10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2017 or

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

For the transition period from ______ to ______

Commission File Number: 001-38149

RBB BANCORP

(Exact name of registrant as specified in its charter)

California	27-2776416
(State or other jurisdiction of Incorporation or organization)	(I.R.S. Employer Identification No.)
660 S. Figueroa Street, Suite 1888
Los Angeles, California	90017
(Address of principal executive offices)	(Zip Code)

(213) 627-9888

(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 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, accelerated filer, non-accelerated filer or smaller reporting company. See definition of “large accelerated filer, accelerated filer and smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ☐	Accelerated filer ☐	Non-accelerated filer ☒	Smaller reporting company ☐
Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐

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

Number of shares of common stock of the registrant: 15,801,374 outstanding as of October 30, 2017.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION (UNAUDITED)		3
ITEM 1.	CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)	3
	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)	9
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	32
	CRITICAL ACCOUNTING POLICIES	34
	OVERVIEW	34
	ANALYSIS OF THE RESULTS OF OPERATIONS	36
	ANALYSIS OF FINANCIAL CONDITION	49
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	68
ITEM 4.	CONTROLS AND PROCEDURES	69
PART II - OTHER INFORMATION		70
ITEM 1.	LEGAL PROCEEDINGS	70
ITEM 1A.	RISK FACTORS	70
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	70
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	70
ITEM 4.	MINE SAFETY DISCLOSURES	70
ITEM 5.	OTHER INFORMATION	70
ITEM 6.	EXHIBITS	70
SIGNATURES		71

2

PART I - FINANCIAL INFORMATION (UNAUDITED)

ITEM1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

RBB BANCORP AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

SEPTEMBER 30, 2017 (UNAUDITED) AND DECEMBER 31, 2016 (AUDITED)

(In thousands, except share amounts)

	September 30,			December 31,
	2017			2016
Assets
Cash and due from banks	$	69,552		$	74,213
Federal funds sold and other cash equivalents		96,500			44,500
Cash and cash equivalents		166,052			118,713
Interest-earning deposits in other financial institutions		100			345
Securities:
Available for sale		55,697			39,277
Held to maturity (fair value of $5,485 and $6,553 at September 30, 2017 and    December 31, 2016, respectively)		5,191			6,214
Mortgage loans held for sale		125,704			44,345
Loans held for investment:
Real estate		827,535			755,301
Commercial		372,531			361,227
Total loans		1,200,066			1,116,528
Unaccreted discount on acquired loans		(5,501	)		(8,085	)
Deferred loan costs (fees), net		1,957			2,003
		1,196,522			1,110,446
Allowance for loan losses		(11,420	)		(14,162	)
Net loans		1,185,102			1,096,284
Premises and equipment		6,300			6,585
Federal Home Loan Bank (FHLB) stock		6,770			6,770
Net deferred tax assets		9,517			11,097
Other real estate owned (OREO)		293			833
Cash surrender value of life insurance		32,578			21,958
Goodwill		29,940			29,940
Servicing assets		5,370			3,704
Core deposit intangibles		1,525			1,793
Accrued interest and other assets		12,575			7,693
	$	1,642,714		$	1,395,551

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

3

RBB BANCORP AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

SEPTEMBER 30, 2017 (UNAUDITED) AND DECEMBER 31, 2016 (AUDITED) (CONTINUED)

(In thousands, except share amounts)

Liabilities and Shareholders’ Equity
	September 30,			December 31,
	2017			2016
Deposits:
Noninterest-bearing demand	$	287,574		$	174,272
Savings, NOW and money market accounts		362,018			296,699
Time deposits under $250,000		317,627			310,969
Time deposits $250,000 and over		351,073			370,823
Total deposits		1,318,292			1,152,763
Reserve for unfunded commitments		489			604
Income tax payable		—			793
Long-term debt		49,492			49,383
Subordinated debentures		3,402			3,334
Accrued interest and other liabilities		10,708			7,089
Total liabilities		1,382,383			1,213,966
Commitments and contingencies - Note 13		—			—
Shareholders' equity:
Preferred Stock - 100,000,000 shares authorized, no par value; none outstanding		—			—
Common Stock - 100,000,000 shares authorized, no par value; 15,790,611 shares    issued and outstanding at September 30, 2017 and 12,827,803 shares at    December 31,2016		204,206			142,651
Additional paid-in capital		8,686			8,417
Retained earnings		47,576			30,784
Accumulated other comprehensive income (loss) - net unrealized loss on    securities available for sale, net of tax of $95 at September 30, 2017 and    $186 at December 31, 2016		(137	)		(267	)
Total shareholders’ equity		260,331			181,585
	$	1,642,714		$	1,395,551

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

4

RBB BANCORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME – (UNAUDITED)

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016

(In thousands, except per share amounts)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2017		2016		2017			2016
Interest and dividend income:
Interest and fees on loans	$	17,200	$	18,169	$	49,992		$	50,042
Interest on interest-earning deposits		371		80		731			236
Interest on investment securities		331		203		922			620
Dividend income on FHLB stock		118		155		353			416
Interest on federal funds sold and other		326		92		628			159
Total interest income		18,346		18,699		52,626			51,473
Interest expense:
Interest on savings deposits, now and money market accounts		649		521		1,698			1,489
Interest on time deposits		2,061		1,801		5,903			5,144
Interest on subordinated debentures and other		908		903		2,720			1,824
Interest on other borrowed funds		—		16		29			24
Total interest expense		3,618		3,241		10,350			8,481
Net interest income		14,728		15,458		42,276			42,992
Provision (recapture) for credit losses		700		1,250		(3,488	)		3,599
Net interest income after provision (recapture) for credit losses		14,028		14,208		45,764			39,393
Noninterest income:
Service charges, fees and other		518		443		1,624			1,182
Gain on sale of loans		2,584		1,870		6,370			4,136
Loan servicing fees, net of amortization		314		95		571			384
Recoveries on loans acquired in business combinations		19		47		76			139
Increase in cash surrender value of life insurance		219		141		620			423
Gain on sale of securities		—		—		—			19
Gain on sale of OREO		142		—		142			—
		3,796		2,596		9,403			6,283
Noninterest expense:
Salaries and employee benefits		4,178		3,481		12,604			10,547
Occupancy and equipment expenses		705		766		2,176			2,388
Data processing		458		563		1,264			1,488
Legal and professional		318		511		227			1,478
Office expenses		153		153		484			455
Marketing and business promotion		250		102		575			408
Insurance and regulatory assessments		201		284		611			810
Amortization of intangibles		87		103		268			268
OREO expenses		6		6		34			16
Other expenses		844		1,068		2,495			4,516
		7,200		7,037		20,738			22,374
Income before income taxes		10,624		9,767		34,429			23,302
Income tax expense		4,013		4,070		13,789			9,609
Net income	$	6,611	$	5,697	$	20,640		$	13,693
Net income per share
Basic	$	0.45	$	0.44	$	1.53		$	1.07
Diluted	$	0.42	$	0.42	$	1.42		$	1.00
Cash dividends declared per common share	$	—	$	—	$	0.30		$	0.20

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

5

RBB BANCORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME – (UNAUDITED)

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016

(In thousands)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2017			2016			2017			2016
Net income	$	6,611		$	5,697		$	20,640		$	13,693
Other comprehensive income (loss):
Unrealized gains (losses) on securities available for sale:
Change in unrealized gains (losses)		(80	)		45			220			710
Reclassification of gains recognized in net income		—			—			—			(19	)
		(80	)		45			220			691
Related income tax effect:
Change in unrealized gains (losses)		33			(18	)		(90	)		(291	)
Reclassification of gains recognized in net income		—			—			—			8
		33			(18	)		(90	)		(283	)
Total other comprehensive income		(47	)		27			130			408
Total comprehensive income	$	6,564		$	5,724		$	20,770		$	14,101

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

6

RBB BANCORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY – (UNAUDITED)

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016

(In thousands, except share amounts)

											Accumulated
					Additional						Other
	Common Stock				Paid-in			Retained			Comprehensive
	Shares		Amount		Capital			Earnings			Income (Loss)			Total
Balance at January 1, 2017		12,827,803	$	142,651	$	8,417		$	30,784		$	(267	)	$	181,585
Net income									20,640						20,640
Stock-based compensation						592									592
Cash dividend									(3,848	)					(3,848	)
Stock options exercised		105,052		1,338		(323	)								1,015
Issuance of common stock, net of issuance costs		2,857,756		60,217											60,217
Other comprehensive income, net of taxes												130			130
Balance at September 30, 2017		15,790,611	$	204,206	$	8,686		$	47,576		$	(137	)	$	260,331
Balance at January 1, 2016		12,770,571	$	141,873	$	7,706		$	14,259		$	(193	)	$	163,645
Net income									13,693						13,693
Stock-based compensation						646									646
Cash dividend									(2,554	)					(2,554	)
Stock options exercised		57,232		778		(183	)								595
Other comprehensive income, net of taxes												408			408
Balance at September 30, 2016		12,827,803	$	142,651	$	8,169		$	25,398		$	215		$	176,433

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

7

RBB BANCORP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS – (UNAUDITED)

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016

(In thousands)

	Nine Months Ended
	September 30,
	2017			2016
Operating activities
Net income	$	20,640		$	13,693
Adjustments to reconcile net income to net cash from
Operating activities:
Depreciation and amortization of premises, equipment and intangibles		971			1,096
Net amortization (accretion) of securities, loans, deposits, and other		(1,257	)		(6,606	)
Provision (recapture) for loan losses		(3,488	)		3,599
Stock-based compensation		592			463
Gain on sale of securities		—			(19	)
Gain on sale of loans		(6,370	)		(4,136	)
Gain on sale of OREO		(142	)		—
Increase in cash surrender value of life insurance		(620	)		(423	)
Loans originated and purchased for sale		(184,468	)		(160,654	)
Proceeds from loans sold		155,372			169,546
Other items		(360	)		7,181
Net cash from operating activities		(19,130	)		23,740
Investing activities
Decrease in interest-earning deposits		245			9,437
Securities available for sale:
Purchases		(18,795	)		(2,000	)
Maturities, prepayments and calls		3,336			3,295
Sales		—			5,083
Purchase of FHLB stock and other equity securities, net		(27	)		(2,998	)
Net (increase) decrease in loans		(131,321	)		42,080
Proceeds from sales of OREO		257			—
Purchase of life insurance		(10,000	)		—
Net cash paid in connection with acquisition		—			(35,051	)
Purchases of premises and equipment		(229	)		(230	)
Net cash from investing activities		(156,534	)		19,616
Financing activities
Net increase (decrease) in demand deposits and savings accounts		178,620			(32,876	)
Net decrease in time deposits		(13,001	)		(26,099	)
Net change in FHLB advances		—			10,000
Cash dividends paid		(3,848	)		(2,554	)
Issuance of subordinated debentures, net of issuance costs		—			49,274
Issuance of common stock, net of issuance costs		60,217			—
Exercise of stock options		1,015			778
Net cash from financing activities		223,003			(1,477	)
Net increase in cash and cash equivalents		47,339			41,879
Cash and cash equivalents at beginning of period		118,713			113,891
Cash and cash equivalents at end of period	$	166,052		$	155,770
Supplemental disclosure of cash flow information
Cash paid during the period:
Interest paid	$	9,528		$	9,175
Taxes paid	$	12,875		$	8,290
Non-cash investing and financing activities:
Transfer of loan to available for sale securities	$	1,000		$	—
Transfer of loans to held for sale	$	114,047		$	48,425
Loan to facilitate OREO	$	425		$	—
Securities held to maturity transferred to available for sale	$	—		$	433
Net change in unrealized holding gain on securities available for sale	$	222		$	710

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

8

RBB BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (UNAUDITED)

NOTE 1 - BUSINESS DESCRIPTION

RBB Bancorp is a bank holding company registered under the Bank Holding Company Act of 1956, as amended. Our principal business is to serve as the holding company for our wholly-owned banking subsidiaries, Royal Business Bank ("Bank") and RBB Asset Management Company ("RAM"), collectively referred to herein as "the Company". At September 30, 2017, the Company had total assets of $1.6 billion, gross loans of $1.2 billion, total deposits of $1.3 billion and total stockholders' equity of $260.3 million. On July 31, 2017, the Company completed its initial public offering of 3,750,000 shares at a price to the public of $23.00 per share. The Company’s stock trades on the Nasdaq Global Select Market under the symbol “RBB”.

Royal Business Bank provides business banking services to the Chinese-American communities in Los Angeles County, Orange County, Ventura County and in Las Vegas, including remote deposit, E-banking, mobile banking, commercial and investor real estate loans, business loans and lines of credit, SBA 7A and 504 loans, mortgage loans, trade finance and a full range of depository accounts. RAM was formed to hold and manage problem assets acquired in business combinations.

The Company operates full-service banking offices in Arcadia, Cerritos, Diamond Bar, Los Angeles, Monterey Park, Oxnard, Rowland Heights, San Gabriel, Silver Lake, Torrance, West LA, and Westlake Village, California and Las Vegas, Nevada and a loan production office in the City of Industry, California.  The Company's primary source of revenue is providing loans to customers, who are predominately small and middle-market businesses and individuals.

We generate our revenue primarily from interest received on loans and leases and, to a lesser extent, from interest received on investment securities.  We have also derived income from noninterest sources, such as fees received in connection with various lending and deposit services, residential mortgage loan originations, loan servicing and gain on sales of loans.  Our principle expenses include interest expense on deposits and subordinated debentures, and operating expenses, such as salaries and employee benefits, occupancy and equipment, data processing, and income tax expense.

We have completed four acquisitions from July 8, 2011 through February 19, 2016, including the acquisition of TFC Holding Company on February 19, 2016. Our acquisitions have been accounted for using the acquisition method of accounting and, accordingly, the operating results of the acquired entities have been included in the consolidated financial statements from their respective acquisition dates. See Note 3. Acquisitions, for more information about the TFC acquisition.

NOTE 2 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited consolidated financial statements and notes thereto of the Company have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) for Form 10-Q and conform to practices within the banking industry and include all of the information and disclosures required by accounting principles generally accepted in the United States of America (“GAAP”) for interim financial reporting.  The accompanying unaudited consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments), which are necessary for a fair presentation of financial results for the interim periods presented. The results of operations for the nine months ended September 30, 2017 are not necessarily indicative of the results for the full year.  Certain amounts reported for 2016 have been reclassified to be consistent with the reporting for 2017.  These interim unaudited financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto as of and for the years ended December 31, 2016, 2015 and 2014, included in our registration statement filed under Form S-1.

Principles of Consolidation and Nature of Operations

The accompanying unaudited consolidated financial statements include the accounts of RBB Bancorp and its wholly-owned subsidiaries Royal Business Bank ("Bank") and RBB Asset Management Company ("RAM"), collectively referred to herein as "the Company".  All significant intercompany transactions have been eliminated.  

RBB Bancorp was formed in January 2011 as a bank holding company.  RAM was formed in 2012 to hold and manage problem assets acquired in business combinations.

RBB Bancorp has no significant business activity other than its investments in Royal Business Bank and RAM.  

9

RBB BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (UNAUDITED)

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Summary of Significant Accounting Policies

The accompanying unaudited consolidated financial statements were compiled in accordance with the accounting policies set forth in Note 1 – Summary of Significant Policies in our Consolidated Financial Statements as of and for the periods ended December 31, 2016, 2015, and 2014, included in our registration statement on Form S-1.  The accompanying consolidated unaudited financial statements reflect all adjustments consisting of normal recurring adjustments that, in the opinion of management, are necessary to reflect a fair statement of our consolidated financial condition, results of operations, and cash flows. The results of operations for acquired companies are included from the dates of acquisition.  Operating results for the three and nine months ended September 30, 2017 are not necessarily indicative of the results that may be expected for the year ended December 31, 2017.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers (Topic 606).  This Update requires an entity to recognize revenue as performance obligations are met, in order to reflect the transfer of promised goods or services to customers in an amount that reflects the consideration the entity is entitled to receive for those goods or services.  The following steps are applied in the updated guidance: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, the entity satisfies a performance obligation.  These amendments are effective for public business entities for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period and one year later for nonpublic business entities.  Early adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that period. The Company plans to adopt ASU 2014-09 on January 1, 2019 utilizing the modified retrospective approach.  Since the guidance does not apply to revenue associated with financial instruments such as loans and investments, which are accounted for under other provisions of GAAP, we do not expect it to impact interest income, our largest component of income.  The Company will perform an overall assessment of revenue streams potentially affected by the ASU, including certain deposit related fees and interchange fees, to determine the impact this guidance will have on our consolidated financial statements.  

In January 2016, the FASB issued ASU 2016-01, Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities (Subtopic 825-10).  Changes made to the current measurement model primarily affect the accounting for equity securities and readily determinable fair values, where changes in fair value will impact earnings instead of other comprehensive income.  The accounting for other financial instruments, such as loans, investments in debt securities, and financial liabilities is largely unchanged.  The Update also changes the presentation and disclosure requirements for financial instruments including a requirement that public business entities use exit price when measuring the fair value of financial instruments measured at amortized cost for disclosure purposes.  This Update is generally effective for public business entities in fiscal years beginning after December 15, 2017, including interim periods within those fiscal years and one year later for nonpublic business entities.  Based upon a preliminary evaluation of the guidance in ASU No. 2016-01 the Company does not believe that the ASU will have a material impact on the Company’s consolidated financial statements.  The Company will continue to monitor any updates to the guidance.  

In February 2016, the FASB issued Accounting Standards Update (ASU) 2016-02, Leases (Topic 842).  The most significant change for lessees is the requirement under the new guidance to recognize right-of-use assets and lease liabilities for all leases not considered short-term leases, which is generally defined as a lease term of less than 12 months. This change will result in lessees recognizing right-of-use assets and lease liabilities for most leases currently accounted for as operating leases under current lease accounting guidance.  The amendments in this Update are effective for interim and annual periods beginning after December 15, 2018, for public business entities and one year later for all other entities.  The Company has several lease agreements which are currently considered operating leases and are therefore not included on the Company’s Consolidated Balance Sheets.  Under the new guidance the Company expects that some of the lease agreements will have to be recognized on the Consolidated Balance Sheets as a right-of-use asset with a corresponding lease liability.  Based upon a preliminary evaluation the Company expects that the ASU will have an impact on the Company’s Consolidated Balance Sheets.  The Company will continue to evaluate how extensive the impact will be under the ASU on the Company’s consolidated financial statements.

10

RBB BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (UNAUDITED)

In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting (Topic 718.)  ASU 2016-09 includes provisions intended to simplify various aspects related to how share-based payments are accounted for and presented in the financial statements.  Under ASU 2016-09, excess tax benefits and certain tax deficiencies will no longer be recorded in additional paid-in capital ("APIC").  Instead, they will record all excess tax benefits and tax deficiencies as income tax expense or benefit in the income statement, and APIC pools will be eliminated.  In addition, the guidance requires excess tax benefits be presented as an operating activity on the statement of cash flows rather than as a financing activity.  ASU 2016-09 also permits an accounting policy election for the impact of forfeitures on the recognition of expense for share-based payment awards.  Forfeitures can be estimated, as required today, or recognized when they occur.  This guidance is effective for public business entities for interim and annual reporting periods beginning after December 15, 2016, and for nonpublic business entities annual reporting periods beginning after December 15, 2017, and interim periods within the reporting periods beginning after December 15, 2018.  Early adoption is permitted, but all of the guidance must be adopted in the same period.  The Company early adopted the ASU as of January 1, 2017. The Company plans to recognize forfeitures as they occur.  The early adoption of the ASU did not have a material effect on the company’s financial statements or disclosures.  

In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instrument (Topic 326).  This ASU significantly changes how entities will measure credit losses for most financial assets and certain other instruments that aren't measured at fair value through net income.  In issuing the standard, the FASB is responding to criticism that today's guidance delays recognition of credit losses.  The standard will replace today's "incurred loss" approach with an "expected loss" model.  The new model, referred to as the current expected credit loss ("CECL") model, will apply to: (1) financial assets subject to credit losses and measured at amortized cost, and (2) certain off-balance sheet credit exposures.  This includes, but is not limited to, loans, leases, held to maturity securities, loan commitments, and financial guarantees.  The CECL model does not apply to available for sale ("AFS") debt securities.  For AFS debt securities with unrealized losses, entities will measure credit losses in a manner similar to what they do today, except that the losses will be recognized as allowances rather than reductions in the amortized cost of the securities.  As a result, entities will recognize improvements to estimated credit losses immediately in earnings rather than as interest income over time, as they do today.  The ASU also simplifies the accounting model for purchased credit-impaired debt securities and loans.  ASU 2016-13 also expands the disclosure requirements regarding an entity's assumptions, models, and methods for estimating the allowance for loan and lease losses.  In addition, public business entities will need to disclose the amortized cost balance for each class of financial asset by credit quality indicator, disaggregated by the year of origination.  ASU No. 2016-13 is effective for interim and annual reporting periods beginning after December 15, 2019, for SEC filers, one year later for non SEC filing public business entities and annual reporting periods beginning after December 15, 2020, for nonpublic business entities and interim periods within the reporting periods beginning after December 15, 2021.  Early adoption is permitted for interim and annual reporting periods beginning after December 15, 2018.  Entities will apply the standard's provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (i.e., modified retrospective approach).  The Company has begun its evaluation of the impact of the implementation of ASU 2016-13.   The implementation of the provisions of ASU No. 2016-13 will most likely impact the Company’s Consolidated Financial Statements as to the level of reserves that will be required for credit losses.  The Company will continue to access the potential impact that this ASU will have on the Company’s consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.” The new guidance clarifies the classification within the statement of cash flows for certain transactions, including debt extinguishment costs, zero-coupon debt, contingent consideration related to business combinations, insurance proceeds, equity method distributions and beneficial interests in securitizations. The guidance also clarifies that cash flows with aspects of multiple classes of cash flows that cannot be separated by source or use should be classified based on the activity that is likely to be the predominant source or use of cash flows for the item. This guidance is effective for fiscal years beginning after December 15, 2017 and will require application using a retrospective transition method. The Company is currently evaluating the impact of adoption of this ASU on its consolidated financial statements.

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. Currently, Topic 805 specifies three elements of a business – inputs, processes, and outputs. While an integrated set of assets and activities (collectively referred to as a “set”) that is a business usually has outputs, outputs are not required. In addition, all the inputs and processes that a seller uses in operating a set are not required if market participants can acquire the set and continue to produce outputs, for example, by integrating the acquired set with their own inputs and processes. This led many transactions to be accounted for as business combinations rather than asset purchases under legacy GAAP. The primary goal of ASU 2017-01 is to narrow the definition of a business, and the guidance in this update provides a screen to determine when a set is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This screen reduces the number of transactions that need to be further evaluated. The amendments in this update are effective for public business entities for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The amendments in this update should be applied prospectively on or after the effective date. The Company is currently evaluating this ASU to determine the impact on its consolidated financial statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (UNAUDITED)

In January 2017, the FASB issued ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350).  This ASU simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill.  The amendments in this Update are required for public business entities and other entities that have goodwill reported in their financial statements and have not elected the private company alternative for the subsequent measurement of goodwill.  As a result, under the ASU, “an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit.”  ASU No. 2017-14 is effective for annual and any interim impairment tests performed in periods beginning after December 15, 2019 for public business entities that are SEC filers, December 15, 2020 for business entities that are not SEC filers, and December 15, 2021 for all other entities.  Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017.   The Company will continue to access the potential impact that this ASU will have on the Company’s consolidated financial statements.

In March 2017, the FASB issued ASU No. 2017-08, Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities, which is intended to enhance “the accounting for the amortization of premiums for purchased callable debt securities.” The ASU shortens the amortization period for certain callable debt securities purchased at a premium by requiring that the premium be amortized to the earliest call date. Under current generally accepted accounting principles (GAAP), entities generally amortize the premium as an adjustment of yield over the contractual life of the instrument.  The amendments in this Update affects all entities that hold investments in callable debt securities that have an amortized cost basis in excess of the amount that is repayable by the issuer at the earliest call date (that is, at a premium). The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. The ASU’s amendments are effective for public business entities for interim and annual periods beginning after December 15, 2018. For other entities, the amendments are effective for annual periods beginning after December 15, 2019, and interim periods thereafter. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity should apply the amendments in this Update on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. Additionally, in the period of adoption, an entity should provide disclosures about a change in accounting principle.The implementation of the provisions of ASU No. 2017-08 will most likely not have a material impact the Company’s consolidated financial statements.The Company will continue to access the potential impact that this ASU will have on the Company’s consolidated financial statements.

In May 2017, the FASB issued ASU No. 2017-09, “Compensation – Stock Compensation (Topic 718): Scope of codification Accounting.” The amendments in ASU 2017-09 provide guidance about which changes to the terms or conditions of a share- entity to apply modification accounting. An entity should account for the effects of a modification unless all the following are met: (1) The fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the modified award is the same as the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the original award immediately before the original award is modified. If the modification does not affect any of the inputs to the valuation technique that the entity uses to value the award, the entity is not required to estimate the value immediately before and after the modification. (2) The vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified. (3) The classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The amendments in ASU No. 2017-09 are effective for annual periods, and interim within those annual reporting periods, beginning after December 15, 2017; early adoption is permitted. The amendments in this ASU should be applied prospectively to an award modified on or after the adoption date. The Company does not expect this ASU to have a material impact on the Company’s consolidated financial statements.

In July 2017, the FASB issued ASU 2017-13—Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to the Staff Announcement at the July 20, 2017 EITF Meeting and Rescission of Prior SEC Staff Announcements and Observer Comments  (SEC Update).  At the July 20, 2017, EITF meeting, the SEC staff announced that it would not object when certain public business entities (PBEs) elect to use the non-PBE effective dates solely to adopt the FASB’s new standards on revenue (ASC 606) and leases (ASC 842). This ASU reflects comments made by the SEC. The Company will continue to evaluate how extensive the impact will be under the ASU on the Company’s consolidated financial statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (UNAUDITED)

NOTE 3 - ACQUISITIONS

On February 19, 2016, the Company acquired all the assets and assumed all the liabilities of TFC Holding Company in exchange for cash of $86.7 million. At closing, TFC primarily consisted of TomatoBank, its wholly owned subsidiary and $3.3 million of trust preferred debentures.  TFC Holding Company operated six branches in the Los Angeles metropolitan area. The Company acquired TFC Holding Company to strategically increase its existing presence in the Los Angeles area. Goodwill in the amount of $25.9 million was recognized in this acquisition. Goodwill represents the future economic benefits arising from net assets acquired that are not individually identified and separately recognized and is attributable to synergies expected to be derived from the combination of the two entities. Goodwill is not deductible for income tax purposes.

The total fair value of assets acquired approximated $469.9 million, which included $51.6 million in cash and cash equivalents, $2.3 million in interest bearing deposits in other financial institutions, $2.0 million in FHLB stock, $387.7 million in loans, $15.8 million in available for sale securities, $4.9 million in deferred tax assets, $225,000 in fixed assets, $1.7 million in core deposit intangible assets and $3.7 million in other assets. The total fair value of liabilities assumed was $409.1 million, which included $405.3 million in deposits, $3.3 million in subordinated debentures and $566,000 in other liabilities. The assets and liabilities, both tangible and intangible, were recorded at their estimated fair values as of February 19, 2016. The assets acquired and liabilities assumed have been accounted for under the acquisition method of accounting. The Company determined the fair value of loans, leases, core deposit intangible, deposits, and subordinated debentures with the assistance of a third party valuation.

These fair values are estimates and are subject to adjustment for up to one year after the acquisition date or when additional information relative to the closing date fair values becomes available and such information is considered final, whichever is earlier.  While additional significant changes to the closing date fair values are not expected, any information relative to the changes in these fair values will be evaluated to determine if such changes are due to events and circumstances that existed as of the acquisition date. During the measurement period, any such changes will be recorded as part of the closing date fair value.  The measurement period ended on February 19, 2017.

In many cases, the fair values of assets acquired and liabilities assumed were determined by estimating the cash flows expected to result from those assets and liabilities and discounting them at appropriate market rates. The most significant category of assets for which this procedure was used was that of acquired loans. The excess of expected cash flows above the fair value of the majority of loans will be accreted to interest income over the remaining lives of the loans in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 310-20.

None of the loans acquired had evidence of deterioration of credit quality since origination for which it was probable, at acquisition, that the Company would be unable to collect all contractually required payments receivable.

In accordance with generally accepted accounting principles there was no carryover of the allowance for loan losses that had been previously recorded by TFC Holding Company.

Non-recurring acquisition related expenses in connection with the TFC acquisition were $1.7 million for the nine months ended September 30, 2016.  There were no non-recurring acquisition related expenses for the nine months ended September 30, 2017

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (UNAUDITED)

NOTE 4 - INVESTMENT SECURITIES

The following table summarizes the amortized cost and fair value of securities available for sale and held to maturity at September 30, 2017 and December 31, 2016, and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income:

			Gross		Gross
(dollars in thousands)	Amortized		Unrealized		Unrealized			Fair
September 30, 2017	Cost		Gains		Losses			Value
Available for sale
Government agency securities	$	5,057	$	—	$	(100	)	$	4,957
Mortgage-backed securities
Government sponsored agencies		33,530		44		(318	)		33,256
Corporate debt securities		17,341		203		(60	)		17,484
	$	55,928	$	247	$	(478	)	$	55,697
Held to maturity
Municipal taxable securities	$	4,296	$	278	$	—		$	4,574
Municipal securities		895		16		—			911
	$	5,191	$	294	$	—		$	5,485
December 31, 2016
Available for sale
Government agency securities	$	5,453	$	—	$	(136	)	$	5,317
Mortgage-backed securities
Government sponsored agencies		23,913		38		(311	)		23,640
Corporate debt securities		10,364		21		(65	)		10,320
	$	39,730	$	59	$	(512	)	$	39,277
Held to maturity
Municipal taxable securities	$	5,301	$	328	$	—		$	5,629
Municipal securities		913		11		—			924
	$	6,214	$	339	$	—		$	6,553

One security with a fair value of $840,000 and $933,000 was pledged to secure a local agency deposit at September 30, 2017 and December 31, 2016, respectively.

The amortized cost and fair value of the investment securities portfolio at September 30, 2017 are shown by expected maturity below. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties.  

	Available for Sale				Held to Maturity
	Amortized		Fair		Amortized		Fair
(dollars in thousands)	Cost		Value		Cost		Value
Due from one to five years	$	31,323	$	31,214	$	2,781	$	2,930
Due from five to ten years		20,556		20,473		2,410		2,555
Due from ten years and greater		4,049		4,010		—		—
	$	55,928	$	55,697	$	5,191	$	5,485

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (UNAUDITED)

The following table summarizes available for sale securities with unrealized losses at September 30, 2017 and December 31, 2016, aggregated by major security type and length of time in a continuous unrealized loss position.  There were no held to maturity securities in a continuous unrealized loss position at September 30, 2017 and December 31, 2016:

	Less than Twelve Months					Twelve Months or More					Total
	Unrealized			Estimated		Unrealized			Estimated		Unrealized			Estimated
(dollars in thousands)	Losses			Fair Value		Losses			Fair Value		Losses			Fair Value
September 30, 2017
Government agency securities	$	(100	)	$	4,957	$	—		$	—	$	(100	)	$	4,957
Mortgage-backed securities
Government sponsored agencies		(255	)		26,916		(63	)		2,105		(318	)		29,021
Corporate debt securities		(60	)		5,994		—			—		(60	)		5,994
Total available for sale	$	(415	)	$	37,867	$	(63	)	$	2,105	$	(478	)	$	39,972
December 31, 2016
Government agency securities	$	(136	)	$	5,317	$	—		$	—	$	(136	)	$	5,317
Mortgage-backed securities
Government sponsored agencies		(221	)		16,231		(90	)		2,504		(311	)		18,735
Corporate debt securities		(65	)		5,147		—			—		(65	)		5,147
Total available for sale	$	(422	)	$	26,695	$	(90	)	$	2,504	$	(512	)	$	29,199

Unrealized losses have not been recognized into income because the issuer bonds are of high credit quality, management does not intend to sell, it is not more likely than not that management would be required to sell the securities prior to their anticipated recovery and the decline in fair value is largely due to changes in interest rates.  The fair value is expected to recover as the bonds approach maturity.

Management evaluates securities for other-than-temporary impairment ("OTTI") on at least a semi-annual basis, and more frequently when economic or market conditions warrant such an evaluation.  For securities in an unrealized loss position, management considers the extent and duration of the unrealized loss, and the financial condition and near-term prospects of the issuer.  Management also assesses whether it intends to sell, or it is more likely than not that it will be required to sell, a security in an unrealized loss position before recovery of its amortized cost basis.  If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings.

NOTE 5 - LOANS AND ALLOWANCE FOR LOAN LOSSES

The Company's loan portfolio consists primarily of loans to borrowers within Los Angeles, Ventura and Orange County, California and Las Vegas, Nevada.  Although the Company seeks to avoid concentrations of loans to a single industry or based upon a single class of collateral, real estate and real estate associated businesses are among the principal industries in the Company's market area and, as a result, the Company's loan and collateral portfolios are, to some degree, concentrated in those industries.

The following tables present the balance and activity related to the allowance for loan losses for held for investment loans by type for the periods presented.

	Three Months Ended September 30,
	2017										2016
(dollars in thousands)	Real Estate		Commercial			Unallocated			Total		Real Estate		Commercial		Unallocated		Total
Beginning balance	$	6,433	$	3,384		$	810		$	10,627	$	9,455	$	2,694	$	—	$	12,149
Additions (reductions) to the allowance    charged to expense		1,239		(115	)		(424	)		700		820		430		—		1,250
Recoveries on loans charged-off		—		93			—			93		—		—		—		—
Less loans charged-off		—		—			—			—		—		—		—		—
Ending balance	$	7,672	$	3,362		$	386		$	11,420	$	10,275	$	3,124	$	—	$	13,399

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (UNAUDITED)

	Nine Months Ended September 30,
	2017											2016
(dollars in thousands)	Real Estate			Commercial			Unallocated		Total			Real Estate		Commercial			Unallocated		Total
Beginning balance	$	8,111		$	6,051		$	—	$	14,162		$	5,788	$	4,235		$	—	$	10,023
Additions (reductions) to the allowance    charged to expense		(439	)		(3,435	)		386		(3,488	)		4,487		(888	)		—		3,599
Recoveries on loans charged-off		—			746			—		746			—		—			—		—
Less loans charged-off		—			—			—		—			—		(223	)		—		(223	)
Ending balance	$	7,672		$	3,362		$	386	$	11,420		$	10,275	$	3,124		$	—	$	13,399

The following table presents the recorded investment in loans and impairment method as of and for the nine months ended September 30, 2017 and September 30, 2016, and the activity in the allowance for loan losses for the year ended December 31, 2016, by portfolio segment:

(dollars in thousands)
As of  September 30, 2017	Real Estate		Commercial		Unallocated		Total
Reserves:
Specific	$	—	$	—	$	—	$	—
General		7,672		3,362		386		11,420
Loans acquired with deteriorated credit quality		—		—		—		—
	$	7,672	$	3,362	$	386	$	11,420
Loans evaluated for impairment:
Individually	$	2,580	$	1,370	$	—	$	3,950
Collectively		819,654		372,602		—		1,192,256
Loans acquired with deteriorated credit quality		316		—		—		316
	$	822,550	$	373,972	$	—	$	1,196,522

As of December 31, 2016	Real Estate		Commercial			Unallocated		Total
Allowance for loan losses:
Beginning of year	$	5,788	$	4,235		$	—	$	10,023
Provisions		2,323		2,651			—		4,974
Charge-offs		—		(835	)		—		(835	)
Recoveries		—		—			—		—
	$	8,111	$	6,051		$	—	$	14,162
Reserves:
Specific	$	—	$	1,782		$	—	$	1,782
General		8,111		4,269			—		12,380
Loans acquired with deteriorated credit quality		—		—			—		—
	$	8,111	$	6,051		$	—	$	14,162
Loans evaluated for impairment:
Individually	$	2,556	$	3,577		$	—	$	6,133
Collectively		744,349		359,234			—		1,103,583
Loans acquired with deteriorated credit quality		730		—			—		730
	$	747,635	$	362,811		$	—	$	1,110,446

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as current financial information, historical payment experience, collateral adequacy, credit documentation, and current economic trends, among other factors.  The Company analyzes loans individually by classifying the loans as to credit risk.  This

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (UNAUDITED)

analysis typically includes larger, non-homogeneous loans such as commercial real estate and commercial and industrial loans.  This analysis is performed on an ongoing basis as new information is obtained.  The Company uses the following definitions for risk ratings:

Pass - Loans classified as pass include loans not meeting the risk ratings defined below.

Special Mention - Loans classified as special mention have a potential weakness that deserves management's close attention.  If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution's credit position at some future date.

Substandard - Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any.  Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt.  They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Impaired - A loan is considered impaired, when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. Additionally, all loans classified as troubled debt restructurings are considered impaired.  

The risk category of loans by class of loans was as follows at September 30, 2017 and December 31, 2016:

(dollars in thousands)			Special
September 30, 2017	Pass		Mention		Substandard		Impaired		Total
Real estate:
Construction and land development	$	94,004	$	—	$	—	$	293	$	94,297
Commercial real estate		444,108		4,517		40,174		2,287		491,086
Single-family residential mortgages		237,167		—		—		—		237,167
Commercial:
Other		222,743		960		971		1,293		225,967
SBA		143,507		1,819		2,602		77		148,005
	$	1,141,529	$	7,296	$	43,747	$	3,950	$	1,196,522
December 31, 2016
Real estate:
Construction and land development	$	87,174	$	1,932	$	—	$	303	$	89,409
Commercial real estate		475,499		4,562		19,484		2,253		501,798
Single-family residential mortgages		136,206		13,950		6,272		—		156,428
Commercial:
Other		194,227		—		9,616		—		203,843
SBA		151,066		1,934		2,391		3,577		158,968
	$	1,044,172	$	22,378	$	37,763	$	6,133	$	1,110,446

The following table presents the recorded investment in non-accrual loans by class of loans.  There were no loans past due 90 days and still on accrual at September 30, 2017 and December 31, 2016:

	September 30		December 31,
(dollars in thousands)	2017		2016
Commercial:
SBA	$	77	$	3,577

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (UNAUDITED)

The following table presents the aging of the recorded investment in past-due loans at September 30, 2017 and December 31, 2016 by class of loans:

	30-59		60-89		Greater Than
(dollars in thousands)	Days		Days		89 Days		Total		Loans Not
September 30, 2017	Past Due		Past Due		Past Due		Past Due		Past Due		Total
Real estate:
Construction and land development	$	—	$	—	$	—	$	—	$	94,297	$	94,297
Commercial real estate		—		—		—		—		491,086		491,086
Single-family residential mortgages		531		—		—		531		236,636		237,167
Commercial:								—
Other		213		—		—		213		225,754		225,967
SBA		254		1,434		—		1,688		146,317		148,005
	$	998	$	1,434	$	—	$	2,432	$	1,194,090	$	1,196,522
December 31, 2016
Real estate:
Construction and land development	$	—	$	—	$	—	$	—	$	89,409	$	89,409
Commercial real estate		—		—		—		—		501,798		501,798
Single-family residential mortgages		—		—		—		—		156,428		156,428
Commercial:
Other		343		—		—		343		203,500		203,843
SBA		—		—		3,577		3,577		155,391		158,968
	$	343	$	—	$	3,577	$	3,920	$	1,106,526	$	1,110,446

Information relating to individually impaired loans presented by class of loans was as follows at September 30, 2017 and December 31, 2016:

	Unpaid
(dollars in thousands)	Principal		Recorded		Average		Interest		Related
September 30, 2017	Balance		Investment		Balance		Income		Allowance
With no related allowance recorded
Construction and land development	$	293	$	293	$	298	$	16	$	—
Commercial real estate		2,287		2,287		2,270		253		—
Commercial - SBA		1,370		1,370		685		79		—
Total	$	3,950	$	3,950	$	3,253	$	348	$	—
December 31, 2016
With no related allowance recorded
Construction and land development	$	303	$	303	$	309	$	21	$	—
Commercial real estate		2,253		2,253		1,710		280		—
Commercial - SBA		18		18		93		—		—
Subtotal		2,574		2,574		2,112		301		—
With an allowance recorded
Commercial - SBA		3,559		3,559		3,559		—		1,782
Total	$	6,133	$	6,133	$	5,671	$	301	$	1,782

No interest income was recognized on a cash basis for the nine months ended September 30, 2017 and 2016 and for the year ended December 31, 2016.  

18

RBB BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (UNAUDITED)

The Company had five and six loans identified as troubled debt restructurings ("TDR's") at September 30, 2017 and December 31, 2016, respectively.  A specific reserve of $1,782,000 had been allocated for one loan at December 31, 2016.  There were no specific reserves on TDRs as of September 30, 2017.  There are no commitments to lend additional amounts at September 30, 2017 and December 31, 2016 to customers with outstanding loans that are classified as TDR's.

During the year ended December 31, 2016 and for the nine months ended September 30, 2017, the terms of certain loans were modified as TDR's.  The modification of the terms generally included loans wherea moratorium on loan payments was granted.  Suchmoratoriums ranged from three months to twelve monthson the loans restructured in 2017 and  2016.

   The following table presents loans by class modified as TDRs that occurred during the nine months ended September 30, 2017 and the year ended December 31, 2016;

			Pre-		Post-
			Modification		Modification
(dollars in thousands)	Number of		Recorded		Recorded
September 30, 2017	Loans		Investment		Investment
Commercial		1	$	1,293	$	1,293
			Pre-		Post-
			Modification		Modification
(dollars in thousands)	Number of		Recorded		Recorded
December 31, 2016	Loans		Investment		Investment
Commercial real estate		1	$	1,047	$	1,047

The Company has purchased loans as part of its whole bank acquisitions, for which there was at acquisition, evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected.

The outstanding balance and carrying amount of purchased credit-impaired loans at September 30, 2017 and December 31, 2016 were as follows:

	September 30,		December 31,
(dollars in thousands)	2017		2016
Outstanding balance	$	324	$	878
Carrying amount	$	316	$	730

For these purchased credit-impaired loans, the Company did not increase the allowance for loan losses during the nine months ended September 30, 2017 or for the year ended December 31, 2016, as there were no significant reductions in the expected cash flows.

Below is a summary of activity in the accretable yield on purchased credit-impaired loans for the nine months ended September 30, 2017 and for the year ended December 31, 2016:

	September 30,			December 31,
(dollars in thousands)	2017			2016
Beginning balance	$	142		$	349
Restructuring as TDR		—			(22	)
Accretion of income		(134	)		(185	)
Ending balance	$	8		$	142

19

RBB BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (UNAUDITED)

NOTE 6 - LOAN SERVICING

Mortgage and SBA loans serviced for others are not reported as assets.  The principal balances at September 30, 2017 and December 31, 2016 are as follows:

	September 30,		December 31,
(dollars in thousands)	2017		2016
Loans serviced for others:
Mortgage loans	$	306,168	$	259,207
SBA loans	$	166,148	$	110,263

Activity for servicing assets follows:

The fair value of servicing assets for mortgage loans was $1,804,000 and $1,184,000 at September 30, 2017 and December 31, 2016, respectively.  The fair value of servicing assets for SBA loans was $4,982,000 and $3,142,000 at September 30, 2017 and December 31, 2016, respectively.

Servicing fees net of servicing asset amortization totaled $571,000 and $384,000 for the nine months ended September 30, 2017 and 2016, respectively.

When mortgage and Small Business Administration ("SBA") loans are sold with servicing retained, servicing rights are initially recorded at fair value with the income statement effect recorded in gains on sales of loans.  Fair value is based on a valuation model that calculates the present value of estimated future net servicing income.  All classes of servicing assets are subsequently measured using the amortization method which requires servicing rights to be amortized into noninterest income in proportion to, and over the period of, the estimated future net servicing income of the underlying loans.

Servicing rights are evaluated for impairment based upon the fair value of the rights as compared to carrying amount.  Impairment is recognized through a valuation allowance for an individual grouping, to the extent that fair value is less than the carrying amount.  If the Company later determines that all or a portion of the impairment no longer exists for a particular grouping, a reduction of the allowance may be recorded as an increase to income.

Servicing fee income is recorded for fees earned for servicing loans.  The fees are based on a contractual percentage of the outstanding principal.  The amortization of mortgage servicing rights is netted against loan servicing fee income.

	Nine Months Ended						Nine Months Ended
	September 30, 2017						September 30, 2016
	Mortgage			SBA			Mortgage			SBA
(dollars in thousands)	Loans			Loans			Loans			Loans
Servicing assets:
Beginning of year	$	1,002		$	2,702		$	298		$	1,807
Additions		501			2,149			602			1,033
Disposals		(134	)		(202	)		(31	)		(99	)
Amortized to expense		(271	)		(377	)		(109	)		(244	)
End of period	$	1,098		$	4,272		$	760		$	2,497

NOTE 7 - GOODWILL AND INTANGIBLES

Goodwill is generally determined as the excess of the fair value of the consideration transferred, plus the fair value of any noncontrolling interests in the acquiree, over the fair value of the net assets acquired and liabilities assumed as of the acquisition date.  Goodwill resulting from whole bank acquisitions is not amortized, but tested for impairment at least annually.  The Company has selected December 31 as the date to perform the annual impairment test.  Goodwill amounted to $29.9 million at September 30, 2017 and December 31, 2016, and is the only intangible asset with an indefinite life on the balance sheet.  There were no impairment losses recognized on goodwill during the nine months ended September 30, 2017 and 2016.

Other intangible assets consist of core deposit intangible ("CDI") assets arising from whole bank acquisitions.   CDI assets are amortized on an accelerated method over their estimated useful life of 8 to 10 years.  CDI was recognized in the 2013 acquisition of

20

RBB BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (UNAUDITED)

Los Angeles National Bank and in the 2016 acquisition of TFC Holding Company.  The unamortized balance at September 30, 2017 and December 31, 2016 was $1,525,000 and $1,793,000, respectively, for both Los Angeles National Bank and TFC Holding Company.  CDI amortization expense was $268,000 and $268,000 for the nine months ended September 30, 2017 and September 30, 2016, respectively, for both Los Angeles National Bank and TFC Holding Company.

Estimated CDI amortization expense for future years is as follows (dollars in thousands):

Year ending December 31:
2017 remaining	$	87
2018		311
2019		274
2020		244
2021		172
Thereafter		437
Total	$	1,525

NOTE 8 - DEPOSITS

At September 30, 2017, the scheduled maturities of time deposits are as follows:

(dollars in thousands)
One year	$	660,187
Two to three years		8,513
	$	668,700

NOTE 9 - LONG-TERM DEBT

At September 30, 2017 and December 31, 2016 long-term debt was as follows:

	September 30,		December 31,
(dollars in thousands)	2017		2016
Principal	$	50,000	$	50,000
Unamortized debt issuance costs	$	508	$	617

In March 2016, the Company issued $50 million of 6.5% fixed to floating rate subordinated debentures, due March 31, 2026. The interest rate is fixed through March 31, 2021 and floats at 3 month LIBOR plus 516 basis points thereafter. The sub-debt is considered Tier-two capital at the Company. The Company allocated $35 million to the Bank as Tier-one capital.

NOTE 10 - SUBORDINATED DEBENTURES

The Company, through the acquisition of TFC Bancorp, acquired TFC Statutory Trust.  The Trust contained a pooled private offering of 5,000 trust preferred securities with a liquidation amount of $1,000 per security. TFC Bancorp issued $5,000,000 of subordinated debentures to the trust in exchange for ownership of all of the common security of the trust and the proceeds of the preferred securities sold by the trust. The Company is not considered the primary beneficiary of this trust (variable interest entity), therefore the trust is not consolidated in the Company's financial statements, but rather the subordinated debentures are shown as a liability at market value as of the close of the acquisition which was $3,255,000. There was a $1,900,000 valuation reserve recorded to arrive at market value which is treated as a yield adjustment and is amortized over the life of the security.  The amount of amortization expense recognized for the nine months ended September 30, 2017 and 2016 was $68,000 and $55,000, respectively.   The Company also purchased an investment in the common stock of the trust for $155,000 which is included in other assets. The Company may redeem the subordinated debentures, subject to prior approval by the Federal Reserve Bank on or after March 15, 2012, at 100% of the principal amount, plus accrued and unpaid interest. The subordinated debentures mature on March 15, 2037. The Company has the option to defer interest payments on the subordinated debentures from time to time for a period not to exceed five consecutive years.  The Company has been paying interest on a quarterly basis. The subordinated debentures may be included in Tier I capital (with certain limitations applicable) under current regulatory guidelines and interpretations. The subordinated debentures have a variable rate of interest equal to the three month London Interbank Offered Rate (LIBOR) plus 1.65%, which was 2.97% and 2.61% at September 30, 2017 and December 31, 2016, respectively.

21

RBB BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (UNAUDITED)

NOTE 11 - BORROWING ARRANGEMENTS

The Company has established secured and unsecured lines of credit.  The Company may borrow funds from time to time on a term or overnight basis from the Federal Home Loan Bank of San Francisco ("FHLB"), the Federal Reserve Bank of San Francisco ("FRB") and other financial institutions as indicated below.

Federal Funds Arrangements with Commercial Banks.  At September 30, 2017, the Company may borrow on an unsecured basis, up to $20.0 million, $10.0 million, $12.0 million and $5.0 million overnight from Zions Bank, Wells Fargo Bank, First Tennessee National Bank, and Pacific Coast Bankers' Bank, respectively.

Letter of Credit Arrangements.  At September 30, 2017, the Company had an unsecured commercial letter of credit line with Wells Fargo Bank for $2.0 million.

FRB Secured Line of Credit.  The secured borrowing capacity of $15.2 million at September 30, 2017 is collateralized by loans pledged with a carrying value of $25.2 million.

FHLB Secured Line of Credit.  The secured borrowing capacity of $326.9 million at September 30, 2017 is collateralized by loans pledged with a carrying value of $373.9 million.

There were no amounts outstanding under any of the arrangements above at September 30, 2017 or December 31, 2016.

NOTE 12 - INCOME TAXES

The asset and liability method is used in accounting for income taxes.  Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.

During the nine months ended September 30, 2017 and 2016, the Company recorded an income tax provision of $13.8 million and $9.6 million, respectively, reflecting an effective tax rate of 40.0% and 41.2% for the nine months ended September 30, 2017 and 2016, respectively. During the three months ended September 30, 2017 and 2016, the Company recorded an income tax provision of $4.0 million and $4.1 million, respectively, reflecting and effective tax rate of 37.8% and 41.7% for the three months ended September 30, 2017 and 2019, respectively.

NOTE 13 - COMMITMENTS

The Company leases several of its operating facilities under various noncancellable operating leases expiring at various dates through 2022.  The Company is also responsible for common area maintenance, taxes and insurance at the various branch locations.

Future minimum rent payments on the Company's leases were as follows at September 30, 2017:

(dollars in thousands)
Year ending December 31:
2017 remaining	$	410
2018		1,350
2019		754
2020		496
2021		382
Thereafter		130
	$	3,522

The minimum rent payments shown above are given for the existing lease obligation and are not a forecast of future rental expense.  Total rental expense, recognized on a straight-line basis, was $1.1 million and $1.2 million for the nine months ended September 30, 2017 and 2016, respectively.

22

RBB BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (UNAUDITED)

In the ordinary course of business, the Company enters into financial commitments to meet the financing needs of its customers.  These financial commitments include commitments to extend credit, unused lines of credit, commercial and similar letters of credit and standby letters of credit.  Those instruments involve to varying degrees, elements of credit and interest rate risk not recognized in the Company's financial statements.

The Company's exposure to loan loss in the event of nonperformance on these financial commitments is represented by the contractual amount of those instruments.  The Company uses the same credit policies in making commitments as it does for loans reflected in the financial statements.

At September 30, 2017 and December 31, 2016, the Company had the following financial commitments whose contractual amount represents credit risk:

	September 30,		December 31,
	2017		2016
(dollars in thousands)
Commitments to make loans	$	97,116	$	68,003
Unused lines of credit		97,662		92,378
Commercial and similar letters of credit		4,144		8,966
Standby letters of credit		1,575		1,250
	$	200,497	$	170,597

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract.  Since many of the commitments are expected to expire without being drawn upon, the total amounts do not necessarily represent future cash requirements.  The Company evaluates each client's credit worthiness on a case-by-case basis.  The amount of collateral obtained if deemed necessary by the Company is based on management's credit evaluation of the customer.

The Company is involved in various matters of litigation which have arisen in the ordinary course of business and accruals for estimates of potential losses have been provided when necessary and appropriate under generally accepted accounting principles.  In the opinion of management, the disposition of such pending litigation will not have a material effect on the Company's financial statements.

NOTE 14 - RELATED PARTY TRANSACTIONS

Loans to principal officers, directors, and their affiliates were as follows:

	September 30,			December 31,
(dollars in thousands)	2017			2016
Beginning balance	$	3,445		$	3,971
New loans and advances		900			1,274
Repayments		(3,345	)		(1,800	)
Ending balance	$	1,000		$	3,445

Loan commitments outstanding to executive officers, directors and their related interests with whom they are associated totaled approximately $3.4 million and $2.3 million at September 30, 2017 and December 31, 2016, respectively.

Deposits from principal officers, directors, and their affiliates at September 30, 2017 and December 31, 2016 were $42.9 million and $37.2 million, respectively.

23

RBB BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (UNAUDITED)

NOTE 15 - STOCK-BASED COMPENSATION

RBB Bancorp 2017 Omnibus Stock Incentive Plan.

The 2017 Omnibus Stock Incentive Plan, or OSIP, was adopted by the Company’s board of directors on January 18, 2017 and approved by the Company’s shareholders at the Company’s annual meeting on May 23, 2017. The OSIP was designed to ensure continued availability of equity awards that will assist the Company in attracting and retaining competent managerial personnel and rewarding key employees, directors and other service providers for high levels of performance. Pursuant to the OSIP, the Company’s board of directors are allowed to grant awards to eligible persons in the form of qualified and non-qualified stock options, restricted stock, restricted stock units, stock appreciation rights and other incentive awards. The Company has reserved up to 30% of issued and outstanding shares of common stock as of the date the Company adopted the 2017 OSIP, or 3,848,341 shares. This represents 24% of the issued and outstanding shares of the Company’s common stock as of September 30, 2017.  As of September 30, 2017, there were 1,353,207 shares of common stock available for issuance under the OSIP. Awards vest, become exercisable and contain such other terms and conditions as determined by the board of directors and set forth in individual agreements with the employees receiving the awards. The OSIP enables the board of directors to set specific performance criteria that must be met before an award vests. The OSIP allows for acceleration of vesting and exercise privileges of grants if a participant’s termination of employment is due to a change in control, death or total disability. If a participant’s job is terminated for cause, then all awards expire at the date of termination.

RBB Bancorp 2010 Stock Option Plan

Under the 2010 Plan, the Company was permitted to grant awards to eligible persons in the form of qualified and non-qualified stock options. The Company reserved up to 30% of the issued and outstanding shares of common stock as of the date the Company adopted the 2010 Plan or 3,494,478 shares, for issuance under the 2010 Plan. After approval of the OSIP at the Company’s annual meeting on May 23, 2017, no additional grants will be made under the 2010 Plan.  The 2010 Plan has terminated and options that were granted under that Plan have become subject to the OSIP.  Awards that were granted under the 2010 Plan will remain exercisable pursuant to the terms and conditions set forth in individual award agreements, but such awards will be assumed and administered under the OSIP. The 2010 Plan award agreements allow for acceleration of exercise privileges of grants upon occurrence of a change in control of the Company. If a participant’s job is terminated for cause, then all unvested awards expire at the date of termination.

The Company recognized stock-based compensation expense of $592,000 and $646,000 and recognized income tax benefits on that expense of $487,000 and $191,000 for the nine months ended September 30, 2017 and 2016, respectively.

NOTE 16 - REGULATORY MATTERS

Holding companies (with assets over $1 billion at the beginning of the year) and banks are subject to various regulatory capital requirements administered by the federal banking agencies.  Failure to meet minimum capital requirements can initiate certain mandatory - and possibly additional discretionary - actions by regulators that, if undertaken, could have a direct material effect on the Company's financial statements.

In July 2013, the federal bank regulatory agencies approved the final rules implementing the Basel Committee on Banking Supervision's capital guidelines for U.S. banks. The new rules became effective on January 1, 2015, with certain of the requirements phased-in over a multi-year schedule.  Under the rules, minimum requirements increased for both the quantity and quality of capital held by the Bank.  The rules include a new common equity Tier 1 ("CET1") capital to risk-weighted assets ratio with minimums for capital adequacy and prompt corrective action purposes of 4.5% and 6.5%, respectively.  The minimum Tier 1 capital to risk-weighted assets ratio was raised from 4.0% to 6.0% under the capital adequacy framework and from 6.0% to 8.0% to be well-capitalized under the prompt corrective action framework.  In addition, the rules introduced the concept of a "conservation buffer" of 2.5% applicable to the three capital adequacy risk-weighted asset ratios (CET1, Tier 1, and Total).  The implementation of the capital conservation buffer began on January 1, 2016 at 0.625% and will be phased in over a four-year period (increasing by that amount on each subsequent January 1, until it reaches 2.5% on January 1, 2019). The capital conservation buffer for September 30, 2017 is 11.08% and 12.49% for the Bank and Bancorp, respectively. If the capital adequacy minimum ratios plus the phased-in conservation buffer amount exceed actual risk-weighted capital ratios, then dividends, share buybacks, and discretionary bonuses to executives could be limited in amount.

24

RBB BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (UNAUDITED)

Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank's assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices.  Capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.  Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the table below) of total, Tier 1 and CET1 capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital (as defined) to average assets (as defined).  As permitted by the regulators for financial institutions that are not deemed to be “advanced approaches” institutions, the Company has elected to opt out of the Basel III requirement to include accumulated other comprehensive income in risk-based capital.  Management believes, at September 30, 2017 and December 31, 2016, that the Bank meets all capital adequacy requirements to which it is subject.

As of December 31, 2016, the most recent notification from the FDIC categorized the Bank as well-capitalized under the regulatory framework for prompt corrective action (there are no conditions or events since that notification that management believes have changed the Bank's category).  To be categorized as well-capitalized, the Bank must maintain minimum ratios as set forth in the table below.

The following table sets forth RBB Bancorp's consolidated and the Bank's actual capital amounts and ratios and related regulatory requirements for the Bank at September 30, 2017:

						Amount of Capital Required
										To Be Well-
										Capitalized
						For Capital				Under Prompt
						Adequacy				Corrective
	Actual					Purposes				Provisions
(dollars in thousands)	Amount		Ratio			Amount		Ratio		Amount		Ratio
As of September 30, 2017:
Tier 1 Leverage Ratio
Consolidated	$	232,521		14.91	%	NA		NA		NA		NA
Bank	$	227,104		14.57	%	$	62,363		4.0%	$	77,953		5.0%
Common Equity Tier 1 Risk-Based Capital Ratio
Consolidated	$	229,244		18.23	%	NA		NA		NA		NA
Bank	$	227,104		18.13	%	$	56,377		4.5%	$	81,433		6.5%
Tier 1 Risk-Based Capital Ratio
Consolidated	$	232,521		18.49	%	NA		NA		NA		NA
Bank	$	227,104		18.13	%	$	75,169		6.0%	$	100,225		8.0%
Total Risk-Based Capital Ratio
Consolidated	$	293,922		23.37	%	NA		NA		NA		NA
Bank	$	239,013		19.08	%	$	100,225		8.0%	$	125,282		10.0%

25

RBB BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (UNAUDITED)

The following table sets forth RBB Bancorp's consolidated and the Bank's actual capital amounts and ratios and related regulatory requirements for the Bank at December 31, 2016:

					Amount of Capital Required
									To Be Well-
									Capitalized
					For Capital				Under Prompt
					Adequacy				Corrective
	Actual				Purposes				Provisions
(dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
As of December 31, 2016:
Tier 1 Leverage Ratio
Consolidated	$	153,682		11.00%	NA		NA		NA		NA
Bank	$	178,645		12.81%	$	55,777		4.0%	$	69,722		5.0%
Common Equity Tier 1 Risk-Based Capital Ratio
Consolidated	$	150,786		13.30%	NA		NA		NA		NA
Bank	$	178,645		15.81%	$	50,860		4.5%	$	73,464		6.5%
Tier 1 Risk-Based Capital Ratio
Consolidated	$	153,682		13.56%	NA		NA		NA		NA
Bank	$	178,645		15.81%	$	67,813		6.0%	$	90,417		8.0%
Total Risk-Based Capital Ratio
Consolidated	$	217,244		19.17%	NA		NA		NA		NA
Bank	$	192,784		17.06%	$	90,417		8.0%	$	113,021		10.0%

The California Financial Code generally acts to prohibit banks from making a cash distribution to its shareholders in excess of the lesser of the bank's undivided profits or the bank's net income for its last three fiscal years less the amount of any distribution made by the bank's shareholders during the same period.

The California general corporation law generally acts to prohibit companies from paying dividends on common stock unless its retained earnings, immediately prior to the dividend payment, equals or exceeds the amount of the dividend.  If a company fails this test, then it may still pay dividends if after giving effect to the dividend the company's assets are at least 125% of its liabilities.

Additionally, the Federal Reserve Bank has issued guidance which requires that they be consulted before payment of a dividend if a bank holding company does not have earnings over the prior four quarters of at least equal to the dividend to be paid, plus other holding company obligations.

NOTE 17 - FAIR VALUE MEASUREMENTS

The following is a description of valuation methodologies used for assets and liabilities recorded at fair value:

Securities:  The fair values of securities available for sale are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1) or matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted prices for specific securities but rather by relying on the securities' relationship to other benchmark quoted securities (Level 2).

Other Real Estate Owned:  Nonrecurring adjustments to certain commercial and residential real estate properties classified as other real estate owned are measured at the lower of carrying amount or fair value, less costs to sell.  In cases where the carrying amount exceeds the fair value, less costs to sell, an impairment loss is recognized.  Fair values are generally based on third party appraisals of the property which are commonly adjusted by management to reflect an expectation of the amount to be ultimately collected and selling costs (Level 3).  

26

RBB BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (UNAUDITED)

Appraisals for other real estate owned are performed by state licensed appraisers (for commercial properties) or state certified appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Company.  When a Notice of Default is recorded, an appraisal report is ordered.  Once received, a member of the credit administration department reviews the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison to independent data sources such as recent market data or industry wide-statistics for residential appraisals.  Commercial appraisals are sent to an independent third party to review.  The Company also compares the actual selling price of collateral that has been sold to the most recent appraised value to determine what additional adjustments, if any, should be made to the appraisal values on any remaining other real estate owned to arrive at fair value.  If the existing appraisal is older than twelve months a new appraisal report is ordered.  No significant adjustments to appraised values have been made as a result of this comparison process as of September 30, 2017.

The following table provides the hierarchy and fair value for each major category of assets and liabilities measured at fair value at September 30, 2017 and December 31, 2016:

(dollars in thousands)	Fair Value Measurements Using:
September 30, 2017	Level 1		Level 2		Level 3		Total
Assets measured at fair value:
On a recurring basis:
Securities available for sale
Government agency securities			$	4,957			$	4,957
Mortgage-backed securities								-
Government sponsored agencies				33,256				33,256
Corporate debt securities				17,484				17,484
	$	—	$	55,697	$	—	$	55,697
On a non-recurring basis:
Other real estate owned	$	—	$	—	$	293	$	293
December 31, 2016
Assets measured at fair value:
On a recurring basis:
Securities available for sale
Government agency securities			$	5,317				5,317
Mortgage-backed securities
Government sponsored agencies				23,640				23,640
Corporate debt securities				10,320				10,320
	$	—	$	39,277	$	—	$	39,277
On a non-recurring basis:
Other real estate owned	$	—	$	—	$	833	$	833

No write-downs to OREO were recorded in for the nine months ended September 30, 2017 or for the year ended December 31, 2016.

27

RBB BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (UNAUDITED)

Quantitative information about the Company's non-recurring Level 3 fair value measurements at September 30, 2017 and December 31, 2016 is as follows:

							Weighted-
(dollars in thousands)	Fair Value		Valuation	Unobservable	Adjustment		Average
September 30, 2017	Amount		Technique	Input	Range		Adjustment
Other real estate owned	$	293	Third Party	Management Adjustments		15%		15%
			Appraisals	to Reflect Current
				Conditions and Selling
				Costs
December 31, 2016
Other real estate owned	$	833	Third Party	Management Adjustments	10% - 15%			12%
			Appraisals	to Reflect Current
				Conditions and Selling
				Costs

NOTE 18 - FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value of a financial instrument is the amount at which the asset or obligation could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.  Fair value estimates are made at a specific point in time based on relevant market information and information about the financial instrument.  These estimates do not reflect any premium or discount that could result from offering for sale at one time the entire holdings of a particular financial instrument.  Because no market value exists for a significant portion of the financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors.  These estimates are subjective in nature, involve uncertainties and matters of judgment and, therefore, cannot be determined with precision.  Changes in assumptions could significantly affect the estimates.

Fair value estimates are based on financial instruments both on and off the balance sheet without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments.  Additionally, tax consequences related to the realization of the unrealized gains and losses can have a potential effect on fair value estimates and have not been considered in many of the estimates.

The following methods and assumptions were used to estimate the fair value of significant financial instruments not previously presented:

Cash and Cash Equivalents

The carrying amounts of cash and short-term instruments approximate fair values.

Time Deposits in Other Banks

Fair values for time deposits with other banks are estimated using discounted cash flow analyses, using interest rates currently being offered with similar terms.

Mortgage Loans Held for Sale

The Company records mortgage loans held for sale at fair value based on the net premium received on recent sales of mortgage loans for identical pools of loans.

Loans

For variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying amounts.  The fair values for all other loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers with similar credit quality.  The methods utilized to estimate the fair value of loans do not necessarily represent an exit price.

28

RBB BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (UNAUDITED)

Deposits

The fair values disclosed for demand deposits, including interest and non-interest demand accounts, savings, and certain types of money market accounts are, by definition based on carrying value.  Fair value for fixed-rate certificates of deposit is estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregate expected monthly maturities on time deposits.  Early withdrawal of fixed-rate certificates of deposit is not expected to be significant

Long-Term Debt

The fair values of the Company’s long-term borrowings are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 2 classification.

Subordinated Debentures

The fair values of the Company’s Subordinated Debentures are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 3 classification.

Off-Balance Sheet Financial Instruments

The fair value of commitments to extend credit and standby letters of credit is estimated using the fees currently charged to enter into similar agreements.  The fair value of these financial instruments is not material.

The fair value hierarchy level and estimated fair value of significant financial instruments at September 30, 2017 and December 31, 2016 are summarized as follows:

		September 30,				December 31,
		2017				2016
	Fair Value	Carrying		Fair		Carrying		Fair
(dollars in thousands)	Hierarchy	Value		Value		Value		Value
Financial Assets:
Cash and due from banks	Level 1	$	69,552	$	69,552	$	74,213	$	74,213
Federal funds sold and other cash equivalents	Level 1		96,500		96,500		44,500		44,500
Interest-earning deposits in other financial institutions	Level 1		100		100		345		345
Investment securities - AFS	Level 2		55,697		55,697		39,277		39,277
Investment securities - HTM	Level 2		5,191		5,485		6,214		6,553
Mortgage loans held for sale	Level 1		125,704		128,491		44,345		45,433
Loans, net	Level 3		1,185,102		1,205,092		1,096,284		1,095,944
Financial Liabilities:
Deposits	Level 2		1,318,292		1,315,698	$	1,152,763	$	1,140,707
Long-term debt	Level 2		49,492		47,657		49,383		48,447
Subordinated debentures	Level 3		3,402		3,582		3,334		3,334

29

RBB BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (UNAUDITED)

NOTE 19 - EARNINGS PER SHARE ("EPS")

The following is a reconciliation of net income and shares outstanding to the income and number of shares used to compute EPS:

	Nine Months Ended
	September 30
	2017					2016
(dollars in thousands except per share amounts)	Income		Shares			Income		Shares
Net income as reported	$	20,640				$	13,693
Shares outstanding				15,790,611					12,827,803
Impact of weighting shares				(2,309,152	)				(35,927	)
Used in basic EPS		20,640		13,481,459			13,693		12,791,876
Dilutive effect of outstanding
Stock options				1,077,584					896,122
Used in dilutive EPS	$	20,640		14,559,043		$	13,693		13,687,998
Basic earnings per common share	$	1.53				$	1.07
Diluted earnings per common share	$	1.42				$	1.00

	Three Months Ended
	September 30
	2017					2016
(dollars in thousands except per share amounts)	Income		Shares			Income		Shares
Net income as reported	$	6,611				$	5,697
Shares outstanding				15,790,611					12,827,803
Impact of weighting shares				(1,023,154	)				-
Used in basic EPS		6,611		14,767,457			5,697		12,827,803
Dilutive effect of outstanding
Stock options				1,084,472					889,429
Used in dilutive EPS	$	6,611		15,851,929		$	5,697		13,717,232
Basic earnings per common share	$	0.45				$	0.44
Diluted earnings per common share	$	0.42				$	0.42

NOTE 20 - QUALIFIED AFFORDABLE HOUSING PROJECT INVESTMENTS

The Company began investing in qualified housing projects in 2016. At September 30, 2017 and December 31, 2016, the balance of the investment for qualified affordable housing projects was $5,768,000 and $986,000, respectively.  This balance is reflected in the accrued interest and other assets line on the consolidated balance sheets.  Total unfunded commitments related to the investments in qualified housing projects totaled $4,572,000 and $840,000 at September 30, 2017 and December 31, 2016, respectively.  The Company expects to fulfill these commitments during the years ending 2027 and 2028.

For the nine months ended September 30, 2017 and 2016, the Company recognized amortization expense of $218,000 and $10,000, respectively, which was included within income tax expense on the consolidated statements of income.

NOTE 21 - RECENT DEVELOPMENTS

On July 27, 2017, the Company completed its public offering of 3,750,000 shares at a price to the public of $23.00 per share and a total offering size of $86,250,000. The offering was originally 3,000,000 shares but due to demand, it was increased to 3,750,000 shares. The Company sold 2,857,756 shares and the selling shareholders sold 892,244 shares of the Company’s common stock. The offering resulted in gross proceeds to the Company of approximately $65.7 million. The Company contributed $25 million of the net proceeds received from this offering to the Bank in July 2017. Our stock now trades on the Nasdaq Global Select Market under the symbol “RBB”.  The increase to capital net of expenses is approximately $60.2 million.

30

RBB BANCORP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (UNAUDITED)

On October 19, 2017, RBB Bancorp declared a cash dividend of $0.08 per share for the third quarter of 2017.  The dividend is payable on November 30, 2017 to common shareholders of record as of October 31, 2017.

31

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

Cautionary Note Regarding Forward-Looking Statements

The following discussion and analysis presents our results of operations and financial condition on a consolidated basis for the nine months ended September 30, 2017. This discussion should be read in conjunction with the unaudited consolidated financial statements, accompanying footnotes and supplemental financial data included herein. The emphasis of this discussion will be amounts as of September 30, 2017 compared to December 31, 2016 for the balance sheets and the nine months ended September 30, 2017 compared to September 30, 2016 for the statements of income.

Because we conduct our material business operations through our bank subsidiary, Royal Business Bank, the discussion and analysis relates to activities primarily conducted by the Bank. We generate most of our revenue from interest on loans and investments and fee-based revenues. Our primary source of funding for our loans is deposits. Our largest expenses are interest on these deposits and salaries and related employee benefits. We measure our performance primarily through our net income, pre-tax and pre-loan provision earnings, net interest margin, efficiency ratio, ratio of allowance for credit losses to total loans, return on average assets and return on average equity, among other metrics, while maintaining appropriate regulatory leverage and risk-based capital ratios.

This Report on Form 10-Q contains forward-looking statements. These forward-looking statements reflect our current views with respect to, among other things, future events and our results of operations, financial condition and financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “projection,” “would” and “outlook,” or the negative version of those words or other comparable words of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements.

There are or will be important factors that could cause our actual results to differ materially from those indicated in these forward-looking statements, including, but not limited to, the following:

• business and economic conditions generally and in the financial services industry, nationally and within our current and future geographic market areas;

• economic, market, operational, liquidity, credit and interest rate risks associated with our business;

• lack of seasoning in our loan portfolio;

• deteriorating asset quality and higher loan charge-offs;

• the laws and regulations applicable to our business;

• our ability to achieve organic loan and deposit growth and the composition of such growth;

• increased competition in the financial services industry, nationally, regionally or locally;

• our ability to maintain our historical earnings trends;

• our ability to raise additional capital to implement our business plan;

• material weaknesses in our internal control over financial reporting;

• systems failures or interruptions involving our information technology and telecommunications systems or third-party servicers;

• the composition of our management team and our ability to attract and retain key personnel;

• the fiscal position of the U.S. federal government and the soundness of other financial institutions;

• our ability to monitor our lending relationships;

• the composition of our loan portfolio, including the identity of our borrowers and the concentration of loans in energy-related industries and in our specialized industries;

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• the portion of our loan portfolio that is comprised of participations and shared national credits;

• the amount of nonperforming and classified assets we hold;

• time and effort necessary to resolve nonperforming assets;

• our ability to identify potential candidates for, consummate, and achieve synergies resulting from, potential future acquisitions;

• our limited operating history as an integrated company and our recent acquisitions;

• environmental liability associated with our lending activities;

• the geographic concentration of our markets in California and the southwest United States;

• the commencement and outcome of litigation and other legal proceedings against us or to which we may become subject;

• the impact of recent and future legislative and regulatory changes, including changes in banking, securities and tax laws and regulations, such as the Dodd-Frank Act, and their application by our regulators;

• requirements to remediate adverse examination findings;

• changes in the scope and cost of FDIC deposit insurance premiums;

• implementation of regulatory initiatives regarding bank capital requirements that may require heightened capital;

• the obligations associated with being a public company;

• our success at managing the risks involved in the foregoing items;

• our modeling estimates related to an increased interest rate environment;

• our ability to achieve the cost savings and efficiencies in connection with branch closures; and

• our estimates as to our expected operational leverage and the expected additional loan capacity of our relationship managers.

The foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements included in this Report. If one or more events related to these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. New factors emerge from time to time, and it is not possible for us to predict which will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

The following discussion provides information about the results of operations, financial condition, liquidity and capital resources of RBB Bancorp and its wholly owned subsidiaries. This information is intended to facilitate the understanding and assessment of significant changes and trends related to our financial condition and the results of our operations. This discussion and analysis should be read in conjunction with our audited financial statements included in our registration statement on Form S-1 filed with the SEC, for the year ended December 31, 2016, and the unaudited consolidated financial statements and accompanying notes presented elsewhere in this report.

33

CRITICAL ACCOUNTING POLICIES

The discussion and analysis of the Company’s unaudited consolidated financial statements are based upon its unaudited consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these unaudited consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities at the date of our financial statements. Actual results may differ from these estimates under different assumptions or conditions.

The following is a summary of the more judgmental and complex accounting estimates and principles. In each area, we have identified the variables we believe are most important in our estimation process. We utilize information available to us to make the necessary estimates to value the related assets and liabilities. Actual performance that differs from our estimates and future changes in the key variables and information could change future valuations and impact the results of operations.

• Loans held for investment

• Loans available for sale

• Securities

• Allowance for loan losses  (ALLL)

• Goodwill and other intangible assets

• Deferred income taxes

• Servicing rights

• Income Taxes

• Stock-Based Compensation

Our significant accounting policies are described in greater detail in our 2016 audited financial statements included in the Form S-1 in “Note 1 – Summary of Significant Accounting Policies” section, and in the “Critical Accounting Policies and Estimates” section, included in our registration statement on Form S-1 as filed with the SEC on July 25, 2017, which are essential to understanding Management’s Discussion and Analysis of Financial Condition and Results of Operations.

OVERVIEW

For the third quarter of 2017, we reported net earnings of $6.6 million, compared with $8.5 million for the second quarter of 2017 and $5.7 million for the third quarter of 2016. This represented a decrease of $1.9 million over the prior quarter and an increase of $914,000 from the third quarter of 2016. Diluted earnings per share were $0.42 per share for the third quarter of 2017, compared to $0.62 in the prior quarter and $0.42 for the same period last year.  The decline in earnings per share relative to the second quarter of 2017 was attributable to the recapture of $4.2 million of provision for loan losses that positively impacted the prior quarter’s results.    Diluted earnings per share remained the same from the 3^rd quarter of 2016 due to additional shares issued as a result of the recent public offering.  At September 30, 2017, total assets were $1.6 billion, an increase of $247.2 million, or 17.7%, from total assets of $1.4 billion at December 31, 2016. Interest-earning assets were $1.5 billion as of September 30, 2017, an increase of $229.9 million, or 17.4%, when compared with $1.3 billion at December 31, 2016. The increase in interest-earning assets was primarily due to an $86.1 million increase in total loans, a $47.3 million increase in cash and cash equivalents, and an $81.4 million increase in mortgage loans held for sale.

At September 30, 2017, available for sale (AFS) investment securities totaled $55.7 million inclusive of a pre-tax unrealized loss of $231,000, compared to $39.3 million inclusive of a pre-tax unrealized loss of $453,000 at December 31, 2016.   At September 30, 2017, held to maturity (HTM) investment securities totaled $5.2 million.

Total loans and leases, net of deferred fees and discounts, were $1.2 billion at September 30, 2017, compared to $1.1 billion at December 31, 2016 and $1.1 billion at September 30, 2016. Total loans and leases (net of deferred fees, discounts and the allowance for loan losses) increased $88.8 million, or 8.1%, from December 31, 2016. The $88.8 million increase in total loans was principally due to increases of approximately $80.7 million in single-family residential (SFR)mortgageloans, $22.1 million in commercial and industrial loans, $4.9 million in construction loans and partially offset by decreases of $10.7 million in commercial real estate loans and $11.0 million in SBA loans.  

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Noninterest-bearing deposits were $287.6 million at September 30, 2017, an increase of $113.3 million, or 65.0%, compared to $174.3 million at December 31, 2016. At September 30, 2017, noninterest-bearing deposits were 21.8% of total deposits, compared to 15.1% at December 31, 2016.  The growth in non-interest deposits is mainly due to marketing efforts by our branches and by branch management.  

Our average cost of total deposits was 0.83% for the quarter ended September 30, 2017, compared to 0.77% for the same period last year. The increase is due to a slight increase in rates of 7 basis points offset by a decrease in volume due to TomatoBank deposit runoff. Borrowings, consisting of long-term debt, remained constant at $52.9 million as of September 30, 2017 compared to $52.7 million as of December 31, 2016.  Although we borrowed from the FHLB during the quarter, we had no FHLB borrowings at September 30, 2017.

The allowance for loan losses was $11.4 million at September 30, 2017, compared to $14.2 million at December 31, 2016. The allowance for loan losses increased by $793,000 during the third quarter of 2017. The increase was a result of a $700,000 loan loss provision due to an increase in loan volume plus a $93,000 recovery on loans charged-off. The allowance for loan losses to total loans and leases outstanding was 0.95% and 1.19% as of September 30, 2017 and December 31, 2016, respectively. In the first nine months of 2017 there was a $3.5 million net recapture in the provision for loan losses compared to $3.6 million provision expense for the same period of 2016.  The decrease was $7.1 million or 196.9%.  The recapture reflects both the receipt of a guaranteed payment on a SBA 7A guaranteed loan of $629,000 in May 2017 that was previously charged-off and the receipt of $3.6 million in July 2017 pursuant to a SBA loan guaranty that we previously fully reserved for in the allowance for loan losses.  

Shareholders’ equity increased $78.7 million, or 43.4%, to $260.3 million during the first nine months of 2017 as $20.6 million of net income, $60.2 million from the Company’s public offering, $268,000 of additional paid in capital and $130,000 increase in accumulated other comprehensive income exceeded $3.8 million of common dividends declared. The increase in accumulated other comprehensive income primarily resulted from increases in unrealized gains on available for sale securities.

Our capital ratios under the revised capital framework referred to as Basel III remain well-above regulatory standards. As of September 30, 2017, the Company’s Tier 1 leverage capital ratio totaled 14.91%, our common equity Tier 1 ratio totaled 18.23%, our Tier 1 risk-based capital ratio totaled 18.49%, and our total risk-based capital ratio totaled 23.37%. Refer to our Regulatory Capital Requirements for further discussion on regulatory capital ratios. During the quarter we raised $60.2 million in common stock (which was net of $5.5 million in expenses) through our initial public offering (IPO), which was completed on July 27, 2017.

35

ANALYSIS OF THE RESULTS OF OPERATIONS

Financial Performance

	For the Three Months Ended												For the Nine Months Ended
	September 30,						Variance						September 30,						Variance
	2017			2016			$			%			2017			2016			$			%
	(Dollars in thousands, except per share amounts)
Interest income	$	18,346		$	18,699		$	(353	)		-1.9	%	$	52,626		$	51,473		$	1,153			2.2	%
Interest expense		3,618			3,241			(377	)		-11.6	%		10,350			8,481			(1,869	)		-22.0	%
Net interest income		14,728			15,458			(730	)		-4.7	%		42,276			42,992			(716	)		-1.7	%
Provision (recapture) for loan    losses		700			1,250			550			44.0	%		(3,488	)		3,599			7,087			196.9	%
Net interest income after    provision (recapture) for credit losses		14,028			14,208			(180	)		-1.3	%		45,764			39,393			6,371			16.2	%
Noninterest income		3,796			2,596			1,200			46.2	%		9,403			6,283			3,120			49.7	%
Noninterest expense		(7,200	)		(7,037	)		163			-2.3	%		(20,738	)		(22,374	)		(1,636	)		7.3	%
Income before income taxes		10,624			9,767			857			8.8	%		34,429			23,302			11,127			47.8	%
Income tax expense		(4,013	)		(4,070	)		(57	)		1.4	%		(13,789	)		(9,609	)		4,180			-43.5	%
Net income	$	6,611		$	5,697		$	914			16.0	%	$	20,640		$	13,693		$	6,947			50.7	%
Earnings per common share:
Basic	$	0.45		$	0.44		$	0.01					$	1.53		$	1.07		$	0.45
Diluted (1)	$	0.42		$	0.42			—					$	1.42		$	1.00		$	0.43
Return on average assets		1.65	%		1.56	%		0.09	%					1.83	%		1.32	%		0.51	%
Return on average shareholders’    equity		11.04	%		12.88	%		-1.83	%					13.59	%		10.78	%		2.82	%
Efficiency ratio (2)		38.87	%		38.98	%		-0.11	%					40.13	%		45.41	%		-5.28	%
Tangible common equity to    tangible assets (3)		14.20	%		10.20	%		4.00	%					14.20	%		10.20	%		4.00	%
Tangible book value per share (3)	$	16.49		$	13.75		$	2.73					$	16.49		$	13.75		$	2.73
Return on average tangible    common equity (3)		12.73	%		15.73	%		-2.99	%					92.17	%		61.09	%		31.08	%
Adjusted return on average assets (3)		1.68	%		1.10	%		0.58	%					1.52	%		1.20	%		0.31	%
Adjusted return on average    tangible common equity (3)		12.98	%		11.06	%		1.91	%					13.33	%		12.11	%		1.22	%

(1) Earnings per share are calculated utilizing the two-class method. Basic earnings per share are calculated by dividing earnings to common shareholders by the weighted average number of common shares outstanding. Diluted earnings per share are calculated by dividing earnings by the weighted average number of shares adjusted for the dilutive effect of outstanding stock options using the treasury stock method.

(2) Efficiency ratio represents noninterest expenses, as adjusted, divided by the sum of fully taxable equivalent net interest income plus noninterest income, as adjusted. Noninterest expense adjustments exclude integration and acquisition related expenses. Noninterest income adjustments exclude bargain purchase gains, realized gains or losses from the sale of investment securities, gains or losses on sale of other assets and CDFI Fund grant.

(3) Tangible book value per share, adjusted return on average assets, adjusted return on average tangible common equity, return on average tangible common equity and tangible common equity to tangible assets are non-GAAP financial measures. See "Non-GAAP Financial Measures" for a reconciliation of these measures to their most comparable GAAP measures.

36

Net Interest Income

The principal component of our earnings is net interest income, which is the difference between the interest and fees earned on loans and investments (interest-earning assets) and the interest paid on deposits and borrowed funds (interest-bearing liabilities). Net interest margin is net interest income as a percentage of average interest-earning assets for the period. The level of interest rates and the volume and mix of interest-earning assets and interest-bearing liabilities impact net interest income and net interest margin. The net interest spread is the yield on average interest earning assets minus the cost of average interest-bearing liabilities. Net interest margin and net interest spread are included on a tax equivalent (TE) basis by adjusting interest income utilizing the federal statutory tax rate of 35%. Our net interest income, interest spread, and net interest margin are sensitive to general business and economic conditions. These conditions include short-term and long-term interest rates, inflation, monetary supply, and the strength of the international, national and state economies, in general, and more specifically, the local economies in which we conduct business. Our ability to manage net interest income during changing interest rate environments will have a significant impact on our overall performance. We manage net interest income through affecting changes in the mix of interest-earning assets as well as the mix of interest-bearing liabilities, changes in the level of interest-bearing liabilities in proportion to interest-earning assets, and in the growth and maturity of earning assets. See the sections on Capital Resources and Liquidity Management and Quantitative and Qualitative Disclosures about Market Risk included herein.

The following tables present average balance sheet information, interest income, interest expense and the corresponding average yields earned and rates paid for the three months ended September 30, 2017 and 2016 and the nine months ended September 30, 2017 and 2016. The average balances are principally daily averages and, for loans, include both performing and nonperforming balances. Interest income on loans includes the effects of discount accretion and net deferred loan origination costs accounted for as yield adjustments.

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Interest-Earning Assets and Interest-Bearing Liabilities

	For the three months ended September 30,
	2017							2016
	Average		Interest		Yield /			Average		Interest		Yield /
(tax-equivalent basis, dollars in thousands)	Balance		& Fees		Rate			Balance		& Fees		Rate
Earning assets:
Federal funds sold, cash    equivalents and other (1)	$	202,005	$	815		1.60	%	$	103,624	$	326		1.25	%
Securities (2)
Available for sale		43,075		276		2.54	%		30,269		149		1.95	%
Held to maturity		5,533		55		3.92	%		6,226		54		3.45	%
Mortgage loans held for sale		98,807		1,149		4.61	%		63,304		764		4.80	%
Loans held for investment: (3)
Real estate		766,911		10,673		5.52	%		807,197		12,711		6.26	%
Commercial(4)		377,501		5,379		5.65	%		361,200		4,696		5.17	%
Total loans HFI		1,144,411		16,051		5.56	%		1,168,397		17,407		5.93	%
Total earning assets		1,493,833	$	18,346		4.87	%		1,371,820	$	18,699		5.42	%
Noninterest-earning assets		96,555							80,212
Total assets	$	1,590,388						$	1,452,032
Interest-bearing liabilities
NOW and money market deposits	$	333,471	$	606		0.72	%	$	290,963	$	480		0.66	%
Savings deposits		36,746		43		0.46	%		35,533		41		0.45	%
Time deposits		690,378		2,061		1.18	%		713,087		1,802		1.01	%
Total interest-bearing deposits		1,060,596		2,711		1.01	%		1,039,583		2,322		0.89	%
FHLB short-term advances		—		—		—			11,902		16		0.55	%
Long-term debt		49,470		848		6.80	%		49,333		849		6.85	%
Subordinated debentures		3,388		60		6.99	%		3,255		54		6.55	%
Total interest-bearing liabilities		1,113,455	$	3,618		1.29	%		1,104,072	$	3,241		1.17	%
Noninterest-bearing liabilities
Noninterest-bearing deposits		227,854							162,005
Other noninterest-bearing liabilities		11,599							9,934
Total noninterest-bearing liabilities		239,453							171,939
Shareholders' equity		237,480							176,021
Total liabilities and shareholders'     equity	$	1,590,388						$	1,452,032
Net interest income / interest rate     spreads			$	14,727		3.58	%			$	15,458		4.25	%
Net interest margin						3.91	%						4.48	%

(1) Includes income and average balances for FHLB stock, term federal funds, interest-bearing time deposits and other miscellaneous interest-earning assets.

(2) We have an insignificant amount of tax-exempt loans and securities, less than $1 million. Interest income and average rates for tax-exempt loans and securities are presented on a tax-equivalent basis as of September 30, 2017 and 2016.

(3) Average loan balances include nonaccrual loans and loans held for sale. Interest income on loans includes - amortization of deferred loan fees, net of deferred loan costs.

(4) Includes purchased receivables, which are short term loans made to investment grade companies and are used for cash - management purposes by the Company.

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	For the nine months ended September 30,
	2017							2016
	Average		Interest		Yield /			Average		Interest		Yield /
(tax-equivalent basis, dollars in thousands)	Balance		& Fees		Rate			Balance		& Fees		Rate
Earning assets:
Federal funds sold, cash    equivalents and other (1)	$	151,755	$	1,712		1.51	%	$	80,475	$	811		1.35	%
Securities (2)
Available for sale		40,862		746		2.44	%		28,703		433		2.01	%
Held to maturity		5,980		176		3.94	%		6,378		187		3.92	%
Mortgage loans held for sale		74,230		2,617		4.71	%		66,848		2,421		4.84	%
Loans held for investment: (3)
Real estate		766,974		31,990		5.58	%		771,131		34,386		5.96	%
Commercial(4)		374,979		15,384		5.49	%		351,731		13,236		5.03	%
Total loans HFI		1,141,953		47,375		5.55	%		1,122,862		47,621		5.67	%
Total earning assets		1,414,780	$	52,627		4.97	%		1,305,266	$	51,474		5.27	%
Noninterest-earning assets		93,160							84,539
Total assets	$	1,507,940						$	1,389,806
Interest-bearing liabilities
NOW and money market deposits	$	301,254	$	1,577		0.70	%	$	282,790	$	1,371		0.65	%
Savings deposits		34,879		121		0.46	%		34,718		118		0.45	%
Time deposits		695,020		5,903		1.14	%		682,484		5,144		1.01	%
Total interest-bearing deposits		1,031,153		7,602		0.99	%		999,992		6,634		0.89	%
FHLB short-term advances		5,128		29		0.77	%		5,949		24		0.54	%
Long-term debt		49,433		2,547		6.89	%		33,001		1,697		6.87	%
Subordinated debentures		3,366		173		6.88	%		2,673		127		6.34	%
Total interest-bearing liabilities		1,089,080	$	10,352		1.27	%		1,041,615	$	8,481		1.09	%
Noninterest-bearing liabilities
Noninterest-bearing deposits		205,532							163,518
Other noninterest-bearing liabilities		10,274							15,052
Total noninterest-bearing liabilities		215,805							178,569
Shareholders' equity		203,054							169,622
Total liabilities and shareholders    equity	$	1,507,940						$	1,389,806
Net interest income / interest rate    spreads			$	42,275		3.70	%			$	42,993		4.18	%
Net interest margin						4.00	%						4.40	%

(1) Includes income and average balances for FHLB stock, term federal funds, interest-bearing time deposits and other miscellaneous interest-earning assets.

(2) We have an insignificant amount of tax-exempt loans and securities, less than $1 million. Interest income and average rates for tax-exempt loans and securities are presented on a tax-equivalent basis as of September 30, 2017 and 2016.

(3) Average loan balances include nonaccrual loans and loans held for sale. Interest income on loans includes - amortization of deferred loan fees, net of deferred loan costs.

(4) Includes purchased receivables, which are short term loans made to investment grade companies and are used for cash - management purposes by the Company.

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Interest Rates and Operating Interest Differential

Increases and decreases in interest income and interest expense result from changes in average balances (volume) of interest-earning assets and interest-bearing liabilities, as well as changes in average interest rates. The following tables show the effect that these factors had on the interest earned on our interest-earning assets and the interest incurred on our interest-bearing liabilities. The effect of changes in volume is determined by multiplying the change in volume by the previous period’s average rate. Similarly, the effect of rate changes is calculated by multiplying the change in average rate by the previous period’s volume. Changes which are not due solely to volume or rate have been allocated to these categories based on the respective percent changes in average volume and average rate as they compare to each other.

	Three Months Ended September 30, 2017 Compared with Three Months Ended September 30, 2016									Nine Months Ended September 30, 2017 Compared with Nine Months Ended September 30, 2016
	Change due to:									Change due to:
(tax-equivalent basis, dollars in thousands)	Volume			Rate			Interest Variance			Volume			Rate			Interest Variance
Earning assets:
Federal funds sold, cash equivalents & other (1)	$	394		$	95		$	489		$	269		$	632		$	901
Securities (2)
Available for sale		82			46			128			74			239			313
Held to maturity		(7	)		8			1			(4	)		(7	)		(11	)
Mortgage loans held for sale		409			(24	)		385			87			110			197
Loans held for investment: (3)
Real estate		(556	)		(1,482	)		(2,038	)		(58	)		(2,337	)		(2,395	)
Commercial (4)		230			452			682			319			1,830			2,148
Total loans		(326	)		(1,030	)		(1,356	)		261			(508	)		(247	)
Total earning assets	$	552		$	(905	)	$	(353	)	$	687		$	466		$	1,153
Interest-bearing liabilities
NOW and money market deposits	$	77		$	50		$	127		$	32		$	174		$	206
Savings deposits		1			1			2			—			3			3
Time deposits		(67	)		327			260			36			723			759
Total interest-bearing deposits		11			378			389			68			900			968
FHLB short-term advances		0			(16	)		(16	)		(2	)		7			5
Long-term debt		2			(4	)		(2	)		283			566			849
Subordinated debentures		2			4			6			12			35			47
Total interest-bearing liabilities		15			362			377			361			1,509			1,869
Net interest	$	537		$	(1,267	)	$	(730	)	$	326		$	(1,042	)	$	(716	)

(1) Includes income and average balances for FHLB stock, term federal funds, interest-bearing time deposits and other miscellaneous interest-earning assets.

(2) We have an insignificant amount of tax-exempt loans and securities, less than $1 million. Interest income and average rates for tax-exempt loans and securities are presented on a tax-equivalent basis as of September 30, 2017 and 2016.

(3) Average loan balances include nonaccrual loans and loans held for sale. Interest income on loans includes - amortization of deferred loan fees, net of deferred loan costs.

(4) Includes purchased receivables, which are short term loans made to investment grade companies and are used for cash - management purposes by the Company.

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Results of Operations—Comparison of Results of Operations for the Three Months Ended September 30, 2017 and 2016

The following discussion of our results of operations compares the three months ended September 30, 2017 to the three months ended September 30, 2016. The results of operations for the three months ended September 30, 2017 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2017.

Net Interest Income/Average Balance Sheet

Our primary source of revenue is net interest income, which is the difference between interest income from earning assets (primarily loans and securities) and interest expense on funding sources (primarily interest-bearing deposits and borrowings). Net interest income is impacted by the level of interest-earning assets and related funding sources, as well as changes in the levels of interest rates. The difference between the average yield on earning assets and the average rate paid for interest-bearing liabilities is the net interest spread. Noninterest-bearing sources of funds, such as demand deposits and shareholders’ equity, also support earning assets. The impact of the noninterest-bearing sources of funds is captured in the net interest margin, which is calculated as net interest income divided by average earning assets.

In the third quarter of 2017, we generated $14.7 million of net interest income, which was a decrease of $730,000, or 4.72%, from the $15.5 million of net interest income we produced in the third quarter of 2016. The decrease in net interest income was primarily due to a 55 basis point decrease in the average yield on interest-earning assets, and an 12 basis point increase in the average rate paid on interest-bearing deposits reflecting an increase in deposit rates, partially offset by an 8.9% increase in the average balance of interest-earning assets. The increase in the average balance of interest-earning assets reflected increases in federal funds sold, cash and other equivalents and securities average balances. The increase in federal funds sold, cash equivalents and other average balances of $98.4 million is primarily due to the Company’s public offering in July 2017, runoff of loans and increased deposit production in the third quarter of 2017. The decrease in average loan balances of $24.0 million is primarily due to the runoff of loans following the acquisition of TomatoBank on February 19, 2016.  Our deposit average balances increased by $86.9 million primarily due to enhanced marketing efforts in 2017. The increase in interest expense was primarily due to increased time deposit rates. For the three months ended September 30, 2017 and 2016, our reported net interest margin was 3.91% and 4.48%, respectively. Our net interest margin benefits from discount accretion on our purchased loan portfolios. Our net interest margin for the three months ended September 30, 2017 and 2016, excluding accretion income would have been 3.74% and 3.67%, respectively.

Interest Income. Total interest income was $18.3 million for the third quarter of 2017 compared to $18.7 million for the third quarter of 2016. The $353,000, or 1.9%, decrease in interest income was primarily due to decreases in purchase discount accretion, partially offset by increases in average balances and yields on federal funds sold and other cash equivalents and securities.

Interest and fees on loans for the third quarter of 2017 was $17.2 million compared to $18.2 million for the third quarter of 2016. The $969,000, or 5.3%, decrease was primarily due to a 37 basis point decrease in the average yield on loans partially offset by a 0.9% increase in the average balance of loans outstanding. In addition interest and fees on loans decreased compared to the third quarter of 2016 due to lower accretion associated with purchase accounting discounts established on TomatoBank loans. Accretion income totaled $639,000 in the third quarter of 2017 compared to $2.8 million in the third quarter of 2016. The average yield on loans benefits from discount accretion on our purchased loan portfolio. For the three months ended September 30, 2017 and 2016, the yield on total loans was 5.56% and 5.93%, respectively, while the yield on total loans excluding accretion income would have been 5.34% and 4.97%, respectively. Due to payoffs of acquired loans, we expect accretion income to continue to decline throughout 2017 in comparison to 2016. The table below illustrates by loan type the accretion income for September 30, 2017 and September 30, 2016.  There were no additions due to acquisitions during the third quarters of 2017 and 2016.

	As of and for the
	Three Months
	Ended September 30,
(Dollars are in thousands)	2017		2016
Beginning balance of discount on purchased loans	$	6,140	$	12,184
Accretion:
Commercial and industrial		54		231
SBA		5		(7	)
Construction and land development		4		80
Commercial real estate		569		2,471
Single-family residential mortgages		7		32
Total accretion	$	639	$	2,807
Ending balance of discount on purchased loans	$	5,501	$	9,377

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Interest income on our securities portfolio increased $128,000, or 63.1%, to $331,000 in the third quarter of 2017 compared to $203,000 in the third quarter of 2016. This increase is mainly attributable to an increase in average balances of $12.1 million or 33.2%, as management purchased $16.8 million in corporate bonds and transferred a corporate sub-debt loan of $1 million to investments once the loan became DTC eligible.

Interest income on federal funds sold, cash equivalents and other investments increased to $326,000 for the three months ended September 30, 2017 compared to $92,000 for the three months ended September 30, 2016. This increase was primarily due to an increase in the level of short-term cash investments in addition to an increase in short-term interest rates. The increase in short-term cash investments is primarily due to raising capital through our public offering in July and an increase in deposits during the third quarter.

Interest Expense. Interest expense on interest-bearing liabilities increased $377,000, or 11.6%, to $3.6 million for the third quarter of 2017 as compared to $3.2 million in the third quarter of 2016 due to increases in interest expense on both deposits and borrowings.

Interest expense on deposits increased to $2.7 million for the third quarter of 2017 as compared to $2.3 million for the third quarter of 2016. The $388,000, or 16.7%, increase in interest expense on deposits was primarily due to a 12 basis point increase in the average rate paid on interest-bearing deposits plus a 2.0% increase in the average balance of interest-bearing deposits The increase in the average balance of interest-bearing deposits resulted from increases in NOW and money market balances partially offset by decreases in time deposit maturities. The increase in the average rate paid was primarily due to the impact of higher market interest rates on deposits.

Interest expense on subordinated notes and subordinated debentures increased $5,000 to $908,000 in the third quarter of 2017 as compared to $903,000 in the third quarter of 2016. Interest expense on FHLB short-term advances was zero in the third quarter of 2017 as compared to $16,000 in the third quarter of 2016.

Provision for (or Recapture of) Loan Losses. The provision for loan losses decreased $550,000 or 44.0%, to $700,000 in the third quarter of 2017 from $1.25 million in the third quarter of 2016, primarily due to increased loan quality in the SBA loan portfolio.  

Noninterest Income. Noninterest income increased $1.2 million, or 46.2%, to $3.8 million for the third quarter of 2017, compared to $2.6 million in the prior comparable quarter. The following table sets forth the major components of our noninterest income for the third quarter of 2017 compared to the third quarter of 2016:

	For the Three Months Ended
	September 30,				Increase
(dollars in thousands)	2017		2016		(decrease)
Noninterest income:
Service charges, fees and other	$	518	$	443	$	75
Gain on sale of loans		2,584		1,870		714
Loan servicing fee, net of amortization		314		95		219
Recoveries on loans acquired in business    combinations		19		47		(28	)
Increase in cash surrender of    life insurance		219		141		78
Gain on sale of OREO		142		—		142
Total noninterest income	$	3,796	$	2,596	$	1,200

Service charges, fees and other income. Service charges, fees and other income totaled $518,000 in the third quarter of 2017 compared to $443,000 in the third quarter of 2016. The increase in services charges, fees and other income is attributable to increased fee income on deposit accounts primarily due to increased demand deposits and restructuring of our fee schedule.

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Gain on sale of loans. Gain on sale of loans is comprised of gains on sale of single-family residential mortgage loans and gains on sale of SBA loans. Gain on sale of loans totaled $2.6 million in the third quarter of 2017 compared to $1.9 million in the third quarter of 2016.  The following table presents loans sold and gains earned for the third quarter of 2017 and 2016:

	For the Three Months Ended
(dollars in thousands)	September 30 2017		September 30 2016
Loans sold:
SBA	$	22,614	$	15,971
Mortgage		43,415		41,602
	$	66,030	$	57,573
Gain on loans sold:
SBA	$	1,615	$	978
Mortgage		969		892
	$	2,584	$	1,870

The increase in SBA loan sales is a result of the Company changing the timing of our SBA loan sales. Prior to 2017, we sold the majority of our SBA loans during the fourth quarter of each year.  Beginning in 2017, we are selling SBA loans on a quarterly basis, and we intend to sell such loans through the remaining quarter of 2017 in the amount of approximately $16 million.

In the third quarter of 2017 we sold $43.4 million of single-family mortgage loans for a gain of $969,000.  In the third quarter of 2016 we sold $41.6 million of single-family mortgage loans for a gain of $892,000 million. For the fourth quarter of 2017, we plan to sell approximately $90 million of single-family mortgage loans.

Loan servicing income, net of amortization. Loan servicing income, net of amortization was $315,000 for the three months ended September 30, 2017 compared to $96,000 for the three months ended September 30, 2016. The increase in loan servicing income is due the increase in the loan servicing portfolio. The single-family residential mortgage loan servicing portfolio was $306.2 million as of September 30, 2017 compared to $230.6 million as of September 30, 2016. The SBA loan servicing portfolio was $166.1 million as of September 30, 2017 compared to $101.4 million as of September 30, 2016. The increase in the respective servicing portfolios reflect the growth in our originations and sales of single-family residential and SBA loans in 2016 and the first nine months of 2017.

Recoveries on loans acquired in business combinations. Recoveries on loans acquired in business combinations decreased $28,000 to $19,000 in the quarter ended September 30, 2017 compared to $47,000 in the comparable quarter of 2016. This decrease is primarily due to our having completed collections on former VCBB and FAB loans, offset slightly by new recoveries resulting from the TomatoBank acquisition.

Increase in cash surrender of life insurance. Cash surrender value increased $78,000 to $219,000 in the quarter ended September 30, 2017 compared to $141,000 in the third quarter in 2016 primarily due to our purchase of an additional $10.0 million in bank owned life insurance, or BOLI, in January 2017.

Gain on sale of OREO.  In the third quarter of 2017, one OREO property was sold for a gain of $142,000.

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Noninterest expense increased $163,000, or 2.3%, to $7.2 million in the third quarter of 2017 compared to $7.0 million in the third quarter of 2016.  The following table sets forth the major components of our noninterest expense for the third quarter of 2017 compared to the third quarter of 2016:

	For the Three Months Ended
	September 30,				Increase
(dollars in thousands)	2017		2016		(decrease)
Noninterest expense:
Salaries and employee benefits	$	4,178	$	3,481	$	697
Occupancy and equipment expenses		705		766		(61	)
Data processing		458		563		(105	)
Legal and professional		318		511		(193	)
Office expenses		153		153		—
Marketing and business promotion		250		102		148
Insurance and regulatory assessments		201		284		(83	)
Amortization of intangibles		87		103		(16	)
OREO expenses (income)		6		6		—
Other expenses		844		1,068		(224	)
Total noninterest expense	$	7,200	$	7,037	$	163

Salaries and employee benefits. Salaries and employee benefits expense increased $697,000, or 20.0%, to $4.2 million for the third quarter of 2017 compared to $3.5 million for the third quarter of 2016. The increase in salaries and employee benefits is due to additional employees in mortgage, BSA, compliance and finance/accounting (related to the Company going public), as well as normal salary increases.

Occupancy and equipment. Occupancy and equipment expense decreased $61,000, or 7.9%, to $705,000 for the third quarter of 2017 compared to $766,000 for the third quarter of 2016.  The decrease is mainly due to furniture and fixture being fully depreciated in our Los Angeles headquarters and San Gabriel credit and administration locations.

Data processing. Data processing expense decreased $105,000, or 18.7%, to $458,000 for the third quarter of 2017, compared to $563,000 for the third quarter of 2016. The decrease was primarily due to discontinuing data lines that were duplicative.

Legal and professional. Legal and professional expense decreased $193,000 to $318,000 for the third quarter of 2017, compared to $511,000 for the third quarter of 2016. Prior to 2017, we would accrue the entire amount of our estimate of the legal expense for a particular matter. Beginning in 2017, we began accruing for legal expenses as such expenses are incurred.

Office expenses. Office expenses were unchanged at $153,000 in the third quarter of 2017 from the third quarter of 2016.

Marketing and business promotion. Marketing and business promotion expense increased $148,000, or 145.6%, to $250,000 in the third quarter of 2017, compared to $102,000 for the third quarter of 2016. This increase was due to additional donations to CRA organizations, as per our policy.

Insurance and regulatory assessments. Insurance and regulatory assessments decreased $83,000, or 29.2%, to $201,000 for the third quarter of 2017, compared to $284,000 for the third quarter of 2016. The decrease was primarily due to lower FDIC insurance expense due to lower accrual rates after our de novo period ended. Our FDIC insurance expense was $120,000 for the three months ended September 30, 2017 compared to $200,000 for the three months ended September 30, 2016.  Our DBO regulatory assessment was $31,000 for the three months ended September 30, 2017 compared to $32,000 for the same period in 2016.  Our corporate insurance was $49,000 for the three months ended September 30, 2017 compared to $52,000 for the three months ended September 30, 2016.

Amortization of intangibles. Amortization of intangibles totaled $87,000 for the three months ended September 30, 2017 versus $103,000 for the three months ended September 30, 2016.

OREO expenses (income). Net OREO expenses were $6,000 for the third quarter of 2017, and $6,000 in the third quarter of 2016.

Other expenses. Other expenses decreased $224,000, or 21.0%, to $844,000 for the third quarter of 2017, compared to $1.1 million in the third quarter of 2016. This decrease is primarily due to a reduction in the provision for off-balance sheet commitments of $350,000, which primarily consist of commercial real estate and commercial & industrial commitments.

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Income Tax Expense

Income tax expense was $4.0 million in the third quarter of 2017 compared to $4.1 million in the third quarter of 2016.  Effective tax rates were 37.8% and 41.7% in the third quarter of 2017 and the third quarter of 2016, respectively.  The decrease in income tax expense and the effective tax rate was primarily due to tax benefits recognized on stock option expense for the exercise of incentive stock options which was $310,000 for the three months ended September 30, 2017.

Net Income

Net income amounted to $6.6 million for the third quarter 2017, a $914,000 or 16.1% increase from the third quarter of 2016, primarily due to the increased gain on loan sales and net loan servicing fees.

Results of Operations—Comparison of Results of Operations for the Nine Months Ended September 30, 2017 and September 30, 2016

The following discussion of our results of operations compares the nine months ended September 30, 2017 and September 30, 2016, respectively.  The results of operations for the nine months ended September 30, 2017 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2017.

Net Interest Income/Average Balance Sheet

In the first nine months of 2017, we generated net interest income of $42.3 million, a decrease of $716,000 or 1.7%, from the net interest income of the same period in 2016. This decrease was largely due to a 30 basis point decrease in the average yield on interest-earning assets partially offset by 8.4% increase in the average balance of interest-earning assets. The increase in the average balance of interest-earning assets was primarily due to funds from the Company’s July public offering, organic growth in commercial and industrial, construction and single-family residential mortgage loans. The decrease in the average yield on interest-earning assets was primarily due to the reduction in accretion income associated with purchase accounting discounts established on loans acquired in the TomatoBank acquisition. For the nine months ended September 30, 2017 and 2016, our reported net interest margin was 4.00% and 4.40%, respectively. Our net interest margin benefits from discount accretion on our purchased loan portfolios. Our net interest margin for the nine months ended September 30, 2017 and 2016, excluding accretion income, would have been 3.75% and 3.76%, respectively.

Interest Income. Total interest income was $52.6 million for the first nine months of 2017 compared to $51.5 million for the same period in 2016. The $1.2 million, or 2.2%, increase in total interest income was due to increases in interest earned on our interest-earning balances, securities portfolio and Federal funds sold.

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Interest and fees on loans (held for investment and held for sale) was $50.0 million for the nine months ending September 30, 2017 compared to $50.0 million for the same period in 2016. The $50,000, or 0.1%, decrease in interest income on loans was primarily due to a 13 basis point decrease in the yield on loans partially offset by a 2.2% increase in the average balance of loans outstanding. The increase in the average balance of loans outstanding was primarily due to organic loan growth in commercial and industrial, single-family residential mortgage loans and construction loans during 2017. The average yield on loans held for investment benefits from discount accretion on our acquired loan portfolios. For the nine months ended September 30, 2017 and 2016, the yield on total loans was 5.55% and 5.67%, respectively, while the yield on total loans excluding accretion income would have been 5.21% and 4.92%, respectively. A substantial portion of our acquired loan portfolio that is subject to discount accretion consists of commercial real estate loans. The table below illustrates by loan type the accretion income for the first nine months of 2017 and 2016:

	As of and for the
	Nine Months
	Ended September 30,
(Dollars are in thousands)	2017		2016
Beginning balance of discount on purchased loans	$	8,085	$	1,712
Additions due to acquisitions:
Commercial and industrial		—		737
SBA		—		177
Construction and land development		—		736
Commercial real estate		—		12,224
Single-family residential mortgages		—		—
Total additions	$	—	$	13,874
Accretion:
Commercial and industrial		186		726
SBA		17		17
Construction and land development		41		620
Commercial real estate		2,293		4,735
Single-family residential mortgages		47		111
Total accretion	$	2,584	$	6,209
Ending balance of discount on purchased loans	$	5,501	$	9,377

Interest income on our securities portfolio increased $302,000, or 48.8%, to $922,000 in the first nine months of 2017 compared to the same period of 2016. The increase in interest income on securities was primarily due to an increased average balance of $11.8 million, or 33.5%, and by a 27 basis point increase in the average yield on securities. We purchased $19.8 million of debt securities with an average yield of 3.39%, which includes the transfer of a corporate sub-debt loan for $1 million to investments once the loan became DTC eligible, in the first nine months of 2017. These purchases increased our average yield by changing the mix of asset classes in our securities portfolio. We have temporarily invested a portion of the proceeds received from our issuance of $50 million of subordinated notes into subordinated debt issued by other community banks and expect to deploy such funds into new loan originations over the next two years.

Interest income on our federal funds sold, cash equivalents and other investments increased $469,000, or 294.7%, to $628,000 in the first nine months of 2017 compared to $159,000 in the same period of 2016. The increase in interest income on cash equivalents was due to a 16 basis point increase in average yield of cash equivalents plus a major increase in the average balance of $71.3 million from the Company’s public offering. The main reasons for the increased yield were the increase in the federal funds rate and placing higher balances into term federal funds for liquidity management purposes.

Interest Expense. Interest expense on interest-bearing liabilities increased $1.9 million, or 22.0%, to $10.4 million in in the first nine months of 2017 compared to the same period of 2016 due to a 4.6% increase in the average balance outstanding and an 18 basis point increase in the average rate.  Deposit expense increased due to the addition of, and having TomatoBank deposits, for the full nine months in 2017 compared to four and a half months in 2016.  In addition, the sub-debt interest expense is higher because the debt was outstanding for the first nine months of 2017, compared to three months in the same period in 2016.

Interest expense on interest-bearing deposits increased to $7.6 million in the first nine months of 2017 compared to $6.6 million in the same period in 2016. The $968,000, or 14.6%, increase in interest expense on deposits was primarily due to the average balance of deposits increasing 3.1%, combined with a 10 basis point increase in rates. The increase in the average balance of deposits resulted primarily from normal growth of deposit accounts.

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Interest expense on borrowings increased to $2.7 million in the first nine months of 2017 compared to $1.8 million in the same period of 2016. This increase reflected increased interest expense on subordinated notes, subordinated debentures and other borrowed funds, consisting of FHLB short-term advances of less than 90-days. The increase in interest expense on subordinated notes of $2.7 million followed the issuance of $50.0 million of subordinated notes on March 31, 2016. The increase in interest expense on subordinated debentures of $47,000 was due to a 25.9% increase in the average balance plus a 55 basis point increase in the average rate. The increase in interest expense on other borrowed funds of $5,000 was due to the average rate on these borrowings increasing 23 basis points partially offset by a 13.8% decrease in the average FHLB short-term advances during the first nine months of 2017, which were utilized to fund single-family residential mortgage loans that were originated and held for sale during the year.

Provision for (or Recapture) of Loan Losses.  In the first nine months of 2017 there was a $3.5 million net recapture in the provision for loan losses compared to $3.6 million provision expense for the same period of 2016.  The decrease was $7.1 million or 196.9%.  The recapture reflects both the receipt of a guaranteed payment on a SBA 7A guaranteed loan of $629,000 in May 2017 that was previously charged-off and the receipt of $3.6 million in July 2017 pursuant to a SBA loan guaranty that we previously fully reserved for in the allowance for loan losses.  

Noninterest Income. Noninterest income increased $3.1 million or 49.7%, to $9.4 million in the first half of 2017.  The following table sets forth major components of our noninterest income for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016:

	For the Nine Months Ended
	September 30,				Increase
(dollars in thousands)	2017		2016		(decrease)
Noninterest income:
Service charges, fees and other	$	1,624	$	1,182	$	442
Gain on sale of loans		6,370		4,136		2,234
Loan servicing fee, net of amortization		571		384		187
Recoveries on loans acquired in business    combinations		76		139		(63	)
Increase in cash surrender of    life insurance		620		423		197
Gain on sale of securities		—		19		(19	)
Gain on sale of OREO		142		—		142
Total noninterest income	$	9,403	$	6,283	$	3,120

Service charges, fees and others. Noninterest income from service charges, fees and other income increased to $1.6 million in the first nine months of 2017 compared to $1.2 million in the first same period of 2016. This increase primarily resulted from services charges on deposit accounts and fees from other operations.

Gain on sale of loans. Our gain on sale of loans increased to $6.4 million in the first nine months of 2017 compared to $4.1 million in the same period of 2016 due to an increased amount of SBA loans sold. The gain on sale of single-family residential mortgage loans was $1.8 million in the first nine months of 2017 compared to $2.5 million in the first nine months of 2016, for a $682,000 decrease.

	For the Nine Months Ended
(dollars in thousands)	September 30 2017		September 30 2016
Loans sold:
SBA	$	68,927	$	27,620
Mortgage		81,071		139,805
	$	149,998	$	167,425
Gain on loans sold:
SBA	$	4,599	$	1,683
Mortgage		1,771		2,453
	$	6,370	$	4,136

We sold $68.9 million in SBA loans in the first nine months of 2017 compared to $27.6 million in the same period of 2016, resulting in a gain on sale of loans of $4.6 million in the first nine months of 2017 compared to $1.7 million in the same period of 2016.  The increase reflects our efforts to increase our originations and sales of such loans to generate additional

47

noninterest income. A lower volume of single-family residential mortgage loans was sold as a result of management’s decision to retain more loans in the portfolio.  

Loan servicing income, net of amortization. Our loan servicing income, net of amortization increased by $187,000 to $571,000 for the nine months ended September 30, 2017 compared to $384,000 for the nine months ended September 30, 2016.  Servicing income increased due to the increased volume of loans being serviced for others. We were servicing $306.2 million of single-family residential mortgage loans as of September 30, 2017 compared to $230.6 million as of December 31, 2016. We were also servicing $166.1 million of SBA loans as of September 30, 2017 compared to $101.4 million as of December 31, 2016. The increase in the respective servicing portfolios reflects the growth in our originations and sales of single-family residential and SBA loans in 2017.

Recoveries on loans acquired in business combinations. Recoveries on loans acquired in business combinations decreased $63,000 to $76,000 in the first nine months of 2017 compared to $139,000 in the same period of 2016. This decrease primarily resulted from lesser recoveries on loans acquired from other bank acquisitions.

Increase in cash surrender value of life insurance. Cash surrender value increased $197,000 to $620,000 in the first nine months of 2017 compared to $423,000 in the same period of 2016, primarily due to an additional $10 million purchase of bank owned life insurance (BOLI) in 2017.

Gain on sales of securities, net. During the first nine months of 2017, we sold no securities.  During the first nine months of 2016, we sold a taxable municipal bond for $452,000 that resulted in a gain of $19,000, and we sold $4.6 million of mortgage-backed securities for no gain or loss.

Gain on sale of OREO.  During the first nine months of 2017, one OREO property was sold for a gain of $142,000.

Noninterest Expense

Noninterest expense decreased $1.6 million or 7.3%, to $20.7 million for the first nine months of 2017 compared to the same period of 2016.  The following table sets forth major components of our noninterest expense for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016:

	For the Nine Months Ended
	September 30,				Increase
(dollars in thousands)	2017		2016		(decrease)
Noninterest expense:
Salaries and employee benefits	$	12,604	$	10,547	$	2,057
Occupancy and equipment expenses		2,176		2,388		(212	)
Data processing		1,264		1,488		(224	)
Legal and professional		227		1,478		(1,251	)
Office expenses		484		455		29
Marketing and business promotion		575		408		167
Insurance and regulatory assessments		611		810		(199	)
Amortization of intangibles		268		268		—
OREO expenses (income)		34		16		18
Other expenses		2,495		4,516		(2,021	)
Total noninterest expense	$	20,738	$	22,374	$	(1,636	)

Salaries and employee benefits. Salaries and employee benefits expense increased $2.1 million, or 19.5%, to $12.6 million in the first nine months of 2017 compared to $10.5 million in the same period of 2016. This increase was primarily attributable to increased staff in credit administration, finance, single-family residential mortgage and risk management. The number of full-time equivalent employees was 195 at September 30, 2017 compared to 169 at September 30, 2016.

Occupancy and equipment. Occupancy and equipment expense decreased $212,000, or 8.9%, to $2.2 million in the first nine months of 2017 compared to $2.4 million for the same period of 2016. This decrease was mainly due to closing two TomatoBank branches in June 2016 and decreased furniture depreciation in our Los Angeles headquarter office and credit administration department.

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Data processing. Data processing expense decreased $224,000, or 15.1%, to $1.3 million in the first nine months of 2017 compared to $1.5 million for the same period of 2016. This decrease resulted primarily from the reduction of duplicated processing costs and data line expense incurred subsequent to the TomatoBank acquisition. Conversion expense associated with the TomatoBank acquisition is in the “other expenses” line item.

Legal and professional. Legal and professional expense decreased $1.3 million, or 84.6%, to $227,000 in the first nine months of 2017 compared to $1.5 million for the same period of 2016. This decrease was primarily due to resolution of lawsuits and a change in the legal accrual procedure.

Office expenses. Office expenses are comprised of communications, postage, armored car, and office supplies and totaled $484,000 in first nine months of 2017 compared to $455,000 for same period of 2016. This 6.4% increase primarily resulted from normal business growth.

Marketing and business promotion. Marketing and business promotion expense increased $167,000, or 41.0%, to $575,000 in the first nine months of 2017 compared to $408,000 for the same period of 2016. This increase was primarily due to normal business growth.

Insurance and regulatory assessments. Insurance and regulatory assessment expense was $611,000 in the first nine months of 2017 compared to $810,000 in the same period of 2016. The $199,000 or 24.6% decrease was primarily due to lower FDIC assessment following exiting our denovo period. Our FDIC insurance assessment was $360,000 for the first nine months of 2017 compared to $563,000 in the same period of 2016. Our DBO regulatory assessment was $95,000 for the first nine months of 2017 compared to $82,000 in the same period of 2016. Our corporate insurance expenses, including our directors and officers insurance and our fidelity bond, was $155,000 for the first nine months of 2017 compared to $163,000 in the same period of 2016.

Amortization of intangibles. Amortization of intangibles was $268,000 in the first nine months of 2017 compared to $268,000 in the same period of 2016. The core deposit intangible asset associated with the acquisition of TomatoBank is being amortized.

OREO expenses (income). Net OREO expense was $34,000 in the first nine months of 2017 compared to $16,000 in the same period of 2016, an increase of $18,000, which was mainly due to the addition of a $540,000 OREO property in 2016 that was marketed for sale.  The OREO was subsequently sold in August 2017 for a gain of $142,000.

Other noninterest expense. Other noninterest expense totaled $2.5 million in the first nine months of 2017 compared to $4.5 million for the same period of 2016. This decrease of $2.0 million followed the TomatoBank acquisition in 2016, with $854,000 in systems termination and conversion fees and $1.1 million in change in control payments pursuant to agreements assumed by us in such acquisition not repeating in 2017.

Income Tax Expense

Income tax expense was $13.8 million in the first nine months of 2017 compared to $9.6 million in the same period of 2016. The increase in income tax expense was consistent with the related growth in pre-tax income. Effective tax rates were 40.1% and 41.2% in the first nine months of 2017 and 2016, respectively. The lower effective tax rate in 2017 was primarily due to higher permanent tax differences.  The tax benefit on the exercise of incentive stock options was $310,000 for the nine months ended September 30, 2017.

Net Income

Net income increased $6.9 million to $20.6 million in the first nine months of 2017, compared to $13.7 million in the same period of 2016. The increase is primarily due to the recapture of the loan loss provision, and an increase in noninterest income due to increased gain on sales of SBA loans, partially offset by higher staff expenses. In addition legal and professional and other noninterest expenses decreased from the same period of 2016 due to the additional expenses incurred as a result of the Tomato Bank acquisition in 2016.

ANALYSIS OF FINANCIAL CONDITION

Assets. Total assets were $1.6 billion as of September 30, 2017 and $1.4 billion as of December 31, 2016. We increased our loans held for investment by $86.1 million, primarily in construction, single-family residential mortgages, and commercial and industrial loans, partially offset by decreases in commercial real estate and SBA loans. The decrease in SBA loans is primarily due to the Company selling more SBA loans than originating and the decrease in commercial real estate loans is due to payoffs from the acquired TomatoBank loans.  Our mortgage loans held for sale increased by $81.4 million in the first nine-months of 2017. We also

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purchased $10.0 million in bank owned life insurance (BOLI) in the first quarter of 2017 to partially offset the increase in benefit expenses. The increase in assets was funded by an increase in deposits of $165.5 million and $78.7 million increase in equity.

Investment Securities

Our investment strategy aims to maximize earnings while maintaining liquidity in securities with minimal credit risk. The types and maturities of securities purchased are primarily based on our current and projected liquidity and interest rate sensitivity positions.

The following table sets forth the book value and percentage of each category of securities at September 30, 2017 and December 31, 2016. The book value for securities classified as available for sale is equal to fair market value and the book value for securities classified as held to maturity is equal to amortized cost.

	September 30, 2017					December 31, 2016
	Book		% of			Book		% of
(dollars in thousands)	Value		Total			Value		Total
Securities, available for sale, at fair value
U.S. government agency securities	$	4,957		8.1	%	$	5,317		11.7	%
Mortgage-backed securities
Government sponsored agencies		33,256		54.6			23,640		52.0
Corporate debt securities		17,484		28.7			10,320		22.6
Total securities, available for sale, at fair value	$	55,697		91.5	%	$	39,277		86.3	%
Securities, held to maturity, at amortized cost
Taxable municipal securities	$	4,296		7.1	%	$	5,301		11.7	%
Tax-exempt municipal securities		895		1.5			913		2.0
Total securities, held to maturity, at amortized cost		5,191		8.5			6,214		13.7
Total securities	$	60,888		100.0	%	$	45,491		100.0	%

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(1) Comprised of corporate debt securities and financial institution subordinated debentures

The tables below set forth investment securities AFS and HTM for the periods presented.

			Gross		Gross
(dollars in thousands)	Amortized		Unrealized		Unrealized			Fair
September 30, 2017	Cost		Gains		Losses			Value
Available for sale
U.S government agency securities	$	5,057	$	—	$	(100	)	$	4,957
Mortgage-backed securities
Government sponsored agencies		33,530		44		(318	)		33,256
Corporate debt securities		17,341		203		(60	)		17,484
	$	55,928	$	247	$	(478	)	$	55,697
Held to maturity
Municipal taxable securities	$	4,296	$	278	$	—		$	4,574
Municipal securities		895		16		—			911
	$	5,191	$	294	$	—		$	5,485
December 31, 2016
Available for sale
U.S. government agency securities	$	5,453	$	—	$	(136	)	$	5,317
Mortgage-backed securities
Government sponsored agencies		23,913		38		(311	)		23,640
Corporate debt securities		10,364		21		(65	)		10,320
	$	39,730	$	59	$	(512	)	$	39,277
Held to maturity
Municipal taxable securities	$	5,301	$	328	$	—		$	5,629
Municipal securities		913		11		—			924
	$	6,214	$	339	$	—		$	6,553

The weighted-average yield on the total investment portfolio at September 30, 2017 was 2.63% with a weighted-average life of 6.4 years. This compares to a weighted-average yield of 2.51% at December 31, 2016 with a weighted-average life of 4.8 years. The weighted average life is the average number of years that each dollar of unpaid principal due remains outstanding. Average life is computed as the weighted-average time to the receipt of all future cash flows, using as the weights the dollar amounts of the principal pay-downs.

Approximately 62% of the securities in the total investment portfolio, at September 30, 2016, are issued by the U.S. government or U.S. government- sponsored agencies and enterprises, which have the implied guarantee of payment of principal and interest. As of September 30, 2017, no U.S. government agency bonds are callable.

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The tables below show the Company’s investment securities’ gross unrealized losses and fair value by investment category and length of time that individual securities have been in a continuous unrealized loss position, at September 30, 2017 and December 31, 2016. The unrealized losses on these securities were primarily attributed to changes in interest rates. The issuers of these securities have not, to our knowledge, evidenced any cause for default on these securities. These securities have fluctuated in value since their purchase dates as market interest rates have fluctuated. However, we have the ability and the intention to hold these securities until their fair values recover to cost or maturity. As such, management does not deem these securities to be other-than-temporarily-impaired A summary of our analysis of these securities and the unrealized losses is described more fully in Note 3 — Investment Securities in the notes to the  2016 consolidated financial statements included in the Form S-1. Economic trends may adversely affect the value of the portfolio of investment securities that we hold.

	Less than Twelve Months					Twelve Months or More					Total
	Unrealized			Estimated		Unrealized			Estimated		Unrealized			Estimated
(dollars in thousands)	Losses			Fair Value		Losses			Fair Value		Losses			Fair Value
September 30, 2017
Government agency securities	$	(100	)	$	4,957	$	—		$	—	$	(100	)	$	4,957
Mortgage-backed securities
Government sponsored agencies		(255	)		26,916		(63	)		2,105		(318	)		29,021
Corporate debt securities		(60	)		5,994		—			—		(60	)		5,994
Total available for sale	$	(415	)	$	37,867	$	(63	)	$	2,105	$	(478	)	$	39,972
December 31, 2016
Government agency securities	$	(136	)	$	5,317	$	—		$	—	$	(136	)	$	5,317
Mortgage-backed securities
Government sponsored agencies		(221	)		16,231		(90	)		2,504		(311	)		18,735
Corporate debt securities		(65	)		5,147		—			—		(65	)		5,147
Total available for sale	$	(422	)	$	26,695	$	(90	)	$	2,504	$	(512	)	$	29,199

The Company did not record any charges for other-than-temporary impairment losses for the nine months ended September 30, 2017 and 2016.

Loans

The loan portfolio is the largest category of our earning assets. At September 30, 2017, total loans, net of allowance for loan losses, totaled $1.2 billion. Prior to 2014, we mainly had two lending products, commercial and industrial loans and commercial real estate (CRE) loans. In 2014, we made the strategic move to diversify our lending into single-family residential mortgage and SBA loans. The following table presents the balance and associated percentage of each major category in our loan portfolio at September 30, 2017 and December 31, 2016:

	As of September 30, 2017					As of December 31, 2016
(dollars in thousands)	$			%		$			%
Loans:
Commercial and industrial	$	225,967			18.9	$	203,843			18.4
SBA		148,005			12.4		158,968			14.3
Construction and land development		94,297			7.9		89,409			8.1
Commercial real estate (1)		491,086			41.0		501,798			45.2
Single-family residential mortgages		237,167			19.8		156,428			14.1
Total loans,(2)	$	1,196,522			100.0	$	1,110,446			100.0
Allowance for loan losses		(11,420	)				(14,162	)
Total loans, net	$	1,185,102				$	1,096,284

(1) Includes non-farm & non-residential real estate loans, multifamily resident and 1-4 family single family residential loan for a business purpose

(2) Net of discounts and deferred fees and costs

Net loans increased $88.8 million, or 8.1%, to $1.2 billion at September 30, 2017 as compared to December 31, 2016. The increase in net loans primarily resulted from organic growth in single-family residential mortgage, and commercial and industrial

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loans, which was partially offset by the sale of SBA loans and continued run-off of TomatoBank commercial real estate loans (the runoff of TomatoBank loans decreased substantially).

Outstanding loan balances increased due to new loan originations, advances on outstanding commitments and loans acquired as a result of acquisitions of other financial institutions, net of amounts received for loan payments and payoffs, charge-offs of loans and transfers of loans to OREO.

Commercial and industrial loans. We provide a mix of variable and fixed rate commercial and industrial loans. The loans are typically made to small- and medium-sized manufacturing, wholesale, retail and service businesses for working capital needs, business expansions and for international trade financing. Commercial and industrial loans include lines of credit with a maturity of one year or less, commercial and industrial term loans with maturities of five years or less, shared national credits with maturities of five years or less, mortgage warehouse lines with a maturity of one year or less, bank subordinated debentures with a maturity of 10 years, purchased receivables with a maturity of two months or less and international trade discounts with a maturity of three months or less. Substantially all of our commercial and industrial loans are collateralized by business assets or by real estate.

Commercial and industrial loans increased $22.1 million, or 10.9%, to $226.0 million as of September 30, 2017 compared to $203.8 million at December 31, 2016. This increase resulted primarily from an increase in shared national credits of $9.9 million, mortgage warehouse lines of $7.9 million and decrease in purchased receivables of $20.2 million.

Commercial real estate loans. Commercial real estate loans include owner-occupied and non-occupied commercial real estate, multi-family residential and single-family residential loans originated for a business purpose. The interest rate for the majority of these loans are Prime based and have a maturity of five years or less except for the single-family residential loans originated for a business purpose which may have a maturity of one year. At September 30, 2017, approximately 9.9% of the commercial real estate portfolio consisted of fixed-rate loans. Our policy maximum loan-to-value, or LTV is 75% for commercial real estate loans. The total commercial real estate portfolio totaled $491.1 million at September 30, 2017 and $501.8 million as of December 31, 2016, of which $178.2 million and $159.5 million, respectively, are secured by owner occupied properties. The multi-family residential loan portfolio totaled $71.0 million as of September 30, 2017 and $70.6 million as of December 31, 2016. The single-family residential loan portfolio originated for a business purpose totaled $46.7 million as of September 30, 2017 and $51.6 million as of December 31, 2016.

Commercial real estate loans decreased $10.7 million, or 2.1%, to $491.1 million at September 30, 2017 as compared to $501.8 million at December 31, 2016. This decrease resulted primarily from the continued pay-off of TomatoBank commercial real estate and single-family residential loans originated for a business purpose.

Construction and land development loans. Construction and land development loans increased $4.9 million or 5.5%, to $94.3 million at September 30, 2017 as compared to $89.4 million at December 31, 2016. This increase in construction and land development loans was primarily due to construction loan originations exceeding loan repayments.  

The following table shows the categories of our construction and land development portfolio as of September 30, 2017 and December 31, 2016:

	As of September 30, 2017				As of December 31, 2016
(dollars in thousands)	$		%		$		%
Residential construction	$	55,048		55.1	$	47,986		53.7
Commercial  construction		26,511		30.1		35,404		39.6
Land development		12,738		14.8		6,019		6.7
Total Construction and land development loans	$	94,297		100.0	$	89,409		100.0

Small Business Administration guaranteed loans. We are designated a Preferred Lender under the SBA Preferred Lender Program. We offer mostly SBA 7(a) variable-rate loans. We generally sell the 75% guaranteed portion of the SBA loans that we originate. Our SBA loans are typically made to small-sized manufacturing, wholesale, retail, hotel/motel and service businesses for working capital needs or business expansions. SBA loans can have any maturity up to 25 years. Typically, non-real estate secured loans mature in less than 10 years.  Collateral may also include inventory, accounts receivable and equipment, and includes personal guarantees. Our unguaranteed SBA loans collateralized by real estate are monitored by collateral type and are included in our CRE Concentration Guidance.

We originate SBA loans through our branch staff, loan officers and through SBA brokers. For the first nine months of 2017, $14.8 million or 17.5% of SBA loan originations were produced by branch staff and loan officers. The remaining $66.3 million was referred to us through SBA brokers.

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As of September 30, 2017 our SBA portfolio totaled $148.0 million of which $68.7 million is guaranteed by the SBA and $79.1 million is unguaranteed, of which $75.8 million is secured by real estate and $3.3 million is unsecured or secured by business assets. We monitor the unguaranteed portfolio by type of real estate collateral. As of September 30, 2017, $44.3 million or 56.0% is secured by hotel/motels; $11.5 million or 14.6% by gas stations; and $20.0 million or 25.3% in other real estate types. We further analyze the unguaranteed portfolio by location. As of September 30, 2017, $63.3 million or 39.8% is located in California; $3.0 million or 3.5% is located in Nevada; $23.5 million or 19.4% is located in Texas; $23.3 million or 15.6% is located in Washington; and $34.7 million or 21.7% is located in other states.

SBA loans decreased $11.0 million, or 6.9%, to $148.0 million at September 30, 2017 compared to $159.0 million at December 31, 2016. This decrease was primarily due to loan sales of $68.9 million, offset by $74.0 million in originations in the first nine-months of 2017.  In 2017, we began selling SBA loans quarterly, whereas previously, we primarily sold SBA loans annually in November of each year.

Single-family residential real estate loans. We originate mainly non-qualified, alternative documentation single-family residential mortgage loans through correspondent relationships or through our branch network or retail channel. The loan product is a seven-year hybrid adjustable mortgage with a current start rate of 4.6% which re-prices after seven years to the one-year LIBOR plus 2.75%. As of September 30, 2017, the average loan-to-value of the portfolio was 59.9%, the average FICO score was 750 and the average duration of the portfolio was 4.7 years. We also offer qualified single-family residential mortgage loans as a correspondent to a national financial institution.

We originate these non-qualified single-family residential mortgage loans both to sell and hold for investment. The loans held for investment are generally originated through our retail branch network to our customers, many of whom establish a deposit relationships with us. During the first nine-months of 2017, we originated $113.1 million of such loans through our retail channel and $173.7 million through our correspondent channel. We sell many of these non-qualified single-family residential mortgage loans to other Asian-American banks. While our loan sales to date have been primarily to two banks, we expect to be expanding our network of banks who will purchase our single-family loan product.

Single-family residential real estate loans, which include $2.2 million of home equity loans, increased $80.7 million, or 51.6%, to $237.2 million as of September 30, 2017 as compared to $156.4 million as of December 31, 2016. In addition, loans held for sale increased $81.4 million or 183.5% to $125.7 million as of September 30, 2017 compared to $44.3 million December 31, 2016. The increase in loans held for sale is mainly due to a decrease in selling single-family residential mortgage loans in the first quarter of 2017 compared to the same period in 2016. For the fourth quarter of 2017 we plan to sell approximately $40 million in single-family residential mortgage loans.

Loan Quality

We use what we believe is a comprehensive methodology to monitor credit quality and prudently manage credit concentration within our loan portfolio. Our underwriting policies and practices govern the risk profile and credit and geographic concentration for our loan portfolio. We also have what we believe to be a comprehensive methodology to monitor these credit quality standards, including a risk classification system that identifies potential problem loans based on risk characteristics by loan type as well as the early identification of deterioration at the individual loan level. In addition to our allowance for loan losses, our purchase discounts on acquired loans provide additional protections against credit losses.

Discounts on Purchased Loans. At acquisition we hire a third-party to determine the fair value of loans acquired. In many of the cases fair values were determined by estimating the cash flows expected to result from those loans and discounting them at appropriate market rates. The excess of expected cash flows above the fair value of the majority of loans will be accreted to interest income over the remaining lives of the loans in accordance with FASB Accounting Standards Codification, or ASC, 310-20.

None of the loans we acquired after 2011 had evidence of deterioration of credit quality since origination for which it was probable, at acquisition, that the Company would be unable to collect all contractually required payments receivable. Loans acquired that had evidence of deterioration of credit quality since origination are referred to as PCI (“purchase credit impaired”) loans.

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With our acquisitions of FAB and VCBB, we acquired $16.7 million contractual amount due with a fair value of $9.7 million of PCI loans. The outstanding balance and carrying amount of PCI loans as of September 30, 2017 and December 31, 2016 were $324,000 and $316,000 and $878,000 and $730,000, respectively. For these PCI loans, the Company did not record an allowance for loan losses for 2017 or 2016 as there were no significant reductions in the expected cash flows.

Analysis of the Allowance for Loan Losses. The following table allocates the allowance for loan losses, or the allowance, by category:

	As of September 30, 2017				As of December 31,  2016
(dollars in thousands)	$		% (1)		$		% (1)
Loans:
Commercial and industrial	$	2,303		1.02	$	2,581		1.27
SBA (2)		1,059		0.72		3,345		2.10
Construction and land development		1,057		1.12		1,206		1.35
Commercial real estate (3)		3,581		0.73		5,952		1.19
Single-family residential mortgages		3,034		1.28		1,078		0.69
Unallocated		386		—		—		—
Allowance for loan losses	$	11,420		0.95	$	14,162		1.28

(1) Represents the percentage of the allowance to total loans in the respective category.

(2) The decrease in the allowance on SBA loans from December 31, 2016 is attributable to the receipt of $3.6 million from the SBA as previously discussed.

(3) Includes non-farm and non-residential real estate loans, multi-family residential and single-family residential loans originated for a business purpose.

The allowance and the balance of accretable credit discounts represent our estimate of probable and reasonably estimable credit losses inherent in loans held for investment as of the respective balance sheet date. The accretable credit discount was $3.1 million at September 30, 2017.  Including the non-accretable credit discount as a percentage of the allowance and credit discounts to loans was 1.2%.

Allowance for loan losses. Our methodology for assessing the appropriateness of the allowance for loan losses includes a general allowance for performing loans, which are grouped based on similar characteristics, and a specific allowance for individual impaired loans or loans considered by management to be in a high-risk category. General allowances are established based on a number of factors, including historical loss rates, an assessment of portfolio trends and conditions, accrual status and economic conditions.

For commercial and industrial, SBA, commercial real estate, construction and land development and single family residential mortgage loans held for investment, a specific allowance may be assigned to individual loans based on an impairment analysis. Loans are considered impaired when it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement. The amount of impairment is based on an analysis of the most probable source of repayment, including the present value of the loan’s expected future cash flows, the estimated market value or the fair value of the underlying collateral. Interest income on impaired loans is accrued as earned, unless the loan is placed on nonaccrual status.

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Credit-discount on loans purchased through acquisition. Purchased loans are recorded at market value in two categories, credit discount and liquidity discount and premiums. The remaining credit discount at the end of a period is compared to the analysis for loan losses for each acquisition. If the credit discount is greater than the expected loss no additional provision is needed. The following table shows our credit discounts by loan portfolio for purchased loans only as of September 30, 2017 and December 31, 2016. We have recorded additional reserves of $221,000 due to the credit discounts on the LANB acquisitions being less than the analysis for loan losses on those acquisitions as of September 30, 2017.

	As of September 30,			As of December 31,
(dollars in thousands)	2017			2016
Commercial and industrial	$	178		$	346
SBA		69			91
Construction and land development		4			61
Commercial real estate		2,818			4,516
Single-family residential mortgages		73			110
Total credit discount on purchased loans	$	3,142		$	5,124
Total remaining balance of purchased loans through    acquisition	$	267,931		$	336,310
Credit-discount to remaining balance of    purchased loans		1.17	%		1.52	%

Individual loans considered to be uncollectible are charged off against the allowance. Factors used in determining the amount and timing of charge-offs on loans include consideration of the loan type, length of delinquency, sufficiency of collateral value, lien priority and the overall financial condition of the borrower. Collateral value is determined using updated appraisals and/or other market comparable information. Charge-offs are generally taken on loans once the impairment is determined to be other-than-temporary. Recoveries on loans previously charged off are added to the allowance.  Net charge-offs to average loans were (0.06)% and none for the three months ended September 30, 2017 and 2016 and (0.07)% and 0.02% for the nine months ended September 30, 2017 and 2016, respectively.

The allowance for loan losses was $11.4 million at September 30, 2017 compared to $14.2 million at December 31, 2016. The $2.7 million decrease at September 30, 2017 compared to December 31, 2016 was due to receipt of a guaranteed payment on a SBA 7A guaranteed loan of $629,000 in May 2017 that was previously charged-off and the receipt of $3.6 million in July 2017 pursuant to a SBA loan guaranty that we previously fully reserved for in the allowance for loan losses plus the $700,000 loan loss provision for the third quarter of 2017.

We analyze the loan portfolio, including delinquencies, concentrations, and risk characteristics, at least quarterly in order to assess the overall level of the allowance and nonaccretable discounts. We also rely on internal and external loan review procedures to further assess individual loans and loan pools, and economic data for overall industry and geographic trends.

In determining the allowance and the related provision for loan losses, we consider three principal elements:  (i) valuation allowances based upon probable losses identified during the review of impaired commercial and industrial, commercial real estate, construction and land development loans, (ii) allocations, by loan classes, on loan portfolios based on historical loan loss experience and qualitative factors and (iii) review of the credit discounts in relationship to the valuation allowance calculated for purchased loans. Provisions for loan losses are charged to operations to record changes to the total allowance to a level deemed appropriate by us.

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The following table provides an analysis of the allowance for loan losses, provision for loan losses and net charge-offs for the nine months ended September 30, 2017 and 2016:

	As of and for the
	Nine Months
	Ended September 30,
(dollars in thousands)	2017			2016
Balance, beginning of period	$	14,162		$	10,023
Charge-offs:
SBA		—			223
Total charge-offs		—			223
Recoveries:
SBA		746			—
Total recoveries		746			—
Net charge-offs		(746	)		223
Provision for (recapture of) loan losses		(3,488	)		3,599
Balance, end of period		11,420			13,399
Total loans at end of period (1)		1,196,522			1,121,873
Average loans(2)		1,141,953			1,122,862
Net charge-offs to average loans		-0.07	%		0.02	%
Allowance for loan losses to total loans		0.95	%		1.19	%
Credit-discount on loans purchased through acquisition		3,142			6,247
Allowance for loan losses plus credit-discount to total loans		1.22	%		1.75	%

(1) Total loans are net of discounts and deferred fees and cost

(2) Excludes loans held for sale

Problem Loans. Loans are considered delinquent when principal or interest payments are past due 30 days or more; delinquent loans may remain on accrual status between 30 days and 89 days past due. Loans on which the accrual of interest has been discontinued are designated as nonaccrual loans. Typically, the accrual of interest on loans is discontinued when principal or interest payments are past due 90 days or when, in the opinion of management, there is a reasonable doubt as to collectability in the normal course of business. When loans are placed on nonaccrual status, all interest previously accrued but not collected is reversed against current period interest income. Income on nonaccrual loans is subsequently recognized only to the extent that cash is received and the loan’s principal balance is deemed collectible. Loans are restored to accrual status when loans become well-secured and management believes full collectability of principal and interest is probable.

A loan is considered impaired when it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement. Impaired loans include loans on nonaccrual status and performing restructured loans. Income from loans on nonaccrual status is recognized to the extent cash is received and when the loan’s principal balance is deemed collectible. Depending on a particular loan’s circumstances, we measure impairment of a loan based upon either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s observable market price, or the fair value of the collateral less estimated costs to sell if the loan is collateral dependent. A loan is considered collateral dependent when repayment of the loan is based solely on the liquidation of the collateral. Fair value, where possible, is determined by independent appraisals, typically on an annual basis. Between appraisal periods, the fair value  may be adjusted based on specific events, such as if deterioration of quality of the collateral comes to our attention as part of our problem loan monitoring process, or if discussions with the borrower lead us to believe the last appraised value no longer reflects the actual market for the collateral. The impairment amount on a collateral-dependent loan is charged-off to the allowance if deemed not collectible and the impairment amount on a loan that is not collateral-dependent is set up as a specific reserve.

In cases where a borrower experiences financial difficulties and we make certain concessionary modifications to contractual terms, the loan is classified as a troubled debt restructuring, or TDR. These concessions may include a reduction of the interest rate, principal or accrued interest, extension of the maturity date or other actions intended to minimize potential losses. Loans restructured at a rate equal to or greater than that of a new loan with comparable risk at the time the loan is modified may be excluded from restructured loan disclosures in years subsequent to the restructuring if the loans are in compliance with their modified terms. A restructured loan is considered impaired despite its accrual status and a specific reserve is calculated based on the present value of expected cash flows discounted at the loan’s effective interest rate or the fair value of the collateral less estimated costs to sell if the loan is collateral dependent.

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Real estate we acquire as a result of foreclosure or by deed-in-lieu of foreclosure is classified as OREO until sold, and is carried at the balance of the loan at the time of foreclosure or at estimated fair value less estimated costs to sell, whichever is less.

The following table sets forth the allocation of our nonperforming assets among our different asset categories as of the dates indicated. Nonperforming loans include nonaccrual loans, loans past due 90 days or more and still accruing interest, and loans modified under troubled debt restructurings. Nonperforming loans exclude PCI loans. The balances of nonperforming loans reflect the net investment in these assets.

	As of			As of
	September 30,			December 31,
(dollars in thousands)	2017			2016
Nonperforming loans:
Commercial and industrial	$	1,293		$	—
Construction and land development		293			303
Commercial real estate		2,287			2,253
Total troubled debt restructures		3,873			2,556
Non-accrual loans:
SBA		77			3,577
Total non-accrual loans		77			3,577
Total non-performing loans		3,950			6,133
Other real estate owned		293			833
Nonperforming assets	$	4,243		$	6,966
Nonperforming loans to total loans		0.33	%		0.55	%
Nonperforming assets to total assets		0.26	%		0.50	%

The decrease in nonperforming loans at September 30, 2017 was primarily due to receiving of a $3.6 million payment on a guaranteed non-accrual SBA loan in July 2017, two loans of $539,000 were paid off subsequent to September 30, 2017, and $1.7 million was returned to accrual status. We had one addition to the nonperforming loans of $1.3 million during the first nine months of 2017.

Our 30-89 day delinquent loans decreased to $2.4 million as of September 30, 2017.  Of this amount, all have been brought current or been paid-off except for $1.7 million.  Of the $1.7 million in delinquent loans, $1.4 million is currently on a payment plan.

We did not recognize any interest income on nonaccrual loans during the periods ended September 30, 2017 and December 31, 2016 while the loans were in nonaccrual status. We recognized interest income on commercial and commercial real estate loans modified under troubled debt restructurings of $348,000 and $301,000 during the periods ended September 30, 2017 and December 31, 2016, respectively.

We utilize an asset risk classification system in compliance with guidelines established by the FDIC as part of our efforts to improve asset quality. In connection with examinations of insured institutions, examiners have the authority to identify problem assets and, if appropriate, classify them. There are three classifications for problem assets: “substandard,” “doubtful,” and “loss.” Substandard assets have one or more defined weaknesses and are characterized by the distinct possibility that the insured institution will sustain some loss if the deficiencies are not corrected. Doubtful assets have the weaknesses of substandard assets with the additional characteristic that the weaknesses make collection or liquidation in full questionable and there is a high probability of loss based on currently existing facts, conditions and values. An asset classified as loss is not considered collectable and is of such little value that continuance as an asset is not warranted.

We use a risk grading system to categorize and determine the credit risk of our loans. Potential problem loans include loans with a risk grade of 6, which are “special mention,” loans with a risk grade of 7, which are “substandard” loans that are generally not considered to be impaired and loans with a risk grade of 8, which are “doubtful” loans generally considered to be impaired. These loans generally require more frequent loan officer contact and receipt of financial data to closely monitor borrower performance. Potential problem loans are managed and monitored regularly through a number of processes, procedures and committees, including oversight by a loan administration committee comprised of executive officers and other members of the Bank’s senior management.

Cash and Cash Equivalents. Cash and cash equivalents increased $47.3 million, or 39.9%, to $166.1 million as of September 30, 2017 as compared to $118.7 million at December 31, 2016. This increase was primarily due to $223.3 million of cash from financing activities, primarily $60.2 million from the issuance of common stock (net of expenses), net increases in deposits of $178.6 million, partially offset by funds used in investment activities of $155.8 million.

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Goodwill and Other Intangible Assets. Goodwill was $29.9 million at September 30, 2017 and December 31, 2016, respectively. Goodwill represents the excess of the consideration paid over the fair value of the net assets acquired. Our other intangible assets, which consist of core deposit intangibles, were $1.5 million and $1.8 million at September 30, 2017 and December 31, 2016, respectively. These assets are amortized primarily on an accelerated basis over their estimated useful lives, generally over a period of 3 to 10 years.

On February 17, 2016, we completed the TFC acquisition. At closing, the acquired entity primarily consisted of TomatoBank, and $5.2 million of subordinated debentures. TomatoBank provided commercial and retail banking services primarily to Asian-Americans through six branches in the metro Los Angeles area.

We acquired TFC for $86.7 million in cash. The identifiable assets acquired of $469.9 million and liabilities assumed of $409.1 million were recorded at fair value. The identifiable assets acquired included the establishment of a $1.7 million core deposit intangible, which is being amortized on an accelerated basis over 8 to 10 years. Based upon the acquisition date fair values of the net assets acquired, we recorded $25.9 million of goodwill in our consolidated balance sheet.

Liabilities. Total liabilities increased $168.4 million to $1.4 billion, or 13.9%, at September 30, 2017 from December 31, 2016, primarily due to deposit growth.

Deposits. As a Chinese-American business bank that focuses on successful businesses and their owners, many of our depositors choose to leave large deposits with us. The Bank measures core deposits by reviewing all relationships over $250,000 on a quarterly basis. After discussions with our regulators on the proper way to measure core deposits, we now track all deposit relationships over $250,000 on a quarterly basis and consider a relationship to be core if there are any three or more of the following: (i) relationships with us (as a director or shareholder); (ii) deposits within our market area; (iii) additional non-deposit services with us; (iv) electronic banking services with us; (v) active demand deposit account with us; (vi) deposits at market interest rates; and (vii) longevity of the relationship with us. We consider all deposit relationships under $250,000 as a core relationship except for time deposits originated through an internet service. This differs from the traditional definition of core deposits which is demand and savings deposits plus time deposits less than $250,000. As many of our customers have more than $250,000 on deposit with us, we believe that using this method reflects a more accurate assessment of our deposit base. As of September 30, 2017, the Bank considers $1.0 billion or 79.4% of our deposits as core relationships.  As of September 30, 2017, our top ten deposit relationships totaled $319.5 million, of which four are related to directors and shareholders of the Company for a total of $104.2 million or 32.6% of our top ten deposit relationships. As of September 30, 2017, our directors and shareholders with deposits over $250,000 totaled $194.9 million or 18.4% of all relationships over $250,000.

The following table summarizes our average deposit balances and weighted average rates at September 30, 2017 and December 31, 2016:

	For the quarter ended				For the year ended
	September 30, 2017				December 31, 2016
			Weighted				Weighted
	Average		Average		Average		Average
(dollars in thousands)	Balance		Rate		Balance		Rate
Noninterest-bearing demand	$	227,854		—	$	151,441		—
Interest-bearing:
NOW		19,192		0.23		18,848		0.25
Savings		36,746		0.46		34,149		0.49
Money market		314,279		0.75		252,472		0.66
Time, less than $250,000		327,926		1.18		311,071		1.07
Time, $250,000 and over		362,452		1.18		354,733		1.17
Total interest-bearing		1,060,596				971,272
Total deposits	$	1,288,450			$	1,122,713

The following table sets forth the maturity of time deposits of $250,000 or more as of September 30, 2017:

	As of September 30, 2017
	Maturity Within:
(dollars in thousands)	Three Months		Three to Six Months		Six to 12 Months		After 12 Months		Total
Time, $250,000 and over	$	82,259	$	81,992	$	181,632	$	5,190	$	351,073
Wholesale deposits (1)		11,767		5,825		22,652		—		40,244
Total	$	94,026	$	87,817	$	204,284	$	5,190	$	391,317

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(1) Wholesale deposits are defined as time deposits under $250,000 originated through via internet rate line and/or through other deposit originators and are considered non-core deposits.

We acquired time deposits from the internet and outside deposits originators as needed to supplement liquidity. These time deposits are primarily under $250,000 and we do not consider them core deposits. The total amount of such deposits as of September 30, 2017 was $40.2 million or 3.2% of total deposits. The balances of such deposits as of December 31, 2016 were $31.0 million. The Bank did not have any brokered deposits during any of the time periods presented.

Total deposits increased $165.5 million to $1.3 billion at September 30, 2017 as compared to $1.2 billion at December 31, 2016, as we grew non-maturity deposit categories. As of September 30, 2017, total deposits were comprised of 22% noninterest-bearing demand accounts, 27% interest-bearing transaction accounts and 51% of time deposits.

Short-Term Borrowings. In addition to deposits, we use short-term borrowings, such as federal funds purchased and FHLB advances, as a source of funds to meet the daily liquidity needs of our customers and fund growth in earning assets.  We did not have any short-term borrowings as of September 30, 2017 or December 31, 2016. The weighted average interest rate on our short-term borrowings was 0.77% and 0.18% for the nine months ended September 30, 2017 and the year ended December 31, 2016, respectively.  The following table sets forth information on our short-term FHLB advances during the periods presented:

	As of and for the
	Nine Months Ended September 30,
(dollars in thousands)	2017			2016
Outstanding at period-end	$	—		$	10,000
Average amount outstanding	$	5,128		$	5,949
Maximum amount outstanding at any month-end	$	10,000		$	20,000
Weighted average interest rate:
During period		0.77	%		0.54	%
End of period		—			0.49	%

Long-Term Debt. Long-term debt consists of subordinated notes.  As of September 30, 2017 the amount outstanding was $49.5 million and $49.4 million at December 31, 2016.  On March 31 and April 15, 2016, we issued $50 million of subordinated notes for aggregate proceeds of $49.4 million. The subordinated notes have a maturity date of April 1, 2026 at a fixed rate of 6.5% for the first five years and a floating rate based on the three-month London Interbank Offered Rate (LIBOR) plus 516 basis points thereafter. Under the terms of our subordinated notes and the related subordinated notes purchase agreements, we are not permitted to declare or pay any dividends on our capital stock if an event of default occurs under the terms of the long term debt.

Subordinated Debentures. We acquired $5.2 million subordinated debentures as part of the TFC acquisition (TFC Statutory Trust I) and recorded it at fair value of $3.3 million. The fair value adjustment is being accreted over the remaining life of the securities. As of September 30, 2017 and December 31, 2016, we had $3.4 million, and $3.3 million, respectively, of subordinated debentures. These debentures mature on March 15, 2037 and have a variable rate of interest equal to the three-month LIBOR plus 1.65%.

In July 2017, British banking regulators announced plans to eliminate the LIBOR rate by the end of 2021, before these subordinated notes and debentures mature.  For these subordinated notes and debentures, there are provisions for amendments to establish a new interest rate benchmark.

Capital Resources and Liquidity Management

Capital Resources. Shareholders’ equity is influenced primarily by earnings, dividends, sales and redemptions of common stock and preferred stock and changes in accumulated other comprehensive income caused primarily by fluctuations in unrealized holding gains or losses, net of taxes, on available for sale investment securities.

Shareholders’ equity increased $78.7 million, or 43.4%, to $260.3 million during the first nine months of 2017 as $60.2 million from the July public offering, $20.6 million of net income, $268,000 of additional paid in capital and $130,000 increase in accumulated other comprehensive income exceeded $3.8 million of common dividends declared. The increase in accumulated other comprehensive income primarily resulted from increases in unrealized gains on available for sale securities.

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On July 27, 2017, we completed our initial public offering of 3,750,000 shares at a price to the public of $23.00 per share and a total offering size of $86,250,000. The offering was originally 3,000,000 shares but due to demand, we increased it to 3,750,000 shares. RBB Bancorp sold 2,857,756 shares and the selling shareholders sold 892,244 shares of RBB Bancorp’s common stock. The offering resulted in gross proceeds to RBB Bancorp of approximately $65.7 million. RBB Bancorp contributed $25 million of the net proceeds received from this offering to the Bank. Our stock now trades on the Nasdaq Global Select Market under the symbol “RBB”.  The increase to capital net of expenses is approximately $60.2 million.

Liquidity Management. Liquidity refers to the measure of our ability to meet the cash flow requirements of depositors and borrowers, while at the same time meeting our operating, capital and strategic cash flow needs, all at a reasonable cost. We continuously monitor our liquidity position to ensure that assets and liabilities are managed in a manner that will meet all short-term and long-term cash requirements. We manage our liquidity position to meet the daily cash flow needs of customers, while maintaining an appropriate balance between assets and liabilities to meet the return on investment objectives of our shareholders.

Our liquidity position is supported by management of liquid assets and liabilities and access to alternative sources of funds. Liquid assets include cash, interest-earning deposits in banks, federal funds sold, available for sale securities, term federal funds, purchased receivables and maturing or prepaying balances in our securities and loan portfolios. Liquid liabilities include core deposits, federal funds purchased, securities sold under repurchase agreements and other borrowings. Other sources of liquidity include the sale of loans, the ability to acquire additional national market noncore deposits, the issuance of additional collateralized borrowings such as FHLB advances, the issuance of debt securities, additional borrowings through the Federal Reserve’s discount window and the issuance of preferred or common securities. Our short-term and long-term liquidity requirements are primarily to fund on-going operations, including payment of interest on deposits and debt, extensions of credit to borrowers, capital expenditures and shareholder dividends. These liquidity requirements are met primarily through cash flow from operations, redeployment of prepaying and maturing balances in our loan and investment portfolios, debt financing and increases in customer deposits. For additional information regarding our operating, investing and financing cash flows, see the consolidated statements of cash flows provided in our consolidated financial statements.

Integral to our liquidity management is the administration of short-term borrowings. To the extent we are unable to obtain sufficient liquidity through core deposits, we seek to meet our liquidity needs through wholesale funding or other borrowings on either a short- or long-term basis.

As of September 30, 2017 and December 31, 2016, we had $47.0 million and $49.0 million of unsecured federal funds lines, respectively, with no amounts advanced against the lines as of such dates. In addition, lines of credit from the Federal Reserve Discount Window at September 30, 2017 and December 31, 2016 were $15.2 million and $15.0 million, respectively. Federal Reserve Discount Window lines were collateralized by a pool of commercial real estate loans totaling $25.3 million and $25.6 million as of September 30, 2017 and December 31, 2016, respectively. We did not have any borrowings outstanding with the Federal Reserve at September 30, 2017 and December 31, 2016 and our borrowing capacity is limited only by eligible collateral.

At September 30, 2017 and December 31, 2016 we did not have any FHLB advances outstanding. Based on the values of loans pledged as collateral, we had $326.9 million and $387.3 million of additional borrowing capacity with the FHLB as of September 30, 2017 and December 31, 2016, respectively. We also maintain relationships in the capital markets with brokers and dealers to issue certificates of deposit.

The Company is a corporation separate and apart from the Bank and, therefore, must provide for its own liquidity. The Company’s main source of funding is dividends declared and paid to us by the Bank and RAM. There are statutory, regulatory and debt covenant limitations that affect the ability of the Bank to pay dividends to the Company. Management believes that these limitations will not impact our ability to meet our ongoing short-term cash obligations.

Regulatory Capital Requirements

We are subject to various regulatory capital requirements administered by the federal and state banking regulators. Failure to meet regulatory capital requirements may result in certain mandatory and possible additional discretionary actions by regulators that, if undertaken, could have a direct material effect on our financial statements. Under capital adequacy guidelines and the regulatory framework for “prompt corrective action” (described below), we must meet specific capital guidelines that involve quantitative measures of our assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting policies.

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In the wake of the global financial crisis of 2008 and 2009, the role of capital has become fundamentally more important, as banking regulators have concluded that the amount and quality of capital held by banking organizations was insufficient to absorb losses during periods of severely distressed economic conditions. The Dodd-Frank Act and new banking regulations promulgated by the U.S. federal banking regulators to implement Basel III have established strengthened capital standards for banks and bank holding companies and require more capital to be held in the form of common stock. These provisions, which generally became applicable to the Company and the Bank on January 1, 2015, impose meaningfully more stringent regulatory capital requirements than those applicable to the Company and the Bank prior to that date. In addition, the Basel III regulations will implement a concept known as the “capital conservation buffer.” In general, banks and bank holding companies will be required to hold a buffer of common equity Tier 1 capital equal to 2.5% of risk-weighted assets over each minimum capital ratio to avoid being subject to limits on capital distributions (e.g., dividends, stock buybacks, etc.) and certain discretionary bonus payments to executive officers. For community banks, the capital conservation buffer requirement commenced on January 1, 2016, with a gradual phase-in. Full compliance with the capital conservation buffer will be required by January 1, 2019.

The table below summarizes the minimum capital requirements applicable to us and the Bank pursuant to Basel III regulations as of the dates reflected and assuming the capital conservation buffer has been fully-phased in. The minimum capital requirements are only regulatory minimums and banking regulators can impose higher requirements on individual institutions. For example, banks and bank holding companies experiencing internal growth or making acquisitions generally will be expected to maintain strong capital positions substantially above the minimum supervisory levels. Higher capital levels may also be required if warranted by the particular circumstances or risk profiles of individual banking organizations. The table below also summarizes the capital requirements applicable to us and the Bank in order to be considered “well-capitalized” from a regulatory perspective, as well as our and the Bank’s capital ratios as of September 30, 2017 and December 31, 2016. We and the Bank exceeded all regulatory capital requirements under Basel III and were considered to be “well-capitalized” as of the dates reflected in the table below:

	Ratio at September 30, 2017		Ratio at December 31, 2016		Regulatory Capital Ratio Requirements		Regulatory Capital Ratio Requirements, including fully phased-in Capital Conservation Buffer		Minimum Requirement for "Well Capitalized" Depository Institution
Tier 1 Leverage Ratio
Consolidated		14.91%		11.00%		4.00%		4.00%	N/A
Bank		14.57%		12.81%		4.00%		4.00%		5.00%
Common Equity Tier 1 Risk-Based Capital Ratio (1)
Consolidated		18.23%		13.30%		4.50%		7.00%	N/A
Bank		18.13%		15.81%		4.50%		7.00%		6.50%
Tier 1 Risk-Based Capital Ratio
Consolidated		18.49%		13.56%		6.00%		8.50%	N/A
Bank		18.13%		15.81%		6.00%		8.50%		8.00%
Total Risk-Based Capital Ratio
Consolidated		23.37%		19.17%		8.00%		10.50%	N/A
Bank		19.08%		17.06%		8.00%		10.50%		10.00%

(1) The common equity tier 1 risk-based ratio, or CET1, is a new ratio created by the Basel III regulations beginning January 1, 2015.

The Basel III regulations also revise the definition of capital and describe the capital components and eligibility criteria for common equity Tier 1 capital, additional Tier 1 capital and Tier 2 capital. The most significant changes to the capital criteria are that: (i) the prior concept of unrestricted Tier 1 capital and restricted Tier 1 capital has been replaced with additional Tier 1 capital and a regulatory capital ratio that is based on common equity Tier 1 capital; and (ii) trust preferred securities and cumulative perpetual preferred stock issued after May 19, 2010 no longer qualify as Tier 1 capital. This change is already effective due to the Dodd-Frank Act, although such instruments issued prior to May 19, 2010 continue to qualify as Tier 1 capital (assuming they qualified as such under the prior regulatory capital standards), subject to the 25% of Tier 1 capital limit.

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Contractual Obligations

The following table contains supplemental information regarding our total contractual obligations at September 30, 2017:

	Payments Due
	Within		One to		Three to		After Five
(dollars in thousands)	One Year		Three Years		Five Years		Years		Total
Deposits without a stated maturity	$	649,592	$	—	$	—	$	—	$	649,592
Time deposits		660,188		8,514		—		—		668,702
Long-term debt		—		—		—		50,000		50,000
Subordinated debentures		—		—		—		5,155		5,155
Leases		410		2,104		878		130		3,522
Total contractual obligations	$	1,310,190	$	10,618	$	878	$	55,285	$	1,376,971

Off-Balance Sheet Arrangements

We have limited off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our financial condition, revenues, expenses, results of operations, liquidity, capital expenditures or capital resources.

In the ordinary course of business, the Company enters into financial commitments to meet the financing needs of its customers. These financial commitments include commitments to extend credit, unused lines of credit, commercial and similar letters of credit and standby letters of credit. Those instruments involve to varying degrees, elements of credit and interest rate risk not recognized in the Company’s financial statements.

The Company’s exposure to loan loss in the event of nonperformance on these financial commitments is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments as it does for loans reflected in the financial statements.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Since many of the commitments are expected to expire without being drawn upon, the total amounts do not necessarily represent future cash requirements. The Company evaluates each client’s credit worthiness on a case-by-case basis. The amount of collateral obtained if deemed necessary by the Company is based on management’s credit evaluation of the customer.

Non-GAAP Financial Measures

Some of the financial measures included in this Form 10-Q are not measures of financial performance recognized by GAAP. These non-GAAP financial measures include “tangible common equity to tangible assets,” “tangible book value per share,” “return on average tangible common equity,” “adjusted earnings,” “adjusted diluted earnings per share,” “adjusted return on average assets,” and “adjusted return on average tangible common equity.” Our management uses these non-GAAP financial measures in its analysis of our performance.

Tangible Common Equity to Tangible Assets Ratio and Tangible Book Value Per Share. The tangible common equity to tangible assets ratio and tangible book value per share are non-GAAP measures generally used by financial analysts and investment bankers to evaluate capital adequacy. We calculate: (i) tangible common equity as total shareholders’ equity less goodwill and other intangible assets (excluding mortgage servicing rights); (ii) tangible assets as total assets less goodwill and other intangible assets; and (iii) tangible book value per share as tangible common equity divided by shares of common stock outstanding.

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Our management, banking regulators, many financial analysts and other investors use these measures in conjunction with more traditional bank capital ratios to compare the capital adequacy of banking organizations with significant amounts of goodwill or other intangible assets, which typically stem from the use of the purchase accounting method of accounting for mergers and acquisitions. Tangible common equity, tangible assets, tangible book value per share and related measures should not be considered in isolation or as a substitute for total shareholders’ equity, total assets, book value per share or any other measure calculated in accordance with GAAP. Moreover, the manner in which we calculate tangible common equity, tangible assets, tangible book value per share and any other related measures may differ from that of other companies reporting measures with similar names. The following table reconciles shareholders’ equity (on a GAAP basis) to tangible common equity and total assets (on a GAAP basis) to tangible assets, and calculates our tangible book value per share:

(dollars in thousands)	September 30, 2017			December 31, 2016
Tangible common equity:
Total shareholders' equity	$	260,331		$	181,585
Adjustments
Goodwill		(29,940	)		(29,940	)
Core deposit intangible		(1,525	)		(1,793	)
Tangible common equity	$	228,866		$	149,852
Tangible assets:
Total assets-GAAP	$	1,642,714		$	1,395,551
Adjustments
Goodwill		(29,940	)		(29,940	)
Core deposit intangible		(1,525	)		(1,793	)
Tangible assets:	$	1,611,249		$	1,363,818
Common shares outstanding		15,790,611			12,827,803
Tangible common equity to tangible assets ratio		14.20	%		10.99	%
Tangible book value per share	$	14.49		$	11.68

Return on Average Tangible Common Equity. Management measures return on average tangible common equity (ROATCE) to assess the Company’s capital strength and business performance. Tangible equity excludes goodwill and other intangible assets (excluding mortgage servicing rights), and is reviewed by banking and financial institution regulators when assessing a financial institution’s capital adequacy. This non-GAAP financial measure should not be considered a substitute for operating results determined in accordance with GAAP and may not be comparable to other similarly titled measures used by other companies. The following table reconciles return on average tangible common equity to its most comparable GAAP measure:

	As of and for the						As of and for the
	Three Months						Nine Months
	Ended September 30,						Ended September 30,
(dollars in thousands)	2017			2016			2017			2016
Net income available to common shareholders	$	6,611		$	5,697		$	20,640		$	13,693
Average shareholder's equity		237,480			176,021			203,054			169,622
Adjustments:
Goodwill		(29,940	)		(29,940	)		(29,940	)		(29,940	)
Core deposit intangible		(1,577	)		(1,959	)		(1,665	)		(1,754	)
Adjusted average tangible common equity	$	205,964		$	144,122		$	171,449		$	137,929
Return on average tangible common equity		12.73	%		15.73	%		16.10	%		13.26	%

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Adjusted Earnings Metrics. Management uses the measure adjusted earnings to assess the performance of our core business and the strength of our capital position. We believe that this non-GAAP financial measure provides meaningful additional information about us to assist investors in evaluating our operating results. This non-GAAP financial measure should not be considered a substitute for operating results determined in accordance with GAAP and may not be comparable to other similarly titled measures used by other companies. The following table reconciles adjusted earnings, adjusted diluted earnings per share, adjusted return on average assets and adjusted return on average tangible common equity to their most comparable GAAP measures:

	As of and for the						As of and for the
	Three Months						Nine Months
	Ended September 30,						Ended September 30,
(dollars in thousands)	2017			2016			2017			2016
Adjusted earnings metrics
Income before taxes - GAAP		10,624			9,767			34,429			23,302
Adjustments to interest income
Accretion of purchase discounts		(638	)		(2,895	)		(2,584	)		(6,298	)
Provision (recapture) for loan loss		700			—			(3,488	)		2,349
Adjustments to noninterest income
Gain on sale of OREO		142			—			142			—
Gain on sale on investment securities, net		—			—			—			(19	)
Integration and acquisition expenses		—			—			14			1,944
Total adjustments to income		204			(2,895	)		(5,916	)		(2,024	)
Adjusted earnings pre-tax		10,828			6,872			28,513			21,278
Adjusted taxes		4,090			2,864			11,420			8,774
Adjusted earnings non-GAAP		6,738			4,008			17,094			12,504
Adjusted diluted EPS	$	0.43		$	0.29		$	1.17		$	0.91
Weighted average diluted common shares    outstanding		15,851,929			13,717,232			14,559,043			13,687,998
Average assets	$	1,590,388		$	1,452,032		$	1,507,940		$	1,389,806
Adjusted return on average assets		1.68	%		1.10	%		1.52	%		1.20	%
Average tangible common equity	$	205,964		$	144,122		$	171,449		$	137,929
Adjusted return on average tangible common    equity		12.98	%		11.06	%		13.33	%		12.11	%

Regulatory Reporting to Financial Statements

Some of the financial measures included in this prospectus differ from those reported on the FRB Y-9(c) report. These financial measures include “core deposits to total deposits” and “net non-core funding dependency ratio”. Our management uses these financial measures in its analysis of our performance.

65

Core Deposits to Total Deposits Ratio. The Bank measures core deposits by reviewing all relationships over $250,000 on a quarterly basis. After discussions with our regulators on the proper way to measure core deposits, we now track all deposit relationships over $250,000 on a quarterly basis and consider a relationship to be core if there are any three or more of the following: (i) relationships with us (as a director or shareholder); (ii) deposits within our market area; (iii) additional non-deposit services with us; (iv) electronic banking services with us; (v) active demand deposit account with us; (vi) deposits at market interest rates; and (vii) longevity of the relationship with us. We consider all deposit relationships under $250,000 as a core relationship except for time deposits originated through an internet service. This differs from the traditional definition of core deposits which is demand and savings deposits plus time deposits less than $250,000. As many of our customers have more than $250,000 on deposit with us, we believe that using this method reflects a more accurate assessment of our deposit base. The following table reconciles the adjusted core deposit to total deposits.

	As of			As of
	September30, 2017			December 31, 2016
(dollars in thousands)
Adjusted core deposit to total deposit ratio and net    non-core funding dependency ratio:
Core deposits  (1)	$	967,219		$	781,940
Adjustments to core deposits
CD > $250,000 considered core deposits (2)		298,191			325,453
Less internet deposits < $250,000 considered    non-core (3)		(40,244	)		(30,971	)
Less other deposits not considered core (4)		(178,325	)		(171,800	)
Adjusted core deposits		1,046,841			904,622
Total deposits		1,318,292		$	1,152,763
Adjusted core deposits to total deposits ratio		79.41	%		78.47	%

(1) Core deposits comprise all demand and savings deposits of any amount plus time deposits less than $250,000.

(2) Comprised of time deposits to core customers over $250,000 as defined in the lead-in to the table above.

(3) Comprised of internet and outside deposit originator time deposits less than $250,000 which are not considered to be core deposits.

(4) Comprised of demand and savings deposits in relationships over $250,000 which are considered non-core deposits because they do not satisfy the definition of core deposits set forth in the lead-in to the table above.

66

Net Non-Core Funding Dependency Ratio. Management measures net non-core funding dependency ratio by using the data provided under “Core Deposits to Total Deposits Ratio” on page 65 to make adjustments to the traditional definition of net non-core funding dependency ratio. The traditional net non-core funding dependency ratio measures non-core funding sources less short term assets divided by total earning assets. The ratio indicates the dependency of the Company on non-core funding. The following table reconciles the adjusted net non-core dependency ratio.

	As of			As of
	September 30, 2017			December 31, 2016
(dollars in thousands)
Non-core deposits (1)	$	351,073		$	370,823
Adjustment to Non-core deposits
CD > $250,000 considered core deposits (2)		(298,191	)		(325,453	)
Internet deposits considered non-core (3)		40,244			30,971
Other deposits not considered core		178,325			171,800
Adjusted non-core deposits		271,451			248,141
Short term borrowings outstanding		—			—
Adjusted non-core liabilities (A)		271,451			248,141
Short term assets (4)		166,152			108,537
Adjustment to short term assets
Purchased receivables with maturities less    than 90-days		2,238			22,368
Adjusted short term assets (B)		168,390			130,905
Net non-core funding (A-B)	$	103,061		$	117,236
Total earning assets	$	1,549,266		$	1,316,651
Adjusted net non-core funding dependency ratio		6.65	%		8.90	%

(1) Non-core deposits are time deposits greater than $250,000

(2) Time deposits to core customers over $250,000

(3) Internet and outside deposit originator time deposits less than $250,000

(4) Short term assets include cash equivalents and investment with maturities less than one year

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk. Market risk represents the risk of loss due to changes in market values of assets and liabilities. We incur market risk in the normal course of business through exposures to market interest rates, equity prices, and credit spreads. We have identified two primary sources of market risk: interest rate risk and price risk.

Interest Rate Risk

Overview. Interest rate risk is the risk to earnings and value arising from changes in market interest rates. Interest rate risk arises from timing differences in the repricings and maturities of interest-earning assets and interest-bearing liabilities (repricing risk), changes in the expected maturities of assets and liabilities arising from embedded options, such as borrowers’ ability to prepay residential mortgage loans at any time and depositors’ ability to redeem certificates of deposit before maturity (option risk), changes in the shape of the yield curve where interest rates increase or decrease in a nonparallel fashion (yield curve risk), and changes in spread relationships between different yield curves, such as U.S. Treasuries and LIBOR (basis risk).

Our asset liability committee, or ALCO establishes broad policy limits with respect to interest rate risk. ALCO establishes specific operating guidelines within the parameters of the board of directors’ policies. In general, we seek to minimize the impact of changing interest rates on net interest income and the economic values of assets and liabilities. Our ALCO meets monthly to monitor the level of interest rate risk sensitivity to ensure compliance with the board of directors’ approved risk limits.

Interest rate risk management is an active process that encompasses monitoring loan and deposit flows complemented by investment and funding activities. Effective management of interest rate risk begins with understanding the dynamic characteristics of assets and liabilities and determining the appropriate interest rate risk posture given business forecasts, management objectives, market expectations, and policy constraints.

An asset sensitive position refers to a balance sheet position in which an increase in short-term interest rates is expected to generate higher net interest income, as rates earned on our interest-earning assets would reprice upward more quickly than rates paid on our interest-bearing liabilities, thus expanding our net interest margin.  Conversely, a liability sensitive position refers to a balance sheet position in which an increase in short-term interest rates is expected to generate lower net interest income, as rates paid on our interest-bearing liabilities would reprice upward more quickly than rates earned on our interest-earning assets, thus compressing our net interest margin.

Income Simulation and Economic Value Analysis. Interest rate risk measurement is calculated and reported to the board and ALCO at least quarterly. The information reported includes period-end results and identifies any policy limits exceeded, along with an assessment of the policy limit breach and the action plan and timeline for resolution, mitigation, or assumption of the risk.

We use two approaches to model interest rate risk: Net Interest Income at Risk, or NII at Risk, and Economic Value of Equity, or EVE. Under NII at Risk, net interest income is modeled utilizing various assumptions for assets, liabilities, and derivatives. EVE measures the period end market value of assets minus the market value of liabilities and the change in this value as rates change. EVE is a period end measurement.

	Net Interest Income Sensitivity
	Immediate Change in Rates
(dollars in thousands)	-100			100			200
September 30, 2017
Dollar change	$	(1,947	)	$	4,432		$	9,317
Percent change		-3.44	%		7.84	%		16.47	%
December 31, 2016:
Dollar change		650			3,315			7,813
Percent change		1.30	%		6.61	%		15.58	%

We report NII at Risk to isolate the change in income related solely to interest earning assets and interest- bearing liabilities. The NII at Risk results included in the table above reflect the analysis used quarterly by management. It models gradual -100, +100 and +200 basis point parallel shifts in market interest rates, implied by the forward yield curve over the next one-year period. Due to the current low level of short-term interest rates, the analysis reflects a declining interest rate scenario of 100 basis points, the point at which many assets and liabilities reach zero percent.

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We are within board policy limits for the +/-100 and +200 basis point scenarios. The NII at Risk reported at September 30, 2017, projects that our earnings are expected to be materially sensitive to changes in interest rates over the next year. In recent periods, the amount of fixed rate assets increased resulting in a position shift from slightly asset sensitive to asset sensitive.

	Economic Value of Equity Sensitivity (Shock)
	Immediate Change in Rates
(dollars in thousands)	-100			100			200
September 30, 2017
Dollar change	$	(33,612	)	$	11,571		$	19,375
Percent change		-12.78	%		4.40	%		7.37	%
December 31, 2016:
Dollar change		(23,016	)		13,611			20,980
Percent change		-9.60	%		5.70	%		8.80	%

The EVE results included in the table above reflect the analysis used quarterly by management. It models immediate -100, +100 and +200 basis point parallel shifts in market interest rates. Due to the current low level of short-term interest rates, the analysis reflects a declining interest rate scenario of 100 basis points, the point at which many assets and liabilities reach zero percent.

We are within board policy limits for the +/-100 and +200 basis point scenarios. The EVE reported at September 30, 2017 projects that as interest rates increase immediately, the economic value of equity position will be expected to increase. When interest rates rise, fixed rate assets generally lose economic value; the longer the duration, the greater the value lost. The opposite is true when interest rates fall.

Price Risk. Price risk represents the risk of loss arising from adverse movements in the prices of financial instruments that are carried at fair value and subject to fair value accounting. We have price risk from our available for sale single-family residential mortgage loans and our fixed-rate available for sale securities.

Basis Risk. Basis risk represents the risk of loss arising from asset and liability pricing movements not changing in the same direction. We have basis risk in our single-family residential mortgage loan portfolio and our securities portfolio.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures. The Company’s management, including our President and Chief Executive Officer and our Chief Financial Officer, have evaluated the effectiveness of our “disclosure controls and procedures” (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end of the period covered by this report. Based on such evaluation, our President and Chief Executive Officer and our Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures were effective as of that date to provide reasonable assurance that the information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its President and Chief Executive Officer and its Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in internal control over financial reporting. There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

69

PART II - OTHER INFORMATION

ITEM1. LEGALPROCEEDINGS

Certain lawsuits and claims arising in the ordinary course of business have been filed or are pending against us or our affiliates, including but not limited to actions involving federal and state securities law claims, employment, wage-hour and labor law claims, lender liability claims, trust and estate administration claims, and consumer and privacy claims, some of which may be styled as “class action” or representative cases. Where appropriate, we establish reserves in accordance with FASB guidance over loss contingencies (ASC 450). The outcome of litigation and other legal and regulatory matters is inherently uncertain, however, and it is possible that one or more of the legal or regulatory matters currently pending or threatened could have a material adverse effect on our liquidity, consolidated financial position, and/or results of operations. As of June 30, 2017, the Company does not have any litigation reserves.

ITEM1A. RISKFACTORS

There have been no material changes to the risk factors as previously disclosed in Item 1A to Part I of our consolidated audited financial statements included in our registration statement on Form S-1 filed with the SEC, for the year ended December 31, 2016. The materiality of any risks and uncertainties identified in our Forward Looking Statements contained in this report or those that are presently unforeseen could result in significant adverse effects on our financial condition, results of operations and cash flows. See Part I, Item 2 for “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report on Form 10-Q.

ITEM2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OFPROCEEDS

Not Applicable

ITEM3. DEFAULTS UPON SENIORSECURITIES

Not Applicable

ITEM4. MINE SAFETYDISCLOSURES

Not Applicable

ITEM5. OTHERINFORMATION

None

ITEM6. EXHIBITS

ExhibitNo.	Description ofExhibits
31.1	CertificationofChiefExecutiveOfficerpursuanttoSection302oftheSarbanes-OxleyActof2002
31.2	CertificationofChiefFinancialOfficerpursuanttoSection302oftheSarbanes-OxleyActof2002
32.1	CertificationofChiefExecutiveOfficerpursuanttoSection906oftheSarbanes-OxleyActof2002
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

70

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.

	RBB BANCORP
	(Registrant)
Date: November 13, 2017	/s/ David Morris
	David Morris Duly Authorized Officer, Executive Vice President and Chief Financial Officer

71

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Alan Thian, certify that:

1.I have reviewed this quarterly report on Form 10-Q of RBB Bancorp;

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

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

4.The registrant’s other certifying officer 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 the registrant’s Board of Directors (or persons performing the equivalent functions):

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

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

Date:   November 13, 2017	By:	/s/ Yee Phong (Alan) Thian
	Yee Phong (Alan) Thian
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, David Morris, certify that:

1.I have reviewed this quarterly report on Form 10-Q of RBB Bancorp;

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

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

4.The registrant’s other certifying officer 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 the registrant’s Board of Directors (or persons performing the equivalent functions):

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

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

Date:   November 13, 2017	By:	/s/ David  Morris
	David  Morris,
	Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

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 RBB Bancorp (the “Company”) on Form 10-Q for the period ended September 30, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Alan Thian, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge that:

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

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

Date:   November 13, 2017	By:	/s/ Yee Phong (Alan) Thian
	Yee Phone (Alan) Thian
	President and Chief Executive Officer

EX-32.2

Exhibit 32.2

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 RBB Bancorp (the “Company”) on Form 10-Q for the period ended September 30, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David Morris, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge that:

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

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

Date:   November 13, 2017	By:	/s/ David Morris
	David Morris,
	Executive Vice President and Chief Financial Officer

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2017	Oct. 30, 2017
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q3
Trading Symbol	RBB
Entity Registrant Name	RBB BANCORP
Entity Central Index Key	0001499422
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		15,801,374

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Assets
Cash and due from banks	$ 69,552	$ 74,213
Federal funds sold and other cash equivalents	96,500	44,500
Cash and cash equivalents	166,052	118,713
Interest-earning deposits in other financial institutions	100	345
Securities:
Available for sale	55,697	39,277
Held to maturity (fair value of $5,485 and $6,553 at September 30, 2017 and December 31, 2016, respectively)	5,191	6,214
Mortgage loans held for sale	125,704	44,345
Loans held for investment:
Real estate	827,535	755,301
Commercial	372,531	361,227
Total loans	1,200,066	1,116,528
Unaccreted discount on acquired loans	(5,501)	(8,085)
Deferred loan costs (fees), net	1,957	2,003
Total loans, gross	1,196,522	1,110,446
Allowance for loan losses	(11,420)	(14,162)
Net loans	1,185,102	1,096,284
Premises and equipment	6,300	6,585
Federal Home Loan Bank (FHLB) stock	6,770	6,770
Net deferred tax assets	9,517	11,097
Other real estate owned (OREO)	293	833
Cash surrender value of life insurance	32,578	21,958
Goodwill	29,940	29,940
Servicing assets	5,370	3,704
Core deposit intangibles	1,525	1,793
Accrued interest and other assets	12,575	7,693
Total Assets	1,642,714	1,395,551
Deposits:
Noninterest-bearing demand	287,574	174,272
Savings, NOW and money market accounts	362,018	296,699
Time deposits under $250,000	317,627	310,969
Time deposits $250,000 and over	351,073	370,823
Total deposits	1,318,292	1,152,763
Reserve for unfunded commitments	489	604
Income tax payable		793
Long-term debt	49,492	49,383
Subordinated debentures	3,402	3,334
Accrued interest and other liabilities	10,708	7,089
Total liabilities	1,382,383	1,213,966
Commitments and contingencies - Note 13
Shareholders' equity:
Preferred Stock - 100,000,000 shares authorized, no par value; none outstanding
Common Stock - 100,000,000 shares authorized, no par value; 15,790,611 shares issued and outstanding at September 30, 2017 and 12,827,803 shares at December 31,2016	204,206	142,651
Additional paid-in capital	8,686	8,417
Retained earnings	47,576	30,784
Accumulated other comprehensive income (loss) - net unrealized loss on securities available for sale, net of tax of $95 at September 30, 2017 and $186 at December 31, 2016	(137)	(267)
Total shareholders’ equity	260,331	181,585
Total Liabilities and Shareholders’ Equity	$ 1,642,714	$ 1,395,551

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CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Statement Of Financial Position [Abstract]
Securities held to maturity, fair value	$ 5,485	$ 6,553
Preferred stock, shares authorized	100,000,000	100,000,000
Preferred stock, par value
Preferred stock, shares outstanding	0	0
Common stock, shares authorized	100,000,000	100,000,000
Common stock, par value
Common stock, shares issued	15,790,611	12,827,803
Common stock, shares outstanding	15,790,611	12,827,803
Accumulated other comprehensive income (loss) - net unrealized loss on securities available for sale, tax	$ 95	$ 186

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CONSOLIDATED STATEMENTS OF INCOME - (UNAUDITED) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Interest and dividend income:
Interest and fees on loans	$ 17,200	$ 18,169	$ 49,992	$ 50,042
Interest on interest-earning deposits	371	80	731	236
Interest on investment securities	331	203	922	620
Dividend income on FHLB stock	118	155	353	416
Interest on federal funds sold and other	326	92	628	159
Total interest income	18,346	18,699	52,626	51,473
Interest expense:
Interest on savings deposits, now and money market accounts	649	521	1,698	1,489
Interest on time deposits	2,061	1,801	5,903	5,144
Interest on subordinated debentures and other	908	903	2,720	1,824
Interest on other borrowed funds		16	29	24
Total interest expense	3,618	3,241	10,350	8,481
Net interest income	14,728	15,458	42,276	42,992
Provision (recapture) for credit losses	700	1,250	(3,488)	3,599
Net interest income after provision (recapture) for credit losses	14,028	14,208	45,764	39,393
Noninterest income:
Service charges, fees and other	518	443	1,624	1,182
Gain on sale of loans	2,584	1,870	6,370	4,136
Loan servicing fees, net of amortization	314	95	571	384
Recoveries on loans acquired in business combinations	19	47	76	139
Increase in cash surrender value of life insurance	219	141	620	423
Gain on sale of securities				19
Gain on sale of OREO	142		142
Total noninterest income	3,796	2,596	9,403	6,283
Noninterest expense:
Salaries and employee benefits	4,178	3,481	12,604	10,547
Occupancy and equipment expenses	705	766	2,176	2,388
Data processing	458	563	1,264	1,488
Legal and professional	318	511	227	1,478
Office expenses	153	153	484	455
Marketing and business promotion	250	102	575	408
Insurance and regulatory assessments	201	284	611	810
Amortization of intangibles	87	103	268	268
OREO expenses	6	6	34	16
Other expenses	844	1,068	2,495	4,516
Total noninterest expense	7,200	7,037	20,738	22,374
Income before income taxes	10,624	9,767	34,429	23,302
Income tax expense	4,013	4,070	13,789	9,609
Net income	$ 6,611	$ 5,697	$ 20,640	$ 13,693
Net income per share
Basic	$ 0.45	$ 0.44	$ 1.53	$ 1.07
Diluted	$ 0.42	$ 0.42	1.42	1.00
Cash dividends declared per common share			$ 0.30	$ 0.20

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - (UNAUDITED) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Statement Of Income And Comprehensive Income [Abstract]
Net income	$ 6,611	$ 5,697	$ 20,640	$ 13,693
Other comprehensive income (loss):
Unrealized gains (losses) on securities available for sale, Change in unrealized gains (losses)	(80)	45	220	710
Unrealized gains (losses) on securities available for sale, Reclassification of gains recognized in net income				(19)
Unrealized gains (losses) on securities available for sale	(80)	45	220	691
Related income tax effect, Change in unrealized gains (losses)	33	(18)	(90)	(291)
Related income tax effect, Reclassification of gains recognized in net income				8
Related income tax effect	33	(18)	(90)	(283)
Total other comprehensive income	(47)	27	130	408
Total comprehensive income	$ 6,564	$ 5,724	$ 20,770	$ 14,101

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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - (UNAUDITED) - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss)
Beginning balance at Dec. 31, 2015	$ 163,645	$ 141,873	$ 7,706	$ 14,259	$ (193)
Beginning balance, shares at Dec. 31, 2015		12,770,571
Net income	13,693			13,693
Stock-based compensation	646		646
Cash dividend	(2,554)			(2,554)
Stock options exercised	595	$ 778	(183)
Stock options exercised, shares		57,232
Other comprehensive income, net of taxes	408				408
Ending balance at Sep. 30, 2016	176,433	$ 142,651	8,169	25,398	215
Ending balance, shares at Sep. 30, 2016		12,827,803
Beginning balance at Dec. 31, 2016	$ 181,585	$ 142,651	8,417	30,784	(267)
Beginning balance, shares at Dec. 31, 2016	12,827,803	12,827,803
Net income	$ 20,640			20,640
Stock-based compensation	592		592
Cash dividend	(3,848)			(3,848)
Stock options exercised	1,015	$ 1,338	(323)
Stock options exercised, shares		105,052
Issuance of common stock, net of issuance costs	60,217	$ 60,217
Issuance of common stock, net of issuance costs, shares		2,857,756
Other comprehensive income, net of taxes	130				130
Ending balance at Sep. 30, 2017	$ 260,331	$ 204,206	$ 8,686	$ 47,576	$ (137)
Ending balance, shares at Sep. 30, 2017	15,790,611	15,790,611

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CONSOLIDATED STATEMENTS OF CASH FLOWS - (UNAUDITED) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Operating activities
Net income	$ 20,640	$ 13,693
Adjustments to reconcile net income to net cash from
Depreciation and amortization of premises, equipment and intangibles	971	1,096
Net amortization (accretion) of securities, loans, deposits, and other	(1,257)	(6,606)
Provision (recapture) for loan losses	(3,488)	3,599
Stock-based compensation	592	463
Gain on sale of securities		(19)
Gain on sale of loans	(6,370)	(4,136)
Gain on sale of OREO	(142)
Increase in cash surrender value of life insurance	(620)	(423)
Loans originated and purchased for sale	(184,468)	(160,654)
Proceeds from loans sold	155,372	169,546
Other items	(360)	7,181
Net cash from operating activities	(19,130)	23,740
Investing activities
Decrease in interest-earning deposits	245	9,437
Securities available for sale:
Purchases	(18,795)	(2,000)
Maturities, prepayments and calls	3,336	3,295
Sales		5,083
Purchase of FHLB stock and other equity securities, net	(27)	(2,998)
Net (increase) decrease in loans	(131,321)	42,080
Proceeds from sales of OREO	257
Purchase of life insurance	(10,000)
Net cash paid in connection with acquisition		(35,051)
Purchases of premises and equipment	(229)	(230)
Net cash from investing activities	(156,534)	19,616
Financing activities
Net increase (decrease) in demand deposits and savings accounts	178,620	(32,876)
Net decrease in time deposits	(13,001)	(26,099)
Net change in FHLB advances		10,000
Cash dividends paid	(3,848)	(2,554)
Issuance of subordinated debentures, net of issuance costs		49,274
Issuance of common stock, net of issuance costs	60,217
Exercise of stock options	1,015	778
Net cash from financing activities	223,003	(1,477)
Net increase in cash and cash equivalents	47,339	41,879
Cash and cash equivalents at beginning of period	118,713	113,891
Cash and cash equivalents at end of period	166,052	155,770
Cash paid during the period:
Interest paid	9,528	9,175
Taxes paid	12,875	8,290
Non-cash investing and financing activities:
Transfer of loan to available for sale securities	1,000
Transfer of loans to held for sale	114,047	48,425
Loan to facilitate OREO	425
Securities held to maturity transferred to available for sale		433
Net change in unrealized holding gain on securities available for sale	$ 222	$ 710

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Business Description

9 Months Ended

Sep. 30, 2017

Business Description [Abstract]

Business Description

NOTE 1 - BUSINESS DESCRIPTION

RBB Bancorp is a bank holding company registered under the Bank Holding Company Act of 1956, as amended. Our principal business is to serve as the holding company for our wholly-owned banking subsidiaries, Royal Business Bank ("Bank") and RBB Asset Management Company ("RAM"), collectively referred to herein as "the Company". At September 30, 2017, the Company had total assets of $1.6 billion, gross loans of $1.2 billion, total deposits of $1.3 billion and total stockholders' equity of $260.3 million. On July 31, 2017, the Company completed its initial public offering of 3,750,000 shares at a price to the public of $23.00 per share. The Company’s stock trades on the Nasdaq Global Select Market under the symbol “RBB”.

Royal Business Bank provides business banking services to the Chinese-American communities in Los Angeles County, Orange County, Ventura County and in Las Vegas, including remote deposit, E-banking, mobile banking, commercial and investor real estate loans, business loans and lines of credit, SBA 7A and 504 loans, mortgage loans, trade finance and a full range of depository accounts. RAM was formed to hold and manage problem assets acquired in business combinations.

The Company operates full-service banking offices in Arcadia, Cerritos, Diamond Bar, Los Angeles, Monterey Park, Oxnard, Rowland Heights, San Gabriel, Silver Lake, Torrance, West LA, and Westlake Village, California and Las Vegas, Nevada and a loan production office in the City of Industry, California.  The Company's primary source of revenue is providing loans to customers, who are predominately small and middle-market businesses and individuals.

We generate our revenue primarily from interest received on loans and leases and, to a lesser extent, from interest received on investment securities.  We have also derived income from noninterest sources, such as fees received in connection with various lending and deposit services, residential mortgage loan originations, loan servicing and gain on sales of loans.  Our principle expenses include interest expense on deposits and subordinated debentures, and operating expenses, such as salaries and employee benefits, occupancy and equipment, data processing, and income tax expense.

We have completed four acquisitions from July 8, 2011 through February 19, 2016, including the acquisition of TFC Holding Company on February 19, 2016. Our acquisitions have been accounted for using the acquisition method of accounting and, accordingly, the operating results of the acquired entities have been included in the consolidated financial statements from their respective acquisition dates. See Note 3. Acquisitions, for more information about the TFC acquisition.

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Basis of Presentation and Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2017

Accounting Policies [Abstract]

Basis of Presentation and Summary of Significant Accounting Policies

NOTE 2 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited consolidated financial statements and notes thereto of the Company have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) for Form 10-Q and conform to practices within the banking industry and include all of the information and disclosures required by accounting principles generally accepted in the United States of America (“GAAP”) for interim financial reporting.  The accompanying unaudited consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments), which are necessary for a fair presentation of financial results for the interim periods presented. The results of operations for the nine months ended September 30, 2017 are not necessarily indicative of the results for the full year.  Certain amounts reported for 2016 have been reclassified to be consistent with the reporting for 2017.  These interim unaudited financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto as of and for the years ended December 31, 2016, 2015 and 2014, included in our registration statement filed under Form S-1.

Principles of Consolidation and Nature of Operations

The accompanying unaudited consolidated financial statements include the accounts of RBB Bancorp and its wholly-owned subsidiaries Royal Business Bank ("Bank") and RBB Asset Management Company ("RAM"), collectively referred to herein as "the Company".  All significant intercompany transactions have been eliminated.  

RBB Bancorp was formed in January 2011 as a bank holding company.  RAM was formed in 2012 to hold and manage problem assets acquired in business combinations.

RBB Bancorp has no significant business activity other than its investments in Royal Business Bank and RAM.  

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Summary of Significant Accounting Policies

The accompanying unaudited consolidated financial statements were compiled in accordance with the accounting policies set forth in Note 1 – Summary of Significant Policies in our Consolidated Financial Statements as of and for the periods ended December 31, 2016, 2015, and 2014, included in our registration statement on Form S-1.  The accompanying consolidated unaudited financial statements reflect all adjustments consisting of normal recurring adjustments that, in the opinion of management, are necessary to reflect a fair statement of our consolidated financial condition, results of operations, and cash flows. The results of operations for acquired companies are included from the dates of acquisition.  Operating results for the three and nine months ended September 30, 2017 are not necessarily indicative of the results that may be expected for the year ended December 31, 2017.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers (Topic 606).  This Update requires an entity to recognize revenue as performance obligations are met, in order to reflect the transfer of promised goods or services to customers in an amount that reflects the consideration the entity is entitled to receive for those goods or services.  The following steps are applied in the updated guidance: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, the entity satisfies a performance obligation.  These amendments are effective for public business entities for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period and one year later for nonpublic business entities.  Early adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that period. The Company plans to adopt ASU 2014-09 on January 1, 2019 utilizing the modified retrospective approach.  Since the guidance does not apply to revenue associated with financial instruments such as loans and investments, which are accounted for under other provisions of GAAP, we do not expect it to impact interest income, our largest component of income.  The Company will perform an overall assessment of revenue streams potentially affected by the ASU, including certain deposit related fees and interchange fees, to determine the impact this guidance will have on our consolidated financial statements.  

In January 2016, the FASB issued ASU 2016-01, Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities (Subtopic 825-10).  Changes made to the current measurement model primarily affect the accounting for equity securities and readily determinable fair values, where changes in fair value will impact earnings instead of other comprehensive income.  The accounting for other financial instruments, such as loans, investments in debt securities, and financial liabilities is largely unchanged.  The Update also changes the presentation and disclosure requirements for financial instruments including a requirement that public business entities use exit price when measuring the fair value of financial instruments measured at amortized cost for disclosure purposes.  This Update is generally effective for public business entities in fiscal years beginning after December 15, 2017, including interim periods within those fiscal years and one year later for nonpublic business entities.  Based upon a preliminary evaluation of the guidance in ASU No. 2016-01 the Company does not believe that the ASU will have a material impact on the Company’s consolidated financial statements.  The Company will continue to monitor any updates to the guidance.  

In February 2016, the FASB issued Accounting Standards Update (ASU) 2016-02, Leases (Topic 842).  The most significant change for lessees is the requirement under the new guidance to recognize right-of-use assets and lease liabilities for all leases not considered short-term leases, which is generally defined as a lease term of less than 12 months.  This change will result in lessees recognizing right-of-use assets and lease liabilities for most leases currently accounted for as operating leases under current lease accounting guidance.  The amendments in this Update are effective for interim and annual periods beginning after December 15, 2018, for public business entities and one year later for all other entities.  The Company has several lease agreements which are currently considered operating leases and are therefore not included on the Company’s Consolidated Balance Sheets.  Under the new guidance the Company expects that some of the lease agreements will have to be recognized on the Consolidated Balance Sheets as a right-of-use asset with a corresponding lease liability.  Based upon a preliminary evaluation the Company expects that the ASU will have an impact on the Company’s Consolidated Balance Sheets.  The Company will continue to evaluate how extensive the impact will be under the ASU on the Company’s consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting (Topic 718.)  ASU 2016-09 includes provisions intended to simplify various aspects related to how share-based payments are accounted for and presented in the financial statements.  Under ASU 2016-09, excess tax benefits and certain tax deficiencies will no longer be recorded in additional paid-in capital ("APIC").  Instead, they will record all excess tax benefits and tax deficiencies as income tax expense or benefit in the income statement, and APIC pools will be eliminated.  In addition, the guidance requires excess tax benefits be presented as an operating activity on the statement of cash flows rather than as a financing activity.  ASU 2016-09 also permits an accounting policy election for the impact of forfeitures on the recognition of expense for share-based payment awards.  Forfeitures can be estimated, as required today, or recognized when they occur.  This guidance is effective for public business entities for interim and annual reporting periods beginning after December 15, 2016, and for nonpublic business entities annual reporting periods beginning after December 15, 2017, and interim periods within the reporting periods beginning after December 15, 2018.  Early adoption is permitted, but all of the guidance must be adopted in the same period.  The Company early adopted the ASU as of January 1, 2017. The Company plans to recognize forfeitures as they occur.  The early adoption of the ASU did not have a material effect on the company’s financial statements or disclosures.  

In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instrument (Topic 326).  This ASU significantly changes how entities will measure credit losses for most financial assets and certain other instruments that aren't measured at fair value through net income.  In issuing the standard, the FASB is responding to criticism that today's guidance delays recognition of credit losses.  The standard will replace today's "incurred loss" approach with an "expected loss" model.  The new model, referred to as the current expected credit loss ("CECL") model, will apply to: (1) financial assets subject to credit losses and measured at amortized cost, and (2) certain off-balance sheet credit exposures.  This includes, but is not limited to, loans, leases, held to maturity securities, loan commitments, and financial guarantees.  The CECL model does not apply to available for sale ("AFS") debt securities.  For AFS debt securities with unrealized losses, entities will measure credit losses in a manner similar to what they do today, except that the losses will be recognized as allowances rather than reductions in the amortized cost of the securities.  As a result, entities will recognize improvements to estimated credit losses immediately in earnings rather than as interest income over time, as they do today.  The ASU also simplifies the accounting model for purchased credit-impaired debt securities and loans.  ASU 2016-13 also expands the disclosure requirements regarding an entity's assumptions, models, and methods for estimating the allowance for loan and lease losses.  In addition, public business entities will need to disclose the amortized cost balance for each class of financial asset by credit quality indicator, disaggregated by the year of origination.  ASU No. 2016-13 is effective for interim and annual reporting periods beginning after December 15, 2019, for SEC filers, one year later for non SEC filing public business entities and annual reporting periods beginning after December 15, 2020, for nonpublic business entities and interim periods within the reporting periods beginning after December 15, 2021.  Early adoption is permitted for interim and annual reporting periods beginning after December 15, 2018.  Entities will apply the standard's provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (i.e., modified retrospective approach).  The Company has begun its evaluation of the impact of the implementation of ASU 2016-13.   The implementation of the provisions of ASU No. 2016-13 will most likely impact the Company’s Consolidated Financial Statements as to the level of reserves that will be required for credit losses.  The Company will continue to access the potential impact that this ASU will have on the Company’s consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.” The new guidance clarifies the classification within the statement of cash flows for certain transactions, including debt extinguishment costs, zero-coupon debt, contingent consideration related to business combinations, insurance proceeds, equity method distributions and beneficial interests in securitizations. The guidance also clarifies that cash flows with aspects of multiple classes of cash flows that cannot be separated by source or use should be classified based on the activity that is likely to be the predominant source or use of cash flows for the item. This guidance is effective for fiscal years beginning after December 15, 2017 and will require application using a retrospective transition method. The Company is currently evaluating the impact of adoption of this ASU on its consolidated financial statements.

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. Currently, Topic 805 specifies three elements of a business – inputs, processes, and outputs. While an integrated set of assets and activities (collectively referred to as a “set”) that is a business usually has outputs, outputs are not required. In addition, all the inputs and processes that a seller uses in operating a set are not required if market participants can acquire the set and continue to produce outputs, for example, by integrating the acquired set with their own inputs and processes. This led many transactions to be accounted for as business combinations rather than asset purchases under legacy GAAP. The primary goal of ASU 2017-01 is to narrow the definition of a business, and the guidance in this update provides a screen to determine when a set is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This screen reduces the number of transactions that need to be further evaluated. The amendments in this update are effective for public business entities for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The amendments in this update should be applied prospectively on or after the effective date. The Company is currently evaluating this ASU to determine the impact on its consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350).  This ASU simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill.  The amendments in this Update are required for public business entities and other entities that have goodwill reported in their financial statements and have not elected the private company alternative for the subsequent measurement of goodwill.  As a result, under the ASU, “an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit.”  ASU No. 2017-14 is effective for annual and any interim impairment tests performed in periods beginning after December 15, 2019 for public business entities that are SEC filers, December 15, 2020 for business entities that are not SEC filers, and December 15, 2021 for all other entities.  Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017.   The Company will continue to access the potential impact that this ASU will have on the Company’s consolidated financial statements.

In March 2017, the FASB issued ASU No. 2017-08, Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities, which is intended to enhance “the accounting for the amortization of premiums for purchased callable debt securities.” The ASU shortens the amortization period for certain callable debt securities purchased at a premium by requiring that the premium be amortized to the earliest call date. Under current generally accepted accounting principles (GAAP), entities generally amortize the premium as an adjustment of yield over the contractual life of the instrument.  The amendments in this Update affects all entities that hold investments in callable debt securities that have an amortized cost basis in excess of the amount that is repayable by the issuer at the earliest call date (that is, at a premium). The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. The ASU’s amendments are effective for public business entities for interim and annual periods beginning after December 15, 2018. For other entities, the amendments are effective for annual periods beginning after December 15, 2019, and interim periods thereafter. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity should apply the amendments in this Update on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. Additionally, in the period of adoption, an entity should provide disclosures about a change in accounting principle.The implementation of the provisions of ASU No. 2017-08 will most likely not have a material impact the Company’s consolidated financial statements.The Company will continue to access the potential impact that this ASU will have on the Company’s consolidated financial statements.

In May 2017, the FASB issued ASU No. 2017-09, “Compensation – Stock Compensation (Topic 718): Scope of codification Accounting.” The amendments in ASU 2017-09 provide guidance about which changes to the terms or conditions of a share- entity to apply modification accounting. An entity should account for the effects of a modification unless all the following are met: (1) The fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the modified award is the same as the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the original award immediately before the original award is modified. If the modification does not affect any of the inputs to the valuation technique that the entity uses to value the award, the entity is not required to estimate the value immediately before and after the modification. (2) The vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified. (3) The classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The amendments in ASU No. 2017-09 are effective for annual periods, and interim within those annual reporting periods, beginning after December 15, 2017; early adoption is permitted. The amendments in this ASU should be applied prospectively to an award modified on or after the adoption date. The Company does not expect this ASU to have a material impact on the Company’s consolidated financial statements.

In July 2017, the FASB issued ASU 2017-13—Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to the Staff Announcement at the July 20, 2017 EITF Meeting and Rescission of Prior SEC Staff Announcements and Observer Comments  (SEC Update).  At the July 20, 2017, EITF meeting, the SEC staff announced that it would not object when certain public business entities (PBEs) elect to use the non-PBE effective dates solely to adopt the FASB’s new standards on revenue (ASC 606) and leases (ASC 842). This ASU reflects comments made by the SEC. The Company will continue to evaluate how extensive the impact will be under the ASU on the Company’s consolidated financial statements.

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Acquisitions

9 Months Ended

Sep. 30, 2017

Business Combinations [Abstract]

Acquisitions

NOTE 3 - ACQUISITIONS

On February 19, 2016, the Company acquired all the assets and assumed all the liabilities of TFC Holding Company in exchange for cash of $86.7 million. At closing, TFC primarily consisted of TomatoBank, its wholly owned subsidiary and $3.3 million of trust preferred debentures.  TFC Holding Company operated six branches in the Los Angeles metropolitan area. The Company acquired TFC Holding Company to strategically increase its existing presence in the Los Angeles area. Goodwill in the amount of $25.9 million was recognized in this acquisition. Goodwill represents the future economic benefits arising from net assets acquired that are not individually identified and separately recognized and is attributable to synergies expected to be derived from the combination of the two entities. Goodwill is not deductible for income tax purposes.

The total fair value of assets acquired approximated $469.9 million, which included $51.6 million in cash and cash equivalents, $2.3 million in interest bearing deposits in other financial institutions, $2.0 million in FHLB stock, $387.7 million in loans, $15.8 million in available for sale securities, $4.9 million in deferred tax assets, $225,000 in fixed assets, $1.7 million in core deposit intangible assets and $3.7 million in other assets. The total fair value of liabilities assumed was $409.1 million, which included $405.3 million in deposits, $3.3 million in subordinated debentures and $566,000 in other liabilities. The assets and liabilities, both tangible and intangible, were recorded at their estimated fair values as of February 19, 2016. The assets acquired and liabilities assumed have been accounted for under the acquisition method of accounting. The Company determined the fair value of loans, leases, core deposit intangible, deposits, and subordinated debentures with the assistance of a third party valuation.

These fair values are estimates and are subject to adjustment for up to one year after the acquisition date or when additional information relative to the closing date fair values becomes available and such information is considered final, whichever is earlier.  While additional significant changes to the closing date fair values are not expected, any information relative to the changes in these fair values will be evaluated to determine if such changes are due to events and circumstances that existed as of the acquisition date. During the measurement period, any such changes will be recorded as part of the closing date fair value.  The measurement period ended on February 19, 2017.

In many cases, the fair values of assets acquired and liabilities assumed were determined by estimating the cash flows expected to result from those assets and liabilities and discounting them at appropriate market rates. The most significant category of assets for which this procedure was used was that of acquired loans. The excess of expected cash flows above the fair value of the majority of loans will be accreted to interest income over the remaining lives of the loans in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 310-20.

None of the loans acquired had evidence of deterioration of credit quality since origination for which it was probable, at acquisition, that the Company would be unable to collect all contractually required payments receivable.

In accordance with generally accepted accounting principles there was no carryover of the allowance for loan losses that had been previously recorded by TFC Holding Company.

Non-recurring acquisition related expenses in connection with the TFC acquisition were $1.7 million for the nine months ended September 30, 2016.  There were no non-recurring acquisition related expenses for the nine months ended September 30, 2017

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Investment Securities

9 Months Ended

Sep. 30, 2017

Investments Debt And Equity Securities [Abstract]

Investment Securities

NOTE 4 - INVESTMENT SECURITIES

The following table summarizes the amortized cost and fair value of securities available for sale and held to maturity at September 30, 2017 and December 31, 2016, and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income:

			Gross		Gross
(dollars in thousands)	Amortized		Unrealized		Unrealized			Fair
September 30, 2017	Cost		Gains		Losses			Value
Available for sale
Government agency securities	$	5,057	$	—	$	(100	)	$	4,957
Mortgage-backed securities
Government sponsored agencies		33,530		44		(318	)		33,256
Corporate debt securities		17,341		203		(60	)		17,484
	$	55,928	$	247	$	(478	)	$	55,697
Held to maturity
Municipal taxable securities	$	4,296	$	278	$	—		$	4,574
Municipal securities		895		16		—			911
	$	5,191	$	294	$	—		$	5,485
December 31, 2016
Available for sale
Government agency securities	$	5,453	$	—	$	(136	)	$	5,317
Mortgage-backed securities
Government sponsored agencies		23,913		38		(311	)		23,640
Corporate debt securities		10,364		21		(65	)		10,320
	$	39,730	$	59	$	(512	)	$	39,277
Held to maturity
Municipal taxable securities	$	5,301	$	328	$	—		$	5,629
Municipal securities		913		11		—			924
	$	6,214	$	339	$	—		$	6,553

One security with a fair value of $840,000 and $933,000 was pledged to secure a local agency deposit at September 30, 2017 and December 31, 2016, respectively.

The amortized cost and fair value of the investment securities portfolio at September 30, 2017 are shown by expected maturity below. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties.  

	Available for Sale				Held to Maturity
	Amortized		Fair		Amortized		Fair
(dollars in thousands)	Cost		Value		Cost		Value
Due from one to five years	$	31,323	$	31,214	$	2,781	$	2,930
Due from five to ten years		20,556		20,473		2,410		2,555
Due from ten years and greater		4,049		4,010		—		—
	$	55,928	$	55,697	$	5,191	$	5,485

The following table summarizes available for sale securities with unrealized losses at September 30, 2017 and December 31, 2016, aggregated by major security type and length of time in a continuous unrealized loss position.  There were no held to maturity securities in a continuous unrealized loss position at September 30, 2017 and December 31, 2016:

	Less than Twelve Months					Twelve Months or More					Total
	Unrealized			Estimated		Unrealized			Estimated		Unrealized			Estimated
(dollars in thousands)	Losses			Fair Value		Losses			Fair Value		Losses			Fair Value
September 30, 2017
Government agency securities	$	(100	)	$	4,957	$	—		$	—	$	(100	)	$	4,957
Mortgage-backed securities
Government sponsored agencies		(255	)		26,916		(63	)		2,105		(318	)		29,021
Corporate debt securities		(60	)		5,994		—			—		(60	)		5,994
Total available for sale	$	(415	)	$	37,867	$	(63	)	$	2,105	$	(478	)	$	39,972
December 31, 2016
Government agency securities	$	(136	)	$	5,317	$	—		$	—	$	(136	)	$	5,317
Mortgage-backed securities
Government sponsored agencies		(221	)		16,231		(90	)		2,504		(311	)		18,735
Corporate debt securities		(65	)		5,147		—			—		(65	)		5,147
Total available for sale	$	(422	)	$	26,695	$	(90	)	$	2,504	$	(512	)	$	29,199

Unrealized losses have not been recognized into income because the issuer bonds are of high credit quality, management does not intend to sell, it is not more likely than not that management would be required to sell the securities prior to their anticipated recovery and the decline in fair value is largely due to changes in interest rates.  The fair value is expected to recover as the bonds approach maturity.

Management evaluates securities for other-than-temporary impairment ("OTTI") on at least a semi-annual basis, and more frequently when economic or market conditions warrant such an evaluation.  For securities in an unrealized loss position, management considers the extent and duration of the unrealized loss, and the financial condition and near-term prospects of the issuer.  Management also assesses whether it intends to sell, or it is more likely than not that it will be required to sell, a security in an unrealized loss position before recovery of its amortized cost basis.  If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings.

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Loans and Allowance for Loan Losses

9 Months Ended

Sep. 30, 2017

Receivables [Abstract]

Loans and Allowance for Loan Losses

NOTE 5 - LOANS AND ALLOWANCE FOR LOAN LOSSES

The Company's loan portfolio consists primarily of loans to borrowers within Los Angeles, Ventura and Orange County, California and Las Vegas, Nevada.  Although the Company seeks to avoid concentrations of loans to a single industry or based upon a single class of collateral, real estate and real estate associated businesses are among the principal industries in the Company's market area and, as a result, the Company's loan and collateral portfolios are, to some degree, concentrated in those industries.

The following tables present the balance and activity related to the allowance for loan losses for held for investment loans by type for the periods presented.

	Three Months Ended September 30,
	2017										2016
(dollars in thousands)	Real Estate		Commercial			Unallocated			Total		Real Estate		Commercial		Unallocated		Total
Beginning balance	$	6,433	$	3,384		$	810		$	10,627	$	9,455	$	2,694	$	—	$	12,149
Additions (reductions) to the allowance    charged to expense		1,239		(115	)		(424	)		700		820		430		—		1,250
Recoveries on loans charged-off		—		93			—			93		—		—		—		—
Less loans charged-off		—		—			—			—		—		—		—		—
Ending balance	$	7,672	$	3,362		$	386		$	11,420	$	10,275	$	3,124	$	—	$	13,399

	Nine Months Ended September 30,
	2017											2016
(dollars in thousands)	Real Estate			Commercial			Unallocated		Total			Real Estate		Commercial			Unallocated		Total
Beginning balance	$	8,111		$	6,051		$	—	$	14,162		$	5,788	$	4,235		$	—	$	10,023
Additions (reductions) to the allowance    charged to expense		(439	)		(3,435	)		386		(3,488	)		4,487		(888	)		—		3,599
Recoveries on loans charged-off		—			746			—		746			—		—			—		—
Less loans charged-off		—			—			—		—			—		(223	)		—		(223	)
Ending balance	$	7,672		$	3,362		$	386	$	11,420		$	10,275	$	3,124		$	—	$	13,399

The following table presents the recorded investment in loans and impairment method as of and for the nine months ended September 30, 2017 and September 30, 2016, and the activity in the allowance for loan losses for the year ended December 31, 2016, by portfolio segment:

(dollars in thousands)
As of  September 30, 2017	Real Estate		Commercial		Unallocated		Total
Reserves:
Specific	$	—	$	—	$	—	$	—
General		7,672		3,362		386		11,420
Loans acquired with deteriorated credit quality		—		—		—		—
	$	7,672	$	3,362	$	386	$	11,420
Loans evaluated for impairment:
Individually	$	2,580	$	1,370	$	—	$	3,950
Collectively		819,654		372,602		—		1,192,256
Loans acquired with deteriorated credit quality		316		—		—		316
	$	822,550	$	373,972	$	—	$	1,196,522

As of December 31, 2016	Real Estate		Commercial			Unallocated		Total
Allowance for loan losses:
Beginning of year	$	5,788	$	4,235		$	—	$	10,023
Provisions		2,323		2,651			—		4,974
Charge-offs		—		(835	)		—		(835	)
Recoveries		—		—			—		—
	$	8,111	$	6,051		$	—	$	14,162
Reserves:
Specific	$	—	$	1,782		$	—	$	1,782
General		8,111		4,269			—		12,380
Loans acquired with deteriorated credit quality		—		—			—		—
	$	8,111	$	6,051		$	—	$	14,162
Loans evaluated for impairment:
Individually	$	2,556	$	3,577		$	—	$	6,133
Collectively		744,349		359,234			—		1,103,583
Loans acquired with deteriorated credit quality		730		—			—		730
	$	747,635	$	362,811		$	—	$	1,110,446

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as current financial information, historical payment experience, collateral adequacy, credit documentation, and current economic trends, among other factors.  The Company analyzes loans individually by classifying the loans as to credit risk.  This analysis typically includes larger, non-homogeneous loans such as commercial real estate and commercial and industrial loans.  This analysis is performed on an ongoing basis as new information is obtained.  The Company uses the following definitions for risk ratings:

Pass - Loans classified as pass include loans not meeting the risk ratings defined below.

Special Mention - Loans classified as special mention have a potential weakness that deserves management's close attention.  If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution's credit position at some future date.

Substandard - Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any.  Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt.  They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Impaired - A loan is considered impaired, when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement.  Additionally, all loans classified as troubled debt restructurings are considered impaired.  

The risk category of loans by class of loans was as follows at September 30, 2017 and December 31, 2016:

(dollars in thousands)			Special
September 30, 2017	Pass		Mention		Substandard		Impaired		Total
Real estate:
Construction and land development	$	94,004	$	—	$	—	$	293	$	94,297
Commercial real estate		444,108		4,517		40,174		2,287		491,086
Single-family residential mortgages		237,167		—		—		—		237,167
Commercial:
Other		222,743		960		971		1,293		225,967
SBA		143,507		1,819		2,602		77		148,005
	$	1,141,529	$	7,296	$	43,747	$	3,950	$	1,196,522
December 31, 2016
Real estate:
Construction and land development	$	87,174	$	1,932	$	—	$	303	$	89,409
Commercial real estate		475,499		4,562		19,484		2,253		501,798
Single-family residential mortgages		136,206		13,950		6,272		—		156,428
Commercial:
Other		194,227		—		9,616		—		203,843
SBA		151,066		1,934		2,391		3,577		158,968
	$	1,044,172	$	22,378	$	37,763	$	6,133	$	1,110,446

The following table presents the recorded investment in non-accrual loans by class of loans.  There were no loans past due 90 days and still on accrual at September 30, 2017 and December 31, 2016:

	September 30		December 31,
(dollars in thousands)	2017		2016
Commercial:
SBA	$	77	$	3,577

The following table presents the aging of the recorded investment in past-due loans at September 30, 2017 and December 31, 2016 by class of loans:

	30-59		60-89		Greater Than
(dollars in thousands)	Days		Days		89 Days		Total		Loans Not
September 30, 2017	Past Due		Past Due		Past Due		Past Due		Past Due		Total
Real estate:
Construction and land development	$	—	$	—	$	—	$	—	$	94,297	$	94,297
Commercial real estate		—		—		—		—		491,086		491,086
Single-family residential mortgages		531		—		—		531		236,636		237,167
Commercial:								—
Other		213		—		—		213		225,754		225,967
SBA		254		1,434		—		1,688		146,317		148,005
	$	998	$	1,434	$	—	$	2,432	$	1,194,090	$	1,196,522
December 31, 2016
Real estate:
Construction and land development	$	—	$	—	$	—	$	—	$	89,409	$	89,409
Commercial real estate		—		—		—		—		501,798		501,798
Single-family residential mortgages		—		—		—		—		156,428		156,428
Commercial:
Other		343		—		—		343		203,500		203,843
SBA		—		—		3,577		3,577		155,391		158,968
	$	343	$	—	$	3,577	$	3,920	$	1,106,526	$	1,110,446

Information relating to individually impaired loans presented by class of loans was as follows at September 30, 2017 and December 31, 2016:

	Unpaid
(dollars in thousands)	Principal		Recorded		Average		Interest		Related
September 30, 2017	Balance		Investment		Balance		Income		Allowance
With no related allowance recorded
Construction and land development	$	293	$	293	$	298	$	16	$	—
Commercial real estate		2,287		2,287		2,270		253		—
Commercial - SBA		1,370		1,370		685		79		—
Total	$	3,950	$	3,950	$	3,253	$	348	$	—
December 31, 2016
With no related allowance recorded
Construction and land development	$	303	$	303	$	309	$	21	$	—
Commercial real estate		2,253		2,253		1,710		280		—
Commercial - SBA		18		18		93		—		—
Subtotal		2,574		2,574		2,112		301		—
With an allowance recorded
Commercial - SBA		3,559		3,559		3,559		—		1,782
Total	$	6,133	$	6,133	$	5,671	$	301	$	1,782

No interest income was recognized on a cash basis for the nine months ended September 30, 2017 and 2016 and for the year ended December 31, 2016.  

The Company had five and six loans identified as troubled debt restructurings ("TDR's") at September 30, 2017 and December 31, 2016, respectively.  A specific reserve of $1,782,000 had been allocated for one loan at December 31, 2016.  There were no specific reserves on TDRs as of September 30, 2017.  There are no commitments to lend additional amounts at September 30, 2017 and December 31, 2016 to customers with outstanding loans that are classified as TDR's.

During the year ended December 31, 2016 and for the nine months ended September 30, 2017, the terms of certain loans were modified as TDR's.  The modification of the terms generally included loans wherea moratorium on loan payments was granted.  Suchmoratoriums ranged from three months to twelve monthson the loans restructured in 2017 and  2016.

   The following table presents loans by class modified as TDRs that occurred during the nine months ended September 30, 2017 and the year ended December 31, 2016;

			Pre-		Post-
			Modification		Modification
(dollars in thousands)	Number of		Recorded		Recorded
September 30, 2017	Loans		Investment		Investment
Commercial		1	$	1,293	$	1,293
			Pre-		Post-
			Modification		Modification
(dollars in thousands)	Number of		Recorded		Recorded
December 31, 2016	Loans		Investment		Investment
Commercial real estate		1	$	1,047	$	1,047

The Company has purchased loans as part of its whole bank acquisitions, for which there was at acquisition, evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected.

The outstanding balance and carrying amount of purchased credit-impaired loans at September 30, 2017 and December 31, 2016 were as follows:

	September 30,		December 31,
(dollars in thousands)	2017		2016
Outstanding balance	$	324	$	878
Carrying amount	$	316	$	730

For these purchased credit-impaired loans, the Company did not increase the allowance for loan losses during the nine months ended September 30, 2017 or for the year ended December 31, 2016, as there were no significant reductions in the expected cash flows.

Below is a summary of activity in the accretable yield on purchased credit-impaired loans for the nine months ended September 30, 2017 and for the year ended December 31, 2016:

	September 30,			December 31,
(dollars in thousands)	2017			2016
Beginning balance	$	142		$	349
Restructuring as TDR		—			(22	)
Accretion of income		(134	)		(185	)
Ending balance	$	8		$	142

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Loan Servicing

9 Months Ended

Sep. 30, 2017

Loan Servicing [Abstract]

Loan Servicing

NOTE 6 - LOAN SERVICING

Mortgage and SBA loans serviced for others are not reported as assets.  The principal balances at September 30, 2017 and December 31, 2016 are as follows:

	September 30,		December 31,
(dollars in thousands)	2017		2016
Loans serviced for others:
Mortgage loans	$	306,168	$	259,207
SBA loans	$	166,148	$	110,263

Activity for servicing assets follows:

The fair value of servicing assets for mortgage loans was $1,804,000 and $1,184,000 at September 30, 2017 and December 31, 2016, respectively.  The fair value of servicing assets for SBA loans was $4,982,000 and $3,142,000 at September 30, 2017 and December 31, 2016, respectively.

Servicing fees net of servicing asset amortization totaled $571,000 and $384,000 for the nine months ended September 30, 2017 and 2016, respectively.

When mortgage and Small Business Administration ("SBA") loans are sold with servicing retained, servicing rights are initially recorded at fair value with the income statement effect recorded in gains on sales of loans.  Fair value is based on a valuation model that calculates the present value of estimated future net servicing income.  All classes of servicing assets are subsequently measured using the amortization method which requires servicing rights to be amortized into noninterest income in proportion to, and over the period of, the estimated future net servicing income of the underlying loans.

Servicing rights are evaluated for impairment based upon the fair value of the rights as compared to carrying amount.  Impairment is recognized through a valuation allowance for an individual grouping, to the extent that fair value is less than the carrying amount.  If the Company later determines that all or a portion of the impairment no longer exists for a particular grouping, a reduction of the allowance may be recorded as an increase to income.

Servicing fee income is recorded for fees earned for servicing loans.  The fees are based on a contractual percentage of the outstanding principal.  The amortization of mortgage servicing rights is netted against loan servicing fee income.

	Nine Months Ended						Nine Months Ended
	September 30, 2017						September 30, 2016
	Mortgage			SBA			Mortgage			SBA
(dollars in thousands)	Loans			Loans			Loans			Loans
Servicing assets:
Beginning of year	$	1,002		$	2,702		$	298		$	1,807
Additions		501			2,149			602			1,033
Disposals		(134	)		(202	)		(31	)		(99	)
Amortized to expense		(271	)		(377	)		(109	)		(244	)
End of period	$	1,098		$	4,272		$	760		$	2,497

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Goodwill and Intangibles

9 Months Ended

Sep. 30, 2017

Goodwill And Intangible Assets Disclosure [Abstract]

Goodwill and Intangibles

NOTE 7 - GOODWILL AND INTANGIBLES

Goodwill is generally determined as the excess of the fair value of the consideration transferred, plus the fair value of any noncontrolling interests in the acquiree, over the fair value of the net assets acquired and liabilities assumed as of the acquisition date.  Goodwill resulting from whole bank acquisitions is not amortized, but tested for impairment at least annually.  The Company has selected December 31 as the date to perform the annual impairment test.  Goodwill amounted to $29.9 million at September 30, 2017 and December 31, 2016, and is the only intangible asset with an indefinite life on the balance sheet.  There were no impairment losses recognized on goodwill during the nine months ended September 30, 2017 and 2016.

Other intangible assets consist of core deposit intangible ("CDI") assets arising from whole bank acquisitions.   CDI assets are amortized on an accelerated method over their estimated useful life of 8 to 10 years.  CDI was recognized in the 2013 acquisition of Los Angeles National Bank and in the 2016 acquisition of TFC Holding Company.  The unamortized balance at September 30, 2017 and December 31, 2016 was $1,525,000 and $1,793,000, respectively, for both Los Angeles National Bank and TFC Holding Company.  CDI amortization expense was $268,000 and $268,000 for the nine months ended September 30, 2017 and September 30, 2016, respectively, for both Los Angeles National Bank and TFC Holding Company.

Estimated CDI amortization expense for future years is as follows (dollars in thousands):

Year ending December 31:
2017 remaining	$	87
2018		311
2019		274
2020		244
2021		172
Thereafter		437
Total	$	1,525

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Deposits

9 Months Ended

Sep. 30, 2017

Maturities Of Time Deposits [Abstract]

Deposits

NOTE 8 - DEPOSITS

At September 30, 2017, the scheduled maturities of time deposits are as follows:

(dollars in thousands)
One year	$	660,187
Two to three years		8,513
	$	668,700

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Long-term Debt

9 Months Ended

Sep. 30, 2017

Debt Disclosure [Abstract]

Long-term Debt

NOTE 9 - LONG-TERM DEBT

At September 30, 2017 and December 31, 2016 long-term debt was as follows:

	September 30,		December 31,
(dollars in thousands)	2017		2016
Principal	$	50,000	$	50,000
Unamortized debt issuance costs	$	508	$	617

In March 2016, the Company issued $50 million of 6.5% fixed to floating rate subordinated debentures, due March 31, 2026. The interest rate is fixed through March 31, 2021 and floats at 3 month LIBOR plus 516 basis points thereafter. The sub-debt is considered Tier-two capital at the Company. The Company allocated $35 million to the Bank as Tier-one capital.

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Subordinated debentures

9 Months Ended

Sep. 30, 2017

Debt Instruments [Abstract]

Subordinated Debentures

NOTE 10 - SUBORDINATED DEBENTURES

The Company, through the acquisition of TFC Bancorp, acquired TFC Statutory Trust.  The Trust contained a pooled private offering of 5,000 trust preferred securities with a liquidation amount of $1,000 per security. TFC Bancorp issued $5,000,000 of subordinated debentures to the trust in exchange for ownership of all of the common security of the trust and the proceeds of the preferred securities sold by the trust. The Company is not considered the primary beneficiary of this trust (variable interest entity), therefore the trust is not consolidated in the Company's financial statements, but rather the subordinated debentures are shown as a liability at market value as of the close of the acquisition which was $3,255,000. There was a $1,900,000 valuation reserve recorded to arrive at market value which is treated as a yield adjustment and is amortized over the life of the security.  The amount of amortization expense recognized for the nine months ended September 30, 2017 and 2016 was $68,000 and $55,000, respectively.   The Company also purchased an investment in the common stock of the trust for $155,000 which is included in other assets. The Company may redeem the subordinated debentures, subject to prior approval by the Federal Reserve Bank on or after March 15, 2012, at 100% of the principal amount, plus accrued and unpaid interest. The subordinated debentures mature on March 15, 2037. The Company has the option to defer interest payments on the subordinated debentures from time to time for a period not to exceed five consecutive years.  The Company has been paying interest on a quarterly basis. The subordinated debentures may be included in Tier I capital (with certain limitations applicable) under current regulatory guidelines and interpretations. The subordinated debentures have a variable rate of interest equal to the three month London Interbank Offered Rate (LIBOR) plus 1.65%, which was 2.97% and 2.61% at September 30, 2017 and December 31, 2016, respectively.

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Borrowing Arrangements

9 Months Ended

Sep. 30, 2017

Debt Disclosure [Abstract]

Borrowing Arrangements

NOTE 11 - BORROWING ARRANGEMENTS

The Company has established secured and unsecured lines of credit.  The Company may borrow funds from time to time on a term or overnight basis from the Federal Home Loan Bank of San Francisco ("FHLB"), the Federal Reserve Bank of San Francisco ("FRB") and other financial institutions as indicated below.

Federal Funds Arrangements with Commercial Banks.  At September 30, 2017, the Company may borrow on an unsecured basis, up to $20.0 million, $10.0 million, $12.0 million and $5.0 million overnight from Zions Bank, Wells Fargo Bank, First Tennessee National Bank, and Pacific Coast Bankers' Bank, respectively.

Letter of Credit Arrangements.  At September 30, 2017, the Company had an unsecured commercial letter of credit line with Wells Fargo Bank for $2.0 million.

FRB Secured Line of Credit.  The secured borrowing capacity of $15.2 million at September 30, 2017 is collateralized by loans pledged with a carrying value of $25.2 million.

FHLB Secured Line of Credit.  The secured borrowing capacity of $326.9 million at September 30, 2017 is collateralized by loans pledged with a carrying value of $373.9 million.

There were no amounts outstanding under any of the arrangements above at September 30, 2017 or December 31, 2016.

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Income Taxes

9 Months Ended

Sep. 30, 2017

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 12 - INCOME TAXES

The asset and liability method is used in accounting for income taxes.  Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.

During the nine months ended September 30, 2017 and 2016, the Company recorded an income tax provision of $13.8 million and $9.6 million, respectively, reflecting an effective tax rate of 40.0% and 41.2% for the nine months ended September 30, 2017 and 2016, respectively. During the three months ended September 30, 2017 and 2016, the Company recorded an income tax provision of $4.0 million and $4.1 million, respectively, reflecting and effective tax rate of 37.8% and 41.7% for the three months ended September 30, 2017 and 2019, respectively.

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Commitments

9 Months Ended

Sep. 30, 2017

Commitments And Contingencies Disclosure [Abstract]

Commitments

NOTE 13 - COMMITMENTS

The Company leases several of its operating facilities under various noncancellable operating leases expiring at various dates through 2022.  The Company is also responsible for common area maintenance, taxes and insurance at the various branch locations.

Future minimum rent payments on the Company's leases were as follows at September 30, 2017:

(dollars in thousands)
Year ending December 31:
2017 remaining	$	410
2018		1,350
2019		754
2020		496
2021		382
Thereafter		130
	$	3,522

The minimum rent payments shown above are given for the existing lease obligation and are not a forecast of future rental expense.  Total rental expense, recognized on a straight-line basis, was $1.1 million and $1.2 million for the nine months ended September 30, 2017 and 2016, respectively.

In the ordinary course of business, the Company enters into financial commitments to meet the financing needs of its customers.  These financial commitments include commitments to extend credit, unused lines of credit, commercial and similar letters of credit and standby letters of credit.  Those instruments involve to varying degrees, elements of credit and interest rate risk not recognized in the Company's financial statements.

The Company's exposure to loan loss in the event of nonperformance on these financial commitments is represented by the contractual amount of those instruments.  The Company uses the same credit policies in making commitments as it does for loans reflected in the financial statements.

At September 30, 2017 and December 31, 2016, the Company had the following financial commitments whose contractual amount represents credit risk:

	September 30,		December 31,
	2017		2016
(dollars in thousands)
Commitments to make loans	$	97,116	$	68,003
Unused lines of credit		97,662		92,378
Commercial and similar letters of credit		4,144		8,966
Standby letters of credit		1,575		1,250
	$	200,497	$	170,597

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract.  Since many of the commitments are expected to expire without being drawn upon, the total amounts do not necessarily represent future cash requirements.  The Company evaluates each client's credit worthiness on a case-by-case basis.  The amount of collateral obtained if deemed necessary by the Company is based on management's credit evaluation of the customer.

The Company is involved in various matters of litigation which have arisen in the ordinary course of business and accruals for estimates of potential losses have been provided when necessary and appropriate under generally accepted accounting principles.  In the opinion of management, the disposition of such pending litigation will not have a material effect on the Company's financial statements.

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Related Party Transactions

9 Months Ended

Sep. 30, 2017

Related Party Transactions [Abstract]

Related Party Transactions

NOTE 14 - RELATED PARTY TRANSACTIONS

Loans to principal officers, directors, and their affiliates were as follows:

	September 30,			December 31,
(dollars in thousands)	2017			2016
Beginning balance	$	3,445		$	3,971
New loans and advances		900			1,274
Repayments		(3,345	)		(1,800	)
Ending balance	$	1,000		$	3,445

Loan commitments outstanding to executive officers, directors and their related interests with whom they are associated totaled approximately $3.4 million and $2.3 million at September 30, 2017 and December 31, 2016, respectively.

Deposits from principal officers, directors, and their affiliates at September 30, 2017 and December 31, 2016 were $42.9 million and $37.2 million, respectively.

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Stock-based Compensation

9 Months Ended

Sep. 30, 2017

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock-based Compensation

NOTE 15 - STOCK-BASED COMPENSATION

RBB Bancorp 2017 Omnibus Stock Incentive Plan.

The 2017 Omnibus Stock Incentive Plan, or OSIP, was adopted by the Company’s board of directors on January 18, 2017 and approved by the Company’s shareholders at the Company’s annual meeting on May 23, 2017. The OSIP was designed to ensure continued availability of equity awards that will assist the Company in attracting and retaining competent managerial personnel and rewarding key employees, directors and other service providers for high levels of performance. Pursuant to the OSIP, the Company’s board of directors are allowed to grant awards to eligible persons in the form of qualified and non-qualified stock options, restricted stock, restricted stock units, stock appreciation rights and other incentive awards. The Company has reserved up to 30% of issued and outstanding shares of common stock as of the date the Company adopted the 2017 OSIP, or 3,848,341 shares. This represents 24% of the issued and outstanding shares of the Company’s common stock as of September 30, 2017.  As of September 30, 2017, there were 1,353,207 shares of common stock available for issuance under the OSIP. Awards vest, become exercisable and contain such other terms and conditions as determined by the board of directors and set forth in individual agreements with the employees receiving the awards. The OSIP enables the board of directors to set specific performance criteria that must be met before an award vests. The OSIP allows for acceleration of vesting and exercise privileges of grants if a participant’s termination of employment is due to a change in control, death or total disability. If a participant’s job is terminated for cause, then all awards expire at the date of termination.

RBB Bancorp 2010 Stock Option Plan

Under the 2010 Plan, the Company was permitted to grant awards to eligible persons in the form of qualified and non-qualified stock options. The Company reserved up to 30% of the issued and outstanding shares of common stock as of the date the Company adopted the 2010 Plan or 3,494,478 shares, for issuance under the 2010 Plan. After approval of the OSIP at the Company’s annual meeting on May 23, 2017, no additional grants will be made under the 2010 Plan.  The 2010 Plan has terminated and options that were granted under that Plan have become subject to the OSIP.  Awards that were granted under the 2010 Plan will remain exercisable pursuant to the terms and conditions set forth in individual award agreements, but such awards will be assumed and administered under the OSIP. The 2010 Plan award agreements allow for acceleration of exercise privileges of grants upon occurrence of a change in control of the Company. If a participant’s job is terminated for cause, then all unvested awards expire at the date of termination.

The Company recognized stock-based compensation expense of $592,000 and $646,000 and recognized income tax benefits on that expense of $487,000 and $191,000 for the nine months ended September 30, 2017 and 2016, respectively.

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Regulatory Matters

9 Months Ended

Sep. 30, 2017

Regulated Operations [Abstract]

Regulatory Matters

NOTE 16 - REGULATORY MATTERS

Holding companies (with assets over $1 billion at the beginning of the year) and banks are subject to various regulatory capital requirements administered by the federal banking agencies.  Failure to meet minimum capital requirements can initiate certain mandatory - and possibly additional discretionary - actions by regulators that, if undertaken, could have a direct material effect on the Company's financial statements.

In July 2013, the federal bank regulatory agencies approved the final rules implementing the Basel Committee on Banking Supervision's capital guidelines for U.S. banks. The new rules became effective on January 1, 2015, with certain of the requirements phased-in over a multi-year schedule.  Under the rules, minimum requirements increased for both the quantity and quality of capital held by the Bank.  The rules include a new common equity Tier 1 ("CET1") capital to risk-weighted assets ratio with minimums for capital adequacy and prompt corrective action purposes of 4.5% and 6.5%, respectively.  The minimum Tier 1 capital to risk-weighted assets ratio was raised from 4.0% to 6.0% under the capital adequacy framework and from 6.0% to 8.0% to be well-capitalized under the prompt corrective action framework.  In addition, the rules introduced the concept of a "conservation buffer" of 2.5% applicable to the three capital adequacy risk-weighted asset ratios (CET1, Tier 1, and Total).  The implementation of the capital conservation buffer began on January 1, 2016 at 0.625% and will be phased in over a four-year period (increasing by that amount on each subsequent January 1, until it reaches 2.5% on January 1, 2019). The capital conservation buffer for September 30, 2017 is 11.08% and 12.49% for the Bank and Bancorp, respectively. If the capital adequacy minimum ratios plus the phased-in conservation buffer amount exceed actual risk-weighted capital ratios, then dividends, share buybacks, and discretionary bonuses to executives could be limited in amount.

Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank's assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices.  Capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.  Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the table below) of total, Tier 1 and CET1 capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital (as defined) to average assets (as defined).  As permitted by the regulators for financial institutions that are not deemed to be “advanced approaches” institutions, the Company has elected to opt out of the Basel III requirement to include accumulated other comprehensive income in risk-based capital.  Management believes, at September 30, 2017 and December 31, 2016, that the Bank meets all capital adequacy requirements to which it is subject.

As of December 31, 2016, the most recent notification from the FDIC categorized the Bank as well-capitalized under the regulatory framework for prompt corrective action (there are no conditions or events since that notification that management believes have changed the Bank's category).  To be categorized as well-capitalized, the Bank must maintain minimum ratios as set forth in the table below.

The following table sets forth RBB Bancorp's consolidated and the Bank's actual capital amounts and ratios and related regulatory requirements for the Bank at September 30, 2017:

						Amount of Capital Required
										To Be Well-
										Capitalized
						For Capital				Under Prompt
						Adequacy				Corrective
	Actual					Purposes				Provisions
(dollars in thousands)	Amount		Ratio			Amount		Ratio		Amount		Ratio
As of September 30, 2017:
Tier 1 Leverage Ratio
Consolidated	$	232,521		14.91	%	NA		NA		NA		NA
Bank	$	227,104		14.57	%	$	62,363		4.0%	$	77,953		5.0%
Common Equity Tier 1 Risk-Based Capital Ratio
Consolidated	$	229,244		18.23	%	NA		NA		NA		NA
Bank	$	227,104		18.13	%	$	56,377		4.5%	$	81,433		6.5%
Tier 1 Risk-Based Capital Ratio
Consolidated	$	232,521		18.49	%	NA		NA		NA		NA
Bank	$	227,104		18.13	%	$	75,169		6.0%	$	100,225		8.0%
Total Risk-Based Capital Ratio
Consolidated	$	293,922		23.37	%	NA		NA		NA		NA
Bank	$	239,013		19.08	%	$	100,225		8.0%	$	125,282		10.0%

The following table sets forth RBB Bancorp's consolidated and the Bank's actual capital amounts and ratios and related regulatory requirements for the Bank at December 31, 2016:

					Amount of Capital Required
									To Be Well-
									Capitalized
					For Capital				Under Prompt
					Adequacy				Corrective
	Actual				Purposes				Provisions
(dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
As of December 31, 2016:
Tier 1 Leverage Ratio
Consolidated	$	153,682		11.00%	NA		NA		NA		NA
Bank	$	178,645		12.81%	$	55,777		4.0%	$	69,722		5.0%
Common Equity Tier 1 Risk-Based Capital Ratio
Consolidated	$	150,786		13.30%	NA		NA		NA		NA
Bank	$	178,645		15.81%	$	50,860		4.5%	$	73,464		6.5%
Tier 1 Risk-Based Capital Ratio
Consolidated	$	153,682		13.56%	NA		NA		NA		NA
Bank	$	178,645		15.81%	$	67,813		6.0%	$	90,417		8.0%
Total Risk-Based Capital Ratio
Consolidated	$	217,244		19.17%	NA		NA		NA		NA
Bank	$	192,784		17.06%	$	90,417		8.0%	$	113,021		10.0%

The California Financial Code generally acts to prohibit banks from making a cash distribution to its shareholders in excess of the lesser of the bank's undivided profits or the bank's net income for its last three fiscal years less the amount of any distribution made by the bank's shareholders during the same period.

The California general corporation law generally acts to prohibit companies from paying dividends on common stock unless its retained earnings, immediately prior to the dividend payment, equals or exceeds the amount of the dividend.  If a company fails this test, then it may still pay dividends if after giving effect to the dividend the company's assets are at least 125% of its liabilities.

Additionally, the Federal Reserve Bank has issued guidance which requires that they be consulted before payment of a dividend if a bank holding company does not have earnings over the prior four quarters of at least equal to the dividend to be paid, plus other holding company obligations.

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Fair Value Measurements

9 Months Ended

Sep. 30, 2017

Fair Value Disclosures [Abstract]

Fair Value Measurements

NOTE 17 - FAIR VALUE MEASUREMENTS

The following is a description of valuation methodologies used for assets and liabilities recorded at fair value:

Securities:  The fair values of securities available for sale are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1) or matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted prices for specific securities but rather by relying on the securities' relationship to other benchmark quoted securities (Level 2).

Other Real Estate Owned:  Nonrecurring adjustments to certain commercial and residential real estate properties classified as other real estate owned are measured at the lower of carrying amount or fair value, less costs to sell.  In cases where the carrying amount exceeds the fair value, less costs to sell, an impairment loss is recognized.  Fair values are generally based on third party appraisals of the property which are commonly adjusted by management to reflect an expectation of the amount to be ultimately collected and selling costs (Level 3).  

Appraisals for other real estate owned are performed by state licensed appraisers (for commercial properties) or state certified appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Company.  When a Notice of Default is recorded, an appraisal report is ordered.  Once received, a member of the credit administration department reviews the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison to independent data sources such as recent market data or industry wide-statistics for residential appraisals.  Commercial appraisals are sent to an independent third party to review.  The Company also compares the actual selling price of collateral that has been sold to the most recent appraised value to determine what additional adjustments, if any, should be made to the appraisal values on any remaining other real estate owned to arrive at fair value.  If the existing appraisal is older than twelve months a new appraisal report is ordered.  No significant adjustments to appraised values have been made as a result of this comparison process as of September 30, 2017.

The following table provides the hierarchy and fair value for each major category of assets and liabilities measured at fair value at September 30, 2017 and December 31, 2016:

(dollars in thousands)	Fair Value Measurements Using:
September 30, 2017	Level 1		Level 2		Level 3		Total
Assets measured at fair value:
On a recurring basis:
Securities available for sale
Government agency securities			$	4,957			$	4,957
Mortgage-backed securities								-
Government sponsored agencies				33,256				33,256
Corporate debt securities				17,484				17,484
	$	—	$	55,697	$	—	$	55,697
On a non-recurring basis:
Other real estate owned	$	—	$	—	$	293	$	293
December 31, 2016
Assets measured at fair value:
On a recurring basis:
Securities available for sale
Government agency securities			$	5,317				5,317
Mortgage-backed securities
Government sponsored agencies				23,640				23,640
Corporate debt securities				10,320				10,320
	$	—	$	39,277	$	—	$	39,277
On a non-recurring basis:
Other real estate owned	$	—	$	—	$	833	$	833

No write-downs to OREO were recorded in for the nine months ended September 30, 2017 or for the year ended December 31, 2016.

Quantitative information about the Company's non-recurring Level 3 fair value measurements at September 30, 2017 and December 31, 2016 is as follows:

							Weighted-
(dollars in thousands)	Fair Value		Valuation	Unobservable	Adjustment		Average
September 30, 2017	Amount		Technique	Input	Range		Adjustment
Other real estate owned	$	293	Third Party	Management Adjustments		15%		15%
			Appraisals	to Reflect Current
				Conditions and Selling
				Costs
December 31, 2016
Other real estate owned	$	833	Third Party	Management Adjustments	10% - 15%			12%
			Appraisals	to Reflect Current
				Conditions and Selling
				Costs

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Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2017

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

NOTE 18 - FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value of a financial instrument is the amount at which the asset or obligation could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.  Fair value estimates are made at a specific point in time based on relevant market information and information about the financial instrument.  These estimates do not reflect any premium or discount that could result from offering for sale at one time the entire holdings of a particular financial instrument.  Because no market value exists for a significant portion of the financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors.  These estimates are subjective in nature, involve uncertainties and matters of judgment and, therefore, cannot be determined with precision.  Changes in assumptions could significantly affect the estimates.

Fair value estimates are based on financial instruments both on and off the balance sheet without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments.  Additionally, tax consequences related to the realization of the unrealized gains and losses can have a potential effect on fair value estimates and have not been considered in many of the estimates.

The following methods and assumptions were used to estimate the fair value of significant financial instruments not previously presented:

Cash and Cash Equivalents

The carrying amounts of cash and short-term instruments approximate fair values.

Time Deposits in Other Banks

Fair values for time deposits with other banks are estimated using discounted cash flow analyses, using interest rates currently being offered with similar terms.

Mortgage Loans Held for Sale

The Company records mortgage loans held for sale at fair value based on the net premium received on recent sales of mortgage loans for identical pools of loans.

Loans

For variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying amounts.  The fair values for all other loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers with similar credit quality.  The methods utilized to estimate the fair value of loans do not necessarily represent an exit price.

Deposits

The fair values disclosed for demand deposits, including interest and non-interest demand accounts, savings, and certain types of money market accounts are, by definition based on carrying value.  Fair value for fixed-rate certificates of deposit is estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregate expected monthly maturities on time deposits.  Early withdrawal of fixed-rate certificates of deposit is not expected to be significant

Long-Term Debt

The fair values of the Company’s long-term borrowings are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 2 classification.

Subordinated Debentures

The fair values of the Company’s Subordinated Debentures are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 3 classification.

Off-Balance Sheet Financial Instruments

The fair value of commitments to extend credit and standby letters of credit is estimated using the fees currently charged to enter into similar agreements.  The fair value of these financial instruments is not material.

The fair value hierarchy level and estimated fair value of significant financial instruments at September 30, 2017 and December 31, 2016 are summarized as follows:

		September 30,				December 31,
		2017				2016
	Fair Value	Carrying		Fair		Carrying		Fair
(dollars in thousands)	Hierarchy	Value		Value		Value		Value
Financial Assets:
Cash and due from banks	Level 1	$	69,552	$	69,552	$	74,213	$	74,213
Federal funds sold and other cash equivalents	Level 1		96,500		96,500		44,500		44,500
Interest-earning deposits in other financial institutions	Level 1		100		100		345		345
Investment securities - AFS	Level 2		55,697		55,697		39,277		39,277
Investment securities - HTM	Level 2		5,191		5,485		6,214		6,553
Mortgage loans held for sale	Level 1		125,704		128,491		44,345		45,433
Loans, net	Level 3		1,185,102		1,205,092		1,096,284		1,095,944
Financial Liabilities:
Deposits	Level 2		1,318,292		1,315,698	$	1,152,763	$	1,140,707
Long-term debt	Level 2		49,492		47,657		49,383		48,447
Subordinated debentures	Level 3		3,402		3,582		3,334		3,334

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Earnings Per Share ("EPS")

9 Months Ended

Sep. 30, 2017

Earnings Per Share [Abstract]

Earnings Per Share ("EPS")

NOTE 19 - EARNINGS PER SHARE ("EPS")

The following is a reconciliation of net income and shares outstanding to the income and number of shares used to compute EPS:

	Nine Months Ended
	September 30
	2017					2016
(dollars in thousands except per share amounts)	Income		Shares			Income		Shares
Net income as reported	$	20,640				$	13,693
Shares outstanding				15,790,611					12,827,803
Impact of weighting shares				(2,309,152	)				(35,927	)
Used in basic EPS		20,640		13,481,459			13,693		12,791,876
Dilutive effect of outstanding
Stock options				1,077,584					896,122
Used in dilutive EPS	$	20,640		14,559,043		$	13,693		13,687,998
Basic earnings per common share	$	1.53				$	1.07
Diluted earnings per common share	$	1.42				$	1.00

	Three Months Ended
	September 30
	2017					2016
(dollars in thousands except per share amounts)	Income		Shares			Income		Shares
Net income as reported	$	6,611				$	5,697
Shares outstanding				15,790,611					12,827,803
Impact of weighting shares				(1,023,154	)				-
Used in basic EPS		6,611		14,767,457			5,697		12,827,803
Dilutive effect of outstanding
Stock options				1,084,472					889,429
Used in dilutive EPS	$	6,611		15,851,929		$	5,697		13,717,232
Basic earnings per common share	$	0.45				$	0.44
Diluted earnings per common share	$	0.42				$	0.42

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Qualified Affordable Housing Project Investments

9 Months Ended

Sep. 30, 2017

Text Block [Abstract]

Qualified Affordable Housing Project Investments

NOTE 20 - QUALIFIED AFFORDABLE HOUSING PROJECT INVESTMENTS

The Company began investing in qualified housing projects in 2016. At September 30, 2017 and December 31, 2016, the balance of the investment for qualified affordable housing projects was $5,768,000 and $986,000, respectively.  This balance is reflected in the accrued interest and other assets line on the consolidated balance sheets.  Total unfunded commitments related to the investments in qualified housing projects totaled $4,572,000 and $840,000 at September 30, 2017 and December 31, 2016, respectively.  The Company expects to fulfill these commitments during the years ending 2027 and 2028.

For the nine months ended September 30, 2017 and 2016, the Company recognized amortization expense of $218,000 and $10,000, respectively, which was included within income tax expense on the consolidated statements of income.

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Recent Developments

9 Months Ended

Sep. 30, 2017

Recent Developments [Abstract]

Recent Developments

NOTE 21 - RECENT DEVELOPMENTS

On July 27, 2017, the Company completed its public offering of 3,750,000 shares at a price to the public of $23.00 per share and a total offering size of $86,250,000. The offering was originally 3,000,000 shares but due to demand, it was increased to 3,750,000 shares. The Company sold 2,857,756 shares and the selling shareholders sold 892,244 shares of the Company’s common stock. The offering resulted in gross proceeds to the Company of approximately $65.7 million. The Company contributed $25 million of the net proceeds received from this offering to the Bank in July 2017. Our stock now trades on the Nasdaq Global Select Market under the symbol “RBB”.  The increase to capital net of expenses is approximately $60.2 million.

On October 19, 2017, RBB Bancorp declared a cash dividend of $0.08 per share for the third quarter of 2017.  The dividend is payable on November 30, 2017 to common shareholders of record as of October 31, 2017.

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Basis of Presentation and Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2017

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying unaudited consolidated financial statements and notes thereto of the Company have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) for Form 10-Q and conform to practices within the banking industry and include all of the information and disclosures required by accounting principles generally accepted in the United States of America (“GAAP”) for interim financial reporting.  The accompanying unaudited consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments), which are necessary for a fair presentation of financial results for the interim periods presented. The results of operations for the nine months ended September 30, 2017 are not necessarily indicative of the results for the full year.  Certain amounts reported for 2016 have been reclassified to be consistent with the reporting for 2017.  These interim unaudited financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto as of and for the years ended December 31, 2016, 2015 and 2014, included in our registration statement filed under Form S-1.

Principles of Consolidation and Nature of Operations

Principles of Consolidation and Nature of Operations

The accompanying unaudited consolidated financial statements include the accounts of RBB Bancorp and its wholly-owned subsidiaries Royal Business Bank ("Bank") and RBB Asset Management Company ("RAM"), collectively referred to herein as "the Company".  All significant intercompany transactions have been eliminated.  

RBB Bancorp was formed in January 2011 as a bank holding company.  RAM was formed in 2012 to hold and manage problem assets acquired in business combinations.

RBB Bancorp has no significant business activity other than its investments in Royal Business Bank and RAM.  

Use of Estimates in the Preparation of Financial Statements

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

The accompanying unaudited consolidated financial statements were compiled in accordance with the accounting policies set forth in Note 1 – Summary of Significant Policies in our Consolidated Financial Statements as of and for the periods ended December 31, 2016, 2015, and 2014, included in our registration statement on Form S-1.  The accompanying consolidated unaudited financial statements reflect all adjustments consisting of normal recurring adjustments that, in the opinion of management, are necessary to reflect a fair statement of our consolidated financial condition, results of operations, and cash flows. The results of operations for acquired companies are included from the dates of acquisition.  Operating results for the three and nine months ended September 30, 2017 are not necessarily indicative of the results that may be expected for the year ended December 31, 2017.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers (Topic 606).  This Update requires an entity to recognize revenue as performance obligations are met, in order to reflect the transfer of promised goods or services to customers in an amount that reflects the consideration the entity is entitled to receive for those goods or services.  The following steps are applied in the updated guidance: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, the entity satisfies a performance obligation.  These amendments are effective for public business entities for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period and one year later for nonpublic business entities.  Early adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that period. The Company plans to adopt ASU 2014-09 on January 1, 2019 utilizing the modified retrospective approach.  Since the guidance does not apply to revenue associated with financial instruments such as loans and investments, which are accounted for under other provisions of GAAP, we do not expect it to impact interest income, our largest component of income.  The Company will perform an overall assessment of revenue streams potentially affected by the ASU, including certain deposit related fees and interchange fees, to determine the impact this guidance will have on our consolidated financial statements.  

In January 2016, the FASB issued ASU 2016-01, Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities (Subtopic 825-10).  Changes made to the current measurement model primarily affect the accounting for equity securities and readily determinable fair values, where changes in fair value will impact earnings instead of other comprehensive income.  The accounting for other financial instruments, such as loans, investments in debt securities, and financial liabilities is largely unchanged.  The Update also changes the presentation and disclosure requirements for financial instruments including a requirement that public business entities use exit price when measuring the fair value of financial instruments measured at amortized cost for disclosure purposes.  This Update is generally effective for public business entities in fiscal years beginning after December 15, 2017, including interim periods within those fiscal years and one year later for nonpublic business entities.  Based upon a preliminary evaluation of the guidance in ASU No. 2016-01 the Company does not believe that the ASU will have a material impact on the Company’s consolidated financial statements.  The Company will continue to monitor any updates to the guidance.  

In February 2016, the FASB issued Accounting Standards Update (ASU) 2016-02, Leases (Topic 842).  The most significant change for lessees is the requirement under the new guidance to recognize right-of-use assets and lease liabilities for all leases not considered short-term leases, which is generally defined as a lease term of less than 12 months.  This change will result in lessees recognizing right-of-use assets and lease liabilities for most leases currently accounted for as operating leases under current lease accounting guidance.  The amendments in this Update are effective for interim and annual periods beginning after December 15, 2018, for public business entities and one year later for all other entities.  The Company has several lease agreements which are currently considered operating leases and are therefore not included on the Company’s Consolidated Balance Sheets.  Under the new guidance the Company expects that some of the lease agreements will have to be recognized on the Consolidated Balance Sheets as a right-of-use asset with a corresponding lease liability.  Based upon a preliminary evaluation the Company expects that the ASU will have an impact on the Company’s Consolidated Balance Sheets.  The Company will continue to evaluate how extensive the impact will be under the ASU on the Company’s consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting (Topic 718.)  ASU 2016-09 includes provisions intended to simplify various aspects related to how share-based payments are accounted for and presented in the financial statements.  Under ASU 2016-09, excess tax benefits and certain tax deficiencies will no longer be recorded in additional paid-in capital ("APIC").  Instead, they will record all excess tax benefits and tax deficiencies as income tax expense or benefit in the income statement, and APIC pools will be eliminated.  In addition, the guidance requires excess tax benefits be presented as an operating activity on the statement of cash flows rather than as a financing activity.  ASU 2016-09 also permits an accounting policy election for the impact of forfeitures on the recognition of expense for share-based payment awards.  Forfeitures can be estimated, as required today, or recognized when they occur.  This guidance is effective for public business entities for interim and annual reporting periods beginning after December 15, 2016, and for nonpublic business entities annual reporting periods beginning after December 15, 2017, and interim periods within the reporting periods beginning after December 15, 2018.  Early adoption is permitted, but all of the guidance must be adopted in the same period.  The Company early adopted the ASU as of January 1, 2017. The Company plans to recognize forfeitures as they occur.  The early adoption of the ASU did not have a material effect on the company’s financial statements or disclosures.  

In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instrument (Topic 326).  This ASU significantly changes how entities will measure credit losses for most financial assets and certain other instruments that aren't measured at fair value through net income.  In issuing the standard, the FASB is responding to criticism that today's guidance delays recognition of credit losses.  The standard will replace today's "incurred loss" approach with an "expected loss" model.  The new model, referred to as the current expected credit loss ("CECL") model, will apply to: (1) financial assets subject to credit losses and measured at amortized cost, and (2) certain off-balance sheet credit exposures.  This includes, but is not limited to, loans, leases, held to maturity securities, loan commitments, and financial guarantees.  The CECL model does not apply to available for sale ("AFS") debt securities.  For AFS debt securities with unrealized losses, entities will measure credit losses in a manner similar to what they do today, except that the losses will be recognized as allowances rather than reductions in the amortized cost of the securities.  As a result, entities will recognize improvements to estimated credit losses immediately in earnings rather than as interest income over time, as they do today.  The ASU also simplifies the accounting model for purchased credit-impaired debt securities and loans.  ASU 2016-13 also expands the disclosure requirements regarding an entity's assumptions, models, and methods for estimating the allowance for loan and lease losses.  In addition, public business entities will need to disclose the amortized cost balance for each class of financial asset by credit quality indicator, disaggregated by the year of origination.  ASU No. 2016-13 is effective for interim and annual reporting periods beginning after December 15, 2019, for SEC filers, one year later for non SEC filing public business entities and annual reporting periods beginning after December 15, 2020, for nonpublic business entities and interim periods within the reporting periods beginning after December 15, 2021.  Early adoption is permitted for interim and annual reporting periods beginning after December 15, 2018.  Entities will apply the standard's provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (i.e., modified retrospective approach).  The Company has begun its evaluation of the impact of the implementation of ASU 2016-13.   The implementation of the provisions of ASU No. 2016-13 will most likely impact the Company’s Consolidated Financial Statements as to the level of reserves that will be required for credit losses.  The Company will continue to access the potential impact that this ASU will have on the Company’s consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.” The new guidance clarifies the classification within the statement of cash flows for certain transactions, including debt extinguishment costs, zero-coupon debt, contingent consideration related to business combinations, insurance proceeds, equity method distributions and beneficial interests in securitizations. The guidance also clarifies that cash flows with aspects of multiple classes of cash flows that cannot be separated by source or use should be classified based on the activity that is likely to be the predominant source or use of cash flows for the item. This guidance is effective for fiscal years beginning after December 15, 2017 and will require application using a retrospective transition method. The Company is currently evaluating the impact of adoption of this ASU on its consolidated financial statements.

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. Currently, Topic 805 specifies three elements of a business – inputs, processes, and outputs. While an integrated set of assets and activities (collectively referred to as a “set”) that is a business usually has outputs, outputs are not required. In addition, all the inputs and processes that a seller uses in operating a set are not required if market participants can acquire the set and continue to produce outputs, for example, by integrating the acquired set with their own inputs and processes. This led many transactions to be accounted for as business combinations rather than asset purchases under legacy GAAP. The primary goal of ASU 2017-01 is to narrow the definition of a business, and the guidance in this update provides a screen to determine when a set is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This screen reduces the number of transactions that need to be further evaluated. The amendments in this update are effective for public business entities for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The amendments in this update should be applied prospectively on or after the effective date. The Company is currently evaluating this ASU to determine the impact on its consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350).  This ASU simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill.  The amendments in this Update are required for public business entities and other entities that have goodwill reported in their financial statements and have not elected the private company alternative for the subsequent measurement of goodwill.  As a result, under the ASU, “an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit.”  ASU No. 2017-14 is effective for annual and any interim impairment tests performed in periods beginning after December 15, 2019 for public business entities that are SEC filers, December 15, 2020 for business entities that are not SEC filers, and December 15, 2021 for all other entities.  Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017.   The Company will continue to access the potential impact that this ASU will have on the Company’s consolidated financial statements.

In March 2017, the FASB issued ASU No. 2017-08, Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities, which is intended to enhance “the accounting for the amortization of premiums for purchased callable debt securities.” The ASU shortens the amortization period for certain callable debt securities purchased at a premium by requiring that the premium be amortized to the earliest call date. Under current generally accepted accounting principles (GAAP), entities generally amortize the premium as an adjustment of yield over the contractual life of the instrument.  The amendments in this Update affects all entities that hold investments in callable debt securities that have an amortized cost basis in excess of the amount that is repayable by the issuer at the earliest call date (that is, at a premium). The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. The ASU’s amendments are effective for public business entities for interim and annual periods beginning after December 15, 2018. For other entities, the amendments are effective for annual periods beginning after December 15, 2019, and interim periods thereafter. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity should apply the amendments in this Update on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. Additionally, in the period of adoption, an entity should provide disclosures about a change in accounting principle.The implementation of the provisions of ASU No. 2017-08 will most likely not have a material impact the Company’s consolidated financial statements.The Company will continue to access the potential impact that this ASU will have on the Company’s consolidated financial statements.

In May 2017, the FASB issued ASU No. 2017-09, “Compensation – Stock Compensation (Topic 718): Scope of codification Accounting.” The amendments in ASU 2017-09 provide guidance about which changes to the terms or conditions of a share- entity to apply modification accounting. An entity should account for the effects of a modification unless all the following are met: (1) The fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the modified award is the same as the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the original award immediately before the original award is modified. If the modification does not affect any of the inputs to the valuation technique that the entity uses to value the award, the entity is not required to estimate the value immediately before and after the modification. (2) The vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified. (3) The classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The amendments in ASU No. 2017-09 are effective for annual periods, and interim within those annual reporting periods, beginning after December 15, 2017; early adoption is permitted. The amendments in this ASU should be applied prospectively to an award modified on or after the adoption date. The Company does not expect this ASU to have a material impact on the Company’s consolidated financial statements.

In July 2017, the FASB issued ASU 2017-13—Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to the Staff Announcement at the July 20, 2017 EITF Meeting and Rescission of Prior SEC Staff Announcements and Observer Comments  (SEC Update).  At the July 20, 2017, EITF meeting, the SEC staff announced that it would not object when certain public business entities (PBEs) elect to use the non-PBE effective dates solely to adopt the FASB’s new standards on revenue (ASC 606) and leases (ASC 842). This ASU reflects comments made by the SEC. The Company will continue to evaluate how extensive the impact will be under the ASU on the Company’s consolidated financial statements.

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Investment Securities (Tables)

9 Months Ended

Sep. 30, 2017

Investments Debt And Equity Securities [Abstract]

Summary of Amortized Cost and Fair Value of Securities Available for Sale and Held to Maturity

The following table summarizes the amortized cost and fair value of securities available for sale and held to maturity at September 30, 2017 and December 31, 2016, and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income:

			Gross		Gross
(dollars in thousands)	Amortized		Unrealized		Unrealized			Fair
September 30, 2017	Cost		Gains		Losses			Value
Available for sale
Government agency securities	$	5,057	$	—	$	(100	)	$	4,957
Mortgage-backed securities
Government sponsored agencies		33,530		44		(318	)		33,256
Corporate debt securities		17,341		203		(60	)		17,484
	$	55,928	$	247	$	(478	)	$	55,697
Held to maturity
Municipal taxable securities	$	4,296	$	278	$	—		$	4,574
Municipal securities		895		16		—			911
	$	5,191	$	294	$	—		$	5,485
December 31, 2016
Available for sale
Government agency securities	$	5,453	$	—	$	(136	)	$	5,317
Mortgage-backed securities
Government sponsored agencies		23,913		38		(311	)		23,640
Corporate debt securities		10,364		21		(65	)		10,320
	$	39,730	$	59	$	(512	)	$	39,277
Held to maturity
Municipal taxable securities	$	5,301	$	328	$	—		$	5,629
Municipal securities		913		11		—			924
	$	6,214	$	339	$	—		$	6,553

Amortized Cost and Fair Value of Investment Securities Portfolio Expected Maturity

The amortized cost and fair value of the investment securities portfolio at September 30, 2017 are shown by expected maturity below. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties.  

	Available for Sale				Held to Maturity
	Amortized		Fair		Amortized		Fair
(dollars in thousands)	Cost		Value		Cost		Value
Due from one to five years	$	31,323	$	31,214	$	2,781	$	2,930
Due from five to ten years		20,556		20,473		2,410		2,555
Due from ten years and greater		4,049		4,010		—		—
	$	55,928	$	55,697	$	5,191	$	5,485

Summary of Available for Sale Securities With Unrealized Losses

The following table summarizes available for sale securities with unrealized losses at September 30, 2017 and December 31, 2016, aggregated by major security type and length of time in a continuous unrealized loss position.  There were no held to maturity securities in a continuous unrealized loss position at September 30, 2017 and December 31, 2016:

	Less than Twelve Months					Twelve Months or More					Total
	Unrealized			Estimated		Unrealized			Estimated		Unrealized			Estimated
(dollars in thousands)	Losses			Fair Value		Losses			Fair Value		Losses			Fair Value
September 30, 2017
Government agency securities	$	(100	)	$	4,957	$	—		$	—	$	(100	)	$	4,957
Mortgage-backed securities
Government sponsored agencies		(255	)		26,916		(63	)		2,105		(318	)		29,021
Corporate debt securities		(60	)		5,994		—			—		(60	)		5,994
Total available for sale	$	(415	)	$	37,867	$	(63	)	$	2,105	$	(478	)	$	39,972
December 31, 2016
Government agency securities	$	(136	)	$	5,317	$	—		$	—	$	(136	)	$	5,317
Mortgage-backed securities
Government sponsored agencies		(221	)		16,231		(90	)		2,504		(311	)		18,735
Corporate debt securities		(65	)		5,147		—			—		(65	)		5,147
Total available for sale	$	(422	)	$	26,695	$	(90	)	$	2,504	$	(512	)	$	29,199

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Loans and Allowance for Loan Losses (Tables)

9 Months Ended

Sep. 30, 2017

Receivables [Abstract]

Summary of Balance and Activity Related to Allowance for Loan Losses for Held for Investment Loans and the Recorded Investments in Loans and Impairment method by Portfolio Segment

The following tables present the balance and activity related to the allowance for loan losses for held for investment loans by type for the periods presented.

	Three Months Ended September 30,
	2017										2016
(dollars in thousands)	Real Estate		Commercial			Unallocated			Total		Real Estate		Commercial		Unallocated		Total
Beginning balance	$	6,433	$	3,384		$	810		$	10,627	$	9,455	$	2,694	$	—	$	12,149
Additions (reductions) to the allowance    charged to expense		1,239		(115	)		(424	)		700		820		430		—		1,250
Recoveries on loans charged-off		—		93			—			93		—		—		—		—
Less loans charged-off		—		—			—			—		—		—		—		—
Ending balance	$	7,672	$	3,362		$	386		$	11,420	$	10,275	$	3,124	$	—	$	13,399

	Nine Months Ended September 30,
	2017											2016
(dollars in thousands)	Real Estate			Commercial			Unallocated		Total			Real Estate		Commercial			Unallocated		Total
Beginning balance	$	8,111		$	6,051		$	—	$	14,162		$	5,788	$	4,235		$	—	$	10,023
Additions (reductions) to the allowance    charged to expense		(439	)		(3,435	)		386		(3,488	)		4,487		(888	)		—		3,599
Recoveries on loans charged-off		—			746			—		746			—		—			—		—
Less loans charged-off		—			—			—		—			—		(223	)		—		(223	)
Ending balance	$	7,672		$	3,362		$	386	$	11,420		$	10,275	$	3,124		$	—	$	13,399

The following table presents the recorded investment in loans and impairment method as of and for the nine months ended September 30, 2017 and September 30, 2016, and the activity in the allowance for loan losses for the year ended December 31, 2016, by portfolio segment:

(dollars in thousands)
As of  September 30, 2017	Real Estate		Commercial		Unallocated		Total
Reserves:
Specific	$	—	$	—	$	—	$	—
General		7,672		3,362		386		11,420
Loans acquired with deteriorated credit quality		—		—		—		—
	$	7,672	$	3,362	$	386	$	11,420
Loans evaluated for impairment:
Individually	$	2,580	$	1,370	$	—	$	3,950
Collectively		819,654		372,602		—		1,192,256
Loans acquired with deteriorated credit quality		316		—		—		316
	$	822,550	$	373,972	$	—	$	1,196,522

As of December 31, 2016	Real Estate		Commercial			Unallocated		Total
Allowance for loan losses:
Beginning of year	$	5,788	$	4,235		$	—	$	10,023
Provisions		2,323		2,651			—		4,974
Charge-offs		—		(835	)		—		(835	)
Recoveries		—		—			—		—
	$	8,111	$	6,051		$	—	$	14,162
Reserves:
Specific	$	—	$	1,782		$	—	$	1,782
General		8,111		4,269			—		12,380
Loans acquired with deteriorated credit quality		—		—			—		—
	$	8,111	$	6,051		$	—	$	14,162
Loans evaluated for impairment:
Individually	$	2,556	$	3,577		$	—	$	6,133
Collectively		744,349		359,234			—		1,103,583
Loans acquired with deteriorated credit quality		730		—			—		730
	$	747,635	$	362,811		$	—	$	1,110,446

Summary of Risk Category of Loans by Class of Loans

The risk category of loans by class of loans was as follows at September 30, 2017 and December 31, 2016:

(dollars in thousands)			Special
September 30, 2017	Pass		Mention		Substandard		Impaired		Total
Real estate:
Construction and land development	$	94,004	$	—	$	—	$	293	$	94,297
Commercial real estate		444,108		4,517		40,174		2,287		491,086
Single-family residential mortgages		237,167		—		—		—		237,167
Commercial:
Other		222,743		960		971		1,293		225,967
SBA		143,507		1,819		2,602		77		148,005
	$	1,141,529	$	7,296	$	43,747	$	3,950	$	1,196,522
December 31, 2016
Real estate:
Construction and land development	$	87,174	$	1,932	$	—	$	303	$	89,409
Commercial real estate		475,499		4,562		19,484		2,253		501,798
Single-family residential mortgages		136,206		13,950		6,272		—		156,428
Commercial:
Other		194,227		—		9,616		—		203,843
SBA		151,066		1,934		2,391		3,577		158,968
	$	1,044,172	$	22,378	$	37,763	$	6,133	$	1,110,446

Summary of Recorded Investment in Non-Accrual Loans by Class of Loans

The following table presents the recorded investment in non-accrual loans by class of loans.  There were no loans past due 90 days and still on accrual at September 30, 2017 and December 31, 2016:

	September 30		December 31,
(dollars in thousands)	2017		2016
Commercial:
SBA	$	77	$	3,577

Summary of Aging Recorded Investment Past-due Loans

The following table presents the aging of the recorded investment in past-due loans at September 30, 2017 and December 31, 2016 by class of loans:

	30-59		60-89		Greater Than
(dollars in thousands)	Days		Days		89 Days		Total		Loans Not
September 30, 2017	Past Due		Past Due		Past Due		Past Due		Past Due		Total
Real estate:
Construction and land development	$	—	$	—	$	—	$	—	$	94,297	$	94,297
Commercial real estate		—		—		—		—		491,086		491,086
Single-family residential mortgages		531		—		—		531		236,636		237,167
Commercial:								—
Other		213		—		—		213		225,754		225,967
SBA		254		1,434		—		1,688		146,317		148,005
	$	998	$	1,434	$	—	$	2,432	$	1,194,090	$	1,196,522
December 31, 2016
Real estate:
Construction and land development	$	—	$	—	$	—	$	—	$	89,409	$	89,409
Commercial real estate		—		—		—		—		501,798		501,798
Single-family residential mortgages		—		—		—		—		156,428		156,428
Commercial:
Other		343		—		—		343		203,500		203,843
SBA		—		—		3,577		3,577		155,391		158,968
	$	343	$	—	$	3,577	$	3,920	$	1,106,526	$	1,110,446

Summary of Individually Impaired Loans Presented by Class of Loans

Information relating to individually impaired loans presented by class of loans was as follows at September 30, 2017 and December 31, 2016:

	Unpaid
(dollars in thousands)	Principal		Recorded		Average		Interest		Related
September 30, 2017	Balance		Investment		Balance		Income		Allowance
With no related allowance recorded
Construction and land development	$	293	$	293	$	298	$	16	$	—
Commercial real estate		2,287		2,287		2,270		253		—
Commercial - SBA		1,370		1,370		685		79		—
Total	$	3,950	$	3,950	$	3,253	$	348	$	—
December 31, 2016
With no related allowance recorded
Construction and land development	$	303	$	303	$	309	$	21	$	—
Commercial real estate		2,253		2,253		1,710		280		—
Commercial - SBA		18		18		93		—		—
Subtotal		2,574		2,574		2,112		301		—
With an allowance recorded
Commercial - SBA		3,559		3,559		3,559		—		1,782
Total	$	6,133	$	6,133	$	5,671	$	301	$	1,782

Summary of Loans Class Modified as TDRs

   The following table presents loans by class modified as TDRs that occurred during the nine months ended September 30, 2017 and the year ended December 31, 2016;

			Pre-		Post-
			Modification		Modification
(dollars in thousands)	Number of		Recorded		Recorded
September 30, 2017	Loans		Investment		Investment
Commercial		1	$	1,293	$	1,293
			Pre-		Post-
			Modification		Modification
(dollars in thousands)	Number of		Recorded		Recorded
December 31, 2016	Loans		Investment		Investment
Commercial real estate		1	$	1,047	$	1,047

Summary of Outstanding Balance and Carrying Amount of Purchased Credit-impaired Loans

The outstanding balance and carrying amount of purchased credit-impaired loans at September 30, 2017 and December 31, 2016 were as follows:

	September 30,		December 31,
(dollars in thousands)	2017		2016
Outstanding balance	$	324	$	878
Carrying amount	$	316	$	730

Summary of Activity in Accretable Yield on Purchased Credit-impaired Loans

Below is a summary of activity in the accretable yield on purchased credit-impaired loans for the nine months ended September 30, 2017 and for the year ended December 31, 2016:

	September 30,			December 31,
(dollars in thousands)	2017			2016
Beginning balance	$	142		$	349
Restructuring as TDR		—			(22	)
Accretion of income		(134	)		(185	)
Ending balance	$	8		$	142

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Loan Servicing (Tables)

9 Months Ended

Sep. 30, 2017

Loan Servicing [Abstract]

Schedule of Principal Balances of Mortgage and SBA Loans Serviced for Others

Mortgage and SBA loans serviced for others are not reported as assets.  The principal balances at September 30, 2017 and December 31, 2016 are as follows:

	September 30,		December 31,
(dollars in thousands)	2017		2016
Loans serviced for others:
Mortgage loans	$	306,168	$	259,207
SBA loans	$	166,148	$	110,263

Schedule of Amortization of Mortgage Servicing Rights Netted Against Loan Servicing Fee Income

The amortization of mortgage servicing rights is netted against loan servicing fee income.

	Nine Months Ended						Nine Months Ended
	September 30, 2017						September 30, 2016
	Mortgage			SBA			Mortgage			SBA
(dollars in thousands)	Loans			Loans			Loans			Loans
Servicing assets:
Beginning of year	$	1,002		$	2,702		$	298		$	1,807
Additions		501			2,149			602			1,033
Disposals		(134	)		(202	)		(31	)		(99	)
Amortized to expense		(271	)		(377	)		(109	)		(244	)
End of period	$	1,098		$	4,272		$	760		$	2,497

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Goodwill and Intangibles (Tables)

9 Months Ended

Sep. 30, 2017

Goodwill And Intangible Assets Disclosure [Abstract]

Schedule of Future Estimated Amortization Expense

Estimated CDI amortization expense for future years is as follows (dollars in thousands):

Year ending December 31:
2017 remaining	$	87
2018		311
2019		274
2020		244
2021		172
Thereafter		437
Total	$	1,525

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Deposits (Tables)

9 Months Ended

Sep. 30, 2017

Maturities Of Time Deposits [Abstract]

Schedule of Maturities of Time Deposits

At September 30, 2017, the scheduled maturities of time deposits are as follows:

(dollars in thousands)
One year	$	660,187
Two to three years		8,513
	$	668,700

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Long-term Debt (Tables)

9 Months Ended

Sep. 30, 2017

Debt Disclosure [Abstract]

Schedule of Subordinated Debentures

At September 30, 2017 and December 31, 2016 long-term debt was as follows:

	September 30,		December 31,
(dollars in thousands)	2017		2016
Principal	$	50,000	$	50,000
Unamortized debt issuance costs	$	508	$	617

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Commitments (Tables)

9 Months Ended

Sep. 30, 2017

Commitments And Contingencies Disclosure [Abstract]

Schedule of Future Minimum Rent Payments on Company's Leases

Future minimum rent payments on the Company's leases were as follows at September 30, 2017:

(dollars in thousands)
Year ending December 31:
2017 remaining	$	410
2018		1,350
2019		754
2020		496
2021		382
Thereafter		130
	$	3,522

Schedule of Financial Commitments whose Contractual Amount Represents Credit Risk

At September 30, 2017 and December 31, 2016, the Company had the following financial commitments whose contractual amount represents credit risk:

	September 30,		December 31,
	2017		2016
(dollars in thousands)
Commitments to make loans	$	97,116	$	68,003
Unused lines of credit		97,662		92,378
Commercial and similar letters of credit		4,144		8,966
Standby letters of credit		1,575		1,250
	$	200,497	$	170,597

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Related Party Transactions (Tables)

9 Months Ended

Sep. 30, 2017

Related Party Transactions [Abstract]

Schedule of Related Party Transactions

Loans to principal officers, directors, and their affiliates were as follows:

	September 30,			December 31,
(dollars in thousands)	2017			2016
Beginning balance	$	3,445		$	3,971
New loans and advances		900			1,274
Repayments		(3,345	)		(1,800	)
Ending balance	$	1,000		$	3,445

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Regulatory Matters (Tables)

9 Months Ended

Sep. 30, 2017

Regulated Operations [Abstract]

Summary of Actual Capital Amounts and Ratios and Related Regulatory Requirements

The following table sets forth RBB Bancorp's consolidated and the Bank's actual capital amounts and ratios and related regulatory requirements for the Bank at September 30, 2017:

						Amount of Capital Required
										To Be Well-
										Capitalized
						For Capital				Under Prompt
						Adequacy				Corrective
	Actual					Purposes				Provisions
(dollars in thousands)	Amount		Ratio			Amount		Ratio		Amount		Ratio
As of September 30, 2017:
Tier 1 Leverage Ratio
Consolidated	$	232,521		14.91	%	NA		NA		NA		NA
Bank	$	227,104		14.57	%	$	62,363		4.0%	$	77,953		5.0%
Common Equity Tier 1 Risk-Based Capital Ratio
Consolidated	$	229,244		18.23	%	NA		NA		NA		NA
Bank	$	227,104		18.13	%	$	56,377		4.5%	$	81,433		6.5%
Tier 1 Risk-Based Capital Ratio
Consolidated	$	232,521		18.49	%	NA		NA		NA		NA
Bank	$	227,104		18.13	%	$	75,169		6.0%	$	100,225		8.0%
Total Risk-Based Capital Ratio
Consolidated	$	293,922		23.37	%	NA		NA		NA		NA
Bank	$	239,013		19.08	%	$	100,225		8.0%	$	125,282		10.0%

The following table sets forth RBB Bancorp's consolidated and the Bank's actual capital amounts and ratios and related regulatory requirements for the Bank at December 31, 2016:

					Amount of Capital Required
									To Be Well-
									Capitalized
					For Capital				Under Prompt
					Adequacy				Corrective
	Actual				Purposes				Provisions
(dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
As of December 31, 2016:
Tier 1 Leverage Ratio
Consolidated	$	153,682		11.00%	NA		NA		NA		NA
Bank	$	178,645		12.81%	$	55,777		4.0%	$	69,722		5.0%
Common Equity Tier 1 Risk-Based Capital Ratio
Consolidated	$	150,786		13.30%	NA		NA		NA		NA
Bank	$	178,645		15.81%	$	50,860		4.5%	$	73,464		6.5%
Tier 1 Risk-Based Capital Ratio
Consolidated	$	153,682		13.56%	NA		NA		NA		NA
Bank	$	178,645		15.81%	$	67,813		6.0%	$	90,417		8.0%
Total Risk-Based Capital Ratio
Consolidated	$	217,244		19.17%	NA		NA		NA		NA
Bank	$	192,784		17.06%	$	90,417		8.0%	$	113,021		10.0%

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2017

Fair Value Disclosures [Abstract]

Schedule of Hierarchy and Fair Value for Each Major Category of Assets and Liabilities Measured at Fair Value

The following table provides the hierarchy and fair value for each major category of assets and liabilities measured at fair value at September 30, 2017 and December 31, 2016:

(dollars in thousands)	Fair Value Measurements Using:
September 30, 2017	Level 1		Level 2		Level 3		Total
Assets measured at fair value:
On a recurring basis:
Securities available for sale
Government agency securities			$	4,957			$	4,957
Mortgage-backed securities								-
Government sponsored agencies				33,256				33,256
Corporate debt securities				17,484				17,484
	$	—	$	55,697	$	—	$	55,697
On a non-recurring basis:
Other real estate owned	$	—	$	—	$	293	$	293
December 31, 2016
Assets measured at fair value:
On a recurring basis:
Securities available for sale
Government agency securities			$	5,317				5,317
Mortgage-backed securities
Government sponsored agencies				23,640				23,640
Corporate debt securities				10,320				10,320
	$	—	$	39,277	$	—	$	39,277
On a non-recurring basis:
Other real estate owned	$	—	$	—	$	833	$	833

Summary of Quantitative Information About Non-recurring Level 3 Fair Value Measurements

Quantitative information about the Company's non-recurring Level 3 fair value measurements at September 30, 2017 and December 31, 2016 is as follows:

							Weighted-
(dollars in thousands)	Fair Value		Valuation	Unobservable	Adjustment		Average
September 30, 2017	Amount		Technique	Input	Range		Adjustment
Other real estate owned	$	293	Third Party	Management Adjustments		15%		15%
			Appraisals	to Reflect Current
				Conditions and Selling
				Costs
December 31, 2016
Other real estate owned	$	833	Third Party	Management Adjustments	10% - 15%			12%
			Appraisals	to Reflect Current
				Conditions and Selling
				Costs

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Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2017

Fair Value Disclosures [Abstract]

Schedule of Fair Value Hierarchy Level and Estimated Fair Value of Significant Financial Instruments

The fair value hierarchy level and estimated fair value of significant financial instruments at September 30, 2017 and December 31, 2016 are summarized as follows:

		September 30,				December 31,
		2017				2016
	Fair Value	Carrying		Fair		Carrying		Fair
(dollars in thousands)	Hierarchy	Value		Value		Value		Value
Financial Assets:
Cash and due from banks	Level 1	$	69,552	$	69,552	$	74,213	$	74,213
Federal funds sold and other cash equivalents	Level 1		96,500		96,500		44,500		44,500
Interest-earning deposits in other financial institutions	Level 1		100		100		345		345
Investment securities - AFS	Level 2		55,697		55,697		39,277		39,277
Investment securities - HTM	Level 2		5,191		5,485		6,214		6,553
Mortgage loans held for sale	Level 1		125,704		128,491		44,345		45,433
Loans, net	Level 3		1,185,102		1,205,092		1,096,284		1,095,944
Financial Liabilities:
Deposits	Level 2		1,318,292		1,315,698	$	1,152,763	$	1,140,707
Long-term debt	Level 2		49,492		47,657		49,383		48,447
Subordinated debentures	Level 3		3,402		3,582		3,334		3,334

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Earnings Per Share ("EPS") (Tables)

9 Months Ended

Sep. 30, 2017

Earnings Per Share [Abstract]

Reconciliation of Net Income and Shares Outstanding to Income and Number of Shares Used to Compute EPS

The following is a reconciliation of net income and shares outstanding to the income and number of shares used to compute EPS:

	Nine Months Ended
	September 30
	2017					2016
(dollars in thousands except per share amounts)	Income		Shares			Income		Shares
Net income as reported	$	20,640				$	13,693
Shares outstanding				15,790,611					12,827,803
Impact of weighting shares				(2,309,152	)				(35,927	)
Used in basic EPS		20,640		13,481,459			13,693		12,791,876
Dilutive effect of outstanding
Stock options				1,077,584					896,122
Used in dilutive EPS	$	20,640		14,559,043		$	13,693		13,687,998
Basic earnings per common share	$	1.53				$	1.07
Diluted earnings per common share	$	1.42				$	1.00

	Three Months Ended
	September 30
	2017					2016
(dollars in thousands except per share amounts)	Income		Shares			Income		Shares
Net income as reported	$	6,611				$	5,697
Shares outstanding				15,790,611					12,827,803
Impact of weighting shares				(1,023,154	)				-
Used in basic EPS		6,611		14,767,457			5,697		12,827,803
Dilutive effect of outstanding
Stock options				1,084,472					889,429
Used in dilutive EPS	$	6,611		15,851,929		$	5,697		13,717,232
Basic earnings per common share	$	0.45				$	0.44
Diluted earnings per common share	$	0.42				$	0.42

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Business Description - Additional Information (Details) $ / shares in Units, $ in Thousands			9 Months Ended	55 Months Ended
	Jul. 31, 2017 $ / shares shares	Jul. 27, 2017 $ / shares shares	Sep. 30, 2017 USD ($) shares	Feb. 19, 2016 Acquisition	Dec. 31, 2016 USD ($)	Sep. 30, 2016 USD ($)	Dec. 31, 2015 USD ($)
Description Of Business [Line Items]
Total assets			$ 1,642,714		$ 1,395,551
Gross loans			1,196,522		1,110,446
Total deposits			1,318,292		1,152,763
Total stockholders' Equity			$ 260,331		$ 181,585	$ 176,433	$ 163,645
Number of acquisitions | Acquisition				4
Initial Public Offering
Description Of Business [Line Items]
Number of shares issued in offering | shares	3,750,000	3,750,000	3,000,000
Share price per share | $ / shares	$ 23.00	$ 23.00

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Acquisitions - Additional Information (Details)		9 Months Ended
	Feb. 19, 2016 USD ($) Branch	Sep. 30, 2017 USD ($)	Sep. 30, 2016 USD ($)	Dec. 31, 2016 USD ($)
Business Acquisition [Line Items]
Goodwill		$ 29,940,000		$ 29,940,000
TFC Holding Company
Business Acquisition [Line Items]
Cash consideration	$ 86,700,000
Trust preferred debentures	$ 3,300,000
Number of branches operated | Branch	6
Goodwill	$ 25,900,000
Fair value of assets acquired	469,900,000
Cash and cash equivalents	51,600,000
Interest bearing deposits in other financial institutions	2,300,000
FHLB stock	2,000,000
Loans	387,700,000
Available for sale securities	15,800,000
Deferred tax asset	4,900,000
Fixed assets	225,000
Core deposit intangible assets acquired	1,700,000
Other assets	3,700,000
Fair value of liabilities assumed	409,100,000
Deposits	405,300,000
Subordinated debentures	3,300,000
Other liabilites	566,000
Loans acquired for deterioration of credit quality	$ 0
Non-recurring acquisition related expenses		$ 0	$ 1,700,000
TFC Holding Company | Maximum
Business Acquisition [Line Items]
Fair value adjustment period from acquisition date	1 year

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Investment Securities - Summary of Amortized Cost and Fair Value of Securities Available for Sale and Held to Maturity - (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Schedule Of Available For Sale Securities [Line Items]
Available for sale, Amortized Cost	$ 55,928	$ 39,730
Available for sale, Gross Unrealized Gains	247	59
Available for sale, Gross Unrealized Losses	(478)	(512)
Available for sale, Fair Value	55,697	39,277
Held to maturity, Amortized Cost	5,191	6,214
Held to maturity, Gross Unrealized Gains	294	339
Securities held to maturity, fair value	5,485	6,553
Municipal Taxable Securities
Schedule Of Available For Sale Securities [Line Items]
Held to maturity, Amortized Cost	4,296	5,301
Held to maturity, Gross Unrealized Gains	278	328
Securities held to maturity, fair value	4,574	5,629
Municipal Securities
Schedule Of Available For Sale Securities [Line Items]
Held to maturity, Amortized Cost	895	913
Held to maturity, Gross Unrealized Gains	16	11
Securities held to maturity, fair value	911	924
Government Agency Securities
Schedule Of Available For Sale Securities [Line Items]
Available for sale, Amortized Cost	5,057	5,453
Available for sale, Gross Unrealized Losses	(100)	(136)
Available for sale, Fair Value	4,957	5,317
Government Sponsored Agencies
Schedule Of Available For Sale Securities [Line Items]
Available for sale, Amortized Cost	33,530	23,913
Available for sale, Gross Unrealized Gains	44	38
Available for sale, Gross Unrealized Losses	(318)	(311)
Available for sale, Fair Value	33,256	23,640
Corporate Debt Securities
Schedule Of Available For Sale Securities [Line Items]
Available for sale, Amortized Cost	17,341	10,364
Available for sale, Gross Unrealized Gains	203	21
Available for sale, Gross Unrealized Losses	(60)	(65)
Available for sale, Fair Value	$ 17,484	$ 10,320

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Investment Securities - Additional Information (Details)	Sep. 30, 2017 USD ($) Security	Dec. 31, 2016 USD ($)
Investments Debt And Equity Securities [Abstract]
Number of investment securities pledged as collateral | Security	1
Fair value of securities pledged to secure local agency deposit	$ 840,000	$ 933,000
Held to maturity securities, continuous unrealized loss position	$ 0	$ 0

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Investment Securities - Amortized Cost and Fair Value of Investment Securities Portfolio Expected Maturity (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis, Fiscal Year Maturity [Abstract]
Due from one to five years, Available for sale, Amortized Cost	$ 31,323
Due from five to ten years, Available for sale, Amortized Cost	20,556
Due from ten years and greater, Available for sale, Amortized Cost	4,049
Available for sale, Amortized Cost	55,928	$ 39,730
Available-for-sale Securities, Debt Maturities, Fair Value, Fiscal Year Maturity [Abstract]
Due from one to five years, Available for sale, Fair Value	31,214
Due from five to ten years, Available for sale, Fair Value	20,473
Due from ten years and greater, Available for sale, Fair Value	4,010
Available for sale, Fair value	55,697	39,277
Held-to-maturity Securities, Debt Maturities, Net Carrying Amount [Abstract]
Due from one to five years, Held to Maturity, Amortized Cost	2,781
Due from five to ten years, Held to Maturity, Amortized Cost	2,410
Held to maturity, Amortized Cost	5,191	6,214
Held-to-maturity Securities, Debt Maturities, Fair Value, Fiscal Year Maturity [Abstract]
Due from one to five years, Held to Maturity, Fair Value	2,930
Due from five to ten years, Held to Maturity, Fair Value	2,555
Held to Maturity, Fair Value	$ 5,485	$ 6,553

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Investment Securities - Summary of Available for Sale Securities With Unrealized Losses (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Schedule Of Available For Sale Securities [Line Items]
Less than Twelve Months Unrealized Losses	$ (415)	$ (422)
Less than Twelve Months Estimated Fair Value	37,867	26,695
Twelve Months or More Unrealized Losses	(63)	(90)
Twelve Months or More Estimated Fair Value	2,105	2,504
Total Unrealized Losses	(478)	(512)
Total Estimated Fair Value	39,972	29,199
Government Agency Securities
Schedule Of Available For Sale Securities [Line Items]
Less than Twelve Months Unrealized Losses	(100)	(136)
Less than Twelve Months Estimated Fair Value	4,957	5,317
Total Unrealized Losses	(100)	(136)
Total Estimated Fair Value	4,957	5,317
Government Sponsored Agencies
Schedule Of Available For Sale Securities [Line Items]
Less than Twelve Months Unrealized Losses	(255)	(221)
Less than Twelve Months Estimated Fair Value	26,916	16,231
Twelve Months or More Unrealized Losses	(63)	(90)
Twelve Months or More Estimated Fair Value	2,105	2,504
Total Unrealized Losses	(318)	(311)
Total Estimated Fair Value	29,021	18,735
Corporate Debt Securities
Schedule Of Available For Sale Securities [Line Items]
Less than Twelve Months Unrealized Losses	(60)	(65)
Less than Twelve Months Estimated Fair Value	5,994	5,147
Total Unrealized Losses	(60)	(65)
Total Estimated Fair Value	$ 5,994	$ 5,147

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Loans and Allowance for Loan Losses - Summary of Balance and Activity Related to Allowance for Loan Losses for Held for Investment Loans (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, Beginning balance	$ 10,627	$ 12,149	$ 14,162	$ 10,023	$ 10,023
Additions (reductions) to the allowance charged to expense	700	1,250	(3,488)	3,599
Recoveries on loans charged-off	93		746
Less loans charged-off				(223)	(835)
Allowance for loan losses, Ending balance	11,420	13,399	11,420	13,399	14,162
Real Estate
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, Beginning balance	6,433	9,455	8,111	5,788	5,788
Additions (reductions) to the allowance charged to expense	1,239	820	(439)	4,487
Allowance for loan losses, Ending balance	7,672	10,275	7,672	10,275	8,111
Commercial
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, Beginning balance	3,384	2,694	6,051	4,235	4,235
Additions (reductions) to the allowance charged to expense	(115)	430	(3,435)	(888)
Recoveries on loans charged-off	93		746
Less loans charged-off				(223)	(835)
Allowance for loan losses, Ending balance	3,362	$ 3,124	3,362	$ 3,124	$ 6,051
Unallocated
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance for loan losses, Beginning balance	810
Additions (reductions) to the allowance charged to expense	(424)		386
Allowance for loan losses, Ending balance	$ 386		$ 386

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Loans and Allowance for Loan Losses - Summary of Recorded Investment in Loans Impairment Method and Activity in Allowance for Loan Losses by Portfolio Segment (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended		12 Months Ended
	Sep. 30, 2017	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Reserves:
Loan losses, Reserves	$ 11,420	$ 11,420		$ 14,162
Loans evaluated for impairment:
Loans, Individually evaluated for impairment	3,950	3,950		6,133
Loans, Collectively evaluated for impairment	1,192,256	1,192,256		1,103,583
Total loans, gross	1,196,522	1,196,522		1,110,446
Allowance for loan losses:
Allowance for loan losses, Beginning balance	10,627	14,162	$ 10,023	10,023
Allowance for loan losses, Provisions		(3,488)	3,599	4,974
Allowance for loan losses, Charge-offs			(223)	(835)
Allowance for loan losses, Recoveries	93	746
Allowance for loan losses, Ending balance	11,420	11,420	13,399	14,162
Loans Acquired with Deteriorated Credit Quality
Loans evaluated for impairment:
Loans acquired	316	316		730
Specific Reserves
Reserves:
Loan losses, Reserves				1,782
General Reserves
Reserves:
Loan losses, Reserves	11,420	11,420		12,380
Real Estate
Reserves:
Loan losses, Reserves	7,672	7,672		8,111
Loans evaluated for impairment:
Loans, Individually evaluated for impairment	2,580	2,580		2,556
Loans, Collectively evaluated for impairment	819,654	819,654		744,349
Total loans, gross	822,550	822,550		747,635
Allowance for loan losses:
Allowance for loan losses, Beginning balance	6,433	8,111	5,788	5,788
Allowance for loan losses, Provisions				2,323
Allowance for loan losses, Ending balance	7,672	7,672	10,275	8,111
Real Estate | Loans Acquired with Deteriorated Credit Quality
Loans evaluated for impairment:
Loans acquired	316	316		730
Real Estate | General Reserves
Reserves:
Loan losses, Reserves	7,672	7,672		8,111
Commercial
Reserves:
Loan losses, Reserves	3,362	3,362		6,051
Loans evaluated for impairment:
Loans, Individually evaluated for impairment	1,370	1,370		3,577
Loans, Collectively evaluated for impairment	372,602	372,602		359,234
Total loans, gross	373,972	373,972		362,811
Allowance for loan losses:
Allowance for loan losses, Beginning balance	3,384	6,051	4,235	4,235
Allowance for loan losses, Provisions				2,651
Allowance for loan losses, Charge-offs			(223)	(835)
Allowance for loan losses, Recoveries	93	746
Allowance for loan losses, Ending balance	3,362	3,362	$ 3,124	6,051
Commercial | Specific Reserves
Reserves:
Loan losses, Reserves				1,782
Commercial | General Reserves
Reserves:
Loan losses, Reserves	3,362	3,362		$ 4,269
Unallocated
Reserves:
Loan losses, Reserves	386	386
Allowance for loan losses:
Allowance for loan losses, Beginning balance	810
Allowance for loan losses, Ending balance	386	386
Unallocated | General Reserves
Reserves:
Loan losses, Reserves	$ 386	$ 386

XML

Loans and Allowance for Loan Losses - Summary of Risk Category of Loans by Class of Loans (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Accounts Notes And Loans Receivable [Line Items]
Total loans	$ 1,196,522	$ 1,110,446
Real Estate | Construction and Land Development
Accounts Notes And Loans Receivable [Line Items]
Total loans	94,297	89,409
Real Estate | Commercial Real Estate
Accounts Notes And Loans Receivable [Line Items]
Total loans	491,086	501,798
Real Estate | Single-family Residential Mortgages
Accounts Notes And Loans Receivable [Line Items]
Total loans	237,167	156,428
Commercial | Other
Accounts Notes And Loans Receivable [Line Items]
Total loans	225,967	203,843
Commercial | SBA
Accounts Notes And Loans Receivable [Line Items]
Total loans	148,005	158,968
Pass
Accounts Notes And Loans Receivable [Line Items]
Total loans	1,141,529	1,044,172
Pass | Real Estate | Construction and Land Development
Accounts Notes And Loans Receivable [Line Items]
Total loans	94,004	87,174
Pass | Real Estate | Commercial Real Estate
Accounts Notes And Loans Receivable [Line Items]
Total loans	444,108	475,499
Pass | Real Estate | Single-family Residential Mortgages
Accounts Notes And Loans Receivable [Line Items]
Total loans	237,167	136,206
Pass | Commercial | Other
Accounts Notes And Loans Receivable [Line Items]
Total loans	222,743	194,227
Pass | Commercial | SBA
Accounts Notes And Loans Receivable [Line Items]
Total loans	143,507	151,066
Special Mention
Accounts Notes And Loans Receivable [Line Items]
Total loans	7,296	22,378
Special Mention | Real Estate | Construction and Land Development
Accounts Notes And Loans Receivable [Line Items]
Total loans		1,932
Special Mention | Real Estate | Commercial Real Estate
Accounts Notes And Loans Receivable [Line Items]
Total loans	4,517	4,562
Special Mention | Real Estate | Single-family Residential Mortgages
Accounts Notes And Loans Receivable [Line Items]
Total loans		13,950
Special Mention | Commercial | Other
Accounts Notes And Loans Receivable [Line Items]
Total loans	960
Special Mention | Commercial | SBA
Accounts Notes And Loans Receivable [Line Items]
Total loans	1,819	1,934
Substandard
Accounts Notes And Loans Receivable [Line Items]
Total loans	43,747	37,763
Substandard | Real Estate | Commercial Real Estate
Accounts Notes And Loans Receivable [Line Items]
Total loans	40,174	19,484
Substandard | Real Estate | Single-family Residential Mortgages
Accounts Notes And Loans Receivable [Line Items]
Total loans		6,272
Substandard | Commercial | Other
Accounts Notes And Loans Receivable [Line Items]
Total loans	971	9,616
Substandard | Commercial | SBA
Accounts Notes And Loans Receivable [Line Items]
Total loans	2,602	2,391
Impaired
Accounts Notes And Loans Receivable [Line Items]
Total loans	3,950	6,133
Impaired | Real Estate | Construction and Land Development
Accounts Notes And Loans Receivable [Line Items]
Total loans	293	303
Impaired | Real Estate | Commercial Real Estate
Accounts Notes And Loans Receivable [Line Items]
Total loans	2,287	2,253
Impaired | Commercial | Other
Accounts Notes And Loans Receivable [Line Items]
Total loans	1,293
Impaired | Commercial | SBA
Accounts Notes And Loans Receivable [Line Items]
Total loans	$ 77	$ 3,577

XML

Loans and Allowance for Loan Losses - Additional Information (Details)	9 Months Ended		12 Months Ended
	Sep. 30, 2017 USD ($) Loan	Sep. 30, 2016 USD ($)	Dec. 31, 2016 USD ($) Loan
Financing Receivable Recorded Investment [Line Items]
Loans past due 90 days and still on accrual	$ 0		$ 0
Interest income recognized on cash basis	$ 0	$ 0	$ 0
Number of loans identified as troubled debt restructurings | Loan	5		6
Specific reserve	$ 11,420,000		$ 14,162,000
Commitments to lend an additional amounts of outstanding loans are classified as TDR's	$ 0		0
Description of loans modified as troubled debt restructuring	During the year ended December 31, 2016 and for the nine months ended September 30, 2017, the terms of certain loans were modified as TDR's. The modification of the terms generally included loans where a moratorium on loan payments was granted. Such moratoriums ranged from three months to twelve months on the loans restructured in 2017 and 2016.
Increase in allowance for loan losses under purchased credit-impaired loans	$ 0		0
Significant reductions in allowance for loan losses under purchased credit-impaired loans	$ 0		0
Minimum
Financing Receivable Recorded Investment [Line Items]
Moratorium on loan payments period granted	3 months
Maximum
Financing Receivable Recorded Investment [Line Items]
Moratorium on loan payments period granted	12 months
One Loan
Financing Receivable Recorded Investment [Line Items]
Specific reserve	$ 0		$ 1,782,000

XML

Loans and Allowance for Loan Losses - Summary of Recorded Investment in Non-Accrual Loans by Class of Loans (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Commercial | SBA
Financing Receivable Recorded Investment Past Due [Line Items]
Recorded investment in non-accrual loans by class of loans	$ 77	$ 3,577

XML

Loans and Allowance for Loan Losses - Summary of Aging Recorded Investment Past-due Loans (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Financing Receivable Recorded Investment Past Due [Line Items]
Total Past Due	$ 2,432	$ 3,920
Loans Not Past Due	1,194,090	1,106,526
Total	1,196,522	1,110,446
Real Estate | Construction and Land Development
Financing Receivable Recorded Investment Past Due [Line Items]
Loans Not Past Due	94,297	89,409
Total	94,297	89,409
Real Estate | Commercial Real Estate
Financing Receivable Recorded Investment Past Due [Line Items]
Loans Not Past Due	491,086	501,798
Total	491,086	501,798
Real Estate | Single-family Residential Mortgages
Financing Receivable Recorded Investment Past Due [Line Items]
Total Past Due	531
Loans Not Past Due	236,636	156,428
Total	237,167	156,428
Commercial | Other
Financing Receivable Recorded Investment Past Due [Line Items]
Total Past Due	213	343
Loans Not Past Due	225,754	203,500
Total	225,967	203,843
Commercial | SBA
Financing Receivable Recorded Investment Past Due [Line Items]
Total Past Due	1,688	3,577
Loans Not Past Due	146,317	155,391
Total	148,005	158,968
30-59 Days Past Due
Financing Receivable Recorded Investment Past Due [Line Items]
Total Past Due	998	343
30-59 Days Past Due | Real Estate | Single-family Residential Mortgages
Financing Receivable Recorded Investment Past Due [Line Items]
Total Past Due	531
30-59 Days Past Due | Commercial | Other
Financing Receivable Recorded Investment Past Due [Line Items]
Total Past Due	213	343
30-59 Days Past Due | Commercial | SBA
Financing Receivable Recorded Investment Past Due [Line Items]
Total Past Due	254
60-89 Days Past Due
Financing Receivable Recorded Investment Past Due [Line Items]
Total Past Due	1,434
60-89 Days Past Due | Commercial | SBA
Financing Receivable Recorded Investment Past Due [Line Items]
Total Past Due	$ 1,434
Greater Than 89 Days Past Due
Financing Receivable Recorded Investment Past Due [Line Items]
Total Past Due		3,577
Greater Than 89 Days Past Due | Commercial | SBA
Financing Receivable Recorded Investment Past Due [Line Items]
Total Past Due		$ 3,577

XML

Loans and Allowance for Loan Losses - Summary of Individually Impaired Loans Presented by Class of Loans (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Financing Receivable Impaired [Line Items]
Unpaid Principal Balance, With no related allowance recorded	$ 3,950	$ 2,574
Recorded Investment, With no related allowance recorded	3,950	2,574
Average Balance, With no related allowance recorded	3,253	2,112
Interest Income, With no related allowance recorded	348	301
Unpaid Principal Balance, With an allowance recorded		6,133
Recorded Investment, With an allowance recorded		6,133
Average Balance, With an allowance recorded		5,671
Interest Income, With an allowance recorded		301
Related Allowance, With an allowance recorded		1,782
Construction and Land Development
Financing Receivable Impaired [Line Items]
Unpaid Principal Balance, With no related allowance recorded	293	303
Recorded Investment, With no related allowance recorded	293	303
Average Balance, With no related allowance recorded	298	309
Interest Income, With no related allowance recorded	16	21
Commercial Real Estate
Financing Receivable Impaired [Line Items]
Unpaid Principal Balance, With no related allowance recorded	2,287	2,253
Recorded Investment, With no related allowance recorded	2,287	2,253
Average Balance, With no related allowance recorded	2,270	1,710
Interest Income, With no related allowance recorded	253	280
Commercial | SBA
Financing Receivable Impaired [Line Items]
Unpaid Principal Balance, With no related allowance recorded	1,370	18
Recorded Investment, With no related allowance recorded	1,370	18
Average Balance, With no related allowance recorded	685	93
Interest Income, With no related allowance recorded	$ 79
Unpaid Principal Balance, With an allowance recorded		3,559
Recorded Investment, With an allowance recorded		3,559
Average Balance, With an allowance recorded		3,559
Related Allowance, With an allowance recorded		$ 1,782

XML

Loans and Allowance for Loan Losses - Summary of Loans Class Modified as TDRs (Details) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2017 USD ($) Loan	Dec. 31, 2016 USD ($) Loan
Financing Receivable Recorded Investment [Line Items]
Number of Loans | Loan	5	6
Commercial
Financing Receivable Recorded Investment [Line Items]
Number of Loans | Loan	1
Pre-Modification Recorded Investment	$ 1,293
Post-Modification Recorded Investment	$ 1,293
Commercial Real Estate
Financing Receivable Recorded Investment [Line Items]
Number of Loans | Loan		1
Pre-Modification Recorded Investment		$ 1,047
Post-Modification Recorded Investment		$ 1,047

XML

Loans and Allowance for Loan Losses - Summary of Outstanding Balance and Carrying Amount of Purchased Credit-impaired Loans (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Receivables [Abstract]
Outstanding balance	$ 324	$ 878
Carrying amount	$ 316	$ 730

XML

Loans and Allowance for Loan Losses - Summary of Activity in Accretable Yield on Purchased Credit-impaired Loans (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Receivables [Abstract]
Beginning balance	$ 142	$ 349
Restructuring as TDR		(22)
Accretion of income	(134)	(185)
Ending balance	$ 8	$ 142

XML

Loan Servicing- Schedule of Principal Balances of Mortgage and SBA Loans Serviced for Others (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Mortgage Loans
Schedule Of Mortgage And Small Business Administration Loans Serviced [Line Items]
Loans serviced for others	$ 306,168	$ 259,207
SBA Loans
Schedule Of Mortgage And Small Business Administration Loans Serviced [Line Items]
Loans serviced for others	$ 166,148	$ 110,263

XML

Loan Servicing - Additional Information (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Loan Sales And Mortgage Servicing Rights [Line Items]
Servicing assets	$ 5,370,000		$ 5,370,000		$ 3,704,000
Loan servicing fees, net of amortization	314,000	$ 95,000	571,000	$ 384,000
Mortgage Loans
Loan Sales And Mortgage Servicing Rights [Line Items]
Servicing assets	1,804,000		1,804,000		1,184,000
SBA Loans
Loan Sales And Mortgage Servicing Rights [Line Items]
Servicing assets	$ 4,982,000		$ 4,982,000		$ 3,142,000

XML

Loan Servicing - Schedule of Amortization of Mortgage Servicing Rights Netted Against Loan Servicing Fee Income (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Mortgage Loans
Servicing assets:
Beginning of year	$ 1,002	$ 298
Additions	501	602
Disposals	(134)	(31)
Amortized to expense	(271)	(109)
End of period	1,098	760
SBA Loans
Servicing assets:
Beginning of year	2,702	1,807
Additions	2,149	1,033
Disposals	(202)	(99)
Amortized to expense	(377)	(244)
End of period	$ 4,272	$ 2,497

XML

Goodwill and Intangibles - Additional information (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Schedule Of Finite Lived Intangible Assets And Goodwill [Line Items]
Goodwill	$ 29,940,000		$ 29,940,000		$ 29,940,000
Impairment losses recognized on goodwill			0	$ 0
Unamortized balance of intangible assets	1,525,000		1,525,000		1,793,000
Amortization of intangibles	87,000	$ 103,000	268,000	268,000
Core Deposit Intangible
Schedule Of Finite Lived Intangible Assets And Goodwill [Line Items]
Unamortized balance of intangible assets	$ 1,525,000		1,525,000		$ 1,793,000
Amortization of intangibles			$ 268,000	$ 268,000
Core Deposit Intangible | Minimum
Schedule Of Finite Lived Intangible Assets And Goodwill [Line Items]
Intangible assets, estimated useful life			8 years
Core Deposit Intangible | Maximum
Schedule Of Finite Lived Intangible Assets And Goodwill [Line Items]
Intangible assets, estimated useful life			10 years

XML

Goodwill and Intangibles - Schedule of Future Estimated Amortization Expense (Details) $ in Thousands	Sep. 30, 2017 USD ($)
Goodwill And Intangible Assets Disclosure [Abstract]
2017 remaining	$ 87
2018	311
2019	274
2020	244
2021	172
Thereafter	437
Total	$ 1,525

XML

Deposits - Schedule of Maturities of Time Deposits (Details) $ in Thousands	Sep. 30, 2017 USD ($)
Maturities Of Time Deposits [Abstract]
One year	$ 660,187
Two to three years	8,513
Time deposits	$ 668,700

XML

Long-term Debt - Schedule of Subordinated Debentures (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Debt Instruments [Abstract]
Principal	$ 50,000,000	$ 50,000,000
Unamortized debt issuance costs	$ 508,000	$ 617,000

XML

Long-term Debt - Additional Information (Details) - USD ($)	1 Months Ended	9 Months Ended
	Mar. 31, 2016	Sep. 30, 2017	Dec. 31, 2016
Debt Instrument [Line Items]
Debt instrument, face amount		$ 50,000,000	$ 50,000,000
6.5% Fixed to Floating Rate Subordinated Debentures, Due March 31, 2026
Debt Instrument [Line Items]
Debt instrument, face amount	$ 50,000,000
Debt instrument, due date	Mar. 31, 2026
Long-term debt, fixed interest rate	6.50%
Debt instrument, fixed to floating interest rate conversion date	Mar. 31, 2021
Debt instrument, floating rate description		3 month LIBOR plus 516 basis points
Debt instrument, basis points	5.16%
Tier-one capital		$ 35,000,000

XML

Subordinated Debentures - Additional Information (Details) - USD ($)			9 Months Ended
	Feb. 19, 2016	Mar. 15, 2012	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Debt Instrument [Line Items]
Debt instrument, face amount			$ 50,000,000		$ 50,000,000
Subordinated Debentures
Debt Instrument [Line Items]
Percentage of principal amount redeemed		100.00%
Debt instrument redemption period			Mar. 15, 2012
Debt instrument maturity period			Mar. 15, 2037
Defer interest payments maximum period			5 years
Debt instrument interest rate description			three month London Interbank Offered Rate (LIBOR) plus 1.65%, which was 2.97% and 2.61% at September 30, 2017 and December 31, 2016
Debt instrument interest percentage			2.97%		2.61%
TFC Statutory Trust | Private Offering
Debt Instrument [Line Items]
Number of trust preferred securities	5,000
Trust preferred securities liquidation amount per preferred security	$ 1,000
TFC Statutory Trust | Subordinated Debentures
Debt Instrument [Line Items]
Debt instrument, face amount	$ 5,000,000
Debt valuation reserve	1,900,000
Debt amortization expense			$ 68,000	$ 55,000
TFC Statutory Trust | Fair Value, Inputs, Level 1
Debt Instrument [Line Items]
Subordinated debenture liability	$ 3,255,000
Other Assets
Debt Instrument [Line Items]
Investment in common stock			$ 155,000
London Interbank Offered Rate | Subordinated Debentures
Debt Instrument [Line Items]
Debt instrument, basis points			1.65%

XML

Borrowing Arrangements - Additional Information (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Debt Instrument [Line Items]
Line of credit amount outstanding	$ 0	$ 0
FRB Secured Line of Credit
Debt Instrument [Line Items]
Secured borrowing capacity	15,200,000
Carrying value of collateral loan pledged	25,200,000
FHLB Secured Line of Credit
Debt Instrument [Line Items]
Secured borrowing capacity	326,900,000
Carrying value of collateral loan pledged	373,900,000
Zions Bank | Maximum
Debt Instrument [Line Items]
Borrowings of unsecured loan	20,000,000
Wells Fargo Bank | Letter of Credit
Debt Instrument [Line Items]
Borrowings of unsecured loan	2,000,000
Wells Fargo Bank | Maximum
Debt Instrument [Line Items]
Borrowings of unsecured loan	10,000,000
First Tennessee National Bank | Maximum
Debt Instrument [Line Items]
Borrowings of unsecured loan	12,000,000
Pacific Coast Bankers' Bank | Maximum
Debt Instrument [Line Items]
Borrowings of unsecured loan	$ 5,000,000

XML

Income Taxes - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended			9 Months Ended
	Sep. 30, 2019	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Income Tax [Line Items]
Income tax expense		$ 4,013	$ 4,070	$ 13,789	$ 9,609
Effective tax rate		37.80%		40.00%	41.20%
Scenario, Forecast
Income Tax [Line Items]
Effective tax rate	41.70%

XML

Commitments - Schedule of Future Minimum Rent Payments on Company's Leases (Details) $ in Thousands	Sep. 30, 2017 USD ($)
Commitments And Contingencies Disclosure [Abstract]
2017 remaining	$ 410
2018	1,350
2019	754
2020	496
2021	382
Thereafter	130
Total	$ 3,522

XML

Commitments - Additional Information (Details) - USD ($)	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Commitments And Contingencies Disclosure [Abstract]
Total rental expense, recognized on straight-line basis	$ 1,100	$ 1,200

XML

Commitments - Schedule of Financial Commitments whose Contractual Amount Represents Credit Risk (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Loss Contingencies [Line Items]
Financial commitments, contractual amount	$ 200,497	$ 170,597
Commitments to Make Loans
Loss Contingencies [Line Items]
Financial commitments, contractual amount	97,116	68,003
Unused Lines of Credit
Loss Contingencies [Line Items]
Financial commitments, contractual amount	97,662	92,378
Commercial and Similar Letters of Credit
Loss Contingencies [Line Items]
Financial commitments, contractual amount	4,144	8,966
Standby Letters of Credit
Loss Contingencies [Line Items]
Financial commitments, contractual amount	$ 1,575	$ 1,250

XML

Related Party Transactions - Schedule of Related Party Transactions (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Related Party Transactions [Abstract]
Beginning balance	$ 3,445	$ 3,971
New loans and advances	900	1,274
Repayments	(3,345)	(1,800)
Ending balance	$ 1,000	$ 3,445

XML

Related Party Transactions - Additional Information (Details) - USD ($) $ in Millions	Sep. 30, 2017	Dec. 31, 2016
Executive Officers, Directors and their Related Interests
Related Party Transaction [Line Items]
Due to related parties	$ 3.4	$ 2.3
Principal Officers, Directors and their Affiliates
Related Party Transaction [Line Items]
Deposits from related parties	$ 42.9	$ 37.2

XML

Stock-based Compensation - Additional Information (Details) - USD ($)	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Jan. 18, 2017
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense	$ 592,000	$ 646,000
Income tax benefits recognized	$ 487,000	$ 191,000
Omnibus Stock Incentive Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Common stock reserved as percentage of issued and outstanding shares			24.00%
Common stock reserved for issuance			3,848,341
Available for issuance of common stock	1,353,207
2010 Stock Option Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Percentage of number of shares of common stock issued and outstanding	30.00%
Maximum | Omnibus Stock Incentive Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Common stock reserved as percentage of issued and outstanding shares			30.00%
Maximum | 2010 Stock Option Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Common stock reserved for issuance	3,494,478
Additional shares of common stock available for grant	0

XML

Regulatory Matters - Additional Information (Details) - USD ($)						9 Months Ended
	Jan. 01, 2019	Jan. 01, 2018	Jan. 02, 2017	Jan. 02, 2016	Jan. 01, 2015	Sep. 30, 2017	Dec. 31, 2016
Compliance With Regulatory Capital Requirements Under Banking Regulations [Line Items]
Common equity Tier 1 capital to risk-weighted assets ratio with minimum for capital adequacy					4.50%
Common equity Tier 1 capital to risk-weighted assets ratio with minimum for prompt corrective action purposes					6.50%
Tier 1 capital to risk-weighted assets ratio with minimum for capital adequacy					4.00%	6.00%	6.00%
Increased Tier 1 capital to risk-weighted assets ratio with minimum for capital adequacy					6.00%
Tier 1 capital to risk-weighted assets ratio with minimum for prompt corrective action purposes					6.00%	8.00%	8.00%
Increased Tier 1 capital to risk-weighted assets ratio with minimum for prompt corrective action purposes					8.00%
Capital conservation buffer			2.50%	0.625%	2.50%
Capital conservation buffer phased-in on pro rata basis period				4 years
Scenario, Forecast
Compliance With Regulatory Capital Requirements Under Banking Regulations [Line Items]
Capital conservation buffer	2.50%	2.50%
Royal Business Bank
Compliance With Regulatory Capital Requirements Under Banking Regulations [Line Items]
Capital conservation buffer						11.08%
RBB Bancorp
Compliance With Regulatory Capital Requirements Under Banking Regulations [Line Items]
Capital conservation buffer						12.49%
Minimum
Compliance With Regulatory Capital Requirements Under Banking Regulations [Line Items]
Regulatory assets							$ 1,000,000,000
Required assets to liabilities ratio after dividend effect						125.00%

XML

Regulatory Matters - Summary of Actual Capital Amounts and Ratios and Related Regulatory Requirements (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016	Jan. 01, 2015
Compliance With Regulatory Capital Requirements Under Banking Regulations [Line Items]
Tier 1 Risk-Based Capital Ratio, Amount	$ 227,104	$ 178,645
Tier 1 Risk-Based Capital Ratio, Ratio	18.13%	15.81%
Tier 1 Risk-Based Capital Ratio, For Capital Adequacy Purposes Amount	$ 75,169	$ 67,813
Tier 1 Risk-Based Capital Ratio, For Capital Adequacy Purposes Ratio	6.00%	6.00%	4.00%
Tier 1 Risk-Based Capital Ratio, To Be Well-Capitalized Under Prompt Corrective Provisions Amount	$ 100,225	$ 90,417
Tier 1 Risk-Based Capital Ratio, To Be Well-Capitalized Under Prompt Corrective Provisions Ratio	8.00%	8.00%	6.00%
Total Risk-Based Capital Ratio, Amount	$ 239,013	$ 192,784
Total Risk-Based Capital Ratio, Ratio	19.08%	17.06%
Total Risk-Based Capital Ratio, For Capital Adequacy Purposes Amount	$ 100,225	$ 90,417
Total Risk-Based Capital Ratio, For Capital Adequacy Purposes Ratio	8.00%	8.00%
Total Risk-Based Capital Ratio, To Be Well-Capitalized Under Prompt Corrective Provisions Amount	$ 125,282	$ 113,021
Total Risk-Based Capital Ratio, To Be Well-Capitalized Under Prompt Corrective Provisions Ratio	10.00%	10.00%
RBB Bancorp
Compliance With Regulatory Capital Requirements Under Banking Regulations [Line Items]
Tier 1 Leverage Ratio, Amount	$ 232,521	$ 153,682
Tier 1 Leverage Ratio, Ratio	14.91%	11.00%
Common Equity Tier 1 Risk-Based Capital Ratio, Amount	$ 229,244	$ 150,786
Common Equity Tier 1 Risk-Based Capital Ratio, Ratio	18.23%	13.30%
Tier 1 Risk-Based Capital Ratio, Amount	$ 232,521	$ 153,682
Tier 1 Risk-Based Capital Ratio, Ratio	18.49%	13.56%
Total Risk-Based Capital Ratio, Amount	$ 293,922	$ 217,244
Total Risk-Based Capital Ratio, Ratio	23.37%	19.17%
Royal Business Bank
Compliance With Regulatory Capital Requirements Under Banking Regulations [Line Items]
Tier 1 Leverage Ratio, Amount	$ 227,104	$ 178,645
Tier 1 Leverage Ratio, Ratio	14.57%	12.81%
Tier 1 Leverage Ratio, For Capital Adequacy Purposes Amount	$ 62,363	$ 55,777
Tier 1 Leverage Ratio, For Capital Adequacy Purposes Ratio	4.00%	4.00%
Tier 1 Leverage Ratio, To Be Well-Capitalized Under Prompt Corrective Provisions Amount	$ 77,953	$ 69,722
Tier 1 Leverage Ratio, To Be Well-Capitalized Under Prompt Corrective Provisions Ratio	5.00%	5.00%
Common Equity Tier 1 Risk-Based Capital Ratio, Amount	$ 227,104	$ 178,645
Common Equity Tier 1 Risk-Based Capital Ratio, Ratio	18.13%	15.81%
Common Equity Tier 1 Risk-Based Capital Ratio, For Capital Adequacy Purposes Amount	$ 56,377	$ 50,860
Common Equity Tier 1 Risk-Based Capital Ratio, For Capital Adequacy Purposes Ratio	4.50%	4.50%
Common Equity Tier 1 Risk-Based Capital Ratio, To Be Well-Capitalized Under Prompt Corrective Provisions Amount	$ 81,433	$ 73,464
Common Equity Tier 1 Risk-Based Capital Ratio, To Be Well-Capitalized Under Prompt Corrective Provisions Ratio	6.50%	6.50%

XML

Fair Value Measurements - Schedule of Hierarchy and Fair Value for Each Major Category of Assets and Liabilities Measured at Fair Value (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Assets measured at fair value:
Assets measured at fair value on recurring basis	$ 55,697	$ 39,277
Other Real Estate Owned
Assets measured at fair value:
Assets measured at fair value on a non-recurring basis	293	833
Government Agency Securities
Assets measured at fair value:
Assets measured at fair value on recurring basis	4,957	5,317
Government Sponsored Agencies
Assets measured at fair value:
Assets measured at fair value on recurring basis	33,256	23,640
Corporate Debt Securities
Assets measured at fair value:
Assets measured at fair value on recurring basis	17,484	10,320
Fair Value Measurements Using Level 2
Assets measured at fair value:
Assets measured at fair value on recurring basis	55,697	39,277
Fair Value Measurements Using Level 2 | Government Agency Securities
Assets measured at fair value:
Assets measured at fair value on recurring basis	4,957	5,317
Fair Value Measurements Using Level 2 | Government Sponsored Agencies
Assets measured at fair value:
Assets measured at fair value on recurring basis	33,256	23,640
Fair Value Measurements Using Level 2 | Corporate Debt Securities
Assets measured at fair value:
Assets measured at fair value on recurring basis	17,484	10,320
Fair Value Measurements Using Level 3 | Other Real Estate Owned
Assets measured at fair value:
Assets measured at fair value on a non-recurring basis	$ 293	$ 833

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Fair Value Measurements - Additional Information (Details) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Fair Value Disclosures [Abstract]
Write-downs to OREO	$ 0	$ 0

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Fair Value Measurements - Summary of Quantitative Information About Non-recurring Level 3 Fair Value Measurements (Details) - Other Real Estate Owned - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Fair Value Inputs Assets Quantitative Information [Line Items]
Fair Value Amount	$ 293	$ 833
Level 3
Fair Value Inputs Assets Quantitative Information [Line Items]
Fair Value Amount	293	833
Level 3 | Third Party Appraisals
Fair Value Inputs Assets Quantitative Information [Line Items]
Fair Value Amount	$ 293	$ 833
Fair Value Adjustment	15.00%
Level 3 | Third Party Appraisals | Minimum
Fair Value Inputs Assets Quantitative Information [Line Items]
Fair Value Adjustment		10.00%
Level 3 | Third Party Appraisals | Maximum
Fair Value Inputs Assets Quantitative Information [Line Items]
Fair Value Adjustment		15.00%
Level 3 | Third Party Appraisals | Weighted Average
Fair Value Inputs Assets Quantitative Information [Line Items]
Fair Value Adjustment	15.00%	12.00%

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Fair Value of Financial Instruments - Schedule of Fair Value Hierarchy Level and Estimated Fair Value of Significant Financial Instruments (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Financial Assets:
Investment securities - AFS	$ 55,697	$ 39,277
Investment securities - HTM	5,485	6,553
Fair Value, Inputs, Level 1 | Carrying Value
Financial Assets:
Cash and due from banks	69,552	74,213
Federal funds sold and other cash equivalents	96,500	44,500
Interest-earning deposits in other financial institutions	100	345
Mortgage loans held for sale	125,704	44,345
Fair Value, Inputs, Level 1 | Fair Value
Financial Assets:
Cash and due from banks	69,552	74,213
Federal funds sold and other cash equivalents	96,500	44,500
Interest-earning deposits in other financial institutions	100	345
Mortgage loans held for sale	128,491	45,433
Fair Value Measurements Using Level 2 | Carrying Value
Financial Assets:
Investment securities - AFS	55,697	39,277
Investment securities - HTM	5,191	6,214
Financial Liabilities:
Deposits	1,318,292	1,152,763
Long-term debt	49,492	49,383
Fair Value Measurements Using Level 2 | Fair Value
Financial Assets:
Investment securities - AFS	55,697	39,277
Investment securities - HTM	5,485	6,553
Financial Liabilities:
Deposits	1,315,698	1,140,707
Long-term debt	47,657	48,447
Fair Value Measurements Using Level 3 | Carrying Value
Financial Assets:
Loans, net	1,185,102	1,096,284
Financial Liabilities:
Subordinated debenture liability	3,402	3,334
Fair Value Measurements Using Level 3 | Fair Value
Financial Assets:
Loans, net	1,205,092	1,095,944
Financial Liabilities:
Subordinated debenture liability	$ 3,582	$ 3,334

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Earnings Per Share ("EPS") - Computation of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Earnings Per Share [Abstract]
Net income as reported	$ 6,611	$ 5,697	$ 20,640	$ 13,693
Shares outstanding	15,790,611	12,827,803	15,790,611	12,827,803
Impact of weighting shares	(1,023,154)		(2,309,152)	(35,927)
Used in basic EPS, Income	$ 6,611	$ 5,697	$ 20,640	$ 13,693
Used in basic EPS, Shares	14,767,457	12,827,803	13,481,459	12,791,876
Dilutive effect of outstanding
Stock options, Shares	1,084,472	889,429	1,077,584	896,122
Used in dilutive EPS, Income	$ 6,611	$ 5,697	$ 20,640	$ 13,693
Used in dilutive EPS, Shares	15,851,929	13,717,232	14,559,043	13,687,998
Basic earnings per common share	$ 0.45	$ 0.44	$ 1.53	$ 1.07
Diluted earnings per common share	$ 0.42	$ 0.42	$ 1.42	$ 1.00

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Qualified Affordable Housing Project Investments - Additional Information (Details) - USD ($)	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Schedule Of Equity Method Investments [Line Items]
Investment for qualified affordable housing projects	$ 5,768,000		$ 986,000
Unfunded commitments related to the investments in qualified housing projects	4,572,000		$ 840,000
Amortization expense	$ 218,000	$ 10,000
Maximum
Schedule Of Equity Method Investments [Line Items]
Expected year in which commitments are fulfilled	2027
Minimum
Schedule Of Equity Method Investments [Line Items]
Expected year in which commitments are fulfilled	2028

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Recent Developments - Additional Information (Details) - USD ($)				9 Months Ended
	Oct. 19, 2017	Jul. 31, 2017	Jul. 27, 2017	Sep. 30, 2017
Recent Developments [Line Items]
Stock issued through public offering				$ 60,217,000
Gross proceeds from initial public offering			$ 65,700,000
Net proceeds from initial public offering			25,000,000
Subsequent Event
Recent Developments [Line Items]
Cash dividends declared per share	$ 0.08
Cash dividend payable date	Nov. 30, 2017
Cash dividend declared, record date	Oct. 31, 2017
Nasdaq Global Select Market
Recent Developments [Line Items]
Increase in capital net of expenses			$ 60,200,000
Common Stock
Recent Developments [Line Items]
Stock issued through public offering, shares				2,857,756
Stock issued through public offering				$ 60,217,000
Number of shares sold			2,857,756
Stock sold by selling shareholders			892,244
Initial Public Offering
Recent Developments [Line Items]
Stock issued through public offering, shares		3,750,000	3,750,000	3,000,000
Share price per share		$ 23.00	$ 23.00
Stock issued through public offering			$ 86,250,000