10-Q

Table Of Contents

 UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2015

Commission File Number 001-34226

1^st Century Bancshares, Inc.

(Exact name of registrant as specified in its charter)

Delaware	26-1169687
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1875 Century Park East, Suite 1400

Los Angeles, California 90067

(Address of principal executive offices)

(Zip Code)

(310) 270-9500

(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 ☒  No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, 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  ☒  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 Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☐	Smaller reporting company ☒
(Do not check if a 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  ☒

10,321,702 shares of common stock of the registrant were outstanding as of August 3, 2015.

1^st Century Bancshares, Inc.

Quarterly Report on Form 10-Q

June 30, 2015

Table of Contents

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets — June 30, 2015 (unaudited) and December 31, 2014	4
	Unaudited Consolidated Statements of Operations and Comprehensive Income — Three and six months ended June 30, 2015 and 2014	5
	Unaudited Consolidated Statements of Changes in Stockholders’ Equity — Six months ended June 30, 2015 and 2014	6
	Unaudited Consolidated Statements of Cash Flows — Six months ended June 30, 2015 and 2014	7
	Notes to Unaudited Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 4.	Controls and Procedures	41
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	42
Item 1A.	Risk Factors	42
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42
Item 3.	Defaults Upon Senior Securities	42
Item 4.	Mine Safety Disclosures	43
Item 5.	Other Information	43
Item 6.	Exhibits	43
Signatures		44

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Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

This Quarterly Report on Form 10-Q may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. You can find many (but not all) of these statements by looking for words such as “approximates,” “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “would,” “may” and other similar expressions in this Quarterly Report on Form 10-Q. With respect to any such forward-looking statements, the Company claims the protection of the safe harbor provided for in the Private Securities Litigation Reform Act of 1995, as amended. The Company cautions investors that any forward-looking statements presented in this Quarterly Report on Form 10-Q, or those that the Company may make orally or in writing from time to time, are based on the beliefs of, assumptions made by, and information available to, management at the time such statements are first made. Actual outcomes will be affected by known and unknown risks, trends, uncertainties and factors that are beyond the Company’s control or ability to predict.  Although the Company believes that management’s beliefs and assumptions are reasonable, they are not guarantees of future performance and some will inevitably prove to be incorrect. As a result, the Company’s actual future results can be expected to differ from management’s expectations, and those differences may be material and adverse to the Company’s business, results of operations and financial condition. Accordingly, investors should use caution in placing any reliance on forward-looking statements to anticipate future results or trends.

Some of the risks and uncertainties that may cause the Company’s actual results, performance or achievements to differ materially from those expressed include, but are not limited to, the following: the impact of changes in interest rates; political instability; changes in the monetary policies of the U.S. Government; a renewed decline in economic conditions; renewed deterioration in the value of California real estate, both residential and commercial; an increase in the level of non-performing assets and charge-offs; further increased competition among financial institutions; the Company’s ability to continue to attract interest bearing deposits and quality loan customers; further government regulation and the implementation and costs associated with the same; internal and external fraud and cyber-security threats including the loss of bank or customer funds, loss of system functionality or the theft or loss of data; management’s ability to successfully manage the Company’s operations; and the other risks set forth in the Company’s reports filed with the U.S. Securities and Exchange Commission. For further discussion of these and other factors, see “Item 1A. Risk Factors” in the Company’s 2014 Annual Report on Form 10-K.

Any forward-looking statements in this Quarterly Report on Form 10-Q and all subsequent written and oral forward-looking statements attributable to the Company or any person acting on behalf of the Company are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. The Company does not undertake any obligation to release publicly any revisions to forward-looking statements to reflect events or circumstances after the date such forward looking statements are made, and hereby specifically disclaims any intention to do so, unless required by law.

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PART I. FINANCIAL INFORMATION

Item 1 — Financial Statements

1^st Century Bancshares, Inc.

Consolidated Balance Sheets

(in thousands, except share and per share data)

	June 30, 2015 (unaudited)			December 31, 2014
ASSETS
Cash and due from banks	$	7,857		$	7,484
Interest earning deposits at other financial institutions		54,653			50,980
Total cash and cash equivalents		62,510			58,464
Investment securities — Available for Sale (“AFS”), at estimated fair value		75,549			79,689
Loans, net of allowance for loan losses of $8,323 and $7,599 at June 30, 2015 and December 31, 2014, respectively		510,741			435,257
Premises and equipment, net		1,843			1,460
Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank (“FRB”) stock		4,896			4,822
Accrued interest and other assets		5,766			5,526
Total Assets	$	661,305		$	585,218
LIABILITIES AND STOCKHOLDERS’ EQUITY
Non-interest bearing demand deposits	$	344,043		$	282,217
Interest bearing deposits:
Interest bearing checking (“NOW”)		27,239			25,492
Money market deposits and savings		161,081			154,706
Certificates of deposit less than $250		1,963			2,185
Certificates of deposit of $250 or greater		46,572			38,572
Total deposits		580,898			503,172
Other borrowings		15,000			17,500
Accrued interest and other liabilities		2,718			2,853
Total Liabilities		598,616			523,525
Commitments and contingencies (Note 9)
Stockholders’ Equity:
Preferred stock, $0.01 par value — 10,000,000 shares authorized, none issued and outstanding at June 30, 2015 and December 31, 2014, respectively		—			—
Common stock, $0.01 par value — 50,000,000 shares authorized, 12,655,633 and 12,129,310 issued at June 30, 2015 and December 31, 2014, respectively		127			121
Additional paid-in capital		74,837			71,736
Accumulated deficit		(845	)		(1,675	)
Accumulated other comprehensive income		57			162
Treasury stock at cost — 2,333,931 and 1,988,869 shares at June 30, 2015 and December 31, 2014, respectively		(11,487	)		(8,651	)
Total Stockholders’ Equity		62,689			61,693
Total Liabilities and Stockholders’ Equity	$	661,305		$	585,218

The accompanying notes are an integral part of the unaudited consolidated financial statements.

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1^st Century Bancshares, Inc.

Unaudited Consolidated Statements of Operations and Comprehensive Income

(in thousands, except per share data)

	Three Months Ended June 30,					Six Months Ended June 30,
	2015			2014		2015			2014
Interest and fee income on:
Loans	$	5,366		$	4,082	$	10,083		$	7,950
Investments		308			508		655			1,069
Other		234			106		348			215
Total interest and fee income		5,908			4,696		11,086			9,234
Interest expense on:
Deposits		112			107		222			217
Borrowings		61			80		109			162
Total interest expense		173			187		331			379
Net interest income		5,735			4,509		10,755			8,855
Provision for loan losses		575			100		725			100
Net interest income after provision for loan losses		5,160			4,409		10,030			8,755
Non-interest income:
Gain on sale of AFS investment securities		—			533		75			786
Other operating income		108			190		263			302
Total non-interest income		108			723		338			1,088
Non-interest expenses:
Compensation and benefits		2,521			2,218		5,216			4,677
Occupancy		510			404		985			776
Professional fees		172			159		350			312
Technology		243			201		473			394
Marketing		103			86		204			162
FDIC assessments		92			108		187			185
Other operating expenses		718			612		1,483			1,281
Total non-interest expenses		4,359			3,788		8,898			7,787
Income before income taxes		909			1,344		1,470			2,056
Income tax provision		394			565		640			875
Net income		515			779		830			1,181
Other Comprehensive Income:
Net change in unrealized (losses) gains on AFS investments, net of tax		(422	)		63		(105	)		175
Comprehensive Income	$	93		$	842	$	725		$	1,356
Basic earnings per share	$	0.05		$	0.08	$	0.09		$	0.13
Diluted earnings per share	$	0.05		$	0.08	$	0.08		$	0.12

The accompanying notes are an integral part of the unaudited consolidated financial statements.

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1^st Century Bancshares, Inc.

Unaudited Consolidated Statements of Changes in Stockholders’ Equity

(in thousands, except share data)

	Common Stock				Additional						Accumulated Other			Treasury Stock						Total
	Issued				Paid-in			Accumulated			Comprehensive			Number of						Stockholders’
	Shares		Amount		Capital			Deficit			Income			Shares			Amount			Equity
Balance at December 31, 2013		11,378,710	$	114	$	67,231		$	(4,036	)	$	52			(1,897,902	)	$	(7,973	)	$	55,388
Restricted stock issued		228,000		2		(2	)		—			—			—			—			—
Exercise of stock options		502,600		5		2,508			—			—			—			—			2,513
Compensation expense associated with restricted stock awards, net of estimated forfeitures		—		—		421			—			—			—			—			421
Shares surrendered to pay taxes on stock based compensation		—		—		—			—			—			(69,360	)		(518	)		(518	)
Net income		—		—		—			1,181			—			—			—			1,181
Other comprehensive income		—		—		—			—			175			—			—			175
Balance at June 30, 2014		12,109,310	$	121	$	70,158		$	(2,855	)	$	227			(1,967,262	)	$	(8,491	)	$	59,160
Balance at December 31, 2014		12,129,310	$	121	$	71,736		$	(1,675	)	$	162			(1,988,869	)	$	(8,651	)	$	61,693
Restricted stock issued		218,750		3		(3	)		—			—			—			—			—
Exercise of stock options		307,573		3		2,461			—			—			—			—			2,464
Compensation expense associated with restricted stock awards, net of estimated forfeitures		—		—		463			—			—			—			—			463
Shares surrendered to pay taxes on stock based compensation		—		—		—			—			—			(345,062	)		(2,836	)		(2,836	)
Excess tax benefit from stock based compensation		—		—		180			—			—			—			—			180
Net income		—		—		—			830			—			—			—			830
Other comprehensive loss		—		—		—			—			(105	)		—			—			(105	)
Balance at June 30, 2015		12,655,633	$	127	$	74,837		$	(845	)	$	57			(2,333,931	)	$	(11,487	)	$	62,689

The accompanying notes are an integral part of the unaudited consolidated financial statements.

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1^st Century Bancshares, Inc.

Unaudited Consolidated Statements of Cash Flows

(in thousands)

	Six Months Ended June 30,
	2015			2014
Cash flows from operating activities:
Net income	$	830		$	1,181
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of premises and equipment		303			244
Amortization of premiums on investment securities, net		316			447
Provision for loan losses		725			100
(Accretion) amortization of deferred loan fees and costs, net		(39	)		4
Gain on sale of AFS investment securities		(75	)		(786	)
Gain on sale of OREO		—			(47	)
Non-cash stock compensation, net of forfeitures		463			421
Excess tax benefit related to stock option exercises and vesting of restricted stock		(180	)		—
Decrease (increase) in accrued interest and other assets		14			(259	)
(Decrease) increase in accrued interest and other liabilities		(135	)		280
Net cash provided by operating activities		2,222			1,585
Cash flows from investing activities:
Activities in AFS investment securities:
Purchases		(8,377	)		(24,865	)
Maturities and principal reductions		6,114			9,515
Proceeds from sale of securities		5,983			44,199
Increase in loans, net		(76,170	)		(29,138	)
Proceeds from sale of OREO		—			137
Purchase of premises and equipment		(686	)		(189	)
Purchase of FRB stock and FHLB stock		(74	)		(135	)
Net cash used in investing activities		(73,210	)		(476	)
Cash flows from financing activities:
Net increase in deposits		77,726			15,006
Repayment of other long-term borrowings		(2,500	)		(2,500	)
Proceeds from exercise of stock options		2,464			2,513
Excess tax benefit related to stock option exercises and vesting of restricted stock		180			—
Shares surrendered to pay taxes on vesting of stock based compensation		(2,836	)		(518	)
Net cash provided by financing activities		75,034			14,501
Increase in cash and cash equivalents		4,046			15,610
Cash and cash equivalents, beginning of period		58,464			44,688
Cash and cash equivalents, end of period	$	62,510		$	60,298
Supplemental cash flow information:
Cash paid during the period for:
Interest	$	305		$	383
Income taxes	$	650		$	405

The accompanying notes are an integral part of the unaudited consolidated financial statements.

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1st Century Bancshares, Inc.

Notes to Unaudited Consolidated Financial Statements

(1) Summary of Significant Accounting Policies

Nature of Operations

1^st Century Bancshares, Inc., a Delaware corporation (“Bancshares”) is a bank holding company with one subsidiary, 1^st Century Bank, National Association (the “Bank”). The Bank commenced operations on March 1, 2004 in the State of California operating under the laws of a National Association (“N.A.”) regulated by the Office of the Comptroller of the Currency (the “OCC”). The Bank is a commercial bank that focuses on closely held and family owned businesses and their employees, professional service firms, real estate professionals and investors, the legal, accounting and medical professions, and small and medium-sized businesses and individuals principally in Los Angeles County. The Bank provides a wide range of banking services to meet the financial needs of the local residential community, with an orientation primarily directed toward owners and employees of the Bank’s business client base. The Bank is subject to both the regulations of and periodic examinations by the OCC, which is the Bank’s federal regulatory agency. Bancshares and the Bank are collectively referred to herein as “the Company.”

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not include all footnotes as would be necessary for a fair presentation of financial position, results of operations and comprehensive income, changes in stockholders’ equity and cash flows in conformity with accounting principles generally accepted in the United States of America (“GAAP”). However, these interim unaudited consolidated financial statements reflect all adjustments (consisting solely of normal recurring adjustments and accruals) which, in the opinion of management, are necessary for a fair presentation of financial position, results of operations and comprehensive income, changes in stockholders’ equity and cash flows for the interim period presented. These unaudited consolidated financial statements have been prepared on a basis consistent with, and should be read in conjunction with, the audited consolidated financial statements as of and for the year ended December 31, 2014, and the notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 filed with the SEC, under the Securities and Exchange Act of 1934, (the “Exchange Act”). The unaudited consolidated financial statements include the accounts of Bancshares and the Bank. All intercompany accounts and transactions have been eliminated.

The results of operations for the three and six months ended June 30, 2015 are not necessarily indicative of the results of operations that may be expected for any other interim period or for the year ending December 31, 2015.

The Company’s accounting and reporting policies conform to GAAP and to general practices within the banking industry. A summary of the significant accounting and reporting policies consistently applied in the preparation of the accompanying unaudited consolidated financial statements follows:

Use of Estimates

Management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Certain assumptions and estimates could prove to be incorrect and cause actual results to differ materially and adversely from the amounts reported in the consolidated financial statements included herewith.

Cash and Cash Equivalents

Cash and cash equivalents include cash and due from banks, interest earning deposits at other financial institutions with original maturities less than 90 days and all highly liquid investments with original maturities of less than 90 days.

Cash Flows

Cash and cash equivalents include cash, deposits with other financial institutions with maturities fewer than 90 days, and federal funds sold. Net cash flows are reported for loan and deposit transactions, interest bearing deposits in other financial institutions and short-term borrowings.

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Investment Securities

Investment securities are classified in three categories. Debt securities that management has a positive intent and ability to hold to maturity are classified as “Held to Maturity” or “HTM” and are recorded at amortized cost. Debt and equity securities bought and held principally for the purpose of selling in the near term are classified as “Trading” securities and are measured at fair value, with unrealized gains and losses included in earnings. Debt and equity securities not classified as “Held to Maturity” or “Trading” with readily determinable fair values are classified as “Available for Sale” or “AFS” and are recorded at fair value, with unrealized gains and losses excluded from earnings and reported in other comprehensive income. The Company uses estimates from third parties in arriving at fair value determinations which are derived in accordance with fair value measurement standards.

Purchase premiums and discounts are recognized in interest income using the interest method over the terms of the securities. Declines in the fair value of investment securities below their cost that are deemed to be other-than-temporary are reflected in earnings as realized losses to the extent the impairment is related to credit losses. The amount of the impairment related to other factors is recognized in other comprehensive income provided that management does not have the intent to sell the securities and it is more likely than not that management will not have to sell the security before recovery of its cost basis. In estimating other-than-temporary impairment losses, management considers (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. Gains and losses on the sale of securities are recorded on the trade date and are determined using the specific identification method.

Federal Reserve Bank Stock and Federal Home Loan Bank Stock

The Bank is a member of the Federal Reserve System (“Fed” or “FRB”). FRB stock is carried at cost and is considered a nonmarketable equity security. Cash dividends from the FRB are reported as interest income on an accrual basis.

The Bank is a member and stockholder of the capital stock of the Federal Home Loan Bank of San Francisco (“FHLB of San Francisco” or “FHLB”). Members are required to own a certain amount of stock based on the level of borrowings and other factors, and may invest in additional amounts. FHLB of San Francisco stock is carried at cost and is considered a nonmarketable equity security. Both cash and stock dividends are reported as interest income.

Loans

Loans, net, are stated at the unpaid principal balances less the allowance for loan losses and unamortized deferred fees and costs. Loan origination fees, net of related direct costs, are deferred and accreted to interest income as an adjustment to yield over the respective maturities of the loans using the effective interest method.

Interest on loans is accrued as earned on a daily basis, except where reasonable doubt exists as to the collection of interest and principal, in which case the accrual of interest is discontinued and the loan is placed on non-accrual status. Loans are placed on non-accrual at the time principal or interest is 90 days delinquent unless well secured and in the process of collection. Interest on non-accrual loans is accounted for on a cash-basis or cost-recovery method, until qualifying for return to accrual status. In order for a loan to return to accrual status, all principal and interest amounts owed must be brought current and future payments must be reasonably assured.

A loan is charged-off at any time the loan is determined to be uncollectible. Collateral dependent loans, which generally include commercial real estate loans, residential loans, and construction and land loans, are typically charged down to their net realizable value when a loan is impaired or on non-accrual status. All other loans are typically charged-off when, based upon current available facts and circumstances, it’s determined that either: (1) a loan is uncollectible, (2) repayment is determined to be protracted beyond a reasonable time frame, or (3) the loan is classified as a loss determined by either the Bank’s internal review process or by external examiners.

Loans are considered impaired when, based upon current information and events, it is probable that the Company will be unable to collect all principal and interest amounts due according to the original contractual terms of the loan agreement on a timely basis. The Company evaluates impairment on a loan-by-loan basis. Once a loan is determined to be impaired, the impairment is measured based on the present value of the expected future cash flows discounted at the loan’s effective interest rate or by using the loan’s most recent market value or the fair value of the collateral if the loan is collateral dependent. Loans that experience insignificant payment delays or payment shortfalls are generally not considered to be impaired.

When the measurement of an impaired loan is less than the recorded amount of the loan, a valuation allowance is established by recording a charge to the provision for loan losses. Subsequent increases or decreases in the valuation allowance for impaired loans are recorded by adjusting the existing valuation allowance for the impaired loan with a corresponding charge or credit to the provision for loan losses. The Company’s policy for recognizing interest income on impaired loans is the same as that for non-accrual loans.

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Troubled Debt Restructurings

In situations where, for economic or legal reasons related to a borrower’s financial difficulties, management may grant a concession for other than an insignificant period of time to the borrower that would not otherwise be considered, the related loan is classified as a troubled debt restructuring (“TDR”). Management strives to identify borrowers in financial difficulty early and work with them to modify their loans to more affordable terms before their loan reaches nonaccrual status. Concessions may include interest rate reductions or below market interest rates, principal forgiveness, restructuring amortization schedules and other actions intended to minimize potential losses.

Allowance for Loan Losses

The allowance for loan losses is established through a provision for loan losses charged to operations and represents an estimate of probable credit losses inherent in the Company’s loan portfolio that have been incurred as of the balance sheet date. Loan losses are charged against the allowance when management believes that principal is uncollectible. Subsequent repayments or recoveries, if any, are credited to the allowance. Management periodically assesses the adequacy of the allowance for loan losses by reference to many quantitative and qualitative factors that may be weighted differently at various times depending on prevailing conditions. The provisions reflect management’s evaluation of the adequacy of the allowance based, in part, upon the historical loss experience of the loan portfolio, as well as estimates from historical peer group loan loss data and the loss experience of other financial institutions, augmented by management judgment. During this process, loans are separated into the following portfolio segments: commercial loans, commercial real estate, residential, land and construction, and consumer and other loans. The relative significance of risk considerations vary by portfolio segment. For commercial loans, commercial real estate loans and land and construction, the primary risk consideration is a borrower’s ability to generate sufficient cash flows to repay their loan. Secondary considerations include the creditworthiness of guarantors and the valuation of collateral. In addition to the creditworthiness of a borrower, the type and location of real estate collateral is an important risk factor for commercial real estate and land and construction loans. The primary risk consideration for residential loans and consumer loans are a borrower’s personal cash flow and liquidity, as well as collateral value.

Loss ratios for all portfolio segments are evaluated on a quarterly basis. Loss ratios associated with historical loss experience are determined based on a rolling migration analysis of each portfolio segment within the portfolio. This migration analysis estimates loss factors based on the performance of each portfolio segment over a four and a half year time period. These loss ratios are then adjusted, if determined necessary, based on other factors including, but not limited to, historical peer group loan loss data and the loss experience of other financial institutions. Management carefully monitors changing economic conditions, the concentrations of loan categories, values of collateral, the financial condition of the borrowers, the history of the loan portfolio, and historical peer group loan loss data to determine the adequacy of the allowance for loan losses. As a part of this process, management typically focuses on loan-to-value (“LTV”) percentages to assess the adequacy of loss ratios of collateral dependent loans within each portfolio segment discussed above, trends within each portfolio segment, as well as general economic and real estate market conditions where the collateral and borrower are located. For loans that are not collateral dependent, which generally consist of commercial and consumer and other loans, management typically focuses on general business conditions where the borrower operates, trends within the portfolio, and other external factors to evaluate the severity of loss factors. The allowance is based on estimates and actual losses may vary from the estimates.

In addition, regulatory agencies, as a part of their examination process, periodically review the Bank’s allowance for loan losses, and may require the Bank to make additions to the allowance based on their judgment about information available to them at the time of their examinations. No assurance can be given that adverse future economic conditions will not lead to increased delinquent loans, and increases in the provision for loan losses and/or charge-offs.

Other Real Estate Owned

OREO represents real estate acquired through or in lieu of foreclosure. OREO is held for sale and is initially recorded at fair value less estimated costs of disposition at the date of foreclosure, establishing a new cost basis. Subsequent to foreclosure, valuations are periodically performed by management and the assets are carried at the lower of cost or estimated fair value less costs of disposition. OREO is included in accrued interest and other assets within the Consolidated Balance Sheets and the net operating results, if any, from OREO are recognized as non-interest expense within the unaudited Consolidated Statements of Operations and Comprehensive Income.

Furniture, Fixtures and Equipment, net

Leasehold improvements and furniture, fixtures and equipment are carried at cost, less depreciation and amortization. Furniture, fixtures and equipment are depreciated using the straight-line method over the estimated useful life of the asset (three to ten years). Leasehold improvements are depreciated using the straight-line method over the terms of the related leases or the estimated lives of the improvements, whichever is shorter.

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Advertising Costs

Advertising costs are expensed as incurred.

Income Taxes

The Company files consolidated federal and combined state income tax returns. Income tax expense or benefit is the total of the current year income tax payable or refundable and the change in the deferred tax assets and liabilities (excluding deferred tax assets and liabilities related to components of other comprehensive income). Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying amounts and tax basis of assets and liabilities, computed using enacted tax rates.

Deferred income tax assets and liabilities are determined using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is determined based on the tax effects of the temporary differences between the book and tax bases of the various balance sheet assets and liabilities and gives current recognition to changes in the rates and laws. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized. The Company records a valuation allowance if it believes, based on all available evidence, that it is “more likely than not” that the future tax assets will not be realized. This assessment requires management to evaluate the Company’s ability to generate sufficient future taxable income or use eligible tax carrybacks, if any, to determine the need for a valuation allowance.

At June 30, 2015 and December 31, 2014, the Company did not have any tax benefits disallowed under accounting standards for uncertainties in income taxes. A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. If applicable, the Company has elected to record interest accrued and penalties related to unrecognized tax benefits in tax expense.

Comprehensive Income

Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. However, certain changes in assets and liabilities, such as unrealized gains and losses on Available for Sale securities, are reported as a separate component of the stockholders’ equity section of the Consolidated Balance Sheets and, along with net income, are components of comprehensive income.

Earnings per Share

The Company reports both basic and diluted earnings per share. Basic earnings per share is determined by dividing net income by the average number of shares of common stock outstanding, while diluted earnings per share is determined by dividing net income by the average number of shares of common stock outstanding adjusted for the dilutive effect of common stock equivalents. Potential dilutive common shares related to outstanding stock options and restricted stock are determined using the treasury stock method. For the three and six months ended June 30, 2015, there were 274,019 and 312,046, respectively, of weighted average stock options that were excluded from the diluted earnings per share calculation due to their antidilutive impact. For the three and six months ended June 30, 2014, there were 350,073 of weighted average stock options that were excluded from the diluted earnings per share calculation due to their antidilutive impact. For the three and six months ended June 30, 2015, there were 99,552 and 58,298, respectively, of weighted average restricted shares that were excluded from the diluted earnings per share calculation due to their antidilutive impact. For the three and six months ended June 30, 2014, there were none and 97,860, respectively, of weighted average restricted shares that were excluded from the diluted earnings per share calculation due to their antidilutive impact.

	Three Months Ended June 30,				Six Months Ended June 30,
(dollars in thousands)	2015		2014		2015		2014
Net income	$	515	$	779	$	830	$	1,181
Average number of common shares outstanding		9,588,951		9,448,548		9,563,456		9,370,900
Effect of dilution of stock options		—		3,351		—		27,653
Effect of dilution of restricted stock		242,278		277,605		254,467		274,513
Average number of common shares outstanding used to calculate diluted earnings per common share		9,831,229		9,729,504		9,817,923		9,673,066

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Fair Value of Financial Instruments

The Company is required to make certain disclosures about its use of fair value measurements in the preparation of its financial statements. These standards establish 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 management’s estimates about market data.

Level 1	Valuation is based upon quoted prices for identical instruments traded in active markets.  Level 1 instruments include securities traded on active exchange markets, such as the New York Stock Exchange, as well as U.S. Treasury securities that are traded by dealers or brokers in active over-the-counter markets.
Level 2	Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.  Level 2 instruments include securities traded in less active dealer or broker markets.

Level 3 Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market.  These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability.  Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.

Stock-Based Compensation

The Company has granted restricted stock awards to directors, employees, and a vendor under the Company’s 2005 Amended and Restated Equity Incentive Plan (the “Equity Incentive Plan”) and the 2013 Equity Incentive Plan. The restricted stock awards are considered fixed awards as the number of shares and fair value is known at the date of grant and the fair value at the grant date is amortized over the vesting and/or service period.

Recent Accounting Pronouncements

In January 2014, the Financial Accounting Standard Board (FASB) issued Accounting Standard Update (ASU) No. 2014-04, Receivables – Troubled Debt Restructurings by Creditors (Subtopic 310-40) – Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure (ASU 2014-04). The amendments of ASU are intended to clarify when a creditor should be considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan such that the loan should be derecognized and the real estate recognized. This ASU is effective for both annual and interim periods beginning after December 15, 2014. The adoption of ASU 2014-04 did not have an impact on its financial statements and disclosures.

In April 2014, the FASB issued ASU No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360) – Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (ASU 2014-08). The amendments in ASU 2014-08 change the criteria for reporting discontinued operations and improve related disclosures. This ASU also addresses sources of confusion and inconsistent application related to financial reporting of discontinued operations guidance. ASU 2014-08 will be effective for annual financial statements with fiscal years beginning on or after December 31, 2014 and interim periods thereafter. The adoption of ASU 2014-08 did not have an impact on its financial statements and disclosures.

In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40) (ASU 2014-15). The objective of ASU 2014-15 is to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and provide related disclosures. Currently, GAAP does not provide guidance to evaluate whether there is substantial doubt regarding an organization’s ability to continue as a going concern. This ASU provides guidance to an organization’s management, with principles and definitions to reduce diversity in the timing and content of financial statement disclosures commonly provided by organizations. ASU 2014-15 is effective for periods ending after December 15, 2016 and interim periods within annual periods beginning after December 15, 2016.

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(2) Investments

The following is a summary of the investments categorized as Available for Sale at June 30, 2015 and December 31, 2014:

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
(in thousands)	Cost		Gains		Losses			Value
At June 30, 2015:
Investments — Available for Sale
U.S. Treasuries and Government Agencies	$	28,438	$	190	$	(5	)	$	28,623
Corporate Notes		2,009		4		—			2,013
Residential Mortgage-Backed Securities		45,006		172		(265	)		44,913
Total	$	75,453	$	366	$	(270	)	$	75,549
At December 31, 2014:
Investments — Available for Sale
U.S Treasuries and Government Agencies	$	25,973	$	160	$	(5	)	$	26,128
Corporate Notes		2,528		10		—			2,538
Residential Mortgage-Backed Securities		50,913		275		(165	)		51,023
Total	$	79,414	$	445	$	(170	)	$	79,689

The Company did not have any investment securities categorized as “Held to Maturity” or “Trading” at June 30, 2015 or December 31, 2014. At June 30, 2015 and December 31, 2014, there were no holdings of securities of any one issuer other than the U.S. government or its agencies, in an amount greater than 10% of shareholders’ equity.

Additionally, at June 30, 2015 and December 31, 2014, the fair value of securities pledged to the State of California Treasurer’s Office to secure their deposits was $55.9 million and $48.4 million, respectively. Deposits from the State of California were $46.0 million and $38.0 million at June 30, 2015 and December 31, 2014, respectively.

The following table summarizes the fair value of AFS securities and the weighted average yield of investment securities by contractual maturity at June 30, 2015. Residential mortgage-backed securities are included in maturity categories based on their stated maturity date. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. The weighted average life of these securities was 3.19 years at June 30, 2015.

(dollars in thousands)

Available for Sale	1 Year or Less		Weighted Average Yield			After 1 Through 5 Years		Weighted Average Yield			After 5 Through 10 Years		Weighted Average Yield			After 10 Years		Weighted Average Yield			Total		Weighted Average Yield
U.S. Treasuries and Government Agencies	$	—		—	%	$	16,000		1.73	%	$	12,623		2.06	%	$	—		—	%	$	28,623		1.87	%
Corporate Notes		2,013		1.31			—		—			—		—			—		—			2,013		1.31
Residential Mortgage-Backed Securities		—		—			458		5.20			20,219		1.44			24,236		1.86			44,913		1.71
Total	$	2,013		1.31	%	$	16,458		1.82	%	$	32,842		1.68	%	$	24,236		1.86	%	$	75,549		1.76	%

A total of 27 and 26 securities had unrealized losses at June 30, 2015 and December 31, 2014, respectively. Information pertaining to securities with gross unrealized losses aggregated by investment category and length of time that individual securities have been in a continuous loss position, follows:

	Less than Twelve Months					Twelve Months or More
(in thousands)	Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value
At June 30, 2015:
Investments-Available for Sale
U.S Treasuries and Government Agencies	$	(5	)	$	2,097	$	—		$	—
Residential Mortgage-Backed Securities		(162	)		23,555		(103	)		6,034
At December 31, 2014:
Investments-Available for Sale
U.S Treasuries and Government Agencies	$	(5	)	$	8,057	$	—		$	—
Residential Mortgage-Backed Securities		(35	)		11,694		(130	)		17,651

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The Company’s assessment that it has the ability to continue to hold impaired investment securities along with its evaluation of their future performance provide the basis for it to conclude that its impaired securities are not other-than-temporarily impaired. In assessing whether it is more likely than not that the Company will be required to sell any impaired security before its anticipated recovery, which may be at their maturity, it considers the significance of each investment, the amount of impairment, as well as the Company’s liquidity position and the impact on the Company’s capital position. As a result of its analyses, the Company determined at June 30, 2015 and December 31, 2014 that the unrealized losses on its securities portfolio on which impairments had not been recognized are temporary.

During the six months ended June 30, 2015, the Company sold available for sale investment securities with an amortized cost of $5.9 million, resulting in realized gains of $75,000, which were recorded in non-interest income within the unaudited Consolidated Statement of Operations and Comprehensive Income. No securities were sold during the three months ended June 30, 2015. During the three and six months ended June 30, 2014, the Company sold available for sale investment securities with an amortized cost of $28.6 million and $43.4 million, respectively, resulting in realized gains of $533,000 and $786,000, respectively.

(3) Loans, Allowance for Loan Losses, and Non-Performing Assets

Loans

The categories of loans listed below are grouped in accordance with the primary purpose of the loans, but in the aggregate 83.8% and 83.5% of all loans are secured by real estate at June 30, 2015 and December 31, 2014, respectively.

	June 30, 2015						December 31, 2014
	Amount			Percent			Amount			Percent
(dollars in thousands)	Outstanding			of Total			Outstanding			of Total
Commercial (1)	$	101,048			19.5	%	$	91,694			20.7	%
Commercial real estate		223,035			43.0	%		185,752			42.0	%
Residential		112,251			21.6	%		98,806			22.3	%
Land and construction		48,893			9.4	%		37,075			8.4	%
Consumer and other (2)		33,750			6.5	%		29,458			6.6	%
Loans, gross		518,977			100.0	%		442,785			100.0	%
Net deferred costs		87						71
Less — allowance for loan losses		(8,323	)					(7,599	)
Loans, net	$	510,741					$	435,257

(1) Unsecured commercial loan balances were $27.1 million and $25.1 million at June 30, 2015 and December 31, 2014, respectively.

(2)Unsecured consumer and other loan balances were $7.1 million and $5.1 million at June 30, 2015 and December 31, 2014, respectively.

As of June 30, 2015 and December 31, 2014, substantially all of the Company’s loan customers were located in Southern California.

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Allowance for Loan Losses and Recorded Investment in Loans

The following is a summary of activities for the allowance for loan losses and recorded investment in loans as of and for the three and six months ended June 30, 2015 and 2014:

(in thousands)	Commercial			Commercial Real Estate		Residential		Land and Construction			Consumer and Other			Total
Three Months Ended June 30, 2015:
Allowance for loan losses:
Beginning balance	$	1,768		$	3,825	$	757	$	916		$	499		$	7,765
Provision for loan losses		—			450		20		55			50			575
Charge-offs		—			—		—		—			(18	)		(18	)
Recoveries		1			—		—		—			—			1
Ending balance	$	1,769		$	4,275	$	777	$	971		$	531		$	8,323
Six Months Ended June 30, 2015:
Allowance for loan losses:
Beginning balance	$	1,752		$	3,825	$	747	$	816		$	459		$	7,599
Provision for loan losses		—			450		30		155			90			725
Charge-offs		—			—		—		—			(18	)		(18	)
Recoveries		17			—		—		—			—			17
Ending balance	$	1,769		$	4,275	$	777	$	971		$	531		$	8,323
As of June 30, 2015:
Ending balance: individually evaluated for impairment	$	35		$	—	$	—	$	—		$	—		$	35
Ending balance: collectively
evaluated for impairment		1,734			4,275		777		971			531			8,288
Total	$	1,769		$	4,275	$	777	$	971		$	531		$	8,323
Loans:
Ending balance: individually evaluated for impairment	$	712		$	—	$	—	$	—		$	48		$	760
Ending balance: collectively
evaluated for impairment		100,336			223,035		112,251		48,893			33,702			518,217
Total	$	101,048		$	223,035	$	112,251	$	48,893		$	33,750		$	518,977
Three Months Ended June 30, 2014:
Allowance for loan losses:
Beginning balance	$	1,579		$	3,660	$	778	$	811		$	424		$	7,252
Provision for loan losses		10			140		110		(120	)		(40	)		100
Charge-offs		—			—		—		—			—			—
Recoveries		15			—		—		—			—			15
Ending balance	$	1,604		$	3,800	$	888	$	691		$	384		$	7,367
Six Months Ended June 30, 2014:
Allowance for loan losses:
Beginning balance	$	1,583		$	3,660	$	758	$	811		$	424		$	7,236
Provision for loan losses		(10	)		140		130		(120	)		(40	)		100
Charge-offs		—			—		—		—			—			—
Recoveries		31			—		—		—			—			31
Ending balance	$	1,604		$	3,800	$	888	$	691		$	384		$	7,367
As of June 30, 2014:
Ending balance: individually evaluated for impairment	$	35		$	—	$	—	$	—		$	—		$	35
Ending balance: collectively
evaluated for impairment		1,569			3,800		888		691			384			7,332
Total	$	1,604		$	3,800	$	888	$	691		$	384		$	7,367
Loans:
Ending balance: individually evaluated for impairment	$	899		$	—	$	—	$	—		$	29		$	928
Ending balance: collectively
evaluated for impairment		77,556			178,576		102,149		29,423			23,960			411,664
Total	$	78,455		$	178,576	$	102,149	$	29,423		$	23,989		$	412,592

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The following is a summary of the allowance for loan losses and recorded investment in loans as of December 31, 2014:

(in thousands)	Commercial		Commercial Real Estate		Residential		Land and Construction		Consumer and Other		Total
Allowance for loan losses:
Ending balance: individually evaluated for impairment	$	20	$	—	$	—	$	—	$	—	$	20
Ending balance: collectively
evaluated for impairment		1,732		3,825		747		816		459		7,579
Total	$	1,752	$	3,825	$	747	$	816	$	459	$	7,599
Loans:
Ending balance: individually evaluated for impairment	$	632	$	—	$	—	$	—	$	49	$	681
Ending balance: collectively
evaluated for impairment		91,062		185,752		98,806		37,075		29,409		442,104
Total	$	91,694	$	185,752	$	98,806	$	37,075	$	29,458	$	442,785

In addition to the allowance for loan losses, the Company also estimates probable losses related to unfunded lending commitments. Unfunded lending commitments are subject to individual reviews and are analyzed and segregated by product type. These classifications, in conjunction with an analysis of historical loss experience, current economic conditions, performance trends within specific portfolio segments and any other pertinent information, result in the estimation of the reserve for unfunded lending commitments. Provision for credit losses related to unfunded lending commitments is reported in other operating expenses in the unaudited Consolidated Statements of Operations and Comprehensive Income. The allowance held for unfunded lending commitments is reported in accrued interest and other liabilities within the accompanying Consolidated Balance Sheets, and not as part of the allowance for loan losses in the above tables. As of June 30, 2015 and December 31, 2014, the allowance for unfunded lending commitments was $345,000 and $320,000, respectively, and is primarily related to $149.7 million and $146.4 million in commitments to extend credit to customers and $2.6 million and $2.7 million in standby/commercial letters of credit at June 30, 2015 and December 31, 2014, respectively.

Non-Performing Assets

The following table presents an aging analysis of the recorded investment of past due loans as of June 30, 2015 and December 31, 2014. Payment activity is reviewed by management on a monthly basis to determine the performance of each loan. Loans are considered to be non-performing when a loan is greater than 90 days delinquent. Loans that are 90 days or more past due may still accrue interest if they are well-secured and in the process of collection. Total additions to non-performing loans during the six months ended June 30, 2015 and 2014 was $100,000 and none, respectively. Non-performing loans represented 0.14% of total loans at both June 30, 2015 and December 31, 2014. There were no accruing loans past due 90 days or more at June 30, 2015 and December 31, 2014.

(in thousands)	30-59 Days Past Due		60-89 Days Past Due		> 90 Days Past Due		Total Past Due		Current		Total
As of June 30, 2015:
Commercial	$	—	$	100	$	612	$	712	$	100,336	$	101,048
Commercial real estate		—		—		—		—		223,035		223,035
Residential		—		—		—		—		112,251		112,251
Land and construction		—		—		—		—		48,893		48,893
Consumer and other		—		—		—		—		33,750		33,750
Totals	$	—	$	100	$	612	$	712	$	518,265	$	518,977
As of December 31, 2014:
Commercial	$	—	$	60	$	572	$	632	$	91,062	$	91,694
Commercial real estate		—		—		—		—		185,752		185,752
Residential		—		—		—		—		98,806		98,806
Land and construction		—		—		—		—		37,075		37,075
Consumer and other		—		—		—		—		29,458		29,458
Totals	$	—	$	60	$	572	$	632	$	442,153	$	442,785

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The following table sets forth non-accrual loans and other real estate owned at June 30, 2015 and December 31, 2014:

(dollars in thousands)	June 30, 2015			December 31, 2014
Non-accrual loans:
Commercial	$	712		$	632
Total non-accrual loans		712			632
Total non-performing assets	$	712		$	632
Non-performing assets to gross loans and OREO		0.14	%		0.14	%
Non-performing assets to total assets		0.11	%		0.11	%

Credit Quality Indicators

The following table represents the credit exposure by internally assigned grades at June 30, 2015 and December 31, 2014. This grading analysis estimates the capability of the borrower to repay the contractual obligations of the loan agreements in accordance with the loan terms. The Company’s internal credit risk grading system is based on management’s experiences with similarly graded loans. Credit risk grades are reassessed each quarter based on any recent developments potentially impacting the creditworthiness of the borrower, as well as other external statistics and factors, which may affect the risk characteristics of the respective loan.

The Company’s internally assigned grades are as follows:

Pass – Strong credit with no existing or known potential weaknesses deserving of management’s close attention.

Special Mention – Potential weaknesses that deserve management’s close attention. Borrower and guarantor’s capacity to meet all financial obligations is marginally adequate or deteriorating.

Substandard – Inadequately protected by the paying capacity of the Borrower and/or collateral pledged. The borrower or guarantor is unwilling or unable to meet loan terms or loan covenants for the foreseeable future.

Doubtful – All the weakness inherent in one classified as Substandard with the added characteristic that those weaknesses in place make the collection or liquidation in full, on the basis of current conditions, highly questionable and improbable.

Loss – Considered uncollectible or no longer a bankable asset. This classification does not mean that the asset has absolutely no recoverable value. In fact, a certain salvage value is inherent in these loans. Nevertheless, it is not practical or desirable to defer writing off a portion or whole of a perceived asset even though partial recovery may be collected in the future.

(in thousands)	Commercial		Commercial Real Estate		Residential		Land and Construction		Consumer and Other
As of June 30, 2015:
Grade:
Pass	$	99,560	$	223,035	$	112,251	$	48,893	$	33,702
Special Mention		127		—		—		—		—
Substandard		1,361		—		—		—		48
Total	$	101,048	$	223,035	$	112,251	$	48,893	$	33,750
As of December 31, 2014:
Grade:
Pass	$	90,235	$	185,201	$	98,806	$	37,075	$	29,409
Special Mention		180		—		—		—		—
Substandard		1,279		551		—		—		49
Total	$	91,694	$	185,752	$	98,806	$	37,075	$	29,458

There were no loans assigned to the Doubtful or Loss grade as of June 30, 2015 and December 31, 2014.

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Impaired Loans

The following table includes the recorded investment and unpaid principal balances for impaired loans with the associated allowance amount, if applicable. Management determined the specific allowance based on the present value of expected future cash flows, discounted at the loan’s effective interest rate, except when the remaining source of repayment for the loan is the operation or liquidation of the collateral. In those cases, the current fair value of the collateral, less selling costs was used to determine the specific allowance recorded. Also presented in the table below are the average recorded investments in the impaired loans and the related amount of interest recognized during the time within the period that the impaired loans were impaired. When the ultimate collectability of the total principal of an impaired loan is in doubt and the loan is on nonaccrual status, all payments are applied to principal, under the cost recovery method. When the ultimate collectability of the total principal of an impaired loan is not in doubt and the loan is on non-accrual status, contractual interest is credited to interest income when received, under the cash basis method. The average balances are calculated based on the month-end balances of the loans of the period reported.

(in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment
As of and for the six months ended June 30, 2015:
With no related allowance recorded:
Commercial	$	572	$	848	$	—	$	572
Commercial real estate		—		—		—		—
Residential		—		—		—		—
Land and construction		—		—		—		—
Consumer and other		48		48		—		49
With an allowance recorded:
Commercial	$	140	$	155	$	35	$	73
Commercial real estate		—		—		—		—
Residential		—		—		—		—
Land and construction		—		—		—		—
Consumer and other		—		—		—		—
Totals:
Commercial	$	712	$	1,003	$	35	$	645
Commercial real estate	$	—	$	—	$	—	$	—
Residential	$	—	$	—	$	—	$	—
Land and construction	$	—	$	—	$	—	$	—
Consumer and other	$	48	$	48	$	—	$	49
As of and for the year ended December 31, 2014:
With no related allowance recorded:
Commercial	$	572	$	848	$	—	$	707
Commercial real estate		—		—		—		—
Residential		—		—		—		—
Land and construction		—		—		—		—
Consumer and other		49		49		—		36
With an allowance recorded:
Commercial	$	60	$	74	$	20	$	106
Commercial real estate		—		—		—		—
Residential		—		—		—		—
Land and construction		—		—		—		—
Consumer and other		—		—		—		—
Totals:
Commercial	$	632	$	922	$	20	$	813
Commercial real estate	$	—	$	—	$	—	$	—
Residential	$	—	$	—	$	—	$	—
Land and construction	$	—	$	—	$	—	$	—
Consumer and other	$	49	$	49	$	—	$	36

During the three and six months ended June 30, 2015, the average balance of impaired loans was $707,000 and $694,000, respectively, compared to $939,000 and $946,000 for the same periods last year. As of June 30, 2015 and December 31, 2014, there were $712,000 and $632,000 of impaired loans on non-accrual status. For both the three and six months ended June 30, 2015, interest income recognized on impaired loans subsequent to their classification as impaired was $1,000, compared to $3,000 and $5,000 for the same periods last year. The Company stops accruing interest on these loans on the date they are classified as non-accrual and reverses any uncollected interest that had been previously accrued as income. The Company may begin recognizing interest income on these loans as cash interest payments are received, if collection of principal is reasonably assured.

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Troubled Debt Restructurings

There were no troubled debt restructurings during the three and six months ended June 30, 2015 and 2014. The impact on the Company’s determination of the allowance for loan losses related to troubled debt restructurings was not material and resulted in no charge-offs during the three and six months ended June 30, 2015 and 2014. During the three and six months ended June 30, 2015 and 2014, there were no defaults recorded on any loans that were modified as troubled debt restructurings during the preceding twelve months. A troubled debt restructuring is considered to be in default once it becomes 60 days or more past due following a modification.

(4) Derivative Financial Instruments

The fair value of derivative positions outstanding is included in accrued interest receivable and other assets and accrued interest payable and other liabilities in the accompanying Consolidated Balance Sheets and in the net change in each of these financial statement line items in the accompanying unaudited Consolidated Statements of Cash Flows.

Interest Rate Derivatives. The Company utilizes interest rate swaps to facilitate the needs of its customers. The Company has entered into interest rate swaps that are not designated as hedging instruments. These derivative contracts relate to transactions in which the Company enters into an interest rate swap with a customer while at the same time entering into an offsetting interest rate swap with another financial institution. In connection with each swap transaction, the Company agrees to pay interest to the customer on a notional amount at a variable interest rate and receive interest from the customer on a similar notional amount at a fixed interest rate. At the same time, the Company agrees to pay another financial institution the same fixed interest rate on the same notional amount and receive the same variable interest rate on the same notional amount. The transaction allows the Company’s customer to effectively convert a variable rate loan to a fixed rate. Because the Company acts as an intermediary for its customer, changes in the fair value of the underlying derivative contracts for the most part offset each other and do not significantly impact the Company’s results of operations.

The notional amounts and estimated fair values of interest rate derivative contracts outstanding at June 30, 2015 and December 31, 2014 are presented in the following table. The Company obtains dealer quotations to value its interest rate derivative contracts.

	June 30, 2015						December 31, 2014
(in thousands)	Notional Amount			Estimated Fair Value			Notional Amount			Estimated Fair Value
Non-hedging interest rate derivatives:
Commercial loan interest rate swaps	$	2,058		$	(32	)	$	2,650		$	(23	)
Commercial loan interest rate swaps	$	(2,058	)	$	32		$	(2,650	)	$	23

The weighted-average rates paid and received for interest rate swaps outstanding at June 30, 2015 and December 31, 2014 were as follow:

	June 30, 2015 Weighted-Average						December 31, 2014 Weighted-Average
	Interest Rate Paid			Interest Rate Received			Interest Rate Paid			Interest Rate Received
Non-hedging interest rate swaps		3.44	%		4.96	%		3.37	%		4.85	%
Non-hedging interest rate swaps		4.96	%		3.44	%		4.85	%		3.37	%

Gains, Losses and Derivative Cash Flows. For non-hedging derivative instruments, gains and losses due to changes in fair value and all cash flows are included in other non-interest income and other non-interest expense in the accompanying unaudited Consolidated Statements of Operations and Comprehensive Income.

As stated above, the Company enters into non-hedge related derivative positions primarily to accommodate the business needs of its customers. Upon the origination of a derivative contract with a customer, the Company simultaneously enters into an offsetting derivative contract with a third party. The Company recognizes immediate income based upon the difference in the bid/ask spread of the underlying transactions with its customers and the third party. Because the Company acts only as an intermediary for its customer, subsequent changes in the fair value of the underlying derivative contracts for the most part offset each other and do not significantly impact the Company’s results of operations.

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(5) Comprehensive Income

Comprehensive income, which includes net income and the net change in unrealized gains on investment securities available for sale, is presented below:

	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2015			2014			2015			2014
Net income	$	515		$	779		$	830		$	1,181
Other comprehensive income (loss):
(Decrease) increase in net unrealized gains on investment securities available for sale, net of tax benefit (expense) of $295 and $43 for the three and six months ended June 30, 2015, respectively, and ($263) and ($445) for the three and six months ended June 30, 2014, respectively		(422	)		377			(61	)		638
Reclassification for net gains included in earnings, net of tax expense of none and $31 for the three and six months ended June 30, 2015, respectively, and $219 and $323 for the three and six months ended June 30, 2014, respectively		—			(314	)		(44	)		(463	)
Comprehensive income	$	93		$	842		$	725		$	1,356

Reclassification adjustments of none and $75,000 for the three and six months ended June 30, 2015, respectively, are included in non-interest income within the unaudited Consolidated Statements of Operations and Comprehensive Income. Reclassification adjustments for the three and six months ended June 30, 2014 were $533,000 and $786,000, respectively. Income tax expense associated with these reclassification adjustments for the three and six months ended June 30, 2015 was none and $31,000, respectively, and is included in income tax provision within the unaudited Consolidated Statements of Operations and Comprehensive Income. Income tax expense associated with these reclassification adjustments for the three and six months ended June 30, 2014 were $219,000 and $323,000, respectively.

Activity of investment securities available for sale included in accumulated other comprehensive income, net of tax, is as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2015			2014			2015			2014
Beginning balance	$	479		$	164		$	162		$	52
Other comprehensive income before reclassifications		(422	)		377			(61	)		638
Amounts reclassified from accumulated other comprehensive income		—			(314	)		(44	)		(463	)
Net other comprehensive income (loss)		(422	)		63			(105	)		175
Ending balance	$	57		$	227		$	57		$	227

(6) Premises and Equipment

Premises and equipment are stated at cost less accumulated depreciation and amortization. Premises and equipment at June 30, 2015 and December 31, 2014 are comprised of the following:

(in thousands)	June 30, 2015			December 31, 2014
Leasehold improvements	$	1,881		$	1,537
Furniture & equipment		3,106			2,803
Software		857			847
Total		5,844			5,187
Accumulated depreciation		(4,001	)		(3,727	)
Premises and equipment, net	$	1,843		$	1,460

Depreciation and amortization included in occupancy expense was $151,000 and $303,000 for the three and six months ended June 30, 2015, respectively, compared to $121,000 and $244,000 for the three and six months ended June 30, 2014, respectively.

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(7) Deposits

The following table reflects the summary of deposit categories by dollar and percentage at June 30, 2015 and December 31, 2014:

	June 30, 2015					December 31, 2014
(dollars in thousands)	Amount		% of Total			Amount		% of Total
Non-interest bearing demand deposits	$	344,043		59.2	%	$	282,217		56.1	%
Interest bearing checking		27,239		4.7	%		25,492		5.1	%
Money market deposits and savings		161,081		27.7	%		154,706		30.7	%
Certificates of deposit		48,535		8.4	%		40,757		8.1	%
Total	$	580,898		100.0	%	$	503,172		100.0	%

At June 30, 2015, the Company had three certificates of deposit with the State of California Treasurer’s Office for a total of $46.0 million, which represented 7.9% of total deposits. The deposits outstanding at June 30, 2015 are scheduled to mature in the third quarter of 2015. The Company intends to renew each of these deposits at maturity. However, there can be no assurance that the State of California Treasurer’s Office will continue to maintain deposit accounts with the Company. At December 31, 2014, the Company had two certificates of deposit with the State of California Treasurer’s Office for a total of $38.0 million, which represented 7.6% of total deposits. The Company was required to pledge $50.6 million and $41.8 million, respectively, of investment securities at June 30, 2015 and December 31, 2014, in connection with these certificates of deposit.

The aggregate amount of certificates of deposit of $250,000 or greater was $46.6 million and $38.6 million, at June 30, 2015 and December 31, 2014, respectively. At June 30, 2015, all certificates of deposit of $250,000 or greater, including deposit accounts with the State of California Treasurer’s Office and CDARS, were scheduled to mature in six months or less.

The table below sets forth the range of interest rates, amount and remaining maturities of the certificates of deposit at June 30, 2015.

(in thousands)			Six months and less		Greater than six months through one year		Greater than one year
0.00%	to	0.99%	$	48,222	$	204	$	69
1.00%	to	1.99%		12		—		28
	Total		$	48,234	$	204	$	97

(8) Other Borrowings

At June 30, 2015 and December 31, 2014, the Company had a borrowing/credit facility secured by a blanket lien on eligible loans at the FHLB of $154.2 million and $146.0 million, respectively. The Company had $15.0 million and $17.5 million of long-term borrowings outstanding under this borrowing/credit facility with the FHLB at June 30, 2015 and December 31, 2014, respectively. The Company had no overnight borrowings outstanding under this borrowing/credit facility at June 30, 2015 and December 31, 2014.

The following table summarizes the outstanding long-term borrowings under the borrowing/credit facility secured by a blanket lien on eligible loans at the FHLB at June 30, 2015 and December 31, 2014 (dollars in thousands):

Maturity Date	Interest Rate		June 30, 2015		December 31, 2014
May 26, 2015		1.65%	$	—	$	2,500
May 23, 2016		2.07%		2,500		2,500
December 29, 2016		1.38%		5,000		5,000
December 30, 2016		1.25%		2,500		2,500
May 2, 2018		0.93%		5,000		5,000
Total		Total	$	15,000	$	17,500

At June 30, 2015 and December 31, 2014, the Company also had $27.0 million in Federal fund lines of credit available with other correspondent banks that could be used to disburse loan commitments and to satisfy demands for deposit withdrawals. Each of these lines of credit is subject to conditions that the Company may not be able to meet at the time when additional liquidity is needed. As of June 30, 2015 and December 31, 2014, the Company had pledged $2.0 million and $2.5 million, respectively, of corporate notes related to these lines of credit.

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(9)  Commitments and Contingencies

Commitments to Extend Credit

The Company is party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit, standby/commercial letters of credit and guarantees on revolving credit card limits. These instruments involve various levels and elements of credit and interest rate risk in excess of the amount recognized in the accompanying consolidated financial statements. The contract or notional amounts of those instruments reflect the extent of involvement the Company has in particular classes of financial instruments. The Company had $149.7 million and $146.4 million in commitments to extend credit to customers and $2.6 million and $2.7 million in standby/commercial letters of credit at June 30, 2015 and December 31, 2014, respectively. The Company also guarantees the outstanding balance on credit cards offered at the Company, but underwritten by another financial institution. The outstanding balances on these credit cards were $154,000 and $136,000 as of June 30, 2015 and December 31, 2014, respectively.

Lease Commitments

The Company leases office premises under three operating leases that will expire in December 2018, May 2019 and June 2024, respectively. Rental expense, which is included in occupancy expense, was $266,000 and $532,000 for the three and six months ended June 30, 2015, respectively, compared to $220,000 and $417,000 for the three and six months ended June 30, 2014, respectively.

The projected minimum rental payments under the term of the leases at June 30, 2015 are as follows (in thousands):

Years ending December 31,
2015 (July-December)	$	483
2016		985
2017		1,015
2018		1,046
2019		834
Thereafter		3,600
Total	$	7,963

Litigation

The Company from time to time is party to lawsuits, which arise out of the normal course of business. At June 30, 2015 and December 31, 2014, the Company did not have any litigation that management believes will have a material impact on the Consolidated Balance Sheets or unaudited Consolidated Statements of Operations and Comprehensive Income.

Restricted Stock

The following table sets forth the Company’s future restricted stock expense, net of estimated forfeitures (in thousands).

Years ending December 31,
2015 (July-December)	$	530
2016		707
2017		525
2018		323
2019		184
Thereafter		153
Total	$	2,422

(10) Fair Value Measurements

The following tables present information about the Company’s assets and liabilities measured at fair value on a recurring and non-recurring basis as of June 30, 2015 and December 31, 2014, and indicate the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value. 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.

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Assets and Liabilities Measured on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis are summarized below:

			Fair Value Measurements Using
(in thousands)	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
At June 30, 2015:
Investments-Available for Sale
U.S. Treasuries and Government Agencies	$	28,623	$	3,898	$	24,725	$	—
Corporate Notes		2,013		—		2,013		—
Residential Mortgage-Backed Securities		44,913		—		44,913		—
Derivative Assets – Interest Rate Swaps		32		—		32		—
Derivative Liabilities – Interest Rate Swaps		32		—		32		—
At December 31, 2014:
Investments-Available for Sale
U.S. Treasuries and Government Agencies	$	26,128	$	3,885	$	22,243	$	—
Corporate Notes		2,538		—		2,538		—
Residential Mortgage-Backed Securities		51,023		—		51,023		—
Derivative Assets – Interest Rate Swaps		23		—		23		—
Derivative Liabilities – Interest Rate Swaps		23		—		23		—

AFS securities — As of June 30, 2015 and December 31, 2014, the Level 2 fair value of the Company’s residential mortgage-backed securities was $44.9 million and $51.0 million, respectively. These securities consist primarily of agency mortgage-backed securities issued by the Federal National Mortgage Association (FNMA) and the Federal Home Loan Mortgage Corporation (FHLMC). The underlying loans for these securities are residential mortgages that were primarily originated beginning in the year of 2005 through the current period. These loans are geographically dispersed throughout the United States. At June 30, 2015 and December 31, 2014, the weighted average yield and weighed average life of these securities were 1.71% and 1.82%, respectively, and 3.19 years and 3.64 years, respectively.

The valuation for investment securities utilizing Level 2 inputs were primarily determined by quotes received from an independent pricing service using matrix pricing, which is a mathematical technique widely used in the industry to value securities without relying exclusively on quoted market prices for the specific securities, but rather by relying on the securities’ relationship to other benchmark quoted securities. There were no transfers into or out of Level 1 or 2 measurements during the three and six months ended June 30, 2015 and 2014.

Assets Measured on a Non-Recurring Basis

Assets measured at fair value on a non-recurring basis are summarized below:

			Fair Value Measurements Using
(in thousands)	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
At June 30, 2015:
Impaired loans
Commercial	$	677	$	—	$	—	$	677
At December 31, 2014:
Impaired loans
Commercial	$	612	$	—	$	—	$	612

Impaired loans — At the time a loan is considered impaired, it is valued at the lower of cost or fair value. The fair value of impaired loans that are collateral dependent is determined using various valuation techniques which are not readily observable in the market place, including consideration of appraised values and other pertinent real estate market data. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Impaired loans are evaluated on a quarterly basis for additional impairment and adjusted accordingly.

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(11) Estimated Fair Value Information

The fair value of a financial instrument is 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. Fair value is best determined based upon quoted market prices. However, in many cases, there are no quoted market prices for the Company’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Estimated fair value amounts have been determined by using available market information and appropriate valuation methodologies. However, considerable judgment is required to interpret market data to develop the estimates of fair value. Accordingly, the estimates presented are not necessarily indicative of the amounts the Company could realize in a current market exchange.

The methods and assumptions used to estimate the fair value of each class of financial instruments for which it is practicable to estimate the value are explained below.

Cash and cash equivalents

The carrying amounts are considered to be their estimated fair values and are classified as Level 1 because of the short-term maturity of these instruments which includes Federal funds sold and interest-earning deposits at other financial institutions.

Investment securities

AFS investment securities are carried at fair value, which are based on quoted prices of exact or similar securities, or on inputs that are observable, either directly or indirectly. The Company obtains quoted prices through third party brokers. Investment securities are classified as Level 1 to the extent that they are based on quoted prices for identical instrument traded in active markets. Investment securities are classified as Level 2 for valuations based on quotes prices for similar securities or inputs that are observable, either directly or indirectly.

FRB and FHLB stock

It is not practical to determine the fair value of FRB and FHLB stock due to restrictions placed on its transferability.

Loans, net

For loans, the fair value is estimated using market quotes for similar assets or the present value of future cash flows, discounted using the current rate at which similar loans would be made to borrowers with similar credit ratings and for the same maturities and giving consideration to estimated prepayment risk and credit risk. The fair value of loans is determined utilizing estimates resulting in a Level 3 classification.

Impaired loans are measured for impairment based on the present value of expected future cash flows discounted at the loan’s effective interest rate, except that as a practical expedient, the Company may measure impairment based on a loan’s observable market price, or the fair value of the collateral (net of estimated costs to sell) if the loan is collateral dependent. The fair value of impaired loans is determined utilizing estimates resulting in a Level 3 classification.

Off-balance sheet credit-related instruments

The fair values of commitments, which include standby letters of credit and commercial letters of credit, are based upon fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing. The related fees are not considered material to the Company’s financial statements as a whole and the fair market value of the Company’s off-balance sheet credit-related instruments cannot be readily determined. The fair value of these items is determined utilizing estimates resulting in a Level 3 classification.

Derivatives

The fair value of derivatives is based on valuation models using observable market data as of the measurement date and is classified as Level 2.

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Deposits

For demand deposits, the carrying amount approximates fair value. The fair values of interest bearing checking, savings, and money market deposits are estimated by discounting future cash flows using the interest rates currently offered for deposits of similar products. Because of the short-term maturity of these deposits, the carrying amounts are considered to be their estimated fair values and are classified as Level 1.

The fair values of the certificates of deposit are estimated by discounting future cash flows based on the rates currently offered for certificates of deposit with similar interest rates and remaining maturities. The fair value of certificates of deposit is determined utilizing estimates resulting in a Level 2 classification.

Other borrowings

The fair values of long term FHLB advances are estimated based on the rates currently offered by the FHLB for advances with similar interest rates and remaining maturities. The fair value of other borrowings is determined utilizing estimates resulting in a Level 2 classification.

Accrued interest

The estimated fair value for both accrued interest receivable and accrued interest payable are considered to be equivalent to the carrying amounts, resulting in a Level 1 classification.

The estimated fair value and carrying amounts of the financial instruments at June 30, 2015 and December 31, 2014 are as follows:

	Carrying		Fair Value Measurements Using:
(dollars in thousands)	Amount		Level 1		Level 2		Level 3		Total
As of June 30, 2015
Assets
Cash and cash equivalents	$	62,510	$	62,510	$	—	$	—	$	62,510
Investment securities		75,549		3,898		71,651		—		75,549
FRB stock		1,729		—		—		—	N/A
FHLB stock		3,167		—		—		—	N/A
Loans, net		510,741		—		—		510,827		510,827
Non-hedging interest rate swaps		32		—		32		—		32
Accrued interest receivable		1,537		1,537		—		—		1,537
Liabilities
Non-interest bearing deposits	$	344,043	$	344,043	$	—	$	—	$	344,043
Interest bearing deposits		236,855		188,320		48,535		—		236,855
Other borrowings		15,000		—		15,051		—		15,051
Non-hedging interest rate swaps		32		—		32		—		32
Accrued interest payable		12		12		—		—		12
As of December 31, 2014
Assets
Cash and cash equivalents	$	58,464	$	58,464	$	—	$	—	$	58,464
Investment securities		79,689		3,885		75,804		—		79,689
FRB stock		1,655		—		—		—	N/A
FHLB stock		3,167		—		—		—	N/A
Loans, net		435,257		—		—		433,588		433,588
Non-hedging interest rate swaps		23		—		23		—		23
Accrued interest receivable		1,418		1,418		—		—		1,418
Liabilities
Non-interest bearing deposits	$	282,217	$	282,217	$	—	$	—	$	282,217
Interest bearing deposits		220,955		180,198		40,757		—		220,955
Other borrowings		17,500		—		17,551		—		17,551
Non-hedging interest rate swaps		23		—		23		—		23
Accrued interest payable		23		23		—		—		23

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(12) Non-Interest Income

The following table summarizes the information regarding non-interest income for the three and six months ended June 30, 2015 and 2014, respectively:

	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2015		2014		2015		2014
Gain on sale of AFS investment securities	$	—	$	533	$	75	$	786
Service charges and other operating income		108		190		263		302
Total non-interest income	$	108	$	723	$	338	$	1,088

(13)  Stock-Based Compensation

On May 8, 2013, the shareholders of the Company approved the Company’s 2013 Equity Incentive Plan (the “Plan”), which provides for the grant of up to 750,000 shares of Common Stock to employees, including officers and directors, non-employee directors and consultants. Stock options, stock appreciation rights, restricted stock and other stock awards, and restricted stock units are all available for grant pursuant to the terms and conditions of the Plan. The Plan was established to consolidate and replace all other previous stock plans and the remaining shares available for grant under these previous plans were cancelled.

Prior to the approval of the Plan, the Company granted restricted stock awards to directors and employees under the 2005 Equity Incentive Plan. Restricted stock awards are considered fixed awards as the number of shares and fair value is known at the date of grant and the fair value at the grant date is amortized over the requisite service period.

Non-cash stock compensation expense recognized in the unaudited Consolidated Statements of Operations and Comprehensive Income related to the restricted stock awards, net of estimated forfeitures, was $239,000 and $463,000 for the three and six months ended June 30, 2015, respectively, compared to $235,000 and $421,000 for the same periods last year. The fair value of restricted stock awards that vested was $582,000 and $727,000 for the three and six months ended June 30, 2015, respectively, compared to $388,000 and $400,000 for the three and six months ended June 30, 2014, respectively.

The following table reflects a combined summary of the activities related to restricted stock awards outstanding for the six months ended June 30, 2015 and 2014, respectively.

	Six Months Ended June 30,
	2015					2014
Restricted Shares	Number of Shares			Weighted Avg Fair Value at Grant Date		Number of Shares			Weighted Avg Fair Value at Grant Date
Beginning balance		615,875		$	5.92		529,529		$	4.62
Granted		218,750			6.98		228,000			7.63
Vested		(149,875	)		4.85		(93,750	)		4.01
Forfeited and surrendered		—			—		—			—
Ending balance		684,750		$	6.49		663,779		$	5.74

The Company recognizes compensation expense for stock options by amortizing the fair value at the grant date over the service, or vesting period.

During the six months ended June 30, 2015 and 2014, there were none and 72,000, respectively, options exercised under the 2004 Founder Stock Option Plan at a weighted average exercise price of $5.00 per share. During the six months ended June 30, 2014, the remaining 19,800 of unexercised options under the plan expired and were automatically cancelled. The weighted average exercise price of the cancelled options was $5.00 per share. As of June 30, 2015 and 2014, there were no remaining options outstanding related to the plan.

There have been no options granted under the Director and Employee Stock Option Plan for the six months ended June 30, 2015 or 2014. There have been 307,573 and 430,600 options exercised during the six months ended June 30, 2015 and 2014, respectively, at a weighted average price of $8.01 and $5.00 per share, respectively. The remaining contractual life of the Director and Employee Stock Options outstanding was none and 1.03 years at June 30, 2015 and 2014, respectively. All options under the Directors and Employee Stock Option Plan were exercisable at June 30, 2014. During the six months ended June 30, 2015, 42,500 of unexercised option under the plan expired and were automatically cancelled. The weighted average exercise price of the cancelled options was $8.40 per share. At June 30, 2014, the weighted average exercise price of the 370,073 shares outstanding under the Director and Employee Stock Option Plan was $7.97. As of June 30, 2015, there were no remaining options outstanding related to the plan.

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The following tables detail the amount of shares authorized and available under all stock plans as of June 30, 2015:

	Shares Reserved		Less Shares Previously Exercised/Vested		Less Shares Outstanding		Total Shares Available for Future Issuance
2004 Founder Stock Option Plan		150,000		121,900		—		—
Director and Employee Stock Option Plan		1,434,000		1,220,097		—		—
2005 Equity Incentive Plan		1,200,000		929,273		258,000		—
2013 Equity Incentive Plan		750,000		20,000		426,750		303,250

(14) Regulatory Matters

Capital

Bancshares and the Bank are subject to the various regulatory capital requirements administered by federal banking agencies. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, Bancshares and the Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. 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 financial statements of the Company.

Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (set forth in the table below) of total and Tier 1 capital (as defined in the regulation) to risk-weighted assets (as defined) and of Tier 1 capital (as defined) to average assets (as defined). Management believes that as of June 30, 2015 and December 31, 2014, the Company and the Bank met all capital adequacy requirements to which they are subject.

At December 31, 2014, the most recent notification from the OCC categorized the Bank as “well-capitalized” under the regulatory framework for prompt corrective action. To generally be categorized as a “well-capitalized” financial institution, the Bank must maintain minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratios. There are no conditions or events since the notification that management believes have changed the Bank’s categorization.

The Company’s and the Bank’s capital ratios as of June 30, 2015 and December 31, 2014 are presented in the table below:

	Company					Bank					For Capital Adequacy Purposes					For the Bank to be “Well-Capitalized” Under Prompt Corrective Measures
(dollars in thousands)	Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio
June 30, 2015:
Total Risk-Based Capital Ratio	$	69,667		12.42	%	$	66,118		11.78	%	$	44,890		8.00	%	$	56,112		10.00	%
Tier 1 Risk-Based Capital Ratio	$	62,633		11.16	%	$	59,083		10.53	%	$	33,668		6.00	%	$	44,890		8.00	%
Common Equity Tier 1 Capital Ratio	$	62,633		11.16	%	$	59,083		10.53	%	$	25,251		4.50	%	$	36,473		6.50	%
Tier 1 Leverage Ratio	$	62,633		9.80	%	$	59,083		9.24	%	$	25,572		4.00	%	$	31,988		5.00	%
December 31, 2014:
Total Risk-Based Capital Ratio	$	67,275		13.94	%	$	63,339		13.13	%	$	38,603		8.00	%	$	48,253		10.00	%
Tier 1 Risk-Based Capital Ratio	$	61,220		12.69	%	$	57,284		11.87	%	$	19,302		4.00	%	$	28,952		6.00	%
Tier 1 Leverage Ratio	$	61,220		10.05	%	$	57,284		9.40	%	$	24,357		4.00	%	$	30,456		5.00	%

On July 2, 2013, the Federal Reserve approved the final rules implementing the Basel Committee on Banking Supervision's (“BCBS”) capital guidelines for U.S. banks. Under the final rules, minimum requirements will increase for both the quantity and quality of capital held by the Company. The rules include a new common equity Tier 1 capital to risk-weighted assets ratio of 4.5%. The new rules also require a common equity Tier 1 capital conservation buffer of 2.5% of risk-weighted assets over each of the required capital ratios that will be phased in from 2016 to 2019 and must be met to avoid limitations the ability of the Bank to pay dividends, repurchase shares or pay discretionary bonuses. The final rules also raise the minimum ratio of Tier 1 capital to risk-weighted assets from 4.0% to 6.0% and require a minimum leverage ratio of 4.0%. The final rules also implement strict eligibility criteria for regulatory capital instruments, excluding trust preferred securities, mortgage servicing rights and certain deferred tax assets, and including unrealized gains and losses on available for sale debt and equity securities. On July 9, 2013, the FDIC and OCC also approved, as an interim final rule, the regulatory capital requirements for U.S. banks, following the actions of the FRB. The FDIC and OCC's rules are identical in substance to the final rules issued by the FRB.

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The phase-in period for the final rules commenced for the Company and the Bank on January 1, 2015, with full compliance with all of the final rule's requirements phased in over a multi-year schedule.

Dividends

In the ordinary course of business, Bancshares is dependent upon dividends from the Bank to provide funds for the payment of dividends to stockholders and to provide for other cash requirements. Banking regulations may limit the amount of dividends that may be paid. Approval by regulatory authorities is required if the effect of dividends declared would cause the regulatory capital of the Bank to fall below specified minimum levels. Approval is also required if dividends declared exceed the net profits for that year combined with the retained net profits for the preceding two years. Currently, the Bank is prohibited from paying dividends to Bancshares until such time as the accumulated deficit is eliminated.

To date, Bancshares has not paid any cash dividends. Payment of stock or cash dividends in the future will depend upon earnings and financial condition and other factors deemed relevant by Bancshares’ Board of Directors, as well as Bancshares’ legal ability to pay dividends. Accordingly, no assurance can be given that any cash dividends will be declared in the foreseeable future.

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

Introduction

Our profitability, like most banks, is primarily dependent on interest rate differentials. In general, the difference between the interest rates paid by us on interest bearing liabilities, such as deposits and other borrowings, and the interest rates received by us on our interest-earning assets, such as loans extended to our clients and securities held in our investment portfolio, comprises the major portion of our earnings. In addition, we may, from time to time, supplement our earnings by monetizing gains in our investment portfolio. 

Critical Accounting Policies and Estimates

The accounting and reporting policies followed by us conform, in all material respects, to accounting principles generally accepted in the United States, or GAAP, and to general practices within the financial services industry. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. While we base our estimates on historical experience, current information and other factors deemed by us to be relevant, actual results could differ materially and adversely from those estimates.

We consider accounting estimates to be critical to reported financial results if (i) the accounting estimate requires management to make assumptions about matters that are highly uncertain and (ii) different estimates that management reasonably could have used for the accounting estimate in the current period, or changes in the accounting estimate that are reasonably likely to occur from period to period, could have a material impact on our financial statements. Accounting polices related to the allowance for loan losses (“ALL”) and income taxes are considered to be critical, as these policies involve considerable subjective judgment and estimation by management. Critical accounting policies, and our procedures related to these policies, are summarized below. There have been no changes to our critical accounting policies and estimates during the three months ended June 30, 2015.

Allowance for Loan Losses. The allowance for loan losses is established through a provision for loan losses charged to operations and represents an estimate of probable incurred losses inherent in the Company’s loan portfolio that have been incurred as of the balance sheet date. Loan losses are charged against the allowance when management believes that principal is uncollectible. Subsequent repayments or recoveries, if any, are credited to the allowance. Management periodically assesses the adequacy of the allowance for loan losses by reference to quantitative and qualitative factors that may be weighted differently at various times depending on prevailing conditions. The provisions reflect management’s evaluation of the adequacy of the allowance based, in part, upon the historical loss experience of the loan portfolio, as well as estimates from historical peer group loan loss data and the loss experience of other financial institutions, augmented by management judgment. During this process, loans are separated into the following portfolio segments: commercial, commercial real estate, residential, land and construction, and consumer and other loans. The relative significance of risk considerations vary by portfolio segment. For commercial loans, commercial real estate loans and land and construction loans, the primary risk consideration is a borrower’s ability to generate sufficient cash flows to repay their loan. Secondary considerations include the creditworthiness of guarantors and the valuation of collateral. In addition to the creditworthiness of a borrower, the type and location of real estate collateral is an important risk factor for commercial real estate and land and construction loans. The primary risk consideration for residential loans and consumer loans are a borrower’s personal cash flow and liquidity, as well as collateral value.

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Loss ratios for all portfolio segments are evaluated on a quarterly basis. Loss ratios associated with historical loss experience are determined based on a rolling migration analysis of each portfolio segment within the portfolio. This migration analysis estimates loss factors based on the performance of each portfolio segment over a four and a half year time period. These loss ratios are then adjusted, if determined necessary by management, based on other factors including, but not limited to, historical peer group loan loss data and the loss experience of other financial institutions. Management carefully monitors changing economic conditions, the concentrations of loan categories, values of collateral, the financial condition of the borrowers, the history of the loan portfolio, and historical peer group loan loss data to determine the adequacy of the allowance for loan losses. As a part of this process, management typically focuses on loan-to-value (“LTV”) percentages to assess the adequacy of loss ratios of collateral dependent loans within each portfolio segment discussed above, trends within each portfolio segment, as well as general economic and real estate market conditions where the collateral and borrower are located. For loans that are not collateral dependent, which generally consist of commercial and consumer and other loans, management typically focuses on general business conditions where the borrower operates, trends within the portfolio, and other external factors to evaluate the severity of loss factors. The allowance is based on estimates and actual losses may vary materially and adversely from the estimates.

In addition, regulatory agencies, as a part of their examination process, periodically review the Bank’s allowance for loan losses, and may require the Bank to make additions to the allowance through provisioning based on their judgment about information available to them at the time of their examinations. No assurance can be given that adverse future economic conditions will not lead to increased delinquent loans, and increases in the provision for loan losses and/or charge-offs. See Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Allowance for Loan Losses” for further details considered by management in estimating the necessary level of the allowance for loan losses.

Income Taxes. Provision for income taxes is the amount of estimated tax due reported on our tax returns and the change in the amount of deferred tax assets and liabilities. Deferred income taxes represent the estimated net income tax expense payable (or benefits receivable) for temporary differences between the carrying amounts for financial reporting purposes and the amounts used for tax purposes. A valuation allowance is required if it is “more likely than not” that a deferred tax asset will not be realized. The determination of the realizability of deferred tax assets is highly subjective and dependent upon management’s evaluation of both positive and negative evidence, including historic financial performance, forecasts of future income, existence of feasible tax planning strategies, length of statutory carryforward period, and assessments of current and future economic and business conditions. Management evaluates the positive and negative evidence and determines the realizability of the deferred tax asset, and the corresponding need for or adequacy of a valuation allowance on a quarterly basis. See Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Deferred Tax Asset” for further discussion of our deferred tax asset and management’s evaluation of the same.

Summary of Financial Condition and Results of Operations

For the three and six months ended June 30, 2015, the Company recorded net income of $515,000, or $0.05 per diluted share, and $830,000, or $0.08 per diluted share, respectively. During the same periods last year, the Company reported net income of $779,000, or $0.08 per diluted share, and $1.2 million, or $0.12 per diluted share, respectively. The decline in net income during the three months ended June 30, 2015 as compared to the same period last year was primarily due to a $475,000 increase in provision for loan losses, a $533,000 decline in gains from the sale of securities, and a $571,000 increase in non-interest expenses. These items were partially offset by an increase in net interest income of $1.2 million, primarily related to an increase in the average balance of loans during the current quarter as compared to the same period last year. The decline in net income during the six months ended June 30, 2015 as compared to the same period last year was primarily due to a $625,000 increase in provision for loan losses, a $711,000 decline in gains from the sale of securities, and a $1.1 million increase in non-interest expenses. These items were partially offset by an increase in net interest income of $1.9 million, primarily related to an increase in the average balance of loans during the six months ended June 30, 2015, as compared to the same period last year.

Total assets at June 30, 2015 were $661.3 million, representing an increase of $76.1 million, or 13.0%, from $585.2 million at December 31, 2014. Cash and cash equivalents at June 30, 2015 were $62.5 million, representing an increase of $4.0 million, or 6.9%, from $58.5 million at December 31, 2014. Loans increased by $76.2 million, from $442.9 million at December 31, 2014 to $519.1 million at June 30, 2015. Loan originations were $84.1 million and $145.5 million during the three and six months ended June 30, 2015, compared to $77.0 million and $101.3 million during the same periods last year. The majority of loan originations during the three and six months ended June 30, 2015 were related to commercial real estate loans and consumer lending loans. Prepayment speeds for the three and six months ended June 30, 2015 were 15.6% and 13.4%, compared to 11.5% and 12.9% for the same periods last year. Investment securities were $75.5 million at June 30, 2015, compared to $79.7 million at December 31, 2014, representing a decline of $4.1 million, or 5.2%. During the six months ended June 30, 2015, the Company sold investment securities with an amortized cost of $5.9 million, recognizing gains of $75,000. No securities were sold during the three months ended June 30, 2015. During the three and six months ended June 30, 2014, the Company sold investment securities with an amortized cost of $28.6 million and $43.4 million, respectively, recognizing gains of $533,000 and $786,000, respectively. The weighted average life of our investment securities was 3.69 years and 4.02 years at June 30, 2015 and December 31, 2014, respectively.

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Total liabilities at June 30, 2015 increased by $75.1 million, or 14.3%, to $598.6 million compared to $523.5 million at December 31, 2014. This increase is primarily due to a $77.7 million increase in deposits. Total core deposits, which includes non-interest bearing demand deposits, interest bearing demand deposits and money market deposits and savings, were $532.4 million and $462.4 million at June 30, 2015 and December 31, 2014, respectively, representing an increase of $70.0 million, or 15.1%.

Average interest earning assets increased $90.5 million, from $542.6 million for the three months ended June 30, 2014 to $633.1 million for the three months ended June 30, 2015. The weighted average interest rate on interest earning assets was 3.74% and 3.47% for the three months ended June 30, 2015 and 2014, respectively. The improvement in this rate was primarily attributable to an increase in the average balance of loans relative to total average earning assets as compared to the same period last year.

Average interest earning assets increased $68.3 million, from $542.3 million for the six months ended June 30, 2014 to $610.6 million for the six months ended June 30, 2015. The weighted average interest rate on interest earning assets was 3.66% and 3.43% for the six months ended June 30, 2015 and 2014, respectively. The improvement in this rate was primarily attributable to an increase in the average balance of loans relative to total average earning assets as compared to the same period last year.

Average interest bearing deposits and borrowings increased $5.1 million, from $239.5 million for the three months ended June 30, 2014 to $244.6 million for the three months ended June 30, 2015. The average cost of interest bearing deposits and borrowings was 0.28% during the three months ended June 30, 2015 compared to 0.31% for the same period last year. The decline in our cost of interest bearing deposits and borrowings is primarily attributable to a decrease in the average balance of our borrowings, as compared to the same period last year.

Average interest bearing deposits and borrowings decreased $4.8 million, from $244.1 million for the six months ended June 30, 2014 to $239.4 million for the six months ended June 30, 2015. The average cost of interest bearing deposits and borrowings was 0.28% during the six months ended June 30, 2015 compared to 0.31% for the same period last year. The decline in our cost of interest bearing deposits and borrowings is primarily attributable to a decrease in the average balance of our borrowings, as compared to the same period last year.

At June 30, 2015, stockholders’ equity totaled $62.7 million, or 9.5% of total assets, as compared to $61.7 million, or 10.5% of total assets at December 31, 2014. The Company’s book value per share of common stock was $6.07 as of June 30, 2015, compared to $5.83 and $6.08 per share as of June 30, 2014 and December 31, 2014, respectively.

Set forth below are certain key financial performance ratios and other financial data for the period indicated:

	Three months ended June 30,						Six months ended June 30,
	2015			2014			2015			2014
Annualized return on average assets		0.32	%		0.57	%		0.27	%		0.43	%
Annualized return on average stockholders’ equity		3.29	%		5.31	%		2.68	%		4.10	%
Average stockholders’ equity to average assets		9.81	%		10.71	%		10.11	%		10.59	%
Net interest margin		3.63	%		3.33	%		3.55	%		3.29	%

Results of Operations

Net Interest Income

The management of interest income and interest expense is fundamental to the performance of the Company. Net interest income, which is the difference between interest income on interest earning assets, such as loans and investment securities, and interest expense on interest bearing liabilities, such as deposits and other borrowings, is the largest component of the Company’s total revenue. Management closely monitors both net interest income and net interest margin (net interest income divided by average earning assets).

Net interest income and net interest margin are affected by several factors including (1) the level of, and the relationship between the dollar amount of interest earning assets and interest bearing liabilities; and (2) the relationship between re-pricing or maturity of our variable-rate and fixed-rate loans, securities, deposits and borrowings.

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The majority of the Company’s loans are indexed to the national prime rate. Movements in the national prime rate have a direct impact on the Company’s loan yield and interest income. The national prime rate, which generally follows the targeted federal funds rate, was 3.25% at June 30, 2015 and 2014. There was no change in the targeted federal funds rate during the three and six months ended June 30, 2015 and 2014, remaining at 0.00%-0.25%.

The Company, through its asset and liability management policies and practices, seeks to maximize net interest income without exposing the Company to a level of interest rate risk deemed excessive by management. Interest rate risk is managed by monitoring the pricing, maturity and re-pricing characteristics of all classes of interest bearing assets and liabilities. This is discussed in more detail in Item 2- “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Asset/Liability Management.”

During the quarter ended June 30, 2015, net interest income was $5.7 million compared to $4.5 million for the same period last year. The increase in net interest income was primarily attributable to a 30 basis point improvement in our net interest spread. This increase in net interest spread was due to increases in the average balances of our loan portfolio during the quarter ended June 30, 2015 as compared to the same period last year, partially offset by a decline in the average balance of our investment portfolio during the same period. The average balance of our loan portfolio was $507.2 million during the quarter ended June 30, 2015, compared to $393.3 million for the same period last year. The average balance of our investment portfolio was $72.6 million during the quarter ended June 30, 2015, compared to $96.5 million for the same period last year.

The Company’s net interest spread was 3.46% for the three months ended June 30, 2015 compared to 3.16% for the same period last year.

The Company’s net interest margin (net interest income divided by average interest earning assets) was 3.63% for the quarter ended June 30, 2015, compared to 3.33% for the same period last year. The 30 basis point increase in net interest margin is primarily due to an increase in the average balance of loans relative to total average earning assets as compared to the same period last year. The percentage of average loans to total average earning assets increased to 80.1% during the quarter ended June 30, 2015, compared to 72.5% during the same period last year.

The following table sets forth the average balances of certain assets, interest income/expense, average yields on interest earning assets, average rates paid on interest bearing liabilities, net interest margins and net interest income/spread for the three months ended June 30, 2015 and 2014, respectively.

	Three Months Ended June 30,
	2015							2014
	Average		Interest					Average		Interest
(dollars in thousands)	Balance		Inc/Exp		Yield			Balance		Inc/Exp		Yield
Assets
Interest earning deposits at other financial institutions	$	48,449	$	31		0.26	%	$	48,043	$	31		0.26	%
U.S. Treasuries and Gov’t agencies		23,459		107		1.83	%		5,534		30		2.15	%
Corporate notes		2,021		7		1.30	%		2,662		9		1.33	%
Residential mortgage-backed securities		47,074		194		1.65	%		88,326		469		2.12	%
Federal Reserve Bank stock		1,724		26		6.00	%		1,599		24		6.00	%
Federal Home Loan Bank stock		3,167		177		22.40	%		3,139		51		6.56	%
Loans (1) (2)		507,180		5,366		4.24	%		393,284		4,082		4.16	%
Earning assets		633,074		5,908		3.74	%		542,587		4,696		3.47	%
Other assets		6,923							6,610
Total assets	$	639,997						$	549,197
Liabilities & Equity
Interest checking (NOW)	$	28,563		10		0.14	%	$	23,725		8		0.14	%
Money market deposits and savings		152,862		95		0.25	%		147,568		90		0.24	%
CDs		46,689		7		0.06	%		41,826		9		0.08	%
Borrowings		16,511		61		1.47	%		26,429		80		1.21	%
Total interest bearing deposits and borrowings		244,625		173		0.28	%		239,548		187		0.31	%
Demand deposits		330,090							248,649
Other liabilities		2,511							2,188
Total liabilities		577,226							490,385
Equity		62,771							58,812
Total liabilities & equity	$	639,997						$	549,197
Net interest income / spread			$	5,735		3.46	%			$	4,509		3.16	%
Net interest margin						3.63	%						3.33	%

(1) Before allowance for loan losses and net deferred loan fees and costs. Included in net interest income was net loan origination fee accretion and (cost amortization) of $45,000 and ($11,000) for the three months ended June 30, 2015 and 2014, respectively.

(2) Includes average non-accrual loans of $658,000 and $734,000 for the three months ended June 30, 2015 and 2014, respectively.

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The Volume and Rate Variances table below sets forth the dollar difference in interest earned and paid for each major category of interest earning assets and interest bearing liabilities for the noted period, and the amount of such change attributable to changes in average balances (volume) or changes in average interest rates. Volume variances are equal to the increase or decrease in the average balance times the prior period rate and rate variances are equal to the increase or decrease in the average rate times the prior period average balance. Variances attributable to both rate and volume changes are equal to the change in rate times the change in average balance and are included below in the average volume column.

	Three Months Ended June 30, 2015 Compared to 2014 Increase (Decrease) Due to Changes in:
(in thousands)	Volume			Rate			Total
Interest income:
Interest earning deposits at other financial institutions	$	—		$	—		$	—
U.S. Treasuries and Gov’t agencies		82			(5	)		77
Corporate notes		(2	)		—			(2	)
Residential mortgage-backed securities		(186	)		(89	)		(275	)
Federal Reserve Bank stock		2			—			2
Federal Home Loan Bank stock		1			125			126
Loans		1,203			81			1,284
Total increase in interest income		1,100			112			1,212
Interest expense:
Interest checking (NOW)		2			—			2
Money market deposits and savings		3			2			5
CDs		—			(2	)		(2	)
Borrowings		(34	)		15			(19	)
Total increase (decrease) in interest expense		(29	)		15			(14	)
Net increase (decrease) in net interest income	$	1,129		$	97		$	1,226

During the six months ended June 30, 2015, net interest income was $10.8 million compared to $8.9 million for the same period last year. The increase in net interest income was primarily attributable to a 26 basis point improvement in our net interest spread. This increase in net interest spread was due to increases in the average balances of our loan portfolio during the six months ended June 30, 2015 as compared to the same period last year, partially offset by a decline in the average balance of our investment portfolio during the same period. The average balance of our loan portfolio was $481.1 million during the six months ended June 30, 2015, compared to $384.3 million for the same period last year. The average balance of our investment portfolio was $75.5 million during the six months ended June 30, 2015, compared to $102.0 million for the same period last year.

The Company’s net interest spread was 3.38% for the six months ended June 30, 2015 compared to 3.12% for the same period last year.

The Company’s net interest margin was 3.55% for the six months ended June 30, 2015, compared to 3.29% for the same period last year. As discussed above, the improvement in our net interest margin is primarily due to an increase in the average balance of loans relative to total earning assets as compared to the same period last year. The percentage of average loans to total average earning assets increased to 78.8% during the six months ended June 30, 2015, compared to 70.9% during the same period last year.

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The following table sets forth the average balances of certain assets, interest income/expense, average yields on interest earning assets, average rates paid on interest bearing liabilities, net interest margins and net interest income/spread for the six months ended June 30, 2015 and 2014, respectively.

	Six Months Ended June 30,
	2015							2014
	Average		Interest					Average		Interest
(dollars in thousands)	Balance		Inc/Exp		Yield			Balance		Inc/Exp		Yield
Assets
Interest earning deposits at other financial institutions	$	49,117	$	64		0.26	%	$	51,368	$	65		0.25	%
U.S. Treasuries and Gov’t agencies		24,904		230		1.86	%		3,224		34		2.15	%
Corporate notes		2,157		14		1.31	%		2,882		19		1.32	%
Residential mortgage-backed securities		48,488		411		1.69	%		95,866		1,016		2.12	%
Federal Reserve Bank stock		1,689		51		6.00	%		1,585		47		6.00	%
Federal Home Loan Bank stock		3,167		233		14.88	%		3,101		103		6.69	%
Loans (1) (2)		481,066		10,083		4.23	%		384,291		7,950		4.17	%
Earning assets		610,588		11,086		3.66	%		542,317		9,234		3.43	%
Other assets		7,112							6,636
Total assets	$	617,700						$	548,953
Liabilities & Equity
Interest checking (NOW)	$	27,188		20		0.15	%	$	21,813		16		0.14	%
Money market deposits and savings		151,456		188		0.25	%		153,140		183		0.24	%
CDs		43,705		14		0.06	%		42,201		18		0.09	%
Borrowings		17,004		109		1.29	%		26,963		162		1.21	%
Total interest bearing deposits and borrowings		239,353		331		0.28	%		244,117		379		0.31	%
Demand deposits		313,188							244,334
Other liabilities		2,705							2,343
Total liabilities		555,246							490,794
Equity		62,454							58,159
Total liabilities & equity	$	617,700						$	548,953
Net interest income / spread			$	10,755		3.38	%			$	8,855		3.12	%
Net interest margin						3.55	%						3.29	%

(1) Before allowance for loan losses and net deferred loan fees and costs. Included in net interest income was net loan origination fee accretion and (cost amortization) of $39,000 and ($4,000) for the six months ended June 30, 2015 and 2014, respectively.

(2) Includes average non-accrual loans of $645,000 and $735,000 for the six months ended June 30, 2015 and 2014, respectively.

The Volume and Rate Variances table below sets forth the dollar difference in interest earned and paid for each major category of interest earning assets and interest bearing liabilities for the noted period, and the amount of such change attributable to changes in average balances (volume) or changes in average interest rates. Volume variances are equal to the increase or decrease in the average balance times the prior period rate and rate variances are equal to the increase or decrease in the average rate times the prior period average balance. Variances attributable to both rate and volume changes are equal to the change in rate times the change in average balance and are included below in the average volume column.

	Six Months Ended June 30, 2015 Compared to 2014 Increase (Decrease) Due to Changes in:
(in thousands)	Volume			Rate			Total
Interest income:
Interest earning deposits at other financial institutions	$	(2	)	$	1		$	(1	)
U.S. Treasuries and Gov’t agencies		201			(5	)		196
Corporate notes		(5	)		—			(5	)
Residential mortgage-backed securities		(430	)		(175	)		(605	)
Federal Reserve Bank stock		4			—			4
Federal Home Loan Bank stock		2			128			130
Loans		2,027			106			2,133
Total increase (decrease) in interest income		1,797			55			1,852
Interest expense:
Interest checking (NOW)		4			—			4
Money market deposits and savings		(2	)		7			5
CDs		1			(5	)		(4	)
Borrowings		(63	)		10			(53	)
Total increase (decrease) in interest expense		(60	)		12			(48	)
Net increase (decrease) in net interest income	$	1,857		$	43		$	1,900

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Provision for Loan Losses

During the three and six months ended June 30, 2015, we recorded a provision for loan losses of $575,000 and $725,000, respectively, compared to $100,000 for both the three and six months ended June 30, 2014. Criticized and classified loans generally consist of special mention, substandard and doubtful loans. Special mention, substandard and doubtful loans were $127,000, $1.4 million and none, respectively, at June 30, 2015, compared to $152,000, $2.2 million and none, respectively, at June 30, 2014. We had net charge-offs of $17,000 and $1,000 during the three and six months ended June 30, 2015, compared to net recoveries $15,000 and $31,000 for the same periods last year. At June 30, 2015, the ALL to total loans was 1.60% compared to 1.72% at December 31, 2014. The risks associated with the adequacy of our ALL and the decline in this ratio may have increased as a result of our loan growth. Management will continue to closely monitor the adequacy of the ALL and will make adjustments as warranted. Management believes that the ALL as of June 30, 2015 and December 31, 2014 was adequate to absorb probable and inherent risks in the loan portfolio. The provision for loan losses was recorded based on an analysis of the factors discussed in Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Financial Condition – Allowance for Loan Losses.

As a percentage of our total loan portfolio, the amount of non-performing loans was 0.14% at both June 30, 2015 and December 31, 2014. As a percentage of our total assets, the amount of non-performing assets was 0.11% at both June 30, 2015 and December 31, 2014.

Non-Interest Income

Non-interest income was $108,000 and $338,000 for the three and six months ended June 30, 2015, compared to $723,000 and $1.1 million for the same periods last year. During the six months ended June 30, 2015, the Company sold investment securities with an amortized cost of $5.9 million, recognizing gains of $75,000. No securities were sold during the three months ended June 30, 2015. During the three and six months ended June 30, 2014, the Company sold $28.6 million and $43.4 million of investment securities, recognizing gains of $533,000 and $786,000. With the exception of such gains, non-interest income primarily consists of customer related fee income.

Non-Interest Expense

Non-interest expense was $4.4 million and $8.9 million for the three and six months ended June 30, 2015, compared to $3.8 million and $7.8 million for the same periods last year. The increases in non-interest expense during the three and six months ended June 30, 2015 as compared to the same periods last year is primarily due to the costs incurred to expand the Bank’s business development and related operational support teams, as well as the supplemental costs associated with the Bank’s recently opened relationship office in Beverly Hills.

Income Tax Provision

During the three and six months ended June 30, 2015, we recorded tax provisions of $394,000 and $640,000, respectively, compared to tax provisions of $565,000 and $875,000 for the same periods last year. The changes in tax provision were consistent with the changes in pre-tax earnings.

Financial Condition

Assets

Total assets at June 30, 2015 were $661.3 million, representing an increase of $76.1 million, or 13.0%, from $585.2 million at December 31, 2014. Cash and cash equivalents at June 30, 2015 were $62.5 million, representing an increase of $4.0 million, or 6.9%, from $58.5 million at December 31, 2014. Loans increased by $76.2 million, from $442.9 million at December 31, 2014 to $519.1 million at June 30, 2015. Loan originations were $84.1 million and $145.5 million during the three and six months ended June 30, 2015, compared to $77.0 million and $101.3 million during the same periods last year. The majority of loan originations during the three and six months ended June 30, 2015 were related to commercial real estate loans and consumer lending loans. Prepayment speeds for the three and six months ended June 30, 2015 were 15.6% and 13.4%, compared to 11.5% and 12.9% for the same periods last year. Investment securities were $75.5 million at June 30, 2015, compared to $79.7 million at December 31, 2014, representing a decline of $4.1 million, or 5.2%. During the six months ended June 30, 2015, the Company sold investment securities with an amortized cost of $5.9 million, recognizing gains of $75,000. No securities were sold during the three months ended June 30, 2015. During the three and six months ended June 30, 2014, the Company sold investment securities with an amortized cost of $28.6 million and $43.4 million, respectively, recognizing gains of $533,000 and $786,000, respectively. The weighted average life of our investment securities was 3.69 years and 4.02 years at June 30, 2015 and December 31, 2014, respectively.

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Cash and Cash Equivalents

Cash and cash equivalents totaled $62.5 million and $58.5 million at June 30, 2015 and December 31, 2014, respectively. Cash and cash equivalents are managed based upon liquidity needs by investing excess liquidity in higher yielding assets such as loans and investment securities. See the section “Liquidity and Asset/Liability Management” below.

Investment Securities

The investment securities portfolio is generally the second largest component of the Company’s interest earning assets, and the structure and composition of this portfolio is important to any analysis of the financial condition of the Company. The investment portfolio serves the following purposes: (i) it can be readily reduced in size to provide liquidity for loan balance increases or deposit balance decreases; (ii) it provides a source of pledged assets for securing certain deposits and borrowed funds, as may be required by law or by specific agreement with a depositor or lender; (iii) it can be used as an interest rate risk management tool, since it provides a large base of assets, the maturity and interest rate characteristics of which can be changed more readily than the loan portfolio to better match changes in the deposit base and other funding sources of the Company; and (iv) it is an alternative interest earning use of funds when loan demand is weak or when deposits grow more rapidly than loans.

At June 30, 2015, investment securities totaled $75.5 million compared to $79.7 million at December 31, 2014. The Company’s investment portfolio is primarily composed of residential mortgage-backed securities issued by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation and debt securities issued by Government Sponsored Agencies. The underlying loans for the mortgage-backed securities are residential mortgages that were primarily originated beginning in 2005 through the current period. These loans are geographically dispersed throughout the United States. At June 30, 2015 and December 31, 2014, the weighted average yield and weighed average life of these residential mortgage-backed securities were 1.71% and 1.82%, respectively, and 3.19 years and 3.64 years, respectively. At June 30, 2015 and December 31, 2014, the weighted average rate and weighed average life of debt securities issued by Government Sponsored Agencies were 1.87% and 1.89%, respectively, and 4.71 years and 5.07 years, respectively.

During the six months ended June 30, 2015, the Company sold investment securities with an amortized cost of $5.9 million, recognizing gains of $75,000. No securities were sold during the three months ended June 30, 2015. During the three and six months ended June 30, 2014, the Company sold $28.6 million and $43.4 million, respectively, of investment securities, recognizing gains of $533,000 and $786,000, respectively. These gains were recorded in non-interest income within the unaudited Consolidated Statement of Operations and Comprehensive Income. In addition, the unrealized gain on investment securities decreased to $96,000 at June 30, 2015, compared to $275,000 at December 31, 2014. We will continue to evaluate the Company’s investments and liquidity needs and will adjust the amount of investment securities accordingly.

Loans

Loans, net of the ALL and deferred loan origination costs/unearned fees, increased 17.3%, or $75.5 million, from $435.3 million at December 31, 2014 to $510.7 million at June 30, 2015. As of June 30, 2015 and December 31, 2014, total loans outstanding totaled $519.1 million and $442.9 million, respectively. Loan originations were $84.1 million and $145.5 million during the three and six months ended June 30, 2015, respectively, compared to $77.0 million and $101.3 million during the same periods last year. The majority of loan originations during the three and six months ended June 30, 2015 were related to commercial real estate loans and consumer lending loans. Prepayment speeds for the three and six months ended June 30, 2015 were 15.6% and $13.4%, respectively, compared to 11.5% and 12.9% for the same periods last year.

As of June 30, 2015 and December 31, 2014, substantially all of the Company’s loan customers were located in Southern California.

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Non-Performing Assets

The following table sets forth non-accrual loans and other real estate owned at June 30, 2015 and December 31, 2014:

(dollars in thousands)	June 30, 2015			December 31, 2014
Non-accrual loans:
Commercial	$	712		$	632
Total non-accrual loans		712			632
Total non-performing assets	$	712		$	632
Non-performing assets to gross loans and OREO		0.14	%		0.14	%
Non-performing assets to total assets		0.11	%		0.11	%

Non-accrual loans totaled $712,000 and $632,000 at June 30, 2015 and December 31, 2014, respectively. There were no accruing loans past due 90 days or more at June 30, 2015 and December 31, 2014. Gross interest income that would have been recorded on non-accrual loans had they been current in accordance with their original terms was $8,000 and $18,000 for the three and six months ended June 30, 2015, respectively, compared to $10,000 and $20,000 for the same periods last year.

At June 30, 2015, non-accrual loans consisted of three commercial loans totaling $712,000. At December 31, 2014, non-accrual loans consisted of two commercial loans totaling $632,000.

At June 30, 2015 and December 31, 2014, the recorded investment in impaired loans was $760,000 and $681,000, respectively. At June 30, 2015 and December 31, 2014, the Company had a specific allowance for loan losses of $35,000 and $20,000, respectively on impaired loans of $140,000 and $60,000, respectively. There were $620,000 and $621,000 of impaired loans with no specific allowance for loan losses at June 30, 2015 and December 31, 2014, respectively. The average outstanding balance of impaired loans for the three and six months ended June 30, 2015 was $707,000 and $694,000, respectively, compared to $939,000 and $946,000 for the same periods last year. At June 30, 2015 and December 31, 2014, there were $712,000 and $632,000, respectively, of impaired loans on non-accrual status. For both the three and six months ended June 30, 2015, interest income recognized on impaired loans subsequent to their classification as impaired was $1,000, compared to $3,000 and $5,000 for the same periods last year. The Company stops accruing interest on these loans on the date they are classified as non-accrual and reverses any uncollected interest that had been previously accrued as income. The Company may begin recognizing interest income on these loans as cash interest payments are received, if collection of principal is reasonably assured.

Allowance for Loan Losses

The ALL is established through provisions for loan losses charged to operations and represents probable incurred credit losses in the Company’s loan portfolio that have been incurred as of the balance sheet date. Loan losses are charged against the ALL when management believes that principal is uncollectible. Subsequent repayments or recoveries, if any, are credited to the ALL. Management periodically assesses the adequacy of the ALL by reference to many quantitative and qualitative factors that may be weighted differently at various times depending on prevailing conditions. These factors include, among others:

• the risk characteristics of various classifications of loans;

• general portfolio trends relative to asset and portfolio size;

• asset categories;

• potential credit concentrations;

• delinquency trends within the loan portfolio;

• changes in the volume and severity of past due and other classified loans;

• historical loss experience and risks associated with changes in economic, social and business conditions; and

• the underwriting standards in effect when the loan was made.

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Accordingly, the calculation of the adequacy of the ALL is not based solely on the level of non-performing assets. The quantitative factors, included above, are utilized by our management to identify two different risk groups (1) individual loans (loans with specifically identifiable risks); and (2) homogeneous loans (groups of loan with similar characteristics). We base the allocation for individual loans on the results of our impairment analysis, which is typically based on the present value of the expected future cash flows discounted at the loan’s effective interest rate or by using the loan’s most recent market value or the fair value of the collateral, if the loan is collateral dependent. Homogenous groups of loans are allocated reserves based on the loss ratio assigned to the pool based on its risk grade. The loss ratio is determined based primarily on the historical loss experience of our loan portfolio. These loss ratios are then adjusted, if determined necessary by management, based on other factors including, but not limited to, historical peer group loan loss data and the loss experience of other financial institutions. Loss ratios for all categories of loans are evaluated by management on a quarterly basis. Historical loss experience is determined based on a rolling migration analysis of each loan category within our portfolio. This migration analysis estimates loss factors based on the performance of each loan category over a four and a half year time period. These quantitative calculations are based on estimates and actual losses may vary materially and adversely from the estimates.

The qualitative factors, included above, are also utilized to identify other risks inherent in the portfolio and to determine whether the estimated credit losses associated with the current portfolio might differ from historical loss trends or the loss ratios discussed above. We estimate a range of exposure for each applicable qualitative factor and evaluate the current condition and trend of each factor. Because of the subjective nature of these factors, the actual losses incurred may vary materially and adversely from the estimated amounts.

In addition, regulatory agencies, as a part of their examination process, periodically review the Bank’s ALL, and may require the Bank to take additional provisions to increase the ALL based on their judgment about information available to them at the time of their examinations. No assurance can be given that adverse future economic conditions or other factors will not lead to increased delinquent loans, further provisions for loan losses and/or charge-offs. Alternatively, no assurance can be given that future economic conditions or other factors will not lead to a decline in delinquent loans, which could result in a reversal of provision for loan losses and/or loan recoveries. Management believes that the ALL as of June 30, 2015 and December 31, 2014 was adequate to absorb probable incurred credit losses inherent in the loan portfolio.

The following is a summary of the activity for the ALL for the three and six months ended June 30, 2015 and 2014:

(in thousands)	Commercial			Commercial Real Estate		Residential		Land and Construction			Consumer and Other			Total
Three Months Ended June 30, 2015:
Allowance for loan losses:
Beginning balance	$	1,768		$	3,825	$	757	$	916		$	499		$	7,765
Provision for loan losses		—			450		20		55			50			575
Charge-offs		—			—		—		—			(18	)		(18	)
Recoveries		1			—		—		—			—			1
Ending balance	$	1,769		$	4,275	$	777	$	971		$	531		$	8,323
Six Months Ended June 30, 2015:
Allowance for loan losses:
Beginning balance	$	1,752		$	3,825	$	747	$	816		$	459		$	7,599
Provision for loan losses		—			450		30		155			90			725
Charge-offs		—			—		—		—			(18	)		(18	)
Recoveries		17			—		—		—			—			17
Ending balance	$	1,769		$	4,275	$	777	$	971		$	531		$	8,323
Three Months Ended June 30, 2014:
Allowance for loan losses:
Beginning balance	$	1,579		$	3,660	$	778	$	811		$	424		$	7,252
Provision for loan losses		10			140		110		(120	)		(40	)		100
Charge-offs		—			—		—		—			—			—
Recoveries		15			—		—		—			—			15
Ending balance	$	1,604		$	3,800	$	888	$	691		$	384		$	7,367
Six Months Ended June 30, 2014:
Allowance for loan losses:
Beginning balance	$	1,583		$	3,660	$	758	$	811		$	424		$	7,236
Provision for loan losses		(10	)		140		130		(120	)		(40	)		100
Charge-offs		—			—		—		—			—			—
Recoveries		31			—		—		—			—			31
Ending balance	$	1,604		$	3,800	$	888	$	691		$	384		$	7,367

There were no loans acquired with deteriorated credit quality during the three and six months ended June 30, 2015 and 2014.

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The ALL was $8.3 million, or 1.60% of our total loan portfolio, at June 30, 2015, compared to $7.6 million, or 1.72% of our total loan portfolio, at December 31, 2014. At June 30, 2015 and December 31, 2014, our non-performing loans were $712,000 and $632,000, respectively. The ratio of our ALL to non-performing loans was 1,169.53% and 1,203.03% at June 30, 2015 and December 31, 2014, respectively. In addition, our ratio of non-performing loans to total loans was 0.14% at both June 30, 2015 and December 31, 2014. The ALL is impacted by inherent risk in the loan portfolio, including the level of our non-performing loans, as well as specific reserves and charge-off activities. The remaining portion of our ALL is allocated to our performing loans based on the quantitative and qualitative factors discussed above.

Deferred Tax Asset

At June 30, 2015 and December 31, 2014, we had a net deferred tax asset of $3.1 million and $3.0 million, respectively. Our net deferred tax asset primarily consists of deferred tax assets related to the allowance for loan losses and equity compensation.

A valuation allowance is required if it is “more likely than not” that a deferred tax asset will not be realized. The determination of the realizability of the deferred tax assets is highly subjective and dependent upon judgment concerning management’s evaluation of both positive and negative evidence, including historical financial performance, the forecasts of future income, existence of feasible tax planning strategies, length of statutory carryforward period, and assessments of the current and future economic and business conditions. Management evaluates the positive and negative evidence and determines the realizability of the deferred tax asset on a quarterly basis. Management may reestablish a valuation allowances in the future to the extent that it is determined that it is more likely than not that these assets will not be realized.

Deposits

The Company’s activities are largely based in the Los Angeles metropolitan area. The Company’s deposit base is also primarily generated from this area.

At June 30, 2015, total deposits were $580.9 million compared to $503.2 million at December 31, 2014, representing an increase of 15.4%, or $77.7 million. Total core deposits, which include non-interest bearing demand deposits, interest bearing demand deposits, and money market deposits and savings, were $532.4 million and $462.4 million at June 30, 2015 and December 31, 2014, respectively. Non-interest bearing deposits represent 59.2% of total deposits at June 30, 2015, compared to 56.1% at December 31, 2014.

The following table reflects a summary of deposit categories by dollar and percentage at June 30, 2015 and December 31, 2014:

	June 30, 2015					December 31, 2014
(dollars in thousands)	Amount		Percent of Total			Amount		Percent of Total
Non-interest bearing demand deposits	$	344,043		59.2	%	$	282,217		56.1	%
Interest bearing checking		27,239		4.7	%		25,492		5.1	%
Money market deposits and savings		161,081		27.7	%		154,706		30.7	%
Certificates of deposit		48,535		8.4	%		40,757		8.1	%
Total	$	580,898		100.0	%	$	503,172		100.0	%

At June 30, 2015, the Company had three certificates of deposit with the State of California Treasurer’s Office for a total of $46.0 million, which represented 7.9% of total deposits. The deposits outstanding at June 30, 2015 are scheduled to mature in the third quarter of 2015. The Company intends to renew each of these deposits at maturity. However, there can be no assurance that the State of California Treasurer’s Office will continue to maintain deposit accounts with the Company. At December 31, 2014, the Company had two certificates of deposit with the State of California Treasurer’s Office for a total of $38.0 million, which represented 7.6% of total deposits. The Company was required to pledge $50.6 million and $41.8 million of investment securities at June 30, 2015 and December 31, 2014, respectively, in connection with these certificates of deposit. For further information on the Company’s certificates of deposit with the State of California Treasurer’s Office, see Part I, Item 1. Financial Statements - Note 7 “Deposits.”

The aggregate amount of certificates of deposit of $250,000 or more was $46.6 million and $38.6 million at June 30, 2015 and December 31, 2014, respectively.

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Scheduled maturities of certificates of deposit in amounts of $250,000 or more at June 30, 2015, including deposit accounts with the State of California Treasurer’s Office and CDARS were as follows:

(in thousands)
Due within 3 months or less	$	46,257
Due after 3 months and within 6 months		315
Due after 6 months and within 12 months		—
Due after 12 months		—
Total	$	46,572

Liquidity and Asset/Liability Management

Liquidity, as it relates to banking, is the ability to meet loan commitments and to honor deposit withdrawals through either the sale or maturity of existing assets or the acquisition of additional funds through deposits or borrowing. The Company’s main sources of funds to provide liquidity are its cash and cash equivalents, paydowns and maturities of investments, loan repayments, and increases in deposits and borrowings. The Company also maintains lines of credit with the Federal Home Loan Bank (“FHLB”), and other correspondent financial institutions.

The liquidity ratio (the sum of cash and cash equivalents and available for sale investments, excluding amounts required to be pledged and operating requirements, divided by total assets) was 12.7% at June 30, 2015 and 15.7% at December 31, 2014.

At June 30, 2015 and December 31, 2014, the Company had a borrowing/credit facility secured by a blanket lien on eligible loans at the FHLB of $154.2 million and $146.0 million, respectively. The Company had $15.0 million and $17.5 million, respectively, of long-term borrowings outstanding under this borrowing/credit facility with the FHLB at June 30, 2015 and December 31, 2014. The Company had no overnight borrowings outstanding under this borrowing/credit facility at June 30, 2015 and December 31, 2014.

The following table summarizes the outstanding long-term borrowings under the borrowing/credit facility secured by a blanket lien on eligible loans at the FHLB at June 30, 2015 and December 31, 2014 (dollars in thousands):

Maturity Date	Interest Rate			June 30, 2015		December 31, 2014
May 26, 2015		1.65	%	$	—	$	2,500
May 23, 2016		2.07	%		2,500		2,500
December 29, 2016		1.38	%		5,000		5,000
December 30, 2016		1.25	%		2,500		2,500
May 2, 2018		0.93	%		5,000		5,000
	Total			$	15,000	$	17,500

At June 30, 2015 and December 31, 2014, the Company also had $27.0 million in Federal fund lines of credit available with other correspondent banks that could be used to disburse loan commitments and to satisfy demands for deposit withdrawals. Each of these lines of credit is subject to conditions that the Company may not be able to meet at the time when additional liquidity is needed. As of June 30, 2015 and December 31, 2014, the Company had pledged $2.0 million and $2.5 million, respectively, of corporate notes related to these lines of credit.

Management believes the level of liquid assets and available credit facilities are sufficient to meet current and anticipated funding needs. In addition, the Bank’s Asset/Liability Management Committee oversees the Company’s liquidity position by reviewing a monthly liquidity report. Management is not aware of any trends, demands, commitments, events or uncertainties that will result or are reasonably likely to result in a material change in the Company’s liquidity.

Capital Expenditures

As of June 30, 2015, the Company was not subject to any material commitments for capital expenditures.

Capital Resources

At June 30, 2015, the Company had total stockholders’ equity of $62.7 million, which included $127,000 in common stock, $74.8 million in additional paid-in capital, $845,000 in accumulated deficit, $57,000 in accumulated other comprehensive income, and $11.5 million in treasury stock.

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Capital

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

Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (set forth in the table below) of total Tier 1 and common equity Tier 1 capital (as defined in the regulation) to risk-weighted assets (as defined) and of Tier 1 capital (as defined) to average assets (as defined). Management believes that as of June 30, 2015 and December 31, 2014, the Company and the Bank met all capital adequacy requirements to which they are subject.

At December 31, 2014, the most recent notification from the OCC categorized the Bank as “well-capitalized” under the regulatory framework for prompt corrective action. To generally be categorized as a “well-capitalized” financial institution, the Bank must maintain minimum total risk-based, Tier 1 risk-based, common equity Tier 1 capital and Tier 1 leverage ratios. There are no conditions or events since the notification that management believes have changed the Bank’s categorization.

The Company’s and the Bank’s capital ratios as of June 30, 2015 and December 31, 2014 are presented in the table below:

	Company					Bank					For Capital Adequacy Purposes					For the Bank to be “Well- Capitalized” Under Prompt Corrective Measures
(dollars in thousands)	Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount			Ratio
June 30, 2015:
Total Risk-Based Capital Ratio	$	69,667		12.42	%	$	66,118		11.78	%	$	44,890		8.00	%		$	56,112		10.00	%
Tier 1 Risk-Based Capital Ratio	$	62,633		11.16	%	$	59,083		10.53	%	$	33,668		6.00	%		$	44,890		8.00	%
Common Equity Tier 1 Capital Ratio	$	62,633		11.16	%	$	59,083		10.53	%	$	25,251		4.50	%		$	36,473		6.50	%
Tier 1 Leverage Ratio	$	62,633		9.80	%	$	59,083		9.24	%	$	25,572		4.00	%		$	31,988		5.00	%
December 31, 2014:
Total Risk-Based Capital Ratio	$	67,275		13.94	%	$	63,339		13.13	%	$	38,603		8.00	%		$	48,253		10.00	%
Tier 1 Risk-Based Capital Ratio	$	61,220		12.69	%	$	57,284		11.87	%	$	19,302		4.00	%		$	28,952		6.00	%
Tier 1 Leverage Ratio	$	61,220		10.05	%	$	57,284		9.40	%	$	24,357		4.00	%		$	30,456		5.00	%

On July 2, 2013, the Federal Reserve approved the final rules implementing the Basel Committee on Banking Supervision's (“BCBS”) capital guidelines for U.S. banks. Under the final rules, minimum requirements will increase for both the quantity and quality of capital held by the Company. The rules include a new common equity Tier 1 capital to risk-weighted assets ratio of 4.5%. The new rules also require a common equity Tier 1 capital conservation buffer of 2.5% of risk-weighted assets over each of the required capital ratios that will be phased in from 2016 to 2019 and must be met to avoid limitations on the ability of the Bank to pay dividends, repurchase shares or pay discretionary bonuses. The final rules also raise the minimum ratio of Tier 1 capital to risk-weighted assets from 4.0% to 6.0% and require a minimum leverage ratio of 4.0%. The final rules also implement strict eligibility criteria for regulatory capital instruments, excluding trust preferred securities, mortgage servicing rights and certain deferred tax assets, and including unrealized gains and losses on available for sale debt and equity securities. On July 9, 2013, the FDIC and OCC also approved, as an interim final rule, the regulatory capital requirements for U.S. banks, following the actions of the FRB. The FDIC and OCC's rules are identical in substance to the final rules issued by the FRB.

The phase-in period for the final rules commenced for the Company and the Bank on January 1, 2015, with full compliance with all of the final rule's requirements phased in over a multi-year schedule. For capital adequacy purposes, the capital ratios of the Company and the Bank would currently be in compliance with the capital conservation buffer discussed above assuming the 2.5% capital conservation buffer was fully phased in as of June 30, 2015. Management will continue to closely monitor these ratios throughout the phase in period and beyond, and intends to take appropriate action, if necessary, to ensure that as the additional requirements are phased in that the BCBS capital guidelines are satisfied. Appropriate actions may include accessing capital markets, the disposition of assets, as well as other actions deemed necessary at that time.

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Dividends

In the ordinary course of business, the Company is dependent upon dividends from the Bank to provide funds for the payment of dividends to shareholders and to provide for other cash requirements. Banking regulations may limit the amount of dividends that may be paid. Approval by regulatory authorities is required if the effect of dividends declared would cause the regulatory capital of the Bank to fall below specified minimum levels. Approval is also required if dividends declared exceed the net profits for that year combined with the retained net profits for the preceding two years. Currently, the Bank is prohibited from paying dividends to the Company until such time as the accumulated deficit is eliminated.

To date, the Company has not paid any cash dividends. Payment of stock or cash dividends in the future will depend upon earnings and financial condition and other factors deemed relevant by the Company’s Board of Directors, as well as the Company’s legal ability to pay dividends. Accordingly, no assurance can be given that any cash dividends will be declared in the foreseeable future.

Off-Balance Sheet Arrangements

In the normal course of business, the Company is a party to financial instruments with off-balance sheet risk. These financial instruments include commitments to extend credit and letters of credit. To varying degrees, these instruments involve elements of credit and interest rate risk in excess of the amount recognized in the statement of financial position.

(in thousands)	June 30, 2015		December 31, 2014
Commitments to extend credit	$	149,652	$	146,403
Commitments to extend credit to directors and officers (undisbursed amount)	$	1,171	$	747
Standby/commercial letters of credit	$	2,646	$	2,670
Guarantees on revolving credit card limits	$	671	$	672
Outstanding credit card balances	$	154	$	136

The Company maintains an allowance for unfunded commitments, based on the level and quality of the Company’s undisbursed loan funds, which comprises the majority of the Company’s off-balance sheet risk. As of June 30, 2015 and December 31, 2014, the allowance for unfunded commitments was $345,000 and $320,000, respectively, which represented 0.23% and 0.21% of the undisbursed commitments and letters of credit, respectively.

Management is not aware of any other off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, and results of operations, liquidity, capital expenditures or capital resources that is material to investors.

For further information on commitments and contingencies, see Part I, Item 1. Financial Statements - Note 9 “Commitments and Contingencies.”

Item 3. Quantitative and Qualitative Disclosure About Market Risk

Not applicable.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time period specified in the U.S. Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to management, including the Principal Executive Officer and the Principal Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

The Company’s management, with the participation of our Principal Executive Officer and Principal Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that, as of the end of such period, our disclosure controls and procedures are effective in ensuring that information required to be disclosed by the Company in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time period specified in the U.S. Securities and Exchange Commission’s rules and forms, and is accumulated and communicated to management, including the Principal Executive Officer and the Principal Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure.

41

Table Of Contents

Changes in Internal Controls

There have not been any changes in the Company’s internal control over financial reporting that occurred during the quarter ended June 30, 2015, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1.          Legal Proceedings

At present, there are no pending or threatened proceedings against the Company which, if determined adversely, would have a material effect on the Company’s business, financial position, results of operations, cash flows or stock price. In the ordinary course of operations, the Company may be party to various legal proceedings.

Item 1A.       Risk Factors

Management is not aware of any material changes to the risk factors discussed in Part 1, Item 1A of the Annual Report on Form 10-K for the year ended December 31, 2014. In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the risk factors discussed in Part I, Item 1A of the Annual Report on Form 10-K for the year ended December 31, 2014, which could materially and adversely affect the Company’s business, financial condition and results of operations. The risks described in the Annual Report on Form 10-K are not the only risks facing the Company. Additional risks and uncertainties not presently known to management or that management currently believes to be immaterial may also materially and adversely affect the Company’s business, financial condition or results of operations.

Item 2.          Unregistered Sales of Equity Securities and Use of Proceeds

Unregistered Sales of Equity Securities

None.

Purchases of Equity Securities

The table below summarizes the Company’s monthly repurchases of equity securities during the three months ended June 30, 2015.

(dollars in thousands, except per share data)

Period	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)		Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans of Program (1)
April 1-30, 2015		—	$	—		—	$	29
May 1-31, 2015		—		—		—		29
June 1-30, 2015		—		—		—		29
Total		—	$	—		—	$	29

(1)     In August 2010, the Company’s Board of Directors authorized the purchase of up to $2.0 million of the Company’s common stock, which was announced by press release and Current Report on Form 8-K on August 16, 2010. Under the Company’s stock repurchase program, the Company has been acquiring its common stock in the open market from time to time beginning in August 2010. The Company’s stock repurchase program may be modified, suspended or terminated by the Board of Directors at any time without notice.

Item 3.     Defaults Upon Senior Securities

None.

42

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Item 4.Mine Safety Disclosures.

None.

Item 5.     Other Information

(a)     Additional Disclosures. None.

(b)     Stockholder Nominations. There have been no material changes in the procedures by which stockholders may recommend nominees to the Board of Directors during the three months ended June 30, 2015. Please see the discussion of these procedures in the most recent proxy statement on Schedule 14A filed with the SEC.

Item 6.     Exhibits

31.1 Principal Executive Officer Certification required under Section 302 of the Sarbanes—Oxley Act of 2002.

31.2 Principal Financial Officer Certification required under Section 302 of the Sarbanes—Oxley Act of 2002.

32 Principal Executive Officer and Principal Financial Officer Certification required under Section 906 of the Sarbanes—Oxley Act of 2002.

101.INS XBRL Instance Document.

101.SCH XBRL Taxonomy Extension Schema Document.

101.CAL XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB XBRL Taxonomy Extension Label Linkbase Document.

101.PRE XBRL Taxonomy Extension Presentation Linkbase Document.

43

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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.

1ST CENTURY BANCSHARES, INC.
By:	/s/ Alan I. Rothenberg.
	Alan I. Rothenberg
	Chairman and Chief Executive Officer
By:	/s/ Bradley S. Satenberg.
	Bradley S. Satenberg
	Executive Vice President and Chief Financial Officer

44

EX-31.1

Exhibit 31.1

Rule 13a-14(a) Certification

of the Chairman of the Board and Chief Executive Officer

I, Alan I. Rothenberg, certify, that:

1.I have reviewed this Quarterly Report on Form 10-Q of 1st Century Bancshares, Inc.;

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 consolidated 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 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 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 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: August 6, 2015	/s/ Alan I. Rothenberg
	Alan I. Rothenberg
	Chairman of the Board, Chief Executive Officer and Principal Executive Officer

EX-31.2

Exhibit 31.2

Rule 13a-14(a) Certification

of the Chief Financial Officer

I, Bradley S. Satenberg, certify, that:

1.     I have reviewed this Quarterly Report on Form 10-Q of 1st Century Bancshares, Inc.;

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 consolidated 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 officers 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 officers 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 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: August 6, 2015	/s/ Bradley S. Satenberg
	Bradley S. Satenberg
	Executive Vice President, Chief Financial Officer and Principal Financial Officer

EX-32

Exhibit 32

CERTIFICATION*

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 1st Century Bancshares, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigneds hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, to the best of the undersigneds’ knowledge that:

(1)     The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; 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: August 6, 2015	/s/ Alan I. Rothenberg
	Alan I. Rothenberg
	Chairman of the Board, Chief Executive Officer and Principal Executive Officer
Date: August 6, 2015	/s/ Bradley S. Satenberg
	Bradley S. Satenberg
	Executive Vice President, Chief Financial Officer and Principal Financial Officer

* A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that Section.

XML

Note 2 - Investments (Details) - Available-for-sale Securities - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Investments — Available for Sale
Available for sale investments, amortized cost	$ 75,453	$ 79,414
Available for sale investments, gross unrealized gains	366	445
Available for sale investments, gross unrealized losses	(270)	(170)
Available for sale investments, fair value	75,549	79,689
US Treasury and Government [Member]
Investments — Available for Sale
Available for sale investments, amortized cost	28,438	25,973
Available for sale investments, gross unrealized gains	190	160
Available for sale investments, gross unrealized losses	(5)	(5)
Available for sale investments, fair value	28,623	26,128
Corporate Note Securities [Member]
Investments — Available for Sale
Available for sale investments, amortized cost	2,009	2,528
Available for sale investments, gross unrealized gains	4	10
Available for sale investments, fair value	2,013	2,538
Residential Mortgage Backed Securities [Member]
Investments — Available for Sale
Available for sale investments, amortized cost	45,006	50,913
Available for sale investments, gross unrealized gains	172	275
Available for sale investments, gross unrealized losses	(265)	(165)
Available for sale investments, fair value	$ 44,913	$ 51,023

XML

Note 5 - Comprehensive Income (Details) - Accumulated Other Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Accumulated Other Comprehensive Income [Abstract]
Beginning balance	$ 479	$ 164	$ 162	$ 52
Other comprehensive income before reclassifications	(422)	377	(61)	638
Amounts reclassified from accumulated other comprehensive income		(314)	(44)	(463)
Net other comprehensive income (loss)	(422)	63	(105)	175
Ending balance	$ 57	$ 227	$ 57	$ 227

XML

Note 3 - Loans, Allowance for Loan Losses, and Non-Performing Assets (Details) - Impaired Loans - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Totals:
Impaired loans - average recorded investment	$ 707,000	$ 939,000	$ 694,000	$ 946,000
Commercial Portfolio Segment [Member]
With no related allowance recorded:
Impaired loans no related allowance - recorded investment	572,000		572,000		$ 572,000
Impaired loans no related allowance - unpaid principal balance	848,000		848,000		848,000
Impaired loans no related allowance - average recorded investment			572,000		707,000
With an allowance recorded:
Impaired loans related allowance - recorded investment	140,000		140,000		60,000
Impaired loans related allowance - unpaid principal balance	155,000		155,000		74,000
Impaired loans - related allowance	35,000		35,000		20,000
Impaired loans related allowance - average recorded investment			73,000		106,000
Totals:
Impaired loans - recorded investment	712,000		712,000		632,000
Impaired loans - unpaid principal balance	1,003,000		1,003,000		922,000
Impaired loans - related allowance	35,000		35,000		20,000
Impaired loans - average recorded investment			645,000		813,000
Consumer and Other Portfolio Segment [Member]
With no related allowance recorded:
Impaired loans no related allowance - recorded investment	48,000		48,000		49,000
Impaired loans no related allowance - unpaid principal balance	48,000		48,000		49,000
Impaired loans no related allowance - average recorded investment			49,000		36,000
Totals:
Impaired loans - recorded investment	48,000		48,000		49,000
Impaired loans - unpaid principal balance	$ 48,000		48,000		49,000
Impaired loans - average recorded investment			$ 49,000		$ 36,000

XML

Note 13 - Stock-Based Compensation (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	May. 08, 2013
Note 13 - Stock-Based Compensation (Details) [Line Items]
Restricted Stock or Unit Expense (in Dollars)	$ 239,000	$ 235,000	$ 463,000	$ 421,000
2013 Equity Incentive Plan [Member]
Note 13 - Stock-Based Compensation (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	750,000		750,000		750,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number	426,750		426,750
2004 Founder Stock Option Plan [Member]
Note 13 - Stock-Based Compensation (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	150,000		150,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period			0	72,000
Share-based Compensation Arrangements by Share-based Payment Award, Options, Exercises in Period, Weighted Average Exercise Price (in Dollars per share)			$ 5.00
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures and Expirations in Period				19,800
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures and Expirations in Period, Weighted Average Exercise Price (in Dollars per share)				$ 5.00
Director and Employee Stock Option Plan [Member]
Note 13 - Stock-Based Compensation (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	1,434,000		1,434,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period			307,573	430,600
Share-based Compensation Arrangements by Share-based Payment Award, Options, Exercises in Period, Weighted Average Exercise Price (in Dollars per share)			$ 8.01	$ 5.00
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures and Expirations in Period			42,500
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures and Expirations in Period, Weighted Average Exercise Price (in Dollars per share)			$ 8.40
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures in Period			0
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross				0
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Remaining Contractual Term				1 year 10 days
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number		370,073		370,073
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price (in Dollars per share)		$ 7.97		$ 7.97
Restricted Stock [Member]
Note 13 - Stock-Based Compensation (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Fair Value (in Dollars)	$ 582,000	$ 388,000	$ 727,000	$ 400,000

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Note 6 - Premises and Equipment (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Property, Plant and Equipment [Abstract]
Depreciation, Depletion and Amortization	$ 151,000	$ 121,000	$ 303,000	$ 244,000

XML

Note 3 - Loans, Allowance for Loan Losses, and Non-Performing Assets (Details) - Nonaccrual Loans and Other Real Estate Owned - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Non-accrual loans:
Non-accrual loans	$ 712	$ 632
Total non-performing assets	$ 712	$ 632
Non-performing assets to gross loans and OREO	0.14%	0.14%
Non-performing assets to total assets	0.11%	0.11%
Commercial Portfolio Segment [Member]
Non-accrual loans:
Non-accrual loans	$ 712	$ 632

XML

Note 12 - Non-Interest Income (Tables)

6 Months Ended

Jun. 30, 2015

Other Income and Expenses [Abstract]

Schedule of Non-Interest Income [Table Text Block]

	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2015		2014		2015		2014
Gain on sale of AFS investment securities	$	—	$	533	$	75	$	786
Service charges and other operating income		108		190		263		302
Total non-interest income	$	108	$	723	$	338	$	1,088

XML

Note 14 - Regulatory Matters (Details)	Jun. 30, 2015	Dec. 31, 2014	Jul. 02, 2013
Disclosure Text Block [Abstract]
Common Equity Tier 1 Capital Required for Capital Adequacy to Risk Weighted Assets	4.50%		4.50%
Common Equity Tier 1 Capital Conservation Buffer			2.50%
Tier One Risk Based Capital Required for Capital Adequacy to Risk Weighted Assets	6.00%	4.00%
Tier One Leverage Capital Required for Capital Adequacy to Average Assets	4.00%	4.00%

XML

Note 7 - Deposits (Details) $ in Thousands	Jun. 30, 2015 USD ($)	Dec. 31, 2014 USD ($)
Note 7 - Deposits (Details) [Line Items]
Interest-bearing Domestic Deposit, Certificates of Deposits	$ 48,535	$ 40,757
Percentage of Interest-bearing Domestic Deposits to Deposits, Certificates of Deposit	8.40%	8.10%
Time Deposit of 250000 or Greater	$ 46,572	$ 38,572
From California Treasurer's Office [Member]
Note 7 - Deposits (Details) [Line Items]
Number of Deposits	3	2
Interest-bearing Domestic Deposit, Certificates of Deposits	$ 46,000	$ 38,000
Percentage of Interest-bearing Domestic Deposits to Deposits, Certificates of Deposit	7.90%	7.60%
Available-for-sale Securities Pledged as Collateral	$ 50,600	$ 41,800

XML

Note 13 - Stock-Based Compensation (Details) - Restricted Stock - Restricted Stock [Member] - $ / shares	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Note 13 - Stock-Based Compensation (Details) - Restricted Stock [Line Items]
Beginning balance	615,875	529,529
Beginning balance	$ 5.92	$ 4.62
Ending balance	684,750	663,779
Ending balance	$ 6.49	$ 5.74
Granted	218,750	228,000
Granted	$ 6.98	$ 7.63
Vested	(149,875)	(93,750)
Vested	$ 4.85	$ 4.01

XML

Note 4 - Derivative Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2015

Note 4 - Derivative Financial Instruments (Tables) [Line Items]

Schedule of Derivative Instruments [Table Text Block]

	June 30, 2015						December 31, 2014
(in thousands)	Notional Amount			Estimated Fair Value			Notional Amount			Estimated Fair Value
Non-hedging interest rate derivatives:
Commercial loan interest rate swaps	$	2,058		$	(32	)	$	2,650		$	(23	)
Commercial loan interest rate swaps	$	(2,058	)	$	32		$	(2,650	)	$	23

Non-Hedging Interest Rate Swaps [Member]

Note 4 - Derivative Financial Instruments (Tables) [Line Items]

Schedule of Derivative Instruments [Table Text Block]

	June 30, 2015 Weighted-Average						December 31, 2014 Weighted-Average
	Interest Rate Paid			Interest Rate Received			Interest Rate Paid			Interest Rate Received
Non-hedging interest rate swaps		3.44	%		4.96	%		3.37	%		4.85	%
Non-hedging interest rate swaps		4.96	%		3.44	%		4.85	%		3.37	%

XML

Note 4 - Derivative Financial Instruments (Details) - Weighted Average Interest Rates on Interest Rate Swaps	Jun. 30, 2015	Dec. 31, 2014
Non-Hedging Interest Rate Swap 1 [Member]
Derivative [Line Items]
Derivative interest rate paid	3.44%	3.37%
Derivative interest rate received	4.96%	4.85%
Non-Hedging Interest Rate Swap 2 [Member]
Derivative [Line Items]
Derivative interest rate paid	4.96%	4.85%
Derivative interest rate received	3.44%	3.37%

XML

Note 3 - Loans, Allowance for Loan Losses, and Non-Performing Assets (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2015 USD ($)	Jun. 30, 2014 USD ($)	Jun. 30, 2015 USD ($)	Jun. 30, 2014 USD ($)	Dec. 31, 2014 USD ($)
Note 3 - Loans, Allowance for Loan Losses, and Non-Performing Assets (Details) [Line Items]
Percentage of Loan Portfolio Secured by Real Estate	83.80%		83.80%		83.50%
Unsecured Commercial Loan Balances	$ 27,100,000		$ 27,100,000		$ 25,100,000
Unsecured Consumer and Other Loan Balances	$ 7,100,000		7,100,000		$ 5,100,000
Additions to Non-performing Loans			$ 100,000	$ 0
Nonperforming Loans to Gross Loans	0.14%		0.14%		0.14%
Financing Receivable, Recorded Investment, 90 Days Past Due and Still Accruing	$ 0		$ 0		$ 0
Loans and Leases Receivable, Gross	518,977,000	$ 412,592,000	518,977,000	412,592,000	442,785,000
Impaired Financing Receivable, Average Recorded Investment	707,000	939,000	694,000	946,000
Financing Receivable, Recorded Investment, Nonaccrual Status	712,000		712,000		632,000
Impaired Financing Receivable, Interest Income, Accrual Method	$ 1,000	$ 3,000	$ 1,000	$ 5,000
Financing Receivable, Modifications, Number of Contracts	0	0	0	0
Financing Receivables, Impaired, Troubled Debt Restructuring, Write-down	$ 0	$ 0	$ 0	$ 0
Financing Receivable, Modifications, Subsequent Default, Number of Contracts	0	0	0	0
Doubtful [Member]
Note 3 - Loans, Allowance for Loan Losses, and Non-Performing Assets (Details) [Line Items]
Loans and Leases Receivable, Gross	$ 0		$ 0		0
Unlikely to be Collected Financing Receivable [Member]
Note 3 - Loans, Allowance for Loan Losses, and Non-Performing Assets (Details) [Line Items]
Loans and Leases Receivable, Gross	0		0		0
Impaired Loans [Member]
Note 3 - Loans, Allowance for Loan Losses, and Non-Performing Assets (Details) [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	712,000		712,000		632,000
Commitments to Extend Credit [Member]
Note 3 - Loans, Allowance for Loan Losses, and Non-Performing Assets (Details) [Line Items]
Other Commitment	149,700,000		149,700,000		146,400,000
Standby Letters of Credit [Member]
Note 3 - Loans, Allowance for Loan Losses, and Non-Performing Assets (Details) [Line Items]
Other Commitment	2,600,000		2,600,000		2,700,000
Unfunded Lending Commitments [Member]
Note 3 - Loans, Allowance for Loan Losses, and Non-Performing Assets (Details) [Line Items]
Unfunded Lending Commitments, Allowance	$ 345,000		$ 345,000		$ 320,000

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Note 1 - Summary of Significant Accounting Policies (Details) - Earnings Per Share - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Note 1 - Summary of Significant Accounting Policies (Details) - Earnings Per Share [Line Items]
Net income (in Dollars)	$ 515	$ 779	$ 830	$ 1,181
Average number of common shares outstanding	9,588,951	9,448,548	9,563,456	9,370,900
Average number of common shares outstanding used to calculate diluted earnings per common share	9,831,229	9,729,504	9,817,923	9,673,066
Employee Stock Option [Member]
Note 1 - Summary of Significant Accounting Policies (Details) - Earnings Per Share [Line Items]
Effect of dilution of stock		3,351		27,653
Restricted Stock [Member]
Note 1 - Summary of Significant Accounting Policies (Details) - Earnings Per Share [Line Items]
Effect of dilution of stock	242,278	277,605	254,467	274,513

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Note 5 - Comprehensive Income (Details) - Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Comprehensive Income [Abstract]
Net income	$ 515	$ 779	$ 830	$ 1,181
Other comprehensive income (loss):
(Decrease) increase in net unrealized gains on investment securities available for sale, net of tax benefit (expense) of $295 and $43 for the three and six months ended June 30, 2015, respectively, and ($263) and ($445) for the three and six months ended June 30, 2014, respectively	(422)	377	(61)	638
Reclassification for net gains included in earnings, net of tax expense of none and $31 for the three and six months ended June 30, 2015, respectively, and $219 and $323 for the three and six months ended June 30, 2014, respectively		(314)	(44)	(463)
Comprehensive income	$ 93	$ 842	$ 725	$ 1,356

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Note 10 - Fair Value Measurements (Details) - Assets Measured on Non-Recurring Basis - Impaired Loans [Member] - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Impaired loans
Asset measured on a nonrecurring basis	$ 677	$ 612
Fair Value, Inputs, Level 3 [Member]
Impaired loans
Asset measured on a nonrecurring basis	$ 677	$ 612

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Note 8 - Other Borrowings (Details) - Long-term Borrowings - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Note 8 - Other Borrowings (Details) - Long-term Borrowings [Line Items]
FHLB interest rate
FHLB outstanding balance	$ 15,000	$ 17,500
May 26, 2015 Maturity Date [Member]
Note 8 - Other Borrowings (Details) - Long-term Borrowings [Line Items]
FHLB interest rate	1.65%
FHLB outstanding balance		2,500
May 23, 2016 Maturity Date [Member]
Note 8 - Other Borrowings (Details) - Long-term Borrowings [Line Items]
FHLB interest rate	2.07%
FHLB outstanding balance	$ 2,500	2,500
December 29, 2016 Maturity Date [Member]
Note 8 - Other Borrowings (Details) - Long-term Borrowings [Line Items]
FHLB interest rate	1.38%
FHLB outstanding balance	$ 5,000	5,000
December 30, 2016 Maturity Date [Member]
Note 8 - Other Borrowings (Details) - Long-term Borrowings [Line Items]
FHLB interest rate	1.25%
FHLB outstanding balance	$ 2,500	2,500
May 2, 2018 Maturity Date [Member]
Note 8 - Other Borrowings (Details) - Long-term Borrowings [Line Items]
FHLB interest rate	0.93%
FHLB outstanding balance	$ 5,000	$ 5,000

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Note 3 - Loans, Allowance for Loan Losses, and Non-Performing Assets (Details) - Credit Exposure by Internally Assigned Grades - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014	Jun. 30, 2014
Grade:
Loans	$ 518,977	$ 442,785	$ 412,592
Commercial Portfolio Segment [Member]
Grade:
Loans	101,048	91,694	78,455
Commercial Portfolio Segment [Member] | Pass [Member]
Grade:
Loans	99,560	90,235
Commercial Portfolio Segment [Member] | Special Mention [Member]
Grade:
Loans	127	180
Commercial Portfolio Segment [Member] | Substandard [Member]
Grade:
Loans	1,361	1,279
Commercial Real Estate Portfolio Segment [Member]
Grade:
Loans	223,035	185,752	178,576
Commercial Real Estate Portfolio Segment [Member] | Pass [Member]
Grade:
Loans	223,035	185,201
Commercial Real Estate Portfolio Segment [Member] | Substandard [Member]
Grade:
Loans		551
Residential Portfolio Segment [Member]
Grade:
Loans	112,251	98,806	102,149
Residential Portfolio Segment [Member] | Pass [Member]
Grade:
Loans	112,251	98,806
Land and Construction Portfolio Segment[Member]
Grade:
Loans	48,893	37,075	29,423
Land and Construction Portfolio Segment[Member] | Pass [Member]
Grade:
Loans	48,893	37,075
Consumer and Other Portfolio Segment [Member]
Grade:
Loans	33,750	29,458	$ 23,989
Consumer and Other Portfolio Segment [Member] | Pass [Member]
Grade:
Loans	33,702	29,409
Consumer and Other Portfolio Segment [Member] | Substandard [Member]
Grade:
Loans	$ 48	$ 49

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Note 3 - Loans, Allowance for Loan Losses, and Non-Performing Assets

6 Months Ended

Jun. 30, 2015

Receivables [Abstract]

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

(3) Loans, Allowance for Loan Losses, and Non-Performing Assets

Loans

The categories of loans listed below are grouped in accordance with the primary purpose of the loans, but in the aggregate 83.8% and 83.5% of all loans are secured by real estate at June 30, 2015 and December 31, 2014, respectively.

	June 30, 2015						December 31, 2014
	Amount			Percent			Amount			Percent
(dollars in thousands)	Outstanding			of Total			Outstanding			of Total
Commercial (1)	$	101,048			19.5	%	$	91,694			20.7	%
Commercial real estate		223,035			43.0	%		185,752			42.0	%
Residential		112,251			21.6	%		98,806			22.3	%
Land and construction		48,893			9.4	%		37,075			8.4	%
Consumer and other (2)		33,750			6.5	%		29,458			6.6	%
Loans, gross		518,977			100.0	%		442,785			100.0	%
Net deferred costs		87						71
Less — allowance for loan losses		(8,323	)					(7,599	)
Loans, net	$	510,741					$	435,257

(1) Unsecured commercial loan balances were $27.1 million and $25.1 million at June 30, 2015 and December 31, 2014, respectively.

(2)Unsecured consumer and other loan balances were $7.1 million and $5.1 million at June 30, 2015 and December 31, 2014, respectively.

As of June 30, 2015 and December 31, 2014, substantially all of the Company’s loan customers were located in Southern California.

Allowance for Loan Losses and Recorded Investment in Loans

The following is a summary of activities for the allowance for loan losses and recorded investment in loans as of and for the three and six months ended June 30, 2015 and 2014:

(in thousands)	Commercial			Commercial Real Estate		Residential		Land and Construction			Consumer and Other			Total
Three Months Ended June 30, 2015:
Allowance for loan losses:
Beginning balance	$	1,768		$	3,825	$	757	$	916		$	499		$	7,765
Provision for loan losses		—			450		20		55			50			575
Charge-offs		—			—		—		—			(18	)		(18	)
Recoveries		1			—		—		—			—			1
Ending balance	$	1,769		$	4,275	$	777	$	971		$	531		$	8,323
Six Months Ended June 30, 2015:
Allowance for loan losses:
Beginning balance	$	1,752		$	3,825	$	747	$	816		$	459		$	7,599
Provision for loan losses		—			450		30		155			90			725
Charge-offs		—			—		—		—			(18	)		(18	)
Recoveries		17			—		—		—			—			17
Ending balance	$	1,769		$	4,275	$	777	$	971		$	531		$	8,323
As of June 30, 2015:
Ending balance: individually evaluated for impairment	$	35		$	—	$	—	$	—		$	—		$	35
Ending balance: collectively
evaluated for impairment		1,734			4,275		777		971			531			8,288
Total	$	1,769		$	4,275	$	777	$	971		$	531		$	8,323
Loans:
Ending balance: individually evaluated for impairment	$	712		$	—	$	—	$	—		$	48		$	760
Ending balance: collectively
evaluated for impairment		100,336			223,035		112,251		48,893			33,702			518,217
Total	$	101,048		$	223,035	$	112,251	$	48,893		$	33,750		$	518,977
Three Months Ended June 30, 2014:
Allowance for loan losses:
Beginning balance	$	1,579		$	3,660	$	778	$	811		$	424		$	7,252
Provision for loan losses		10			140		110		(120	)		(40	)		100
Charge-offs		—			—		—		—			—			—
Recoveries		15			—		—		—			—			15
Ending balance	$	1,604		$	3,800	$	888	$	691		$	384		$	7,367
Six Months Ended June 30, 2014:
Allowance for loan losses:
Beginning balance	$	1,583		$	3,660	$	758	$	811		$	424		$	7,236
Provision for loan losses		(10	)		140		130		(120	)		(40	)		100
Charge-offs		—			—		—		—			—			—
Recoveries		31			—		—		—			—			31
Ending balance	$	1,604		$	3,800	$	888	$	691		$	384		$	7,367
As of June 30, 2014:
Ending balance: individually evaluated for impairment	$	35		$	—	$	—	$	—		$	—		$	35
Ending balance: collectively
evaluated for impairment		1,569			3,800		888		691			384			7,332
Total	$	1,604		$	3,800	$	888	$	691		$	384		$	7,367
Loans:
Ending balance: individually evaluated for impairment	$	899		$	—	$	—	$	—		$	29		$	928
Ending balance: collectively
evaluated for impairment		77,556			178,576		102,149		29,423			23,960			411,664
Total	$	78,455		$	178,576	$	102,149	$	29,423		$	23,989		$	412,592

The following is a summary of the allowance for loan losses and recorded investment in loans as of December 31, 2014:

(in thousands)	Commercial		Commercial Real Estate		Residential		Land and Construction		Consumer and Other		Total
Allowance for loan losses:
Ending balance: individually evaluated for impairment	$	20	$	—	$	—	$	—	$	—	$	20
Ending balance: collectively
evaluated for impairment		1,732		3,825		747		816		459		7,579
Total	$	1,752	$	3,825	$	747	$	816	$	459	$	7,599
Loans:
Ending balance: individually evaluated for impairment	$	632	$	—	$	—	$	—	$	49	$	681
Ending balance: collectively
evaluated for impairment		91,062		185,752		98,806		37,075		29,409		442,104
Total	$	91,694	$	185,752	$	98,806	$	37,075	$	29,458	$	442,785

In addition to the allowance for loan losses, the Company also estimates probable losses related to unfunded lending commitments. Unfunded lending commitments are subject to individual reviews and are analyzed and segregated by product type. These classifications, in conjunction with an analysis of historical loss experience, current economic conditions, performance trends within specific portfolio segments and any other pertinent information, result in the estimation of the reserve for unfunded lending commitments. Provision for credit losses related to unfunded lending commitments is reported in other operating expenses in the unaudited Consolidated Statements of Operations and Comprehensive Income. The allowance held for unfunded lending commitments is reported in accrued interest and other liabilities within the accompanying Consolidated Balance Sheets, and not as part of the allowance for loan losses in the above tables. As of June 30, 2015 and December 31, 2014, the allowance for unfunded lending commitments was $345,000 and $320,000, respectively, and is primarily related to $149.7 million and $146.4 million in commitments to extend credit to customers and $2.6 million and $2.7 million in standby/commercial letters of credit at June 30, 2015 and December 31, 2014, respectively.

Non-Performing Assets

The following table presents an aging analysis of the recorded investment of past due loans as of June 30, 2015 and December 31, 2014. Payment activity is reviewed by management on a monthly basis to determine the performance of each loan. Loans are considered to be non-performing when a loan is greater than 90 days delinquent. Loans that are 90 days or more past due may still accrue interest if they are well-secured and in the process of collection. Total additions to non-performing loans during the six months ended June 30, 2015 and 2014 was $100,000 and none, respectively. Non-performing loans represented 0.14% of total loans at both June 30, 2015 and December 31, 2014. There were no accruing loans past due 90 days or more at June 30, 2015 and December 31, 2014.

(in thousands)	30-59 Days Past Due		60-89 Days Past Due		> 90 Days Past Due		Total Past Due		Current		Total
As of June 30, 2015:
Commercial	$	—	$	100	$	612	$	712	$	100,336	$	101,048
Commercial real estate		—		—		—		—		223,035		223,035
Residential		—		—		—		—		112,251		112,251
Land and construction		—		—		—		—		48,893		48,893
Consumer and other		—		—		—		—		33,750		33,750
Totals	$	—	$	100	$	612	$	712	$	518,265	$	518,977
As of December 31, 2014:
Commercial	$	—	$	60	$	572	$	632	$	91,062	$	91,694
Commercial real estate		—		—		—		—		185,752		185,752
Residential		—		—		—		—		98,806		98,806
Land and construction		—		—		—		—		37,075		37,075
Consumer and other		—		—		—		—		29,458		29,458
Totals	$	—	$	60	$	572	$	632	$	442,153	$	442,785

The following table sets forth non-accrual loans and other real estate owned at June 30, 2015 and December 31, 2014:

(dollars in thousands)	June 30, 2015			December 31, 2014
Non-accrual loans:
Commercial	$	712		$	632
Total non-accrual loans		712			632
Total non-performing assets	$	712		$	632
Non-performing assets to gross loans and OREO		0.14	%		0.14	%
Non-performing assets to total assets		0.11	%		0.11	%

Credit Quality Indicators

The following table represents the credit exposure by internally assigned grades at June 30, 2015 and December 31, 2014. This grading analysis estimates the capability of the borrower to repay the contractual obligations of the loan agreements in accordance with the loan terms. The Company’s internal credit risk grading system is based on management’s experiences with similarly graded loans. Credit risk grades are reassessed each quarter based on any recent developments potentially impacting the creditworthiness of the borrower, as well as other external statistics and factors, which may affect the risk characteristics of the respective loan.

The Company’s internally assigned grades are as follows:

Pass – Strong credit with no existing or known potential weaknesses deserving of management’s close attention.

Special Mention – Potential weaknesses that deserve management’s close attention. Borrower and guarantor’s capacity to meet all financial obligations is marginally adequate or deteriorating.

Substandard – Inadequately protected by the paying capacity of the Borrower and/or collateral pledged. The borrower or guarantor is unwilling or unable to meet loan terms or loan covenants for the foreseeable future.

Doubtful – All the weakness inherent in one classified as Substandard with the added characteristic that those weaknesses in place make the collection or liquidation in full, on the basis of current conditions, highly questionable and improbable.

Loss – Considered uncollectible or no longer a bankable asset. This classification does not mean that the asset has absolutely no recoverable value. In fact, a certain salvage value is inherent in these loans. Nevertheless, it is not practical or desirable to defer writing off a portion or whole of a perceived asset even though partial recovery may be collected in the future.

(in thousands)	Commercial		Commercial Real Estate		Residential		Land and Construction		Consumer and Other
As of June 30, 2015:
Grade:
Pass	$	99,560	$	223,035	$	112,251	$	48,893	$	33,702
Special Mention		127		—		—		—		—
Substandard		1,361		—		—		—		48
Total	$	101,048	$	223,035	$	112,251	$	48,893	$	33,750
As of December 31, 2014:
Grade:
Pass	$	90,235	$	185,201	$	98,806	$	37,075	$	29,409
Special Mention		180		—		—		—		—
Substandard		1,279		551		—		—		49
Total	$	91,694	$	185,752	$	98,806	$	37,075	$	29,458

There were no loans assigned to the Doubtful or Loss grade as of June 30, 2015 and December 31, 2014.

Impaired Loans

The following table includes the recorded investment and unpaid principal balances for impaired loans with the associated allowance amount, if applicable. Management determined the specific allowance based on the present value of expected future cash flows, discounted at the loan’s effective interest rate, except when the remaining source of repayment for the loan is the operation or liquidation of the collateral. In those cases, the current fair value of the collateral, less selling costs was used to determine the specific allowance recorded. Also presented in the table below are the average recorded investments in the impaired loans and the related amount of interest recognized during the time within the period that the impaired loans were impaired. When the ultimate collectability of the total principal of an impaired loan is in doubt and the loan is on nonaccrual status, all payments are applied to principal, under the cost recovery method. When the ultimate collectability of the total principal of an impaired loan is not in doubt and the loan is on non-accrual status, contractual interest is credited to interest income when received, under the cash basis method. The average balances are calculated based on the month-end balances of the loans of the period reported.

(in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment
As of and for the six months ended June 30, 2015:
With no related allowance recorded:
Commercial	$	572	$	848	$	—	$	572
Commercial real estate		—		—		—		—
Residential		—		—		—		—
Land and construction		—		—		—		—
Consumer and other		48		48		—		49
With an allowance recorded:
Commercial	$	140	$	155	$	35	$	73
Commercial real estate		—		—		—		—
Residential		—		—		—		—
Land and construction		—		—		—		—
Consumer and other		—		—		—		—
Totals:
Commercial	$	712	$	1,003	$	35	$	645
Commercial real estate	$	—	$	—	$	—	$	—
Residential	$	—	$	—	$	—	$	—
Land and construction	$	—	$	—	$	—	$	—
Consumer and other	$	48	$	48	$	—	$	49
As of and for the year ended December 31, 2014:
With no related allowance recorded:
Commercial	$	572	$	848	$	—	$	707
Commercial real estate		—		—		—		—
Residential		—		—		—		—
Land and construction		—		—		—		—
Consumer and other		49		49		—		36
With an allowance recorded:
Commercial	$	60	$	74	$	20	$	106
Commercial real estate		—		—		—		—
Residential		—		—		—		—
Land and construction		—		—		—		—
Consumer and other		—		—		—		—
Totals:
Commercial	$	632	$	922	$	20	$	813
Commercial real estate	$	—	$	—	$	—	$	—
Residential	$	—	$	—	$	—	$	—
Land and construction	$	—	$	—	$	—	$	—
Consumer and other	$	49	$	49	$	—	$	36

During the three and six months ended June 30, 2015, the average balance of impaired loans was $707,000 and $694,000, respectively, compared to $939,000 and $946,000 for the same periods last year. As of June 30, 2015 and December 31, 2014, there were $712,000 and $632,000 of impaired loans on non-accrual status. For both the three and six months ended June 30, 2015, interest income recognized on impaired loans subsequent to their classification as impaired was $1,000, compared to $3,000 and $5,000 for the same periods last year. The Company stops accruing interest on these loans on the date they are classified as non-accrual and reverses any uncollected interest that had been previously accrued as income. The Company may begin recognizing interest income on these loans as cash interest payments are received, if collection of principal is reasonably assured.

Troubled Debt Restructurings

There were no troubled debt restructurings during the three and six months ended June 30, 2015 and 2014. The impact on the Company’s determination of the allowance for loan losses related to troubled debt restructurings was not material and resulted in no charge-offs during the three and six months ended June 30, 2015 and 2014. During the three and six months ended June 30, 2015 and 2014, there were no defaults recorded on any loans that were modified as troubled debt restructurings during the preceding twelve months. A troubled debt restructuring is considered to be in default once it becomes 60 days or more past due following a modification.

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Note 9 - Commitments and Contingencies (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Note 9 - Commitments and Contingencies (Details) [Line Items]
Operating Leases, Rent Expense	$ 266,000	$ 220,000	$ 532,000	$ 417,000
Credit Cards [Member]
Note 9 - Commitments and Contingencies (Details) [Line Items]
Other Commitment	154,000		154,000		$ 136,000
Commitments to Extend Credit [Member]
Note 9 - Commitments and Contingencies (Details) [Line Items]
Other Commitment	149,700,000		149,700,000		146,400,000
Standby Letters of Credit [Member]
Note 9 - Commitments and Contingencies (Details) [Line Items]
Other Commitment	$ 2,600,000		$ 2,600,000		$ 2,700,000

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Note 3 - Loans, Allowance for Loan Losses, and Non-Performing Assets (Details) - Loans Outstanding - USD ($) $ in Thousands		Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, gross		$ 518,977		$ 442,785
Loans, gross, percent of total		100.00%		100.00%
Net deferred costs		$ 87		$ 71
Less — allowance for loan losses		(8,323)	$ (7,765)	(7,599)	$ (7,367)	$ (7,252)	$ (7,236)
Loans, net		510,741		435,257
Commercial Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, gross	[1]	$ 101,048		$ 91,694
Loans, gross, percent of total	[1]	19.50%		20.70%
Less — allowance for loan losses		$ (1,769)	(1,768)	$ (1,752)	(1,604)	(1,579)	(1,583)
Commercial Real Estate Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, gross		$ 223,035		$ 185,752
Loans, gross, percent of total		43.00%		42.00%
Less — allowance for loan losses		$ (4,275)	(3,825)	$ (3,825)	(3,800)	(3,660)	(3,660)
Residential Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, gross		$ 112,251		$ 98,806
Loans, gross, percent of total		21.60%		22.30%
Less — allowance for loan losses		$ (777)	(757)	$ (747)	(888)	(778)	(758)
Land and Construction Portfolio Segment[Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, gross		$ 48,893		$ 37,075
Loans, gross, percent of total		9.40%		8.40%
Less — allowance for loan losses		$ (971)	(916)	$ (816)	(691)	(811)	(811)
Consumer and Other Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, gross	[2]	$ 33,750		$ 29,458
Loans, gross, percent of total	[2]	6.50%		6.60%
Less — allowance for loan losses		$ (531)	$ (499)	$ (459)	$ (384)	$ (424)	$ (424)

[1] Unsecured commercial loan balances were $27.1 million and $25.1 million at June 30, 2015 and December 31, 2014, respectively.

[2] Unsecured consumer and other loan balances were $7.1 million and $5.1 million at June 30, 2015 and December 31, 2014, respectively.

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Note 8 - Other Borrowings (Tables)

6 Months Ended

Jun. 30, 2015

Other Liabilities and Financial Instruments Subject to Mandatory Redemption [Abstract]

Schedule of Debt [Table Text Block]

Maturity Date	Interest Rate		June 30, 2015		December 31, 2014
May 26, 2015		1.65%	$	—	$	2,500
May 23, 2016		2.07%		2,500		2,500
December 29, 2016		1.38%		5,000		5,000
December 30, 2016		1.25%		2,500		2,500
May 2, 2018		0.93%		5,000		5,000
Total		Total	$	15,000	$	17,500

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Note 7 - Deposits (Tables)

6 Months Ended

Jun. 30, 2015

Disclosure Text Block [Abstract]

Schedule of Deposits [Table Text Block]

	June 30, 2015					December 31, 2014
(dollars in thousands)	Amount		% of Total			Amount		% of Total
Non-interest bearing demand deposits	$	344,043		59.2	%	$	282,217		56.1	%
Interest bearing checking		27,239		4.7	%		25,492		5.1	%
Money market deposits and savings		161,081		27.7	%		154,706		30.7	%
Certificates of deposit		48,535		8.4	%		40,757		8.1	%
Total	$	580,898		100.0	%	$	503,172		100.0	%

Schedule of Certificates of Deposit [Table Text Block]

(in thousands)			Six months and less		Greater than six months through one year		Greater than one year
0.00%	to	0.99%	$	48,222	$	204	$	69
1.00%	to	1.99%		12		—		28
	Total		$	48,234	$	204	$	97

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Note 6 - Premises and Equipment (Details) - Premises and Equipment - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Property, Plant and Equipment [Line Items]
Premises and equipment	$ 5,844	$ 5,187
Accumulated depreciation	(4,001)	(3,727)
Premises and equipment, net	1,843	1,460
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Premises and equipment	1,881	1,537
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Premises and equipment	3,106	2,803
Software and Software Development Costs [Member]
Property, Plant and Equipment [Line Items]
Premises and equipment	$ 857	$ 847

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Note 3 - Loans, Allowance for Loan Losses, and Non-Performing Assets (Details) - Activities in Allowance for Loan Losses and Recorded Investment in Loans - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Allowance for loan losses:
Beginning balance	$ 7,765	$ 7,252	$ 7,599	$ 7,236
Provision for loan losses	575	100	725	100
Charge-offs	(18)	0	(18)	0
Recoveries	1	15	17	31
Ending balance	8,323	7,367	8,323	7,367
As of June 30, 2015:
Ending balance: individually evaluated for impairment			35	35	$ 20
Ending balance: collectively
Ending balance: collectively evaluated for impairment			8,288	7,332	7,579
Total	8,323	7,252	8,323	7,367	7,599
Loans:
Ending balance: individually evaluated for impairment			760	928	681
Ending balance: collectively
Ending balance: collectively evaluated for impairment			518,217	411,664	442,104
Financing Receivable-Total			518,977	412,592	442,785
Commercial Portfolio Segment [Member]
Allowance for loan losses:
Beginning balance	1,768	1,579	1,752	1,583
Provision for loan losses	0	10	0	(10)
Charge-offs	0	0	0	0
Recoveries	1	15	17	31
Ending balance	1,769	1,604	1,769	1,604
As of June 30, 2015:
Ending balance: individually evaluated for impairment			35	35	20
Ending balance: collectively
Ending balance: collectively evaluated for impairment			1,734	1,569	1,732
Total	1,768	1,579	1,769	1,604	1,752
Loans:
Ending balance: individually evaluated for impairment			712	899	632
Ending balance: collectively
Ending balance: collectively evaluated for impairment			100,336	77,556	91,062
Financing Receivable-Total			101,048	78,455	91,694
Commercial Real Estate Portfolio Segment [Member]
Allowance for loan losses:
Beginning balance	3,825	3,660	3,825	3,660
Provision for loan losses	450	140	450	140
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Ending balance	4,275	3,800	4,275	3,800
As of June 30, 2015:
Ending balance: individually evaluated for impairment			0	0	0
Ending balance: collectively
Ending balance: collectively evaluated for impairment			4,275	3,800	3,825
Total	3,825	3,660	4,275	3,800	3,825
Loans:
Ending balance: individually evaluated for impairment			0	0	0
Ending balance: collectively
Ending balance: collectively evaluated for impairment			223,035	178,576	185,752
Financing Receivable-Total			223,035	178,576	185,752
Residential Portfolio Segment [Member]
Allowance for loan losses:
Beginning balance	757	778	747	758
Provision for loan losses	20	110	30	130
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Ending balance	777	888	777	888
As of June 30, 2015:
Ending balance: individually evaluated for impairment			0	0	0
Ending balance: collectively
Ending balance: collectively evaluated for impairment			777	888	747
Total	757	778	777	888	747
Loans:
Ending balance: individually evaluated for impairment			0	0	0
Ending balance: collectively
Ending balance: collectively evaluated for impairment			112,251	102,149	98,806
Financing Receivable-Total			112,251	102,149	98,806
Land and Construction Portfolio Segment[Member]
Allowance for loan losses:
Beginning balance	916	811	816	811
Provision for loan losses	55	(120)	155	(120)
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Ending balance	971	691	971	691
As of June 30, 2015:
Ending balance: individually evaluated for impairment			0	0	0
Ending balance: collectively
Ending balance: collectively evaluated for impairment			971	691	816
Total	916	811	971	691	816
Loans:
Ending balance: individually evaluated for impairment			0	0	0
Ending balance: collectively
Ending balance: collectively evaluated for impairment			48,893	29,423	37,075
Financing Receivable-Total			48,893	29,423	37,075
Consumer and Other Portfolio Segment [Member]
Allowance for loan losses:
Beginning balance	499	424	459	424
Provision for loan losses	50	(40)	90	(40)
Charge-offs	(18)	0	(18)	0
Recoveries	0	0	0	0
Ending balance	531	384	531	384
As of June 30, 2015:
Ending balance: individually evaluated for impairment			0	0	0
Ending balance: collectively
Ending balance: collectively evaluated for impairment			531	384	459
Total	$ 499	$ 424	531	384	459
Loans:
Ending balance: individually evaluated for impairment			48	29	49
Ending balance: collectively
Ending balance: collectively evaluated for impairment			33,702	23,960	29,409
Financing Receivable-Total			$ 33,750	$ 23,989	$ 29,458

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Note 9 - Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2015

Commitments and Contingencies Disclosure [Abstract]

Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block]

Years ending December 31,
2015 (July-December)	$	483
2016		985
2017		1,015
2018		1,046
2019		834
Thereafter		3,600
Total	$	7,963

Schedule of Share-based Compensation Arrangement by Share-based Payment Award, Restricted Stock Units, Vested and Expected to Vest [Table Text Block]

Years ending December 31,
2015 (July-December)	$	530
2016		707
2017		525
2018		323
2019		184
Thereafter		153
Total	$	2,422

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Note 10 - Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2015

Disclosure Text Block [Abstract]

Fair Value, Assets Measured on Recurring Basis [Table Text Block]

			Fair Value Measurements Using
(in thousands)	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
At June 30, 2015:
Investments-Available for Sale
U.S. Treasuries and Government Agencies	$	28,623	$	3,898	$	24,725	$	—
Corporate Notes		2,013		—		2,013		—
Residential Mortgage-Backed Securities		44,913		—		44,913		—
Derivative Assets – Interest Rate Swaps		32		—		32		—
Derivative Liabilities – Interest Rate Swaps		32		—		32		—
At December 31, 2014:
Investments-Available for Sale
U.S. Treasuries and Government Agencies	$	26,128	$	3,885	$	22,243	$	—
Corporate Notes		2,538		—		2,538		—
Residential Mortgage-Backed Securities		51,023		—		51,023		—
Derivative Assets – Interest Rate Swaps		23		—		23		—
Derivative Liabilities – Interest Rate Swaps		23		—		23		—

Fair Value Measurements, Nonrecurring [Table Text Block]

			Fair Value Measurements Using
(in thousands)	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
At June 30, 2015:
Impaired loans
Commercial	$	677	$	—	$	—	$	677
At December 31, 2014:
Impaired loans
Commercial	$	612	$	—	$	—	$	612

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Note 2 - Investments

6 Months Ended

Jun. 30, 2015

Investments Schedule [Abstract]

Investment [Text Block]

(2) Investments

The following is a summary of the investments categorized as Available for Sale at June 30, 2015 and December 31, 2014:

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
(in thousands)	Cost		Gains		Losses			Value
At June 30, 2015:
Investments — Available for Sale
U.S. Treasuries and Government Agencies	$	28,438	$	190	$	(5	)	$	28,623
Corporate Notes		2,009		4		—			2,013
Residential Mortgage-Backed Securities		45,006		172		(265	)		44,913
Total	$	75,453	$	366	$	(270	)	$	75,549
At December 31, 2014:
Investments — Available for Sale
U.S Treasuries and Government Agencies	$	25,973	$	160	$	(5	)	$	26,128
Corporate Notes		2,528		10		—			2,538
Residential Mortgage-Backed Securities		50,913		275		(165	)		51,023
Total	$	79,414	$	445	$	(170	)	$	79,689

The Company did not have any investment securities categorized as “Held to Maturity” or “Trading” at June 30, 2015 or December 31, 2014. At June 30, 2015 and December 31, 2014, there were no holdings of securities of any one issuer other than the U.S. government or its agencies, in an amount greater than 10% of shareholders’ equity.

Additionally, at June 30, 2015 and December 31, 2014, the fair value of securities pledged to the State of California Treasurer’s Office to secure their deposits was $55.9 million and $48.4 million, respectively. Deposits from the State of California were $46.0 million and $38.0 million at June 30, 2015 and December 31, 2014, respectively.

The following table summarizes the fair value of AFS securities and the weighted average yield of investment securities by contractual maturity at June 30, 2015. Residential mortgage-backed securities are included in maturity categories based on their stated maturity date. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. The weighted average life of these securities was 3.19 years at June 30, 2015.

(dollars in thousands)

Available for Sale	1 Year or Less		Weighted Average Yield			After 1 Through 5 Years		Weighted Average Yield			After 5 Through 10 Years		Weighted Average Yield			After 10 Years		Weighted Average Yield			Total		Weighted Average Yield
U.S. Treasuries and Government Agencies	$	—		—	%	$	16,000		1.73	%	$	12,623		2.06	%	$	—		—	%	$	28,623		1.87	%
Corporate Notes		2,013		1.31			—		—			—		—			—		—			2,013		1.31
Residential Mortgage-Backed Securities		—		—			458		5.20			20,219		1.44			24,236		1.86			44,913		1.71
Total	$	2,013		1.31	%	$	16,458		1.82	%	$	32,842		1.68	%	$	24,236		1.86	%	$	75,549		1.76	%

A total of 27 and 26 securities had unrealized losses at June 30, 2015 and December 31, 2014, respectively. Information pertaining to securities with gross unrealized losses aggregated by investment category and length of time that individual securities have been in a continuous loss position, follows:

	Less than Twelve Months					Twelve Months or More
(in thousands)	Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value
At June 30, 2015:
Investments-Available for Sale
U.S Treasuries and Government Agencies	$	(5	)	$	2,097	$	—		$	—
Residential Mortgage-Backed Securities		(162	)		23,555		(103	)		6,034
At December 31, 2014:
Investments-Available for Sale
U.S Treasuries and Government Agencies	$	(5	)	$	8,057	$	—		$	—
Residential Mortgage-Backed Securities		(35	)		11,694		(130	)		17,651

The Company’s assessment that it has the ability to continue to hold impaired investment securities along with its evaluation of their future performance provide the basis for it to conclude that its impaired securities are not other-than-temporarily impaired. In assessing whether it is more likely than not that the Company will be required to sell any impaired security before its anticipated recovery, which may be at their maturity, it considers the significance of each investment, the amount of impairment, as well as the Company’s liquidity position and the impact on the Company’s capital position. As a result of its analyses, the Company determined at June 30, 2015 and December 31, 2014 that the unrealized losses on its securities portfolio on which impairments had not been recognized are temporary.

During the six months ended June 30, 2015, the Company sold available for sale investment securities with an amortized cost of $5.9 million, resulting in realized gains of $75,000, which were recorded in non-interest income within the unaudited Consolidated Statement of Operations and Comprehensive Income. No securities were sold during the three months ended June 30, 2015. During the three and six months ended June 30, 2014, the Company sold available for sale investment securities with an amortized cost of $28.6 million and $43.4 million, respectively, resulting in realized gains of $533,000 and $786,000, respectively.

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Note 11 - Estimated Fair Value Information (Tables)

6 Months Ended

Jun. 30, 2015

Fair Value Disclosures [Abstract]

Fair Value, by Balance Sheet Grouping [Table Text Block]

	Carrying		Fair Value Measurements Using:
(dollars in thousands)	Amount		Level 1		Level 2		Level 3		Total
As of June 30, 2015
Assets
Cash and cash equivalents	$	62,510	$	62,510	$	—	$	—	$	62,510
Investment securities		75,549		3,898		71,651		—		75,549
FRB stock		1,729		—		—		—	N/A
FHLB stock		3,167		—		—		—	N/A
Loans, net		510,741		—		—		510,827		510,827
Non-hedging interest rate swaps		32		—		32		—		32
Accrued interest receivable		1,537		1,537		—		—		1,537
Liabilities
Non-interest bearing deposits	$	344,043	$	344,043	$	—	$	—	$	344,043
Interest bearing deposits		236,855		188,320		48,535		—		236,855
Other borrowings		15,000		—		15,051		—		15,051
Non-hedging interest rate swaps		32		—		32		—		32
Accrued interest payable		12		12		—		—		12
As of December 31, 2014
Assets
Cash and cash equivalents	$	58,464	$	58,464	$	—	$	—	$	58,464
Investment securities		79,689		3,885		75,804		—		79,689
FRB stock		1,655		—		—		—	N/A
FHLB stock		3,167		—		—		—	N/A
Loans, net		435,257		—		—		433,588		433,588
Non-hedging interest rate swaps		23		—		23		—		23
Accrued interest receivable		1,418		1,418		—		—		1,418
Liabilities
Non-interest bearing deposits	$	282,217	$	282,217	$	—	$	—	$	282,217
Interest bearing deposits		220,955		180,198		40,757		—		220,955
Other borrowings		17,500		—		17,551		—		17,551
Non-hedging interest rate swaps		23		—		23		—		23
Accrued interest payable		23		23		—		—		23

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Note 2 - Investments (Details) - Available-for-sale Securities by Contractual Maturity - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Schedule of Available-for-sale Securities [Line Items]
Available for sale investments, 1 year or less	$ 2,013
Available for sale investments, weighted average yield	1.76%
Available for sale investments, after 1 through 5 years	$ 16,458
Available for sale investments, after 5 through 10 years	32,842
Available for sale investments, after 10 years	24,236
Available for sale investments, fair value	$ 75,549	$ 79,689
US Treasury and Government [Member]
Schedule of Available-for-sale Securities [Line Items]
Available for sale investments, weighted average yield	1.87%
Available for sale investments, after 1 through 5 years	$ 16,000
Available for sale investments, after 5 through 10 years	12,623
Available for sale investments, fair value	28,623	26,128
Corporate Note Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available for sale investments, 1 year or less	$ 2,013
Available for sale investments, weighted average yield	1.31%
Available for sale investments, fair value	$ 2,013	2,538
Residential Mortgage Backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available for sale investments, weighted average yield	1.71%
Available for sale investments, after 1 through 5 years	$ 458
Available for sale investments, after 5 through 10 years	20,219
Available for sale investments, after 10 years	24,236
Available for sale investments, fair value	$ 44,913	$ 51,023
One Year or Less [Member]
Schedule of Available-for-sale Securities [Line Items]
Available for sale investments, weighted average yield	1.31%
One Year or Less [Member] | Corporate Note Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available for sale investments, weighted average yield	1.31%
After One Through Five Years [Member]
Schedule of Available-for-sale Securities [Line Items]
Available for sale investments, weighted average yield	1.82%
After One Through Five Years [Member] | US Treasury and Government [Member]
Schedule of Available-for-sale Securities [Line Items]
Available for sale investments, weighted average yield	1.73%
After One Through Five Years [Member] | Residential Mortgage Backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available for sale investments, weighted average yield	5.20%
After Five Through Ten Years [Member]
Schedule of Available-for-sale Securities [Line Items]
Available for sale investments, weighted average yield	1.68%
After Five Through Ten Years [Member] | US Treasury and Government [Member]
Schedule of Available-for-sale Securities [Line Items]
Available for sale investments, weighted average yield	2.06%
After Five Through Ten Years [Member] | Residential Mortgage Backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available for sale investments, weighted average yield	1.44%
After Ten Years [Member]
Schedule of Available-for-sale Securities [Line Items]
Available for sale investments, weighted average yield	1.86%
After Ten Years [Member] | Residential Mortgage Backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available for sale investments, weighted average yield	1.86%

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Note 5 - Comprehensive Income (Details) - Comprehensive Income (Parentheticals) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Comprehensive Income [Abstract]
Net unrealized gains on investment securities available for sale, tax benefit (expense)	$ 295	$ (263)	$ 43	$ (445)
Reclassification for net gains included in earnings, tax	$ 0	$ 219	$ 31	$ 323

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Note 13 - Stock-Based Compensation (Details) - Shares Authorized and Available Under all Stock Plans - shares	Jun. 30, 2015	Jun. 30, 2014	May. 08, 2013
2004 Founder Stock Option Plan [Member]
Note 13 - Stock-Based Compensation (Details) - Shares Authorized and Available Under all Stock Plans [Line Items]
Equity incentive plans, shares reserved	150,000
Equity incentive plans, less shares previously exercised/vested	121,900
Director and Employee Stock Option Plan [Member]
Note 13 - Stock-Based Compensation (Details) - Shares Authorized and Available Under all Stock Plans [Line Items]
Equity incentive plans, shares reserved	1,434,000
Equity incentive plans, less shares previously exercised/vested	1,220,097
Equity incentive plans, less shares outstanding		370,073
2005 Equity Incentive Plan [Member]
Note 13 - Stock-Based Compensation (Details) - Shares Authorized and Available Under all Stock Plans [Line Items]
Equity incentive plans, shares reserved	1,200,000
Equity incentive plans, less shares previously exercised/vested	929,273
Equity incentive plans, less shares outstanding	258,000
2013 Equity Incentive Plan [Member]
Note 13 - Stock-Based Compensation (Details) - Shares Authorized and Available Under all Stock Plans [Line Items]
Equity incentive plans, shares reserved	750,000		750,000
Equity incentive plans, less shares previously exercised/vested	20,000
Equity incentive plans, less shares outstanding	426,750
Equity incentive plans, total shares available for issuance	303,250

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Consolidated Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
ASSETS
Cash and due from banks	$ 7,857	$ 7,484
Interest earning deposits at other financial institutions	54,653	50,980
Total cash and cash equivalents	62,510	58,464
Investment securities — Available for Sale (“AFS”), at estimated fair value	75,549	79,689
Loans, net of allowance for loan losses of $8,323 and $7,599 at June 30, 2015 and December 31, 2014, respectively	510,741	435,257
Premises and equipment, net	1,843	1,460
Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank (“FRB”) stock	4,896	4,822
Accrued interest and other assets	5,766	5,526
Total Assets	661,305	585,218
LIABILITIES AND STOCKHOLDERS’ EQUITY
Non-interest bearing demand deposits	344,043	282,217
Interest bearing deposits:
Interest bearing checking (“NOW”)	27,239	25,492
Money market deposits and savings	161,081	154,706
Certificates of deposit less than $250	1,963	2,185
Certificates of deposit of $250 or greater	46,572	38,572
Total deposits	580,898	503,172
Other borrowings	15,000	17,500
Accrued interest and other liabilities	2,718	2,853
Total Liabilities	$ 598,616	$ 523,525
Commitments and contingencies (Note 9)
Stockholders’ Equity:
Preferred stock, $0.01 par value — 10,000,000 shares authorized, none issued and outstanding at June 30, 2015 and December 31, 2014, respectively
Common stock, $0.01 par value — 50,000,000 shares authorized, 12,655,633 and 12,129,310 issued at June 30, 2015 and December 31, 2014, respectively	$ 127	$ 121
Additional paid-in capital	74,837	71,736
Accumulated deficit	(845)	(1,675)
Accumulated other comprehensive income	57	162
Treasury stock at cost — 2,333,931 and 1,988,869 shares at June 30, 2015 and December 31, 2014, respectively	(11,487)	(8,651)
Total Stockholders’ Equity	62,689	61,693
Total Liabilities and Stockholders’ Equity	$ 661,305	$ 585,218

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Note 3 - Loans, Allowance for Loan Losses, and Non-Performing Assets (Details) - Aging Analysis of Past Due Loans - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014	Jun. 30, 2014
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable-Past Due	$ 712	$ 632
Financing Receivable-Current	518,265	442,153
Financing Receivable-Total	518,977	442,785	$ 412,592
Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable-Past Due	100	60
Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable-Past Due	612	572
Commercial Portfolio Segment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable-Past Due	712	632
Financing Receivable-Current	100,336	91,062
Financing Receivable-Total	101,048	91,694	78,455
Commercial Portfolio Segment [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable-Past Due	100	60
Commercial Portfolio Segment [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable-Past Due	612	572
Commercial Real Estate Portfolio Segment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable-Current	223,035	185,752
Financing Receivable-Total	223,035	185,752	178,576
Residential Portfolio Segment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable-Current	112,251	98,806
Financing Receivable-Total	112,251	98,806	102,149
Land and Construction Portfolio Segment[Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable-Current	48,893	37,075
Financing Receivable-Total	48,893	37,075	29,423
Consumer and Other Portfolio Segment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable-Current	33,750	29,458
Financing Receivable-Total	$ 33,750	$ 29,458	$ 23,989

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Unaudited Consolidated Statements of Cash Flows - USD ($)	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Cash flows from operating activities:
Net income	$ 830,000	$ 1,181,000
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of premises and equipment	303,000	244,000
Amortization of premiums on investment securities, net	316,000	447,000
Provision for loan losses	725,000	100,000
(Accretion) amortization of deferred loan fees and costs, net	(39,000)	4,000
Gain on sale of AFS investment securities	(75,000)	(786,000)
Gain on sale of OREO		(47,000)
Non-cash stock compensation, net of forfeitures	463,000	421,000
Excess tax benefit related to stock option exercises and vesting of restricted stock	(180,000)
Decrease (increase) in accrued interest and other assets	14,000	(259,000)
(Decrease) increase in accrued interest and other liabilities	(135,000)	280,000
Net cash provided by operating activities	2,222,000	1,585,000
Activities in AFS investment securities:
Purchases	(8,377,000)	(24,865,000)
Maturities and principal reductions	6,114,000	9,515,000
Proceeds from sale of securities	5,983,000	44,199,000
Increase in loans, net	(76,170,000)	(29,138,000)
Proceeds from sale of OREO		137,000
Purchase of premises and equipment	(686,000)	(189,000)
Purchase of FRB stock and FHLB stock	(74,000)	(135,000)
Net cash used in investing activities	(73,210,000)	(476,000)
Cash flows from financing activities:
Net increase in deposits	77,726,000	15,006,000
Repayment of other long-term borrowings	(2,500,000)	(2,500,000)
Proceeds from exercise of stock options	2,464,000	2,513,000
Excess tax benefit related to stock option exercises and vesting of restricted stock	180,000
Shares surrendered to pay taxes on vesting of stock based compensation	(2,836,000)	(518,000)
Net cash provided by financing activities	75,034,000	14,501,000
Increase in cash and cash equivalents	4,046,000	15,610,000
Cash and cash equivalents, beginning of period	58,464,000	44,688,000
Cash and cash equivalents, end of period	62,510,000	60,298,000
Cash paid during the period for:
Interest	305,000	383,000
Income taxes	$ 650,000	$ 405,000

XML

Note 7 - Deposits (Details) - Certificates of Deposit by Interest Rate and Maturity - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Note 7 - Deposits (Details) - Certificates of Deposit by Interest Rate and Maturity [Line Items]
Certificates of deposit	$ 48,535	$ 40,757
Minimum [Member] | Range 1 [Member]
Note 7 - Deposits (Details) - Certificates of Deposit by Interest Rate and Maturity [Line Items]
Interest rates	0.00%
Minimum [Member] | Range 2 [Member]
Note 7 - Deposits (Details) - Certificates of Deposit by Interest Rate and Maturity [Line Items]
Interest rates	1.00%
Maximum [Member] | Range 1 [Member]
Note 7 - Deposits (Details) - Certificates of Deposit by Interest Rate and Maturity [Line Items]
Interest rates	0.99%
Maximum [Member] | Range 2 [Member]
Note 7 - Deposits (Details) - Certificates of Deposit by Interest Rate and Maturity [Line Items]
Interest rates	1.99%
Six Months and Less [Member]
Note 7 - Deposits (Details) - Certificates of Deposit by Interest Rate and Maturity [Line Items]
Certificates of deposit	$ 48,234
Six Months and Less [Member] | Range 1 [Member]
Note 7 - Deposits (Details) - Certificates of Deposit by Interest Rate and Maturity [Line Items]
Certificates of deposit	48,222
Six Months and Less [Member] | Range 2 [Member]
Note 7 - Deposits (Details) - Certificates of Deposit by Interest Rate and Maturity [Line Items]
Certificates of deposit	12
Greater Than Six Months Through One Year [Member]
Note 7 - Deposits (Details) - Certificates of Deposit by Interest Rate and Maturity [Line Items]
Certificates of deposit	204
Greater Than Six Months Through One Year [Member] | Range 1 [Member]
Note 7 - Deposits (Details) - Certificates of Deposit by Interest Rate and Maturity [Line Items]
Certificates of deposit	204
Greater Than One Year [Member]
Note 7 - Deposits (Details) - Certificates of Deposit by Interest Rate and Maturity [Line Items]
Certificates of deposit	97
Greater Than One Year [Member] | Range 1 [Member]
Note 7 - Deposits (Details) - Certificates of Deposit by Interest Rate and Maturity [Line Items]
Certificates of deposit	69
Greater Than One Year [Member] | Range 2 [Member]
Note 7 - Deposits (Details) - Certificates of Deposit by Interest Rate and Maturity [Line Items]
Certificates of deposit	$ 28

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Note 14 - Regulatory Matters (Tables)

6 Months Ended

Jun. 30, 2015

Disclosure Text Block [Abstract]

Schedule of Compliance with Regulatory Capital Requirements under Banking Regulations [Table Text Block]

	Company					Bank					For Capital Adequacy Purposes					For the Bank to be “Well-Capitalized” Under Prompt Corrective Measures
(dollars in thousands)	Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio
June 30, 2015:
Total Risk-Based Capital Ratio	$	69,667		12.42	%	$	66,118		11.78	%	$	44,890		8.00	%	$	56,112		10.00	%
Tier 1 Risk-Based Capital Ratio	$	62,633		11.16	%	$	59,083		10.53	%	$	33,668		6.00	%	$	44,890		8.00	%
Common Equity Tier 1 Capital Ratio	$	62,633		11.16	%	$	59,083		10.53	%	$	25,251		4.50	%	$	36,473		6.50	%
Tier 1 Leverage Ratio	$	62,633		9.80	%	$	59,083		9.24	%	$	25,572		4.00	%	$	31,988		5.00	%
December 31, 2014:
Total Risk-Based Capital Ratio	$	67,275		13.94	%	$	63,339		13.13	%	$	38,603		8.00	%	$	48,253		10.00	%
Tier 1 Risk-Based Capital Ratio	$	61,220		12.69	%	$	57,284		11.87	%	$	19,302		4.00	%	$	28,952		6.00	%
Tier 1 Leverage Ratio	$	61,220		10.05	%	$	57,284		9.40	%	$	24,357		4.00	%	$	30,456		5.00	%

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Note 10 - Fair Value Measurements (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Note 10 - Fair Value Measurements (Details) [Line Items]
Available-for-sale Securities	$ 75,549	$ 79,689
Available-for-sale Securities, Weighted Average Life	3 years 69 days
Residential Mortgage Backed Securities [Member]
Note 10 - Fair Value Measurements (Details) [Line Items]
Available-for-sale Securities, Weighted Average Interest Rate	1.71%	1.82%
Available-for-sale Securities, Weighted Average Life	3 years 69 days	3 years 233 days
Fair Value, Inputs, Level 2 [Member]
Note 10 - Fair Value Measurements (Details) [Line Items]
Available-for-sale Securities	$ 71,651	$ 75,804
Fair Value, Inputs, Level 2 [Member] | Residential Mortgage Backed Securities [Member]
Note 10 - Fair Value Measurements (Details) [Line Items]
Available-for-sale Securities	$ 44,900	$ 51,000

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Note 1 - Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2015

Accounting Policies [Abstract]

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Three Months Ended June 30,				Six Months Ended June 30,
(dollars in thousands)	2015		2014		2015		2014
Net income	$	515	$	779	$	830	$	1,181
Average number of common shares outstanding		9,588,951		9,448,548		9,563,456		9,370,900
Effect of dilution of stock options		—		3,351		—		27,653
Effect of dilution of restricted stock		242,278		277,605		254,467		274,513
Average number of common shares outstanding used to calculate diluted earnings per common share		9,831,229		9,729,504		9,817,923		9,673,066

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Note 1 - Summary of Significant Accounting Policies (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Note 1 - Summary of Significant Accounting Policies (Details) [Line Items]
Unrecognized Tax Benefits (in Dollars)	$ 0		$ 0		$ 0
Employee Stock Option [Member]
Note 1 - Summary of Significant Accounting Policies (Details) [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	274,019	350,073	312,046	350,073
Restricted Stock [Member]
Note 1 - Summary of Significant Accounting Policies (Details) [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	99,552	0	58,298	97,860
Minimum [Member] | Furniture and Fixtures [Member]
Note 1 - Summary of Significant Accounting Policies (Details) [Line Items]
Property, Plant and Equipment, Useful Life			3 years
Maximum [Member] | Furniture and Fixtures [Member]
Note 1 - Summary of Significant Accounting Policies (Details) [Line Items]
Property, Plant and Equipment, Useful Life			10 years

XML

Note 3 - Loans, Allowance for Loan Losses, and Non-Performing Assets (Tables)

6 Months Ended

Jun. 30, 2015

Note 3 - Loans, Allowance for Loan Losses, and Non-Performing Assets (Tables) [Line Items]

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

	June 30, 2015						December 31, 2014
	Amount			Percent			Amount			Percent
(dollars in thousands)	Outstanding			of Total			Outstanding			of Total
Commercial (1)	$	101,048			19.5	%	$	91,694			20.7	%
Commercial real estate		223,035			43.0	%		185,752			42.0	%
Residential		112,251			21.6	%		98,806			22.3	%
Land and construction		48,893			9.4	%		37,075			8.4	%
Consumer and other (2)		33,750			6.5	%		29,458			6.6	%
Loans, gross		518,977			100.0	%		442,785			100.0	%
Net deferred costs		87						71
Less — allowance for loan losses		(8,323	)					(7,599	)
Loans, net	$	510,741					$	435,257

Allowance for Credit Losses on Financing Receivables [Table Text Block]

(in thousands)	Commercial			Commercial Real Estate		Residential		Land and Construction			Consumer and Other			Total
Three Months Ended June 30, 2015:
Allowance for loan losses:
Beginning balance	$	1,768		$	3,825	$	757	$	916		$	499		$	7,765
Provision for loan losses		—			450		20		55			50			575
Charge-offs		—			—		—		—			(18	)		(18	)
Recoveries		1			—		—		—			—			1
Ending balance	$	1,769		$	4,275	$	777	$	971		$	531		$	8,323
Six Months Ended June 30, 2015:
Allowance for loan losses:
Beginning balance	$	1,752		$	3,825	$	747	$	816		$	459		$	7,599
Provision for loan losses		—			450		30		155			90			725
Charge-offs		—			—		—		—			(18	)		(18	)
Recoveries		17			—		—		—			—			17
Ending balance	$	1,769		$	4,275	$	777	$	971		$	531		$	8,323
As of June 30, 2015:
Ending balance: individually evaluated for impairment	$	35		$	—	$	—	$	—		$	—		$	35
Ending balance: collectively
evaluated for impairment		1,734			4,275		777		971			531			8,288
Total	$	1,769		$	4,275	$	777	$	971		$	531		$	8,323
Loans:
Ending balance: individually evaluated for impairment	$	712		$	—	$	—	$	—		$	48		$	760
Ending balance: collectively
evaluated for impairment		100,336			223,035		112,251		48,893			33,702			518,217
Total	$	101,048		$	223,035	$	112,251	$	48,893		$	33,750		$	518,977
Three Months Ended June 30, 2014:
Allowance for loan losses:
Beginning balance	$	1,579		$	3,660	$	778	$	811		$	424		$	7,252
Provision for loan losses		10			140		110		(120	)		(40	)		100
Charge-offs		—			—		—		—			—			—
Recoveries		15			—		—		—			—			15
Ending balance	$	1,604		$	3,800	$	888	$	691		$	384		$	7,367
Six Months Ended June 30, 2014:
Allowance for loan losses:
Beginning balance	$	1,583		$	3,660	$	758	$	811		$	424		$	7,236
Provision for loan losses		(10	)		140		130		(120	)		(40	)		100
Charge-offs		—			—		—		—			—			—
Recoveries		31			—		—		—			—			31
Ending balance	$	1,604		$	3,800	$	888	$	691		$	384		$	7,367
As of June 30, 2014:
Ending balance: individually evaluated for impairment	$	35		$	—	$	—	$	—		$	—		$	35
Ending balance: collectively
evaluated for impairment		1,569			3,800		888		691			384			7,332
Total	$	1,604		$	3,800	$	888	$	691		$	384		$	7,367
Loans:
Ending balance: individually evaluated for impairment	$	899		$	—	$	—	$	—		$	29		$	928
Ending balance: collectively
evaluated for impairment		77,556			178,576		102,149		29,423			23,960			411,664
Total	$	78,455		$	178,576	$	102,149	$	29,423		$	23,989		$	412,592

(in thousands)	Commercial		Commercial Real Estate		Residential		Land and Construction		Consumer and Other		Total
Allowance for loan losses:
Ending balance: individually evaluated for impairment	$	20	$	—	$	—	$	—	$	—	$	20
Ending balance: collectively
evaluated for impairment		1,732		3,825		747		816		459		7,579
Total	$	1,752	$	3,825	$	747	$	816	$	459	$	7,599
Loans:
Ending balance: individually evaluated for impairment	$	632	$	—	$	—	$	—	$	49	$	681
Ending balance: collectively
evaluated for impairment		91,062		185,752		98,806		37,075		29,409		442,104
Total	$	91,694	$	185,752	$	98,806	$	37,075	$	29,458	$	442,785

Past Due Financing Receivables [Table Text Block]

(in thousands)	30-59 Days Past Due		60-89 Days Past Due		> 90 Days Past Due		Total Past Due		Current		Total
As of June 30, 2015:
Commercial	$	—	$	100	$	612	$	712	$	100,336	$	101,048
Commercial real estate		—		—		—		—		223,035		223,035
Residential		—		—		—		—		112,251		112,251
Land and construction		—		—		—		—		48,893		48,893
Consumer and other		—		—		—		—		33,750		33,750
Totals	$	—	$	100	$	612	$	712	$	518,265	$	518,977
As of December 31, 2014:
Commercial	$	—	$	60	$	572	$	632	$	91,062	$	91,694
Commercial real estate		—		—		—		—		185,752		185,752
Residential		—		—		—		—		98,806		98,806
Land and construction		—		—		—		—		37,075		37,075
Consumer and other		—		—		—		—		29,458		29,458
Totals	$	—	$	60	$	572	$	632	$	442,153	$	442,785

Impaired Financing Receivables [Table Text Block]

(in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment
As of and for the six months ended June 30, 2015:
With no related allowance recorded:
Commercial	$	572	$	848	$	—	$	572
Commercial real estate		—		—		—		—
Residential		—		—		—		—
Land and construction		—		—		—		—
Consumer and other		48		48		—		49
With an allowance recorded:
Commercial	$	140	$	155	$	35	$	73
Commercial real estate		—		—		—		—
Residential		—		—		—		—
Land and construction		—		—		—		—
Consumer and other		—		—		—		—
Totals:
Commercial	$	712	$	1,003	$	35	$	645
Commercial real estate	$	—	$	—	$	—	$	—
Residential	$	—	$	—	$	—	$	—
Land and construction	$	—	$	—	$	—	$	—
Consumer and other	$	48	$	48	$	—	$	49
As of and for the year ended December 31, 2014:
With no related allowance recorded:
Commercial	$	572	$	848	$	—	$	707
Commercial real estate		—		—		—		—
Residential		—		—		—		—
Land and construction		—		—		—		—
Consumer and other		49		49		—		36
With an allowance recorded:
Commercial	$	60	$	74	$	20	$	106
Commercial real estate		—		—		—		—
Residential		—		—		—		—
Land and construction		—		—		—		—
Consumer and other		—		—		—		—
Totals:
Commercial	$	632	$	922	$	20	$	813
Commercial real estate	$	—	$	—	$	—	$	—
Residential	$	—	$	—	$	—	$	—
Land and construction	$	—	$	—	$	—	$	—
Consumer and other	$	49	$	49	$	—	$	36

Financing Receivable Credit Quality Indicators [Table Text Block]

(in thousands)	Commercial		Commercial Real Estate		Residential		Land and Construction		Consumer and Other
As of June 30, 2015:
Grade:
Pass	$	99,560	$	223,035	$	112,251	$	48,893	$	33,702
Special Mention		127		—		—		—		—
Substandard		1,361		—		—		—		48
Total	$	101,048	$	223,035	$	112,251	$	48,893	$	33,750
As of December 31, 2014:
Grade:
Pass	$	90,235	$	185,201	$	98,806	$	37,075	$	29,409
Special Mention		180		—		—		—		—
Substandard		1,279		551		—		—		49
Total	$	91,694	$	185,752	$	98,806	$	37,075	$	29,458

Nonaccrual Loans [Member]

Note 3 - Loans, Allowance for Loan Losses, and Non-Performing Assets (Tables) [Line Items]

Impaired Financing Receivables [Table Text Block]

(dollars in thousands)	June 30, 2015			December 31, 2014
Non-accrual loans:
Commercial	$	712		$	632
Total non-accrual loans		712			632
Total non-performing assets	$	712		$	632
Non-performing assets to gross loans and OREO		0.14	%		0.14	%
Non-performing assets to total assets		0.11	%		0.11	%

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Note 11 - Estimated Fair Value Information (Details) - Financial Instruments - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014	Jun. 30, 2014	Dec. 31, 2013
Assets
Cash and cash equivalents	$ 62,510	$ 58,464	$ 60,298	$ 44,688
Cash and cash equivalents, fair value	62,510	58,464
Available for sale investments, fair value	75,549	79,689
FRB stock	1,729	1,655
FHLB stock	3,167	3,167
Loans, net	510,741	435,257
Loans, net, fair value	510,827	433,588
Non-hedging interest rate swaps	32	23
Non-hedging interest rate swaps, fair value	32	23
Accrued interest receivable	1,537	1,418
Accrued interest receivable, fair value	1,537	1,418
Liabilities
Deposits	580,898	503,172
Other borrowings	15,000	17,500
Other borrowings, fair value	15,051	17,551
Accrued interest payable	12	23
Accrued interest payable, fair value	12	23
Non-Interest Bearing Deposit Liabilities [Member]
Liabilities
Deposits	344,043	282,217
Deposits, fair value	344,043	282,217
Interest Bearing Deposit Liabilities [Member]
Liabilities
Deposits	236,855	220,955
Deposits, fair value	236,855	220,955
Fair Value, Inputs, Level 1 [Member]
Assets
Cash and cash equivalents, fair value	62,510	58,464
Available for sale investments, fair value	3,898	3,885
Accrued interest receivable	1,537	1,418
Accrued interest receivable, fair value	1,537	1,418
Liabilities
Accrued interest payable	12	23
Accrued interest payable, fair value	12	23
Fair Value, Inputs, Level 1 [Member] | Non-Interest Bearing Deposit Liabilities [Member]
Liabilities
Deposits, fair value	344,043	282,217
Fair Value, Inputs, Level 1 [Member] | Interest Bearing Deposit Liabilities [Member]
Liabilities
Deposits, fair value	188,320	180,198
Fair Value, Inputs, Level 2 [Member]
Assets
Available for sale investments, fair value	71,651	75,804
Non-hedging interest rate swaps, fair value	32	23
Liabilities
Other borrowings, fair value	15,051	17,551
Fair Value, Inputs, Level 2 [Member] | Interest Bearing Deposit Liabilities [Member]
Liabilities
Deposits, fair value	48,535	40,757
Fair Value, Inputs, Level 3 [Member]
Assets
Loans, net, fair value	$ 510,827	$ 433,588

XML

Note 1 - Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2015

Accounting Policies [Abstract]

Significant Accounting Policies [Text Block]

(1) Summary of Significant Accounting Policies

Nature of Operations

1^st Century Bancshares, Inc., a Delaware corporation (“Bancshares”) is a bank holding company with one subsidiary, 1^st Century Bank, National Association (the “Bank”). The Bank commenced operations on March 1, 2004 in the State of California operating under the laws of a National Association (“N.A.”) regulated by the Office of the Comptroller of the Currency (the “OCC”). The Bank is a commercial bank that focuses on closely held and family owned businesses and their employees, professional service firms, real estate professionals and investors, the legal, accounting and medical professions, and small and medium-sized businesses and individuals principally in Los Angeles County. The Bank provides a wide range of banking services to meet the financial needs of the local residential community, with an orientation primarily directed toward owners and employees of the Bank’s business client base. The Bank is subject to both the regulations of and periodic examinations by the OCC, which is the Bank’s federal regulatory agency. Bancshares and the Bank are collectively referred to herein as “the Company.”

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not include all footnotes as would be necessary for a fair presentation of financial position, results of operations and comprehensive income, changes in stockholders’ equity and cash flows in conformity with accounting principles generally accepted in the United States of America (“GAAP”). However, these interim unaudited consolidated financial statements reflect all adjustments (consisting solely of normal recurring adjustments and accruals) which, in the opinion of management, are necessary for a fair presentation of financial position, results of operations and comprehensive income, changes in stockholders’ equity and cash flows for the interim period presented. These unaudited consolidated financial statements have been prepared on a basis consistent with, and should be read in conjunction with, the audited consolidated financial statements as of and for the year ended December 31, 2014, and the notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 filed with the SEC, under the Securities and Exchange Act of 1934, (the “Exchange Act”). The unaudited consolidated financial statements include the accounts of Bancshares and the Bank. All intercompany accounts and transactions have been eliminated.

The results of operations for the three and six months ended June 30, 2015 are not necessarily indicative of the results of operations that may be expected for any other interim period or for the year ending December 31, 2015.

The Company’s accounting and reporting policies conform to GAAP and to general practices within the banking industry. A summary of the significant accounting and reporting policies consistently applied in the preparation of the accompanying unaudited consolidated financial statements follows:

Use of Estimates

Management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Certain assumptions and estimates could prove to be incorrect and cause actual results to differ materially and adversely from the amounts reported in the consolidated financial statements included herewith.

Cash and Cash Equivalents

Cash and cash equivalents include cash and due from banks, interest earning deposits at other financial institutions with original maturities less than 90 days and all highly liquid investments with original maturities of less than 90 days.

Cash Flows

Cash and cash equivalents include cash, deposits with other financial institutions with maturities fewer than 90 days, and federal funds sold. Net cash flows are reported for loan and deposit transactions, interest bearing deposits in other financial institutions and short-term borrowings.

Investment Securities

Investment securities are classified in three categories. Debt securities that management has a positive intent and ability to hold to maturity are classified as “Held to Maturity” or “HTM” and are recorded at amortized cost. Debt and equity securities bought and held principally for the purpose of selling in the near term are classified as “Trading” securities and are measured at fair value, with unrealized gains and losses included in earnings. Debt and equity securities not classified as “Held to Maturity” or “Trading” with readily determinable fair values are classified as “Available for Sale” or “AFS” and are recorded at fair value, with unrealized gains and losses excluded from earnings and reported in other comprehensive income. The Company uses estimates from third parties in arriving at fair value determinations which are derived in accordance with fair value measurement standards.

Purchase premiums and discounts are recognized in interest income using the interest method over the terms of the securities. Declines in the fair value of investment securities below their cost that are deemed to be other-than-temporary are reflected in earnings as realized losses to the extent the impairment is related to credit losses. The amount of the impairment related to other factors is recognized in other comprehensive income provided that management does not have the intent to sell the securities and it is more likely than not that management will not have to sell the security before recovery of its cost basis. In estimating other-than-temporary impairment losses, management considers (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. Gains and losses on the sale of securities are recorded on the trade date and are determined using the specific identification method.

Federal Reserve Bank Stock and Federal Home Loan Bank Stock

The Bank is a member of the Federal Reserve System (“Fed” or “FRB”). FRB stock is carried at cost and is considered a nonmarketable equity security. Cash dividends from the FRB are reported as interest income on an accrual basis.

The Bank is a member and stockholder of the capital stock of the Federal Home Loan Bank of San Francisco (“FHLB of San Francisco” or “FHLB”). Members are required to own a certain amount of stock based on the level of borrowings and other factors, and may invest in additional amounts. FHLB of San Francisco stock is carried at cost and is considered a nonmarketable equity security. Both cash and stock dividends are reported as interest income.

Loans

Loans, net, are stated at the unpaid principal balances less the allowance for loan losses and unamortized deferred fees and costs. Loan origination fees, net of related direct costs, are deferred and accreted to interest income as an adjustment to yield over the respective maturities of the loans using the effective interest method.

Interest on loans is accrued as earned on a daily basis, except where reasonable doubt exists as to the collection of interest and principal, in which case the accrual of interest is discontinued and the loan is placed on non-accrual status. Loans are placed on non-accrual at the time principal or interest is 90 days delinquent unless well secured and in the process of collection. Interest on non-accrual loans is accounted for on a cash-basis or cost-recovery method, until qualifying for return to accrual status. In order for a loan to return to accrual status, all principal and interest amounts owed must be brought current and future payments must be reasonably assured.

A loan is charged-off at any time the loan is determined to be uncollectible. Collateral dependent loans, which generally include commercial real estate loans, residential loans, and construction and land loans, are typically charged down to their net realizable value when a loan is impaired or on non-accrual status. All other loans are typically charged-off when, based upon current available facts and circumstances, it’s determined that either: (1) a loan is uncollectible, (2) repayment is determined to be protracted beyond a reasonable time frame, or (3) the loan is classified as a loss determined by either the Bank’s internal review process or by external examiners.

Loans are considered impaired when, based upon current information and events, it is probable that the Company will be unable to collect all principal and interest amounts due according to the original contractual terms of the loan agreement on a timely basis. The Company evaluates impairment on a loan-by-loan basis. Once a loan is determined to be impaired, the impairment is measured based on the present value of the expected future cash flows discounted at the loan’s effective interest rate or by using the loan’s most recent market value or the fair value of the collateral if the loan is collateral dependent. Loans that experience insignificant payment delays or payment shortfalls are generally not considered to be impaired.

When the measurement of an impaired loan is less than the recorded amount of the loan, a valuation allowance is established by recording a charge to the provision for loan losses. Subsequent increases or decreases in the valuation allowance for impaired loans are recorded by adjusting the existing valuation allowance for the impaired loan with a corresponding charge or credit to the provision for loan losses. The Company’s policy for recognizing interest income on impaired loans is the same as that for non-accrual loans.

Troubled Debt Restructurings

In situations where, for economic or legal reasons related to a borrower’s financial difficulties, management may grant a concession for other than an insignificant period of time to the borrower that would not otherwise be considered, the related loan is classified as a troubled debt restructuring (“TDR”). Management strives to identify borrowers in financial difficulty early and work with them to modify their loans to more affordable terms before their loan reaches nonaccrual status. Concessions may include interest rate reductions or below market interest rates, principal forgiveness, restructuring amortization schedules and other actions intended to minimize potential losses.

Allowance for Loan Losses

The allowance for loan losses is established through a provision for loan losses charged to operations and represents an estimate of probable credit losses inherent in the Company’s loan portfolio that have been incurred as of the balance sheet date. Loan losses are charged against the allowance when management believes that principal is uncollectible. Subsequent repayments or recoveries, if any, are credited to the allowance. Management periodically assesses the adequacy of the allowance for loan losses by reference to many quantitative and qualitative factors that may be weighted differently at various times depending on prevailing conditions. The provisions reflect management’s evaluation of the adequacy of the allowance based, in part, upon the historical loss experience of the loan portfolio, as well as estimates from historical peer group loan loss data and the loss experience of other financial institutions, augmented by management judgment. During this process, loans are separated into the following portfolio segments: commercial loans, commercial real estate, residential, land and construction, and consumer and other loans. The relative significance of risk considerations vary by portfolio segment. For commercial loans, commercial real estate loans and land and construction, the primary risk consideration is a borrower’s ability to generate sufficient cash flows to repay their loan. Secondary considerations include the creditworthiness of guarantors and the valuation of collateral. In addition to the creditworthiness of a borrower, the type and location of real estate collateral is an important risk factor for commercial real estate and land and construction loans. The primary risk consideration for residential loans and consumer loans are a borrower’s personal cash flow and liquidity, as well as collateral value.

Loss ratios for all portfolio segments are evaluated on a quarterly basis. Loss ratios associated with historical loss experience are determined based on a rolling migration analysis of each portfolio segment within the portfolio. This migration analysis estimates loss factors based on the performance of each portfolio segment over a four and a half year time period. These loss ratios are then adjusted, if determined necessary, based on other factors including, but not limited to, historical peer group loan loss data and the loss experience of other financial institutions. Management carefully monitors changing economic conditions, the concentrations of loan categories, values of collateral, the financial condition of the borrowers, the history of the loan portfolio, and historical peer group loan loss data to determine the adequacy of the allowance for loan losses. As a part of this process, management typically focuses on loan-to-value (“LTV”) percentages to assess the adequacy of loss ratios of collateral dependent loans within each portfolio segment discussed above, trends within each portfolio segment, as well as general economic and real estate market conditions where the collateral and borrower are located. For loans that are not collateral dependent, which generally consist of commercial and consumer and other loans, management typically focuses on general business conditions where the borrower operates, trends within the portfolio, and other external factors to evaluate the severity of loss factors. The allowance is based on estimates and actual losses may vary from the estimates.

In addition, regulatory agencies, as a part of their examination process, periodically review the Bank’s allowance for loan losses, and may require the Bank to make additions to the allowance based on their judgment about information available to them at the time of their examinations. No assurance can be given that adverse future economic conditions will not lead to increased delinquent loans, and increases in the provision for loan losses and/or charge-offs.

Other Real Estate Owned

OREO represents real estate acquired through or in lieu of foreclosure. OREO is held for sale and is initially recorded at fair value less estimated costs of disposition at the date of foreclosure, establishing a new cost basis. Subsequent to foreclosure, valuations are periodically performed by management and the assets are carried at the lower of cost or estimated fair value less costs of disposition. OREO is included in accrued interest and other assets within the Consolidated Balance Sheets and the net operating results, if any, from OREO are recognized as non-interest expense within the unaudited Consolidated Statements of Operations and Comprehensive Income.

Furniture, Fixtures and Equipment, net

Leasehold improvements and furniture, fixtures and equipment are carried at cost, less depreciation and amortization. Furniture, fixtures and equipment are depreciated using the straight-line method over the estimated useful life of the asset (three to ten years). Leasehold improvements are depreciated using the straight-line method over the terms of the related leases or the estimated lives of the improvements, whichever is shorter.

Advertising Costs

Advertising costs are expensed as incurred.

Income Taxes

The Company files consolidated federal and combined state income tax returns. Income tax expense or benefit is the total of the current year income tax payable or refundable and the change in the deferred tax assets and liabilities (excluding deferred tax assets and liabilities related to components of other comprehensive income). Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying amounts and tax basis of assets and liabilities, computed using enacted tax rates.

Deferred income tax assets and liabilities are determined using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is determined based on the tax effects of the temporary differences between the book and tax bases of the various balance sheet assets and liabilities and gives current recognition to changes in the rates and laws. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized. The Company records a valuation allowance if it believes, based on all available evidence, that it is “more likely than not” that the future tax assets will not be realized. This assessment requires management to evaluate the Company’s ability to generate sufficient future taxable income or use eligible tax carrybacks, if any, to determine the need for a valuation allowance.

At June 30, 2015 and December 31, 2014, the Company did not have any tax benefits disallowed under accounting standards for uncertainties in income taxes. A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. If applicable, the Company has elected to record interest accrued and penalties related to unrecognized tax benefits in tax expense.

Comprehensive Income

Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. However, certain changes in assets and liabilities, such as unrealized gains and losses on Available for Sale securities, are reported as a separate component of the stockholders’ equity section of the Consolidated Balance Sheets and, along with net income, are components of comprehensive income.

Earnings per Share

The Company reports both basic and diluted earnings per share. Basic earnings per share is determined by dividing net income by the average number of shares of common stock outstanding, while diluted earnings per share is determined by dividing net income by the average number of shares of common stock outstanding adjusted for the dilutive effect of common stock equivalents. Potential dilutive common shares related to outstanding stock options and restricted stock are determined using the treasury stock method. For the three and six months ended June 30, 2015, there were 274,019 and 312,046, respectively, of weighted average stock options that were excluded from the diluted earnings per share calculation due to their antidilutive impact. For the three and six months ended June 30, 2014, there were 350,073 of weighted average stock options that were excluded from the diluted earnings per share calculation due to their antidilutive impact. For the three and six months ended June 30, 2015, there were 99,552 and 58,298, respectively, of weighted average restricted shares that were excluded from the diluted earnings per share calculation due to their antidilutive impact. For the three and six months ended June 30, 2014, there were none and 97,860, respectively, of weighted average restricted shares that were excluded from the diluted earnings per share calculation due to their antidilutive impact.

	Three Months Ended June 30,				Six Months Ended June 30,
(dollars in thousands)	2015		2014		2015		2014
Net income	$	515	$	779	$	830	$	1,181
Average number of common shares outstanding		9,588,951		9,448,548		9,563,456		9,370,900
Effect of dilution of stock options		—		3,351		—		27,653
Effect of dilution of restricted stock		242,278		277,605		254,467		274,513
Average number of common shares outstanding used to calculate diluted earnings per common share		9,831,229		9,729,504		9,817,923		9,673,066

Fair Value of Financial Instruments

The Company is required to make certain disclosures about its use of fair value measurements in the preparation of its financial statements. These standards establish 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 management’s estimates about market data.

Level 1	Valuation is based upon quoted prices for identical instruments traded in active markets.  Level 1 instruments include securities traded on active exchange markets, such as the New York Stock Exchange, as well as U.S. Treasury securities that are traded by dealers or brokers in active over-the-counter markets.
Level 2	Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.  Level 2 instruments include securities traded in less active dealer or broker markets.

Level 3 Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market.  These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability.  Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.

Stock-Based Compensation

The Company has granted restricted stock awards to directors, employees, and a vendor under the Company’s 2005 Amended and Restated Equity Incentive Plan (the “Equity Incentive Plan”) and the 2013 Equity Incentive Plan. The restricted stock awards are considered fixed awards as the number of shares and fair value is known at the date of grant and the fair value at the grant date is amortized over the vesting and/or service period.

Recent Accounting Pronouncements

In January 2014, the Financial Accounting Standard Board (FASB) issued Accounting Standard Update (ASU) No. 2014-04, Receivables – Troubled Debt Restructurings by Creditors (Subtopic 310-40) – Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure (ASU 2014-04). The amendments of ASU are intended to clarify when a creditor should be considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan such that the loan should be derecognized and the real estate recognized. This ASU is effective for both annual and interim periods beginning after December 15, 2014. The adoption of ASU 2014-04 did not have an impact on its financial statements and disclosures.

In April 2014, the FASB issued ASU No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360) – Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (ASU 2014-08). The amendments in ASU 2014-08 change the criteria for reporting discontinued operations and improve related disclosures. This ASU also addresses sources of confusion and inconsistent application related to financial reporting of discontinued operations guidance. ASU 2014-08 will be effective for annual financial statements with fiscal years beginning on or after December 31, 2014 and interim periods thereafter. The adoption of ASU 2014-08 did not have an impact on its financial statements and disclosures.

In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40) (ASU 2014-15). The objective of ASU 2014-15 is to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and provide related disclosures. Currently, GAAP does not provide guidance to evaluate whether there is substantial doubt regarding an organization’s ability to continue as a going concern. This ASU provides guidance to an organization’s management, with principles and definitions to reduce diversity in the timing and content of financial statement disclosures commonly provided by organizations. ASU 2014-15 is effective for periods ending after December 15, 2016 and interim periods within annual periods beginning after December 15, 2016.

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Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Allowance for loan losses (in Dollars)	$ 8,323	$ 7,599
Preferred stock, par value (in Dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in Dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	50,000,000	50,000,000
Common stock, shares issued	12,655,633	12,129,310
Treasury stock, shares	2,333,931	1,988,869

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Note 11 - Estimated Fair Value Information

6 Months Ended

Jun. 30, 2015

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

(11) Estimated Fair Value Information

The fair value of a financial instrument is 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. Fair value is best determined based upon quoted market prices. However, in many cases, there are no quoted market prices for the Company’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Estimated fair value amounts have been determined by using available market information and appropriate valuation methodologies. However, considerable judgment is required to interpret market data to develop the estimates of fair value. Accordingly, the estimates presented are not necessarily indicative of the amounts the Company could realize in a current market exchange.

The methods and assumptions used to estimate the fair value of each class of financial instruments for which it is practicable to estimate the value are explained below.

Cash and cash equivalents

The carrying amounts are considered to be their estimated fair values and are classified as Level 1 because of the short-term maturity of these instruments which includes Federal funds sold and interest-earning deposits at other financial institutions.

Investment securities

AFS investment securities are carried at fair value, which are based on quoted prices of exact or similar securities, or on inputs that are observable, either directly or indirectly. The Company obtains quoted prices through third party brokers. Investment securities are classified as Level 1 to the extent that they are based on quoted prices for identical instrument traded in active markets. Investment securities are classified as Level 2 for valuations based on quotes prices for similar securities or inputs that are observable, either directly or indirectly.

FRB and FHLB stock

It is not practical to determine the fair value of FRB and FHLB stock due to restrictions placed on its transferability.

Loans, net

For loans, the fair value is estimated using market quotes for similar assets or the present value of future cash flows, discounted using the current rate at which similar loans would be made to borrowers with similar credit ratings and for the same maturities and giving consideration to estimated prepayment risk and credit risk. The fair value of loans is determined utilizing estimates resulting in a Level 3 classification.

Impaired loans are measured for impairment based on the present value of expected future cash flows discounted at the loan’s effective interest rate, except that as a practical expedient, the Company may measure impairment based on a loan’s observable market price, or the fair value of the collateral (net of estimated costs to sell) if the loan is collateral dependent. The fair value of impaired loans is determined utilizing estimates resulting in a Level 3 classification.

Off-balance sheet credit-related instruments

The fair values of commitments, which include standby letters of credit and commercial letters of credit, are based upon fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing. The related fees are not considered material to the Company’s financial statements as a whole and the fair market value of the Company’s off-balance sheet credit-related instruments cannot be readily determined. The fair value of these items is determined utilizing estimates resulting in a Level 3 classification.

Derivatives

The fair value of derivatives is based on valuation models using observable market data as of the measurement date and is classified as Level 2.

Deposits

For demand deposits, the carrying amount approximates fair value. The fair values of interest bearing checking, savings, and money market deposits are estimated by discounting future cash flows using the interest rates currently offered for deposits of similar products. Because of the short-term maturity of these deposits, the carrying amounts are considered to be their estimated fair values and are classified as Level 1.

The fair values of the certificates of deposit are estimated by discounting future cash flows based on the rates currently offered for certificates of deposit with similar interest rates and remaining maturities. The fair value of certificates of deposit is determined utilizing estimates resulting in a Level 2 classification.

Other borrowings

The fair values of long term FHLB advances are estimated based on the rates currently offered by the FHLB for advances with similar interest rates and remaining maturities. The fair value of other borrowings is determined utilizing estimates resulting in a Level 2 classification.

Accrued interest

The estimated fair value for both accrued interest receivable and accrued interest payable are considered to be equivalent to the carrying amounts, resulting in a Level 1 classification.

The estimated fair value and carrying amounts of the financial instruments at June 30, 2015 and December 31, 2014 are as follows:

	Carrying		Fair Value Measurements Using:
(dollars in thousands)	Amount		Level 1		Level 2		Level 3		Total
As of June 30, 2015
Assets
Cash and cash equivalents	$	62,510	$	62,510	$	—	$	—	$	62,510
Investment securities		75,549		3,898		71,651		—		75,549
FRB stock		1,729		—		—		—	N/A
FHLB stock		3,167		—		—		—	N/A
Loans, net		510,741		—		—		510,827		510,827
Non-hedging interest rate swaps		32		—		32		—		32
Accrued interest receivable		1,537		1,537		—		—		1,537
Liabilities
Non-interest bearing deposits	$	344,043	$	344,043	$	—	$	—	$	344,043
Interest bearing deposits		236,855		188,320		48,535		—		236,855
Other borrowings		15,000		—		15,051		—		15,051
Non-hedging interest rate swaps		32		—		32		—		32
Accrued interest payable		12		12		—		—		12
As of December 31, 2014
Assets
Cash and cash equivalents	$	58,464	$	58,464	$	—	$	—	$	58,464
Investment securities		79,689		3,885		75,804		—		79,689
FRB stock		1,655		—		—		—	N/A
FHLB stock		3,167		—		—		—	N/A
Loans, net		435,257		—		—		433,588		433,588
Non-hedging interest rate swaps		23		—		23		—		23
Accrued interest receivable		1,418		1,418		—		—		1,418
Liabilities
Non-interest bearing deposits	$	282,217	$	282,217	$	—	$	—	$	282,217
Interest bearing deposits		220,955		180,198		40,757		—		220,955
Other borrowings		17,500		—		17,551		—		17,551
Non-hedging interest rate swaps		23		—		23		—		23
Accrued interest payable		23		23		—		—		23

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Document And Entity Information - shares	6 Months Ended
	Jun. 30, 2015	Aug. 03, 2015
Document and Entity Information [Abstract]
Entity Registrant Name	1st Century Bancshares, Inc.
Document Type	10-Q
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		10,321,702
Amendment Flag	false
Entity Central Index Key	0001420525
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Smaller Reporting Company
Entity Well-known Seasoned Issuer	No
Document Period End Date	Jun. 30, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q2

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Note 12 - Non-Interest Income

6 Months Ended

Jun. 30, 2015

Other Income and Expenses [Abstract]

Other Income and Other Expense Disclosure [Text Block]

(12) Non-Interest Income

The following table summarizes the information regarding non-interest income for the three and six months ended June 30, 2015 and 2014, respectively:

	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2015		2014		2015		2014
Gain on sale of AFS investment securities	$	—	$	533	$	75	$	786
Service charges and other operating income		108		190		263		302
Total non-interest income	$	108	$	723	$	338	$	1,088

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Unaudited Consolidated Statements of Operations and Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Interest and fee income on:
Loans	$ 5,366	$ 4,082	$ 10,083	$ 7,950
Investments	308	508	655	1,069
Other	234	106	348	215
Total interest and fee income	5,908	4,696	11,086	9,234
Interest expense on:
Deposits	112	107	222	217
Borrowings	61	80	109	162
Total interest expense	173	187	331	379
Net interest income	5,735	4,509	10,755	8,855
Provision for loan losses	575	100	725	100
Net interest income after provision for loan losses	5,160	4,409	10,030	8,755
Non-interest income:
Gain on sale of AFS investment securities		533	75	786
Other operating income	108	190	263	302
Total non-interest income	108	723	338	1,088
Non-interest expenses:
Compensation and benefits	2,521	2,218	5,216	4,677
Occupancy	510	404	985	776
Professional fees	172	159	350	312
Technology	243	201	473	394
Marketing	103	86	204	162
FDIC assessments	92	108	187	185
Other operating expenses	718	612	1,483	1,281
Total non-interest expenses	4,359	3,788	8,898	7,787
Income before income taxes	909	1,344	1,470	2,056
Income tax provision	394	565	640	875
Net income	515	779	830	1,181
Other Comprehensive Income:
Net change in unrealized (losses) gains on AFS investments, net of tax	(422)	63	(105)	175
Comprehensive Income	$ 93	$ 842	$ 725	$ 1,356
Basic earnings per share (in Dollars per share)	$ 0.05	$ 0.08	$ 0.09	$ 0.13
Diluted earnings per share (in Dollars per share)	$ 0.05	$ 0.08	$ 0.08	$ 0.12

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Note 6 - Premises and Equipment

6 Months Ended

Jun. 30, 2015

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment Disclosure [Text Block]

(6) Premises and Equipment

Premises and equipment are stated at cost less accumulated depreciation and amortization. Premises and equipment at June 30, 2015 and December 31, 2014 are comprised of the following:

(in thousands)	June 30, 2015			December 31, 2014
Leasehold improvements	$	1,881		$	1,537
Furniture & equipment		3,106			2,803
Software		857			847
Total		5,844			5,187
Accumulated depreciation		(4,001	)		(3,727	)
Premises and equipment, net	$	1,843		$	1,460

Depreciation and amortization included in occupancy expense was $151,000 and $303,000 for the three and six months ended June 30, 2015, respectively, compared to $121,000 and $244,000 for the three and six months ended June 30, 2014, respectively.

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Note 5 - Comprehensive Income

6 Months Ended

Jun. 30, 2015

Disclosure Text Block [Abstract]

Comprehensive Income (Loss) Note [Text Block]

(5) Comprehensive Income

Comprehensive income, which includes net income and the net change in unrealized gains on investment securities available for sale, is presented below:

	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2015			2014			2015			2014
Net income	$	515		$	779		$	830		$	1,181
Other comprehensive income (loss):
(Decrease) increase in net unrealized gains on investment securities available for sale, net of tax benefit (expense) of $295 and $43 for the three and six months ended June 30, 2015, respectively, and ($263) and ($445) for the three and six months ended June 30, 2014, respectively		(422	)		377			(61	)		638
Reclassification for net gains included in earnings, net of tax expense of none and $31 for the three and six months ended June 30, 2015, respectively, and $219 and $323 for the three and six months ended June 30, 2014, respectively		—			(314	)		(44	)		(463	)
Comprehensive income	$	93		$	842		$	725		$	1,356

Reclassification adjustments of none and $75,000 for the three and six months ended June 30, 2015, respectively, are included in non-interest income within the unaudited Consolidated Statements of Operations and Comprehensive Income. Reclassification adjustments for the three and six months ended June 30, 2014 were $533,000 and $786,000, respectively. Income tax expense associated with these reclassification adjustments for the three and six months ended June 30, 2015 was none and $31,000, respectively, and is included in income tax provision within the unaudited Consolidated Statements of Operations and Comprehensive Income. Income tax expense associated with these reclassification adjustments for the three and six months ended June 30, 2014 were $219,000 and $323,000, respectively.

Activity of investment securities available for sale included in accumulated other comprehensive income, net of tax, is as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2015			2014			2015			2014
Beginning balance	$	479		$	164		$	162		$	52
Other comprehensive income before reclassifications		(422	)		377			(61	)		638
Amounts reclassified from accumulated other comprehensive income		—			(314	)		(44	)		(463	)
Net other comprehensive income (loss)		(422	)		63			(105	)		175
Ending balance	$	57		$	227		$	57		$	227

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Note 2 - Investments (Tables)

6 Months Ended

Jun. 30, 2015

Investments Schedule [Abstract]

Schedule of Available-for-sale Securities Reconciliation [Table Text Block]

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
(in thousands)	Cost		Gains		Losses			Value
At June 30, 2015:
Investments — Available for Sale
U.S. Treasuries and Government Agencies	$	28,438	$	190	$	(5	)	$	28,623
Corporate Notes		2,009		4		—			2,013
Residential Mortgage-Backed Securities		45,006		172		(265	)		44,913
Total	$	75,453	$	366	$	(270	)	$	75,549
At December 31, 2014:
Investments — Available for Sale
U.S Treasuries and Government Agencies	$	25,973	$	160	$	(5	)	$	26,128
Corporate Notes		2,528		10		—			2,538
Residential Mortgage-Backed Securities		50,913		275		(165	)		51,023
Total	$	79,414	$	445	$	(170	)	$	79,689

Available-for-sale Securities [Table Text Block]

Available for Sale	1 Year or Less		Weighted Average Yield			After 1 Through 5 Years		Weighted Average Yield			After 5 Through 10 Years		Weighted Average Yield			After 10 Years		Weighted Average Yield			Total		Weighted Average Yield
U.S. Treasuries and Government Agencies	$	—		—	%	$	16,000		1.73	%	$	12,623		2.06	%	$	—		—	%	$	28,623		1.87	%
Corporate Notes		2,013		1.31			—		—			—		—			—		—			2,013		1.31
Residential Mortgage-Backed Securities		—		—			458		5.20			20,219		1.44			24,236		1.86			44,913		1.71
Total	$	2,013		1.31	%	$	16,458		1.82	%	$	32,842		1.68	%	$	24,236		1.86	%	$	75,549		1.76	%

Unrealized Gain (Loss) on Investments [Table Text Block]

	Less than Twelve Months					Twelve Months or More
(in thousands)	Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value
At June 30, 2015:
Investments-Available for Sale
U.S Treasuries and Government Agencies	$	(5	)	$	2,097	$	—		$	—
Residential Mortgage-Backed Securities		(162	)		23,555		(103	)		6,034
At December 31, 2014:
Investments-Available for Sale
U.S Treasuries and Government Agencies	$	(5	)	$	8,057	$	—		$	—
Residential Mortgage-Backed Securities		(35	)		11,694		(130	)		17,651

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Note 13 - Stock-Based Compensation

6 Months Ended

Jun. 30, 2015

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

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

(13)  Stock-Based Compensation

On May 8, 2013, the shareholders of the Company approved the Company’s 2013 Equity Incentive Plan (the “Plan”), which provides for the grant of up to 750,000 shares of Common Stock to employees, including officers and directors, non-employee directors and consultants. Stock options, stock appreciation rights, restricted stock and other stock awards, and restricted stock units are all available for grant pursuant to the terms and conditions of the Plan. The Plan was established to consolidate and replace all other previous stock plans and the remaining shares available for grant under these previous plans were cancelled.

Prior to the approval of the Plan, the Company granted restricted stock awards to directors and employees under the 2005 Equity Incentive Plan. Restricted stock awards are considered fixed awards as the number of shares and fair value is known at the date of grant and the fair value at the grant date is amortized over the requisite service period.

Non-cash stock compensation expense recognized in the unaudited Consolidated Statements of Operations and Comprehensive Income related to the restricted stock awards, net of estimated forfeitures, was $239,000 and $463,000 for the three and six months ended June 30, 2015, respectively, compared to $235,000 and $421,000 for the same periods last year. The fair value of restricted stock awards that vested was $582,000 and $727,000 for the three and six months ended June 30, 2015, respectively, compared to $388,000 and $400,000 for the three and six months ended June 30, 2014, respectively.

The following table reflects a combined summary of the activities related to restricted stock awards outstanding for the six months ended June 30, 2015 and 2014, respectively.

	Six Months Ended June 30,
	2015					2014
Restricted Shares	Number of Shares			Weighted Avg Fair Value at Grant Date		Number of Shares			Weighted Avg Fair Value at Grant Date
Beginning balance		615,875		$	5.92		529,529		$	4.62
Granted		218,750			6.98		228,000			7.63
Vested		(149,875	)		4.85		(93,750	)		4.01
Forfeited and surrendered		—			—		—			—
Ending balance		684,750		$	6.49		663,779		$	5.74

The Company recognizes compensation expense for stock options by amortizing the fair value at the grant date over the service, or vesting period.

During the six months ended June 30, 2015 and 2014, there were none and 72,000, respectively, options exercised under the 2004 Founder Stock Option Plan at a weighted average exercise price of $5.00 per share. During the six months ended June 30, 2014, the remaining 19,800 of unexercised options under the plan expired and were automatically cancelled. The weighted average exercise price of the cancelled options was $5.00 per share. As of June 30, 2015 and 2014, there were no remaining options outstanding related to the plan.

There have been no options granted under the Director and Employee Stock Option Plan for the six months ended June 30, 2015 or 2014. There have been 307,573 and 430,600 options exercised during the six months ended June 30, 2015 and 2014, respectively, at a weighted average price of $8.01 and $5.00 per share, respectively. The remaining contractual life of the Director and Employee Stock Options outstanding was none and 1.03 years at June 30, 2015 and 2014, respectively. All options under the Directors and Employee Stock Option Plan were exercisable at June 30, 2014. During the six months ended June 30, 2015, 42,500 of unexercised option under the plan expired and were automatically cancelled. The weighted average exercise price of the cancelled options was $8.40 per share. At June 30, 2014, the weighted average exercise price of the 370,073 shares outstanding under the Director and Employee Stock Option Plan was $7.97. As of June 30, 2015, there were no remaining options outstanding related to the plan.

The following tables detail the amount of shares authorized and available under all stock plans as of June 30, 2015:

	Shares Reserved		Less Shares Previously Exercised/Vested		Less Shares Outstanding		Total Shares Available for Future Issuance
2004 Founder Stock Option Plan		150,000		121,900		—		—
Director and Employee Stock Option Plan		1,434,000		1,220,097		—		—
2005 Equity Incentive Plan		1,200,000		929,273		258,000		—
2013 Equity Incentive Plan		750,000		20,000		426,750		303,250

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Note 9 - Commitments and Contingencies

6 Months Ended

Jun. 30, 2015

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

(9)  Commitments and Contingencies

Commitments to Extend Credit

The Company is party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit, standby/commercial letters of credit and guarantees on revolving credit card limits. These instruments involve various levels and elements of credit and interest rate risk in excess of the amount recognized in the accompanying consolidated financial statements. The contract or notional amounts of those instruments reflect the extent of involvement the Company has in particular classes of financial instruments. The Company had $149.7 million and $146.4 million in commitments to extend credit to customers and $2.6 million and $2.7 million in standby/commercial letters of credit at June 30, 2015 and December 31, 2014, respectively. The Company also guarantees the outstanding balance on credit cards offered at the Company, but underwritten by another financial institution. The outstanding balances on these credit cards were $154,000 and $136,000 as of June 30, 2015 and December 31, 2014, respectively.

Lease Commitments

The Company leases office premises under three operating leases that will expire in December 2018, May 2019 and June 2024, respectively. Rental expense, which is included in occupancy expense, was $266,000 and $532,000 for the three and six months ended June 30, 2015, respectively, compared to $220,000 and $417,000 for the three and six months ended June 30, 2014, respectively.

The projected minimum rental payments under the term of the leases at June 30, 2015 are as follows (in thousands):

Years ending December 31,
2015 (July-December)	$	483
2016		985
2017		1,015
2018		1,046
2019		834
Thereafter		3,600
Total	$	7,963

Litigation

The Company from time to time is party to lawsuits, which arise out of the normal course of business. At June 30, 2015 and December 31, 2014, the Company did not have any litigation that management believes will have a material impact on the Consolidated Balance Sheets or unaudited Consolidated Statements of Operations and Comprehensive Income.

Restricted Stock

The following table sets forth the Company’s future restricted stock expense, net of estimated forfeitures (in thousands).

Years ending December 31,
2015 (July-December)	$	530
2016		707
2017		525
2018		323
2019		184
Thereafter		153
Total	$	2,422

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Note 8 - Other Borrowings (Details) - USD ($)	Jun. 30, 2015	Dec. 31, 2014
FHLB [Member]
Note 8 - Other Borrowings (Details) [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	$ 154,200,000	$ 146,000,000
Long-term Federal Home Loan Bank Advances, Noncurrent	15,000,000	17,500,000
Short-Term Overnight Borrowing [Member]
Note 8 - Other Borrowings (Details) [Line Items]
Long-term Line of Credit	0	0
Federal Line of Credit [Member]
Note 8 - Other Borrowings (Details) [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	27,000,000	27,000,000
Federal Line of Credit [Member] | Corporate Note Securities [Member]
Note 8 - Other Borrowings (Details) [Line Items]
Available-for-sale Securities Pledged as Collateral	$ 2,000,000	$ 2,500,000

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Note 7 - Deposits

6 Months Ended

Jun. 30, 2015

Disclosure Text Block [Abstract]

Deposit Liabilities Disclosures [Text Block]

(7) Deposits

The following table reflects the summary of deposit categories by dollar and percentage at June 30, 2015 and December 31, 2014:

	June 30, 2015					December 31, 2014
(dollars in thousands)	Amount		% of Total			Amount		% of Total
Non-interest bearing demand deposits	$	344,043		59.2	%	$	282,217		56.1	%
Interest bearing checking		27,239		4.7	%		25,492		5.1	%
Money market deposits and savings		161,081		27.7	%		154,706		30.7	%
Certificates of deposit		48,535		8.4	%		40,757		8.1	%
Total	$	580,898		100.0	%	$	503,172		100.0	%

At June 30, 2015, the Company had three certificates of deposit with the State of California Treasurer’s Office for a total of $46.0 million, which represented 7.9% of total deposits. The deposits outstanding at June 30, 2015 are scheduled to mature in the third quarter of 2015. The Company intends to renew each of these deposits at maturity. However, there can be no assurance that the State of California Treasurer’s Office will continue to maintain deposit accounts with the Company. At December 31, 2014, the Company had two certificates of deposit with the State of California Treasurer’s Office for a total of $38.0 million, which represented 7.6% of total deposits. The Company was required to pledge $50.6 million and $41.8 million, respectively, of investment securities at June 30, 2015 and December 31, 2014, in connection with these certificates of deposit.

The aggregate amount of certificates of deposit of $250,000 or greater was $46.6 million and $38.6 million, at June 30, 2015 and December 31, 2014, respectively. At June 30, 2015, all certificates of deposit of $250,000 or greater, including deposit accounts with the State of California Treasurer’s Office and CDARS, were scheduled to mature in six months or less.

The table below sets forth the range of interest rates, amount and remaining maturities of the certificates of deposit at June 30, 2015.

(in thousands)			Six months and less		Greater than six months through one year		Greater than one year
0.00%	to	0.99%	$	48,222	$	204	$	69
1.00%	to	1.99%		12		—		28
	Total		$	48,234	$	204	$	97

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Note 8 - Other Borrowings

6 Months Ended

Jun. 30, 2015

Other Liabilities and Financial Instruments Subject to Mandatory Redemption [Abstract]

Other Liabilities Disclosure [Text Block]

(8) Other Borrowings

At June 30, 2015 and December 31, 2014, the Company had a borrowing/credit facility secured by a blanket lien on eligible loans at the FHLB of $154.2 million and $146.0 million, respectively. The Company had $15.0 million and $17.5 million of long-term borrowings outstanding under this borrowing/credit facility with the FHLB at June 30, 2015 and December 31, 2014, respectively. The Company had no overnight borrowings outstanding under this borrowing/credit facility at June 30, 2015 and December 31, 2014.

The following table summarizes the outstanding long-term borrowings under the borrowing/credit facility secured by a blanket lien on eligible loans at the FHLB at June 30, 2015 and December 31, 2014 (dollars in thousands):

Maturity Date	Interest Rate		June 30, 2015		December 31, 2014
May 26, 2015		1.65%	$	—	$	2,500
May 23, 2016		2.07%		2,500		2,500
December 29, 2016		1.38%		5,000		5,000
December 30, 2016		1.25%		2,500		2,500
May 2, 2018		0.93%		5,000		5,000
Total		Total	$	15,000	$	17,500

At June 30, 2015 and December 31, 2014, the Company also had $27.0 million in Federal fund lines of credit available with other correspondent banks that could be used to disburse loan commitments and to satisfy demands for deposit withdrawals. Each of these lines of credit is subject to conditions that the Company may not be able to meet at the time when additional liquidity is needed. As of June 30, 2015 and December 31, 2014, the Company had pledged $2.0 million and $2.5 million, respectively, of corporate notes related to these lines of credit.

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Note 10 - Fair Value Measurements

6 Months Ended

Jun. 30, 2015

Disclosure Text Block [Abstract]

Fair Value, Measurement Inputs, Disclosure [Text Block]

(10) Fair Value Measurements

The following tables present information about the Company’s assets and liabilities measured at fair value on a recurring and non-recurring basis as of June 30, 2015 and December 31, 2014, and indicate the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value. 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.

Assets and Liabilities Measured on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis are summarized below:

			Fair Value Measurements Using
(in thousands)	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
At June 30, 2015:
Investments-Available for Sale
U.S. Treasuries and Government Agencies	$	28,623	$	3,898	$	24,725	$	—
Corporate Notes		2,013		—		2,013		—
Residential Mortgage-Backed Securities		44,913		—		44,913		—
Derivative Assets – Interest Rate Swaps		32		—		32		—
Derivative Liabilities – Interest Rate Swaps		32		—		32		—
At December 31, 2014:
Investments-Available for Sale
U.S. Treasuries and Government Agencies	$	26,128	$	3,885	$	22,243	$	—
Corporate Notes		2,538		—		2,538		—
Residential Mortgage-Backed Securities		51,023		—		51,023		—
Derivative Assets – Interest Rate Swaps		23		—		23		—
Derivative Liabilities – Interest Rate Swaps		23		—		23		—

AFS securities — As of June 30, 2015 and December 31, 2014, the Level 2 fair value of the Company’s residential mortgage-backed securities was $44.9 million and $51.0 million, respectively. These securities consist primarily of agency mortgage-backed securities issued by the Federal National Mortgage Association (FNMA) and the Federal Home Loan Mortgage Corporation (FHLMC). The underlying loans for these securities are residential mortgages that were primarily originated beginning in the year of 2005 through the current period. These loans are geographically dispersed throughout the United States. At June 30, 2015 and December 31, 2014, the weighted average yield and weighed average life of these securities were 1.71% and 1.82%, respectively, and 3.19 years and 3.64 years, respectively.

The valuation for investment securities utilizing Level 2 inputs were primarily determined by quotes received from an independent pricing service using matrix pricing, which is a mathematical technique widely used in the industry to value securities without relying exclusively on quoted market prices for the specific securities, but rather by relying on the securities’ relationship to other benchmark quoted securities. There were no transfers into or out of Level 1 or 2 measurements during the three and six months ended June 30, 2015 and 2014.

Assets Measured on a Non-Recurring Basis

Assets measured at fair value on a non-recurring basis are summarized below:

			Fair Value Measurements Using
(in thousands)	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
At June 30, 2015:
Impaired loans
Commercial	$	677	$	—	$	—	$	677
At December 31, 2014:
Impaired loans
Commercial	$	612	$	—	$	—	$	612

Impaired loans — At the time a loan is considered impaired, it is valued at the lower of cost or fair value. The fair value of impaired loans that are collateral dependent is determined using various valuation techniques which are not readily observable in the market place, including consideration of appraised values and other pertinent real estate market data. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Impaired loans are evaluated on a quarterly basis for additional impairment and adjusted accordingly.

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Note 9 - Commitments and Contingencies (Details) - Future Restricted Stock Expense $ in Thousands	Jun. 30, 2015 USD ($)
Future Restricted Stock Expense [Abstract]
2015 (July-December)	$ 530
2016	707
2017	525
2018	323
2019	184
Thereafter	153
Total	$ 2,422

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Note 10 - Fair Value Measurements (Details) - Assets and Liabilities Measured on Recurring Basis - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Investments-Available for Sale
Derivative assets – interest rate swaps	$ 32	$ 23
Derivative liabilities – interest rate swaps	32	23
US Government Agencies Debt Securities [Member]
Investments-Available for Sale
Available for sale investments	28,623	26,128
Corporate Note Securities [Member]
Investments-Available for Sale
Available for sale investments	2,013	2,538
Residential Mortgage Backed Securities [Member]
Investments-Available for Sale
Available for sale investments	44,913	51,023
Fair Value, Inputs, Level 1 [Member] | US Government Agencies Debt Securities [Member]
Investments-Available for Sale
Available for sale investments	3,898	3,885
Fair Value, Inputs, Level 2 [Member]
Investments-Available for Sale
Derivative assets – interest rate swaps	32	23
Derivative liabilities – interest rate swaps	32	23
Fair Value, Inputs, Level 2 [Member] | US Government Agencies Debt Securities [Member]
Investments-Available for Sale
Available for sale investments	24,725	22,243
Fair Value, Inputs, Level 2 [Member] | Corporate Note Securities [Member]
Investments-Available for Sale
Available for sale investments	2,013	2,538
Fair Value, Inputs, Level 2 [Member] | Residential Mortgage Backed Securities [Member]
Investments-Available for Sale
Available for sale investments	$ 44,913	$ 51,023

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Note 9 - Commitments and Contingencies (Details) - Minimum Future Rental Payments $ in Thousands	Jun. 30, 2015 USD ($)
Minimum Future Rental Payments [Abstract]
2015 (July-December)	$ 483
2016	985
2017	1,015
2018	1,046
2019	834
Thereafter	3,600
Total	$ 7,963

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Note 13 - Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2015

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

Schedule of Share-based Compensation, Restricted Stock Units Award Activity [Table Text Block]

	Six Months Ended June 30,
	2015					2014
Restricted Shares	Number of Shares			Weighted Avg Fair Value at Grant Date		Number of Shares			Weighted Avg Fair Value at Grant Date
Beginning balance		615,875		$	5.92		529,529		$	4.62
Granted		218,750			6.98		228,000			7.63
Vested		(149,875	)		4.85		(93,750	)		4.01
Forfeited and surrendered		—			—		—			—
Ending balance		684,750		$	6.49		663,779		$	5.74

Schedule of Share-based Compensation, Shares Authorized Under Stock Option Plans [Table Text Block]

	Shares Reserved		Less Shares Previously Exercised/Vested		Less Shares Outstanding		Total Shares Available for Future Issuance
2004 Founder Stock Option Plan		150,000		121,900		—		—
Director and Employee Stock Option Plan		1,434,000		1,220,097		—		—
2005 Equity Incentive Plan		1,200,000		929,273		258,000		—
2013 Equity Incentive Plan		750,000		20,000		426,750		303,250

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Note 5 - Comprehensive Income (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Non Interest Income [Member]
Note 5 - Comprehensive Income (Details) [Line Items]
Reclassification from Accumulated Other Comprehensive Income, Current Period, before Tax	$ 0	$ 533,000	$ 75,000	$ 786,000
Income Tax Provision [Member]
Note 5 - Comprehensive Income (Details) [Line Items]
Other Comprehensive Income (Loss), Tax	$ 0	$ 219,000	$ 31,000	$ 323,000

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Accounting Policies, by Policy (Policies)

6 Months Ended

Jun. 30, 2015

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not include all footnotes as would be necessary for a fair presentation of financial position, results of operations and comprehensive income, changes in stockholders’ equity and cash flows in conformity with accounting principles generally accepted in the United States of America (“GAAP”). However, these interim unaudited consolidated financial statements reflect all adjustments (consisting solely of normal recurring adjustments and accruals) which, in the opinion of management, are necessary for a fair presentation of financial position, results of operations and comprehensive income, changes in stockholders’ equity and cash flows for the interim period presented. These unaudited consolidated financial statements have been prepared on a basis consistent with, and should be read in conjunction with, the audited consolidated financial statements as of and for the year ended December 31, 2014, and the notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 filed with the SEC, under the Securities and Exchange Act of 1934, (the “Exchange Act”). The unaudited consolidated financial statements include the accounts of Bancshares and the Bank. All intercompany accounts and transactions have been eliminated.

The results of operations for the three and six months ended June 30, 2015 are not necessarily indicative of the results of operations that may be expected for any other interim period or for the year ending December 31, 2015.

The Company’s accounting and reporting policies conform to GAAP and to general practices within the banking industry.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

Management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Certain assumptions and estimates could prove to be incorrect and cause actual results to differ materially and adversely from the amounts reported in the consolidated financial statements included herewith.

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash and Cash Equivalents

Cash and cash equivalents include cash and due from banks, interest earning deposits at other financial institutions with original maturities less than 90 days and all highly liquid investments with original maturities of less than 90 days.

Cash Flows

Cash and cash equivalents include cash, deposits with other financial institutions with maturities fewer than 90 days, and federal funds sold. Net cash flows are reported for loan and deposit transactions, interest bearing deposits in other financial institutions and short-term borrowings.

Marketable Securities, Policy [Policy Text Block]

Investment Securities

Investment securities are classified in three categories. Debt securities that management has a positive intent and ability to hold to maturity are classified as “Held to Maturity” or “HTM” and are recorded at amortized cost. Debt and equity securities bought and held principally for the purpose of selling in the near term are classified as “Trading” securities and are measured at fair value, with unrealized gains and losses included in earnings. Debt and equity securities not classified as “Held to Maturity” or “Trading” with readily determinable fair values are classified as “Available for Sale” or “AFS” and are recorded at fair value, with unrealized gains and losses excluded from earnings and reported in other comprehensive income. The Company uses estimates from third parties in arriving at fair value determinations which are derived in accordance with fair value measurement standards.

Purchase premiums and discounts are recognized in interest income using the interest method over the terms of the securities. Declines in the fair value of investment securities below their cost that are deemed to be other-than-temporary are reflected in earnings as realized losses to the extent the impairment is related to credit losses. The amount of the impairment related to other factors is recognized in other comprehensive income provided that management does not have the intent to sell the securities and it is more likely than not that management will not have to sell the security before recovery of its cost basis. In estimating other-than-temporary impairment losses, management considers (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. Gains and losses on the sale of securities are recorded on the trade date and are determined using the specific identification method.

Federal Reserve Bank Stock and Federal Home Loan Bank Stock [Policy Text Block]

Federal Reserve Bank Stock and Federal Home Loan Bank Stock

The Bank is a member of the Federal Reserve System (“Fed” or “FRB”). FRB stock is carried at cost and is considered a nonmarketable equity security. Cash dividends from the FRB are reported as interest income on an accrual basis.

The Bank is a member and stockholder of the capital stock of the Federal Home Loan Bank of San Francisco (“FHLB of San Francisco” or “FHLB”). Members are required to own a certain amount of stock based on the level of borrowings and other factors, and may invest in additional amounts. FHLB of San Francisco stock is carried at cost and is considered a nonmarketable equity security. Both cash and stock dividends are reported as interest income.

Finance, Loans and Leases Receivable, Policy [Policy Text Block]

Loans

Loans, net, are stated at the unpaid principal balances less the allowance for loan losses and unamortized deferred fees and costs. Loan origination fees, net of related direct costs, are deferred and accreted to interest income as an adjustment to yield over the respective maturities of the loans using the effective interest method.

Interest on loans is accrued as earned on a daily basis, except where reasonable doubt exists as to the collection of interest and principal, in which case the accrual of interest is discontinued and the loan is placed on non-accrual status. Loans are placed on non-accrual at the time principal or interest is 90 days delinquent unless well secured and in the process of collection. Interest on non-accrual loans is accounted for on a cash-basis or cost-recovery method, until qualifying for return to accrual status. In order for a loan to return to accrual status, all principal and interest amounts owed must be brought current and future payments must be reasonably assured.

A loan is charged-off at any time the loan is determined to be uncollectible. Collateral dependent loans, which generally include commercial real estate loans, residential loans, and construction and land loans, are typically charged down to their net realizable value when a loan is impaired or on non-accrual status. All other loans are typically charged-off when, based upon current available facts and circumstances, it’s determined that either: (1) a loan is uncollectible, (2) repayment is determined to be protracted beyond a reasonable time frame, or (3) the loan is classified as a loss determined by either the Bank’s internal review process or by external examiners.

Loans are considered impaired when, based upon current information and events, it is probable that the Company will be unable to collect all principal and interest amounts due according to the original contractual terms of the loan agreement on a timely basis. The Company evaluates impairment on a loan-by-loan basis. Once a loan is determined to be impaired, the impairment is measured based on the present value of the expected future cash flows discounted at the loan’s effective interest rate or by using the loan’s most recent market value or the fair value of the collateral if the loan is collateral dependent. Loans that experience insignificant payment delays or payment shortfalls are generally not considered to be impaired.

When the measurement of an impaired loan is less than the recorded amount of the loan, a valuation allowance is established by recording a charge to the provision for loan losses. Subsequent increases or decreases in the valuation allowance for impaired loans are recorded by adjusting the existing valuation allowance for the impaired loan with a corresponding charge or credit to the provision for loan losses. The Company’s policy for recognizing interest income on impaired loans is the same as that for non-accrual loans.

Loans and Leases Receivable, Troubled Debt Restructuring Policy [Policy Text Block]

Troubled Debt Restructurings

In situations where, for economic or legal reasons related to a borrower’s financial difficulties, management may grant a concession for other than an insignificant period of time to the borrower that would not otherwise be considered, the related loan is classified as a troubled debt restructuring (“TDR”). Management strives to identify borrowers in financial difficulty early and work with them to modify their loans to more affordable terms before their loan reaches nonaccrual status. Concessions may include interest rate reductions or below market interest rates, principal forgiveness, restructuring amortization schedules and other actions intended to minimize potential losses.

Loans and Leases Receivable, Allowance for Loan Losses Policy [Policy Text Block]

Allowance for Loan Losses

The allowance for loan losses is established through a provision for loan losses charged to operations and represents an estimate of probable credit losses inherent in the Company’s loan portfolio that have been incurred as of the balance sheet date. Loan losses are charged against the allowance when management believes that principal is uncollectible. Subsequent repayments or recoveries, if any, are credited to the allowance. Management periodically assesses the adequacy of the allowance for loan losses by reference to many quantitative and qualitative factors that may be weighted differently at various times depending on prevailing conditions. The provisions reflect management’s evaluation of the adequacy of the allowance based, in part, upon the historical loss experience of the loan portfolio, as well as estimates from historical peer group loan loss data and the loss experience of other financial institutions, augmented by management judgment. During this process, loans are separated into the following portfolio segments: commercial loans, commercial real estate, residential, land and construction, and consumer and other loans. The relative significance of risk considerations vary by portfolio segment. For commercial loans, commercial real estate loans and land and construction, the primary risk consideration is a borrower’s ability to generate sufficient cash flows to repay their loan. Secondary considerations include the creditworthiness of guarantors and the valuation of collateral. In addition to the creditworthiness of a borrower, the type and location of real estate collateral is an important risk factor for commercial real estate and land and construction loans. The primary risk consideration for residential loans and consumer loans are a borrower’s personal cash flow and liquidity, as well as collateral value.

Loss ratios for all portfolio segments are evaluated on a quarterly basis. Loss ratios associated with historical loss experience are determined based on a rolling migration analysis of each portfolio segment within the portfolio. This migration analysis estimates loss factors based on the performance of each portfolio segment over a four and a half year time period. These loss ratios are then adjusted, if determined necessary, based on other factors including, but not limited to, historical peer group loan loss data and the loss experience of other financial institutions. Management carefully monitors changing economic conditions, the concentrations of loan categories, values of collateral, the financial condition of the borrowers, the history of the loan portfolio, and historical peer group loan loss data to determine the adequacy of the allowance for loan losses. As a part of this process, management typically focuses on loan-to-value (“LTV”) percentages to assess the adequacy of loss ratios of collateral dependent loans within each portfolio segment discussed above, trends within each portfolio segment, as well as general economic and real estate market conditions where the collateral and borrower are located. For loans that are not collateral dependent, which generally consist of commercial and consumer and other loans, management typically focuses on general business conditions where the borrower operates, trends within the portfolio, and other external factors to evaluate the severity of loss factors. The allowance is based on estimates and actual losses may vary from the estimates.

In addition, regulatory agencies, as a part of their examination process, periodically review the Bank’s allowance for loan losses, and may require the Bank to make additions to the allowance based on their judgment about information available to them at the time of their examinations. No assurance can be given that adverse future economic conditions will not lead to increased delinquent loans, and increases in the provision for loan losses and/or charge-offs.

Real Estate Owned, Valuation Allowance, Policy [Policy Text Block]

Other Real Estate Owned

OREO represents real estate acquired through or in lieu of foreclosure. OREO is held for sale and is initially recorded at fair value less estimated costs of disposition at the date of foreclosure, establishing a new cost basis. Subsequent to foreclosure, valuations are periodically performed by management and the assets are carried at the lower of cost or estimated fair value less costs of disposition. OREO is included in accrued interest and other assets within the Consolidated Balance Sheets and the net operating results, if any, from OREO are recognized as non-interest expense within the unaudited Consolidated Statements of Operations and Comprehensive Income.

Property, Plant and Equipment, Policy [Policy Text Block]

Furniture, Fixtures and Equipment, net

Leasehold improvements and furniture, fixtures and equipment are carried at cost, less depreciation and amortization. Furniture, fixtures and equipment are depreciated using the straight-line method over the estimated useful life of the asset (three to ten years). Leasehold improvements are depreciated using the straight-line method over the terms of the related leases or the estimated lives of the improvements, whichever is shorter.

Advertising Cost, Policy, Expensed Advertising Cost [Policy Text Block]

Advertising Costs

Advertising costs are expensed as incurred.

Income Tax, Policy [Policy Text Block]

Income Taxes

The Company files consolidated federal and combined state income tax returns. Income tax expense or benefit is the total of the current year income tax payable or refundable and the change in the deferred tax assets and liabilities (excluding deferred tax assets and liabilities related to components of other comprehensive income). Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying amounts and tax basis of assets and liabilities, computed using enacted tax rates.

Deferred income tax assets and liabilities are determined using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is determined based on the tax effects of the temporary differences between the book and tax bases of the various balance sheet assets and liabilities and gives current recognition to changes in the rates and laws. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized. The Company records a valuation allowance if it believes, based on all available evidence, that it is “more likely than not” that the future tax assets will not be realized. This assessment requires management to evaluate the Company’s ability to generate sufficient future taxable income or use eligible tax carrybacks, if any, to determine the need for a valuation allowance.

At June 30, 2015 and December 31, 2014, the Company did not have any tax benefits disallowed under accounting standards for uncertainties in income taxes. A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. If applicable, the Company has elected to record interest accrued and penalties related to unrecognized tax benefits in tax expense.

Comprehensive Income, Policy [Policy Text Block]

Comprehensive Income

Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. However, certain changes in assets and liabilities, such as unrealized gains and losses on Available for Sale securities, are reported as a separate component of the stockholders’ equity section of the Consolidated Balance Sheets and, along with net income, are components of comprehensive income.

Earnings Per Share, Policy [Policy Text Block]

Earnings per Share

The Company reports both basic and diluted earnings per share. Basic earnings per share is determined by dividing net income by the average number of shares of common stock outstanding, while diluted earnings per share is determined by dividing net income by the average number of shares of common stock outstanding adjusted for the dilutive effect of common stock equivalents. Potential dilutive common shares related to outstanding stock options and restricted stock are determined using the treasury stock method. For the three and six months ended June 30, 2015, there were 274,019 and 312,046, respectively, of weighted average stock options that were excluded from the diluted earnings per share calculation due to their antidilutive impact. For the three and six months ended June 30, 2014, there were 350,073 of weighted average stock options that were excluded from the diluted earnings per share calculation due to their antidilutive impact. For the three and six months ended June 30, 2015, there were 99,552 and 58,298, respectively, of weighted average restricted shares that were excluded from the diluted earnings per share calculation due to their antidilutive impact. For the three and six months ended June 30, 2014, there were none and 97,860, respectively, of weighted average restricted shares that were excluded from the diluted earnings per share calculation due to their antidilutive impact.

	Three Months Ended June 30,				Six Months Ended June 30,
(dollars in thousands)	2015		2014		2015		2014
Net income	$	515	$	779	$	830	$	1,181
Average number of common shares outstanding		9,588,951		9,448,548		9,563,456		9,370,900
Effect of dilution of stock options		—		3,351		—		27,653
Effect of dilution of restricted stock		242,278		277,605		254,467		274,513
Average number of common shares outstanding used to calculate diluted earnings per common share		9,831,229		9,729,504		9,817,923		9,673,066

Fair Value Measurement, Policy [Policy Text Block]

Fair Value of Financial Instruments

The Company is required to make certain disclosures about its use of fair value measurements in the preparation of its financial statements. These standards establish 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 management’s estimates about market data.

Level 1	Valuation is based upon quoted prices for identical instruments traded in active markets.  Level 1 instruments include securities traded on active exchange markets, such as the New York Stock Exchange, as well as U.S. Treasury securities that are traded by dealers or brokers in active over-the-counter markets.
Level 2	Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.  Level 2 instruments include securities traded in less active dealer or broker markets.

Level 3 Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market.  These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability.  Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.

Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]

Stock-Based Compensation

The Company has granted restricted stock awards to directors, employees, and a vendor under the Company’s 2005 Amended and Restated Equity Incentive Plan (the “Equity Incentive Plan”) and the 2013 Equity Incentive Plan. The restricted stock awards are considered fixed awards as the number of shares and fair value is known at the date of grant and the fair value at the grant date is amortized over the vesting and/or service period.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements

In January 2014, the Financial Accounting Standard Board (FASB) issued Accounting Standard Update (ASU) No. 2014-04, Receivables – Troubled Debt Restructurings by Creditors (Subtopic 310-40) – Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure (ASU 2014-04). The amendments of ASU are intended to clarify when a creditor should be considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan such that the loan should be derecognized and the real estate recognized. This ASU is effective for both annual and interim periods beginning after December 15, 2014. The adoption of ASU 2014-04 did not have an impact on its financial statements and disclosures.

In April 2014, the FASB issued ASU No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360) – Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (ASU 2014-08). The amendments in ASU 2014-08 change the criteria for reporting discontinued operations and improve related disclosures. This ASU also addresses sources of confusion and inconsistent application related to financial reporting of discontinued operations guidance. ASU 2014-08 will be effective for annual financial statements with fiscal years beginning on or after December 31, 2014 and interim periods thereafter. The adoption of ASU 2014-08 did not have an impact on its financial statements and disclosures.

In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40) (ASU 2014-15). The objective of ASU 2014-15 is to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and provide related disclosures. Currently, GAAP does not provide guidance to evaluate whether there is substantial doubt regarding an organization’s ability to continue as a going concern. This ASU provides guidance to an organization’s management, with principles and definitions to reduce diversity in the timing and content of financial statement disclosures commonly provided by organizations. ASU 2014-15 is effective for periods ending after December 15, 2016 and interim periods within annual periods beginning after December 15, 2016.

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Note 5 - Comprehensive Income (Tables)

6 Months Ended

Jun. 30, 2015

Disclosure Text Block [Abstract]

Comprehensive Income (Loss) [Table Text Block]

	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2015			2014			2015			2014
Net income	$	515		$	779		$	830		$	1,181
Other comprehensive income (loss):
(Decrease) increase in net unrealized gains on investment securities available for sale, net of tax benefit (expense) of $295 and $43 for the three and six months ended June 30, 2015, respectively, and ($263) and ($445) for the three and six months ended June 30, 2014, respectively		(422	)		377			(61	)		638
Reclassification for net gains included in earnings, net of tax expense of none and $31 for the three and six months ended June 30, 2015, respectively, and $219 and $323 for the three and six months ended June 30, 2014, respectively		—			(314	)		(44	)		(463	)
Comprehensive income	$	93		$	842		$	725		$	1,356

Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block]

	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2015			2014			2015			2014
Beginning balance	$	479		$	164		$	162		$	52
Other comprehensive income before reclassifications		(422	)		377			(61	)		638
Amounts reclassified from accumulated other comprehensive income		—			(314	)		(44	)		(463	)
Net other comprehensive income (loss)		(422	)		63			(105	)		175
Ending balance	$	57		$	227		$	57		$	227

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Note 4 - Derivative Financial Instruments (Details) - Interest Rate Derivative Contracts - Commercial Loan Interest Rate Swaps [Member] - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Non-hedging interest rate derivatives:
Commercial loan interest rate swaps	$ 2,058	$ 2,650
Commercial loan interest rate swaps	(32)	(23)
Commercial loan interest rate swaps	(2,058)	(2,650)
Commercial loan interest rate swaps	$ 32	$ 23

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Note 2 - Investments (Details) - Securities in a Continuous Loss Position - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
US Treasury and Government [Member]
Investments-Available for Sale
Available for sale investments, less than twelve months, gross unrealized losses	$ (5)	$ (5)
Available for sale investments, less than twelve months, fair value	2,097	8,057
Residential Mortgage Backed Securities [Member]
Investments-Available for Sale
Available for sale investments, less than twelve months, gross unrealized losses	(162)	(35)
Available for sale investments, less than twelve months, fair value	23,555	11,694
Available for sale investments, twelve months or more, gross unrealized losses	(103)	(130)
Available for sale investments, twelve months or more, fair value	$ 6,034	$ 17,651

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Unaudited Consolidated Statements of Changes in Stockholders’ Equity - USD ($) $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	AOCI Attributable to Parent [Member]	Treasury Stock [Member]	Total
Balance, at Dec. 31, 2013	$ 114	$ 67,231	$ (4,036)	$ 52	$ (7,973)	$ 55,388
Balance, (in Shares) at Dec. 31, 2013	11,378,710				(1,897,902)
Restricted stock issued	$ 2	(2)
Restricted stock issued (in Shares)	228,000
Exercise of stock options	$ 5	2,508				2,513
Exercise of stock options (in Shares)	502,600
Earned restricted stock compensation, net of estimated forfeitures		421				421
Shares surrendered to pay taxes on stock based compensation					$ (518)	(518)
Shares surrendered to pay taxes on stock based compensation (in Shares)					(69,360)
Net income			1,181			1,181
Other comprehensive income (loss)				175		175
Balance, at Jun. 30, 2014	$ 121	70,158	(2,855)	227	$ (8,491)	59,160
Balance, (in Shares) at Jun. 30, 2014	12,109,310				(1,967,262)
Balance, at Dec. 31, 2014	$ 121	71,736	(1,675)	162	$ (8,651)	61,693
Balance, (in Shares) at Dec. 31, 2014	12,129,310				(1,988,869)
Restricted stock issued	$ 3	(3)
Restricted stock issued (in Shares)	218,750
Exercise of stock options	$ 3	2,461				2,464
Exercise of stock options (in Shares)	307,573
Earned restricted stock compensation, net of estimated forfeitures		463				463
Shares surrendered to pay taxes on stock based compensation					$ (2,836)	(2,836)
Shares surrendered to pay taxes on stock based compensation (in Shares)					(345,062)
Excess tax benefit from stock based compensation		180				180
Net income			830			830
Other comprehensive income (loss)				(105)		(105)
Balance, at Jun. 30, 2015	$ 127	$ 74,837	$ (845)	$ 57	$ (11,487)	$ 62,689
Balance, (in Shares) at Jun. 30, 2015	12,655,633				(2,333,931)

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Note 4 - Derivative Financial Instruments

6 Months Ended

Jun. 30, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities Disclosure [Text Block]

(4) Derivative Financial Instruments

The fair value of derivative positions outstanding is included in accrued interest receivable and other assets and accrued interest payable and other liabilities in the accompanying Consolidated Balance Sheets and in the net change in each of these financial statement line items in the accompanying unaudited Consolidated Statements of Cash Flows.

Interest Rate Derivatives. The Company utilizes interest rate swaps to facilitate the needs of its customers. The Company has entered into interest rate swaps that are not designated as hedging instruments. These derivative contracts relate to transactions in which the Company enters into an interest rate swap with a customer while at the same time entering into an offsetting interest rate swap with another financial institution. In connection with each swap transaction, the Company agrees to pay interest to the customer on a notional amount at a variable interest rate and receive interest from the customer on a similar notional amount at a fixed interest rate. At the same time, the Company agrees to pay another financial institution the same fixed interest rate on the same notional amount and receive the same variable interest rate on the same notional amount. The transaction allows the Company’s customer to effectively convert a variable rate loan to a fixed rate. Because the Company acts as an intermediary for its customer, changes in the fair value of the underlying derivative contracts for the most part offset each other and do not significantly impact the Company’s results of operations.

The notional amounts and estimated fair values of interest rate derivative contracts outstanding at June 30, 2015 and December 31, 2014 are presented in the following table. The Company obtains dealer quotations to value its interest rate derivative contracts.

	June 30, 2015						December 31, 2014
(in thousands)	Notional Amount			Estimated Fair Value			Notional Amount			Estimated Fair Value
Non-hedging interest rate derivatives:
Commercial loan interest rate swaps	$	2,058		$	(32	)	$	2,650		$	(23	)
Commercial loan interest rate swaps	$	(2,058	)	$	32		$	(2,650	)	$	23

The weighted-average rates paid and received for interest rate swaps outstanding at June 30, 2015 and December 31, 2014 were as follow:

	June 30, 2015 Weighted-Average						December 31, 2014 Weighted-Average
	Interest Rate Paid			Interest Rate Received			Interest Rate Paid			Interest Rate Received
Non-hedging interest rate swaps		3.44	%		4.96	%		3.37	%		4.85	%
Non-hedging interest rate swaps		4.96	%		3.44	%		4.85	%		3.37	%

Gains, Losses and Derivative Cash Flows. For non-hedging derivative instruments, gains and losses due to changes in fair value and all cash flows are included in other non-interest income and other non-interest expense in the accompanying unaudited Consolidated Statements of Operations and Comprehensive Income.

As stated above, the Company enters into non-hedge related derivative positions primarily to accommodate the business needs of its customers. Upon the origination of a derivative contract with a customer, the Company simultaneously enters into an offsetting derivative contract with a third party. The Company recognizes immediate income based upon the difference in the bid/ask spread of the underlying transactions with its customers and the third party. Because the Company acts only as an intermediary for its customer, subsequent changes in the fair value of the underlying derivative contracts for the most part offset each other and do not significantly impact the Company’s results of operations.

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Note 7 - Deposits (Details) - Deposits by Category - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Deposits by Category [Abstract]
Non-interest bearing demand deposits	$ 344,043	$ 282,217
Non-interest bearing demand deposits	59.20%	56.10%
Interest bearing checking	$ 27,239	$ 25,492
Interest bearing checking	4.70%	5.10%
Money market deposits and savings	$ 161,081	$ 154,706
Money market deposits and savings	27.70%	30.70%
Certificates of deposit	$ 48,535	$ 40,757
Certificates of deposit	8.40%	8.10%
Total	$ 580,898	$ 503,172
Total	100.00%	100.00%

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Note 12 - Non-Interest Income (Details) - Non-Interest Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Note 12 - Non-Interest Income (Details) - Non-Interest Income [Line Items]
Gain on sale of AFS investment securities		$ 533	$ 75	$ 786
Service charges and other operating income	$ 108	190	263	302
Total non-interest income	108	723	338	1,088
Service Charges and Other Operating Income [Member]
Note 12 - Non-Interest Income (Details) - Non-Interest Income [Line Items]
Service charges and other operating income	$ 108	$ 190	$ 263	$ 302

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Note 6 - Premises and Equipment (Tables)

6 Months Ended

Jun. 30, 2015

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment [Table Text Block]

(in thousands)	June 30, 2015			December 31, 2014
Leasehold improvements	$	1,881		$	1,537
Furniture & equipment		3,106			2,803
Software		857			847
Total		5,844			5,187
Accumulated depreciation		(4,001	)		(3,727	)
Premises and equipment, net	$	1,843		$	1,460

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Note 14 - Regulatory Matters (Details) - Capital Ratios - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014	Jul. 02, 2013
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Total Risk-Based Capital Ratio, amount for capital adequacy purposes	$ 44,890	$ 38,603
Total Risk-Based Capital Ratio, ratio for capital adequacy purposes	8.00%	8.00%
Total Risk-Based Capital Ratio, actual for the bank to be well capitalized under prompt corrective measures	$ 56,112	$ 48,253
Total Risk-Based Capital Ratio, ratio for the bank to be well capitalized under prompt corrective measures	10.00%	10.00%
Tier 1 Risk-Based Capital Ratio, amount for capital adequacy purposes	$ 33,668	$ 19,302
Tier 1 Risk-Based Capital Ratio, ratio for capital adequacy purposes	6.00%	4.00%
Tier 1 Risk-Based Capital Ratio, actual for the bank to be well capitalized under prompt corrective measures	$ 44,890	$ 28,952
Tier 1 Risk-Based Capital Ratio, ratio for the bank to be well capitalized under prompt corrective measures	8.00%	6.00%
Common Equity Tier 1 Capital Ratio	$ 25,251
Common Equity Tier 1 Capital Ratio	4.50%		4.50%
Common Equity Tier 1 Capital Ratio	$ 36,473
Common Equity Tier 1 Capital Ratio	6.50%
Tier 1 Leverage Ratio, amount for capital adequacy purposes	$ 25,572	$ 24,357
Tier 1 Leverage Ratio, ratio for capital adequacy purposes	4.00%	4.00%
Tier 1 Leverage Ratio, actual for the bank to be well capitalized under prompt corrective measures	$ 31,988	$ 30,456
Tier 1 Leverage Ratio, ratio for the bank to be well capitalized under prompt corrective measures	5.00%	5.00%
Company [Member]
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Total Risk-Based Capital Ratio, amount	$ 69,667	$ 67,275
Total Risk-Based Capital Ratio, ratio	12.42%	13.94%
Tier 1 Risk-Based Capital Ratio, amount	$ 62,633	$ 61,220
Tier 1 Risk-Based Capital Ratio, ratio	11.16%	12.69%
Common Equity Tier 1 Capital Ratio	$ 62,633
Common Equity Tier 1 Capital Ratio	11.16%
Tier 1 Leverage Ratio, amount	$ 62,633	$ 61,220
Tier 1 Leverage Ratio, ratio	9.80%	10.05%
Bank [Member]
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Total Risk-Based Capital Ratio, amount	$ 66,118	$ 63,339
Total Risk-Based Capital Ratio, ratio	11.78%	13.13%
Tier 1 Risk-Based Capital Ratio, amount	$ 59,083	$ 57,284
Tier 1 Risk-Based Capital Ratio, ratio	10.53%	11.87%
Common Equity Tier 1 Capital Ratio	$ 59,083
Common Equity Tier 1 Capital Ratio	10.53%
Tier 1 Leverage Ratio, amount	$ 59,083	$ 57,284
Tier 1 Leverage Ratio, ratio	9.24%	9.40%

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Note 2 - Investments (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2015 USD ($)	Jun. 30, 2014 USD ($)	Jun. 30, 2015 USD ($)	Jun. 30, 2014 USD ($)	Mar. 31, 2015 USD ($)	Dec. 31, 2014 USD ($)
Note 2 - Investments (Details) [Line Items]
Trading Securities	$ 0		$ 0		$ 0	$ 0
Held-to-maturity Securities	0		0			0
Interest-bearing Domestic Deposit, Certificates of Deposits	$ 48,535,000		$ 48,535,000			$ 40,757,000
Available-for-sale Securities, Weighted Average Life			3 years 69 days
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	27		27			26
Available-for-sale Securities, Sold During Period, Amortized Cost	$ 0	$ 28,600,000	$ 5,900,000	$ 43,400,000
Available-for-sale Securities, Gross Realized Gains		$ 533,000	75,000	$ 786,000
From California Treasurer's Office [Member]
Note 2 - Investments (Details) [Line Items]
Available-for-sale Securities Pledged as Collateral	50,600,000		50,600,000			$ 41,800,000
Interest-bearing Domestic Deposit, Certificates of Deposits	46,000,000		46,000,000			38,000,000
To California Treasurer's Office [Member]
Note 2 - Investments (Details) [Line Items]
Available-for-sale Securities Pledged as Collateral	$ 55,900,000		$ 55,900,000			$ 48,400,000

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Note 14 - Regulatory Matters

6 Months Ended

Jun. 30, 2015

Disclosure Text Block [Abstract]

Regulatory Capital Requirements under Banking Regulations [Text Block]

(14) Regulatory Matters

Capital

Bancshares and the Bank are subject to the various regulatory capital requirements administered by federal banking agencies. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, Bancshares and the Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. 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 financial statements of the Company.

Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (set forth in the table below) of total and Tier 1 capital (as defined in the regulation) to risk-weighted assets (as defined) and of Tier 1 capital (as defined) to average assets (as defined). Management believes that as of June 30, 2015 and December 31, 2014, the Company and the Bank met all capital adequacy requirements to which they are subject.

At December 31, 2014, the most recent notification from the OCC categorized the Bank as “well-capitalized” under the regulatory framework for prompt corrective action. To generally be categorized as a “well-capitalized” financial institution, the Bank must maintain minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratios. There are no conditions or events since the notification that management believes have changed the Bank’s categorization.

The Company’s and the Bank’s capital ratios as of June 30, 2015 and December 31, 2014 are presented in the table below:

	Company					Bank					For Capital Adequacy Purposes					For the Bank to be “Well-Capitalized” Under Prompt Corrective Measures
(dollars in thousands)	Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio
June 30, 2015:
Total Risk-Based Capital Ratio	$	69,667		12.42	%	$	66,118		11.78	%	$	44,890		8.00	%	$	56,112		10.00	%
Tier 1 Risk-Based Capital Ratio	$	62,633		11.16	%	$	59,083		10.53	%	$	33,668		6.00	%	$	44,890		8.00	%
Common Equity Tier 1 Capital Ratio	$	62,633		11.16	%	$	59,083		10.53	%	$	25,251		4.50	%	$	36,473		6.50	%
Tier 1 Leverage Ratio	$	62,633		9.80	%	$	59,083		9.24	%	$	25,572		4.00	%	$	31,988		5.00	%
December 31, 2014:
Total Risk-Based Capital Ratio	$	67,275		13.94	%	$	63,339		13.13	%	$	38,603		8.00	%	$	48,253		10.00	%
Tier 1 Risk-Based Capital Ratio	$	61,220		12.69	%	$	57,284		11.87	%	$	19,302		4.00	%	$	28,952		6.00	%
Tier 1 Leverage Ratio	$	61,220		10.05	%	$	57,284		9.40	%	$	24,357		4.00	%	$	30,456		5.00	%

On July 2, 2013, the Federal Reserve approved the final rules implementing the Basel Committee on Banking Supervision's (“BCBS”) capital guidelines for U.S. banks. Under the final rules, minimum requirements will increase for both the quantity and quality of capital held by the Company. The rules include a new common equity Tier 1 capital to risk-weighted assets ratio of 4.5%. The new rules also require a common equity Tier 1 capital conservation buffer of 2.5% of risk-weighted assets over each of the required capital ratios that will be phased in from 2016 to 2019 and must be met to avoid limitations the ability of the Bank to pay dividends, repurchase shares or pay discretionary bonuses. The final rules also raise the minimum ratio of Tier 1 capital to risk-weighted assets from 4.0% to 6.0% and require a minimum leverage ratio of 4.0%. The final rules also implement strict eligibility criteria for regulatory capital instruments, excluding trust preferred securities, mortgage servicing rights and certain deferred tax assets, and including unrealized gains and losses on available for sale debt and equity securities. On July 9, 2013, the FDIC and OCC also approved, as an interim final rule, the regulatory capital requirements for U.S. banks, following the actions of the FRB. The FDIC and OCC's rules are identical in substance to the final rules issued by the FRB.

The phase-in period for the final rules commenced for the Company and the Bank on January 1, 2015, with full compliance with all of the final rule's requirements phased in over a multi-year schedule.

Dividends

In the ordinary course of business, Bancshares is dependent upon dividends from the Bank to provide funds for the payment of dividends to stockholders and to provide for other cash requirements. Banking regulations may limit the amount of dividends that may be paid. Approval by regulatory authorities is required if the effect of dividends declared would cause the regulatory capital of the Bank to fall below specified minimum levels. Approval is also required if dividends declared exceed the net profits for that year combined with the retained net profits for the preceding two years. Currently, the Bank is prohibited from paying dividends to Bancshares until such time as the accumulated deficit is eliminated.

To date, Bancshares has not paid any cash dividends. Payment of stock or cash dividends in the future will depend upon earnings and financial condition and other factors deemed relevant by Bancshares’ Board of Directors, as well as Bancshares’ legal ability to pay dividends. Accordingly, no assurance can be given that any cash dividends will be declared in the foreseeable future.