

• Corporate securities – TRACE reported trades.

Inputs may be prioritized differently on any given day for any security and not all inputs listed are available for use in the evaluation process on any given day for each security evaluation.

The valuation methodology used by asset type includes:

• Obligations of U.S. government agencies – security characteristics, defined sector break-down, benchmark yields, applied base spread, yield to maturity (bullet structures), corporate action adjustment, and evaluations based on T+3 settlement.

• Obligations of states and political subdivisions – security characteristics, benchmark yields, applied base spread, yield to worst or market convention, ratings updates, prepayment schedules (housing bonds), material event notice adjustments, and evaluations based on T+3 settlement.

• Private-label mortgage-backed securities – security characteristics, prepayment speeds, cash flows, TBA, Treasury and swap curves, IO/PO strips or floating indexes, applied base spread, spread adjustments, yield to worst or market convention, ratings updates (whole-loan collateral), and evaluations based on T+0 settlement.

• Mortgage-backed securities – security characteristics, TBA, Treasury, or floating index benchmarks, spread to TBA levels, prepayment speeds, applied spreads, and evaluations based on T+0 settlement.

• SBA pools – security characteristics, TBA, Treasury, or floating index benchmarks, spread to TBA levels, prepayment speeds, applied spreads, and evaluations based on T+0 settlement.

• Corporate securities – security characteristics, defined sector break-down, benchmark yields, applied based spread, yield to maturity (bullet structures), corporate action adjustment, and evaluations based on T+3 settlement.

The third-party pricing service follows multiple review processes to assess the available market, credit and deal-level information to support its valuation estimates. If sufficient objectively verifiable information is not available to support a security’s valuation, an alternate independent evaluation source will be used.

The Company’s securities portfolio was valued through its independent third-party pricing service using evaluated pricing models and quoted prices based on market data. For further assurance, the Company’s estimate of fair value was compared to an additional independent third-party estimate at June 30, 2016, and the Company obtained key inputs for a sample of securities across sectors and evaluated those inputs for reasonableness. This analysis was performed at the individual security level and no material variances were noted.

There have been no significant changes in the valuation techniques during the periods reported.

The tables below show assets measured at fair value on a nonrecurring basis as of September 30, 2016 and December 31, 2015:

	Carrying Value		Fair Value
September 30, 2016			Level 1		Level 2		Level 3
Other real estate owned		9,966		—		—		9,966
Total	$	9,966	$	—	$	—	$	9,966
	Carrying Value		Fair Value
December 31, 2015			Level 1		Level 2		Level 3
Loans measured for impairment (net of government guarantees and specific reserves)	$	53	$	—	$	—	$	53
Other real estate owned		10,147		—		—		10,147
Total	$	10,200	$	—	$	—	$	10,200

The following is a description of the inputs and valuation methodologies used for assets recorded at fair value on a nonrecurring basis.

Loans measured for impairment (net of government guarantees and specific reserves) include the estimated fair value of collateral-dependent loans, less collectible government guarantees, as well as certain noncollateral-dependent loans measured for impairment with an allocated specific reserve. When a collateral-dependent loan is identified as impaired, the value of the loan is measured using the current fair value of the collateral less selling costs. The fair value of collateral is generally estimated by obtaining external appraisals which are usually updated every 6 to 12 months based on the nature of the impaired loans. Certain noncollateral-dependent loans measured for impairment with an allocated specific reserve are valued based upon the estimated net realizable value of the loan. If the estimated fair value of the impaired loan, less collectible government guarantees, is less than the recorded investment in the loan, impairment is recognized as a charge-off through the allowance for loan losses. The carrying value of the loan is adjusted to the estimated fair value. The carrying value of loans fully charged off is zero.

Other real estate owned represents real estate which the Company has taken control of in partial or full satisfaction of loans. At the time of foreclosure, other real estate owned is recorded at the lower of the carrying amount of the loan or fair value less costs to sell, which becomes the property’s new basis. Any write downs based on the asset’s fair value at the date of acquisition are charged to the allowance for loan losses. After foreclosure, management periodically orders appraisals or performs valuations to ensure that the real estate is carried at the lower of its new cost basis or fair value, net of estimated costs to sell. Appraisals are generally updated every 6 to 12 months on other real estate owned. Fair value adjustments on other real estate owned are recognized within net loss on real estate owned. The loss represents impairments on other real estate owned for fair value adjustments based on the fair value of the real estate.

There have been no significant changes in the valuation techniques during the periods reported.

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Regulatory Matters

9 Months Ended

Sep. 30, 2016

Banking and Thrift [Abstract]

Regulatory Matters

NOTE 12 – REGULATORY MATTERS

The Company and the Bank are subject to the regulations of certain federal and state agencies and receive periodic examinations by those regulatory authorities. In addition, they are subject to various regulatory capital requirements administered by federal banking 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 consolidated 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 Company and 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 regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios of Total capital, Tier 1 capital, common equity Tier 1 to risk-weighted assets and, Tier 1 capital to leverage assets. Management believes that, as of September 30, 2016, the Company and the Bank met all capital adequacy requirements to which they were subject.

As of September 30, 2016, and according to Federal Reserve and FDIC guidelines, the Bank was considered to be well-capitalized. To be categorized as well-capitalized, the Bank must maintain minimum Total capital, Tier 1 capital, common equity Tier 1 to risk-weighted assets and, Tier 1 capital to leverage assets ratios as set forth in the following table.

	Actual					For Capital Adequacy Purposes					To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of September 30, 2016:
Total capital (to risk weighted assets)
Bank:	$	256,454		11.90	%	$	172,432		8.00	%	$	215,540		10.00	%
Company:	$	270,622		12.55	%		NA					NA
Tier 1 capital (to risk weighted assets)
Bank:	$	235,375		10.92	%	$	129,324		6.00	%	$	172,432		8.00	%
Company:	$	215,471		9.99	%		NA					NA
Common Equity Tier 1 (to risk weighted assets)
Bank:	$	235,375		10.92	%	$	96,993		4.50	%	$	140,101		6.50	%
Company:	$	203,359		9.43	%		NA					NA
Tier 1 capital (to leverage assets)
Bank:	$	235,375		11.26	%	$	83,578		4.00	%	$	107,770		5.00	%
Company:	$	215,471		10.33	%		NA					NA
As of December 31, 2015:
Total capital (to risk weighted assets)
Bank:	$	200,236		12.52	%	$	127,990		8.00	%	$	159,988		10.00	%
Company:	$	201,261		12.58	%		NA					NA
Tier 1 capital (to risk weighted assets)
Bank:	$	182,575		11.41	%	$	95,993		6.00	%	$	127,990		8.00	%
Company:	$	183,600		11.47	%		NA					NA
Common Equity Tier 1 (to risk weighted assets)
Bank:	$	182,575		11.41	%	$	71,995		4.50	%	$	103,992		6.50	%
Company:	$	175,600		10.97	%		NA					NA
Tier 1 capital (to leverage assets)
Bank:	$	182,575		9.88	%	$	73,939		4.00	%	$	92,422		5.00	%
Company:	$	183,600		9.93	%		NA					NA

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Basis of Presentation (Policies)

9 Months Ended

Sep. 30, 2016

Accounting Policies Abstract

Basis of Presentation

The accompanying consolidated financial statements have been prepared by the Company without audit and in conformity with generally accepted accounting principles in the United States of America for interim financial information. The consolidated financial statements include all adjustments and normal accruals, which the Company considers necessary for a fair presentation of the results of operations for such interim periods. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, as of the date of the balance sheets and income and expenses for the periods. Areas including allowance for loan losses, goodwill and intangibles and other real estate owned are particularly susceptible to change, and actual results could differ from those estimates.

The balance sheet data as of December 31, 2015, was derived from audited consolidated financial statements, but does not include all disclosures contained in the Company’s 2015 Form 10-K. The interim consolidated financial statements should be read in conjunction with the December 31, 2015, consolidated financial statements, including the notes thereto, included in the Company’s 2015 Form 10-K.

Loans

Loans are stated at the amount of unpaid principal net of loan premiums or discounts for purchased loans, net of deferred loan origination fees, discounts associated with retained portions of loans sold, and an allowance for loan losses. Interest on loans is calculated using the simple-interest method on daily balances of the principal amount outstanding. Loan origination fees, net of origination costs and discounts, are amortized over the lives of the loans as adjustments to yield.

Allowance for Loan Losses

Allowance for Loan Losses

The allowance for loan losses is established as an amount that management considers adequate to absorb possible losses on existing loans within the portfolio. The allowance consists of general, specific and unallocated components. The general component is based upon all loans collectively evaluated for impairment. The specific component is based upon all loans individually evaluated for impairment. The unallocated component represents credit losses inherent in the loan portfolio that may not have been contemplated in the general risk factors or the specific allowance analysis. Loans are charged against the allowance when management believes the collection of principal and interest is unlikely.

The Company performs regular credit reviews of the loan portfolio to determine the credit quality and adherence to underwriting standards. When loans are originated, they are assigned a risk rating that is reassessed periodically during the term of the loan through the credit review process. The Company’s internal risk rating methodology assigns risk ratings ranging from one to ten, where a higher rating represents higher risk. The ten-point risk rating categories are a primary factor in determining an appropriate amount for the allowance for loan losses.

Estimated credit losses reflect consideration of all significant factors that affect the collectability of the loan portfolio. The historical loss rate for each group of loans with similar risk characteristics is determined based on the Company’s own loss experience in that group. Historical loss experience and recent trends in losses provide a reasonable starting point for analysis, however, they do not by themselves form a sufficient basis to determine the appropriate level for the allowance for loan losses. Qualitative or environmental factors that are likely to cause estimated credit losses to differ from historical losses are also considered, including but not limited to:

• Changes in international, regional and local economic and business conditions and developments that affect the collectability of the portfolio, including the condition of various market segments,

• Changes in the nature and volume of the portfolio and in the terms of loans,

• Changes in the volume and severity of past due loans, the volume of nonaccrual loans and the volume and severity of adversely classified or graded loans,

• Changes in the quality of the institution’s loan review system,

• Changes in the value of underlying collateral for collateral-dependent loans,

• The existence and effect of any concentrations of credit, and changes in the level of such concentrations,

• The effect of other external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in the institution’s existing portfolio,

• Changes in lending policies and procedures, including changes in underwriting standards and collection, charge-off, and recovery practices not considered elsewhere in estimating credit losses, and

• Changes in the current and future U.S. political environment, including debt ceiling negotiations, government shutdown and healthcare reform that may affect national, regional and local economic conditions, taxation, or disruption of national or global financial markets.

The adequacy of the allowance for loan losses and the reserve for unfunded commitments is determined using a consistent, systematic methodology and is monitored regularly based on management’s evaluation of numerous factors. For each portfolio segment, these factors include:

• The quality of the current loan portfolio,

• The trend in the migration of the loan portfolio’s risk ratings,

• The velocity of migration of losses and potential losses,

• Current economic conditions,

• Loan concentrations,

• Loan growth rates,

• Past-due and nonperforming trends,

• Evaluation of specific loss estimates for all significant problem loans,

• Recovery experience, and

• Peer comparison loss rates.

Fair Value Measurements

The Company also adheres to the FASB guidance with regards to ASC 820, “Fair Value Measures.” This guidance defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. The statement requires fair value measurement disclosure of all assets and liabilities that are carried at fair value on either a recurring or nonrecurring basis. The Company determines fair value based upon quoted prices when available or through the use of alternative approaches, such as matrix or model pricing, when market quotes are not readily accessible or available. The valuation techniques used are based on observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. These two types of inputs create the following fair value hierarchy:

• Level 1 – Quoted prices for identical instruments in active markets.

• Level 2 – Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active or model-derived valuations whose inputs are observable or whose significant value drivers are observable.

• Level 3 – Unobservable inputs are used to measure fair value to the extent that observable inputs are not available. The Company’s own data used to develop unobservable inputs is adjusted for market consideration when reasonably available.

Financial instruments, measured at fair value, are broken down in the tables below by recurring or nonrecurring measurement status. Recurring assets are initially measured at fair value and are required to be remeasured at fair value in the financial statements at each reporting date. Assets measured on a nonrecurring basis are assets that, due to an event or circumstance, were required to be remeasured at fair value after initial recognition in the financial statements at some time during the reporting period.

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Business Combinations (Tables)

9 Months Ended

Sep. 30, 2016

Business Combinations [Abstract]

Summary of Net Assets Acquired and Estimated Fair Value Adjustments

A summary of the net assets acquired and the estimated fair value adjustments of Foundation Bancorp are presented below:

	September 6, 2016
Cost basis net assets	$	90,993
Less:
Cash payment to shareholders		(19,337	)
Stock issued		(47,794	)
Fair value adjustments:
Loans, net		(11,257	)
Core deposit intangible		5,762
Junior subordinated debentures		3,173
Deferred tax asset adjustment		(2,948	)
Securities		1,541
Other		1,274
Goodwill	$	21,407

Statement of Assets Acquired and Liabilities Assumed at Fair Values

The statement of assets acquired and liabilities assumed at their fair values are presented below as of the transaction closing date:

FOUNDATION BANCORP, INC.

Opening balance sheet

(in thousands)

unaudited

	September 6, 2016
ASSETS
Cash and due from banks, net of consideration paid	$	43,855
Securities available-for-sale		88,331
Gross loans		281,790
Fair value adjustments
Credit quality-related		(8,884	)
Interest rate-related		(2,373	)
Net Loans		270,533
Interest receivable		934
Federal Home Loan Bank stock		532
Property and equipment		408
Goodwill		21,407
Core deposit intangible		5,762
Deferred tax asset		3,894
Other real estate owned		1,592
Bank-owned life insurance		11,574
Other asset		1,218
Total Assets	$	450,040
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits	$	396,509
Other liabilities		2,724
Junior subordinated debentures		3,013
Total liabilities		402,246
Common stock issued to Foundation Bancorp shareholders		47,794
Total liabilities and shareholders’ equity	$	450,040

Summary of Acquired Loans at Acquisition Date

Acquired loans at the acquisition date and as of September 30, 2016, are presented below:

	September 6, 2016			September 30, 2016
Contractually required principal payments	$	281,790		$	277,683
Purchase adjustment for credit and interest rate		(11,257	)		(10,748	)
Balance of acquired loans	$	270,533		$	266,935

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Securities Available-for-Sale (Tables)

9 Months Ended

Sep. 30, 2016

Investments, Debt and Equity Securities [Abstract]

Schedule of Amortized Cost, Gross Unrealized Gains, Gross Unrealized Losses and Estimated Fair Values of Securities Available-for-Sale

The amortized cost and estimated fair values of securities available-for-sale at September 30, 2016, were as follows:

			Gross		Gross			Estimated		Percentage
	Amortized		Unrealized		Unrealized			Fair		of
	Cost		Gains		Losses			Value		Portfolio
Unrealized Loss Positions
Private-label mortgage-backed securities		249		—		(24	)		225		0	%
Mortgage-backed securities		83,009		—		(328	)		82,681		17	%
SBA pools		19,261		—		(95	)		19,166		4	%
Obligations of states and political subdivisions		13,236		—		(60	)		13,176		3	%
Corporate securities		899		—		(13	)		886		0	%
	$	116,654	$	—	$	(520	)	$	116,134		24	%
Unrealized Gain Positions
Obligations of U.S. government agencies	$	25,290	$	1,262	$	—		$	26,552		6	%
Obligations of states and political subdivisions		97,705		4,629		—			102,334		21	%
Private-label mortgage-backed securities		1,728		157		—			1,885		0	%
Mortgage-backed securities		206,376		3,678		—			210,054		44	%
SBA pools		25,205		245		—			25,449		5	%
	$	356,304	$	9,971	$	—		$	366,274		76	%
	$	472,958	$	9,971	$	(520	)	$	482,408		100	%

The amortized cost and estimated fair values of securities available-for-sale at December 31, 2015, were as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value		Percentage of Portfolio
Unrealized Loss Positions
Obligations of U.S. government agencies	$	14,491	$	—	$	(119	)	$	14,372		3.92	%
Obligations of states and political subdivisions		13,438		—		(149	)		13,289		3.62	%
Private-label mortgage-backed securities		663		—		(33	)		630		0.17	%
Mortgage-backed securities		95,040		—		(856	)		94,184		25.69	%
SBA pools		17,225		—		(101	)		17,124		4.67	%
Corporate securities		899		—		(5	)		893		0.25	%
	$	141,756	$	—	$	(1,263	)	$	140,492		38.32	%
Unrealized Gain Positions
Obligations of U.S. government agencies	$	29,669	$	582	$	—		$	30,251		8.25	%
Obligations of states and political subdivisions		80,119		3,743		—			83,862		22.88	%
Private-label mortgage-backed securities		2,028		131		—			2,159		0.59	%
Mortgage-backed securities		90,126		1,060		—			91,186		24.87	%
SBA pools		18,560		88		—			18,648		5.09	%
	$	220,502	$	5,604	$	—		$	226,106		61.68	%
	$	362,258	$	5,604	$	(1,263	)	$	366,598		100.00	%

Schedule of Investment Securities in Continuous Unrealized Loss Position

The following table presents a summary of securities in a continuous unrealized loss position at September 30, 2016:

	Securities in Continuous Unrealized Loss Position for Less Than 12 Months		Gross Unrealized Loss on Securities in Loss Position for Less Than 12 Months			Securities in Continuous Unrealized Loss Position for 12 Months or Longer		Gross Unrealized Loss on Securities in Loss Position for 12 Months or Longer
Private-label mortgage-backed securities	$	—	$	—		$	225	$	(24	)
Mortgage-backed securities		79,207		(282	)		3,474		(46	)
SBA pools		15,240		(72	)		3,926		(23	)
Obligations of states and political subdivisions		13,176		(60	)		—		—
Corporate securities		—		—			886		(13	)
	$	107,623	$	(414	)	$	8,511	$	(106	)

At December 31, 2015, the Bank held 432 investment securities, of which 92 were in unrealized loss positions. The following table presents a summary of securities in a continuous unrealized loss position at December 31, 2015:

	Securities in Continuous Unrealized Loss Position for Less Than 12 Months		Gross Unrealized Loss on Securities in Loss Position for Less Than 12 Months			Securities in Continuous Unrealized Loss Position for 12 Months or Longer		Gross Unrealized Loss on Securities in Loss Position for 12 Months or Longer
Obligations of U.S. government agencies	$	14,372	$	(119	)	$	—	$	—
Obligations of states and political subdivisions		12,761		(145	)		528		(4	)
Private-label mortgage-backed securities		240		(4	)		390		(29	)
Mortgage-backed securities		87,896		(711	)		6,288		(145	)
SBA pools		13,539		(78	)		3,585		(23	)
Corporate securities		893		(5	)		—		—
	$	129,701	$	(1,062	)	$	10,791	$	(201	)

Schedule of Roll-Forward Amount of Credit-Related OTTI

Following is a tabular roll-forward of the aggregate amount of credit-related OTTI at the beginning and end of the periods presented along with the amounts recognized in earnings during the three and nine months ended September 30, 2016, and 2015:

	Three months ended				Nine months ended
	September 30,				September 30,
	2016		2015		2016		2015
Balance, beginning of period:	$	266	$	241	$	249	$	227
Additions:
Initial OTTI credit loss		2		—		19		14
Balance, end of period:	$	268	$	241	$	268	$	241

Schedule of Amortized Cost and Fair Value of Securities Available-for-Sale

The amortized cost and estimated fair value of securities at September 30, 2016, by maturity, are shown below. Obligations of U.S. government agencies, states and political subdivisions and corporate securities are shown by contractual maturity. Mortgage-backed securities and SBA variable pools are shown by projected average life.

	September 30, 2016
	Amortized Cost		Estimated Fair Value
Due in one year or less	$	8,466	$	8,523
Due after one year through 5 years		240,116		243,481
Due after 5 years through 10 years		180,377		185,187
Due after 10 years		43,999		45,217
	$	472,958	$	482,408

Schedule of Investment Securities Pledged to Secure Public Deposits and Repurchase Agreements

The following table presents investment securities which were pledged to secure public deposits and repurchase agreements as permitted or required by law:

	September 30, 2016				December 31, 2015
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Pledged to secure public deposits	$	24,435	$	26,677	$	27,938	$	29,052
Pledged to secure repurchase agreements		1,637		1,714		3,985		4,111
	$	26,072	$	28,391	$	31,923	$	33,163

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Loans, Allowance for Loan Losses, and Credit Quality Indicators (Tables)

9 Months Ended

Sep. 30, 2016

Summary of Loan Classifications

Major classifications of period-end loans are as follows:

	September 30,			% of Gross			December 31,			% of Gross
	2016			Loans			2015			Loans
Real estate loans
Multi-family residential	$	79,126			4.37	%	$	66,445			4.73	%
Residential 1-4 family		61,498			3.40	%		53,776			3.82	%
Owner-occupied commercial		425,879			23.55	%		364,742			25.94	%
Nonowner-occupied commercial		431,119			23.84	%		300,774			21.39	%
Total permanent real estate loans		997,622			55.16	%		785,737			55.88	%
Construction loans
Multi-family residential		24,567			1.36	%		7,027			0.50	%
Residential 1-4 family		42,130			2.33	%		30,856			2.19	%
Commercial real estate		78,369			4.33	%		42,680			3.04	%
Commercial bare land and acquisition & development		19,050			1.05	%		20,537			1.46	%
Residential bare land and acquisition & development		8,852			0.49	%		7,268			0.52	%
Total construction real estate loans		172,968			9.56	%		108,368			7.71	%
Total real estate loans		1,170,590			64.72	%		894,105			63.59	%
Commercial loans		630,091			34.84	%		501,976			35.70	%
Consumer loans		3,201			0.18	%		3,351			0.24	%
Other loans		4,764			0.26	%		6,580			0.47	%
Gross loans		1,808,646			100.00	%		1,406,012			100.00	%
Deferred loan origination fees		(1,910	)					(1,530	)
		1,806,736						1,404,482
Allowance for loan losses		(20,531	)					(17,301	)
Total loans, net of allowance for loan losses and net deferred fees	$	1,786,205					$	1,387,181

Summary of Contractually Required Principal Balance of Purchased Credit Impaired Loans and Carrying Value

The following table represents the contractually required principal balance of purchased credit impaired loans and the carrying balance at September 30, 2016 and December 31, 2015:

	September 30,			December 31,
	2016			2015
Contractually required principal payments for purchase credit impaired loans	$	27,668		$	11,528
Accretable yield		(1,696	)		(1,070	)
Nonaccretable yield		(919	)		(378	)
Balance of purchased credit impaired loans	$	25,053		$	10,080

Summary of Changes in Accretable Yield for Purchased Credit Impaired Loans

The following tables summarize the changes in the accretable yield for purchased credit impaired loans for the periods ended September 30, 2016 and 2015:

	Three months ended September 30,
	2016												2015
	Century			Capital Pacific			Foundation			Total			Century			Capital Pacific			Total
Balance, beginning of period	$	—		$	860		$	—		$	860		$	96		$	1,364		$	1,460
Additions		—			—			908			908			—			—			—
Accretion to interest income		—			(49	)		(22	)		(71	)		(28	)		(114	)		(142	)
Balance, end of period	$	—		$	811		$	886		$	1,697		$	68		$	1,250		$	1,318
	Nine months ended September 30,
	2016												2015
	Century			Capital Pacific			Foundation			Total			Century			Capital Pacific			Total
Balance, beginning of period	$	39		$	1,031		$	—		$	1,070		$	151		$	—		$	151
Additions		—			—			908			908			—			1,569			1,569
Accretion to interest income		(39	)		(220	)		(22	)		(281	)		(83	)		(319	)		(402	)
Balance, end of period	$	—		$	811		$	886		$	1,697		$	68		$	1,250		$	1,318

Summary of Allowance for Credit Losses Activity by Loan Segment

A summary of the activity in the allowance for loan losses by major loan classification follows:

	For the three months ended September 30, 2016
	Commercial and Other			Real Estate		Construction		Consumer			Unallocated			Total
Beginning balance	$	7,391		$	9,137	$	1,341	$	46		$	1,212		$	19,127
Charge-offs		(43	)		—		—		(1	)		—			(44	)
Recoveries		57			9		1		1			—			68
Provision (reclassification)		896			339		312		(4	)		(163	)		1,380
Ending balance	$	8,301		$	9,485	$	1,654	$	42		$	1,049		$	20,531
	For the nine months ended September 30, 2016
	Commercial and Other			Real Estate		Construction		Consumer			Unallocated			Total
Beginning balance	$	6,349		$	8,297	$	1,258	$	46		$	1,351		$	17,301
Charge-offs		(708	)		—		—		(4	)		—			(712	)
Recoveries		159			44		162		2			—			367
Provision (reclassification)		2,501			1,144		234		(2	)		(302	)		3,575
Ending balance	$	8,301		$	9,485	$	1,654	$	42		$	1,049		$	20,531

At September 30, 2016, the allowance for loan losses on dental loans was $4,798, compared to $4,022 at December 31, 2015. See Note 5 for additional information on the dental loan portfolio.

The following table presents the allowance and recorded investment in loans by major loan classification at September 30, 2016 and December 31, 2015:

	Balances as of September 30, 2016
	Commercial and Other		Real Estate		Construction		Consumer		Unallocated		Total
Ending allowance: collectively evaluated for impairment	$	7,567	$	9,481	$	1,654	$	42	$	1,049	$	19,793
Ending allowance: individually evaluated for impairment		734		4		—		—		—		738
Ending allowance: loans acquired with deteriorated credit quality		—		—		—		—		—		—
Total ending allowance	$	8,301	$	9,485	$	1,654	$	42	$	1,049	$	20,531
Ending loan balance: collectively evaluated for impairment	$	620,997	$	978,030	$	170,816	$	3,201	$	—	$	1,773,044
Ending loan balance: individually evaluated for impairment		4,463		3,934		2,152				—		10,549
Ending loan balance: loans acquired with deteriorated credit quality		9,395		15,658		—		—		—		25,053
Total ending loan balance	$	634,855	$	997,622	$	172,968	$	3,201	$	—	$	1,808,646
	Balances as of December 31, 2015
	Commercial and Other		Real Estate		Construction		Consumer		Unallocated		Total
Ending allowance: collectively evaluated for impairment	$	6,303	$	8,267	$	1,159	$	46	$	1,351	$	17,126
Ending allowance: individually evaluated for impairment		46		30		99		—		—		175
Ending allowance: loans acquired with deteriorated credit quality		—		—		—		—		—		—
Total ending allowance	$	6,349	$	8,297	$	1,258	$	46	$	1,351	$	17,301
Ending loan balance: collectively evaluated for impairment	$	504,261	$	771,543	$	107,977	$	3,351	$	—	$	1,387,132
Ending loan balance: individually evaluated for impairment		2,627		5,782		391		—		—		8,800
Ending loan balance: loans acquired with deteriorated credit quality		1,668		8,412		—		—		—		10,080
Total ending loan balance	$	508,556	$	785,737	$	108,368	$	3,351	$	—	$	1,406,012

Credit Quality Indicators

The following tables present the Company’s loan portfolio information by loan type and credit grade at September 30, 2016 and December 31, 2015:

Credit Quality Indicators

As of September 30, 2016

	Loan Grade
	Pass			Special Mention			Substandard			Doubtful			Totals
Real estate loans
Multi-family residential	$	79,126		$	—		$	—		$	—		$	79,126
Residential 1-4 family		57,629			—			3,869			—			61,498
Owner-occupied commercial		413,835			—			12,044			—			425,879
Nonowner-occupied commercial		424,397			—			6,722			—			431,119
Total real estate loans		974,987			—			22,635			—			997,622
Construction
Multi-family residential		24,567			—			—			—			24,567
Residential 1-4 family		42,130			—			—			—			42,130
Commercial real estate		78,369			—			—			—			78,369
Commercial bare land and acquisition & development		19,050			—			—			—			19,050
Residential bare land and acquisition & development		6,630			—			2,222			—			8,852
Total construction loans		170,746			—			2,222			—			172,968
Commercial and other		613,144						20,050			1,661			634,855
Consumer		3,201			—			—			—			3,201
Totals	$	1,762,078		$	—		$	44,907		$	1,661		$	1,808,646
Percentage of portfolio		97.43	%		0.00	%		2.48	%		0.09	%		100.00	%
Credit Quality Indicators
As of December 31, 2015
	Loan Grade
	Pass			Special Mention			Substandard			Doubtful			Totals
Real estate loans
Multi-family residential	$	66,208		$	—		$	237		$	—		$	66,445
Residential 1-4 family		49,077			—			4,699			—			53,776
Owner-occupied commercial		353,249			—			11,493			—			364,742
Nonowner-occupied commercial		296,528			—			4,246			—			300,774
Total real estate loans		765,062			—			20,675			—			785,737
Construction
Multi-family residential		7,027			—			—			—			7,027
Residential 1-4 family		30,803			—			53			—			30,856
Commercial real estate		42,580			—			100			—			42,680
Commercial bare land and acquisition & development		20,265			—			272			—			20,537
Residential bare land and acquisition & development		4,969			—			2,299			—			7,268
Total construction loans		105,644			—			2,724			—			108,368
Commercial and other		494,267			—			14,289			—			508,556
Consumer		3,350			—			1			—			3,351
Totals	$	1,368,323		$	—		$	37,689		$	—		$	1,406,012
Percentage of portfolio		97.32	%		0.00	%		2.68	%		0.00	%		100.00	%

Aged Analysis of Dental Loans Receivable

The following tables present an aging analysis of past due and nonaccrual loans at September 30, 2016 and December 31, 2015:

Age Analysis of Loans Receivable

As of September 30, 2016

	30-59 Days Past Due Still Accruing			60-89 Days Past Due Still Accruing			Greater Than 90 days Past Due Still Accruing			Nonaccrual			Total Past Due and Nonaccrual			Total Current			Total Loans Receivable
Real estate loans
Multi-family residential	$	—		$	—		$	—		$	—		$	—		$	79,126		$	79,126
Residential 1-4 family		23			—			—			162			185			58,634			58,819
Owner-occupied commercial		—			—			—			—			—			416,118			416,118
Nonowner-occupied commercial		—			—			—			663			663			427,238			427,901
Total real estate loans		23			—			—			825			848			981,116			981,964
Construction
Multi-family residential		—			—			—			—			—			24,567			24,567
Residential 1-4 family		—			—			—			—			—			42,130			42,130
Commercial real estate		—			—			—			—			—			78,369			78,369
Commercial bare land and acquisition & development		—			—			—			—			—			19,050			19,050
Residential bare land and acquisition & development		—			—			—			—			—			8,852			8,852
Total construction loans		—			—			—			—			—			172,968			172,968
Commercial and other		149			—			—			2,847			2,996			622,464			625,460
Consumer		—			—			—			—			—			3,201			3,201
Total	$	172		$	—		$	—		$	3,672		$	3,844		$	1,779,749		$	1,783,593
Percentage of portfolio		0.01	%		0.00	%		0.00	%		0.21	%		0.22	%		99.78	%		100.00	%

Age Analysis of Loans Receivable

As of December 31, 2015

	30-59 Days Past Due Still Accruing			60-89 Days Past Due Still Accruing			Greater Than 90 days Past Due Still Accruing			Nonaccrual			Total Past Due and Nonaccrual			Total Current			Total Loans Receivable
Real estate loans
Multi-family residential	$	—		$	—		$	—		$	—		$	—		$	66,445		$	66,445
Residential 1-4 family		—			—			—			374			374			51,578			51,952
Owner-occupied commercial		—			—			—			—			—			359,065			359,065
Nonowner-occupied commercial		—			—			—			750			750			299,486			300,236
Total real estate loans		—			—			—			1,124			1,124			776,574			777,698
Construction
Multi-family residential		—			—			—			—			—			7,027			7,027
Residential 1-4 family		480			—			—			53			533			30,323			30,856
Commercial real estate		—			—			—			—			—			42,580			42,580
Commercial bare land and acquisition & development		—			—			—			—			—			20,265			20,265
Residential bare land and acquisition & development		—			—			—			—			—			7,268			7,268
Total construction loans		480			—			—			53			533			107,463			107,996
Commercial and other		—			—			—			1,495			1,495			505,392			506,887
Consumer		1			3			—			—			4			3,347			3,351
Total	$	481		$	3		$	—		$	2,672		$	3,156		$	1,392,776		$	1,395,932
Percentage of portfolio		0.03	%		0.00	%		0.00	%		0.19	%		0.23	%		99.77	%		100.00	%

Analysis of Impaired Loans

The following tables display an analysis of the Company’s impaired loans at September 30, 2016, and December 31, 2015:

Impaired Loan Analysis

As of September 30, 2016

	Recorded Investment With No Specific Allowance Valuation		Recorded Investment With Specific Allowance Valuation		Total Recorded Investment		Unpaid Principal Balance		Average Recorded Investment		Related Specific Allowance Valuation
Real estate
Multi-family residential	$	—	$	—	$	—	$	—	$	—	$	—
Residential 1-4 family		461		303		764		785		606		3
Owner-occupied commercial		104		874		978		978		1,192		1
Nonowner-occupied commercial		2,192		—		2,192		2,254		2,249		—
Total real estate loans		2,757		1,177		3,934		4,017		4,047		4
Construction
Multi-family residential		—		—		—		—		—		—
Residential 1-4 family		—		—		—		—		50		—
Commercial real estate		—		—		—		—		—		—
Commercial bare land and acquisition & development		—		—		—		—		—		—
Residential bare land and acquisition & development		2,152		—		2,152		2,151		1,764		—
Total construction loans		2,152		—		2,152		2,151		1,814		—
Commercial and other		2,305		2,158		4,463		4,834		3,215		734
Consumer		—		—		—		—		—		—
Total impaired loans	$	7,214	$	3,335	$	10,549	$	11,002	$	9,076	$	738

Impaired Loan Analysis

As of December 31, 2015

	Recorded Investment With No Specific Allowance Valuation		Recorded Investment With Specific Allowance Valuation		Total Recorded Investment		Unpaid Principal Balance		Average Recorded Investment		Related Specific Allowance Valuation
Real estate
Multi-family residential	$	—	$	—	$	—	$	—	$	—	$	—
Residential 1-4 family		374		308		682		911		766		5
Owner-occupied commercial		2,788		—		2,788		2,788		1,177		—
Nonowner-occupied commercial		2,287		25		2,312		2,374		2,395		25
Total real estate loans		5,449		333		5,782		6,073		4,338		30
Construction
Multi-family residential		—		—		—		—		—		—
Residential 1-4 family		53		—		53		72		32		—
Commercial real estate		—		—		—		—		—		—
Commercial bare land and acquisition & development		—		—		—		—		—		—
Residential bare land and acquisition & development		—		338		338		338		347		99
Total construction loans		53		338		391		410		379		99
Commercial and other		2,091		536		2,627		3,018		2,404		46
Consumer		—		—		—		—		—		—
Total impaired loans	$	7,593	$	1,207	$	8,800	$	9,501	$	7,121	$	175

Schedule of Troubled Debt Restructurings by Class

The following table displays the Company’s TDRs by class at September 30, 2016 and December 31, 2015:

	Troubled Debt Restructurings as of
	September 30, 2016				December 31, 2015
	Number of Contracts		Post-Modification Outstanding Recorded Investment		Number of Contracts		Post-Modification Outstanding Recorded Investment
Real estate
Multifamily residential		—	$	—		—	$	—
Residential 1-4 family		4		764		6		682
Owner-occupied commercial		3		1,421		3		2,788
Non owner-occupied commercial		6		2,192		7		2,312
Total real estate loans		13		4,377		16		5,782
Construction
Multifamily residential		—		—		—		—
Residential 1-4 family		—		—		—		—
Commercial real estate		—		—		—		—
Commercial bare land and acquisition & development		—		—		—		—
Residential bare land and acquisition & development		2		1,827		—		—
Total construction loans		2		1,827		—		—
Commercial and other		14		2,883		11		2,170
Consumer		—		—		—		—
Total		29	$	9,087		27	$	7,952

Schedule of Restructured Loans

Below is a table of the newly restructured loans identified in the nine months ended September 30, 2016.

	Troubled Debt Restructurings Identified During
	the nine months ended September 30, 2016
	Rate Modification		Term Modification		Interest-only Modification		Combination Modification
Real estate
Multi-family residential	$	—	$	—	$	—	$	—
Residential 1-4 family		—		—		—		299
Owner-occupied commercial		—		—		444		—
Nonowner-occupied commercial		—		—		—		—
Total real estate loans		—		—		444		299
Construction
Multi-family residential		—		—		—		—
Residential 1-4 family		—		—		—		—
Commercial real estate		—		—		—		—
Commercial bare land and acquisition & development		—		—		—		—
Residential bare land and acquisition & development		—		—		—		1,827
Total construction loans		—		—		—		1,827
Commercial and other		—		—		363		673
Consumer		—		—		—		—
Total	$	—	$	—	$	807	$	2,799

Schedule of Troubled Debt Restructurings that Subsequently Defaulted

The following table represents loans receivable modified as TDRs that subsequently defaulted within the first twelve months of restructure during the period.

	Troubled Debt Restructurings
	that Subsequently Defaulted During
	the nine months ended September 30,
	2016				2015
	Number of Contracts		Recorded Investment		Number of Contracts		Recorded Investment
Real estate
Multi-family residential		—	$	—		—	$	—
Residential 1-4 family		—		—		—		—
Owner-occupied commercial		1		444		—		—
Nonowner-occupied commercial		—		—		—		—
Total real estate loans		1		444		—		—
Construction
Multi-family residential		—		—		—		—
Residential 1-4 family		—		—		—		—
Commercial real estate		—		—		—		—
Commercial bare land and acquisition & development		—		—		—		—
Residential bare land and acquisition & development		—		—		—		—
Total construction loans		—		—		—		—
Commercial and other		—		—		—		—
Consumer		—		—		—		—
Total	$	1	$	444	$	—	$	—

Dental Loan [Member]

Credit Quality Indicators

The following tables present the Company’s dental loan portfolio by market and credit grade at September 30, 2016 and December 31, 2015:

As of September 30, 2016

	Loan Grade
	Pass		Special Mention		Substandard		Doubtful		Totals
Local	$	148,834	$	—	$	2,064	$	—	$	150,898
National		216,464		—		1,112		1,661		219,237
Total	$	365,298	$	—	$	3,176	$	1,661	$	370,135
As of December 31, 2015
	Loan Grade
	Pass		Special Mention		Substandard		Doubtful		Totals
Local	$	143,541	$	—	$	2,276	$	—	$	145,817
National		191,574		—		2,771		—		194,345
Total	$	335,115	$	—	$	5,047	$	—	$	340,162

Aged Analysis of Dental Loans Receivable

The following tables present an aged analysis of the dental loan portfolio by market, including nonaccrual loans, as of September 30, 2016 and December 31, 2015:

As of September 30, 2016

	30-59 Days Past Due Still Accruing		60-89 Days Past Due Still Accruing		Greater Than 90 Days Past Due Still Accruing		Nonaccrual		Total Past Due and Nonaccrual		Total Current		Total Loans Receivable
Local	$	—	$	—	$	—	$	465	$	465	$	150,433	$	150,898
National		—		—		—		1,661		1,661		217,576		219,237
Total	$	—	$	—	$	—	$	2,126	$	2,126	$	368,009	$	370,135
As of December 31, 2015
	30-59 Days Past Due Still Accruing		60-89 Days Past Due Still Accruing		Greater Than 90 Days Past Due Still Accruing		Nonaccrual		Total Past Due and Nonaccrual		Total Current		Total Loans Receivable
Local	$	—	$	—	$	—	$	513	$	513	$	145,304	$	145,817
National		—		—		—		—		—		194,345		194,345
Total	$	—	$	—	$	—	$	513	$	513	$	339,649	$	340,162

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Dental Loan Portfolio (Tables)

9 Months Ended

Sep. 30, 2016

Text Block [Abstract]

Major Classifications of Dental Loans

Major classifications of dental loans at September 30, 2016 and December 31, 2015, were as follows:

	September 30, 2016		December 31, 2015
Real estate secured loans:
Owner-occupied commercial	$	59,323	$	56,145
Other dental real estate loans		893		2,198
Total permanent real estate loans		60,216		58,343
Dental construction loans		3,149		4,334
Total real estate loans		63,365		62,677
Commercial loans		306,770		277,485
Gross loans	$	370,135	$	340,162

Dental Loan Total by Market

The following table summarizes the Company’s dental lending by borrower location:

	September 30, 2016		December 31, 2015
Local	$	150,898	$	145,817
National		219,237		194,345
Total	$	370,135	$	340,162

Dental Portfolio Allowance Activity

The specific component is based upon dental loans individually evaluated for impairment.

	Three months ended September 30,						Nine months ended September 30,
	2016			2015			2016			2015
Balance, beginning of period	$	4,151		$	4,080		$	4,022		$	4,141
Reclassification		601			189			704			158
Charge-offs		(9	)		(36	)		(9	)		(78	)
Recoveries		55			9			81			21
Balance, end of period	$	4,798		$	4,242		$	4,798		$	4,242

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Federal Home Loan Bank Borrowings (Tables)

9 Months Ended

Sep. 30, 2016

Banking and Thrift [Abstract]

Federal Home Loan Bank Borrowings by Year of Maturity and Applicable Interest Rate

Below is a summary of outstanding FHLB borrowings by maturity.

	Current Rates			September 30, 2016
Cash management advance		NA		$	15,000
2016		0.57-1.86	%		22,500
2017		2.28	%		3,000
2018		1.55	%		3,000
2019		—			—
2020		—			—
Thereafter		3.85	%		2,000
				$	45,500

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Share-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Compensation Expenses and Tax Benefits

The following table identifies the compensation expense recorded and tax benefits received by the Company on its share-based compensation plans for the three and nine months ended September 30, 2016, and 2015:

	Three months ended September 30,
	2016				2015
	Compensation Expense		Tax Benefit		Compensation Expense/ (Income)			Tax Benefit (Expense)
Equity-based awards:
Employee RSUs	$	397	$	151	$	372		$	141
Liability-based awards:
Employee cash SARs		—		—		(100	)		(38	)
	$	397	$	151	$	272		$	103
	Nine months ended September 30,
	2016				2015
	Compensation Expense		Tax Benefit		Compensation Expense/ (Income)			Tax Benefit (Expense)
Equity-based awards:
Director restricted stock	$	240	$	91	$	248		$	94
Employee RSUs		1,187		451		1,080			410
Liability-based awards:
Employee cash SARs		—		—		(150	)		(57	)
	$	1,427	$	542	$	1,178		$	447

Summary of Stock Options, Employee Stock SARs, and Employee Cash SARs Exercised

The following table identifies stock options, employee stock SARs, and employee cash SARs exercised during the three and nine months ended September 30, 2016 and 2015:

	Three months ended
	September 30, 2016
	Number Exercised		Weighted Average Exercise Price		Intrinsic Value		Number of Shares Issued		Net Cash Payment to Employees
Stock options		30,074	$	16.54	$	9		9,832		NA
Employee stock SARs		41,237	$	15.83	$	5		1,768		NA
Employee cash SARs		27,521	$	15.95		NA		NA	$	45
		98,832			$	14		11,600	$	45
	Nine months ended
	September 30, 2016
	Number Exercised		Weighted Average Exercise Price		Intrinsic Value		Number of Shares Issued		Net Cash Payment to Employees
Stock options		65,034	$	13.86	$	117		44,792		NA
Employee stock SARs		79,806	$	14.54	$	26		6,634		NA
Employee cash SARs		47,644	$	15.11		NA		NA	$	73
		192,484			$	143		51,426	$	73
	Three months ended
	September 30, 2015
	Number Exercised		Weighted Average Exercise Price		Intrinsic Value		Number of Shares Issued		Net Cash Payment to Employees
Stock options		—	$	—	$	—		—		NA
Employee stock SARs		2,204	$	11.61	$	2		171		NA
Employee cash SARs		1,271	$	12.07		NA		NA	$	1
		3,475				2		171		1
	Nine months ended
	September 30, 2015
	Number Exercised		Weighted Average Exercise Price		Intrinsic Value		Number of Shares Issued		Net Cash Payment to Employees
Stock options		1,102	$	12.25	$	2		1,102		NA
Employee stock SARs		3,417	$	11.57	$	4		265		NA
Employee cash SARs		1,479	$	12.07		NA		NA	$	1
		5,998				6		1,367		1

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Derivative Instruments (Tables)

9 Months Ended

Sep. 30, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Summary of Quantitative Information Pertaining to Commercial Loan Related Interest Rate Swaps

The following tables present quantitative information pertaining to the commercial loan related interest rate swaps as of September 30, 2016 and December 31, 2015:

	September 30, 2016						December 31, 2015
	Hedge- Designated			Not-Hedge- Designated			Hedge- Designated			Not-Hedge- Designated
Notional amount	$	1,500		$	8,600		$	1,525		$	8,774
Weighted average pay rate		5.71	%		4.85	%		5.71	%		4.85	%
Weighted average receive rate		3.52	%		3.61	%		3.20	%		3.28	%
Weighted average maturity in years		6.9			5.7			7.6			6.5

Summary of Derivative Instruments

The following table presents the fair values of derivative instruments and their locations in the consolidated balance sheets as of September 30, 2016 and December 31, 2015:

		Asset Derivatives				Liability Derivatives
Derivative	Balance sheet location	September 30, 2016		December 31, 2015		September 30, 2016		December 31, 2015
Cash flow hedge—trust preferred	Other assets or other payables	$	—	$	82	$	82	$	—
Cash flow hedge—long term borrowing	Other assets or other payables		—		—		780		—
Interest rate swap designated as hedging instrument	Other assets or other payables		114		66		147		93
Interest rate swap not designated as hedging instrument	Other assets or other payables		162		24		162		24
		$	276	$	172	$	1,171	$	117

The following table presents the income statement impact of the derivative instruments for the three and nine months ended September 30, 2016 and 2015:

		Three months ended						Nine months ended
	Income statement location	September 30,						September 30,
Derivative		2016			2015			2016			2015
Interest rate swap designated as hedging instrument	Other noninterest income	$	(2	)	$	(10	)	$	(6	)	$	(9	)
		$	(2	)	$	(10	)	$	(6	)	$	(9	)

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Fair Value (Tables)

9 Months Ended

Sep. 30, 2016

Fair Value Disclosures [Abstract]

Estimated Fair Values of Financial Instruments

The estimated fair values of the financial instruments at September 30, 2016 and December 31, 2015:

	September 30, 2016				December 31, 2015
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets:
Cash and cash equivalents	$	107,173	$	107,173	$	36,675	$	36,675
Securities available-for-sale		482,408		482,408		366,598		366,598
Loans, net of deferred fees		1,806,736		1,796,152		1,404,482		1,389,562
Interest receivable		5,957		5,957		5,721		5,721
Federal Home Loan Bank stock		4,643		4,643		5,208		5,208
Bank-owned life insurance		34,927		34,927		22,884		22,884
Interest rate swaps		275		275		172		172
Financial liabilities:
Deposits	$	2,162,633	$	2,162,127	$	1,597,093	$	1,597,280
Federal Home Loan Bank borrowings		45,500		45,613		77,500		77,651
Subordinated debenture		34,072		34,072		—		—
Junior subordinated debentures		11,272		6,706		8,248		2,741
Interest payable		711		711		138		138
Interest rate swaps		1,171		1,171		117		117

Fair Value Hierarchy for Assets and Liabilities Not Measured at Fair Value

The following table presents information about the level in the fair value hierarchy for the Company’s assets and liabilities not measured and carried at fair value as of September 30, 2016 and December 31, 2015:

	Carrying Amount		Fair Value at September 30, 2016
			Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	107,173	$	107,173	$	—	$	—
Loans, net of deferred fees		1,806,736		—		—		1,796,152
Interest receivable		5,957		5,957		—		—
Federal Home Loan Bank stock		4,643		4,643		—		—
Interest rate swaps		275		275		—		—
Financial liabilities:
Deposits	$	2,162,633	$	1,983,492	$	178,635	$	—
Federal Home Loan Bank borrowings		45,500		—		45,613		—
Subordinated debentures		34,072		—		34,072		—
Junior subordinated debentures		11,272		—		6,706		—
Interest payable		711		711		—		—
Interest rate swaps		1,171		1,171		—		—
	Carrying Amount		Fair Value at December 31, 2015
			Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	36,675	$	36,675	$	—	$	—
Loans		1,404,482		—		—		1,389,562
Interest receivable		5,721		5,721		—		—
Federal Home Loan Bank stock		5,208		5,208		—		—
Interest rate swaps		172		172		—		—
Financial liabilities:
Deposits	$	1,597,093	$	1,458,490	$	138,790	$	—
Federal Home Loan Bank borrowings		77,500		—		77,651		—
Junior subordinated debentures		8,248		—		2,741		—
Accrued interest payable		138		138		—		—
Interest rate swaps		117		117		—		—

Assets and Liabilities Measured at Fair Value on Recurring Basis

The tables below show assets and liabilities measured at fair value on a recurring basis as of September 30, 2016 and December 31, 2015:

	Carrying Value		Fair Value at September 30, 2016
			Level 1		Level 2		Level 3
Financial Assets
Available-for-sale securities
Obligations of U.S. government agencies	$	26,552	$	—	$	26,552	$	—
Obligations of states and political subdivisions		115,509		—		115,509		—
Agency mortgage-backed securities		292,735		—		292,735		—
Private-label mortgage-backed securities		2,110		—		656		1,454
SBA pools		44,616		—		44,616		—
Corporate securities		886		—		886		—
Interest rate swaps		275		275		—		—
Total assets measured on a recurring basis	$	482,683	$	275	$	480,954	$	1,454
Financial Liabilities
Interest rate swap liabilities measured on a recurring basis	$	1,171	$	1,171	$	—	$	—
	Carrying Value		Fair Value at December 31, 2015
			Level 1		Level 2		Level 3
Available-for-sale securities
Obligations of U.S. government agencies	$	44,623	$	—	$	44,623	$	—
Obligations of states and political subdivisions		97,151		—		97,151		—
Agency mortgage-backed securities		185,370		—		185,370		—
Private-label mortgage-backed securities		2,790		—		1,204		1,586
SBA pools		35,771		—		35,771		—
Corporate securities		893		—		893		—
Interest rate swaps		172		172		—		—
Total assets measured on a recurring basis	$	366,770	$	172	$	365,012	$	1,586
Financial Liabilities
Interest rate swap liabilities measured on a recurring basis	$	117	$	117	$	—	$	—

Reconciliation of Private-Label Mortgage-Backed Securities Measured at Fair Value on Recurring Basis

The following table provides a reconciliation of private-label mortgage-backed securities measured at fair value on a recurring basis using unobservable inputs (Level 3) for the three and nine months ended September 30, 2016 and 2015:

	Three months ended September 30,						Nine months ended September 30,
	2016			2015			2016			2015
Beginning balance	$	1,399		$	1,782		$	1,586		$	1,568
Transfers into level 3		70			—			70			300
Transfers out of Level 3		—			—			—			—
Total gains or losses
Included in earnings		(2	)		—			(14	)		(13	)
Included in other comprehensive income		64			(2	)		45			65
Paydowns		(77	)		(85	)		(233	)		(225	)
Purchases, issuances, sales and settlements
Purchases		—			—			—			—
Issuances		—			—			—			—
Sales		—			—			—			—
Settlements		—			—			—			—
Ending balance	$	1,454		$	1,695		$	1,454		$	1,695

Assets Measured at Fair Value on Nonrecurring Basis

The tables below show assets measured at fair value on a nonrecurring basis as of September 30, 2016 and December 31, 2015:

	Carrying Value		Fair Value
September 30, 2016			Level 1		Level 2		Level 3
Other real estate owned		9,966		—		—		9,966
Total	$	9,966	$	—	$	—	$	9,966
	Carrying Value		Fair Value
December 31, 2015			Level 1		Level 2		Level 3
Loans measured for impairment (net of government guarantees and specific reserves)	$	53	$	—	$	—	$	53
Other real estate owned		10,147		—		—		10,147
Total	$	10,200	$	—	$	—	$	10,200

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Regulatory Matters (Tables)

9 Months Ended

Sep. 30, 2016

Banking and Thrift [Abstract]

Schedule of Compliance with Regulatory Capital Requirements

To be categorized as well-capitalized, the Bank must maintain minimum Total capital, Tier 1 capital, common equity Tier 1 to risk-weighted assets and, Tier 1 capital to leverage assets ratios as set forth in the following table.

	Actual					For Capital Adequacy Purposes					To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of September 30, 2016:
Total capital (to risk weighted assets)
Bank:	$	256,454		11.90	%	$	172,432		8.00	%	$	215,540		10.00	%
Company:	$	270,622		12.55	%		NA					NA
Tier 1 capital (to risk weighted assets)
Bank:	$	235,375		10.92	%	$	129,324		6.00	%	$	172,432		8.00	%
Company:	$	215,471		9.99	%		NA					NA
Common Equity Tier 1 (to risk weighted assets)
Bank:	$	235,375		10.92	%	$	96,993		4.50	%	$	140,101		6.50	%
Company:	$	203,359		9.43	%		NA					NA
Tier 1 capital (to leverage assets)
Bank:	$	235,375		11.26	%	$	83,578		4.00	%	$	107,770		5.00	%
Company:	$	215,471		10.33	%		NA					NA
As of December 31, 2015:
Total capital (to risk weighted assets)
Bank:	$	200,236		12.52	%	$	127,990		8.00	%	$	159,988		10.00	%
Company:	$	201,261		12.58	%		NA					NA
Tier 1 capital (to risk weighted assets)
Bank:	$	182,575		11.41	%	$	95,993		6.00	%	$	127,990		8.00	%
Company:	$	183,600		11.47	%		NA					NA
Common Equity Tier 1 (to risk weighted assets)
Bank:	$	182,575		11.41	%	$	71,995		4.50	%	$	103,992		6.50	%
Company:	$	175,600		10.97	%		NA					NA
Tier 1 capital (to leverage assets)
Bank:	$	182,575		9.88	%	$	73,939		4.00	%	$	92,422		5.00	%
Company:	$	183,600		9.93	%		NA					NA

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Business Combinations - Additional Information (Detail) $ / shares in Units, $ in Thousands		3 Months Ended	9 Months Ended
	Sep. 06, 2016 USD ($) $ / shares shares	Sep. 30, 2016 USD ($)	Sep. 30, 2016 USD ($)	Sep. 30, 2015 USD ($)	Dec. 31, 2015 USD ($)
Business Acquisition [Line Items]
Merger-related expense		$ 1,767	$ 3,745	$ 1,836
Contractually required principal payments for purchase credit impaired loans		27,668	$ 27,668		$ 11,528
Foundation Bancorp Inc [Member]
Business Acquisition [Line Items]
Acquisition date			Sep. 06, 2016
Acquisition method resulted in the recognition of preliminary goodwill	$ 21,407
Merger-related expense		1,767	$ 3,745
Contractually required principal payments for purchase credit impaired loans	281,790	$ 277,683	$ 277,683
Foundation Bancorp Inc [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Business Acquisition [Line Items]
Contractually required principal payments for purchase credit impaired loans	$ 21,575
Foundation Bancorp Inc [Member] | Merger Agreement [Member]
Business Acquisition [Line Items]
Business acquisition, common stock for each share exchanged | shares	12.50
Cash received by shareholders for business acquisition per share | $ / shares	$ 0.7911
Acquisition consideration transferred, Cash transferred percentage	30.00%
Acquisition consideration transferred, Common stock transferred percentage	70.00%
Maximum aggregate cash consideration for acquisition	$ 19,337
Aggregate stock consideration to be issued for acquisition | shares	2,853,361
Cash received by shareholders on closing stock price per share | $ / shares	$ 16.75
Consideration received by all cash election shareholders in cash | $ / shares	$ 8.72
Consideration received by all cash election shareholders in shares	0.23915
Consideration received by mixed election shareholders in cash | $ / shares	$ 3.75
Consideration received by mixed election shareholders in shares	0.55377

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Business Combinations - Summary of Net Assets Acquired and Estimated Fair Value Adjustments (Detail) - Foundation Bancorp Inc [Member] $ in Thousands	Sep. 06, 2016 USD ($)
Business Acquisition [Line Items]
Cost basis net assets	$ 90,993
Stock issued	(47,794)
Fair value adjustments:
Loans, net	(11,257)
Core deposit intangible	5,762
Junior subordinated debentures	3,173
Deferred tax asset adjustment	(2,948)
Securities	1,541
Other	1,274
Goodwill	21,407
Shareholders [Member]
Business Acquisition [Line Items]
Cash payment to shareholders	$ (19,337)

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Business Combinations - Statement of Assets Acquired and Liabilities Assumed at Fair Values (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Sep. 06, 2016	Dec. 31, 2015
ASSETS
Cash and due from banks, net of consideration paid	$ 35,819		$ 23,819
LIABILITIES AND SHAREHOLDERS' EQUITY
Junior subordinated debentures	$ 11,272		$ 8,248
Foundation Bancorp Inc [Member]
ASSETS
Cash and due from banks, net of consideration paid		$ 43,855
Securities available-for-sale		88,331
Gross loans		281,790
Fair value adjustments
Credit quality-related		(8,884)
Interest rate-related		(2,373)
Net Loans		270,533
Interest receivable		934
Federal Home Loan Bank stock		532
Property and equipment		408
Goodwill		21,407
Core deposit intangible		5,762
Deferred tax asset		3,894
Other real estate owned		1,592
Bank-owned life insurance		11,574
Other asset		1,218
Total Assets		450,040
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits		396,509
Other liabilities		2,724
Junior subordinated debentures		3,013
Total liabilities		402,246
Common stock issued to Foundation Bancorp shareholders		47,794
Total liabilities and shareholders' equity		$ 450,040

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Business Combinations - Summary of Acquired Loans at Acquisition Date (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Sep. 06, 2016	Dec. 31, 2015
Business Acquisition [Line Items]
Contractually required principal payments	$ 27,668		$ 11,528
Foundation Bancorp Inc [Member]
Business Acquisition [Line Items]
Contractually required principal payments	277,683	$ 281,790
Purchase adjustment for credit and interest rate	(10,748)	(11,257)
Balance of acquired loans	$ 266,935	$ 270,533

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Securities Available-for-Sale - Schedule of Amortized Cost, Gross Unrealized Gains, Gross Unrealized Losses and Estimated Fair Values of Securities Available-for-Sale (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 472,958	$ 362,258
Gross Unrealized Gains	9,971	5,604
Gross Unrealized Losses	(520)	(1,263)
Estimated Fair Value	$ 482,408	$ 366,598
Percentage of Portfolio	100.00%	100.00%
Unrealized Loss Positions [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 116,654	$ 141,756
Gross Unrealized Losses	(520)	(1,263)
Estimated Fair Value	$ 116,134	$ 140,492
Percentage of Portfolio	24.00%	38.32%
Unrealized Loss Positions [Member] | Obligations of U.S. Government Agencies [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost		$ 14,491
Gross Unrealized Losses		(119)
Estimated Fair Value		$ 14,372
Percentage of Portfolio		3.92%
Unrealized Loss Positions [Member] | Obligations of States and Political Subdivisions [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 13,236	$ 13,438
Gross Unrealized Losses	(60)	(149)
Estimated Fair Value	$ 13,176	$ 13,289
Percentage of Portfolio	3.00%	3.62%
Unrealized Loss Positions [Member] | Private-Label Mortgage-Backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 249	$ 663
Gross Unrealized Losses	(24)	(33)
Estimated Fair Value	$ 225	$ 630
Percentage of Portfolio	0.00%	0.17%
Unrealized Loss Positions [Member] | Mortgage-Backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 83,009	$ 95,040
Gross Unrealized Losses	(328)	(856)
Estimated Fair Value	$ 82,681	$ 94,184
Percentage of Portfolio	17.00%	25.69%
Unrealized Loss Positions [Member] | SBA Pools [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 19,261	$ 17,225
Gross Unrealized Losses	(95)	(101)
Estimated Fair Value	$ 19,166	$ 17,124
Percentage of Portfolio	4.00%	4.67%
Unrealized Loss Positions [Member] | Corporate Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 899	$ 899
Gross Unrealized Losses	(13)	(5)
Estimated Fair Value	$ 886	$ 893
Percentage of Portfolio	0.00%	0.25%
Unrealized Gain Positions [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 356,304	$ 220,502
Gross Unrealized Gains	9,971	5,604
Estimated Fair Value	$ 366,274	$ 226,106
Percentage of Portfolio	76.00%	61.68%
Unrealized Gain Positions [Member] | Obligations of U.S. Government Agencies [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 25,290	$ 29,669
Gross Unrealized Gains	1,262	582
Estimated Fair Value	$ 26,552	$ 30,251
Percentage of Portfolio	6.00%	8.25%
Unrealized Gain Positions [Member] | Obligations of States and Political Subdivisions [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 97,705	$ 80,119
Gross Unrealized Gains	4,629	3,743
Estimated Fair Value	$ 102,334	$ 83,862
Percentage of Portfolio	21.00%	22.88%
Unrealized Gain Positions [Member] | Private-Label Mortgage-Backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 1,728	$ 2,028
Gross Unrealized Gains	157	131
Estimated Fair Value	$ 1,885	$ 2,159
Percentage of Portfolio	0.00%	0.59%
Unrealized Gain Positions [Member] | Mortgage-Backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 206,376	$ 90,126
Gross Unrealized Gains	3,678	1,060
Estimated Fair Value	$ 210,054	$ 91,186
Percentage of Portfolio	44.00%	24.87%
Unrealized Gain Positions [Member] | SBA Pools [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 25,205	$ 18,560
Gross Unrealized Gains	245	88
Estimated Fair Value	$ 25,449	$ 18,648
Percentage of Portfolio	5.00%	5.09%

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Securities Available-for-Sale - Additional Information (Detail)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2016 USD ($) Securities	Sep. 30, 2015 USD ($) Securities	Sep. 30, 2016 USD ($) Securities	Sep. 30, 2015 USD ($) Securities	Dec. 31, 2015 USD ($) Securities
Schedule of Available-for-sale Securities [Line Items]
Investment securities in unrealized loss positions, number of positions | Securities	484		484		432
Available for sale securities number of securities | Securities	61		61		92
Additional other-than-temporary impairment	$ 2,000	$ 0	$ 19,000	$ 14,000
Amortized Cost	$ 472,958,000		$ 472,958,000		$ 362,258,000
Projected average life of securities portfolio			4 years 8 months 19 days		4 years 2 months 16 days
Number of investment securities sold | Securities	30	19	60	41
Proceeds from sale of investment securities	$ 54,426,000	$ 21,069,000	$ 98,309,000	$ 35,216,000
Gross gain from investment securities sold	0	143,000	552,000	585,000
Gross loss from investment securities sold	0	0	243,000	249,000
Net gain from investment securities sold		$ 143,000	309,000	$ 336,000
Balance of repurchase agreement	1,107,000		1,107,000		$ 71,000
Substandard [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 1,440,000		$ 1,440,000		$ 1,506,000
Private-Label Mortgage-Backed Securities [Member] | Substandard [Member]
Schedule of Available-for-sale Securities [Line Items]
Number of private-label mortgage-backed securities | Securities	10		10

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Securities Available-for-Sale - Schedule of Investment Securities in Continuous Unrealized Loss Position (Detail) - Unrealized Loss Positions [Member] - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Schedule of Available-for-sale Securities [Line Items]
Securities in Continuous Unrealized Loss Positions for less than 12 Months	$ 107,623	$ 129,701
Gross Unrealized Loss on Securities in Loss Position for Less than 12 Months	(414)	(1,062)
Securities in Continuous Unrealized Loss Positions for 12 Months or Longer	8,511	10,791
Gross Unrealized Loss on Securities in Loss Position for 12 Months or Longer	(106)	(201)
Obligations of U.S. Government Agencies [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities in Continuous Unrealized Loss Positions for less than 12 Months		14,372
Gross Unrealized Loss on Securities in Loss Position for Less than 12 Months		(119)
Obligations of States and Political Subdivisions [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities in Continuous Unrealized Loss Positions for less than 12 Months	13,176	12,761
Gross Unrealized Loss on Securities in Loss Position for Less than 12 Months	(60)	(145)
Securities in Continuous Unrealized Loss Positions for 12 Months or Longer		528
Gross Unrealized Loss on Securities in Loss Position for 12 Months or Longer		(4)
Private-Label Mortgage-Backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities in Continuous Unrealized Loss Positions for less than 12 Months		240
Gross Unrealized Loss on Securities in Loss Position for Less than 12 Months		(4)
Securities in Continuous Unrealized Loss Positions for 12 Months or Longer	225	390
Gross Unrealized Loss on Securities in Loss Position for 12 Months or Longer	(24)	(29)
Mortgage-Backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities in Continuous Unrealized Loss Positions for less than 12 Months	79,207	87,896
Gross Unrealized Loss on Securities in Loss Position for Less than 12 Months	(282)	(711)
Securities in Continuous Unrealized Loss Positions for 12 Months or Longer	3,474	6,288
Gross Unrealized Loss on Securities in Loss Position for 12 Months or Longer	(46)	(145)
SBA Pools [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities in Continuous Unrealized Loss Positions for less than 12 Months	15,240	13,539
Gross Unrealized Loss on Securities in Loss Position for Less than 12 Months	(72)	(78)
Securities in Continuous Unrealized Loss Positions for 12 Months or Longer	3,926	3,585
Gross Unrealized Loss on Securities in Loss Position for 12 Months or Longer	(23)	(23)
Corporate Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities in Continuous Unrealized Loss Positions for less than 12 Months		893
Gross Unrealized Loss on Securities in Loss Position for Less than 12 Months		$ (5)
Securities in Continuous Unrealized Loss Positions for 12 Months or Longer	886
Gross Unrealized Loss on Securities in Loss Position for 12 Months or Longer	$ (13)

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Securities Available-for-Sale - Schedule of Roll-Forward Amount of Credit-Related OTTI (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Investments, Debt and Equity Securities [Abstract]
Balance, beginning of period:	$ 266	$ 241	$ 249	$ 227
Initial OTTI credit loss	2	0	19	14
Balance, end of period:	$ 268	$ 241	$ 268	$ 241

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Securities Available-for-Sale - Schedule of Amortized Cost and Fair Value of Securities Available-for-Sale (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Investments, Debt and Equity Securities [Abstract]
Due in one year or less, Amortized Cost	$ 8,466
Due after one year through 5 years, Amortized Cost	240,116
Due after 5 years through 10 years, Amortized Cost	180,377
Due after 10 years, Amortized Cost	43,999
Amortized Cost	472,958	$ 362,258
Due in one year or less, Estimated Fair Value	8,523
Due after one year through 5 years, Estimated Fair Value	243,481
Due after 5 years through 10 years, Estimated Fair Value	185,187
Due after 10 years, Estimated Fair Value	45,217
Estimated Fair Value	$ 482,408	$ 366,598

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Securities Available-for-Sale - Schedule of Investment Securities Pledged to Secure Public Deposits and Repurchase Agreements (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 472,958	$ 362,258
Collateral Pledged [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	26,072	31,923
Estimated Fair Value	28,391	33,163
Collateral Pledged [Member] | Securities Pledged as Collateral [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	24,435	27,938
Estimated Fair Value	26,677	29,052
Collateral Pledged [Member] | Repurchase Accounts [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	1,637	3,985
Estimated Fair Value	$ 1,714	$ 4,111

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Loans, Allowance for Loan Losses, and Credit Quality Indicators - Summary of Loan Classifications (Detail) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Financing Receivable, Allowance for Credit Losses [Line Items]
Gross loans	$ 1,808,646	$ 1,406,012
Deferred loan origination fees	(1,910)	(1,530)
Gross loans, net of deferred income	1,806,736	1,404,482
Allowance for loan losses	(20,531)	(17,301)
Net loans	$ 1,786,205	$ 1,387,181
Percentage of gross loans	100.00%	100.00%
Commercial Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Gross loans	$ 630,091	$ 501,976
Percentage of gross loans	34.84%	35.70%
Other Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Gross loans	$ 4,764	$ 6,580
Percentage of gross loans	0.26%	0.47%
Real Estate Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Gross loans	$ 997,622	$ 785,737
Real Estate Loans [Member] | Multi-Family Residential [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Gross loans	79,126	66,445
Real Estate Loans [Member] | Residential 1-4 Family [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Gross loans	61,498	53,776
Real Estate Loans [Member] | Owner-Occupied Commercial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Gross loans	425,879	364,742
Real Estate Loans [Member] | Nonowner-Occupied Commercial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Gross loans	431,119	300,774
Consumer [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Gross loans	3,201	3,351
Allowance for loan losses	$ (42)	$ (46)
Percentage of gross loans	0.18%	0.24%
Real Estate Secured Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Gross loans	$ 1,170,590	$ 894,105
Percentage of gross loans	64.72%	63.59%
Real Estate Secured Loans [Member] | Real Estate Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Gross loans	$ 997,622	$ 785,737
Percentage of gross loans	55.16%	55.88%
Real Estate Secured Loans [Member] | Real Estate Loans [Member] | Multi-Family Residential [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Gross loans	$ 79,126	$ 66,445
Percentage of gross loans	4.37%	4.73%
Real Estate Secured Loans [Member] | Real Estate Loans [Member] | Residential 1-4 Family [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Gross loans	$ 61,498	$ 53,776
Percentage of gross loans	3.40%	3.82%
Real Estate Secured Loans [Member] | Real Estate Loans [Member] | Owner-Occupied Commercial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Gross loans	$ 425,879	$ 364,742
Percentage of gross loans	23.55%	25.94%
Real Estate Secured Loans [Member] | Real Estate Loans [Member] | Nonowner-Occupied Commercial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Gross loans	$ 431,119	$ 300,774
Percentage of gross loans	23.84%	21.39%
Real Estate Secured Loans [Member] | Construction Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Gross loans	$ 172,968	$ 108,368
Percentage of gross loans	9.56%	7.71%
Real Estate Secured Loans [Member] | Construction Loans [Member] | Multi-Family Residential [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Gross loans	$ 24,567	$ 7,027
Percentage of gross loans	1.36%	0.50%
Real Estate Secured Loans [Member] | Construction Loans [Member] | Residential 1-4 Family [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Gross loans	$ 42,130	$ 30,856
Percentage of gross loans	2.33%	2.19%
Real Estate Secured Loans [Member] | Construction Loans [Member] | Commercial Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Gross loans	$ 78,369	$ 42,680
Percentage of gross loans	4.33%	3.04%
Real Estate Secured Loans [Member] | Construction Loans [Member] | Commercial Bare Land and Acquisition & Development [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Gross loans	$ 19,050	$ 20,537
Percentage of gross loans	1.05%	1.46%
Real Estate Secured Loans [Member] | Construction Loans [Member] | Residential Bare Land and Acquisition & Development [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Gross loans	$ 8,852	$ 7,268
Percentage of gross loans	0.49%	0.52%

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Loans, Allowance for Loan Losses, and Credit Quality Indicators - Additional Information (Detail)			3 Months Ended		9 Months Ended	12 Months Ended
	Sep. 30, 2016 USD ($)	Dec. 31, 2015 USD ($)	Sep. 30, 2016 USD ($) Contract	Sep. 30, 2015 USD ($) Contract	Sep. 30, 2016 USD ($) Contract	Dec. 31, 2015 USD ($)	Jun. 30, 2016 USD ($) RiskRating	Jun. 30, 2015 USD ($)	Dec. 31, 2014 USD ($)
Guarantor Obligations [Line Items]
Outstanding loans to dental professionals	$ 1,786,205,000	$ 1,387,181,000	$ 1,786,205,000		$ 1,786,205,000	$ 1,387,181,000
Percentage of total outstanding loans	20.46%	24.19%			20.46%	24.19%
Percentage of total loan portfolio					10.00%
Percentage of loan portfolio collateralized by real estate	64.72%
Allowance for loan losses	$ 20,531,000	$ 17,301,000	20,531,000		$ 20,531,000	$ 17,301,000	$ 19,127,000
Valuation allowance for impaired loans	738,000	175,000	738,000		738,000	175,000
Recorded investment in impaired loans, net of government guarantees	9,551,000	7,527,000	9,551,000		9,551,000	7,527,000
Loan unfunded commitments on classified loans	3,370,000	360,000	3,370,000		3,370,000	360,000
Interest income recognized in the period					0
Government guarantees	998,000	1,273,000	$ 998,000		$ 998,000	1,273,000
Identified TDRs newly considered for impairment | Contract					9
TDRs that subsequently defaulted | Contract			0	0	1
Commitments to lend additional funds on loans restructured as TDRs	0	0	$ 0		$ 0	0
Troubled Debt Restructurings [Member]
Guarantor Obligations [Line Items]
Recorded investment in nonaccrual status	2,228,000	1,807,000	2,228,000		2,228,000	1,807,000
Dental Loan [Member]
Guarantor Obligations [Line Items]
Outstanding loans to dental professionals	370,135,000	340,162,000	370,135,000		370,135,000	340,162,000
Allowance for loan losses	4,798,000	4,022,000	4,798,000	$ 4,242,000	4,798,000	4,022,000	$ 4,151,000	$ 4,080,000	$ 4,141,000
Allowance for Loan Losses [Member]
Guarantor Obligations [Line Items]
Valuation allowance for impaired loans	$ 10,549,000	$ 8,800,000	$ 10,549,000		$ 10,549,000	$ 8,800,000
Minimum [Member]
Guarantor Obligations [Line Items]
Internal risk rating | RiskRating							1
Maximum [Member]
Guarantor Obligations [Line Items]
Internal risk rating | RiskRating							10

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Loans, Allowance for Loan Losses, and Credit Quality Indicators - Summary of Contractually Required Principal Balance of Purchased Credit Impaired Loans and Carrying Value (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Jun. 30, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Dec. 31, 2014
Receivables [Abstract]
Contractually required principal payments for purchase credit impaired loans	$ 27,668		$ 11,528
Accretable yield	(1,697)	$ (860)	(1,070)	$ (1,318)	$ (1,460)	$ (151)
Nonaccretable yield	(919)		(378)
Balance of purchased credit impaired loans	$ 25,053		$ 10,080

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Loans, Allowance for Loan Losses, and Credit Quality Indicators - Summary of Changes in Accretable Yield for Purchased credit Impaired Loans (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Impaired Loans By Type [Line Items]
Balance, beginning of period	$ 860	$ 1,460	$ 1,070	$ 151
Additions	908		908	1,569
Accretion to interest income	(71)	(142)	(281)	(402)
Balance, end of period	1,697	1,318	1,697	1,318
Century [Member]
Impaired Loans By Type [Line Items]
Balance, beginning of period		96	39	151
Accretion to interest income		(28)	(39)	(83)
Balance, end of period		68		68
Capital Pacific Bank [Member]
Impaired Loans By Type [Line Items]
Balance, beginning of period	860	1,364	1,031
Additions				1,569
Accretion to interest income	(49)	(114)	(220)	(319)
Balance, end of period	811	$ 1,250	811	$ 1,250
Foundation Bancorp Inc [Member]
Impaired Loans By Type [Line Items]
Additions	908		908
Accretion to interest income	(22)		(22)
Balance, end of period	$ 886		$ 886

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Loans, Allowance for Loan Losses, and Credit Quality Indicators - Summary of Allowance for Credit Losses Activity by Loan Segment (Detail) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2016	Dec. 31, 2015
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, beginning of period	$ 19,127	$ 17,301
Charge-offs	(44)	(712)
Recoveries	68	367
Provision (reclassification)	1,380	3,575
Balance, end of period	20,531	20,531
Ending allowance: collectively evaluated for impairment	19,793	19,793	$ 17,126
Ending allowance: individually evaluated for impairment	738	738	175
Total ending allowance	20,531	20,531	17,301
Ending loan balance: collectively evaluated for impairment	1,773,044	1,773,044	1,387,132
Ending loan balance: individually evaluated for impairment	10,549	10,549	8,800
Total ending loan balance	1,808,646	1,808,646	1,406,012
Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Ending loan balance: loans acquired with deteriorated credit quality	25,053	25,053	10,080
Commercial and Other [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, beginning of period	7,391	6,349
Charge-offs	(43)	(708)
Recoveries	57	159
Provision (reclassification)	896	2,501
Balance, end of period	8,301	8,301
Ending allowance: collectively evaluated for impairment	7,567	7,567	6,303
Ending allowance: individually evaluated for impairment	734	734	46
Total ending allowance	8,301	8,301	6,349
Ending loan balance: collectively evaluated for impairment	620,997	620,997	504,261
Ending loan balance: individually evaluated for impairment	4,463	4,463	2,627
Total ending loan balance	634,855	634,855	508,556
Commercial and Other [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Ending loan balance: loans acquired with deteriorated credit quality	9,395	9,395	1,668
Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, beginning of period	9,137	8,297
Recoveries	9	44
Provision (reclassification)	339	1,144
Balance, end of period	9,485	9,485
Ending allowance: collectively evaluated for impairment	9,481	9,481	8,267
Ending allowance: individually evaluated for impairment	4	4	30
Total ending allowance	9,485	9,485	8,297
Ending loan balance: collectively evaluated for impairment	978,030	978,030	771,543
Ending loan balance: individually evaluated for impairment	3,934	3,934	5,782
Total ending loan balance	997,622	997,622	785,737
Real Estate [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Ending loan balance: loans acquired with deteriorated credit quality	15,658	15,658	8,412
Construction [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, beginning of period	1,341	1,258
Recoveries	1	162
Provision (reclassification)	312	234
Balance, end of period	1,654	1,654
Ending allowance: collectively evaluated for impairment	1,654	1,654	1,159
Ending allowance: individually evaluated for impairment			99
Total ending allowance	1,654	1,654	1,258
Ending loan balance: collectively evaluated for impairment	170,816	170,816	107,977
Ending loan balance: individually evaluated for impairment	2,152	2,152	391
Total ending loan balance	172,968	172,968	108,368
Consumer [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, beginning of period	46	46
Charge-offs	(1)	(4)
Recoveries	1	2
Provision (reclassification)	(4)	(2)
Balance, end of period	42	42
Ending allowance: collectively evaluated for impairment	42	42	46
Total ending allowance	42	42	46
Ending loan balance: collectively evaluated for impairment	3,201	3,201	3,351
Total ending loan balance	3,201	3,201	3,351
Unallocated [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, beginning of period	1,212	1,351
Provision (reclassification)	(163)	(302)
Balance, end of period	1,049	1,049
Ending allowance: collectively evaluated for impairment	1,049	1,049	1,351
Total ending allowance	$ 1,049	$ 1,049	$ 1,351

XML

Loans, Allowance for Loan Losses, and Credit Quality Indicators - Credit Quality Indicators (Detail) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Financing Receivable, Recorded Investment [Line Items]
Percentage of total portfolio	100.00%	100.00%
Loan Grade	$ 1,808,646	$ 1,406,012
Real Estate Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan Grade	997,622	785,737
Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan Grade	172,968	108,368
Commercial and Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan Grade	634,855	508,556
Consumer [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan Grade	3,201	3,351
Multi-Family Residential [Member] | Real Estate Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan Grade	79,126	66,445
Multi-Family Residential [Member] | Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan Grade	24,567	7,027
Residential 1-4 Family [Member] | Real Estate Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan Grade	61,498	53,776
Residential 1-4 Family [Member] | Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan Grade	42,130	30,856
Owner-Occupied Commercial [Member] | Real Estate Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan Grade	425,879	364,742
Nonowner-Occupied Commercial [Member] | Real Estate Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan Grade	431,119	300,774
Commercial Real Estate [Member] | Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan Grade	78,369	42,680
Commercial Bare Land and Acquisition & Development [Member] | Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan Grade	19,050	20,537
Residential Bare Land and Acquisition & Development [Member] | Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan Grade	$ 8,852	$ 7,268
Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Percentage of total portfolio	97.43%	97.32%
Loan Grade	$ 1,762,078	$ 1,368,323
Pass [Member] | Real Estate Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan Grade	974,987	765,062
Pass [Member] | Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan Grade	170,746	105,644
Pass [Member] | Commercial and Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan Grade	613,144	494,267
Pass [Member] | Consumer [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan Grade	3,201	3,350
Pass [Member] | Multi-Family Residential [Member] | Real Estate Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan Grade	79,126	66,208
Pass [Member] | Multi-Family Residential [Member] | Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan Grade	24,567	7,027
Pass [Member] | Residential 1-4 Family [Member] | Real Estate Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan Grade	57,629	49,077
Pass [Member] | Residential 1-4 Family [Member] | Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan Grade	42,130	30,803
Pass [Member] | Owner-Occupied Commercial [Member] | Real Estate Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan Grade	413,835	353,249
Pass [Member] | Nonowner-Occupied Commercial [Member] | Real Estate Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan Grade	424,397	296,528
Pass [Member] | Commercial Real Estate [Member] | Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan Grade	78,369	42,580
Pass [Member] | Commercial Bare Land and Acquisition & Development [Member] | Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan Grade	19,050	20,265
Pass [Member] | Residential Bare Land and Acquisition & Development [Member] | Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan Grade	$ 6,630	$ 4,969
Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Percentage of total portfolio	0.00%	0.00%
Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Percentage of total portfolio	2.48%	2.68%
Loan Grade	$ 44,907	$ 37,689
Substandard [Member] | Real Estate Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan Grade	22,635	20,675
Substandard [Member] | Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan Grade	2,222	2,724
Substandard [Member] | Commercial and Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan Grade	20,050	14,289
Substandard [Member] | Consumer [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan Grade		1
Substandard [Member] | Multi-Family Residential [Member] | Real Estate Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan Grade		237
Substandard [Member] | Residential 1-4 Family [Member] | Real Estate Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan Grade	3,869	4,699
Substandard [Member] | Residential 1-4 Family [Member] | Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan Grade		53
Substandard [Member] | Owner-Occupied Commercial [Member] | Real Estate Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan Grade	12,044	11,493
Substandard [Member] | Nonowner-Occupied Commercial [Member] | Real Estate Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan Grade	6,722	4,246
Substandard [Member] | Commercial Real Estate [Member] | Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan Grade		100
Substandard [Member] | Commercial Bare Land and Acquisition & Development [Member] | Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan Grade		272
Substandard [Member] | Residential Bare Land and Acquisition & Development [Member] | Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan Grade	$ 2,222	$ 2,299
Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Percentage of total portfolio	0.09%	0.00%
Loan Grade	$ 1,661
Doubtful [Member] | Commercial and Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan Grade	$ 1,661

XML

Loans, Allowance for Loan Losses, and Credit Quality Indicators - Aged Analysis of Dental Loans Receivable (Detail) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total ending loan balance	$ 1,808,646	$ 1,406,012
Real Estate Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total ending loan balance	997,622	785,737
Real Estate Loans [Member] | Multi-Family Residential [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total ending loan balance	79,126	66,445
Real Estate Loans [Member] | Residential 1-4 Family [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total ending loan balance	61,498	53,776
Real Estate Loans [Member] | Owner-Occupied Commercial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total ending loan balance	425,879	364,742
Real Estate Loans [Member] | Nonowner-Occupied Commercial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total ending loan balance	431,119	300,774
Construction [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total ending loan balance	172,968	108,368
Construction [Member] | Multi-Family Residential [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total ending loan balance	24,567	7,027
Construction [Member] | Residential 1-4 Family [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total ending loan balance	42,130	30,856
Construction [Member] | Commercial Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total ending loan balance	78,369	42,680
Construction [Member] | Commercial Bare Land and Acquisition & Development [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total ending loan balance	19,050	20,537
Construction [Member] | Residential Bare Land and Acquisition & Development [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total ending loan balance	8,852	7,268
Commercial and Other [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total ending loan balance	634,855	508,556
Consumer [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total ending loan balance	$ 3,201	$ 3,351
Age Analysis of Loans Receivable [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual, Percentage of total portfolio	0.21%	0.19%
Total Past Due and Nonaccrual, Percentage of total portfolio	0.22%	0.23%
Total Current, Percentage of total portfolio	99.78%	99.77%
Total Loans Receivable, Percentage of total portfolio	100.00%	100.00%
Nonaccrual	$ 3,672	$ 2,672
Total Past Due and Nonaccrual	3,844	3,156
Total Current	1,779,749	1,392,776
Total ending loan balance	1,783,593	1,395,932
Age Analysis of Loans Receivable [Member] | Real Estate Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual	825	1,124
Total Past Due and Nonaccrual	848	1,124
Total Current	981,116	776,574
Total ending loan balance	981,964	777,698
Age Analysis of Loans Receivable [Member] | Real Estate Loans [Member] | Multi-Family Residential [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Current	79,126	66,445
Total ending loan balance	79,126	66,445
Age Analysis of Loans Receivable [Member] | Real Estate Loans [Member] | Residential 1-4 Family [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual	162	374
Total Past Due and Nonaccrual	185	374
Total Current	58,634	51,578
Total ending loan balance	58,819	51,952
Age Analysis of Loans Receivable [Member] | Real Estate Loans [Member] | Owner-Occupied Commercial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Current	416,118	359,065
Total ending loan balance	416,118	359,065
Age Analysis of Loans Receivable [Member] | Real Estate Loans [Member] | Nonowner-Occupied Commercial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual	663	750
Total Past Due and Nonaccrual	663	750
Total Current	427,238	299,486
Total ending loan balance	427,901	300,236
Age Analysis of Loans Receivable [Member] | Construction [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual		53
Total Past Due and Nonaccrual		533
Total Current	172,968	107,463
Total ending loan balance	172,968	107,996
Age Analysis of Loans Receivable [Member] | Construction [Member] | Multi-Family Residential [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Current	24,567	7,027
Total ending loan balance	24,567	7,027
Age Analysis of Loans Receivable [Member] | Construction [Member] | Residential 1-4 Family [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual		53
Total Past Due and Nonaccrual		533
Total Current	42,130	30,323
Total ending loan balance	42,130	30,856
Age Analysis of Loans Receivable [Member] | Construction [Member] | Commercial Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Current	78,369	42,580
Total ending loan balance	78,369	42,580
Age Analysis of Loans Receivable [Member] | Construction [Member] | Commercial Bare Land and Acquisition & Development [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Current	19,050	20,265
Total ending loan balance	19,050	20,265
Age Analysis of Loans Receivable [Member] | Construction [Member] | Residential Bare Land and Acquisition & Development [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Current	8,852	7,268
Total ending loan balance	8,852	7,268
Age Analysis of Loans Receivable [Member] | Commercial and Other [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual	2,847	1,495
Total Past Due and Nonaccrual	2,996	1,495
Total Current	622,464	505,392
Total ending loan balance	625,460	506,887
Age Analysis of Loans Receivable [Member] | Consumer [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due and Nonaccrual		4
Total Current	3,201	3,347
Total ending loan balance	$ 3,201	$ 3,351
30 to 59 Days Past Due Still Accruing [Member] | Age Analysis of Loans Receivable [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Still Accruing, Percentage of total portfolio	0.01%	0.03%
Past Due Loans Still Accruing	$ 172	$ 481
30 to 59 Days Past Due Still Accruing [Member] | Age Analysis of Loans Receivable [Member] | Real Estate Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Loans Still Accruing	23
30 to 59 Days Past Due Still Accruing [Member] | Age Analysis of Loans Receivable [Member] | Real Estate Loans [Member] | Residential 1-4 Family [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Loans Still Accruing	23
30 to 59 Days Past Due Still Accruing [Member] | Age Analysis of Loans Receivable [Member] | Construction [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Loans Still Accruing		480
30 to 59 Days Past Due Still Accruing [Member] | Age Analysis of Loans Receivable [Member] | Construction [Member] | Residential 1-4 Family [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Loans Still Accruing		480
30 to 59 Days Past Due Still Accruing [Member] | Age Analysis of Loans Receivable [Member] | Commercial and Other [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Loans Still Accruing	$ 149
30 to 59 Days Past Due Still Accruing [Member] | Age Analysis of Loans Receivable [Member] | Consumer [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Loans Still Accruing		$ 1
60 to 89 Days Past Due Still Accruing [Member] | Age Analysis of Loans Receivable [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Still Accruing, Percentage of total portfolio	0.00%	0.00%
Past Due Loans Still Accruing		$ 3
60 to 89 Days Past Due Still Accruing [Member] | Age Analysis of Loans Receivable [Member] | Consumer [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Loans Still Accruing		$ 3
Grater Than 90 Days Past Due Still Accruing [Member] | Age Analysis of Loans Receivable [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Still Accruing, Percentage of total portfolio	0.00%	0.00%

XML

Loans, Allowance for Loan Losses, and Credit Quality Indicators - Analysis of Impaired Loans (Detail) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Financing Receivable, Impaired [Line Items]
Recorded Investment With No Specific Allowance Valuation	$ 7,214	$ 7,593
Recorded Investment With Specific Allowance Valuation	3,335	1,207
Total Recorded Investment	10,549	8,800
Unpaid Principal Balance	11,002	9,501
Average Recorded Investment	9,076	7,121
Related Specific Allowance Valuation	738	175
Real Estate [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment With No Specific Allowance Valuation	2,757	5,449
Recorded Investment With Specific Allowance Valuation	1,177	333
Total Recorded Investment	3,934	5,782
Unpaid Principal Balance	4,017	6,073
Average Recorded Investment	4,047	4,338
Related Specific Allowance Valuation	4	30
Real Estate [Member] | Residential 1-4 Family [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment With No Specific Allowance Valuation	461	374
Recorded Investment With Specific Allowance Valuation	303	308
Total Recorded Investment	764	682
Unpaid Principal Balance	785	911
Average Recorded Investment	606	766
Related Specific Allowance Valuation	3	5
Real Estate [Member] | Owner-Occupied Commercial [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment With No Specific Allowance Valuation	104	2,788
Recorded Investment With Specific Allowance Valuation	874
Total Recorded Investment	978	2,788
Unpaid Principal Balance	978	2,788
Average Recorded Investment	1,192	1,177
Related Specific Allowance Valuation	1
Real Estate [Member] | Nonowner-Occupied Commercial [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment With No Specific Allowance Valuation	2,192	2,287
Recorded Investment With Specific Allowance Valuation		25
Total Recorded Investment	2,192	2,312
Unpaid Principal Balance	2,254	2,374
Average Recorded Investment	2,249	2,395
Related Specific Allowance Valuation		25
Construction [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment With No Specific Allowance Valuation	2,152	53
Recorded Investment With Specific Allowance Valuation		338
Total Recorded Investment	2,152	391
Unpaid Principal Balance	2,151	410
Average Recorded Investment	1,814	379
Related Specific Allowance Valuation		99
Construction [Member] | Residential 1-4 Family [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment With No Specific Allowance Valuation		53
Total Recorded Investment		53
Unpaid Principal Balance		72
Average Recorded Investment	50	32
Construction [Member] | Residential Bare Land and Acquisition & Development [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment With No Specific Allowance Valuation	2,152
Recorded Investment With Specific Allowance Valuation		338
Total Recorded Investment	2,152	338
Unpaid Principal Balance	2,151	338
Average Recorded Investment	1,764	347
Related Specific Allowance Valuation		99
Commercial and Other [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment With No Specific Allowance Valuation	2,305	2,091
Recorded Investment With Specific Allowance Valuation	2,158	536
Total Recorded Investment	4,463	2,627
Unpaid Principal Balance	4,834	3,018
Average Recorded Investment	3,215	2,404
Related Specific Allowance Valuation	$ 734	$ 46

XML

Loans, Allowance for Loan Losses, and Credit Quality Indicators - Schedule of Troubled Debt Restructurings by Class (Detail) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2016 USD ($) Contract	Dec. 31, 2015 USD ($) Contract
Financing Receivable, Modifications [Line Items]
Number of Contracts | Contract	29	27
Post-Modification Outstanding Recorded Investment | $	$ 9,087	$ 7,952
Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts | Contract	13	16
Post-Modification Outstanding Recorded Investment | $	$ 4,377	$ 5,782
Real Estate [Member] | Residential 1-4 Family [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts | Contract	4	6
Post-Modification Outstanding Recorded Investment | $	$ 764	$ 682
Real Estate [Member] | Owner-Occupied Commercial [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts | Contract	3	3
Post-Modification Outstanding Recorded Investment | $	$ 1,421	$ 2,788
Real Estate [Member] | Nonowner-Occupied Commercial [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts | Contract	6	7
Post-Modification Outstanding Recorded Investment | $	$ 2,192	$ 2,312
Construction [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts | Contract	2
Post-Modification Outstanding Recorded Investment | $	$ 1,827
Construction [Member] | Residential Bare Land and Acquisition & Development [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts | Contract	2
Post-Modification Outstanding Recorded Investment | $	$ 1,827
Commercial and Other [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts | Contract	14	11
Post-Modification Outstanding Recorded Investment | $	$ 2,883	$ 2,170

XML

Loans, Allowance for Loan Losses, and Credit Quality Indicators - Schedule of Restructured Loans (Detail) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Financing Receivable, Modifications [Line Items]
Combination Modification	$ 9,087	$ 7,952
Interest-only Modification [Member]
Financing Receivable, Modifications [Line Items]
Combination Modification	807
Combination Modification[Member]
Financing Receivable, Modifications [Line Items]
Combination Modification	2,799
Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Combination Modification	4,377	5,782
Real Estate [Member] | Residential 1-4 Family [Member]
Financing Receivable, Modifications [Line Items]
Combination Modification	764	682
Real Estate [Member] | Owner-Occupied Commercial [Member]
Financing Receivable, Modifications [Line Items]
Combination Modification	1,421	2,788
Real Estate [Member] | Interest-only Modification [Member]
Financing Receivable, Modifications [Line Items]
Combination Modification	444
Real Estate [Member] | Interest-only Modification [Member] | Owner-Occupied Commercial [Member]
Financing Receivable, Modifications [Line Items]
Combination Modification	444
Real Estate [Member] | Combination Modification[Member]
Financing Receivable, Modifications [Line Items]
Combination Modification	299
Real Estate [Member] | Combination Modification[Member] | Residential 1-4 Family [Member]
Financing Receivable, Modifications [Line Items]
Combination Modification	299
Construction [Member]
Financing Receivable, Modifications [Line Items]
Combination Modification	1,827
Construction [Member] | Residential Bare Land and Acquisition & Development [Member]
Financing Receivable, Modifications [Line Items]
Combination Modification	1,827
Construction [Member] | Combination Modification[Member]
Financing Receivable, Modifications [Line Items]
Combination Modification	1,827
Construction [Member] | Combination Modification[Member] | Residential Bare Land and Acquisition & Development [Member]
Financing Receivable, Modifications [Line Items]
Combination Modification	1,827
Commercial and Other [Member]
Financing Receivable, Modifications [Line Items]
Combination Modification	2,883	$ 2,170
Commercial and Other [Member] | Interest-only Modification [Member]
Financing Receivable, Modifications [Line Items]
Combination Modification	363
Commercial and Other [Member] | Combination Modification[Member]
Financing Receivable, Modifications [Line Items]
Combination Modification	$ 673

XML

Loans, Allowance for Loan Losses, and Credit Quality Indicators - Schedule of Troubled Debt Restructurings that Subsequently Defaulted (Detail) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016 Contract	Sep. 30, 2015 Contract	Sep. 30, 2016 USD ($) Contract
Financing Receivable, Modifications [Line Items]
Number of Contracts | Contract	0	0	1
Recorded Investment | $			$ 444
Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts | Contract			1
Recorded Investment | $			$ 444
Real Estate [Member] | Owner-Occupied Commercial [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts | Contract			1
Recorded Investment | $			$ 444

XML

Dental Loan Portfolio - Additional Information (Detail) $ in Thousands			9 Months Ended	12 Months Ended
	Sep. 30, 2016 USD ($)	Dec. 31, 2015 USD ($)	Sep. 30, 2016 USD ($) State	Dec. 31, 2015 USD ($)
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding loans to dental professionals	$ 1,786,205	$ 1,387,181	$ 1,786,205	$ 1,387,181
Percentage of total outstanding loans	20.46%	24.19%	20.46%	24.19%
Government guarantees	$ 6,852	$ 9,027	$ 6,852	$ 9,027
Percentage of outstanding dental loan			1.85%	2.65%
Number of national loan states | State			43
Dental Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Outstanding loans to dental professionals	$ 370,135	$ 340,162	$ 370,135	$ 340,162

XML

Dental Loan Portfolio - Major Classifications of Dental Loans (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans Receivable	$ 1,786,205	$ 1,387,181
Dental Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans Receivable	370,135	340,162
Residential Portfolio Segment [Member] | Dental Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans Receivable	63,365	62,677
Residential Portfolio Segment [Member] | Dental Loan [Member] | Other Dental Real Estate Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans Receivable	893	2,198
Residential Portfolio Segment [Member] | Dental Loan [Member] | Owner-Occupied Commercial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans Receivable	59,323	56,145
Residential Portfolio Segment [Member] | Dental Loan [Member] | Dental Construction Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans Receivable	3,149	4,334
Real Estate Loans [Member] | Dental Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans Receivable	60,216	58,343
Commercial and Other [Member] | Dental Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans Receivable	$ 370,135	$ 340,162

XML

Dental Loan Portfolio - Dental Loan Total by Market (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans Receivable	$ 1,786,205	$ 1,387,181
Dental Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans Receivable	370,135	340,162
Commercial and Other [Member] | Dental Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans Receivable	370,135	340,162
Commercial and Other [Member] | Dental Loan [Member] | Local [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans Receivable	150,898	145,817
Commercial and Other [Member] | Dental Loan [Member] | National [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans Receivable	$ 219,237	$ 194,345

XML

Dental Loan Portfolio - Dental Portfolio Allowance Activity (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, beginning of period	$ 19,127		$ 17,301
Reclassification	1,380		3,575
Charge-offs	(44)		(712)
Recoveries	68		367
Balance, end of period	20,531		20,531
Dental Loan [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, beginning of period	4,151	$ 4,080	4,022	$ 4,141
Reclassification	601	189	704	158
Charge-offs	(9)	(36)	(9)	(78)
Recoveries	55	9	81	21
Balance, end of period	$ 4,798	$ 4,242	$ 4,798	$ 4,242

XML

Dental Loan Portfolio - Credit Quality Indicators (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Financing Receivable, Recorded Investment [Line Items]
Total Loans Receivable	$ 1,786,205	$ 1,387,181
Dental Loan [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans Receivable	370,135	340,162
Commercial and Other [Member] | Dental Loan [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans Receivable	370,135	340,162
Commercial and Other [Member] | Dental Loan [Member] | Local [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans Receivable	150,898	145,817
Commercial and Other [Member] | Dental Loan [Member] | National [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans Receivable	219,237	194,345
Commercial and Other [Member] | Pass [Member] | Dental Loan [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans Receivable	365,298	335,115
Commercial and Other [Member] | Pass [Member] | Dental Loan [Member] | Local [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans Receivable	148,834	143,541
Commercial and Other [Member] | Pass [Member] | Dental Loan [Member] | National [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans Receivable	216,464	191,574
Commercial and Other [Member] | Substandard [Member] | Dental Loan [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans Receivable	3,176	5,047
Commercial and Other [Member] | Substandard [Member] | Dental Loan [Member] | Local [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans Receivable	2,064	2,276
Commercial and Other [Member] | Substandard [Member] | Dental Loan [Member] | National [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans Receivable	1,112	$ 2,771
Commercial and Other [Member] | Doubtful [Member] | Dental Loan [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans Receivable	1,661
Commercial and Other [Member] | Doubtful [Member] | Dental Loan [Member] | National [Member]
Financing Receivable, Recorded Investment [Line Items]
Total Loans Receivable	$ 1,661

XML

Dental Loan Portfolio - Aged Analysis of Dental Loans Receivable (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Accounts, Notes, Loans and Financing Receivable [Line Items]
Net loans	$ 1,786,205	$ 1,387,181
Dental Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Net loans	370,135	340,162
Dental Loan [Member] | Commercial and Other [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
30-59 Days Past Due Still Accruing	0	0
60-89 Days Past Due Still Accruing	0	0
Greater Than 90 Days Still Accruing	0	0
Nonaccrual	2,126	513
Total Past Due and Nonaccrual	2,126	513
Total Current	368,009	339,649
Net loans	370,135	340,162
Dental Loan [Member] | Commercial and Other [Member] | Local [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
30-59 Days Past Due Still Accruing	0	0
60-89 Days Past Due Still Accruing	0	0
Greater Than 90 Days Still Accruing	0	0
Nonaccrual	465	513
Total Past Due and Nonaccrual	465	513
Total Current	150,433	145,304
Net loans	150,898	145,817
Dental Loan [Member] | Commercial and Other [Member] | National [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
30-59 Days Past Due Still Accruing	0	0
60-89 Days Past Due Still Accruing	0	0
Greater Than 90 Days Still Accruing	0	0
Nonaccrual	1,661
Total Past Due and Nonaccrual	1,661
Total Current	217,576	194,345
Net loans	$ 219,237	$ 194,345

XML

Federal Funds and Overnight Funds Purchased - Additional Information (Detail) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Federal Home Loan Banks [Abstract]
Unsecured federal funds borrowing lines	$ 129,000,000	$ 129,000,000
Unsecured federal funds borrowing lines outstanding	0	0
Secured overnight borrowing line from Federal Reserve Bank	81,915,000	76,912,000
Commercial loans pledged for Federal Reserve Bank borrowing line	144,242,000	140,801,000
Outstanding borrowings	$ 0	$ 0

XML

Federal Home Loan Bank Borrowings - Additional Information (Detail) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Banking and Thrift [Abstract]
Percentage of federal home loan bank borrowings	35.00%
FHLB maximum borrowing line	$ 888,671,000	$ 657,086,000
Pledged real estate loans and securities	827,300,000	666,297,000
Discounted value on pledged real estate loans and securities	602,715,000	414,044,000
Federal Home Loan Bank borrowings	$ 45,500,000	$ 77,500,000

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Federal Home Loan Bank Borrowings - Summary of Outstanding FHLB Borrowings by Maturity and Applicable Interest Rate (Detail) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Federal Home Loan Bank borrowings	$ 45,500	$ 77,500
Cash Management Advance [Member]
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Federal Home Loan Bank borrowings	$ 15,000
2016 [Member]
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
FHLB borrowings, maturity date	2016
Federal Home Loan Bank borrowings	$ 22,500
2016 [Member] | Minimum [Member]
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Current Rates	0.57%
2016 [Member] | Maximum [Member]
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Current Rates	1.86%
2017 [Member]
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
FHLB borrowings, maturity date	2017
Current Rates	2.28%
Federal Home Loan Bank borrowings	$ 3,000
2018 [Member]
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
FHLB borrowings, maturity date	2018
Current Rates	1.55%
Federal Home Loan Bank borrowings	$ 3,000
2019 [Member]
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
FHLB borrowings, maturity date	2019
2020 [Member]
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
FHLB borrowings, maturity date	2020
Thereafter [Member]
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Current Rates	3.85%
Federal Home Loan Bank borrowings	$ 2,000

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Borrowed Funds - Additional Information (Detail) - USD ($) $ in Thousands		9 Months Ended
	Sep. 06, 2016	Sep. 30, 2016	Jun. 30, 2016	Dec. 31, 2015
Debt Instrument [Line Items]
Junior subordinated debentures		$ 11,272		$ 8,248
Subordinated Debentures [Member]
Debt Instrument [Line Items]
Fair value of debentures		$ 34,072
Subordinated Debentures [Member] | Public Offering [Member]
Debt Instrument [Line Items]
Debentures, principal amount			$ 35,000
Debentures, callable description		The Notes are callable at par after five years.
Debentures, maturity date		Sep. 30, 2026
Debentures, fixed interest rate		5.875%
Debentures, interest rate terms		Bear interest at a fixed annual rate of 5.875% per year, from and including June 27, 2016 but excluding September 30, 2021. From and including September 30, 2021 to the maturity date or early redemption date, the interest rate will reset quarterly to an annual interest rate equal to the then-current three-month LIBOR plus 471.5 basis points.
Junior Subordinated Debentures [Member]
Debt Instrument [Line Items]
Debentures, fixed interest rate		6.265%
Debentures, interest rate terms		The interest rate on the Debentures was 6.265% until January 2011, after which it was converted to a floating rate of three-month LIBOR plus 135 basis points.
Junior subordinated debentures		$ 8,248
Fair value of debentures		11,272		$ 8,248
Trust Preferred Securities [Member]
Debt Instrument [Line Items]
Trust preferred securities, liquidation amount		$ 8,000
Trust preferred securities, interest rate		6.265%
Trust preferred securities, interest rate terms		The interest rate on the TPS was 6.265% until January 2011, after which it was converted to a floating rate of three-month LIBOR plus 135 basis points.
Trust preferred securities, maturity year		2035
Trust preferred securities, callable date		Jan. 07, 2011
London Interbank Offered Rate (LIBOR) [Member] | Subordinated Debentures [Member] | Public Offering [Member]
Debt Instrument [Line Items]
Debentures, variable rate		4.715%
London Interbank Offered Rate (LIBOR) [Member] | Junior Subordinated Debentures [Member]
Debt Instrument [Line Items]
Debentures, variable rate		1.35%
London Interbank Offered Rate (LIBOR) [Member] | Trust Preferred Securities [Member]
Debt Instrument [Line Items]
Trust preferred securities, variable rate		1.35%
Foundation Bancorp Inc [Member]
Debt Instrument [Line Items]
Junior subordinated debentures	$ 3,013
Acquisition date		Sep. 06, 2016
Foundation Bancorp Inc [Member] | Junior Subordinated Debentures [Member]
Debt Instrument [Line Items]
Debentures, interest rate terms		The interest rate on the these trust preferred securities is a floating rate of three-month LIBOR plus 173 basis points.
Junior subordinated debentures	6,148
Fair value of debentures	3,013
Foundation Bancorp Inc [Member] | Trust Preferred Securities [Member]
Debt Instrument [Line Items]
Trust preferred securities, liquidation amount	$ 6,000
Foundation Bancorp Inc [Member] | London Interbank Offered Rate (LIBOR) [Member] | Junior Subordinated Debentures [Member]
Debt Instrument [Line Items]
Debentures, variable rate	1.73%

XML

Share-Based Compensation - Additional Information (Detail) $ in Thousands		9 Months Ended
	Sep. 30, 2016 USD ($) shares	Sep. 30, 2016 USD ($) shares
2006 SOEC Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation, authorized shares | shares	1,550,000	1,550,000
Maximum percentage of awards to be granted at exercise prices		100.00%
Stock Options [Member] | Minimum [Member] | 2006 SOEC Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation, award vesting period		4 years
Stock Options [Member] | Maximum [Member] | 2006 SOEC Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation, award vesting period		10 years
Employee RSUs [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation expense | $	$ 3,811	$ 3,811
Forfeiture rate	13.00%
Weighted-average period of time	2 years 9 months

XML

Share-Based Compensation - Schedule of Compensation Expenses and Tax Benefits (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation Expense	$ 397		$ 1,427	$ 1,178
Compensation Expense/(Income)		$ 272		1,178
Tax Benefit (Expense)	151	103	542	447
Director Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation Expense			240
Compensation Expense/(Income)				248
Tax Benefit (Expense)			91	94
Employee RSUs [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation Expense	397		1,187
Compensation Expense/(Income)		372		1,080
Tax Benefit (Expense)	$ 151	141	$ 451	410
Employee Cash SARs [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation Expense/(Income)		(100)		(150)
Tax Benefit (Expense)		$ (38)		$ (57)

XML

Share-Based Compensation - Summary of Stock Options, Employee Stock SARs, and Employee Cash SARs Exercised (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number Exercised	98,832	3,475	192,484	5,998
Intrinsic Value	$ 14	$ 2	$ 143	$ 6
Number of Shares Issued	11,600	171	51,426	1,367
Net Cash Payment to Employees	$ 45	$ 1	$ 73	$ 1
Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number Exercised	30,074		65,034	1,102
Weighted Average Exercise Price	$ 16.54		$ 13.86	$ 12.25
Intrinsic Value	$ 9		$ 117	$ 2
Number of Shares Issued	9,832		44,792	1,102
Employee Stock SARs [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number Exercised	41,237	2,204	79,806	3,417
Weighted Average Exercise Price	$ 15.83	$ 11.61	$ 14.54	$ 11.57
Intrinsic Value	$ 5	$ 2	$ 26	$ 4
Number of Shares Issued	1,768	171	6,634	265
Employee Cash SARs [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number Exercised	27,521	1,271	47,644	1,479
Weighted Average Exercise Price	$ 15.95	$ 12.07	$ 15.11	$ 12.07
Net Cash Payment to Employees	$ 45	$ 1	$ 73	$ 1

XML

Derivative Instruments - Additional Information (Detail)		3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2016 USD ($) Derivative	Sep. 30, 2016 USD ($) Derivative	Sep. 30, 2015 USD ($)	Sep. 30, 2016 USD ($) Derivative	Sep. 30, 2015 USD ($)	Dec. 31, 2015 USD ($)
Derivatives, Fair Value [Line Items]
Derivative notional amount	$ 8,000,000	$ 8,000,000		$ 8,000,000
Unrealized loss on fair value of derivative instrument	82,000	160,000	$ (154,000)	(944,000)	$ (212,000)
Pledging under collateral arrangements	400,000	400,000		400,000
Collateral posting	$ 250,000	$ 250,000		$ 250,000		$ 250,000
Fixed Rate Note [Member]
Derivatives, Fair Value [Line Items]
Debt instrument term				10 years		10 years
Debt instrument interest rate	5.71%	5.71%		5.71%		5.71%
Debt instrument maturity date				Aug. 31, 2023		Aug. 31, 2023
Interest Rate Swap Agreement [Member]
Derivatives, Fair Value [Line Items]
Number of derivative instruments | Derivative	2	2		2
Interest Rate Swap Agreement [Member] | Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Derivative notional amount	$ 1,500,000	$ 1,500,000		$ 1,500,000		$ 1,525,000
Interest Rate Swap Agreement [Member] | Not Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Derivative notional amount	8,600,000	8,600,000		8,600,000		$ 8,774,000
Forward Starting Interest Rate Swap [Member] | Cash Flow Hedging [Member]
Derivatives, Fair Value [Line Items]
Derivative notional amount	26,500,000	26,500,000		26,500,000
Unrealized loss on fair value of derivative instrument	475,000
Pledging under collateral arrangements	$ 1,250,000	$ 1,250,000		$ 1,250,000
Junior Subordinated Debentures [Member]
Derivatives, Fair Value [Line Items]
Debt instrument interest rate	6.265%	6.265%		6.265%
Junior Subordinated Debentures [Member] | Interest Rate Swap Agreement [Member]
Derivatives, Fair Value [Line Items]
Debt instrument maturity term				7 years
Debt instrument interest rate	2.73%	2.73%		2.73%

XML

Derivative Instruments - Summary of Quantitative Information Pertaining to Commercial Loan Related Interest Rate Swaps (Detail) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Derivatives, Fair Value [Line Items]
Notional amount	$ 8,000,000
Not Designated as Hedging Instrument [Member] | Commercial Loans [Member]
Derivatives, Fair Value [Line Items]
Notional amount	$ 8,600,000	$ 8,774,000
Weighted average maturity in years	5 years 8 months 12 days	6 years 6 months
Not Designated as Hedging Instrument [Member] | Commercial Loans [Member] | Pay Rate [Member]
Derivatives, Fair Value [Line Items]
Weighted average pay rate	4.85%	4.85%
Not Designated as Hedging Instrument [Member] | Commercial Loans [Member] | Receive Rate [Member]
Derivatives, Fair Value [Line Items]
Weighted average pay rate	3.61%	3.28%
Designated as Hedging Instrument [Member] | Commercial Loans [Member]
Derivatives, Fair Value [Line Items]
Notional amount	$ 1,500,000	$ 1,525,000
Weighted average maturity in years	6 years 10 months 24 days	7 years 7 months 6 days
Designated as Hedging Instrument [Member] | Commercial Loans [Member] | Pay Rate [Member]
Derivatives, Fair Value [Line Items]
Weighted average pay rate	5.71%	5.71%
Designated as Hedging Instrument [Member] | Commercial Loans [Member] | Receive Rate [Member]
Derivatives, Fair Value [Line Items]
Weighted average pay rate	3.52%	3.20%

XML

Derivative Instruments - Summary of Derivative Instruments (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Derivative Instruments, Gain (Loss) [Line Items]
Income statement impact of interest rate swaps	$ (2)	$ (10)	$ (6)	$ (9)
Designated as Hedging Instrument [Member] | Other Noninterest Income [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Income statement impact of interest rate swaps	(2)	$ (10)	(6)	$ (9)
Other Assets [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Asset Derivatives	276		276		$ 172
Other Assets [Member] | Designated as Hedging Instrument [Member] | Interest Rate Swap Agreement [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Asset Derivatives	114		114		66
Other Assets [Member] | Not Designated as Hedging Instrument [Member] | Interest Rate Swap Agreement [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Asset Derivatives	162		162		24
Other Payables [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Liability Derivatives	1,171		1,171		117
Other Payables [Member] | Designated as Hedging Instrument [Member] | Interest Rate Swap Agreement [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Liability Derivatives	147		147		93
Other Payables [Member] | Not Designated as Hedging Instrument [Member] | Interest Rate Swap Agreement [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Liability Derivatives	162		162		24
Cash Flow Hedge-Trust Preferred [Member] | Other Assets [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Asset Derivatives					$ 82
Cash Flow Hedge-Trust Preferred [Member] | Other Payables [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Liability Derivatives	82		82
Cash Flow Hedge-Long Term Borrowing [Member] | Other Payables [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Liability Derivatives	$ 780		$ 780

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Fair Value - Estimated Fair Values of Financial Instruments (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Financial assets:
Cash and cash equivalents	$ 107,173	$ 36,675
Securities available-for-sale	482,408	366,598
Loans, net of deferred fees	1,806,736	1,404,482
Interest receivable	5,957	5,721
Federal Home Loan Bank stock	4,643	5,208
Bank-owned life insurance	34,927	22,884
Interest rate swaps	275	172
Financial liabilities:
Deposits	2,162,633	1,597,093
Federal Home Loan Bank borrowings	45,500	77,500
Interest payable	711	138
Interest rate swaps	1,171	117
Subordinated Debentures [Member]
Financial liabilities:
Debentures	34,072
Junior Subordinated Debentures [Member]
Financial liabilities:
Debentures	11,272	8,248
Carrying Amount [Member]
Financial assets:
Cash and cash equivalents	107,173	36,675
Securities available-for-sale	482,408	366,598
Loans, net of deferred fees	1,806,736	1,404,482
Interest receivable	5,957	5,721
Federal Home Loan Bank stock	4,643	5,208
Bank-owned life insurance	34,927	22,884
Interest rate swaps	275	172
Financial liabilities:
Deposits	2,162,633	1,597,093
Federal Home Loan Bank borrowings	45,500	77,500
Interest payable	711	138
Interest rate swaps	1,171	117
Carrying Amount [Member] | Subordinated Debentures [Member]
Financial liabilities:
Debentures	34,072
Carrying Amount [Member] | Junior Subordinated Debentures [Member]
Financial liabilities:
Debentures	11,272	8,248
Fair Value [Member]
Financial assets:
Cash and cash equivalents	107,173	36,675
Securities available-for-sale	482,408	366,598
Loans, net of deferred fees	1,796,152	1,389,562
Interest receivable	5,957	5,721
Federal Home Loan Bank stock	4,643	5,208
Bank-owned life insurance	34,927	22,884
Interest rate swaps	275	172
Financial liabilities:
Deposits	2,162,127	1,597,280
Federal Home Loan Bank borrowings	45,613	77,651
Interest payable	711	138
Interest rate swaps	1,171	117
Fair Value [Member] | Subordinated Debentures [Member]
Financial liabilities:
Debentures	34,072
Fair Value [Member] | Junior Subordinated Debentures [Member]
Financial liabilities:
Debentures	$ 6,706	$ 2,741

XML

Fair Value - Fair Value Hierarchy for Assets and Liabilities Not Measured at Fair Value (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Financial assets:
Cash and cash equivalents	$ 107,173	$ 36,675
Loans, net of deferred fees	1,806,736	1,404,482
Interest receivable	5,957	5,721
Federal Home Loan Bank stock	4,643	5,208
Interest rate swaps	275	172
Financial liabilities:
Deposits	2,162,633	1,597,093
Federal Home Loan Bank borrowings	45,500	77,500
Interest payable	711	138
Interest rate swaps	1,171	117
Subordinated Debentures [Member]
Financial liabilities:
Debentures	34,072
Junior Subordinated Debentures [Member]
Financial liabilities:
Debentures	11,272	8,248
Level 1 [Member]
Financial assets:
Cash and cash equivalents	107,173	36,675
Interest receivable	5,957	5,721
Federal Home Loan Bank stock	4,643	5,208
Interest rate swaps	275	172
Financial liabilities:
Deposits	1,983,492	1,458,490
Interest payable	711	138
Interest rate swaps	1,171	117
Level 2 [Member]
Financial liabilities:
Deposits	178,635	138,790
Federal Home Loan Bank borrowings	45,613	77,651
Level 2 [Member] | Subordinated Debentures [Member]
Financial liabilities:
Debentures	34,072
Level 2 [Member] | Junior Subordinated Debentures [Member]
Financial liabilities:
Debentures	6,706	2,741
Level 3 [Member]
Financial assets:
Loans, net of deferred fees	$ 1,796,152	$ 1,389,562

XML

Fair Value - Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	$ 482,408	$ 366,598
Derivative assets	275	172
Total assets measured on a recurring basis	482,683	366,770
Obligations of U.S. Government Agencies [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	26,552	44,623
Obligations of States and Political Subdivisions [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	115,509	97,151
Mortgage-Backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	292,735	185,370
Private-Label Mortgage-Backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	2,110	2,790
SBA Pools [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	44,616	35,771
Corporate Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	886	893
Interest Rate Swap Agreement [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	275	172
Interest rate swap liabilities measured on a recurring basis	1,171	117
Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	275	172
Total assets measured on a recurring basis	275	172
Level 1 [Member] | Interest Rate Swap Agreement [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	275	172
Interest rate swap liabilities measured on a recurring basis	1,171	117
Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets measured on a recurring basis	480,954	365,012
Level 2 [Member] | Obligations of U.S. Government Agencies [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	26,552	44,623
Level 2 [Member] | Obligations of States and Political Subdivisions [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	115,509	97,151
Level 2 [Member] | Mortgage-Backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	292,735	185,370
Level 2 [Member] | Private-Label Mortgage-Backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	656	1,204
Level 2 [Member] | SBA Pools [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	44,616	35,771
Level 2 [Member] | Corporate Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	886	893
Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets measured on a recurring basis	1,454	1,586
Level 3 [Member] | Private-Label Mortgage-Backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities	$ 1,454	$ 1,586

XML

Fair Value - Additional Information (Detail) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2016 USD ($) Security	Dec. 31, 2015 Security
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Transfer of security from levels 1 and 2 to level 3 | Security	0	0
Carrying value of loans fully charged off | $	$ 0
Other Real Estate Owned [Member] | Impaired Loans [Member] | Minimum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Term period for external appraisals	6 months
Other Real Estate Owned [Member] | Impaired Loans [Member] | Maximum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Term period for external appraisals	12 months

XML

Fair Value - Reconciliation of Private-Label Mortgage-Backed Securities Measured at Fair Value on Recurring Basis (Detail) - Private-Label Mortgage-Backed Securities [Member] - Level 3 [Member] - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Beginning balance	$ 1,399	$ 1,782	$ 1,586	$ 1,568
Transfers into level 3	70		70	300
Transfers out of Level 3	0	0	0	0
Included in earnings	(2)		(14)	(13)
Included in other comprehensive income	64	(2)	45	65
Paydowns	(77)	(85)	(233)	(225)
Purchases, issuances, sales and settlements
Purchases	0	0	0	0
Issuances	0	0	0	0
Sales	0	0	0	0
Settlements	0	0	0	0
Ending balance	$ 1,454	$ 1,695	$ 1,454	$ 1,695

XML

Fair Value - Assets Measured at Fair Value on Nonrecurring Basis (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans measured for impairment (net of government guarantees and specific reserves)		$ 53
Other real estate owned	$ 9,966	10,147
Total	9,966	10,200
Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans measured for impairment (net of government guarantees and specific reserves)		53
Other real estate owned	9,966	10,147
Total	$ 9,966	$ 10,200

XML

Regulatory Matters - Schedule of Compliance with Regulatory Capital Requirements (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Total capital (to risk weighted assets), Actual Amount	$ 270,622	$ 201,261
Total capital (to risk weighted assets), Actual Ratio	12.55%	12.58%
Tier 1 capital (to risk weighted assets), Actual Amount	$ 215,471	$ 183,600
Tier 1 capital (to risk weighted assets), Actual Ratio	9.99%	11.47%
Common Equity Tier 1 (to risk weighted assets),Actual Amount	$ 203,359	$ 175,600
Common Equity Tier 1 (to risk weighted assets),Actual Ratio	9.43%	10.97%
Tier 1 capital (to leverage assets), Actual Amount	$ 215,471	$ 183,600
Tier 1 capital (to leverage assets), Actual Ratio	10.33%	9.93%
Pacific Continental Bank [Member]
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Total capital (to risk weighted assets), Actual Amount	$ 256,454	$ 200,236
Total capital (to risk weighted assets), Actual Ratio	11.90%	12.52%
Tier 1 capital (to risk weighted assets), Actual Amount	$ 235,375	$ 182,575
Tier 1 capital (to risk weighted assets), Actual Ratio	10.92%	11.41%
Common Equity Tier 1 (to risk weighted assets),Actual Amount	$ 235,375	$ 182,575
Common Equity Tier 1 (to risk weighted assets),Actual Ratio	10.92%	11.41%
Tier 1 capital (to leverage assets), Actual Amount	$ 235,375	$ 182,575
Tier 1 capital (to leverage assets), Actual Ratio	11.26%	9.88%
Total capital (to risk weighted assets), For Capital Adequacy Purposes Amount	$ 172,432	$ 127,990
Tier 1 capital (to risk weighted assets), For Capital Adequacy Purposes Amount	129,324	95,993
Common Equity Tier 1 (to risk weighted assets), For Capital Adequacy Purposes Amount	96,993	71,995
Tier 1 capital (to leverage assets), For Capital Adequacy Purposes Amount	$ 83,578	$ 73,939
Total capital (to risk weighted assets), For Capital Adequacy Purposes Ratio	8.00%	8.00%
Tier 1 capital (to risk weighted assets), For Capital Adequacy Purposes Ratio	6.00%	6.00%
Common Equity Tier 1 (to risk weighted assets), For Capital Adequacy Purposes Ratio	4.50%	4.50%
Tier 1 capital (to leverage assets), For Capital Adequacy Purposes Ratio	4.00%	4.00%
Total capital (to risk weighted assets), To Be Well Capitalized Under Prompt Corrective Action Provisions Amount	$ 215,540	$ 159,988
Tier 1 capital (to risk weighted assets), To Be Well Capitalized Under Prompt Corrective Action Provisions Amount	172,432	127,990
Common Equity Tier 1 (to risk weighted assets), To Be Well Capitalized Under Prompt Corrective Action Provisions Amount	140,101	103,992
Tier 1 capital (to leverage assets), To Be Well Capitalized Under Prompt Corrective Action Provisions Amount	$ 107,770	$ 92,422
Total capital (to risk weighted assets), To Be Well Capitalized Under Prompt Corrective Action Provisions Ratio	10.00%	10.00%
Tier 1 capital (to risk weighted assets), To Be Well Capitalized Under Prompt Corrective Action Provisions Ratio	8.00%	8.00%
Common Equity Tier 1 (to risk weighted assets), To Be Well Capitalized Under Prompt Corrective Action Provisions Ratio	6.50%	6.50%
Tier 1 capital (to leverage assets), To Be Well Capitalized Under Prompt Corrective Action Provisions Ratio	5.00%	5.00%