10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2013

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

For the transition period from                      to                     

CU BANCORP

(Exact name of registrant as specified in its charter)

California	90-0779788
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
15821 Ventura Boulevard, Suite 110 Encino, California	91436
(Address of principal executive offices)	(Zip Code)

(818) 257-7700

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate 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  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer	¨	Accelerated Filer	¨
Non Accelerated Filer	¨	Smaller reporting company	x

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

As of August 9, 2013, the number of shares outstanding of the registrant’s no par value Common Stock was 10,738,921.

CU BANCORP

JUNE 30, 2013, FORM 10-Q

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
ITEM 1.	Financial Statements
	Consolidated Balance Sheets June 30, 2013 (Unaudited) and December 31, 2012	2
	Consolidated Statements of Income Six Months Ended June 30, 2013 and 2012 (Unaudited)	3
	Consolidated Statements of Comprehensive Income Three and Six Months Ended June 30, 2013 and 2012 (Unaudited)	4
	Consolidated Statements of Changes in Shareholders’ Equity Year Ended December 31, 2012 and Six Months Ended June 30, 2013 (Unaudited)	5
	Consolidated Statements of Cash Flows Six Months Ended June 30, 2013 and 2012 (Unaudited)	6
	Notes to the Consolidated Financial Statements (Unaudited)	7
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Overview	30
	Results of Operations	35
	Financial Condition	45
	Liquidity	49
	Dividends	49
	Capital Resources	50
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	52
ITEM 4.	Controls and Procedures	53
PART II. OTHER INFORMATION
ITEM 1.	Legal Proceedings	54
ITEM 1A.	Risk Factors	54
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	54
ITEM 3.	Defaults Upon Senior Securities	54
ITEM 4.	Mine Safety Disclosures	54
ITEM 5.	Other Information	54
ITEM 6.	Exhibits	54
Signatures		55

i

CU BANCORP

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share data)

	June 30,			December 31,
	2013			2012
	(Unaudited)			(Audited)
ASSETS
Cash and due from banks	$	28,246		$	25,181
Interest earning deposits in other financial institutions		161,552			157,715
Total Cash and Cash Equivalents		189,798			182,896
Certificates of deposit in other financial institutions		28,304			27,006
Investment securities available-for-sale, at fair value		109,955			118,153
Loans		885,027			854,885
Allowance for loan loss		(9,412	)		(8,803	)
Net loans		875,615			846,082
Premises and equipment, net		3,193			3,422
Deferred tax assets, net		13,155			13,818
Other real estate owned, net		3,112			3,112
Goodwill		12,292			12,292
Core deposit intangibles		1,581			1,747
Bank owned life insurance		20,891			20,583
Accrued interest receivable and other assets		20,765			20,526
Total Assets	$	1,278,661		$	1,249,637
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES
Non-interest bearing demand deposits	$	571,045		$	543,527
Interest bearing transaction accounts		127,585			112,747
Money market and savings deposits		338,885			340,466
Certificates of deposit		60,192			81,336
Total deposits		1,097,707			1,078,076
Securities sold under agreements to repurchase		29,612			22,857
Subordinated debentures, net		9,283			9,169
Accrued interest payable and other liabilities		12,492			13,912
Total Liabilities		1,149,094			1,124,014
Commitments and Contingencies (Note 11)		0			0
SHAREHOLDERS’ EQUITY
Serial Preferred Stock – authorized, 50,000,000 shares no par value, no shares issued or outstanding		0			0
Common stock - authorized, 75,000,000 shares no par value, 10,734,250 and 10,758,674 shares issued and outstanding at June 30, 2013 and December 31, 2012, respectively		118,938			118,885
Additional paid-in capital		7,275			7,052
Retained earnings (deficit)		2,768			(1,708	)
Accumulated other comprehensive income		586			1,394
Total Shareholders’ Equity		129,567			125,623
Total Liabilities and Shareholders’ Equity	$	1,278,661		$	1,249,637

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

Page 2 of 55

CU BANCORP

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(Dollars in thousands, except per share data)

	Three Months Ended June 30,					Six Months Ended June 30,
	2013		2012			2013		2012
Interest Income
Interest and fees on loans	$	12,462	$	6,357		$	23,887	$	13,047
Interest on investment securities		495		603			979		1,207
Interest on interest bearing deposits in other financial institutions		157		201			317		385
Total Interest Income		13,114		7,161			25,183		14,639
Interest Expense
Interest on interest bearing transaction accounts		64		38			116		78
Interest on money market and savings deposits		249		132			509		267
Interest on certificates of deposit		74		40			150		84
Interest on securities sold under agreements to repurchase		21		26			40		46
Interest on subordinated debentures		126		0			250		0
Total Interest Expense		534		236			1,065		475
Net Interest Income		12,580		6,925			24,118		14,164
Provision for loan losses		1,153		380			1,287		380
Net Interest Income After Provision For Loan Losses		11,427		6,545			22,831		13,784
Non-Interest Income
Gain on sale of securities, net		0		0			5		0
Gain on sale of SBA loans, net		60		0			410		0
Other-than-temporary impairment losses		0		(30	)		0		(60	)
Deposit account service charge income		583		480			1,151		943
Other non-interest income		1,047		302			1,550		491
Total Non-Interest Income		1,690		752			3,116		1,374
Non-Interest Expense
Salaries and employee benefits (includes stock based compensation expense of $217 and $221 for the three months, and $475 and $486 for the six months ended June 30, 2013 and 2012, respectively)		5,655		3,625			11,330		7,563
Occupancy		1,019		799			2,083		1,551
Data processing		479		413			961		872
Legal and professional		572		145			1,079		385
FDIC deposit assessment		189		157			435		298
Merger related expenses		0		190			43		338
OREO valuation write-downs and expenses		23		20			49		298
Office services expenses		259		248			525		475
Other operating expenses		1,085		673			2,085		1,395
Total Non-Interest Expense		9,281		6,270			18,590		13,175
Net Income Before Provision for Income Taxes		3,836		1,027			7,357		1,983
Provision for income taxes		1,515		502			2,881		952
Net Income	$	2,321	$	525		$	4,476	$	1,031
Earnings Per Share
Basic earnings per share	$	0.22	$	0.08		$	0.43	$	0.15
Diluted earnings per share	$	0.22	$	0.08		$	0.42	$	0.15

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

Page 3 of 55

CU BANCORP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(In thousands)

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
Net Income	$	2,321		$	525		$	4,476		$	1,031
Other Comprehensive Income, net of tax:
Non-credit portion of other-than-temporary impairments arising during the period		0			70			(22	)		190
Net unrealized (losses) on investment securities arising during the period		(734	)		(54	)		(786	)		(77	)
Other Comprehensive Income (Loss)		(734	)		16			(808	)		113
Comprehensive Income	$	1,587		$	541		$	3,668		$	1,144

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

Page 4 of 55

CU BANCORP

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

For the Year Ended December 31, 2012 and the Six Months Ended June 30, 2013

(2013 activity unaudited)

(Dollars and shares in thousands)

	Common Stock
	Outstanding Shares			Amount		Additional Paid in Capital			Retained Earnings (Deficit)			Accumulated Other Comprehensive Income (Loss)			Total Shareholders’ Equity
Balance at December 31, 2011		6,950		$	77,225	$	6,164		$	(3,435	)	$	890		$	80,844
Net Issuance of Restricted Stock		110			0		0			0			0			0
Issuance of Stock for Purchase of PC Bancorp, net of $199 in issuance costs		3,721			41,660		0			0			0			41,660
Stock based compensation expense related to employee stock options and restricted stock		0			0		1,120			0			0			1,120
Restricted Stock Repurchase/Dividend		(22	)		0		(228	)		0			0			(228	)
Excess tax deficiency – Stock based compensation		0			0		(4	)		0			0			(4	)
Net Income		0			0		0			1,727			0			1,727
Other Comprehensive Income		0			0		0			0			504			504
Balance at December 31, 2012		10,759		$	118,885	$	7,052		$	(1,708	)	$	1,394		$	125,623
Net Issuance (forfeiture) of Restricted Stock		(9	)		0		0			0			0			0
Stock based compensation expense related to employee stock options and restricted stock		0			0		475			0			0			475
Restricted Stock Repurchase/Dividend		(22	)		0		(283	)		0			0			(283	)
Excess tax benefit – Stock based compensation		0			0		31			0			0			31
Exercise of Stock Options		6			53		0			0			0			53
Net income		0			0		0			4,476			0			4,476
Other Comprehensive (Loss)		0			0		0			0			(808	)		(808	)
Balance at June 30, 2013		10,734		$	118,938	$	7,275		$	2,768		$	586		$	129,567

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

Page 5 of 55

CU BANCORP

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in thousands)

	Six Months Ended June 30,
	2013			2012
Cash flows from operating activities:
Net income:	$	4,476		$	1,031
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		1,287			380
Provision for unfunded loan commitments		34			0
Stock based compensation expense		475			486
Depreciation		568			474
Net accretion of discounts for loans acquired and deferred loan fees/costs		(3,071	)		(1,118	)
Net amortization from investment securities		840			603
Increase in Bank Owned Life Insurance		(308	)		0
OREO valuation write-downs		0			232
Net other-than-temporary impairment losses recognized in operations		0			60
Gain on sale of securities, net		(5	)		0
Gain on sale of SBA loans, net		(410	)		0
Amortization of core deposit intangible		166			69
Amortization of time deposit premium		(106	)		0
Accretion of subordinated debenture discount		114			0
(Increase) decrease in deferred tax assets		1,228			(11	)
(Increase) decrease in accrued interest receivable and other assets		(389	)		293
Decrease in accrued interest payable and other liabilities		(1,454	)		(287	)
Net cash provided by operating activities		3,445			2,212
Cash flows from investing activities:
Purchases of available-for-sale investment securities		(20,395	)		0
Proceeds from sales of investment securities		2,854			0
Proceeds from repayment and maturities from investment securities		23,531			10,674
Loans originated, net of principal payments		(27,339	)		1,589
Purchases of premises and equipment		(339	)		(703	)
Net (increase) decrease in certificates of deposit in other financial institutions		(1,298	)		11,716
Net purchase (redemption) of Federal Home Loan Bank and other bank stock		150			(37	)
Net cash provided by (used in) investing activities		(22,836	)		23,239
Cash flows from financing activities:
Net increase in Non-interest bearing demand deposits		27,518			65,667
Net increase in Interest bearing transaction accounts		14,838			24,676
Net increase (decrease) in Money market and savings deposits		(1,581	)		15,623
Net (decrease) in Certificates of deposit		(21,038	)		(2,367	)
Net increase in Securities sold under agreements to repurchase		6,755			3,205
Excess tax benefits on stock compensation		31			0
Net proceeds from stock options exercised		53			0
Restricted stock repurchase/dividends		(283	)		(224	)
Net cash provided by financing activities		26,293			106,580
Net increase in cash and cash equivalents		6,902			132,031
Cash and cash equivalents, beginning of year		182,896			134,230
Cash and cash equivalents, end of period	$	189,798		$	266,261
Supplemental disclosures of cash flow information:
Cash paid during the year for interest	$	1,074		$	473
Cash paid during the year for taxes	$	1,304		$	1,300
Supplemental disclosures of non-cash investing activities:
Net increase (decrease) in unrealized gain (loss) on investment securities, net of tax	$	(808	)	$	113

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

Page 6 of 55

CU BANCORP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2013

(Unaudited)

Note 1 - Basis of Financial Statement Presentation

CU Bancorp (the “Company”) is a bank holding company whose operating subsidiary is California United Bank. CU Bancorp was established to facilitate the reorganization and merger of Premier Commercial Bank, N.A. into California United Bank, which took place after the close of business on July 31, 2012. As a bank holding company, CU Bancorp is subject to regulation of the Federal Reserve Board (“FRB”). The term “Company”, as used throughout this document, refers to the consolidated balance sheets and consolidated statements of income of CU Bancorp and California United Bank.

California United Bank (the “Bank”) is a full-service commercial business bank offering a broad range of banking products and services including: deposit services, lending and cash management to small and medium-sized businesses, to non-profit organizations, to business principals and entrepreneurs, to the professional community, including attorneys, certified public accountants, financial advisors, healthcare providers and investors. The Bank opened for business in 2005, with its headquarters office located in Encino, California. As a state chartered non-member bank, the Bank is subject to regulation by the California Department of Financial Institutions, (the “DFI”) and the Federal Deposit Insurance Corporation (“FDIC”). The deposits of the Bank are insured by the FDIC, to the maximum amount allowed by law.

The consolidated financial statements include the accounts of the Company and the Bank. Significant intercompany items have been eliminated in consolidation. The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission.

CU Bancorp is the common shareholder of Premier Commercial Statutory Trust I, Premier Commercial Statutory Trust II, and Premier Commercial Statutory Trust III, entities which were acquired in the merger with Premier Commercial Bancorp (“PC Bancorp”). These trusts were established for the sole purpose of issuing trust preferred securities and do not meet the criteria for consolidation in accordance with ASC 810 Consolidation. For more detail, see Note 7 – Borrowings and Subordinated Debentures.

Certain information and footnote disclosures presented in the annual consolidated financial statements are not included in the interim consolidated financial statements. Accordingly, the accompanying unaudited interim consolidated financial statements should be read in conjunction with our 2012 Annual Report on Form 10-K. In the opinion of management, the accompanying financial statements contain all necessary adjustments of a normal recurring nature, to present fairly the consolidated financial position of the Company and the results of its operations for the interim period presented.

Additional Significant Accounting Policies

Loans Held for Sale and Servicing Assets: Loans held for sale are loans originated and includes the principal amount outstanding net of unearned income and the loans are carried at the lower of cost or fair value on an aggregate basis. A decline in the aggregate fair value of the loans below their aggregate carrying amount is recognized through a charge to earnings in the period of such decline. Unearned income on these loans is taken into earnings when they are sold. At June 30, 2013, the Company had no loans classified as held for sale.

Gains or losses resulting from sales of loans are recognized at the date of settlement and are based on the difference between the cash received and the carrying value of the related loans less transaction costs. A transfer of financial assets in which control is surrendered is accounted for as a sale to the extent that consideration other than beneficial interests in the transferred assets is received in the exchange. Assets, liabilities, derivative financial instruments, or other retained interests issued or obtained through the sale of financial assets are measured at estimated fair value, if practicable.

The most common retained interest related to loan sales is a servicing asset. Servicing assets are amortized in proportion to and over the period of the estimated future net servicing income. The amortization of the servicing asset and the servicing income are included in noninterest income in the consolidated statements of income. The fair value of the servicing assets is estimated by discounting the future cash flows using market-based discount rates and prepayment speeds. The Company’s servicing asset is evaluated regularly for impairment. The servicing asset is stratified based on the original term to maturity and the year of origination of the underlying loans for purposes of measuring impairment. The risk is that loans prepay faster than anticipated and the fair value of the asset declines. If the fair value of the servicing asset is less than the amortized carrying value, the asset is considered to be impaired and an impairment charge will be taken against earnings. The servicing asset is included in other assets on the consolidated balance sheets.

Income Taxes: The Company’s consolidated effective statutory federal and state income tax rate is approximately 41%. The actual effective rate reflected within these financial statements is dependent on the composition of taxable earnings in the period. A number of expenses such as certain merger related expenses, certain business and entertainment expenses, country club dues, etc. are not allowable as an expense for either federal or state purposes and are classified as permanent tax-to-book taxable income differences. In addition, the Company has several items included in income, that are excluded from taxable income, such as net interest income on loans within the State of California designated enterprise zone areas for state income taxes and the increase in cash surrender value of life insurance policies. Because of these differences, the Company’s effective tax may vary considerably between reporting years. During 2012, due to the inclusion of significant merger related costs, the Company had an effective tax rate in excess of its statutory rate. For 2013, to the extent the Company does not have any significant merger related costs, the consolidated effective tax rate for the period ending June 30, 2013 is expected to be the consolidated effective tax rate which is below its statutory rate. Based on recently enacted legislation during the second quarter of 2013, the California State Legislature has repealed the net interest deduction on interest income for loans within the designated State of California Enterprise Zones. The effective date of this legislation is effective January 1, 2014.

Page 7 of 55

Note 2 - Recent Accounting Pronouncements

In February 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2013-02, Other Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. The amendments in this update supersede and replace the presentation requirements for reclassifications out of accumulated other comprehensive income in ASUs 2011-05 (issued in June 2011) and 2011-12 (issued in December 2011). These amendments do not change the current requirements for reporting net income or other comprehensive income in financial statements. However, the amendments require an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. These amendments are effective prospectively for reporting periods beginning after December 15, 2012. The Company adopted the original ASU in the first quarter of 2012. The additional presentation requirements have been implemented and are disclosed in Note 8 herein.

In February 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2013-04, Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation is Fixed at the Reporting Date. The amendments in this update provide guidance for the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation is fixed at the reporting date, except for obligations addressed within existing guidance in U.S. GAAP. This guidance requires an entity to measure those obligations as the sum of the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors and any additional amount the reporting entity expects to pay on behalf of its co-obligors. This ASU also requires an entity to disclose the nature and amount of the obligation, as well as other information about those obligations. The amendments are effective upon issuance. The adoption of this ASU did not have an impact on the Company’s financial position or results of operations.

In January 2013, the FASB issued ASU 2013-01, Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities. This update amends ASU 2011-11, Balance Sheet (Topic 210): Disclosures about offsetting Assets and Liabilities. The amendment clarifies that the scope of ASU 2011-11 applies to derivatives accounted for in accordance with Topic 815, Derivatives and Hedging, including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions that are either offset in accordance with Section 210-20-45 or Section 815-10-45 or subject to an enforceable master netting arrangement or similar agreement. The amendments are effective for fiscal and interim periods beginning on or after January 1, 2013. The adoption of this ASU did not have an impact on the Company’s financial position or results of operations.

Note 3 - Computation of Tangible Book Value per Common Share

Tangible book value per common share was calculated by dividing total shareholders’ equity by the number of common shares issued. The tables below present the computation of tangible book value per common share as of the dates indicated (in thousands, except share data):

	June 30, 2013		December 31, 2012
Total Shareholders’ Equity	$	129,567	$	125,623
Less: Goodwill and core deposit intangibles		13,873		14,039
Tangible shareholders’ equity	$	115,694	$	111,584
Common shares issued and outstanding		10,734,250		10,758,674
Tangible book value per common share	$	10.78	$	10.37

Note 4 - Computation of Earnings per Common Share

Basic and diluted earnings per common share were determined by dividing the net income by the applicable basic and diluted weighted average common shares outstanding. The table below presents the basic and diluted earnings per common share computations for the periods indicated (dollars and shares in thousands, except per share data):

	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012
Net Income	$	2,321	$	525	$	4,476	$	1,031
Basic weighted average common shares outstanding		10,502		6,732		10,494		6,722
Dilutive effect of potential common share issuances from stock options and restricted stock		158		161		195		141
Diluted weighted average common shares outstanding		10,660		6,893		10,689		6,863
Income per common share
Basic	$	0.22	$	0.08	$	0.43	$	0.15
Diluted	$	0.22	$	0.08	$	0.42	$	0.15
Anti-dilutive shares not included in the calculation of diluted earnings per share		23		246		134		246

Page 8 of 55

Note 5 - Investment Securities

The investment securities portfolio has been classified as available-for-sale, and as such is recorded at estimated fair value.

The following tables present the amortized cost and estimated fair values of investment securities as of the dates indicated (dollars in thousands):

			Gross Unrealized
June 30, 2013 – Available-for-sale:	Amortized Cost		Gains		Losses		Net Non-credit Gains on Other– than- temporarily Impaired Securities		Estimated Fair Value
U.S. Govt Agency and Sponsored Agency - Note Securities	$	7,265	$	7	$	5	$	0	$	7,267
U.S. Govt Agency - SBA Securities		44,383		1,054		149		0		45,288
U.S. Govt Agency - GNMA Mortgage-Backed Securities		25,649		331		585		0		25,395
U.S. Govt Sponsored Agency - CMO & Mortgage-Backed Securities		17,735		472		291		0		17,916
Corporate Securities		9,239		182		0		0		9,421
Municipal Securities		4,688		2		22		0		4,668
Total investment securities	$	108,959	$	2,048	$	1,052	$	0	$	109,955
December 31, 2012 – Available-for-sale:
U.S. Govt Agency and Sponsored Agency - Note Securities	$	18,888	$	24	$	1	$	0	$	18,911
U.S. Govt Agency - SBA Securities		42,308		703		32		0		42,979
U.S. Govt Agency - GNMA Mortgage-Backed Securities		22,237		728		5		0		22,960
U.S. Govt Sponsored Agency - CMO & Mortgage-Backed Securities		12,335		696		0		0		13,031
Corporate Securities		10,311		235		0		0		10,546
Municipal Securities		6,831		3		18		0		6,816
Private Issue CMO Securities		2,874		0		0		36		2,910
Total investment securities	$	115,784	$	2,389	$	56	$	36	$	118,153

The Company’s investment securities portfolio at June 30, 2013 consists of U.S. Agency and U.S. Sponsored Agency issued AAA and AA rated “investment grade” securities, investment grade corporate bond securities and municipal securities. Securities with a market value of $30.2 million and $23.3 million were pledged to secure securities sold under agreements to repurchase at June 30, 2013 and December 31, 2012, respectively. See Note 7 “Borrowings and Subordinated Debentures.” Securities with a market value of $11 million were pledged to secure a certificate of deposit of $10.0 million with the State of California Treasurer’s office at both June 30, 2013 and December 31, 2012. Securities with a market value of $4.2 million and $12 million were pledged to secure a credit facility with the Federal Reserve Bank of San Francisco at June 30, 2013 and December 31, 2012, respectively. Securities with a market value of $19.7 million and $16.0 million were pledged to secure outstanding standby letters of credit confirmed/issued by a correspondent bank for the benefit of the Company’s customers in the amount of $13.4 million and $12.7 million at June 30, 2013 and December 31, 2012, respectively. Securities with a market value of $1.5 million and $281,000 were pledged to secure local agency deposits at June 30, 2013 and December 31, 2012, respectively.

Page 9 of 55

Presented below are investment securities with unrealized losses that are considered to be temporarily-impaired or other-than-temporarily impaired. They are summarized and classified according to the duration of the loss period as of the dates indicated as follows (dollars in thousands):

	< 12 Continuous Months				> 12 Continuous Months				Total
	Fair Value		Net Unrealized Loss		Fair Value		Net Unrealized Loss		Fair Value		Net Unrealized Loss
June 30, 2013
Temporarily-impaired available-for-sale investment securities:
U.S. Govt. - Agency and Sponsored Agency Note Securities	$	10,022	$	153	$	707	$	1	$	10,729	$	154
U.S. Govt. Sponsored Agency CMO & Mortgage-Backed Securities		22,470		876		0		0		22,470		876
Municipal Securities		3,151		22		0		0		3,151		22
Total temporarily-impaired available-for-sale investment securities	$	35,643	$	1,051	$	707	$	1	$	36,350	$	1,052
December 31, 2012
Temporarily-impaired available-for-sale investment securities:
U.S. Govt. - Agency and Sponsored Agency Note Securities	$	2,209	$	1	$	0	$	0	$	2,209	$	1
U.S. Govt. Agency SBA Securities		5,124		32		0		0		5,124		32
U.S. Govt. Sponsored Agency CMO & Mortgage-Backed Securities		2,126		5		0		0		2,126		5
Municipal Securities		6,293		18		0		0		6,293		18
Total temporarily-impaired available-for-sale investment securities	$	15,752	$	56	$	0	$	0	$	15,752	$	56
Other-than-temporarily impaired available-for-sale investment securities:
Private Issue CMO Securities		0		0		1,235		65		1,235		65
Total temporarily-impaired and other-than-temporarily impaired available-for-sale investment securities	$	15,752	$	56	$	1,235	$	65	$	16,987	$	121

The amortized cost, estimated fair value and average yield of debt securities at June 30, 2013, are presented in the table below (dollars in thousands). Maturity categories are determined as follows:

• U.S. Govt. Agency and U.S. Govt. Sponsored Agency bonds and notes – maturity date

• U.S. Govt. Sponsored Agency CMO or Mortgage-Backed Securities, U.S. Govt. Agency GNMA Mortgage-Backed Securities and U.S. Gov. Agency SBA Securities – estimated cash flow taking into account estimated pre-payment speeds

• Corporate Bonds and Municipal Securities – maturity date

Although mortgage-backed and U.S. Government Agency securities have contractual maturities through 2050, the expected maturity will differ from the contractual maturities because borrowers or issuers may have the right to prepay such obligations without penalties.

	June 30, 2013
Maturities Schedule of Securities	Amortized Cost		Fair Value		Weighted Average Yield
Due through one year	$	20,091	$	20,472		1.63	%
Due after one year through five years		43,638		44,301		1.80	%
Due after five years through ten years		23,537		23,545		2.39	%
Due after ten years		21,693		21,637		2.66	%
Total	$	108,959	$	109,955		2.06	%

The weighted average yields in the above table are based on effective rates of book balances at the end of the period. Yields are derived by dividing interest income, adjusted for amortization of premiums and accretion of discounts, by total amortized cost.

On each reporting date, the Company evaluates the securities portfolio to determine if there has been an other-than-temporary impairment on each of the individual securities in the investment securities portfolio. In estimating whether an other-than-temporary impairment loss has occurred, management considers, among other things, (i) the length of time and the extent to which the fair value has been less than cost, (ii) the financial condition and near-term prospects of the issuer, (iii) the current liquidity and volatility of the market for each of the individual security categories, (iv) the current slope and shape of the Treasury yield curve, along with where the economy is in the current interest rate cycle, (v) the current spread between Treasuries and the specific security categories, and the spread differential between the current spread and the long-term average spread for that security category, (vi) the projected cash flows from the specific security type, (vii) the financial guarantee and financial rating of the issuer and (viii) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

Page 10 of 55

If it’s determined that an other-than-temporary impairment exists on a debt security, the Company then determines if (a) it intends to sell the security or (b) it is more likely than not that it will be required to sell the security before its anticipated recovery. If either of the conditions is met, the Company will recognize an other-than-temporary impairment in earnings equal to the difference between the security’s fair value and its adjusted cost basis. If neither of the conditions is met, the Company determines (a) the amount of the impairment related to credit loss and (b) the amount of the impairment due to all other factors. The difference between the present value of the cash flows expected to be collected and the amortized cost basis is the credit loss. The credit loss is the portion of the other-than-temporary impairments that is recognized in earnings and is a reduction to the cost basis of the security. The portion of total impairment related to all other factors is included in other comprehensive income. Significant judgment is required in this analysis that includes, but is not limited to, assumptions regarding the collectability of principal and interest, future default rates, future prepayment speeds, the amount of current delinquencies that will result in defaults and the amount of eventual recoveries expected on these defaulted loans through the foreclosure process.

In January of 2013, the Company sold all of its private issue CMO securities at a net gain of $4,600. The Company has had no other sales of investment securities through the six months ended June 30, 2013, and as of that date owned no investment securities that have other-than-temporary impairment.

Investments in FHLB Common Stock

The Company’s investment in the common stock of the FHLB is carried at cost and was $4.7 million and $4.9 million as of June 30, 2013 and December 31, 2012 respectively. See Note 7 “Borrowings and Subordinated Debentures” for a detailed discussion regarding the Company’s FHLB borrowings and the requirements to purchase FHLB common stock.

The Company’s investment in FHLB stock is included in other assets on the accompanying balance sheets.

Note 6 - Loans

The following table presents the composition of the Company’s loan portfolio as of the dates indicated (dollars in thousands):

	June 30,		December 31,
	2013		2012
Commercial and Industrial Loans:	$	277,076	$	262,637
Loans Secured by Real Estate:
Construction, Land Development and Other Land		56,461		48,528
Owner-Occupied Nonresidential Properties		180,483		181,844
Other Nonresidential Properties		260,902		246,450
1-4 Family Residential Properties		64,765		62,037
Multifamily Residential Properties		32,212		31,610
Total Commercial and Other Real Estate		538,362		521,941
Other Loans:		13,128		21,779
Total Loans	$	885,027	$	854,885

The following table is a breakout of the Company’s loan portfolio stratified by the industry concentration of the borrower by their respective NAICS code as of the dates indicated (dollars in thousands):

	June 30,		December 31,
	2013		2012
Real Estate	$	342,048	$	312,625
Hotel/Lodging		72,905		82,483
Manufacturing		77,656		77,203
Construction		67,133		55,385
Wholesale		52,270		54,218
Finance		44,721		59,791
Healthcare		42,378		41,857
Professional Services		40,660		44,714
Restaurant/Food Service		35,383		24,105
Retail		25,160		30,302
Other Services		24,030		23,239
Administrative Management		21,188		19,078
Information		12,151		4,492
Transportation		9,521		11,431
Entertainment		6,250		8,132
Other		11,573		5,830
Total	$	885,027	$	854,885

Page 11 of 55

SBA Loans

As part of the acquisition of PC Bancorp, the Company acquired loans that were originated under the guidelines of the Small Business Administration (“SBA”) program. Furthermore, the Company continues to originate SBA loans. The total portfolio of the SBA contractual loan balances being serviced by the Company at June 30, 2013 was $105 million, of which $71 million has been sold. Of the $34 million remaining on the Company’s books, $9 million is un-guaranteed and $25 million is guaranteed by the SBA.

For SBA guaranteed loans, a secondary market exists to purchase the guaranteed portion of these loans with the Company continuing to “service” the entire loan. The secondary market for guaranteed loans is comprised of investors seeking long term assets with yields that adapt to the prevailing interest rates. These investors are typically financial institutions, insurance companies, pension funds, unions and other types of investors specializing in the acquisition of this product. When a decision to sell the guaranteed portion of an SBA loan is made by the Company, bids are solicited from secondary market investors and the loan is normally sold to the highest bidder.

The Company currently plans to maintain and grow the SBA loan portfolio and is planning on selling some of the guaranteed portion of SBA loans generated during future quarters. While there were no loans classified as held for sale at June 30, 2013, the Company has recently originated approximately $1.6 million in commercial and industrial SBA loans. While the Company does not currently plan on selling these loans, it may choose to do so in the future. The Company sold approximately $4.0 million of the guaranteed portion of its SBA loans during the six months ended June 30, 2013 and recorded a net gain on sale of $410,000.

Allowance for Loan Loss

The following table is a summary of the activity for the allowance for loan loss for the periods indicated (dollars in thousands):

	Three Months Ended June  30,						Six Months Ended June 30,
	2013			2012			2013			2012
Allowance for loan loss at beginning of period	$	8,841		$	7,512		$	8,803		$	7,495
Provision for loan losses		1,153			380			1,287			380
Net (charge-offs) recoveries:
Charge-offs		(616	)		(586	)		(737	)		(589	)
Recoveries		34			23			59			43
Net (charge-offs)		(582	)		(563	)		(678	)		(546	)
Allowance for loan loss at end of period	$	9,412		$	7,329		$	9,412		$	7,329
Net (charge-offs) to average loans		(0.07	)%		(0.12	)%		(0.08	)%		(0.12	)%

	June 30, 2013			December 31, 2012
Allowance for loan loss to total loans		1.06	%		1.03	%
Allowance for loan loss to total loans accounted for at historical cost, which excludes loan balances and the related allowance for loans acquired through acquisition		1.50	%		1.54	%

Page 12 of 55

The following tables present, by portfolio segment, the changes in the allowance for loan loss and the recorded investment in loans as of the dates and for the periods indicated (dollars in thousands):

	Commercial and Industrial			Construction, Land Development and Other Land			Commercial and Other Real Estate			Other			Total
Three Months Ended June 30, 2013
Beginning balance	$	4,187		$	2,147		$	2,400		$	107		$	8,841
Provision for loan losses		1,014			213			(6	)		(68	)		1,153
Net (charge-offs) recoveries:
Charge-offs		(569	)		(0	)		(47	)		(0	)		(616	)
Recoveries		27			0			4			3			34
Net (charge-offs) recoveries		(542	)		0			(43	)		3			(582	)
Ending balance	$	4,659		$	2,360		$	2,351		$	42		$	9,412
Three Months Ended June 30, 2012
Beginning balance	$	3,837		$	805		$	2,626		$	244		$	7,512
Provision for loan losses		747			(142	)		(225	)		0			380
Net (charge-offs) recoveries:
Charge-offs		(443	)		0			(136	)		(7	)		(586	)
Recoveries		20			0			0			3			23
Net (charge-offs) recoveries		(423	)		0			(136	)		(4	)		(563	)
Ending balance	$	4,161		$	663		$	2,265		$	240		$	7,329

	Commercial and Industrial			Construction, Land Development and Other Land			Commercial and Other Real Estate			Other			Total
Six Months Ended June 30, 2013
Beginning balance	$	4,572		$	2,035		$	2,084		$	112		$	8,803
Provision for loan losses		650			325			379			(67	)		1,287
Net (charge-offs) recoveries:
Charge-offs		(612	)		(0	)		(117	)		(8	)		(737	)
Recoveries		49			0			5			5			59
Net (charge-offs) recoveries		(563	)		0			(112	)		(3	)		(678	)
Ending balance	$	4,659		$	2,360		$	2,351		$	42		$	9,412
Six Months Ended June 30, 2012
Beginning balance	$	3,541		$	752		$	2,911		$	291		$	7,495
Provision for loan losses		1,026			(89	)		(510	)		(47	)		380
Net (charge-offs) recoveries:
Charge-offs		(443	)		0			(136	)		(10	)		(589	)
Recoveries		37			0			0			6			43
Net (charge-offs) recoveries		(406	)		0			(136	)		(4	)		(546	)
Ending balance	$	4,161		$	663		$	2,265		$	240		$	7,329

Page 13 of 55

	Commercial and Industrial		Construction, Land Development and Other Land		Commercial and Other Real Estate		Other		Total
June 30, 2013
Allowance for Loan Loss – Ending balance:
Individually evaluated for impairment	$	158	$	0	$	0	$	0	$	158
Collectively evaluated for impairment		4,491		2,360		2,351		42		9,244
Purchased credit impaired (loans acquired with deteriorated credit quality)		10		0		0		0		10
Total Allowance for Loan Loss	$	4,659	$	2,360	$	2,351	$	42	$	9,412
Loans receivable – Ending balance:
Individually evaluated for impairment	$	2,681	$	1,159	$	3,340	$	0	$	7,180
Collectively evaluated for impairment		273,300		55,302		531,752		13,128		873,482
Purchased credit impaired (loans acquired with deteriorated credit quality)		1,095		0		3,270		0		4,365
Total Loans Receivable	$	277,076	$	56,461	$	538,362	$	13,128	$	885,027
December 31, 2012
Allowance for Loan Loss – Ending balance:
Individually evaluated for impairment	$	11	$	0	$	0	$	0	$	11
Collectively evaluated for impairment		4,552		2,035		2,084		112		8,783
Purchased credit impaired (loans acquired with deteriorated credit quality)		9		0		0		0		9
Total Allowance for Loan Loss	$	4,572	$	2,035	$	2,084	$	112	$	8,803
Loans receivable – Ending balance:
Individually evaluated for impairment	$	885	$	1,200	$	3,499	$	0	$	5,584
Collectively evaluated for impairment		260,982		47,328		512,312	$	21,775		842,397
Purchased credit impaired (loans acquired with deteriorated credit quality)		770		0		6,130	$	4		6,904
Total Loans Receivable	$	262,637	$	48,528	$	521,941	$	21,779	$	854,885

Credit Quality of Loans

The Company utilizes an internal loan classification system as a means of reporting problem and potential problem loans. Under the Company’s loan risk rating system, loans are classified as “Pass,” with problem and potential problem loans as “Special Mention,” “Substandard” “Doubtful” and “Loss”. Individual loan risk ratings are updated continuously or at any time the situation warrants. In addition, management regularly reviews problem loans to determine whether any loan requires a classification change, in accordance with the Company’s policy and applicable regulations. The grading analysis estimates the capability of the borrower to repay the contractual obligations of the loan agreements as scheduled or at all. The internal loan classification risk grading system is based on experiences with similarly graded loans.

The Company’s internally assigned grades are as follows:

• Pass – loans which are protected by the current net worth and paying capacity of the obligor or by the value of the underlying collateral. Loans not meeting the criteria of special mention, substandard, doubtful or loss that have been analyzed individually as part of the above described process are considered to be pass-rated loans.

• Special Mention – loans where a potential weakness or risk exists, which could cause a more serious problem if not corrected. Special Mention loans do not currently expose the Company to sufficient risk to warrant classification as a Substandard, Doubtful or Loss classification, but possess weaknesses that deserve management’s close attention.

• Substandard – loans that have a well-defined weakness based on objective evidence and can be characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

• Doubtful – loans classified as doubtful have all the weaknesses inherent in those classified as substandard with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable.

Page 14 of 55

• Loss – loans classified as a loss are considered uncollectible, or of such value that continuance as an asset is not warranted.

The following tables present the risk category of loans by class of loans based on the most recent internal loan classification as of the dates indicated (dollars in thousands):

	Commercial and Industrial		Construction, Land Development and Other Land		Commercial and Other Real Estate		Other		Total
June 30, 2013
Pass	$	265,362	$	55,302	$	513,055	$	13,125	$	846,844
Special Mention		1,428		0		3,037		0		4,465
Substandard		9,741		1,159		22,270		3		33,173
Doubtful		545		0		0		0		545
Total	$	277,076	$	56,461	$	538,362	$	13,128	$	885,027
December 31, 2012
Pass	$	250,624	$	47,328	$	493,768	$	21,655	$	813,375
Special Mention		4,602		0		5,300		0		9,902
Substandard		7,411		1,200		22,873		119		31,603
Doubtful		0		0		0		5		5
Total	$	262,637	$	48,528	$	521,941	$	21,779	$	854,885

Age Analysis of Past Due and Non-Accrual Loans

The following tables present an aging analysis of the recorded investment of past due loans and non-accrual loans as of the dates indicated (dollars in thousands):

	31-60 Days Past Due		61-90 Days Past Due		Greater than 90 Days Past Due and Accruing		Total Past Due and Accruing		Total Non Accrual		Current		Total Loans
June 30, 2013
Commercial and Industrial	$	246	$	961	$	0	$	1,207	$	3,771	$	272,098	$	277,076
Construction, Land Development and Other Land		0		0		0		0		1,159		55,302		56,461
Commercial and Other Real Estate		0		0		0		0		5,539		532,823		538,362
Other		0		2		0		2		0		13,126		13,128
Total	$	246	$	963	$	0	$	1,209	$	10,469	$	873,349	$	885,027

	31-60 Days Past Due		61-90 Days Past Due		Greater than 90 Days Past Due and Accruing		Total Past Due and Accruing		Total Non Accrual		Current		Total Loans
December 31, 2012
Commercial and Industrial	$	1,025	$	0	$	0	$	1,025	$	1,583	$	260,029	$	262,637
Construction, Land Development and Other Land		0		0		0		0		1,200		47,328		48,528
Commercial and Other Real Estate		2,884		0		0		2,884		7,742		511,315		521,941
Other		0		0		0		0		5		21,774		21,779
Total	$	3,909	$	0	$	0	$	3,909	$	10,530	$	840,446	$	854,885

Troubled Debt Restructuring

The Company’s loan portfolio contains certain loans that have been modified in a Troubled Debt Restructuring (“TDR”), where economic concessions have been granted to borrowers experiencing financial difficulties. Loans are restructured in an effort to maximize collections. Economic concessions can include: reductions to the interest rate, payment extensions, forgiveness of principal or other actions.

The modification process includes evaluation of impairment based on the present value of expected future cash flows, discounted at the contractual interest rate of the original loan agreement, except when the sole (remaining) source of repayment for the loan is the operation or liquidation of the loan collateral. In these cases, management uses the current fair value of the collateral, less selling costs, to evaluate the loan for impairment. If management determines that the value of the modified loan is less than the recorded investment in the loan (net of previous charge-offs and unamortized premium or discount), impairment is recognized through a specific allowance or a charge-off.

Page 15 of 55

Impairment analyses are performed on troubled debt restructured loans in conjunction with the normal allowance for loan loss process.

The following tables include the recorded investment and unpaid principal balances for TDR loans for the dates and periods indicated (dollars in thousands). This table includes two commercial and industrial TDR loans that were purchased credit impaired (“PCI”). As of June 30, 2013, these two TDR PCI loans had a recorded investment of $97,850 and unpaid principal balances of $157,377. Both of these loans had been performing in compliance with their restructured agreements, and were returned to accrual status during the fourth quarter of 2012. One loan is still accruing and performing in compliance with its restructured agreement, the other had to be placed on non-accrual status during the second quarter of 2013.

	Recorded Investment		Unpaid Principal Balance		Interest Income Recognized
Period ended June 30, 2013
Commercial and Industrial	$	611	$	904	$	1
Construction, Land Development and Other Land		1,159		2,791		0
Commercial and Other Real Estate		2,236		2,785		0
Total	$	4,006	$	6,480	$	1

	Recorded Investment		Unpaid Principal Balance		Interest Income Recognized
Year ended December 31, 2012
Commercial and Industrial	$	314	$	626	$	5
Construction, Land Development and Other Land		1,200		2,791		0
Commercial and Other Real Estate		4,193		4,874		32
Total	$	5,707	$	8,291	$	37

The following table shows the pre- and post-modification recorded investment in TDR loans by type of modification and loan segment that have occurred during the periods indicated (dollars in thousands):

	Three Months Ended June 30, 2013						Three Months Ended June 30, 2012
	Number of Loans		Pre- Modification Recorded Investment		Post- Modification Recorded Investment		Number of Loans		Pre- Modification Recorded Investment		Post- Modification Recorded Investment
Reduced Interest Rate:
Construction, Land Development and Other Land		0	$	0	$	0		0	$	0	$	0
Lengthened Amortization:
Commercial and Industrial		0		0		0		0		0		0
Commercial and Other Real Estate		0		0		0		0		0		0
		0		0		0		0		0		0
Total		0	$	0	$	0		0	$	0	$	0

	Six Months Ended June 30, 2013						Six Months Ended June 30, 2012
	Number of Loans		Pre- Modification Recorded Investment		Post- Modification Recorded Investment		Number of Loans		Pre- Modification Recorded Investment		Post- Modification Recorded Investment
Reduced Interest Rate:
Construction, Land Development and Other Land		0	$	0	$	0		0	$	0	$	0
Lengthened Amortization:
Commercial and Industrial		1		310		310		0		0		0
Commercial and Other Real Estate		0		0		0		0		0		0
		0		0		0		0		0		0
Total		1	$	310	$	310		0	$	0	$	0

There was no financial impact for specific reserves or from charge-offs for the modified loans included in the table above.

Page 16 of 55

The Company restructured one new TDR loan during the six months ended June 30, 2013; interest only payments were extended on a commercial and industrial SBA 7a loan with a pre and post modification recorded investment of $310,000.

Payments were not received as scheduled on the one new TDR loan that was restructured during the six months ended June 30, 2013. This borrower is in negotiation for a further modification of payments going forward. In addition, an accruing TDR loan which was originally PCI, with a recorded investment of approximately $66,000, was placed on non-accrual status when the borrower filed Chapter 7 bankruptcy. Aside from these two loans, there have been no other payment defaults in 2013, subsequent to modification on troubled debt restructured loans modified within the last twelve months.

Loans are restructured in an effort to maximize collections. Impairment analyses are performed on the Company’s troubled debt restructured loans in conjunction with the normal allowance for loan loss process. The Company’s troubled debt restructured loans are analyzed to ensure adequate cash flow or collateral supports the outstanding loan balance.

Impaired Loans

Impaired loans are evaluated by comparing the fair value of the collateral, if the loan is collateral dependent, and the present value of the expected future cash flows discounted at the loan’s effective interest rate, if the loan is not collateral dependent. The Company recognizes interest income from impaired loans on an accrual basis, unless the loan is on non-accrual status. There were no loans greater than 90 days past due and still accruing interest at June 30, 2013 or December 31, 2012.

A valuation allowance is established for an impaired loan when the fair value of the loan is less than the recorded investment. In certain cases, portions of impaired loans are charged-off to realizable value instead of establishing a valuation allowance and are included, when applicable in the table above as “Impaired loans without specific valuation allowance.” The valuation allowance disclosed below is included in the allowance for loan loss reported in the consolidated balance sheets as of June 30, 2013 and December 31, 2012.

The following tables present, by loan category, the recorded investment and unpaid principal balances for impaired loans with the associated allowance amount, if applicable, as of the dates and for the periods indicated (dollars in thousands). This table excludes purchased credit impaired loans (loans acquired with deteriorated credit quality) of $4.4 million and $6.9 million at June 30, 2013 and December 31, 2012, respectively.

	June 30, 2013						December 31, 2012
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
With no specific allowance recorded:
Commercial and Industrial	$	1,986	$	2,041	$	0	$	677	$	1,490	$	0
Construction, Land Development and Other Land		1,159		2,791		0		1,201		2,791		0
Commercial and Other Real Estate		3,340		4,370		0		3,498		4,331		0
With a specific allowance recorded:
Commercial and Industrial		695		1,420		9		208		463		11
Construction, Land Development and Other Land		0		0		0		0		0		0
Commercial and Other Real Estate		0		0		0		0		0		0
Total
Commercial and Industrial		2,681		3,461		9		885		1,953		11
Construction, Land Development and Other Land		1,159		2,791		0		1,201		2,791		0
Commercial and Other Real Estate		3,340		4,370		0		3,498		4,331		0
Total	$	7,180	$	10,622	$	9	$	5,584	$	9,075	$	11

Page 17 of 55

	Three Months Ended June 30,								Six Months Ended June 30,
	2013				2012				2013				2012
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no specific allowance recorded:
Commercial and Industrial	$	1,500	$	0	$	586	$	0	$	994	$	0	$	587	$	0
Construction, Land Development and Other Land		1,159		0		1,249		0		1,179		0		1,260		0
Commercial and Other Real Estate		3,340		0		131		0		3,398		0		65		0
With a specific allowance recorded:
Commercial and Industrial		488		0		200		0		319		0		200		0
Construction, Land Development and Other Land		0		0		0		0		0		0		0		0
Commercial and Other Real Estate		0		0		1,064		0		0		0		1,064		0
Total:
Commercial and Industrial		1,988		0		786		0		1,313		0		787		0
Construction, Land Development and Other Land		1,159		0		1,249		0		1,179		0		1,260		0
Commercial and Other Real Estate		3,340		0		1,195		0		3,398		0		1,130		0
Total	$	6,487	$	0	$	3,230	$	0	$	5,890	$	0	$	3,176	$	0

The following is a summary of additional information pertaining to impaired loans for the periods indicated (dollars in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012
Interest foregone on impaired loans	$	141	$	86	$	230	$	160
Cash collections applied to reduce principal balance	$	110	$	22	$	152	$	43
Interest income recognized on cash collections	$	0	$	0	$	0	$	0

Loans Acquired Through Acquisition

The following table reflects the accretable net discount for loans acquired through acquisition accounted for under ASC 310 “Receivables” for the periods indicated (dollars in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
Balance, beginning of period	$	11,269		$	2,193		$	12,189		$	2,585
Accretion, included in interest income		(1,139	)		(361	)		(2,083	)		(753	)
Reclassifications (to) from non-accretable yield		0			0			24			0
Balance, end of period	$	10,130		$	1,832		$	10,130		$	1,832

The above table reflects the fair value adjustment on the loans acquired from mergers that will be amortized to loan interest income based on the effective yield method over the remaining life of the loans. These amounts do not include the fair value adjustments on the purchased credit impaired loans acquired from mergers.

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Purchased Credit Impaired (“PCI”) Loans

We evaluated loans acquired through acquisition in accordance with guidance in ASC 310-30 related to loans acquired with deteriorated credit quality. Acquired loans are considered credit-impaired if there is evidence of deterioration of credit quality since origination and it is probable, at the acquisition date, that we will be unable to collect all contractually required amounts.

When the timing and/or amounts of expected cash flows on such loans are not reasonably estimable, no interest is accreted and the loan is reported as a non-accrual loan; otherwise, if the timing and amounts of expected cash flows for purchased credit-impaired loans are reasonably estimable, then interest is accreted and the loans are reported as accruing loans.

The non-accretable difference represents the difference between the undiscounted contractual cash flows and the undiscounted expected cash flows, and also reflects the estimated credit losses in the acquired loan portfolio at the acquisition date and can fluctuate due to changes in expected cash flows during the life of the PCI loans.

The following table reflects the outstanding balance and related carrying value of PCI loans as of the dates indicated (dollars in thousands):

	June 30, 2013				December 31, 2012
	Unpaid Principal Balance		Carrying Value		Unpaid Principal Balance		Carrying Value
Commercial and Industrial	$	1,613	$	1,095	$	1,221	$	770
Commercial and Other Real Estate		6,053		3,270		9,424		6,130
Other		0		0		73		4
Total	$	7,666	$	4,365	$	10,718	$	6,904

The following table reflects the activities in the accretable net discount for PCI loans for the period indicated (dollars in thousands):

	Three Months Ended June 30,					Six Months Ended June 30,
	2013			2012		2013			2012
Balance, beginning of period	$	9		$	0	$	9		$	0
Accretion, included in interest income		(9	)		0		(9	)		0
Reclassifications (to) from non-accretable yield		428			0		428			0
Balance, end of period	$	428		$	0	$	428		$	0

Note 7 - Borrowings and Subordinated Debentures

Securities Sold Under Agreements to Repurchase

The Company enters into certain transactions, the legal form of which are sales of securities under agreements to repurchase (“Repos”) at a later date at a set price. Securities sold under agreements to repurchase generally mature within 1 day to 180 days from the issue date.

As discussed in Note 5 – Investment Securities, the Company has pledged certain investments as collateral for these agreements. Securities with a fair value of $30.2 million and $23.3 million were pledged to secure the Repos at June 30, 2013 and December 31, 2012, respectively. The Company segregates both the principal and accrued interest on these securities with the Company’s third party safekeeping custodians. All principal and interest payments on the investment securities that are pledged as collateral on the Repo program are received directly by the safekeeping custodian.

The tables below describe the terms and maturity of the Company’s Repos as of the dates indicated (dollars in thousands):

	June 30, 2013
Date Issued	Amount		Interest Rate			Original Term	Maturity Date
June 4, 2013	$	950		0.125	%	62 days	August 5, 2013
June 28, 2013		28,662		0.10% – 0.40	%	3 days	July 1, 2013
Total	$	29,612		0.30	%

	December 31, 2012
Date Issued	Amount		Interest Rate			Original Term	Maturity Date
November 5, 2012	$	1,020		0.15	%	91 days	February 4, 2013
December 31, 2012		21,837		0.10% – 0.40	%	1 day	January 2, 2013
Total	$	22,857		0.21	%

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Federal Home Loan Bank Borrowings

As of June 30, 2013, the Company had no outstanding advances (borrowings) from the Federal Home Loan Bank “FHLB”.

The Company’s credit facility with the FHLB is $316 million, which represents approximately 25% of the Bank’s total assets, as reported by the Bank in its March 31, 2013 FFIEC Call Report.

As of June 30, 2013, the Company had $748 million of loan collateral pledged with the FHLB which provides $288 million in borrowing capacity. The Company is required to purchase FHLB common stock to support its FHLB advances. At June 30, 2013 and December 31, 2012, the Company had $4.7 million and $4.9 million of FHLB common stock. The current value of the FHLB common stock of $4.7 million would support FHLB advances up to $101 million. Any advances from the FHLB in excess of $101 million would require additional purchases of FHLB common stock. The FHLB has historically repurchased all of its excess capital stock from each bank where the level of capital stock is in excess of that bank’s current average borrowings. The FHLB repurchased $150,000 and $187,000 of the Company’s FHLB capital stock during the six months ending June 30, 2013 and twelve months ending December 31, 2012, respectively.

Subordinated Debentures

The following table summarizes the terms of each issuance of the subordinated debentures outstanding as of June 30, 2013:

Series	Amount (in  thousands)			Issuance Date	Maturity Date	Rate Index	Current Rate			Next Reset Date
Trust I	$	6,186		12/10/04	03/15/35	3 month LIBOR + 2.05%		2.32	%	9/16/2013
Trust II		3,093		12/23/05	03/15/36	3 month LIBOR + 1.75%		2.02	%	9/16/2013
Trust III		3,093		06/30/06	09/15/36	3 month LIBOR + 1.85%		2.12	%	9/16/2013
Subtotal		12,372
Fair value adjustment		(3,089	)
Total	$	9,283

The Company had an aggregate outstanding balance of $12.4 million in subordinated debentures at June 30, 2013. These subordinated debentures were acquired as part of the PC Bancorp merger and were issued to trusts originally established by PC Bancorp, which in turn issued trust preferred securities.

These subordinated debentures were issued in three separate series. Each issuance had a maturity of 30 years from their approximate date of issue. All three subordinated debentures are variable rate instruments that reprice quarterly based on the three month LIBOR plus a margin (see tables above). All three subordinated debentures had their interest rates reset in June of 2013 and are set to reprice again in September 2013 at the current three month LIBOR plus their index, and will continue to reprice quarterly through their maturity date. Trust I and Trust II are currently callable at par with no prepayment penalties. Trust III has a prepayment penalty equal to 100.501% of the outstanding principal through September 15, 2013. After this date Trust III would be callable at par with no prepayment penalties.

The Company currently includes in Tier 1 capital an amount of subordinated debentures equal to no more than 25% of the sum of all core capital elements, which is generally defined as shareholders’ equity less goodwill, core deposit intangibles and a portion of the SBA servicing assets. The Company’s existing subordinated debentures were grandfathered as Tier 1 capital under the Dodd-Frank Wall Street Reform and Consumer Protection Act. However, in June of 2012, the U.S. federal banking agencies issued three notices of proposed rulemaking (“NPR’s”) that would revise and replace the current regulatory capital requirements to make them consistent with the Basel III Capital Standards established by the Basel Committee on Banking Supervision and certain provisions of the Dodd Frank Wall Street Reform and Consumer Protection Act. Under the Basel III NPR, the Company’s existing subordinated debentures would have been phased out of Tier 1 capital over a period of 10 years. However, on July 2, 2013, the Federal Reserve Board issued a final regulatory capital rule which minimizes the burden on smaller less complex financial institutions. One of the key changes made to the originally issued NPR’s will allow the Company’s existing subordinated debentures to be grandfathered into tier one capital (subject to a limit of 25 percent of tier 1 capital).

Interest payments made by the Company on subordinated debentures are considered dividend payments under FRB regulations. Notification to the FRB is required prior to the Company declaring and paying a dividend during any period in which the Company’s quarterly net earnings are insufficient to fund the dividend amount. This notification requirement is included in regulatory guidance regarding safety and soundness surrounding capital and includes other non-financial measures such as asset quality, financial condition, capital adequacy, liquidity, future earnings projections, capital planning and credit concentrations. Should the FRB object to the dividend payments, the Company would be precluded from paying interest on the subordinated debentures after giving notice within 15 days before the payment date. Payments would not commence until approval is received or the Company no longer needs to provide notice under applicable guidance. The Company has the right, assuming no default has occurred, to defer payments of interest on the subordinated debentures at any time for a period not to exceed 20 consecutive quarters. The Company has not deferred any interest payments.

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Note 8 - Other Comprehensive Income (Loss)

The following table presents the changes in accumulated other comprehensive income (loss) by component for the periods indicated (dollars in thousands):

	Before Tax			Tax Effect			Net of Tax
Three Months Ended – June 30, 2013
Net unrealized gains (losses) on investment securities:
Beginning balance	$	2,243		$	923		$	1,320
Non-credit portion of other-than-temporary impairments arising during the period		0			0			0
Net unrealized losses arising during the period		(1,247	)		(513	)		(734	)
Net other comprehensive loss		(1,247	)		(513	)		(734	)
Ending balance	$	996		$	410		$	586
Three Months Ended – June 30, 2012
Net unrealized gains (losses) on investment securities:
Beginning balance	$	1,678		$	691		$	987
Non-credit portion of other-than-temporary impairments arising during the period		110			40			70
Net unrealized losses arising during the period		(82	)		(28	)		(54	)
Net other comprehensive income		28			12			16
Ending balance	$	1,706		$	703		$	1,003

	Before Tax			Tax Effect			Net of Tax
Six Months Ended – June 30, 2013
Net unrealized gains (losses) on investment securities:
Beginning balance	$	2,369		$	975		$	1,394
Non-credit portion of other-than-temporary impairments arising during the period		(32	)		(13	)		(19	)
Net unrealized losses arising during the period		(1,336	)		(550	)		(786	)
Other comprehensive loss before reclassifications		(1,368	)		(563	)		(805	)
Reclassification adjustment for gains realized in net income		(5	)		(2	)		(3	)
Net other comprehensive loss		(1,373	)		(565	)		(808	)
Ending balance	$	996		$	410		$	586
Six Months Ended – June 30, 2012
Net unrealized gains (losses) on investment securities:
Beginning balance	$	1,536		$	646		$	890
Non-credit portion of other-than-temporary impairments arising during the period		286			96			190
Net unrealized losses arising during the period		(116	)		(39	)		(77	)
Net other comprehensive income		170			57			113
Ending balance	$	1,706		$	703		$	1,003

The table below presents the components of accumulated other comprehensive income (loss) as of the dates indicated (dollars in thousands):

	June 30, 2013			June 30, 2012
Net unrealized gain on non other-than-temporarily impaired investment securities	$	996		$	2,150
Net unrealized gain (loss) on other-than-temporarily impaired investment securities		0			(444	)
Total net unrealized gain on investment securities		996			1,706
Tax expense		(410	)		(703	)
Total accumulated other comprehensive income	$	586		$	1,003

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Note 9 - Stock Options and Restricted Stock

Equity Compensation Plans

At June 30, 2013, the Company had one active stock-based employee and director compensation plan, the “2007 Equity and Incentive Plan”, and two terminated stock based compensation plans, the “2005 Plans”, which were terminated effective August 12, 2007, and replaced with the 2007 Equity and Incentive Plan. These plans are described more fully in Note 11, “Stock Options and Restricted Stock” in the Company’s Annual Report on Form 10K for the year ended December 31, 2012. The outstanding vested and unvested stock options and unvested restricted stock under the Equity and Incentive Plans listed above, were transferred and assumed by CU Bancorp in connection with the holding company reorganization, from options and restricted stock originally issued by California United Bank.

The Company’s “2007 Equity and Incentive Plan” allows the Company to issue stock options, restricted stock, restricted stock units and performance units. Certain options and share awards provide for accelerated vesting if there is a change in control as defined in the plans.

At June 30, 2013, future compensation expense related to non-vested stock option and restricted stock grants is reflected in the table below (dollars in thousands):

Future Stock Based Compensation Expense	Stock Options		Restricted Stock		Total
Remainder of 2013	$	9	$	402	$	411
2014		10		478		488
2015		1		168		169
2016		0		53		53
2017		0		2		2
Thereafter		0		0		0
Total	$	20	$	1,103	$	1,123

The estimated fair value of all stock options granted in prior years has been calculated using the Black-Scholes option pricing model. The use of the Black-Scholes model requires the use of input parameters and assumptions used for estimating the fair value of stock options granted in 2010 and prior years.

There were no stock options granted during 2011, 2012, or during the first six months of 2013.

Stock Options

The following table summarizes the share option activity under the plans as of the date and for the period indicated:

	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in Years)		Aggregate Intrinsic Value
							(thousands)
Outstanding stock options at December 31, 2012		734,896	$	12.44		2.8	$	966
Granted		0
Exercised		5,625
Forfeited		625
Expired		10,000
Outstanding stock options at June 30, 2013		718,646	$	12.39		2.3	$	3,078
Exercisable options at June 30, 2013		698,371	$	12.40		2.3	$	3,001
Unvested options at June 30, 2013		20,275	$	12.01		3.2	$	77
Outstanding, vested and expected to vest at June 30, 2013		718,646	$	12.39		2.3	$	3,078

Stock option compensation expense was $3,000 and $12,000 for the three month period ended June 30, 2013 and 2012, respectively, and $13,000 and $30,000, for the six month period ended June 30, 2013 and 2012, respectively.

Restricted Stock

The weighted-average grant-date fair value per share in the table below is calculated by taking the number of shares of restricted stock issued divided by the total aggregate cost of the restricted shares issued. The aggregate cost of the restricted stock was calculated by multiplying the number of shares granted at each of the grant dates by the closing stock price of the Company’s common stock on the date of the grant.

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The following table summarizes the restricted stock activity under the plans for the period indicated:

	Number of Shares		Weighted-Average Grant- Date Fair  Value per Share
Restricted Stock:
Unvested, at December 31, 2012		290,550	$	11.99
Granted		2,500		12.74
Vested		64,200		12.15
Cancelled and forfeited		10,600		11.00
Unvested, at June 30, 2013		218,250	$	12.00

Restricted stock compensation expense related to the restricted stock grants reflected in the table above was $214,000 and $463,000 for the three month period ended June 30, 2013 and 2012, respectively. Restricted stock compensation expense related to the restricted stock grants reflected in the table above was $208,000 and $456,000 for the six month period ended June 30, 2013 and 2012, respectively. Restricted stock awards reflected in the table above are valued at the closing stock price on the date of grant and are expensed to stock based compensation expense over the period for which the related service is performed. During the six months ending June 30, 2013, the Company issued 2,500 shares of restricted stock to one of its employees.

Note 10 - Common Stock

As part of the merger with PC Bancorp, the Company initially issued 3,721,382 shares of common stock on July 31, 2012 to the shareholders of PC Bancorp.

During 2012, 117,300 shares of restricted stock were issued to the Company’s Directors and employees. During the six months ending June 30, 2013, the Company issued 2,500 shares of restricted stock to a Company employee. In addition, the Company issued 5,625 shares and 0 shares of stock from the exercise of employee stock options for the six months ending June 30, 2013 and for the twelve months ending December 31, 2012, respectively. The Company cancelled 10,600 and 7,500 shares of unvested restricted stock during the six months of 2013 and for the full year of 2012, respectively, related to employee turnover. Net issuance (forfeiture) of stock for the six months of 2013 and for the twelve months of 2012 was (24,424) shares and 109,800 shares, respectively. See Note 9 – “Stock Options and Restricted Stock” for a more detailed analysis related to the issuances of these shares.

The Company has a program that allows employees to make an election to have a portion of their restricted stock that became vested during the year, redeemed by the Company to provide funds to pay the employee’s tax obligation related to the vesting of the stock. During the six months of 2013 and during the full year of 2012, a number of the Company’s employees elected to participate in this program. A total of 22,049 and 21,921 shares of employee unvested restricted stock were retired under this program for a total value of $283,000 and $228,000 during the six months of 2013, and for the full year of 2012, respectively. The retirement of these shares upon vesting is accounted for as a dividend.

Note 11 - Commitments and Contingencies

Litigation

From time to time the Company is a party to claims and legal proceedings arising in the ordinary course of business. The Company accrues for any probable loss contingencies that are estimable and discloses any possible losses in accordance with Accounting Standards Codification (“ASC”) 450, “Contingencies”. As of June 30, 2013, there were no legal proceedings against the Company the outcome of which are expected to have a material adverse impact on the Company’s financial position, results of operations or cash flows, as a whole.

Note 12 - Fair Value of Assets and Liabilities

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for an asset or liability in an orderly transaction between market participants at the measurement date. ASC Topic 825 requires disclosure of the fair value of financial assets and financial liabilities, including both those financial assets and financial liabilities that are measured and reported at fair value on a recurring basis and a non-recurring basis. The methodologies for estimating the fair value of financial assets and financial liabilities that are measured at fair value on a recurring or non-recurring basis are discussed below.

In accordance with accounting guidance, the Company groups its financial assets and financial liabilities measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are as follows:

• Level 1 – Observable unadjusted quoted market prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date

• Level 2 – Significant other observable market based inputs, other than Level 1 prices such as quoted prices for similar assets or liabilities or unobservable inputs that are corroborated by market data. This includes quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data, either directly or indirectly. This would include those financial instruments that are valued using models or other valuation methodologies where substantially all of the assumptions are observable in the marketplace, can be derived from observable market data or are supported by observable levels at which transactions are executed in the marketplace.

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• Level 3 – Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. Assets measured utilizing level 3 are for positions that are not traded in active markets or are subject to transfer restrictions, and or where valuations are adjusted to reflect illiquidity and or non-transferability. These assumptions are not corroborated by market data. This is comprised of financial instruments whose fair value is estimated based on internally developed models or methodologies utilizing significant inputs that are generally less readily observable from objective sources. Management uses a combination of reviews of the underlying financial statements, appraisals and management’s judgment regarding credit quality to determine the value of the financial asset or liability.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Management maximizes the use of observable inputs and attempts to minimize the use of unobservable inputs when determining fair value measurements. The following is a description of both the general and specific valuation methodologies used for certain instruments measured at fair value, as well as the general classification of these instruments pursuant to the valuation hierarchy.

Investment Securities Available-for-Sale: The fair value of securities available for sale may be determined by obtaining quoted prices in active markets, when available, from nationally recognized securities exchanges (Level 1 inputs). If quoted market prices are not available, the fair value is determined by a matrix pricing, which is a mathematical technique widely used in the securities industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs). Debt securities’ pricing is generally obtained from one of the matrix pricing models developed from one of the three national pricing agencies. In cases where significant credit valuation adjustments are incorporated into the estimation of fair value, reported amounts are classified as Level 3 inputs.

Securities classified as available-for-sale are accounted for at their current fair value rather than amortized historical cost. Unrealized gains or losses are excluded from net income and reported as an amount net of taxes as a separate component of accumulated other comprehensive income included in shareholders’ equity.

The Company considers the inputs utilized to fair value the U.S. Agency and U.S. Sponsored Agency issued debt securities (callable and non-callable notes), mortgage backed securities guaranteed by those agencies, collateralized mortgage obligations issued by those agencies, corporate bond securities, and municipal securities within level 2 of the valuation hierarchy. Management bases the fair value for these investments primarily on third party price indications provided by independent pricing sources utilized by the Company’s bond accounting system to obtain market pricing on its individual securities. Vining Sparks, who provides the Company with its bond accounting system, utilizes pricing from three independent third party pricing sources for pricing of securities. These third party pricing sources utilize, quoted market prices or when quoted market prices are not available, then fair values are estimated using nationally recognized third-party vendor pricing models that would also be classified within the level 2 valuation hierarchy because the inputs are observable. However, the fair value reported may not be indicative of the amounts that could be realized in an actual market exchange.

The fair value of the Company’s U.S. Agency and U.S. Sponsored Agency callable and non-callable agency securities, mortgage backed securities guaranteed by those agencies, and collateralized mortgage obligations issued by those agencies, corporate bond securities, and municipal securities are calculated using an option adjusted spread model from one of the nationally recognized third-party pricing models. Depending on the assumptions used and the treasury yield curve and other interest rate assumptions, the fair value could vary significantly in the near term.

Loans: The fair value for loans is estimated by discounting the expected future cash flows using current interest rates at which similar loans would be made to borrowers with similar credit ratings for the same remaining maturities, adjusted for the allowance for loan loss. Loans are segregated by type such as commercial and industrial, commercial real estate, construction and other loans with similar credit characteristics and are further segmented into fixed and variable interest rate loan categories. Expected future cash flows are projected based on contractual cash flows, adjusted for estimated prepayments.

Impaired Loans: The fair value of impaired loans is determined based on an evaluation at the time the loan is originally identified as impaired, and periodically thereafter, at the lower of cost or fair value. Fair value on impaired loans is measured based on the value of the collateral securing these loans, if the loan is collateral dependent, or based on the discounted cash flows for non collateral dependent loans, and are classified at a level 3 in the fair value hierarchy. Collateral on collateral dependent loans may be real estate and/or business assets including equipment, inventory and/or accounts receivable and is determined based on appraisals performed by qualified licensed appraisers hired by the Company. Appraised and reported values may be discounted based on management’s historical knowledge, changes in market conditions from the time of valuation, and/or management’s expertise and knowledge of the client and client’s business. Such discounts are typically significant and result in a Level 3 classification of the inputs for determining fair value. For unsecured loans, the estimated future discounted cash flows of the business or borrower, are used in evaluating the fair value. Impaired loans are reviewed and evaluated on at least a quarterly basis for additional impairment and adjusted accordingly, based on the same factors identified above.

Interest Rate Swap Contracts: The fair value of the interest rate swap contracts are provided by an independent third party vendor that specializes in interest rate risk management and fair value analysis using a system that utilizes current market data to estimate cash flows of the interest rate swaps utilizing the future LIBOR yield curve through the maturity date of the interest rate swap contract. The forward LIBOR yield curve is the primary factor in the valuation of the interest rate swap contracts. Accordingly, the interest rate swap contracts are categorized as a level 2 valuation.

Other Real Estate Owned: The fair value of other real estate owned is generally based on real estate appraisals (unless more current market information is available) less estimated costs of sale. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are typically significant and result in a Level 3 classification of the inputs for determining fair value.

SBA Servicing Asset: The Company acquired an SBA servicing asset with the PC Bancorp merger. This servicing asset was initially fair valued at the merger date based on an evaluation by a third party who specializes in fair value analysis. The fair value of this asset was based on the estimated

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discounted future cash flows utilizing market based discount rates and estimated prepayment speeds. The discount rate was based on the current U.S. Treasury yield curve, plus a spread for marketplace risk associated with these assets. Prepayment speeds were selected based on the historical prepayments of similar SBA pools. The prepayment speeds determine the timing of the cash flows. The SBA servicing asset is amortized over the estimated life of the loans based on an effective yield approach. In addition, the Company’s servicing asset is evaluated regularly for impairment by discounting the estimated future cash flows using market-based discount rates and prepayment speeds. If the calculated present value of the servicing asset declines below the Company’s current carrying value, the servicing asset is written down to its present value. Based on the Company’s methodology in its valuation of the SBA servicing asset, the current carrying value is estimated to approximate the fair value. The valuation inputs required in valuing the SBA servicing asset are considered to be level 3 inputs.

Non-Maturing Deposits: The fair values for non-maturing deposits (deposits with no contractual termination date), which include non-interest bearing demand deposits, interest bearing transaction accounts, money market deposits and savings accounts are equal to their carrying amounts, which represent the amounts payable on demand. Because the carrying value and fair value are by definition identical, and accordingly non-maturity deposits are categorized as a level 1 valuation, these balances are not listed in the following tables.

Maturing Deposits: The fair values of fixed maturity certificates of deposit (time deposits) are estimated using a discounted cash flow calculation that applies current market deposit interest rates to the Bank’s current certificate of deposit interest rates for similar term certificates. The rates being paid on certificates of deposit not acquired from PC Bancorp at June 30, 2013 and December 31, 2012, were generally identical to the market interest rates for comparable terms and thus both the carry amount and fair value are generally considered approximately identical as of the reporting dates. The deposits acquired from PC Bancorp were initially adjusted to their fair value at the date of acquisition. The interest rates used to calculate the fair value adjustments on the PCB certificates were considered to be the market rates at the date of acquisition. Maturing deposits are categorized as level 2 valuations.

Securities Sold under Agreements to Repurchase (“Repos”): The fair value of securities sold under agreements to repurchase is estimated based on the discounted value of future cash flows expected to be paid on the deposits. The carrying amounts of Repos with maturities of 90 days or less approximate their fair values. The fair value of Repos with maturities greater that 90 days is estimated based on the discounted value of the contractual future cash flows. Securities sold under agreements to repurchase are categorized as a level 1 valuation.

Subordinated Debentures: The fair value of the three variable rate subordinated debentures (“debentures”) is estimated using a discounted cash flow calculation that applies the three month LIBOR plus the margin index at June 30, 2013, to the cash flows from the debentures, based on the actual interest rate the debentures were accruing at June 30, 2013. Because all three of the debentures re-priced on June 17, 2013 based on the current three month LIBOR index rate plus the index margin at that date, and with relatively little to no change in the three month LIBOR index rate from the re-pricing date through June 30, 2013, the current face value of the debentures and their calculated market value are approximately equal.

Fair value of commitments: Loan commitments that are priced on an index plus a margin to a market rate of interest are reported at the carrying value of the loan commitment. Loan commitments on which the committed fixed interest rate is less than the current market rate were insignificant at June 30, 2013 and December 31, 2012.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table summarizes the financial assets and financial liabilities measured at fair value on a recurring basis as of the dates indicated, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value (dollars in thousands):

	Total Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets – June 30, 2013
Investment securities available-for-sale	$	109,955	$	0	$	109,955	$	0
Financial Liabilities – June 30, 2013
Interest Rate Swap Contracts	$	4,556	$	0	$	4,556	$	0
Financial Assets – December 31, 2012
Investment securities available-for-sale	$	118,153	$	0	$	115,243	$	2,910
Financial Liabilities – December 31, 2012
Interest Rate Swap Contracts	$	6,038	$	0	$	6,038	$	0

The investment securities that comprise the balances reflected in the “Significant Unobservable Inputs (Level 3)” as of December 31, 2012 include private issue CMO securities. These securities were sold during the first quarter of 2013 for a net gain of $4,600.

The private issue CMO securities were valued at December 31, 2012 utilizing pricing obtained from the national market pricing services that are utilized in the Company’s bond accounting system. Due to the price volatility associated with these securities, the Company had classified them as level 3. All of these securities were sold in the first quarter of 2013. The roll forward of these securities is listed in the table below.

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The following table below presents a roll-forward of all assets and liabilities and additional information about the financial assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the periods presented (dollars in thousands):

	Balance at January 1,		Included in Earnings			Included in Other Comprehensive Income (Loss)		Purchases, Issuances, (Sales) Settlements			Transfers into (out of) Level 3		Balance at June 30,
Financial Assets – Measured at Fair Value using Level 3 – June 30, 2013
Private Issue CMO Securities	$	2,910	$	(20	)	$	0	$	(2,890	)	$	0	$	0
Total	$	2,910	$	(20	)	$	0	$	(2,890	)	$	0	$	0
Financial Assets – Measured at Fair Value using Level 3 – June 30, 2012
Private Issue CMO Securities	$	2,775	$	(51	)	$	287	$	(252	)	$	0	$	2,759
U.S. Government Sponsored Agency CMO Securities		2,379		(1	)		6		(402	)		0		1,982
Total	$	5,154	$	(52	)	$	293	$	(654	)	$	0	$	4,741

Assets Measured at Fair Value on a Non-recurring Basis

The Company may be required periodically, to measure certain financial assets and financial liabilities at fair value on a nonrecurring basis, that is, the instruments are not measured at fair value on an ongoing basis, but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). These include assets that are measured at the lower of cost or market value that were recognized at fair value below cost at the end of or during the period.

The following table presents the balances of assets and liabilities measured at fair value on a non-recurring basis by caption and by level within the fair value hierarchy as of the dates indicated (dollars in thousands):

	Carrying Value at end of period		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable  Inputs (Level 3)
Financial Assets – June 30, 2013
Collateral dependent impaired loans with specific valuation allowance and/or partial charge-offs	$	1,957	$	0	$	0	$	1,940
Other real estate owned		3,112		0		0		3,112
Total	$	5,069	$	0	$	0	$	5,052
Financial Assets – December 31, 2012
Collateral dependent impaired loans with specific valuation allowance and/or partial charge-offs	$	2,056	$	0	$	0	$	2,269
Other real estate owned		3,112		0		0		3,112
Total	$	5,168	$	0	$	0	$	5,381

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The following table presents the significant unobservable inputs used in the fair value measurements for Level 3 assets and liabilities measured at fair value on a recurring or non-recurring basis as of the dates indicated (dollars in thousands):

	Fair Value at June  30, 2013		Valuation Technique	Significant Unobservable Inputs	Significant Unobservable Input Values
Financial Assets – June 30, 2013
Collateral dependent impaired loans with specific valuation allowance and/or partial charge-offs (2)	$	1,545	Commercial Real Estate building and land appraisals	Real Estate appraisal valuations	$	1,640
		395	Accounts Receivable aging valuation and Inventory liquidation valuation	Accounts Receivable valuation estimates and Inventory liquidation values		429
				Less estimated selling costs		(129)
Total - Collateral dependent impaired loans	$	1,940		Net Valuation	$	1,940
Other real estate owned	$	3,112	Purchase and sale agreement (1)	Contract	$	3,190
				Less estimated selling costs		(78	)
				Net Valuation	$	3,112

(1) The Company has entered into a non-publicly disclosed purchase and sales agreement to sell this parcel of real estate to a private third party. The purchase price was a negotiated amount based on a number of both public and non-public economic factors.

(2) The Company has established a specific valuation allowance of $150,000 to cover the potential for any possible shortfall in the collateral values supporting these loans.

Fair Value of Financial Asset and Liability Table

ASC Topic 825 requires disclosure of the fair value of financial assets and financial liabilities, including those financial assets and financial liabilities that are not measured and reported at fair value on a recurring basis or non-recurring basis. The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is required to develop the estimates of fair value. Accordingly, the estimates presented below are not necessarily indicative of the amounts the Company could have realized in a current market exchange as of June 30, 2013 and December 31, 2012. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. The description of the valuation methodologies used for assets and liabilities measured at fair value and for estimating fair value for financial instruments not recorded at fair value has been described above.

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The table below presents the carrying amounts and fair values of financial instruments as of the dates indicated (dollars in thousands):

					Fair Value Measurements
	Carrying Amount		Fair Value		Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
June 30, 2013
Financial Assets
Investment securities available-for-sale	$	109,955	$	109,955	$	0	$	109,955	$	0
Loans, net		875,615		878,242		0		0		878,242
Financial Liabilities
Certificates of deposit		60,192		60,310		0		60,310		0
Securities sold under agreements to repurchase		29,612		29,612		0		29,612		0
Subordinated debentures		9,283		12,372		0		0		12,372
Interest rate swap contracts		4,556		4,556		0		4,556		0
December 31, 2012
Financial Assets
Investment securities available-for-sale	$	118,153	$	118,153	$	0	$	115,243	$	2,910
Loans, net		846,082		848,146		0		0		848,146
Financial Liabilities
Certificates of deposit		81,336		81,648		0		81,648		0
Securities sold under agreements to repurchase		22,857		22,857		0		22,857		0
Subordinated debentures		9,169		12,372		0		0		12,372
Interest rate swap contracts		6,038		6,038		0		6,038		0

Note 13 - Derivative Financial Instruments

The Company acquired interest rate swap contracts (“swaps”) on July 31, 2012 as a result of the merger with PC Bancorp. The Company has incorporated these instruments into its asset liability program when monitoring its interest rate risk position. All of the interest rate swap contracts are with the same counterparty bank.

At June 30, 2013, the Company had twenty three pay-fixed, receive-variable interest rate contracts that were designed to convert fixed rate loans into variable rate loans. In addition, the Company had one pay-fixed, receive-variable interest rate swap contract at the holding company that was settled during the first quarter of 2013. Twenty one of the twenty three swap contracts are designated as interest rate hedges at June 30, 2013. The interest rate swaps function as economic hedges of the associated fixed rate loans. The outstanding swaps have maturities of up to 10 years.

The location of the asset and liability derivative instruments as of June 30, 2013 and December 31, 2012, and the amount of income, expense and gain or loss recognized for the three and six months ended June 30, 2013 and 2012 are presented in the tables below (dollars in thousands):

	Liability Derivatives
	June 30, 2013		December 31, 2012
Fair Value Hedges
Interest rate contacts notional amount	$	32,458	$	35,990
Derivatives not designated as hedging instruments under ASC 815:
Interest rate swap contracts fair value	$	827	$	1,114
Derivatives designated as hedging instruments under ASC 815:
Interest rate swap contracts fair value		3,729		4,924
Total interest rate contracts fair value	$	4,556	$	6,038
Balance sheet location		Accrued Interest Payable and Other Liabilities		Accrued Interest Payable and Other Liabilities

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	The Effect of Derivative Instruments on the Consolidated Statements of Income
	Three Months Ended June 30,					Six Months Ended June 30,
	2013			2012		2013			2012
Derivatives not designated as hedging instruments:
Interest rate swap contracts – loans
Increase in fair value of interest rate swap contracts	$	155		$	0	$	217		$	0
Payments (paid) on interest rate swap contracts on loans		(69	)		0		(156	)		0
Net increase in other non-interest income		86			0		61			0
Interest rate swap contracts – subordinated debenture
Increase in fair value of interest rate swap contracts		0			0		70			0
Payments (paid) on interest rate swap contracts on subordinated debentures		0			0		(70	)		0
Net increase in other non-interest income		0			0		0			0
Total net increase in other non-interest income	$	86		$	0	$	61		$	0
Derivatives designated as hedging instruments:
Interest rate swap contracts – loans
Increase in fair value of interest rate swap contracts	$	851		$	0	$	1,196		$	0
Decrease in fair value of hedged loans		(521	)		0		(590	)		0
Payment (paid) on interest rate swap contracts on loans		(331	)		0		(633	)		0
Net (decrease) in interest income on loans	$	(1	)	$	0	$	(27	)	$	0

The total amount of interest paid on all interest rate swap contracts by the Company for the three and six months ended June 30, 2013 was $400,000 and $859,000, respectively. The total change for the three and six months ended June 30, 2013 in the fair value of the interest rate swap contracts was an increase in value of $1,006,000 and an increase in value of $1,483,000, respectively, resulting in a decline in the recorded liability of the swap contracts. In addition the net change in the fair value of the hedged loans reflected a decline in value of $521,000 and a decline in value of $590,000, respectively. The net decline in the recorded liability of the interest rate swap contracts and the net decline in the fair value of the hedged loans during the quarter ended June 30, 2013, was the direct result of the increase in the interest rate futures market on both the 5 year and 10 year treasury yields. The increase in the treasury yield increased the value of the swap contracts, thus reducing the negative value of the swap liability recorded by the Company. The interest rate swap contract originally associated with the subordinated debenture that was scheduled to mature in June 2013 was liquidated prior to maturity during the first quarter of 2013. The final payment associated with the liquidation of this swap agreement was completely offset by the liquidation of the fair value liability associated with the interest rate swap contract, resulting in no impact to non-interest income during the first quarter of 2013.

The amount of interest recognized in earnings due to the amount of the interest rate swap contracts that are ineffective was considered insignificant during the first and second quarters of 2013.

Under the interest rate swap contracts, the Company is required to pledge and maintain collateral for the credit support under these agreements. At June 30, 2013, the Company had $4.3 million in certificates of deposit pledged to support the interest rate swap contracts and $2.1 million of due from bank balances with the counterparty to the interest rate swap contracts.

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

See “Cautionary Statement for Purposes of the “Safe Harbor” Provisions of the Private Securities Litigation Reform Act of 1995” below relating to “forward-looking” statements included in this report.

The following is management’s discussion and analysis of the major factors that influenced the results of the operations and financial condition of CU Bancorp, the (“Company”) for the current period. This analysis should be read in conjunction with the audited financial statements and accompanying notes included in the Company’s 2012 Annual Report on Form 10K and with the unaudited financial statements and notes as set forth in this report.

OVERVIEW

CAUTIONARY STATEMENT FOR PURPOSES OF THE “SAFE HARBOR” PROVISIONS OF THE

PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

We have made forward-looking statements in this document about the Company, for which the Company claims the protection of the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995.

A number of factors, many of which are beyond the Company’s ability to control or predict, could cause future results to differ materially from those contemplated by such forward-looking statements. These factors include: (1) changes in general economic, political, or industry conditions and the related credit and market conditions and the impact they have on the Company and its customers, including changes in consumer spending, borrowing and savings habits; (2) the impact on financial markets and the economy of the level of U.S. and European debt; (3) the effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the Board of Governors of the Federal Reserve System; (4) continued delay in the pace of economic recovery and continued stagnant or decreasing employment levels; (5) the effect of the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the rules and regulations to be promulgated by supervisory and oversight agencies implementing the new legislation, taking into account that the precise timing, extent and nature of such rules and regulations and the impact on the Company is uncertain; (6) the impact of revised capital requirements under Basel III; (7) significant changes in applicable laws and regulations, including those concerning taxes, banking and securities; (8) changes in the level of nonperforming assets, charge-offs, other real estate owned and provision expense; (9) changes in inflation, interest rates, and market liquidity which may impact interest margins and impact funding sources; (10) the Company’s ability to attract new employees and retain and motivate existing employees; (11) increased competition in the Company’s markets and our ability to increase market share and control expenses; (12) changes in the financial performance and/or condition of the Company’s customers, or changes in the performance or creditworthiness of our customers’ suppliers or other counterparties, which could lead to decreased loan utilization rates, delinquencies, or defaults and could negatively affect our customers’ ability to meet certain credit obligations; (13) a substantial and permanent loss of client accounts; (14) soundness of other financial institutions which could adversely affect the Company; (15) protracted labor disputes in the Company’s markets; (16) the impact of natural disasters, terrorist activities or international hostilities on the operations of our business or the value of collateral; (17) the effect of acquisitions and integration of acquired businesses and de novo branching efforts; (18) changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or regulatory agencies; (19) the impact of cyber security attacks or other disruptions to the Company’s information systems and any resulting compromise of data or disruptions in service; and (20) the success of the Company at managing the risks involved in the foregoing.

Forward-looking statements speak only as of the date they are made, and the Company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the statements are made.

For a more complete discussion of these risks and uncertainties, see the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 and particularly, Item 1A, titled “Risk Factors.”

Recent Developments

Regulatory Legislation

Dodd-Frank Wall Street Reform and Consumer Protection Act: In July 2010, the Dodd-Frank Financial Reform Bill (“the Wall Street Reform and Consumer Protection Act”) was passed by Congress and signed into law by President Obama. This legislation aims to restore responsibility and accountability to the U.S. financial system and significantly revises and expands the rulemaking, supervisory and enforcement authority of the federal bank regulatory agencies. The numerous rules and regulations that have been promulgated and are yet to be promulgated and finalized under the Dodd-Frank Act are likely to impact our operations and compliance costs.

In general, more stringent capital, liquidity and leverage requirements are expected to impact our business as the Dodd-Frank Act is fully implemented. The federal agencies have issued rules most of which will apply directly to larger institutions with either more than $50 billion in assets or more than $10 billion in assets, such as Federal Reserve regulations for financial institutions deemed systemically significant, Federal Reserve and FDIC rules requiring stress tests and Federal Reserve rules to implement the Volcker Rule. However, requirements and policies imposed on larger institutions may, in some cases, become “best practice” standards for smaller institutions. Therefore, as a result of the changes required by the Dodd-Frank Act, the profitability of our business activities may be impacted and we may be required to make changes to certain of our business practices. These changes may also require us to devote significant management attention and resources to evaluate and make any changes necessary to comply with new statutory and regulatory requirements.

The federal regulatory agencies have issued some of the rules implementing the Dodd-Frank Act and are in the process of additional regulations, studies and reports as required by Dodd-Frank. We cannot predict the extent to which the interpretations and implementation of this wide-ranging federal legislation by regulations and in supervisory policies and practices may affect us. Many of the requirements of Dodd-Frank will

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be implemented over time and most will be subject to regulations to be implemented or which will not become fully effective for several years. There can be no assurance that these or future reforms (such as possible new standards for commercial real estate lending or new stress testing guidance for all banks) arising out of these regulations and studies and reports required by Dodd-Frank will not significantly increase our compliance or other operating costs and earnings or otherwise have a significant impact on our business, financial condition and results of operations. Dodd-Frank will likely result in more stringent capital, liquidity and leverage requirements on us and may otherwise adversely affect our business. For example, the provisions that affect the payment of interest on demand deposits and interchange fees are likely to increase the costs associated with deposits, as well as place limitations on certain revenues those deposits may generate. As a result of the changes required by Dodd-Frank, the profitability of our business activities may be impacted and we may be required to make changes to certain of our business practices. These changes may also require us to invest significant management attention and resources to evaluate and make any changes necessary to comply with new statutory and regulatory requirements.

For a more detailed discussion regarding the Dodd-Frank Wall Street Reform and Consumer Protection Act, see the Company’s December 31, 2012 Form 10K, Part I, Item 1 – Business – Supervision and Regulation – Recent Legislation and Regulation – Dodd-Frank Wall Street Reform and Consumer Protection Act.

Tax Legislation

The State of California recently enacted legislation that significantly modifies and eliminates most of the tax deduction and tax credits that could be utilized by companies operating in California Enterprise Zones. Under the recently enacted legislation, the net interest income deductions on loans made by financial institutions to borrowers that operate in a qualified California Enterprise Zones will be eliminated as a tax deduction for California income taxes effective January 1, 2014. In addition, the hiring tax credits related to the hiring of qualified employees in California Enterprise Zones is also eliminated. The Company was taking advantage of these deduction and tax credits in 2012 and 2013.

The elimination of the net interest income deductions on loans within designated enterprise zones, within the State of California, and the elimination of new tax credits on the hiring on qualified employees that work in an Enterprise Zone by the Company, will increase the Company’s effective tax rate beginning in 2014.

Regulatory Capital

Final Basel III Capital Rule: On July 2, 2013, the Board of Governors of the Federal Reserve System (“Federal Reserve”) approved a final rule (the “Final Rule”) that revises the current capital rules for U.S. banking organizations including the capital rules for the Company and California United Bank. The FDIC adopted the rule as an “interim final rule” on July 9, 2013. The Final Rule implements the regulatory capital reforms recommended by the Basel Committee on Banking Supervision from December 2010, commonly referred to as “Basel III,” as well as additional capital reforms required by the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”). Key reforms include increased requirements for both the quantity and quality of capital held by banks so that they are more capable of absorbing losses and withstanding periods of financial distress, and the establishment of alternative standards of creditworthiness in place of credit ratings. The Company will be required to begin complying with the new capital rules on January 1, 2015 with the transition period for the capital conservation capital buffers (discussed below) on January 1, 2016. It is generally expected that additional regulations will be implemented by bank regulatory agencies relative to capital requirements.

¨ Increased Capital Requirements. Consistent with Basel III and the earlier proposals (the “Proposals”), the Final Rule requires banking organizations to maintain the following minimum risk-based capital ratios, when fully-phased in: (i) a new ratio of common equity Tier 1 capital to risk-weighted assets (common equity Tier 1 capital ratio) of 4.5%; (ii) a ratio of Tier 1 capital to risk-weighted assets (Tier 1 capital ratio) of 6%, increased from 4%; and (iii) a ratio of total capital to risk-weighted assets (total capital ratio) of 8%. The Final Rule also imposes a new leverage ratio of Tier 1 capital to average total consolidated assets of 4% which will apply to the Company.

¨ Capital Buffer Requirement. In addition to the minimum risk-based capital ratios, the Final Rule establishes a capital conservation buffer applicable to all banking organizations that consists of common equity Tier 1 capital equal to at least 2.5% of risk-weighted assets when fully phased in. The phase-in period for the capital conservation capital buffers for all banking organizations will begin on January 1, 2016. The common equity Tier 1 capital conservation buffer for 2016 will be 0.625%, increasing to 1.25% in 2017, increasing to 1.875% in 2018 and increasing to 2.5% in 2019. The minimum common equity Tier 1 capital ratio plus the capital conservation buffer will be 4.5% in 2015, 5.125% in 2016, 5.75% in 2017, 6.375% in 2018 and 7.0% in 2019.

¨ Capital Definitions. The Final Rule revises the definition of capital with an emphasis on the inclusion of common equity Tier 1 capital and establishes strict eligibility criteria for regulatory capital instruments. Deductions from, and adjustments to, capital are generally stricter than under the current capital rules, including with respect to goodwill and other intangibles, mortgage servicing assets, deferred tax assets, and non-significant investments in the capital of unconsolidated financial institutions. The new definitions of regulatory capital and capital ratios are incorporated into the agencies’ prompt corrective action (PCA) framework. In addition, the Final Rule amends the agencies’ current capital rules to improve the methodology for calculating risk-weighted assets to increase risk sensitivity.

¨ Regulatory Capital Treatment of AOCI. Accumulated Other Comprehensive Income (“AOCI”) generally includes the net accumulated unrealized gains and losses on certain assets and liabilities, such as investment securities classified as available-for-sale, that have not been included in net income, yet are included within equity capital under U.S. generally accepted accounting principles. Under the agencies’ current general risk-based capital rules, most components of AOCI are not reflected in a banking organization’s regulatory capital. The Final Rule permits a non-advanced approaches banking organization such as the Company to make a one-time election to “opt out” of including most elements of AOCI in regulatory capital and instead effectively use the existing treatment under the general risk-based capital rules. The AOCI opt-out election must be made in a bank’s first call report or a company’s first FR Y-9 series report, as applicable, that is filed after the banking organization becomes subject to the Final Rule, after January 1, 2015.

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¨ Grandfathering of Certain Trust Preferred Securities. The Final Rule permanently grandfathers non-qualifying capital instruments (such as trust preferred securities and cumulative perpetual preferred stock) issued before May 19, 2010 for inclusion in the Tier 1 capital of banking organizations with total consolidated assets less than $15 billion as of December 31, 2009 such as the Company. As a result the Company’s trust preferred securities will continue to be included in Tier 1 capital.

¨ Additional Deductions from Capital. Banking organizations will continued to be required to deduct goodwill and certain other intangible assets, from Common Equity Tier I Capital. Under the new rule, Mortgage Servicing Assets “MSAs” and Deferred Tax Assets “DTAs” are subject to stricter limitations than those applicable under the current general capital rules. DTAs arising from temporary differences and MSAs are each subject to an individual limit of 10 percent of common equity Tier 1 capital elements and are subject to an aggregate limit of 15 percent of common equity Tier 1 capital elements. The amount of these items in excess of the 10 and 15 percent thresholds are to be deducted from common equity Tier 1 capital. Amounts of DTAs and MSAs that are not deducted due to the threshold limits must be assigned to the 250 percent risk weight.

¨ Changes in Risk-Weightings. The Final Rules have adopted similar risk weighting for residential mortgage loans as existing under the current general risk-based capital rules. The risk weights for residential mortgage loans under the existing general risk-based capital rules, assign a risk weight of either 50 percent (for most first-lien exposures) that are not past due, reported as nonaccrual or restructured, or 100 percent for other residential mortgage exposures. These same risk weights are incorporated into the new Final Rules. Most commercial loans would continue to be risk-weighted at 100 percent; “high volatility” commercial real estate loans would be risk-weighted at 150 percent. Changes are also being made in risk weighting of certain past-due credits, requiring a 150 percent risk weighting for those not collateralized or guaranteed.

The new capital standard rules are to become effective in stages for smaller, less complex banking organizations beginning on January 1, 2015 and being phased in through 2019. Requirements to maintain higher levels of capital and or to maintain higher levels of liquid assets may adversely impact the Company’s net income and return on equity, restrict the ability to pay dividends and require the raising of additional capital.

These new capital rules incorporate selected changes to the Basel III provision contained in the Company’s December 31, 2012 Form 10K, Part I, Item 1 – Business – Bank Regulation – Basel Capital and Liquidity Initiatives.

Capital

As of June 30, 2013, the Company’s Tier 1 leverage ratio, Tier 1 risk-based capital ratio, and Total risk-based capital ratio were 9.85%, 11.69% and 12.60%, respectively As of June 30, 2013, the Bank’s Tier 1 leverage ratio, Tier 1 risk-based capital ratio, and Total risk-based capital ratio were 9.27%, 10.99% and 11.91%, respectively. This compares with the Bank’s Tier 1 leverage ratio, Tier 1 risk-based capital ratio, and Total risk-based capital ratio at June 30, 2012 of 8.57%, 11.98% and 13.20%, respectively. These ratios placed the Bank and CU Bancorp in the “well-capitalized” category as defined by federal regulations, which require corresponding capital ratios of 5%, 6% and 10%, respectively, to qualify for that designation.

Corporate Governance

The following are some of the key corporate governance practices at both the Company and the Bank, which are oriented to ensure that there are no conflicts of interest and that the Company operates in the best interests of shareholders:

• Eight of the Company’s and Bank’s eleven directors at June 30, 2013 are independent outside directors.

• None of the Company’s senior officers and directors have received loans from the Bank.

• There are no loans by the Bank to outside companies controlled by, or affiliated with officers or directors.

• The Company’s Board of Directors has Audit and Risk, and Compensation, Nomination and Governance committees comprised solely of independent outside directors.

Number of Employees

The number of active full-time equivalent employees increased from 167 at December 31, 2012 to 170 at June 30, 2013.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with generally accepted accounting principles (“GAAP”). The preparation of these 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.

Various elements of our accounting policies, by their nature, are inherently subject to estimation techniques, valuation assumptions, and other subjective assessments. We have identified several accounting policies that, due to judgments, estimates, and assumptions inherent in those policies, are essential to an understanding of our consolidated financial statements. These policies relate to the methodologies that determine our allowance for loan loss, the treatment of non-accrual loans, the classification and valuation of investment securities, the valuation of retained interests and servicing assets related to the sales of SBA loans, accounting for and valuation of derivatives and hedging activities, accounting for business combinations, evaluation of goodwill for impairment, and accounting for income taxes.

Our critical accounting policies are described in greater detail in our 2012 Annual Report on Form 10-K, Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates.

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We believe that our most critical accounting policies upon which our financial condition depends, and which involve the most complex or subjective decisions or assessment, are as follows:

Allowance for Loan Loss

We maintain an allowance for loan loss to provide for probable losses in the loan portfolio. Additions to the allowance are made by charges to operating expense in the form of a provision for loan losses. All loans or portions thereof that are judged to be uncollectible will be charged against the allowance while any recoveries would be credited to the allowance. We have instituted loan policies designed primarily for internal use, to adequately evaluate and analyze risk factors associated with our loan portfolio and to enable us to assess such risk factors prior to granting new loans and to assess the sufficiency of the allowance. We conduct an evaluation of the loan portfolio on a quarterly basis. This evaluation includes an assessment of the following factors: the results of any current internal and external loan reviews including any regulatory examination, historical loan loss experience, estimated probable loss exposure on substandard credits, concentrations of credit, value of collateral and any known impairment in the borrowers’ ability to repay and present economic conditions.

Investment Securities

The Company currently classifies its investment securities under the available-for-sale classification. Under the available-for-sale classification, securities can be sold in response to certain conditions, such as changes in interest rates, changes in the credit quality of the securities, when the credit quality of a security does not conform with current investment policy guidelines, fluctuations in deposit levels or loan demand or need to restructure the portfolio to better match the maturity or interest rate characteristics of liabilities with assets. Securities classified as available-for-sale are accounted for at their current fair value rather than amortized historical cost. Unrealized gains or losses are excluded from net income and reported as a separate component of accumulated other comprehensive income (net of taxes) included in shareholders’ equity.

At each reporting date, investment securities are assessed to determine whether there is an other-than-temporary impairment. If it is probable, based on current information, that we will be unable to collect all amounts due according to the contractual terms of a debt security not impaired at acquisition, an other-than-temporary impairment shall be considered to have occurred. Once impairment is considered to have occurred, the credit portion of the loss is required to be recognized in current earnings, while the non-credit portion of the loss is recorded as a separate component of shareholders’ equity. Realized gains and losses on sales of securities are recognized in earnings at the time of sale and are determined on a specific-identification basis. Purchase premiums and discounts are recognized in interest income using the interest method over the terms of the securities. For mortgage-backed securities, the amortization or accretion is based on estimated average lives of the securities. The lives of these securities can fluctuate based on the amount of prepayments received on the underlying collateral of the securities. The amount of prepayments varies from time to time based on the interest rate environment and the rate of turnover of mortgages. The Bank’s investment in FHLB stock and other bank stock is carried at cost and is included in other assets on the accompanying balance sheets.

Derivative Financial Instruments and Hedging Activities

All derivative instruments are recorded on the consolidated balance sheet at fair value. For derivatives designated as fair value hedges, changes in the fair value of the derivative and hedged item related to the hedged risk are recognized in earnings. ASC Topic 815 establishes the accounting and reporting standards requiring that every derivative instrument (including certain derivative instruments embedded in other contracts) be recorded in the consolidated balance sheet as either an asset or liability measured at its fair value. ASC Topic 815 requires that changes in the derivative’s fair value be recognized currently in earnings unless specific hedge accounting criteria are met. Accounting for qualifying hedges allows a derivative’s gains and losses to offset related results on the hedged item in the income statement, and requires that a company must formally document, designate and assess the effectiveness of transactions that receive hedge accounting.

On the date a derivative contract is entered into, the Company will designate the derivative contract as either a fair value hedge (i.e. a hedge of the fair value of a recognized asset or liability), a cash flow hedge (i.e. a hedge of the variability of cash flows to be received or paid related to a recognized asset or liability), or a stand-alone derivative (i.e. an instrument with no hedging designation). For a derivative designated as a fair value hedge, the changes in the fair value of the derivative and of the hedged item attributable to the hedged risk are recognized in earnings. If the derivative is designated as a cash flow hedge, the effective portions of changes in the fair value of the derivative are recorded in other comprehensive income and are recognized in the income statement when the hedged item affects earnings. Changes in the fair value of derivatives that do not qualify for hedge accounting are reported currently in earnings, as other non-interest income.

The Company will discontinue hedge accounting prospectively when: it is determined that the derivative is no longer effective in offsetting change in the fair value of the hedged item, the derivative expires or is sold, is terminated, is exercised or management determines that designation of the derivative as a hedging instrument is no longer appropriate. When hedge accounting is discontinued, the Company will continue to carry the derivative on the consolidated balance sheet at its fair value (if applicable), but will no longer adjust the hedged asset or liability for changes in fair value. The adjustments of the carrying amount of the hedged asset or liability will be accounted for in the same manner as other components of the carrying amount of that asset or liability, and the adjustments are amortized to interest income over the remaining life of the hedged item upon the termination of hedge accounting.

Business Combinations

On July 31, 2012 the Company acquired Premier Commercial Bancorp (“PC Bancorp”) and its subsidiary Premier Commercial Bank, N.A. (“PCB”) headquartered in Anaheim, California through a merger transaction. At the date of acquisition, PC Bancorp had assets of approximately $396.6 million, two offices in Orange County, California, an Anaheim branch and an Irvine/Newport Beach branch. Shareholders of PC Bancorp received 3,721,382 shares equal to approximately $41.87 million in the common stock of CU Bancorp, and PC Bancorp stock option holders received $455,000 in cash in payout of their options.

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The assets and liabilities of PC Bancorp that were acquired in 2012 were accounted for at fair value at the date of acquisition. The Company obtained either a third party analysis or an internal valuation analysis of the fair value of the assets and liabilities acquired. An analysis was performed as of the date of acquisition on loans, investment securities, interest rate swap contracts, SBA loan servicing assets, contractual lease obligations, deferred compensation, deposits and subordinated debentures as of the acquisition date. Balances that were considered to be at fair value at the date of acquisition were cash and cash equivalents, bank owned life insurance, interest rate swap contracts, other assets (interest receivable) and other liabilities (interest payable).

For a detailed analysis of the business combinations accounting related to either PC Bancorp or California Oaks State Bank (“COSB”), see the Company’s December 31, 2012 Form 10K, Footnote 2, Business Combinations.

Income Taxes

Deferred income tax assets and liabilities are computed using the asset and liability method, which recognizes a liability or asset representing the tax effects, based on current tax law, of future deductible or taxable amounts attributable to events that have been recognized in the financial statements. A valuation allowance may be established to the extent necessary to reduce the deferred tax asset to the level at which it is “more likely than not” that the tax assets or benefits will be realized. Realization of tax benefits depends on having sufficient taxable income, available tax loss carrybacks or credits, the reversing of taxable temporary differences and/or tax planning strategies within the reversal period and that current legislative tax law allows for the realization of those tax benefits.

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RESULTS OF OPERATIONS

The following table presents condensed statements of income and related performance data for the periods indicated and the dollar and percentage changes between the periods (dollars in thousands, except per share data):

	Three Months Ended June 30,												Six Months Ended June 30,
	Amounts						Increase (Decrease)						Amounts						Increase (Decrease)
	2013			2012			$			%			2013			2012			$			%
Interest Income	$	13,114		$	7,161		$	5,953			83.1	%	$	25,183		$	14,639		$	10,544			72.0	%
Interest Expense		534			236			298			126.3	%		1,065			475			590			124.2	%
Net Interest Income		12,580			6,925			5,655			81.7	%		24,118			14,164			9,954			70.3	%
Provision for loan losses		1,153			380			773			203.4	%		1,287			380			907			238.7	%
Gain on sale of securities		—			—			—			—	%		5			—			5			100.0	%
Gain on sale of SBA loans		60			—			60			100.0	%		410			—			410			100.0	%
Other non-interest income		1,630			752			878			116.8	%		2,701			1,374			1,327			96.6	%
Non-interest expense		9,281			6,270			3,011			48.0	%		18,590			13,175			5,415			41.1	%
Provision for income taxes		1,515			502			1,013			201.8	%		2,881			952			1,929			202.6	%
Net Income	$	2,321		$	525		$	1,796			342.1	%	$	4,476		$	1,031		$	3,445			334.1	%
Earnings per share
Basic	$	0.22		$	0.08		$	0.14			175.0	%	$	0.43		$	0.15		$	0.28			186.7	%
Diluted	$	0.22		$	0.08		$	0.14			175.0	%	$	0.42		$	0.15		$	0.27			180.0	%
Return on average equity		7.14	%		2.56	%		4.58			178.9	%		7.02	%		2.53	%		4.49			177.5	%
Return on average assets		0.73	%		0.24	%		0.48			200.2	%		0.70	%		0.29	%		0.41			142.9	%
Net interest rate spread		4.06	%		3.23	%		0.83			25.7	%		3.94	%		3.34	%		0.60			18.0	%
Net interest margin		4.25	%		3.37	%		0.88			26.1	%		4.13	%		3.49	%		0.64			18.3	%
Efficiency ratio (1)		65.31	%		81.40	%		(16.1	)		(19.8	)%		69.32	%		84.47	%		(15.2	)		(17.9	)%

(1) Efficiency ratio is defined as non-interest expense divided by the sum of net interest income, gain on sale of SBA loans, and other non-interest income.

Operations Performance Summary

Three Months Ended June 30, 2013 and 2012

The Company reported net income of $2.3 million (or earnings per share of $0.22 and $0.22 on a basic and diluted basis, respectively) for the three months ended June 30, 2013, compared to net income of $525,000 (or earnings per share of $0.08 and $0.08 on a basic and diluted basis, respectively) for the corresponding period in 2012. This represents a $1.8 million or 342% increase between the two periods. The following describes the changes in the major components of the Company’s net income for the three months ended June 30, 2013 compared to the comparable period in 2012.

Net interest income increased by $5.7 million to $12.6 million, an 81.7% increase for the quarter ended June 30, 2013, compared to the second quarter of 2012, primarily due to the acquisition of PC Bancorp, with an increase in interest income of $6.0 million partially offset by an increase in interest expense by $300,000. Interest income increased between the two periods primarily due to an increase in interest income on loans of $6.1 million These increases were partially offset by a decrease of $108,000 in interest income on investment securities, and a decrease of $44,000 from interest earned on deposits in other financial institutions. Interest expense increased between these periods primarily as a result of the acquisition of interest bearing deposits and borrowings from the PC Bancorp acquisition.

The increase in interest income of $6.0 million to $13.1 million for the quarter ending June 30, 2013, compared to the comparable period in 2012 is primarily the result of an increase in average interest earning assets of $362 million coupled with an increase in the overall yields on interest-earning assets of 94 basis points to 4.43%. The increase in average interest earning assets increased interest income by $5.7 million, and the increase in the overall yield of 94 basis points increased interest income by $244,000 for the second quarter of 2013 compared to 2012. All of the increase in interest income for the second quarter of 2013 compared to the second quarter of 2012 was derived from the Company’s loan portfolio.

Loan interest income for the quarter ending June 30, 2013, increased by $6.1 million, or 96%, to $12.5 million compared to the quarter ending June 30, 2012. This increase was attributable to both organic loan growth, as well as to loans acquired as part of the PC Bancorp acquisition. The Company’s overall growth in the average outstanding loans during the second quarter of 2013 compared to 2012 was $412 million and the increase in the loan yield was 17 basis points. The Company acquired $278 million in loans on July 31, 2012 as part of the acquisition. The increase in average loan balances added $5.7 million to loan interest income, as average loan balances increased by $412 million, or 90% between the two periods. For the quarter ended June 30, 2013, the Company’s average quarterly loan portfolio was $872 million, and for the quarter ended June 30, 2012 the average quarterly loan portfolio was $460 million. During the second quarter of 2013, loan interest income was positively impacted by $1.6 million related to the amortization of the fair value adjustments related to loans acquired from both the COSB and PC Bancorp acquisitions. Included in this amortization was approximately $891,000 in amortization of fair value discounts earned on early loan payoffs of acquired loans. The amortization of the fair value adjustments related to the acquired loans of $1.6 million positively impacted the overall quarterly loan yield by 73 basis points, with the $891,000 in amortization of the fair value adjustments on early loan payoffs positively impacting the second quarter loan yield by 41 basis points, and net interest margin by 30 basis points. In addition, during the second quarter of 2013, the Company recorded $162 thousand of interest income related to the recovery of interest income on a non-accrual loan that was paid off. The recovery of this interest income had a positive impact of 6 basis points on the Company’s net interest margin in the second quarter of 2013. The yield on loans in the second quarter of 2013 was also negatively impacted by new loan originations in the low 4% coupon range, coupled with higher rate loans paying off during the quarter.

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Interest income on investment securities declined by $108,000 to $495,000; a 18% decrease for the three months ended June 30, 2013 compared to the same period in 2012. The overall decline in investment securities income was attributable to a decline in the overall yields between the two periods partially offset by a slight increase in the average balances. The investment securities yield declined from 2.33% to 1.86%, a decrease of 47 basis points, which resulted in a decrease of $126,000 in interest income. The increase in the average outstanding balance of $3.1 million increased interest income by approximately $18,000 in the second quarter of 2013 compared to 2012. The decline in the overall yield between the second quarter of 2013 and the same period in 2012 was the result of the loss of higher yielding securities, due to the runoff of principal balances on the higher yielding mortgage backed securities portfolio and the sale of the private issue CMO’s. The reinvestments of funds in new securities between these periods were at substantially lower rates than the yield on securities that were running off between these periods. Also impacting the investment securities yield was the acquisition of the $44.4 million of securities on July 31, 2012 from the PC Bancorp acquisition. The overall yield of the PC Bancorp securities was approximately 1.78% at July 31, 2012, after the fair value adjustment, which negatively impacted the overall yields between periods.

Interest income on interest bearing deposits in other financial institutions decreased by $44,000, or 22%, to $157,000 for the second quarter of 2013 compared to the second quarter of 2012. The decrease in interest income was attributable to the decrease of $53 million or 20% in average balances from the second quarter of 2012 to 2013. The average balance during the second quarter of 2013 was $209 million compared to $262 million in 2012. The overall yield for both 2013 and 2012 was 0.30%. The decrease in the average balances attributed to the entire decrease in the interest income on these short term investments. The decrease in the balances between these periods was the result of the Company deploying more of its funding sources into loans.

Interest expense on interest bearing deposit accounts increased by $177,000, or 84%, to $387,000 for the second quarter of 2013 compared to the second quarter of 2012. The increase in interest expense on deposits was primarily attributable to the increase in the average balances coupled with an increase in the rates paid on deposits acquired from the PC Bancorp acquisition. The overall rate increased from 0.26% in the second quarter of 2012 to 0.29% in the second quarter of 2013, an increase of 3 basis points, which resulted in an increase in interest expense of $45,000. Adding to the increase in deposit interest expense was the increase in the average balances of interest earning deposits between the quarters. Total average interest bearing deposits increased by $205 million or 62%, to $535 million between these two quarters. The increase in the average balances increased interest expense on deposits by $132,000. The increase in average interest bearing deposits was attributable to the organic growth in deposits, as well as the acquisition of $253.8 million from the PC Bancorp acquisition on July 31, 2012.

Interest expense on borrowings increased by $121,000 for the second quarter of 2013 compared to the second quarter of 2012, to a total of $147,000. The primary increase is attributable to the acquisition of subordinated debentures related to the PC Bancorp acquisition. The increase in interest expense associated with the subordinated debentures was $126,000.

The Company recorded a provision for loan losses of $1,153,000 during the second quarter of 2013, compared to a loan loss provision of $380,000 for the second quarter of 2012 The provision for the second quarter of 2013 was deemed necessary due to an overall increase of approximately $41 million in the Company’s organic loan balances from $611 million at March 31, 2013 to $652 million at June 30, 2013 and second quarter 2013 net loan charge-offs of $582,000. The Company has an allowance for loan loss of 1.50% of the outstanding loans that are accounted for at historical cost, which excludes loans that were accounted for at fair value from the COSB acquisition and from the PC Bancorp acquisition. Loans acquired from the both the PC Bancorp and COSB acquisitions were originally accounted for at fair value. During the second quarter of 2013, the Company recorded $616,000 of loan charge-offs and recorded loan recoveries of $34,000, for net charge-offs of $582,000.

Non-interest income increased by $938,000, to $1.7 million for the second quarter ended June 30, 2013, as compared to the second quarter of 2012. This increase was the result of a one-time $250,000 insurance settlement related to the wire fraud of the last quarter of 2012. Other increases include: an increase of $70,000 in SBA loan servicing income, an increase of $60,000 from the gain on sale of SBA loans, an increase of $129,000 in bank owned life insurance income, an increase of $103,000 in deposit account service charges resulting from growth in the number and balances of the Company’s deposit accounts primarily from the PC Bancorp acquisition, an increase of $81,000 in other non-interest loan-related fees, an increase of $87,000 in dividend income, and an increase of $86,000 in derivative income. The fluctuation in net gain on sale of loans is primarily due to originating more commercial and industrial loans which may have a longer horizon to sale than commercial real estate.

Non-interest expense increased by $3.0 million or 48%, to $9.3 million, during the three months ended June 30, 2013, compared to the second quarter of 2012. See the “Non-Interest Expense Table” following this section for a detail listing of current year expenses, their dollar change and percent change compared to the comparable period of the prior year. The increase between the second quarter of 2013 and 2012 is primarily attributable to the acquisition of PC Bancorp. The increase in the second quarter of 2013 is mainly associated with increases in the following: salaries and employee benefits of $2.0 million or 56%, occupancy cost of $220,000 or 28%, data processing costs of $66,000 or 16%, legal and professional of $427,000 or 295%, FDIC deposit assessments of $32,000 or 20%, office service expense of $11,000 or 4% and other operating expense of $412,000 or 61%. The increase in other operating expense reflects an increase of $83,000 is shareholder services, an increase of $49,000 in the amortization of core deposit intangible assets, an increase of $35,000 in director fees, a $40,000 legal settlement, and an increase of $44,000 in software amortization, an increase of $33,000 in advertising and marketing, an increase of $36,000 in loan origination costs, an increase of $ 21,000 in investor relation costs, and an increase of $20,000 on the provision for off balance sheet commitments. These increases were partially offset by a decrease in merger related expenses of $190,000. The increase of $2.0 million in salaries and employee benefits during the second quarter ended June 30, 2013, compared to the same quarter of 2012, reflects an increase in employees associated with the PC Bancorp acquisition consistent with an increase in active full time employees (“FTE”) from 117 to 170 as a result of the merger and larger servicing requirement, in addition to an increase in employee commissions associated with SBA loan sales. The increase in occupancy costs during the second quarter of 2013 was due to the addition of the two PC Bancorp administrative and branch offices acquired from the merger. The increase in legal and professional costs was related to higher legal fees, an increase in internal audit costs and higher consulting fees related directly to two former PC Bancorp executives providing services to the Company beginning in August of 2012. The increase in legal fees was the result of a lawsuit acquired from the PC Bancorp

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acquisition. The increase in the FDIC deposit assessment is related to the acquisition of insurable deposits from the PC Bancorp acquisition, as well as growth in the Company’s organic deposit portfolio. Most of the cost increases are a direct result of the increased size of the Company after the merger with PC Bancorp, with higher staffing levels, more deposit and loan customers, and the establishment and ongoing cost associated with a holding company.

The provision for income tax expense for the second quarter ended June 30, 2013 was $1.5 million, which represents an effective tax rate of approximately 39.5%, compared to income tax expense of $502,000 or an effective tax rate of approximately 48.9% for the second quarter of 2012. The Company’s statutory tax rate is approximately 41.0%. The effective tax rate for the second quarter ending June 30, 2013 is lower than the statutory rate due primarily to income that is excluded for taxes which include net interest income on loans within the State of California designated enterprise zone areas for state income taxes, and income from the increase in the cash surrender value of life insurance policies, that is included in non-interest income. The higher effective rate for the second quarter of 2012 was impacted by certain operating costs that are not tax deductible such as certain merger costs, business entertainment expenses and membership dues. Non-deductible entertainment expense for the second quarter of 2013 compared to 2012 was $31,000 and $24,000, respectively. There was no non-deductible merger cost for the second quarter of 2013, which compares to $190,000 of non-deductible merger cost for the second quarter of 2012. The non-deductible merger costs included legal, accounting and other costs

The State of California recently enacted legislation that becomes effective January 1, 2014 that will eliminate the net interest income deductions on loans within designated enterprise zones, within the State of California. The elimination of the net interest deduction is projected to increase the Company’s effective tax rates beginning in 2014.

Average Balances, Interest Income and Expense, Yields and Rates

Three Months Ended June 30, 2013 and 2012

The following table presents the Company’s average balance sheets, together with the total dollar amounts of interest income and interest expense and the weighted average interest yield/rate for the periods presented. All average balances are daily average balances (dollars in thousands).

	Three Months Ended June 30,
	2013							2012
	Average Balance		Interest Income/ Expense		Average Yield/ Rate (5)			Average Balance		Interest Income/ Expense		Average Yield/ Rate (5)
Interest-Earning Assets:
Loans (1)	$	872,048	$	12,462		5.73	%	$	459,699	$	6,357		5.56	%
Deposits in other financial institutions		208,871		157		0.30	%		262,055		201		0.30	%
Investment Securities (2)		106,706		495		1.86	%		103,638		603		2.33	%
Total interest-earning assets		1,187,625		13,114		4.43	%		825,392		7,161		3.49	%
Non-interest-earning assets		92,770							44,017
Total assets	$	1,280,395						$	869,409
Interest-Bearing Liabilities:
Interest bearing transaction accounts		132,392		64		0.19	%	$	73,978		38		0.21	%
Money market and savings deposits		334,729		249		0.30	%		206,870		132		0.26	%
Certificates of deposit		67,914		74		0.44	%		48,940		40		0.33	%
Total interest bearing deposits		535,035		387		0.29	%		329,788		210		0.26	%
Subordinated debentures		9,599		126		5.26	%		—		—		—	%
Securities sold under agreements to repurchase		27,913		21		0.30	%		28,832		26		0.35	%
Total borrowings		37,512		147		1.57	%		28,832		26		0.35	%
Total interest bearing liabilities		572,547		534		0.37	%		358,620		236		0.26	%
Non-interest bearing demand deposits		566,018							426,989
Total funding sources		1,138,565							785,609
Non-interest-bearing liabilities		11,820							1,676
Shareholders’ equity		130,010							82,124
Total liabilities and shareholders’ equity	$	1,280,395						$	869,409
Excess of interest-earning assets over funding sources	$	49,060						$	39,783
Net interest income			$	12,580						$	6,925
Net interest rate spread (3)						4.06	%						3.23	%
Net interest margin (4)						4.25	%						3.37	%

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(1) Average balances of loans are calculated net of deferred loan fees, but would include non-accrual loans which have a zero yield. The Company had $10.5 million of non-accrual loans as of June 30, 2013 and $5.8 million of non-accrual loans as of June 30, 2012. Amortization of net deferred loan fees less loan costs and the amortization of the fair value adjustments related to the loans acquired thru acquisition are included in total net interest income as of June 30, 2013 and 2012 of $1.9 million and $0.5 million, respectively. $1.6 million of the 2013 amortization is attributable to the loans acquired through acquisition; the amortization of the fair value adjustments related to the PC Bancorp loans was $1.3 million which increased the quarterly net loan yields by 61 basis points and increased the net interest margin by 45 basis points At June 30, 2013, the remaining balance of the loan fair value adjustments acquired through mergers was $13.1 million. Of the $13.1 million, $10.6 million is available to be amortized to loan interest income based on the effective yield method over the life of the loans, while $2.5 million is related to purchase credit impaired loans that are not accretable at June 30, 2013.

(2) Average balances of investment securities are presented on an amortized cost basis and thus do not include the unrealized market gain or loss on the securities.

(3) Net interest rate spread represents the yield earned on average total interest-earning assets less the rate paid on average total interest-bearing liabilities.

(4) Net interest margin is computed by dividing annualized net interest income by average total interest-earning assets.

(5) Annualized

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Net Changes in Average Balances, Composition, Yields and Rates

Three Months Ended June 30, 2013 and 2012

The following table sets forth the composition of average interest-earning assets and average interest-bearing liabilities by category and by the percentage of each category to the total for the periods indicated, including the change in average balance and the percentage change in the average balance, composition, and yield/rate between these respective periods (dollars in thousands):

	Three Months Ended June 30,
	2013								2012								Increase (Decrease)
	Average Balance		% of Total			Average Yield/ Rate			Average Balance		% of Total			Average Yield/ Rate			Average Balance			% of Total			Average Yield/ Rate
Interest-Earning Assets:
Loans	$	872,048		73.4	%		5.73	%	$	459,699		55.7	%		5.56	%	$	412,349			89.7	%		0.17	%
Deposits in other financial institutions		208,871		17.6	%		0.30	%		262,055		31.7	%		0.32	%		(53,184	)		(20.3	%)		0.00	%
Investment Securities		106,706		9.0	%		1.86	%		103,638		12.6	%		2.20	%		3,068			3.0	%		(0.47	%)
Total interest-earning assets	$	1,187,625		100.0	%		4.43	%	$	825,392		100.0	%		3.49	%	$	362,233			43.9	%		0.94	%
Interest-Bearing Liabilities:
Non-interest bearing demand deposits	$	566,018		49.7	%				$	426,989		54.4	%				$	139,029			32.6	%
Interest bearing transaction accounts		132,392		11.6	%		0.19	%		73,978		9.4	%		0.21	%		58,414			79.0	%		(0.02	%)
Money market and savings deposits		334,729		29.4	%		0.30	%		206,870		26.3	%		0.26	%		127,859			61.8	%		0.04	%
Certificates of deposit		67,914		6.0	%		0.44	%		48,940		6.2	%		0.33	%		18,974			38.8	%		0.11	%
Total deposits		1,101,053		96.7	%		0.14	%		756,777		96.3	%		0.11	%		344,276			45.5	%		0.03	%
Subordinated debentures		9,599		0.8	%		5.26	%		—		—	%		—	%		9,599			100.0	%		5.26	%
Securities sold under agreements to repurchase		27,913		2.5	%		0.30	%		28,832		3.7	%		0.35	%		(919	)		(3.2	%)		(0.06	%)
Total Borrowings		37,512		3.3	%		1.57	%		28,832		3.7	%		0.35	%		8,680			30.1	%		1.21	%
Total funding sources	$	1,138,565		100.0	%		0.19	%	$	785,609		100.0	%		0.12	%		352,956			44.9	%		0.07	%

Volume and Rate Variance Analysis of Net Interest Income

Three Months Ended June 30, 2013 and 2012

The following table presents the dollar amount of changes in interest income and interest expense due to changes in average balances of interest-earning assets and interest-bearing liabilities and changes in interest rates. For each category of interest-earning assets and interest-bearing liabilities, information is provided on changes attributable to: (i) changes in volume (i.e. changes in average balance multiplied by prior period rate) and (ii) changes in rate (i.e. changes in rate multiplied by prior period average balance). For purposes of this table, changes attributable to both rate and volume which cannot be segregated have been allocated proportionately based on the absolute dollar amounts of the changes due to volume and rate (dollars in thousands):

	Three Months Ended June 30, 2013 vs. 2012
	Increase Volume			(Decrease) Rate			Due To Total
Interest Income:
Loans	$	5,734		$	371		$	6,105
Deposits in other financial institutions		(44	)		—			(44	)
Investment securities		18			(126	)		(108	)
Total interest income		5,709			245			5,953
Interest Expense:
Interest bearing transaction accounts		33			(7	)		26
Money market and savings deposits		83			34			117
Certificates of deposit		15			19			34
Total deposits		131			46			177
Subordinated debentures		126			—			126
Securities sold under agreements to repurchase		(1	)		(4	)		(5	)
Total Borrowings		125			(4	)		121
Total interest expense		256			42			298
Net Interest Income	$	5,452		$	203		$	5,655

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Operations Performance Summary

Six Months Ended June 30, 2013 and 2012

Net income was $4.5 million (or $0.43 and $0.42 per common share on a basic and diluted basis, respectively) for the six months ended June 30, 2013, compared to net income of $1.0 million (or $0.15 per common share on a basic and diluted basis) for the corresponding period in 2012. This represents a $3.4 million or 334.1% increase for the six months ended June 30, 2013 compared to the six months ended June 30, 2012. The following describes the changes in the major components of the Company’s net income for the six months ended June 30, 2013 compared to the same period in 2012.

Net interest income increased by $10.0 million to $24.1 million, a 70% increase for the six months ended June 30, 2013, compared to the same period in 2012, primarily due to the acquisition of PC Bancorp, with an increase in interest income of $10.5 million partially offset by an increase in interest expense by $590,000. Interest income increased between the two periods primarily due to an increase in interest income on loans of $10.8 million. These increases were partially offset by a decrease of $228,000 in interest income on investment securities, and a decrease of $68,000 from interest earned on deposits in other financial institutions. Interest expense increased between these periods primarily as a result of the interest bearing deposits and borrowings acquired in the PC Bancorp acquisition.

The increase in interest income of $10.5 million to $25.2 million is primarily the result of higher average balances in the interest-earning assets categories for the six months ending June 30, 2013, compared to the same period of 2012, as a result of both the acquisition of loans from the PC Bancorp merger and internal organic loan growth. Average interest earning assets increased by $363 million or 45% between these periods, due to both the PC Bancorp acquisition and organic loan growth. The increase in interest earning assets resulted in an increase to interest income of $10.9 million. This increase was partially offset by a slight decline in the yield on loans of 3 basis points negatively impacting interest income by $127,000 and by a decline of 47 basis points in the investment securities portfolio which negatively impacted interest income by $259,000. The overall yield on interest earning assets increased from 3.61% for the six months ended June 30, 2012 to 4.31% for the comparable period in 2013. This increase was a result of the composition change in the earning asset mix between these two periods. Loans, the highest yielding segment of the Company’s earning assets, accounted for 73% of total interest earning assets in the 2013 period compared to 57% in 2012.

Loan interest income for the six months ending June 30, 2013 increased by $10.8 million, or 83% to $23.9 million, compared to the same period in 2012. This increase was attributable to an increase in the average outstanding loan balances of $392 million, which added $11.0 million to loan interest income, as average loan balances increased to $857 million, an 84% increase over 2012. A significant portion of this increase is attributable to the merger of PC Bancorp. At June 30, 2012, the Company’s loan portfolio was $488 million and by June 30, 2013 the loan portfolio had increased to $885 million, an increase of $397 million, or 81%. Offsetting the increase in interest income from the growth in loan balances was a decline in the yield earned on average loan balances of 3 basis points between the two periods, reducing loan interest income by $127,000. During the first six months of 2013, loan interest income was positively impacted by $2.5 million related to the amortization of the fair value adjustments related to loans acquired from both the COSB and PC Bancorp acquisitions. Included in this amortization was approximately $928,000 in amortization of fair value discounts earned on early loan payoffs of acquired loans. The amortization of the fair value adjustments related to the acquired loans of $2.5 million positively impacted the overall six months 2013 loan yield by 60 basis points, with the $928,000 in amortization of the fair value adjustments on early loan payoffs positively impacting the six months 2013 loan yield by 22 basis points during the first half of 2013. This compares with the first half of 2012, where loan interest income was positively impacted by $451,000 of discount earned as a result of the early payoff of two COSB loans. The Company’s loan yield for both the six months ending June 30, 2013 and 2012, would have been lower had it not been for these transactions on early payoffs.

Interest income on investment securities declined by $228,000 to $979,000, a 19% decrease for the six months ended June 30, 2013 compared to the same period in 2012. This decrease was primarily attributable to a significant decline in the overall yield in the Company’s securities portfolio. The yield on the Company’s investment securities declined from 2.26% for the first six months of 2012 to 1.79% for the first six months of 2013, a decline of 47 basis points, and reduced investment interest income by $259,000 for 2013 compared to 2012. Partially offsetting the decline in the yield was an increase of $3 million in the average balance of investment securities. The slight increase in the average balance of the Bank’s investment securities was the result of purchasing additional investment securities during 2013 to offset the overall runoff within the securities portfolio, this increase resulted in an increase of $31,000 in interest income. The decline in the overall yield between the six month period ending June 30, 2013 and the same period in 2012, was the result of the loss of higher yielding securities due to the runoff of principal balances on the higher yielding mortgage backed securities portfolio and the sale of the private issue CMO’s. The reinvestments of funds in new securities between these periods were at substantially lower rates than the yield on securities that were running off between these periods. Also impacting the investment securities yield was the addition of $44.4 million of securities on July 31, 2012 from the PC Bancorp acquisition. The overall yield of the PC Bancorp securities was approximately 1.78% at July 31, 2012, after the fair value adjustment, which negatively impacted the overall yields between periods

Interest on interest bearing deposits in other financial institutions decreased by $68,000, to $317,000 an 18% decline for the six months ended June 30, 2013, compared to the same period in 2012. This decrease was due to a decrease of $32 million in the average balance, a decline in the yield of 1 basis point, from earning 0.31% for the six months of 2012 to earning 0.30% for 2013 The decrease of $32 million resulted in a decline of $56,000 in interest income, and the decline of 1 basis point resulted in a loss of $12,000 in interest income for the six month period ending June 30, 2013 compared to the comparable period in 2012. The average balance decrease was the result of the Company reducing its liquidity during the first six months of 2013 compared to the comparable period in 2012. The decrease in the average balances maintained in these short term investments was the result of utilizing a portion of the excess liquidity that the Company had been building in preparation of the merger with PC Bancorp and reinvesting the funds into loans. The overall decrease in the average balance in interest bearing deposits in other financial institutions was consistent with the Company’s plan of reducing liquidity subsequent to the merger with PC Bancorp.

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Interest expense on interest bearing deposit accounts increased by $346,000, or 81% to $775,000 for the six months ending June 30, 2013 compared to the same period of 2012. The increase in interest expense on deposits was primarily attributable to an increase in the average deposit balances between these periods and a slight increase in the rate paid on deposits as well. Total average interest bearing deposits increased by $210 million, to $540 million between these six month periods resulting in an increase in interest expense of $268,000. The overall rate paid on the Company’s interest bearing deposit liabilities, increased from 0.26% for the six month period ending June 30, 2012 to 0.29% for the same period of 2013, an increase of 3 basis points which resulted in an increase of interest expense of $78,000. The over-all growth in both the Company’s non-interest bearing deposits, as well as its interest bearing deposits, was the result of the PC Bancorp merger in addition to organic deposit growth, by the targeting of both new and existing business customers by the Company’s relationship managers. The Company experienced a $134 million increase in its six month average non-interest bearing deposits between 2013 and 2012, with the increase attributable to both the PC Bancorp merger and organic growth.

The provision for loan losses increased by $907,000, to a total of $1.3 million for the six months ending June 30, 2013 compared to the same period of 2012. The provision increased the allowance for loan loss as a result of the organic loan growth in the Company’s loan portfolio during the six month period ending June 30, 2013 in addition to replenishment of the allowance from the net charge-offs recorded by the Company of $678,000. The Company’s organic loans increased by approximately $49 million from $603 million at December 31, 2012, to $652 million at June 30, 2013. A portion of the current period’s provision was to rebuild the allowance for net charge offs recorded during the six month period ending June 30, 2013. The Company recorded total charge offs of $737,000, and recoveries of $59,000, for net charge offs of $678,000 for the six months ending June 30, 2013. The Company has an allowance for loan loss for those loans that are accounted for at historical cost (this excludes loans that were accounted for at fair from both the PC Bancorp and COSB acquisitions) of approximately 1.50% of the outstanding loan balance. Total loans outstanding increased by approximately $30 million to $885 million at June 30, 2013 from $855 million at December 31, 2012.

Non-interest income increased by $1.7 million, to $3.1 million, for the six months ended June 30, 2013 as compared to the same period of 2012. This increase was the result of the gain on sale of SBA loans in 2013 of $410,000 with no sales in 2012. The reduction of impairment losses on investment securities between these two periods, with no impairment losses recorded in 2013, compared to losses of $60,000 in 2012. An increase in deposit account service charge income by $208,000 resulting from growth in the number and balances of the Company’s deposit accounts primarily from the PC Bancorp acquisition ,and the growth of other non-interest income of $1.1 million resulting from the following: a one-time $250,000 insurance settlement related to the wire fraud of the fourth quarter of 2012, an increase of $171,000 in SBA loan servicing income, an increase in Bank Owned Life Insurance of $256,000 in 2013 compared to 2012, other non-interest loan related fees of $141,000, an increase in dividend income of $112,000 and derivative income from the non-hedged swap contracts of $61,000. The reduction of the other-than-temporary impairment losses was the result of the sale of the private issue CMO securities in January of 2013. The gain on sale of investment securities in 2013 was from the sale of all of the Company’s private issue CMO securities in the first quarter of 2013. There were no sales of investment securities during the first six months of 2012.

Non-interest expense increased by $5.4 million or 41%, to $18.6 million, during the six months ended June 30, 2013, compared to the same period of 2012. See the “Non-Interest Expense Table” following this section for a detail listing of current year expenses, their dollar change and percent change compared to the comparable period of last year. The increase between the six months ending June 30, 2013 and 2012 is primarily attributable to the acquisition of PC Bancorp in the third quarter of 2012. The following cost increases were experienced during 2013: Salaries and employee benefits increased by $3.8 million or 50%, to $11.3 million, occupancy costs increased by $532,000 or 34% to $2.1 million, data processing increased by $89,000 or 10%, to $961,000, legal and professional costs increased by $694,000 or 180% to $1.1 million, FDIC deposit assessments increased by $137,000 or 46% to $435,000, office services expense increased by $50,000 or 11% to $525,000, and other operating expenses increased by $690,000 or 49%. These increases were offset by a decline in merger related expenses of $295,000 or 87% to $43,000, and OREO valuation write-downs and expenses declined by $249,000 or 84% to $49,000. The Company’s salaries and employee benefit cost increase of $3.8 million was primarily due to the increase in the number of full time employees from 121 as of June 30, 2012 to 170 as of June 30, 2013 as a result of the PC Bancorp merger and a larger servicing requirement, in addition to an increase in employee commissions associated with SBA loan sales. In addition, the Company recorded higher bonus and incentive compensation in the first six months of 2013 compared to the same period in 2012 commensurate with the increase in staffing levels in 2013. The increase in occupancy costs during the second quarter of 2013 was due to the addition of the two PC Bancorp administrative and branch offices acquired from the merger. The primary increase in data processing expense is due to the increase in the number of customers that the Company is servicing with the cost associated with maintaining a larger number of accounts that have resulted from the PC Bancorp merger. The change in the merger related expenses between 2013 and 2012 reflect the pending merger with PC Bancorp in 2012, with only a small amount of residual cost of the PC Bancorp merger incurred in 2013. The decline in the OREO expense during 2013 was the result of the Company taking a $232,000 valuation write-down on its one OREO property in the first quarter of 2012 and no associated write-downs in 2013. The increase in the FDIC deposit assessment is related to the acquisition of insurable deposits from the PC Bancorp acquisition, as well as growth in the Company’s organic deposit portfolio. The increase in legal and professional cost between 2013 and 2012 was related to higher legal fees, an increase in internal audit costs and higher consulting fees related directly to two former PC Bancorp executives providing services to the Company beginning in August of 2012. The increase in legal fees was the result of a lawsuit acquired from the PC Bancorp acquisition. The increase in other operating expense of $690,000 consisted of the following: an increase of $140,000 in shareholder services, an increase of $98,000 in the amortization of core deposit intangible assets, an increase of $71,000 in director fees, a $40,000 legal settlement, an increase of $88,000 in software amortization, an increase of $52,000 in advertising and marketing, an increase of $69,000 in loan origination costs, an increase of $ 44,000 in investor relation costs, and an increase of $34,000 in the provision for off balance sheet commitments. Most of the cost increases are a direct result of the increase in the size of the Company as a result of the merger with PC Bancorp, having higher staffing levels, more deposit and loan customers, and the establishment and cost associated with a holding company.

The provision for income tax expense for the six months ended June 30, 2013 was $2.9 million which represents an effective tax rate of approximately 39.2%, compared to income tax expense of $952,000 or an effective tax rate of approximately 48.0% for the six month period in 2012. The Company’s statutory tax rate is approximately 41.0%. The effective tax rate for the six months ending June 30, 2013 is lower than the statutory rate due primarily to income that is excluded for taxes which include net interest income on loans within the State of California designated enterprise zone areas for state income tax, and income from the increase in the cash surrender value of life insurance policies that is included in non-interest

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income. The higher effective rate for the six months of 2012 was impacted by certain operating costs that are not tax deductible such as certain merger costs, business entertainment expenses and membership dues. Non-deductible entertainment expense for the six months ended June 30, 2013 compared to 2012 was $61,000 and $60,000, respectively. Non-deductible merger costs for the six months ended June 30, 2013, compared to 2012 was $16,000 and $337,000, respectively. The non-deductible merger costs included legal, accounting and other costs.

The State of California recently enacted legislation that becomes effective January 1, 2014 that will eliminate the net interest income deductions on loans within designated enterprise zones, within the State of California. The elimination of the net interest deduction will result in an increase in Company’s effective tax rates beginning in 2014.

Average Balances, Interest Income and Expense, Yields and Rates

Six months ended June 30, 2013 and 2012

The following table presents the Company’s average balance sheets, together with the total dollar amounts of interest income and interest expense and the weighted average interest yield/rate for the periods presented. All average balances are daily average balances (dollars in thousands).

	Six Months Ended June 30,
	2013							2012
	Average Balance		Interest Income/ Expense		Average Yield/ Rate (5)			Average Balance		Interest Income/ Expense		Average Yield/ Rate (5)
Interest-Earning Assets:
Loans (1)	$	857,224	$	23,887		5.62	%	$	464,732	$	13,047		5.65	%
Deposits in other financial institutions		211,520		317		0.30	%		243,620		385		0.31	%
Investment Securities (2)		109,537		979		1.79	%		106,662		1,207		2.26	%
Total interest-earning assets		1,178,281		25,183		4.31	%		815,014		14,639		3.61	%
Non-interest-earning assets		92,776							44,649
Total assets	$	1,271,057						$	859,663
Interest-Bearing Liabilities:
Interest bearing transaction accounts		125,416	$	116		0.19	%	$	72,923	$	78		0.22	%
Money market and savings deposits		342,502		509		0.30	%		207,445		267		0.26	%
Certificates of deposit		72,057		150		0.42	%		49,403		84		0.34	%
Total interest bearing deposits		539,975		775		0.29	%		329,771		429		0.26	%
Subordinated debentures		9,400		250		5.36	%		—		—		—	%
Securities sold under agreements to repurchase		26,889		40		0.30	%		26,088		46		0.35	%
Total borrowings		36,289		290		1.61	%		26,088		46		0.35	%
Total interest bearing liabilities		576,264		1,065		0.37	%		355,859		475		0.27	%
Non-interest bearing demand deposits		553,808							419,594
Total funding sources		1,130,072							775,453
Non-interest-bearing liabilities		12,328							2,439
Shareholders’ equity		128,657							81,771
Total liabilities and shareholders’ equity	$	1,271,057						$	859,663
Excess of interest-earning assets over funding sources	$	48,209						$	39,561
Net interest income			$	24,118						$	14,164
Net interest rate spread (3)						3.94	%						3.34	%
Net interest margin (4)						4.13	%						3.49	%

(1) Average balances of loans are calculated net of deferred loan fees, but would include non-accrual loans which have a zero yield. The Company had $10.5 million of non-accrual loans as of June 30, 2013 and $5.8 million of non-accrual loans as of June 30, 2012. Amortization of net deferred loan fees less loan costs and the amortization of the fair value adjustments related to loans acquired through acquisition are included in total net interest income as of June 30, 2013 and 2012 of $3.1 million and $1.1 million, respectively. $2.5 million of the 2013 amortization is attributable to the loans acquired through acquisition; the PC Bancorp amortization of the fair value adjustment was $2.2 million which increased the loan yield by 52 basis points and increased the net interest margin by 38 basis points. At June 30, 2013, the remaining balance of the loan fair value adjustments acquired through mergers was $13.1 million. Of the $13.1 million, $10.6 million is available to be amortized to loan interest income based on the effective yield method over the life of the loans, while $2.5 million is related to purchase credit impaired loans that are not accretable at June 30, 2013.

(2) Average balances of investment securities are presented on an amortized cost basis and thus do not include the unrealized market gain or loss on the securities.

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(3) Net interest rate spread represents the yield earned on average total interest-earning assets less the rate paid on average total interest-bearing liabilities.

(4) Net interest margin is computed by dividing annualized net interest income by average total interest-earning assets.

(5) Annualized

Net Changes in Average Balances, Composition, Yields and Rates

Six months ended June 30, 2013 and 2012

The following table sets forth the composition of average interest-earning assets and average interest-bearing liabilities by category and by the percentage of each category to the total for the periods indicated, including the change in average balance and the percentage change in the average balance, composition, and yield/rate between these respective periods (dollars in thousands):

	Six Months Ended June 30,
	2013								2012								Increase (Decrease)
	Average Balance		% of Total			Average Yield/ Rate			Average Balance		% of Total			Average Yield/ Rate			Average Balance			% of Total			Average Yield/ Rate
Interest-Earning Assets:
Loans	$	857,224		72.8	%		5.62	%	$	464,732		57.0	%		5.65	%	$	392,492			84.5	%		(0.03	)%
Deposits in other financial institutions		211,520		18.0	%		0.30	%		243,620		29.9	%		0.31	%		(32,100	)		(13.2	)%		(0.01	)%
Investment Securities		109,537		9.3	%		1.79	%		106,662		13.1	%		2.26	%		2,875			2.7	%		(0.47	)%
Total interest-earning assets	$	1,178,281		100.0	%		4.31	%	$	815,014		100.0	%		3.61	%	$	363,267			44.6	%		0.70	%
Interest-Bearing Liabilities:
Non-interest bearing demand deposits	$	553,808		49.0	%				$	419,594		54.1	%					134,214			32.0	%
Interest bearing transaction accounts		125,416		11.1	%		0.19	%		72,923		9.4	%		0.22	%		52,493			72.0	%		(0.03	)%
Money market and savings deposits		342,502		30.3	%		0.30	%		207,445		26.8	%		0.26	%		135,058			65.1	%		0.04	%
Certificates of deposit		72,057		6.4	%		0.42	%		49,403		6.4	%		0.34	%		22,654			45.9	%		0.08	%
Total deposits		1,093,783		96.8	%		0.14	%		749,365		96.6	%		0.12	%		344,418			63.7	%		0.02	%
Subordinated debentures		9,400		0.8	%		5.36	%		—		—	%		—	%		9,400			100.0	%		5.36	%
Securities sold under agreements to repurchase		26,889		2.4	%		0.30	%		26,088		3.4	%		0.35	%		801			3.1	%		(0.05	)%
Total Borrowings		36,289		3.2	%		1.61	%		26,088		3.4	%		0.35	%		10,201			39.1	%		1.26	%
Total funding sources	$	1,130,072		100	%		0.19	%	$	775,453		100	%		0.12	%	$	354,619			45.7	%		0.07	%

Volume and Rate Variance Analysis of Net Interest Income

Six Months Ended June 30, 2013 and 2012

The following table presents the dollar amount of changes in interest income and interest expense due to changes in average balances of interest-earning assets and interest-bearing liabilities and changes in interest rates. For each category of interest-earning assets and interest-bearing liabilities, information is provided on changes attributable to: (i) changes in volume (i.e. changes in average balance multiplied by prior period rate) and (ii) changes in rate (i.e. changes in rate multiplied by prior period average balance). For purposes of this table, the change in one day less accrual for the six months of 2013 compared to 2012 and changes attributable to both rate and volume which cannot be segregated have been allocated proportionately based on the absolute dollar amounts of the changes due to volume and changes due to rate (dollars in thousands):

	Volume			Rate			Total
Interest Income:
Loans	$	10,967		$	(127	)	$	10,840
Deposits in other financial institutions		(56	)		(12	)		(68	)
Investment securities		31			(259	)		(228	)
Total interest income		10,942			(398	)		10,544
Interest Expense:
Interest bearing transaction accounts		56			(18	)		38
Money market and savings deposits		174			68			242
Certificates of deposit		38			28			66
Total deposits		268			78			346
Federal Home Loan Bank borrowings		250			—			250
Securities sold under agreements to repurchase		1			(7	)		(6	)
Total borrowings		251			(7	)		244
Total interest expense		519			71			590
Net Interest Income	$	10,423		$	(469	)	$	9,954

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Non-interest Expense

The following table sets forth certain information with respect to the Company’s non-interest expense for the periods indicated (dollars in thousands):

	Three Months Ended June 30,				Increase (Decrease)						Six Months Ended June 30,				Increase (Decrease)
	2013		2012		$			%			2013		2012		$			%
Salaries and employee benefits	$	5,438	$	3,404	$	2,206			59.5	%	$	10,855	$	7,077	$	3,756			49.8	%
Stock based compensation expense		217		221		(4	)		(1.8	)%		475		486		(11	)		(2.3	)%
Occupancy		1,019		799		220			27.5	%		2,083		1,551		532			34.3	%
Data processing		479		413		66			16.0	%		961		872		89			10.2	%
Legal and professional		572		145		427			294.5	%		1,079		385		694			180.3	%
FDIC deposit assessment		189		157		32			20.4	%		435		298		137			46.0	%
Merger related expenses		—		190		(190	)		(100.0	)%		43		338		(295	)		(87.3	)%
OREO valuation write-downs and expenses		23		20		3			15.0	%		49		298		(249	)		(83.6	)%
Office services expense		259		248		11			4.44	%		525		475		50			10.5	%
Other operating expenses		1,085		673		412			61.2	%		2,085		1,395		690			49.5	%
Total Non-Interest Expense	$	9,281	$	6,270	$	3,011			48.0	%	$	18,590	$	13,175	$	5,415			41.1	%

Non-interest expense for the three months ended June 30, 2013 increased by $3.0 million to $9.3 million compared to the second quarter in 2012. This was primarily due to the merger of PC Bancorp in the third quarter of 2013. Almost all major cost categories increased due to the increase in staffing, office locations, occupancy costs, and data processing that resulted from the merger. For a more detailed discussion of these fluctuations, see the Operations Performance Summary – Three Months Ended June 30, 2013 and 2012.

Non-interest expense for the six months ended June 30, 2013 increased by $5.4 million to $18.6 million compared to the six month period in 2012. This was primarily due to the merger of PC Bancorp in the third quarter of 2013. Almost all major cost categories increased due to the increase in staffing, office locations, occupancy costs, and data processing that resulted from the merger. For a more detailed discussion of these fluctuations, see the Operations Performance Summary – Six Months Ended June 30, 2013 and 2012.

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FINANCIAL CONDITION

Balance Sheet Analysis

The following table presents balance sheets as of the dates indicated and the dollar and percentage changes between the periods (dollars in thousands):

	June  30, 2013			December 31, 2012			Increase (Decrease)
							$			%
Assets
Cash and cash equivalents	$	189,798		$	182,896		$	6,902			3.8	%
Certificates of deposit in financial institutions		28,304			27,006			1,298			4.8	%
Investment securities available-for-sale, at fair value		109,955			118,153			(8,198	)		(6.9	)%
Loans:
Loans		885,027			854,885			30,142			3.5	%
Allowance for loan loss		(9,412	)		(8,803	)		(609	)		6.9	%
Net loans		875,615			846,082			29,533			3.5	%
Goodwill		12,292			12,292			—			—	%
Bank owned life insurance		20,891			20,583			308			1.5	%
Other assets		41,806			42,625			(819	)		(1.9	)%
Total assets	$	1,278,661		$	1,249,637		$	29,024			2.3	%
Liabilities
Deposits:
Non-interest bearing demand deposits	$	571,045		$	543,527		$	27,518			5.0	%
Interest bearing transaction accounts		127,585			112,747			14,838			13.2	%
Money market and savings deposits		338,885			340,466			(1,581	)		(0.5	)%
Certificates of deposit		60,192			81,336			(21,144	)		(26.0	)%
Total deposits		1,097,707			1,078,076			19,631			1.8	%
Securities sold under agreements to repurchase		29,612			22,857			6,755			29.6	%
Subordinated debentures, net		9,283			9,169			144			1.2
Accrued interest payable and other liabilities		12,492			13,912			(1,420	)		(10.2	)%
Total liabilities		1,149,094			1,124,014			25,080			2.2	%
Shareholders’ Equity
Common stock		118,938			118,885			53			0.1	%
Additional paid-in capital		7,275			7,052			223			3.2	%
Retained earnings (deficit)		2,768			(1,708	)		4,476			(262.1	)%
Accumulated other comprehensive income		586			1,394			(808	)		(58.0	)%
Total shareholders’ equity		129,567			125,623			3,944			3.1	%
Total liabilities and shareholders’ equity	$	1,278,661		$	1,249,637		$	29,024			2.3	%

Total assets increased by $29 million or 2.3%, during the six month period ended June 30, 2013. Funding sources for this asset growth came primarily from two sources. The largest source was through the growth in the Company’s deposit base of $20 million, and the second source was from the growth of balances maintained in securities sold under agreements to repurchase of $7 million. The growth from deposit balances came primarily from the growth in non-interest bearing demand deposits of $28 million offset by an overall decline in interest bearing deposits of $8 million.

During the six months ended June 30, 2013, the Company had approximately $48 million of net organic loan growth from new relationships, which was partially offset by $18 million in loan run-off from acquired portfolios (from PC Bancorp and COSB). Total liabilities increased by $25 million during the six months ended June 30, 2013, due primarily to increases in non-interest bearing deposits of $28 million.

While total deposit growth for the six months ended June 30, 2013, was $20 million, the growth in lower cost core deposits was consistent with the Company’s overall deposit liability strategy of building the Company’s lower cost core deposit base as non-interest bearing demand deposits, interest bearing transaction accounts and money market and savings deposits increased by $41 million and certificates of deposits decreased by $21 million. The decline in certificates of deposits is primarily related to certificates acquired from PC Bancorp. Although money market deposits were relatively flat between the periods, the organic growth of $18 million in money market accounts was offset by the decline in accounts acquired from PC Bancorp.

The Company, as part of its overall business plan, has been focused on attracting lower cost deposits. In addition, the Company continues to evaluate and take advantage of opportunities to reduce PC Bancorp’s higher cost deposits as part of the Company’s ongoing efforts to maintain a low cost deposit base.

Shareholders’ equity increased by a net $4 million to $130 million, during the six months ended June 30, 2013, primarily due to net income of $4.5 million, which was partially offset by a decline in accumulated other comprehensive income of $808,000 for the period. The decrease in accumulated other comprehensive income, which consists of the net unrealized gains and losses in the Company’s investment securities portfolio net

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of tax, was negatively impacted by the increase in the 6 month through 10 year Treasury yields from December 31, 2012 to June 30, 2013. The increase in the Treasury yields between the periods presented directly affected and reduced the amount of unrealized gains on the Company’s investment securities portfolio. The duration of the investment securities portfolio at June 30, 2013 is approximately 2.8 years.

Lending

The Company’s lending continues to be originated primarily through direct contact with borrowers through the Company’s relationship managers and/or executive officers. The Company’s net loans increased by $30 million for the six months ended June 30, 2013. The growth in the Company’s organic loan portfolio was approximately $48 million during the first six months of 2013, generally consistent with the mix and type of properties at December 31, 2012. The Company had 31 commercial banking relationship managers and 3 commercial real estate relationship managers at June 30, 2013. This compares with 35 commercial banking relationship managers and 3 commercial real estate relationship managers at December 31, 2012. The Company’s loans acquired as part of both the COSB and PC Bancorp acquisition declined by approximately $18 million during the six months ending June 30, 2013. The Company’s credit approval process includes an examination of the collateral, cash flow, and debt service coverage of the loan, as well as the financial condition and credit references of the borrower. The Company’s senior management is actively involved in its lending activities and collateral valuation and review process and the Company obtains independent third party appraisals of real property securing commercial real estate loans, as required by applicable federal and state laws and regulations. There is also a loan committee comprised of senior management that reviews problem loans. The Company’s commercial and industrial line of credit utilization was approximately 48% as of June 30, 2013 and 50% as of December 31, 2012. The decline in the credit utilization at the end of the first six months of 2013 was expected because of the higher line utilization rate at year-end. The Company experienced a spike in line utilization at December 31, 2012 as a result of several businesses paying bonuses and commissions in December versus January or February, to take advantage of the lower payroll taxes, as well as lower California personal income tax rates in 2012 versus 2013. Line utilization was also impacted by federal fiscal cliff concerns.

The Company believes that it manages credit risk closely in its loan portfolio and uses a variety of policy guidelines and analytical tools to achieve its asset quality objectives.

Allowance for Loan Loss

The allowance for loan loss increased by $609,000, to $9.4 million during the six months ended June 30, 2013, due to a provision for loan losses of $1.3 million offset by $678,000 of net loan charge-offs during the period. The Company recorded loan charge-offs of $737,000 and loan recoveries of $59,000 during the six months ended June 30, 2013. The allowance for loan loss as a percentage of total loans was 1.06% at June 30, 2013 and 1.03% at December 31, 2012. The allowance for loan loss as a percentage of loans (excluding loan balances and the related allowance for loan loss on loans acquired through acquisition) was 1.50% and 1.54%, respectively, at June 30, 2013 and December 31, 2012. The decrease in the allowance ratio was directly attributable to improvements in the economic conditions within the Company’s markets.

The Company’s management considered the following factors in evaluating the allowance for loan loss at June 30, 2013:

• General economic and business conditions affecting the key lending areas of the Company

• Economic and business conditions of areas outside the lending areas, if any

• Credit quality trends (including trends in non-performing loans expected to result from existing conditions)

• Collateral values

• Loan volumes and concentrations

• Seasoning of the loan portfolio

• Specific industry conditions within portfolio segments

• Recent loss experience in particular segments of the portfolio (number and dollar amount of loan charge offs during the quarter)

• Duration of the current business cycle

• Company regulatory examination results and findings of the Company’s external credit review examiners

• The number of loans being upgraded and or downgraded

• The amount and status of the non-accrual loans at June 30, 2013

• The dollar amount and number of charge-offs incurred in the first six months of 2013

• The overall growth and composition of the loans, including the current loan classifications

• Changes to the overall economic conditions within the markets in which the Company makes loans

• Concentrations within its loan portfolio, as well as risk conditions within its commercial and industrial loan portfolio

• The remaining fair value adjustments on loans acquired through acquisition, with special attention to the fair value adjustments associated with the purchased credit impaired loans

Management has considered various material elements of potential risk within the loan portfolio, including classified credits, pools of loans with similar characteristics, economic factors, trends in the loan portfolio and modifications and changes in the Company’s lending policies, procedures and underwriting criteria. In addition, management recognized the potential for unforeseen events to occur when evaluating the qualitative factors in all categories of its analysis.

The monitoring of the Company’s loan portfolio results in a continuous update to the loan grade each loan is assigned which reflects the relative level of risk in the transaction. Allocations of higher levels of risk have been assessed higher reserve requirements particularly for loans falling within the criticized and classified categories. The risk factors utilized by the Company have been established based on management’s years of historical experience at other lending institutions based on similar business lending models. The risk factors utilized by the Company are adjusted to reflect current circumstances.

The Company also allocates reserves in accordance with the requirements of ASC 310, Receivables and the evaluation of impaired loans.

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The Company is utilizing migration analysis when reviewing the Company’s past loan loss history. The migration analysis is adjusted for loan history, as well as current economic conditions, and weighted experience over the last eight quarters. In addition to loan loss and credit experience for banks within the Company’s local market area, management considers the allowance of its peer group, including their historical loan loss experience, as well as changes within their loan portfolio, in evaluating the adequacy of the allowance for loan loss for the Company. Management also takes into consideration the losses and charge-offs experienced during the current year. A great deal of focus has been given to the earnings and cash flows of the Company’s borrowers and their capacity to repay their contractual obligation. In considering all of the above factors, management believes that the allowance for loan loss as of June 30, 2013 is adequate.

Although the Company maintains its allowance for loan loss at a level which it considers adequate to provide for potential losses, there can be no assurance that such losses will not exceed the estimated amounts, thereby adversely affecting future results of operations.

The following table is a summary of the activity for the allowance for loan loss as of the dates and for the periods indicated (dollars in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
Allowance for loan loss at beginning of period	$	8,841		$	7,512		$	8,803		$	7,495
Provision for loan losses		1,153			380			1,287			380
Net (charge-offs) recoveries:
Charge-offs		(616	)		(586	)		(737	)		(589	)
Recoveries		34			23			59			43
Total net (charge-offs) recoveries		(582	)		(563	)		(678	)		(546	)
Allowance for loan loss at end of period	$	9,412		$	7,329		$	9,412		$	7,329
Net (charge-offs) recoveries to average loans		(0.07	)%		(0.12	)%		(0.08	)%		(0.12	)%

	June 30, 2013			December 31, 2012
Allowance for loan loss to total loans		1.06	%		1.03	%
Allowance for loan loss to total loans accounted for at historical cost, which excludes loan balances and the related allowance for loans acquired through acquisition		1.50	%		1.54	%
Allowance for loan loss to total non-accrual loans		89.9	%		83.6	%
Allowance for loan loss to non-accrual loans, excluding non-accrual purchased loans acquired through acquisition and related allowance		251.0	%		375.6	%

The following is a summary of information pertaining to impaired loans, excluding purchased credit impaired loans, for the dates indicated (dollars in thousands):

	June 30, 2013		December 31, 2012
Impaired loans with a valuation allowance	$	695	$	208
Impaired loans without a valuation allowance		6,485		5,376
Total impaired loans (1)	$	7,180	$	5,584
Valuation allowance related to impaired loans	$	9	$	11
Loans on non-accrual status (2)	$	10,469	$	10,530
Troubled debt restructured loans	$	4,006	$	5,707

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Total nonaccrual loans were $10.5 million, or 1.18% of total loans, at June 30, 2013, compared with $10.5 million, or 1.23% of total loans, at December 31, 2012. Excluding acquired loans, total nonaccrual loans were $3.8 million, or 0.42% of total loans at June 30, 2013, compared with $2.3 million, or 0.27% of total loans at December 31, 2012. Nonaccrual loans originated by the Company at June 30, 2013, were primarily attributable to two commercial and industrial loans with an aggregate outstanding balance of $2.1 million. One of these loans had a partial charge-off in the second quarter of 2013. Neither of these loans was past due as of March 31, 2013. One of these loans is located in Orange County and the other is located in Los Angeles County.

	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012
Average recorded investment in impaired loans	$	6,487	$	3,230	$	5,890	$	3,176
Interest foregone on impaired loans	$	141	$	86	$	230	$	160
Cash collections applied to reduce principal balance	$	110	$	22	$	152	$	43
Interest income recognized on cash collections	$	0	$	0	$	0	$	0

(1) This balance excludes purchased credit impaired loans. Purchased credit impaired loans were acquired through acquisitions and had evidence of deterioration in credit quality prior to acquisition. The fair value of purchased credit impaired loans as of the date of acquisition includes estimates of credit losses.

(2) This balance includes loans acquired with deteriorated credit quality through acquisition of $3.3 million and $8.2 million as of June 30, 2013 and December 31, 2012, respectively.

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LIQUIDITY

The Company’s primary long term sources of funds from the liability side of the balance sheet have historically been growth in non-interest bearing and interest bearing deposits from its core customers. Additional sources of funds from the Company’s asset side of the balance sheet have included Federal Funds Sold, Interest-Earning Deposits with Other Financial Institutions, balances maintained with the Federal Reserve Bank, Short Term Certificates of Deposit in Other Financial Institutions and payments of principal and interest on loans and investment securities. While maturities and scheduled principal amortization on loans are a reasonably predictable source of funds, deposit flows and loan prepayments are greatly influenced by the level of interest rates, economic conditions and competition.

As an additional source of liquidity, the Company maintains credit facilities, “Fed Funds Borrowing Lines,” of $47 million with its primary correspondent banks for the purchase of overnight Federal funds. The lines are subject to availability of funds and have restrictions as to the number of days and length used during a month, $5 million of these credit facilities require the pledging of investment securities collateral.

The Company has established a secured credit facility with the FHLB of San Francisco which allows the Company to borrow up to 25% of the Bank’s total assets, which equates to a credit line of approximately $316 million at June 30, 2013. The Company currently has no outstanding borrowings with the FHLB. As of June 30, 2013, the Company had $748 million of loan collateral pledged with the FHLB which provides $288 million in borrowing capacity. Any amount of borrowings in excess of the $288 million would require the Company to pledge additional collateral. In addition the Company must maintain a certain investment in the common stock of the FHLB. The Company’s investment in the common stock of the FHLB is $4.7 million at June 30, 2013. This level of capital would allow the Company to borrow up to $101 million. Any advances from the FHLB in excess of the $101 million would require additional purchases of FHLB common stock. The Company had no securities pledged with the FHLB at June 30, 2013.

The Company maintains a secured credit facility with the Federal Reserve Bank of San Francisco (“FRB”) which is collateralized by investment securities pledged with the FRB. At June 30, 2013, the Company’s available borrowing capacity was $4.2 million.

The Company maintains investments in short term certificates of deposit with other financial institutions, with an average remaining maturity of approximately six months, with various balances maturing monthly. The Company had balances of $28 million and $27 million at June 30, 2013 and December 31, 2012, respectively. At June 30, 2013, $4.3 million of the Company’s certificates of deposit with other financial institutions were pledged as collateral as credit support for the interest rate swap contracts and are not available as a source of liquidity.

As of June 30, 2013, the Company’s primary overnight source of liquidity consisted of cash and cash equivalents of $190 million which compared to $183 million at December 31, 2012. Of the $190 million in cash and cash equivalents at June 30, 2013, approximately $169 million was with the Federal Reserve Bank.

The Company’s commitments to extend credit (off-balance sheet liquidity risk) are agreements to lend funds to customers as long as there are no violations as established in the loan agreement. Many of the commitments are expected to expire without being drawn upon, and as such, the total commitment amounts do not necessarily represent future cash requirements. Financial instruments with off-balance sheet risk for the Company include both undisbursed loan commitments, as well as undisbursed letters of credit. The Company’s exposure to extend credit was $302 million and $295 million at June 30, 2013 and December 31, 2012, respectively.

The Holding Company liquidity on a stand-alone basis was $1.4 million and $1.5 million, in cash on deposit at the Bank, at June 30, 2013 and December 31, 2012, respectively. Management believes this amount of cash is currently sufficient to fund the holding company’s cash flow needs over the next twelve to twenty four months.

DIVIDENDS

To date, the Company has not paid any cash dividends. Payment of stock or cash dividends in the future will depend upon earnings, liquidity, financial condition and other factors deemed relevant by our Board of Directors. Notification to the FRB is required prior to declaring and paying a dividend to shareholders that exceeds earnings for the period for which the dividend is being paid. This notification requirement is included in regulatory guidance regarding safety and soundness surrounding capital and includes other non-financial measures such as asset quality, financial condition, capital adequacy, liquidity, future earnings projections, capital planning and credit concentrations. Should the FRB object to dividend payments, the Company would be precluded from declaring and paying dividends, until approval is received or the Company no longer needs to provide notice under applicable guidance.

California law also limits the Company’s ability to pay dividends. A corporation may make a distribution/dividend from retained earnings to the extent that the retained earnings exceed (a) the amount of the distribution plus (b) the amount if any, of dividends in arrears on shares with preferential dividend rights. Alternatively, a corporation may make a distribution/dividend, if, immediately after the distribution, the value of its assets equals or exceeds the sum of (a) its total liabilities plus (b) the liquidation preference of any shares which have a preference upon dissolution over the rights of shareholders receiving the distribution/dividend.

The Bank is subject to certain restrictions on the amount of dividends that may be declared without regulatory approval. Such dividends shall not exceed the lesser of the Bank’s retained earnings or net income for its last three fiscal years (less any distributions to shareholders made during such period. In addition, the Bank may not pay dividends that would result in its capital being reduced below the minimum requirements shown above for capital adequacy purposes.

As of June 30, 2013, both CU Bancorp and the Bank, had positive retained earnings and positive net income that would allow either the holding company or the Bank to pay a dividend. However, the Company has no plans to pay a cash dividend to either the Holding Company or to CU Bancorp’s shareholders at the current time.

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In December of 2011, the Bank received approval, from the DFI to repurchase employee restricted stock upon the vesting of restricted stock, only in amounts necessary to cover employee tax withholding obligations from the period January 1, 2012 to December 31, 2012, at the option of the restricted stockholder. Approval from the DFI was necessary due to the Bank having negative retained earnings at the time the employees restricted stock vested. This program was designed to provide the Bank’s employees with the financial ability to cover their tax liability obligation associated with the vesting of their restricted stock. These transactions under the State of California Corporations Code are defined as dividends or distributions to shareholders. The DFI approval for this program extended through December 31, 2012. No request for DFI approval for 2013 had been requested. With the establishment of CU Bancorp and the corporate reorganization on July 31, 2012, this program was no longer available to the Company’s employees during the remaining portion of 2012. For the seven months ended July 31, 2012, 22,000 shares of employee restricted stock had been repurchased, for a dollar value of $228,000. The Company has continued to provide this program to its employees during 2013, based on both positive retained earnings and positive net income at the Company for the six months ended June 30, 2013.

CAPITAL RESOURCES

The Company’s objective is to maintain a level of capital that will support sustained asset and loan growth, provide for anticipated credit risks, and ensure that regulatory guidelines and industry standards are met. The Company and the Bank are subject to certain minimum capital adequacy and minimum well capitalized category guidelines adopted by the Federal Reserve and the FDIC. These guidelines relate primarily to the Tier 1 leverage ratio, the Tier 1 risk-based capital ratio, and the Total risk-based capital ratio. The minimum well capitalized required ratios are 5.00% Tier 1 leverage, 6.00% Tier 1 risk-based capital and 10.00% total risk-based capital. The minimum capital adequacy required ratios are 4.00% Tier 1 leverage, 4.00% Tier 1 risk-based capital and 8.00% total risk-based capital. At June 30, 2013, the Company and the Bank exceeded the required ratios for minimum capital adequacy and classification as well capitalized.

The following table presents the regulatory capital ratios and data of the Company and the Bank as of the dates indicated (dollars in thousands):

CU Bancorp

	June 30, 2013			December 31, 2012
Regulatory Capital Ratios:
Tier 1 leverage ratio		9.85	%		9.13	%
Tier 1 risk-based capital ratio		11.69	%		11.46	%
Total risk-based capital ratio		12.60	%		12.35	%
Regulatory Capital Data:
Tier 1 capital	$	124,473		$	117,118
Total risk-based capital	$	134,175		$	126,177
Average total assets	$	1,263,515		$	1,301,737
Risk-weighted assets	$	1,064,974		$	1,021,882

California United Bank

	June 30, 2013			December 31, 2012
Regulatory Capital Ratios:
Tier 1 leverage ratio		9.27	%		8.55	%
Tier 1 risk-based capital ratio		10.99	%		10.72	%
Total risk-based capital ratio		11.91	%		11.61	%
Regulatory Capital Data:
Tier 1 capital	$	116,812		$	109,346
Total risk-based capital	$	126,514		$	118,405
Average total assets	$	1,260,483		$	1,278,336
Risk-weighted assets	$	1,062,418		$	1,020,190

Total Tier 1 capital of the Company increased by $7.4 million or 6.3% to $124.5 million during the six months ended June 30, 2013. The increase in the Company’s Tier 1 leverage ratio during the six months ended June 30, 2013 of $7.4 million was primarily the result of the Bank’s earnings of $4.5 million during the first six months of 2013, and a decrease in the amount of disallowed deferred tax assets that are subtracted from regulatory capital of $1.6 million during the first six months of 2013. The Company’s total average assets used in the calculation of Tier 1 leverage ratio decreased by $38 million or 2.9%.

Total risk-based capital of the Company increased by $8.0 million or 6.3% to $134.2 million during the six months ended June 30, 2013. The increase in the Company’s Tier 1 risk-based capital and total risk-based capital ratios during the six months ended June 30, 2013 was primarily due to the increase in the Bank’s earnings of $4.5 million during the six months ended June 30, 2013, and the decrease in the amount of disallowed deferred tax assets that are subtracted from regulatory capital of $1.6 million during the first six months of 2013. The Bank’s total risk-weighted assets used in the calculation of total risk-based capital ratio increased by $43 million or 4.2%, which was attributable to the growth in the Company’s loan portfolio.

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Total Tier 1 capital at the Bank increased by $7.5 million or 6.8% to $116.8 million during the six months ended June 30, 2013. The increase in the Bank’s Tier 1 leverage ratio during the six months ended June 30, 2013 of $7.5 million was primarily the result of the Bank’s earnings of $4.7 million during the first six months of 2013, and a decrease in the amount of disallowed deferred tax assets that are subtracted from regulatory capital of $2.1 million during the first six months of 2013. The Bank’s total average assets used in the calculation of Tier 1 leverage ratio decreased by $18 million or 1.4%.

Total risk-based capital at the Bank increased by $8.1 million or 6.9% to $126.5 million during the six months ended June 30, 2013. The increase in the Bank’s Tier 1 risk-based capital and total risk-based capital ratios during the six months ended June 30, 2013 was primarily due to the increase in the Bank’s earnings of $4.7 million and the decrease in the amount of disallowed deferred tax assets that are subtracted from regulatory capital of $2.1 million during the six months of 2013. The Bank’s total risk-weighted assets used in the calculation of total risk-based capital ratio increased by $42 million or 4.7%, which was attributable to the growth in the Company’s loan portfolio.

The primary impact and change in the capital ratios of both the Company and the Bank from December 31, 2012, to June 30, 2013, was the increase in the Company’s earnings and the reduction in the amount of disallowed deferred tax assets that are subtracted from regulatory capital.

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ITEM 3. Quantitative and Qualitative Disclosures about Market Risk

The Company’s primary market risk is interest rate risk. Interest rate risk is the potential for economic losses due to future interest rate changes. These economic losses can be reflected as a loss of future net interest income and/or a loss of current fair market values. The objective is to measure the effect on net interest income and to adjust the balance sheet to minimize the inherent risk while at the same time maximizing income. Management realizes certain risks are inherent and that the goal is to identify and minimize the risks. To mitigate interest rate risk, the structure of the Company’s balance sheet is managed with the objective of correlating the movements of interest rates on loans and investments with those of deposits and borrowings.

The Company’s exposure to interest rate risk is reviewed by the Company’s Management Asset/Liability Committee formally on a quarterly basis and on an ongoing basis. The main tool used to monitor interest rate risk is a dynamic simulation model that quantifies the estimated exposure of net interest income to sustained interest rate changes. The simulation model estimates the impact of changing interest rates on the interest income from all interest-earning assets and the interest expense paid on all interest-bearing liabilities reflected on the Company’s balance sheet. This sensitivity analysis is compared to Company policy limits, which specify a maximum tolerance level for net interest income exposure over a one-year horizon assuming no balance sheet growth, given a 100 and 400 basis point upward and 200 basis point downward shift in interest rates.

An additional tool used by management to monitor interest rate risk includes the standard GAP report, which measures the estimated difference between the amount of interest-sensitive assets and interest-sensitive liabilities anticipated to mature or reprice during future periods, based on certain assumptions. In general, the GAP report presents the carrying amounts of these assets and liabilities in a particular period based on either the date that they first reprice, for variable rate products, or the maturity date, for fixed rate products.

At June 30, 2013, the Company had twenty three pay-fixed, receive-variable interest rate contracts that were designed to convert fixed rate loans into variable rate loans. Twenty one of these swap contacts are designated as interest rate hedges. The Company acquired these interest rate swap contracts as part of the merger with PC Bancorp. See Note 13 to the consolidated financial statements.

The Company has no market risk sensitive instruments held for trading purposes. Management believes that the Company’s market risk is reasonable at this time.

The following depicts the Company’s net interest income sensitivity analysis as of June 30, 2013 (dollars in thousands):

Simulated Rate Changes	Estimated Net Interest Income Sensitivity
+ 400 basis points	35.5%	$14,494
+ 100 basis points	8.1%	$3,318
- 200 basis points (1)	(3.4)%	$(1,395)

The Company is currently asset sensitive. The estimated sensitivity does not necessarily represent our forecast and the results may not be indicative of actual changes to our net interest income. These estimates are based upon a number of assumptions including: the nature and timing of interest rate levels including yield curve shape, prepayments on loans and securities, pricing strategies on loans and deposits and replacement of asset and liability cash flows. While the assumptions used are based on current economic and local market conditions, there is no assurance as to the predictive nature of these conditions including how customer preferences or competitor influences might change.

Variable rate loans make up 70% of the loan portfolio. However, the Company has floors on some of its loans. At June 30, 2013, 48% of variable rate loans are at their floor, and thus an increase in the underlying index may not necessarily result in an increase in the coupon until the loan index plus margin exceeds that floor.

The Company’s static GAP as of June 30, 2013 is not materially different from that reported at December 31, 2012 and is thus not included in this 10Q. See the Company’s Static Gap reports under “Item7A-Quantitative and Qualitative Disclosures about Market Risk” in the Company’s 2012 Annual Report on Form 10-K.

(1) The simulated rate change under the -200 basis points reflected above actually reflects only a maximum negative 25 basis points or less decline in actual rates based on the current targeted Fed Funds target rate by the government of 0% to 0.25%. The -200 simulation model reflects slight repricing of liabilities of less than 0.25% due to the Company paying significantly less than 25 basis points on its deposit accounts, and slightly higher downward repricing of the Company’s interest-earning assets in the -200 simulation model.

Page 52 of 55

ITEM 4. Controls and Procedures

(a) As of the end of the period covered by this Quarterly Report on Form 10-Q, the Company’s principal executive officer (“CEO”) and principal financial officer (“CFO”) have evaluated the effectiveness of the Company’s “disclosure controls and procedures” (“Disclosure Controls”). Disclosure Controls, as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are procedures that are designed with the objective of ensuring that information required to be disclosed in the Company’s reports filed under the Exchange Act, such as this Quarterly Report, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure Controls are also designed with the objective of ensuring that such information is accumulated and communicated to the Company’s management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

The Company’s management, including the CEO and CFO, does not expect that the Company’s Disclosure Controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple errors or mistakes. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Based upon their controls evaluation, the CEO and CFO have concluded that the Company’s Disclosure Controls are effective at a reasonable assurance level.

(b) There have been no significant changes in the Company’s internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation.

Page 53 of 55

PART II – OTHER INFORMATION

ITEM 1. Legal Proceedings

None.

ITEM 1A. Risk Factors

There have been no material changes from the risk factors previously disclosed in the Company’s 2012 Annual Report on Form 10-K.

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

None.

ITEM 3. Defaults upon Senior Securities

None.

ITEM 4. Mine Safety Disclosures

Not applicable.

ITEM 5. Other Information

a) None.

b) None.

ITEM 6. Exhibits

(a) Exhibits

31.1	Section 302 Certification of Chief Executive Officer (“CEO”)
31.2	Section 302 Certification of Chief Financial Officer (“CFO”)
32.1	Section 906 Certification of CEO
32.2	Section 906 Certification of CFO
101.INS*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Calculation Linkbase Document
101 DEF*	XBRL Taxonomy Extension Definition Linkbase Document
101 LAB*	XBRL Taxonomy Label Linkbase Document
101.PRE*	XBRL Taxonomy Presentation Linkbase Document

Page 54 of 55

SIGNATURES

Pursuant to the requirements of the Security Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

CU BANCORP

Date:	August 13, 2013	/s/ DAVID I. RAINER
		David I. Rainer
		President and Chief Executive Officer
Date:	August 13, 2013	/s/ KAREN A. SCHOENBAUM
		Karen A. Schoenbaum
		Executive Vice President and Chief Financial Officer

Page 55 of 55

EX-31.1

Exhibit 31.1

Certification

I, David I. Rainer, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of CU 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, is made known to us by others within the entity, 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.

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.

/s/ DAVID I. RAINER

David I. Rainer

President and Chief Executive Officer

Date: August 13, 2013

EX-31.2

Exhibit 31.2

Certification

I, Karen A. Schoenbaum, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of CU 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, is made known to us by others within the entity, 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.

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.

/s/ KAREN A. SCHOENBAUM

Karen A. Schoenbaum

Executive Vice President and Chief Financial Officer

Date: August 13, 2013

EX-32.1

Exhibit 32.1

Certification

Pursuant to the requirement set forth in Section 906 of the Sarbanes-Oxley Act of 2002, David I. Rainer hereby certifies as follows:

1. He is the duly appointed Chief Executive Officer of CU Bancorp, (the “Company”).

2. Based on his knowledge, the Bank’s Quarterly Report on Form 10-Q for the period ended June 30, 2013, and to which this Certification is attached as Exhibit 32.1 (the “Periodic Report”), fully complies with the requirements of section 13(a) or section 15(d) of the Securities Exchange Act of 1934 and the information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Bank.

IN WITNESS WHEREOF, the undersigned has set his hand hereto as of this 13th day of August 2013.

/s/ DAVID I. RAINER

David I. Rainer

Chief Executive Officer

EX-32.2

Exhibit 32.2

Certification

Pursuant to the requirement set forth in Section 906 of the Sarbanes-Oxley Act of 2002, Karen A. Schoenbaum hereby certifies as follows:

1. She is the duly appointed Chief Financial Officer of CU Bancorp, (the “Company”).

2. Based on her knowledge, the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2013, and to which this Certification is attached as Exhibit 32.2 (the “Periodic Report”), fully complies with the requirements of section 13(a) or section 15(d) of the Securities Exchange Act of 1934 and the information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

IN WITNESS WHEREOF, the undersigned has set his hand hereto as of this 13th day of August 2013.

/s/ KAREN A. SCHOENBAUM

Karen A. Schoenbaum

Executive Vice President and Chief Financial Officer

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Other Comprehensive Income (Loss)

6 Months Ended

Jun. 30, 2013

Other Comprehensive Income (Loss)

Note 8 - Other Comprehensive Income (Loss)

The following table presents the changes in accumulated other comprehensive income (loss) by component for the periods indicated (dollars in thousands):

	Before Tax			Tax Effect			Net of Tax
Three Months Ended – June 30, 2013
Net unrealized gains (losses) on investment securities:
Beginning balance	$	2,243		$	923		$	1,320
Non-credit portion of other-than-temporary impairments arising during the period		0			0			0
Net unrealized losses arising during the period		(1,247	)		(513	)		(734	)
Net other comprehensive loss		(1,247	)		(513	)		(734	)
Ending balance	$	996		$	410		$	586
Three Months Ended – June 30, 2012
Net unrealized gains (losses) on investment securities:
Beginning balance	$	1,678		$	691		$	987
Non-credit portion of other-than-temporary impairments arising during the period		110			40			70
Net unrealized losses arising during the period		(82	)		(28	)		(54	)
Net other comprehensive income		28			12			16
Ending balance	$	1,706		$	703		$	1,003

	Before Tax			Tax Effect			Net of Tax
Six Months Ended – June 30, 2013
Net unrealized gains (losses) on investment securities:
Beginning balance	$	2,369		$	975		$	1,394
Non-credit portion of other-than-temporary impairments arising during the period		(32	)		(13	)		(19	)
Net unrealized losses arising during the period		(1,336	)		(550	)		(786	)
Other comprehensive loss before reclassifications		(1,368	)		(563	)		(805	)
Reclassification adjustment for gains realized in net income		(5	)		(2	)		(3	)
Net other comprehensive loss		(1,373	)		(565	)		(808	)
Ending balance	$	996		$	410		$	586
Six Months Ended – June 30, 2012
Net unrealized gains (losses) on investment securities:
Beginning balance	$	1,536		$	646		$	890
Non-credit portion of other-than-temporary impairments arising during the period		286			96			190
Net unrealized losses arising during the period		(116	)		(39	)		(77	)
Net other comprehensive income		170			57			113
Ending balance	$	1,706		$	703		$	1,003

The table below presents the components of accumulated other comprehensive income (loss) as of the dates indicated (dollars in thousands):

	June 30, 2013			June 30, 2012
Net unrealized gain on non other-than-temporarily impaired investment securities	$	996		$	2,150
Net unrealized gain (loss) on other-than-temporarily impaired investment securities		0			(444	)
Total net unrealized gain on investment securities		996			1,706
Tax expense		(410	)		(703	)
Total accumulated other comprehensive income	$	586		$	1,003

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Borrowings and Subordinated Debentures - Additional Information (Detail) (USD $)	6 Months Ended	12 Months Ended
	Jun. 30, 2013 Y	Dec. 31, 2012
Borrowings [Line Items]
Securities with a fair market value	$ 30,200,000	$ 23,300,000
Credit facility, maximum borrowing capacity	316,000,000
Credit facility, percentage of Bank's total assets	25.00%
Credit facility, loan collateral pledge	748,000,000
Borrowing capacity	288,000,000
Common stock of FHLB	4,700,000	4,900,000
Current value of FHLB common stock	4,700,000
Maximum advances by FHLB	101,000,000
Repurchased amount	150,000	187,000
Subordinated debentures	9,283,000	9,169,000
Issuance maturity period from its date of issue	30
Prepayment penalty	100.501%
Trust preferred securities tier one capital	25.00%
Tier 1 capital period	10 years
Subordinate debentures, interest payment terms	The Company has the right, assuming no default has occurred, to defer payments of interest on the subordinated debentures at any time for a period not to exceed 20 consecutive quarters.
Minimum
Borrowings [Line Items]
Repurchase maturity date	1 day
Maximum
Borrowings [Line Items]
Repurchase maturity date	180 days
PC Bancorp
Borrowings [Line Items]
Subordinated debentures	$ 12,400,000

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Consolidated Statements Of Income (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Interest Income
Interest and fees on loans	$ 12,462	$ 6,357	$ 23,887	$ 13,047
Interest on investment securities	495	603	979	1,207
Interest on interest bearing deposits in other financial institutions	157	201	317	385
Total Interest Income	13,114	7,161	25,183	14,639
Interest Expense
Interest on interest bearing transaction accounts	64	38	116	78
Interest on money market and savings deposits	249	132	509	267
Interest on certificates of deposit	74	40	150	84
Interest on securities sold under agreements to repurchase	21	26	40	46
Interest on subordinated debentures	126	0	250	0
Total Interest Expense	534	236	1,065	475
Net Interest Income	12,580	6,925	24,118	14,164
Provision for loan losses	1,153	380	1,287	380
Net Interest Income After Provision For Loan Losses	11,427	6,545	22,831	13,784
Non-Interest Income
Gain on sale of securities, net	0	0	5	0
Gain on sale of SBA loans, net	60	0	410	0
Other-than-temporary impairment losses	0	(30)	0	(60)
Deposit account service charge income	583	480	1,151	943
Other non-interest income	1,047	302	1,550	491
Total Non-Interest Income	1,690	752	3,116	1,374
Non-Interest Expense
Salaries and employee benefits (includes stock based compensation expense of $217 and $221 for the three months, and $475 and $486 for the six months ended June 30, 2013 and 2012, respectively)	5,655	3,625	11,330	7,563
Occupancy	1,019	799	2,083	1,551
Data processing	479	413	961	872
Legal and professional	572	145	1,079	385
FDIC deposit assessment	189	157	435	298
Merger related expenses	0	190	43	338
OREO valuation write-downs and expenses	23	20	49	298
Office services expenses	259	248	525	475
Other operating expenses	1,085	673	2,085	1,395
Total Non-Interest Expense	9,281	6,270	18,590	13,175
Net Income Before Provision for Income Taxes	3,836	1,027	7,357	1,983
Provision for income taxes	1,515	502	2,881	952
Net Income	$ 2,321	$ 525	$ 4,476	$ 1,031
Earnings Per Share
Basic earnings per share	$ 0.22	$ 0.08	$ 0.43	$ 0.15
Diluted earnings per share	$ 0.22	$ 0.08	$ 0.42	$ 0.15

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Basis of Financial Statement Presentation

6 Months Ended

Jun. 30, 2013

Basis of Financial Statement Presentation

Note 1 - Basis of Financial Statement Presentation

CU Bancorp (the “Company”) is a bank holding company whose operating subsidiary is California United Bank. CU Bancorp was established to facilitate the reorganization and merger of Premier Commercial Bank, N.A. into California United Bank, which took place after the close of business on July 31, 2012. As a bank holding company, CU Bancorp is subject to regulation of the Federal Reserve Board (“FRB”). The term “Company”, as used throughout this document, refers to the consolidated balance sheets and consolidated statements of income of CU Bancorp and California United Bank.

California United Bank (the “Bank”) is a full-service commercial business bank offering a broad range of banking products and services including: deposit services, lending and cash management to small and medium-sized businesses, to non-profit organizations, to business principals and entrepreneurs, to the professional community, including attorneys, certified public accountants, financial advisors, healthcare providers and investors. The Bank opened for business in 2005, with its headquarters office located in Encino, California. As a state chartered non-member bank, the Bank is subject to regulation by the California Department of Financial Institutions, (the “DFI”) and the Federal Deposit Insurance Corporation (“FDIC”). The deposits of the Bank are insured by the FDIC, to the maximum amount allowed by law.

The consolidated financial statements include the accounts of the Company and the Bank. Significant intercompany items have been eliminated in consolidation. The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission.

CU Bancorp is the common shareholder of Premier Commercial Statutory Trust I, Premier Commercial Statutory Trust II, and Premier Commercial Statutory Trust III, entities which were acquired in the merger with Premier Commercial Bancorp (“PC Bancorp”). These trusts were established for the sole purpose of issuing trust preferred securities and do not meet the criteria for consolidation in accordance with ASC 810 Consolidation. For more detail, see Note 7 – Borrowings and Subordinated Debentures.

Certain information and footnote disclosures presented in the annual consolidated financial statements are not included in the interim consolidated financial statements. Accordingly, the accompanying unaudited interim consolidated financial statements should be read in conjunction with our 2012 Annual Report on Form 10-K. In the opinion of management, the accompanying financial statements contain all necessary adjustments of a normal recurring nature, to present fairly the consolidated financial position of the Company and the results of its operations for the interim period presented.

Additional Significant Accounting Policies

Loans Held for Sale and Servicing Assets: Loans held for sale are loans originated and includes the principal amount outstanding net of unearned income and the loans are carried at the lower of cost or fair value on an aggregate basis. A decline in the aggregate fair value of the loans below their aggregate carrying amount is recognized through a charge to earnings in the period of such decline. Unearned income on these loans is taken into earnings when they are sold. At June 30, 2013, the Company had no loans classified as held for sale.

Gains or losses resulting from sales of loans are recognized at the date of settlement and are based on the difference between the cash received and the carrying value of the related loans less transaction costs. A transfer of financial assets in which control is surrendered is accounted for as a sale to the extent that consideration other than beneficial interests in the transferred assets is received in the exchange. Assets, liabilities, derivative financial instruments, or other retained interests issued or obtained through the sale of financial assets are measured at estimated fair value, if practicable.

The most common retained interest related to loan sales is a servicing asset. Servicing assets are amortized in proportion to and over the period of the estimated future net servicing income. The amortization of the servicing asset and the servicing income are included in noninterest income in the consolidated statements of income. The fair value of the servicing assets is estimated by discounting the future cash flows using market-based discount rates and prepayment speeds. The Company’s servicing asset is evaluated regularly for impairment. The servicing asset is stratified based on the original term to maturity and the year of origination of the underlying loans for purposes of measuring impairment. The risk is that loans prepay faster than anticipated and the fair value of the asset declines. If the fair value of the servicing asset is less than the amortized carrying value, the asset is considered to be impaired and an impairment charge will be taken against earnings. The servicing asset is included in other assets on the consolidated balance sheets.

Income Taxes: The Company’s consolidated effective statutory federal and state income tax rate is approximately 41%. The actual effective rate reflected within these financial statements is dependent on the composition of taxable earnings in the period. A number of expenses such as certain merger related expenses, certain business and entertainment expenses, country club dues, etc. are not allowable as an expense for either federal or state purposes and are classified as permanent tax-to-book taxable income differences. In addition, the Company has several items included in income, that are excluded from taxable income, such as net interest income on loans within the State of California designated enterprise zone areas for state income taxes and the increase in cash surrender value of life insurance policies. Because of these differences, the Company’s effective tax may vary considerably between reporting years. During 2012, due to the inclusion of significant merger related costs, the Company had an effective tax rate in excess of its statutory rate. For 2013, to the extent the Company does not have any significant merger related costs, the consolidated effective tax rate for the period ending June 30, 2013 is expected to be the consolidated effective tax rate which is below its statutory rate. Based on recently enacted legislation during the second quarter of 2013, the California State Legislature has repealed the net interest deduction on interest income for loans within the designated State of California Enterprise Zones. The effective date of this legislation is effective January 1, 2014.

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Computation of Earnings per Common Share (Tables)

6 Months Ended

Jun. 30, 2013

Basic and Diluted Earnings per Common Share Computations

The table below presents the basic and diluted earnings per common share computations for the periods indicated (dollars and shares in thousands, except per share data):

	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012
Net Income	$	2,321	$	525	$	4,476	$	1,031
Basic weighted average common shares outstanding		10,502		6,732		10,494		6,722
Dilutive effect of potential common share issuances from stock options and restricted stock		158		161		195		141
Diluted weighted average common shares outstanding		10,660		6,893		10,689		6,863
Income per common share
Basic	$	0.22	$	0.08	$	0.43	$	0.15
Diluted	$	0.22	$	0.08	$	0.42	$	0.15
Anti-dilutive shares not included in the calculation of diluted earnings per share		23		246		134		246

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Significant Unobservable Inputs Used in Fair Value Measurements for Level Three Assets and Liabilities Measured at Fair Value on Recurring or Non-Recurring Basis (Detail) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013
Collateral Dependent Impaired Loans With Specific Valuation Allowance And Or Partial Charge Offs
Quantitative Information About Significant Unobservable Inputs [Line Items]
Real Estate appraisal valuations	$ 1,640	[1]
Valuation Technique	Commercial Real Estate building and land appraisals	[1]
Assets, fair value	1,545	[1]
Collateral dependent impaired loans
Quantitative Information About Significant Unobservable Inputs [Line Items]
Accounts Receivable aging valuation and Inventory liquidation valuation	429
Less estimated selling costs	(129)
Net Valuation	1,940
Valuation Technique	Accounts Receivable aging valuation and Inventory liquidation valuation
Assets, fair value	1,940
Other Real Estate Owned
Quantitative Information About Significant Unobservable Inputs [Line Items]
Contract	3,190
Less estimated selling costs	(78)
Net Valuation	3,112
Valuation Technique	Purchase and sale Agreement	[2]
Assets, fair value	3,112
Collateral dependent impaired loans, other
Quantitative Information About Significant Unobservable Inputs [Line Items]
Assets, fair value	$ 395

[1] The Company has established a specific valuation allowance of $150,000 to cover the potential for any possible shortfall in the collateral values supporting these loans.

[2] The Company has entered into a non-publicly disclosed purchase and sales agreement to sell this parcel of real estate to a private third party. The purchase price was a negotiated amount based on a number of both public and non-public economic factors.

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Changes in Accumulated Other Comprehensive Income (Loss) (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Net unrealized gains (losses) on investment securities:
Beginning balance	$ 2,243	$ 1,678	$ 2,369	$ 1,536
Non-credit portion of other-than-temporary impairments arising during the period	0	110	(32)	286
Net unrealized losses arising during the period	(1,247)	(82)	(1,336)	(116)
Other comprehensive loss before reclassifications			(1,368)
Net other comprehensive income (loss)	(1,247)	28		170
Ending balance	996	1,706	996	1,706
Net unrealized gains (losses) on investment securities:
Beginning balance	923	691	975	646
Non-credit portion of other-than-temporary impairments arising during the period	0	40	(13)	96
Net unrealized losses arising during the period	(513)	(28)	(550)	(39)
Other comprehensive loss before reclassifications			(563)
Net other comprehensive income (loss)	(513)	12		57
Ending balance	410	703	410	703
Net unrealized gains (losses) on investment securities:
Beginning balance	1,320	987	1,394	890
Non-credit portion of other-than-temporary impairments arising during the period	0	70	(19)	190
Net unrealized losses arising during the period	(734)	(54)	(786)	(77)
Other comprehensive income (loss) before reclassifications			(805)
Net other comprehensive income (loss)	(734)	16	(808)	113
Ending balance	586	1,003	586	1,003
Reclassification out of Accumulated Other Comprehensive Income [Member]
Net unrealized gains (losses) on investment securities:
Reclassification adjustment for gains realized in net income			(5)
Net other comprehensive income (loss)			(1,373)
Net unrealized gains (losses) on investment securities:
Reclassification adjustment for gains realized in net income			(2)
Net other comprehensive income (loss)			(565)
Net unrealized gains (losses) on investment securities:
Reclassification adjustment for gains realized in net income			(3)
Net other comprehensive income (loss)			$ (808)

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Stock Options and Restricted Stock

6 Months Ended

Jun. 30, 2013

Stock Options and Restricted Stock

Note 9 - Stock Options and Restricted Stock

Equity Compensation Plans

At June 30, 2013, the Company had one active stock-based employee and director compensation plan, the “2007 Equity and Incentive Plan”, and two terminated stock based compensation plans, the “2005 Plans”, which were terminated effective August 12, 2007, and replaced with the 2007 Equity and Incentive Plan. These plans are described more fully in Note 11, “Stock Options and Restricted Stock” in the Company’s Annual Report on Form 10K for the year ended December 31, 2012. The outstanding vested and unvested stock options and unvested restricted stock under the Equity and Incentive Plans listed above, were transferred and assumed by CU Bancorp in connection with the holding company reorganization, from options and restricted stock originally issued by California United Bank.

The Company’s “2007 Equity and Incentive Plan” allows the Company to issue stock options, restricted stock, restricted stock units and performance units. Certain options and share awards provide for accelerated vesting if there is a change in control as defined in the plans.

At June 30, 2013, future compensation expense related to non-vested stock option and restricted stock grants is reflected in the table below (dollars in thousands):

Future Stock Based Compensation Expense	Stock Options		Restricted Stock		Total
Remainder of 2013	$	9	$	402	$	411
2014		10		478		488
2015		1		168		169
2016		0		53		53
2017		0		2		2
Thereafter		0		0		0
Total	$	20	$	1,103	$	1,123

The estimated fair value of all stock options granted in prior years has been calculated using the Black-Scholes option pricing model. The use of the Black-Scholes model requires the use of input parameters and assumptions used for estimating the fair value of stock options granted in 2010 and prior years.

There were no stock options granted during 2011, 2012, or during the first six months of 2013.

Stock Options

The following table summarizes the share option activity under the plans as of the date and for the period indicated:

	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in Years)		Aggregate Intrinsic Value
							(thousands)
Outstanding stock options at December 31, 2012		734,896	$	12.44		2.8	$	966
Granted		0
Exercised		5,625
Forfeited		625
Expired		10,000
Outstanding stock options at June 30, 2013		718,646	$	12.39		2.3	$	3,078
Exercisable options at June 30, 2013		698,371	$	12.40		2.3	$	3,001
Unvested options at June 30, 2013		20,275	$	12.01		3.2	$	77
Outstanding, vested and expected to vest at June 30, 2013		718,646	$	12.39		2.3	$	3,078

Stock option compensation expense was $3,000 and $12,000 for the three month period ended June 30, 2013 and 2012, respectively, and $13,000 and $30,000, for the six month period ended June 30, 2013 and 2012, respectively.

Restricted Stock

The weighted-average grant-date fair value per share in the table below is calculated by taking the number of shares of restricted stock issued divided by the total aggregate cost of the restricted shares issued. The aggregate cost of the restricted stock was calculated by multiplying the number of shares granted at each of the grant dates by the closing stock price of the Company’s common stock on the date of the grant.

The following table summarizes the restricted stock activity under the plans for the period indicated:

	Number of Shares		Weighted-Average Grant- Date Fair  Value per Share
Restricted Stock:
Unvested, at December 31, 2012		290,550	$	11.99
Granted		2,500		12.74
Vested		64,200		12.15
Cancelled and forfeited		10,600		11.00
Unvested, at June 30, 2013		218,250	$	12.00

Restricted stock compensation expense related to the restricted stock grants reflected in the table above was $214,000 and $463,000 for the three month period ended June 30, 2013 and 2012, respectively. Restricted stock compensation expense related to the restricted stock grants reflected in the table above was $208,000 and $456,000 for the six month period ended June 30, 2013 and 2012, respectively. Restricted stock awards reflected in the table above are valued at the closing stock price on the date of grant and are expensed to stock based compensation expense over the period for which the related service is performed. During the six months ending June 30, 2013, the Company issued 2,500 shares of restricted stock to one of its employees.

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Recorded Investment and Unpaid Principal Balances for Impaired Loans (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Financing Receivable, Impaired [Line Items]
Recorded Investment	$ 7,180		$ 7,180		$ 5,584
Unpaid Principal Balance	10,622		10,622		9,075
Related Allowance	9		9		11
Average Recorded Investment	6,487	3,230	5,890	3,176
Interest Income Recognized	0	0	0	0
Commercial and Industrial
Financing Receivable, Impaired [Line Items]
Recorded Investment	2,681		2,681		885
Unpaid Principal Balance	3,461		3,461		1,953
Related Allowance	9		9		11
Average Recorded Investment	1,988	786	1,313	787
Interest Income Recognized	0	0	0	0
Construction, Land Development and Other Land
Financing Receivable, Impaired [Line Items]
Recorded Investment	1,159		1,159		1,201
Unpaid Principal Balance	2,791		2,791		2,791
Related Allowance	0		0		0
Average Recorded Investment	1,159	1,249	1,179	1,260
Interest Income Recognized	0	0	0	0
Commercial and Other Real Estate
Financing Receivable, Impaired [Line Items]
Recorded Investment	3,340		3,340		3,498
Unpaid Principal Balance	4,370		4,370		4,331
Related Allowance	0		0		0
Average Recorded Investment	3,340	1,195	3,398	1,130
Interest Income Recognized	0	0	0	0
With no specific allowance recorded | Commercial and Industrial
Financing Receivable, Impaired [Line Items]
Recorded Investment	1,986		1,986		677
Unpaid Principal Balance	2,041		2,041		1,490
Related Allowance	0		0		0
Average Recorded Investment	1,500	586	994	587
Interest Income Recognized	0	0	0	0
With no specific allowance recorded | Construction, Land Development and Other Land
Financing Receivable, Impaired [Line Items]
Recorded Investment	1,159		1,159		1,201
Unpaid Principal Balance	2,791		2,791		2,791
Related Allowance	0		0		0
Average Recorded Investment	1,159	1,249	1,179	1,260
Interest Income Recognized	0	0	0	0
With no specific allowance recorded | Commercial and Other Real Estate
Financing Receivable, Impaired [Line Items]
Recorded Investment	3,340		3,340		3,498
Unpaid Principal Balance	4,370		4,370		4,331
Related Allowance	0		0		0
Average Recorded Investment	3,340	131	3,398	65
Interest Income Recognized	0	0	0	0
With a specific allowance recorded | Commercial and Industrial
Financing Receivable, Impaired [Line Items]
Recorded Investment	695		695		208
Unpaid Principal Balance	1,420		1,420		463
Related Allowance	9		9		11
Average Recorded Investment	488	200	319	200
Interest Income Recognized	0	0	0	0
With a specific allowance recorded | Construction, Land Development and Other Land
Financing Receivable, Impaired [Line Items]
Recorded Investment	0		0		0
Unpaid Principal Balance	0		0		0
Related Allowance	0		0		0
Average Recorded Investment	0	0	0	0
Interest Income Recognized	0	0	0	0
With a specific allowance recorded | Commercial and Other Real Estate
Financing Receivable, Impaired [Line Items]
Recorded Investment	0		0		0
Unpaid Principal Balance	0		0		0
Related Allowance	0		0		0
Average Recorded Investment	0	1,064	0	1,064
Interest Income Recognized	$ 0	$ 0	$ 0	$ 0

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Components of Accumulated Other Comprehensive Income (Loss) (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011
Accumulated Other Comprehensive Income (Loss) [Line Items]
Net unrealized gain on non other-than-temporarily impaired investment securities	$ 996			$ 2,150
Net unrealized gain (loss) on other-than-temporarily impaired investment securities	0			(444)
Total net unrealized gain on investment securities	996	2,243	2,369	1,706	1,678	1,536
Tax expense	(410)	(923)	(975)	(703)	(691)	(646)
Total accumulated other comprehensive income	$ 586	$ 1,320	$ 1,394	$ 1,003	$ 987	$ 890

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Maturities Schedule of Securities (Detail) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Dec. 31, 2012
Schedule of Available-for-sale Securities [Line Items]
Due through one year	$ 20,091
Due after one year through five years	43,638
Due after five years through ten years	23,537
Due after ten years	21,693
Total	108,959
Due through one year	20,472
Due after one year through five years	44,301
Due after five years through ten years	23,545
Due after ten years	21,637
Investment securities available-for-sale	$ 109,955	$ 118,153
Due through one year	1.63%
Due after one year through five years	1.80%
Due after five years through ten years	2.39%
Due after ten years	2.66%
Total	2.06%

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Borrowings and Subordinated Debentures (Tables)

6 Months Ended

Jun. 30, 2013

Terms and Maturity of Company's Repos

The tables below describe the terms and maturity of the Company’s Repos as of the dates indicated (dollars in thousands):

	June 30, 2013
Date Issued	Amount		Interest Rate			Original Term	Maturity Date
June 4, 2013	$	950		0.125	%	62 days	August 5, 2013
June 28, 2013		28,662		0.10% – 0.40	%	3 days	July 1, 2013
Total	$	29,612		0.30	%

	December 31, 2012
Date Issued	Amount		Interest Rate			Original Term	Maturity Date
November 5, 2012	$	1,020		0.15	%	91 days	February 4, 2013
December 31, 2012		21,837		0.10% – 0.40	%	1 day	January 2, 2013
Total	$	22,857		0.21	%

Terms of Issuance Subordinated Debentures Outstanding

The following table summarizes the terms of each issuance of the subordinated debentures outstanding as of June 30, 2013:

Series	Amount (in  thousands)			Issuance Date	Maturity Date	Rate Index	Current Rate			Next Reset Date
Trust I	$	6,186		12/10/04	03/15/35	3 month LIBOR + 2.05%		2.32	%	9/16/2013
Trust II		3,093		12/23/05	03/15/36	3 month LIBOR + 1.75%		2.02	%	9/16/2013
Trust III		3,093		06/30/06	09/15/36	3 month LIBOR + 1.85%		2.12	%	9/16/2013
Subtotal		12,372
Fair value adjustment		(3,089	)
Total	$	9,283

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Loans (Tables)

6 Months Ended

Jun. 30, 2013

Composition of Company's Loan Portfolio

The following table presents the composition of the Company’s loan portfolio as of the dates indicated (dollars in thousands):

	June 30,		December 31,
	2013		2012
Commercial and Industrial Loans:	$	277,076	$	262,637
Loans Secured by Real Estate:
Construction, Land Development and Other Land		56,461		48,528
Owner-Occupied Nonresidential Properties		180,483		181,844
Other Nonresidential Properties		260,902		246,450
1-4 Family Residential Properties		64,765		62,037
Multifamily Residential Properties		32,212		31,610
Total Commercial and Other Real Estate		538,362		521,941
Other Loans:		13,128		21,779
Total Loans	$	885,027	$	854,885

Company's Loans Portfolio, Stratified by Industry Concentration of Borrower

The following table is a breakout of the Company’s loan portfolio stratified by the industry concentration of the borrower (by their respective NAICS code) as of the dates indicated (dollars in thousands):

	June 30,		December 31,
	2013		2012
Real Estate	$	342,048	$	312,625
Hotel/Lodging		72,905		82,483
Manufacturing		77,656		77,203
Construction		67,133		55,385
Wholesale		52,270		54,218
Finance		44,721		59,791
Healthcare		42,378		41,857
Professional Services		40,660		44,714
Restaurant/Food Service		35,383		24,105
Retail		25,160		30,302
Other Services		24,030		23,239
Administrative Management		21,188		19,078
Information		12,151		4,492
Transportation		9,521		11,431
Entertainment		6,250		8,132
Other		11,573		5,830
Total	$	885,027	$	854,885

Summary of Activity for Allowance for Loan Loss

The following table is a summary of the activity for the allowance for loan loss for the periods indicated (dollars in thousands):

	Three Months Ended June  30,						Six Months Ended June 30,
	2013			2012			2013			2012
Allowance for loan loss at beginning of period	$	8,841		$	7,512		$	8,803		$	7,495
Provision for loan losses		1,153			380			1,287			380
Net (charge-offs) recoveries:
Charge-offs		(616	)		(586	)		(737	)		(589	)
Recoveries		34			23			59			43
Net (charge-offs)		(582	)		(563	)		(678	)		(546	)
Allowance for loan loss at end of period	$	9,412		$	7,329		$	9,412		$	7,329
Net (charge-offs) to average loans		(0.07	)%		(0.12	)%		(0.08	)%		(0.12	)%

	June 30, 2013			December 31, 2012
Allowance for loan loss to total loans		1.06	%		1.03	%
Allowance for loan loss to total loans accounted for at historical cost, which excludes loan balances and the related allowance for loans acquired through acquisition		1.50	%		1.54	%

Changes in Allowance for Loan Loss and Recorded Investment in Loans

The following tables present, by portfolio segment, the changes in the allowance for loan loss and the recorded investment in loans as of the dates and for the periods indicated (dollars in thousands):

	Commercial and Industrial			Construction, Land Development and Other Land			Commercial and Other Real Estate			Other			Total
Three Months Ended June 30, 2013
Beginning balance	$	4,187		$	2,147		$	2,400		$	107		$	8,841
Provision for loan losses		1,014			213			(6	)		(68	)		1,153
Net (charge-offs) recoveries:
Charge-offs		(569	)		(0	)		(47	)		(0	)		(616	)
Recoveries		27			0			4			3			34
Net (charge-offs) recoveries		(542	)		0			(43	)		3			(582	)
Ending balance	$	4,659		$	2,360		$	2,351		$	42		$	9,412
Three Months Ended June 30, 2012
Beginning balance	$	3,837		$	805		$	2,626		$	244		$	7,512
Provision for loan losses		747			(142	)		(225	)		0			380
Net (charge-offs) recoveries:
Charge-offs		(443	)		0			(136	)		(7	)		(586	)
Recoveries		20			0			0			3			23
Net (charge-offs) recoveries		(423	)		0			(136	)		(4	)		(563	)
Ending balance	$	4,161		$	663		$	2,265		$	240		$	7,329

	Commercial and Industrial			Construction, Land Development and Other Land			Commercial and Other Real Estate			Other			Total
Six Months Ended June 30, 2013
Beginning balance	$	4,572		$	2,035		$	2,084		$	112		$	8,803
Provision for loan losses		650			325			379			(67	)		1,287
Net (charge-offs) recoveries:
Charge-offs		(612	)		(0	)		(117	)		(8	)		(737	)
Recoveries		49			0			5			5			59
Net (charge-offs) recoveries		(563	)		0			(112	)		(3	)		(678	)
Ending balance	$	4,659		$	2,360		$	2,351		$	42		$	9,412
Six Months Ended June 30, 2012
Beginning balance	$	3,541		$	752		$	2,911		$	291		$	7,495
Provision for loan losses		1,026			(89	)		(510	)		(47	)		380
Net (charge-offs) recoveries:
Charge-offs		(443	)		0			(136	)		(10	)		(589	)
Recoveries		37			0			0			6			43
Net (charge-offs) recoveries		(406	)		0			(136	)		(4	)		(546	)
Ending balance	$	4,161		$	663		$	2,265		$	240		$	7,329

	Commercial and Industrial		Construction, Land Development and Other Land		Commercial and Other Real Estate		Other		Total
June 30, 2013
Allowance for Loan Loss – Ending balance:
Individually evaluated for impairment	$	158	$	0	$	0	$	0	$	158
Collectively evaluated for impairment		4,491		2,360		2,351		42		9,244
Purchased credit impaired (loans acquired with deteriorated credit quality)		10		0		0		0		10
Total Allowance for Loan Loss	$	4,659	$	2,360	$	2,351	$	42	$	9,412
Loans receivable – Ending balance:
Individually evaluated for impairment	$	2,681	$	1,159	$	3,340	$	0	$	7,180
Collectively evaluated for impairment		273,300		55,302		531,752		13,128		873,482
Purchased credit impaired (loans acquired with deteriorated credit quality)		1,095		0		3,270		0		4,365
Total Loans Receivable	$	277,076	$	56,461	$	538,362	$	13,128	$	885,027
December 31, 2012
Allowance for Loan Loss – Ending balance:
Individually evaluated for impairment	$	11	$	0	$	0	$	0	$	11
Collectively evaluated for impairment		4,552		2,035		2,084		112		8,783
Purchased credit impaired (loans acquired with deteriorated credit quality)		9		0		0		0		9
Total Allowance for Loan Loss	$	4,572	$	2,035	$	2,084	$	112	$	8,803
Loans receivable – Ending balance:
Individually evaluated for impairment	$	885	$	1,200	$	3,499	$	0	$	5,584
Collectively evaluated for impairment		260,982		47,328		512,312	$	21,775		842,397
Purchased credit impaired (loans acquired with deteriorated credit quality)		770		0		6,130	$	4		6,904
Total Loans Receivable	$	262,637	$	48,528	$	521,941	$	21,779	$	854,885

Risk Category of Loans by Class of Loans

The following tables present the risk category of loans by class of loans based on the most recent internal loan classification as of the dates indicated (dollars in thousands):

	Commercial and Industrial		Construction, Land Development and Other Land		Commercial and Other Real Estate		Other		Total
June 30, 2013
Pass	$	265,362	$	55,302	$	513,055	$	13,125	$	846,844
Special Mention		1,428		0		3,037		0		4,465
Substandard		9,741		1,159		22,270		3		33,173
Doubtful		545		0		0		0		545
Total	$	277,076	$	56,461	$	538,362	$	13,128	$	885,027
December 31, 2012
Pass	$	250,624	$	47,328	$	493,768	$	21,655	$	813,375
Special Mention		4,602		0		5,300		0		9,902
Substandard		7,411		1,200		22,873		119		31,603
Doubtful		0		0		0		5		5
Total	$	262,637	$	48,528	$	521,941	$	21,779	$	854,885

Aging Analysis of Recorded Investment

The following tables present an aging analysis of the recorded investment of past due loans and non-accrual loans as of the dates indicated (dollars in thousands):

	31-60 Days Past Due		61-90 Days Past Due		Greater than 90 Days Past Due and Accruing		Total Past Due and Accruing		Total Non Accrual		Current		Total Loans
June 30, 2013
Commercial and Industrial	$	246	$	961	$	0	$	1,207	$	3,771	$	272,098	$	277,076
Construction, Land Development and Other Land		0		0		0		0		1,159		55,302		56,461
Commercial and Other Real Estate		0		0		0		0		5,539		532,823		538,362
Other		0		2		0		2		0		13,126		13,128
Total	$	246	$	963	$	0	$	1,209	$	10,469	$	873,349	$	885,027

	31-60 Days Past Due		61-90 Days Past Due		Greater than 90 Days Past Due and Accruing		Total Past Due and Accruing		Total Non Accrual		Current		Total Loans
December 31, 2012
Commercial and Industrial	$	1,025	$	0	$	0	$	1,025	$	1,583	$	260,029	$	262,637
Construction, Land Development and Other Land		0		0		0		0		1,200		47,328		48,528
Commercial and Other Real Estate		2,884		0		0		2,884		7,742		511,315		521,941
Other		0		0		0		0		5		21,774		21,779
Total	$	3,909	$	0	$	0	$	3,909	$	10,530	$	840,446	$	854,885

Recorded Investment and Unpaid Principal Balances for TDR Loans

The following tables include the recorded investment and unpaid principal balances for TDR loans for the dates and periods indicated (dollars in thousands). This table includes two commercial and industrial TDR loans that were purchased credit impaired (“PCI”). As of June 30, 2013, these two TDR PCI loans had a recorded investment of $97,850 and unpaid principal balances of $157,377. Both of these loans had been performing in compliance with their restructured agreements, and were returned to accrual status during the fourth quarter of 2012. One loan is still accruing and performing in compliance with its restructured agreement, the other had to be placed on non-accrual status during the second quarter of 2013.

	Recorded Investment		Unpaid Principal Balance		Interest Income Recognized
Period ended June 30, 2013
Commercial and Industrial	$	611	$	904	$	1
Construction, Land Development and Other Land		1,159		2,791		0
Commercial and Other Real Estate		2,236		2,785		0
Total	$	4,006	$	6,480	$	1

	Recorded Investment		Unpaid Principal Balance		Interest Income Recognized
Year ended December 31, 2012
Commercial and Industrial	$	314	$	626	$	5
Construction, Land Development and Other Land		1,200		2,791		0
Commercial and Other Real Estate		4,193		4,874		32
Total	$	5,707	$	8,291	$	37

Pre and Post Modification Recorded Investment in TDR Loans

The following table shows the pre- and post-modification recorded investment in TDR loans by type of modification and loan segment that have occurred during the periods indicated (dollars in thousands):

	Three Months Ended June 30, 2013						Three Months Ended June 30, 2012
	Number of Loans		Pre- Modification Recorded Investment		Post- Modification Recorded Investment		Number of Loans		Pre- Modification Recorded Investment		Post- Modification Recorded Investment
Reduced Interest Rate:
Construction, Land Development and Other Land		0	$	0	$	0		0	$	0	$	0
Lengthened Amortization:
Commercial and Industrial		0		0		0		0		0		0
Commercial and Other Real Estate		0		0		0		0		0		0
		0		0		0		0		0		0
Total		0	$	0	$	0		0	$	0	$	0

	Six Months Ended June 30, 2013						Six Months Ended June 30, 2012
	Number of Loans		Pre- Modification Recorded Investment		Post- Modification Recorded Investment		Number of Loans		Pre- Modification Recorded Investment		Post- Modification Recorded Investment
Reduced Interest Rate:
Construction, Land Development and Other Land		0	$	0	$	0		0	$	0	$	0
Lengthened Amortization:
Commercial and Industrial		1		310		310		0		0		0
Commercial and Other Real Estate		0		0		0		0		0		0
		0		0		0		0		0		0
Total		1	$	310	$	310		0	$	0	$	0

Recorded Investment and Unpaid Principal Balances for Impaired Loans

The following tables present, by loan category, the recorded investment and unpaid principal balances for impaired loans with the associated allowance amount, if applicable, as of the dates and for the periods indicated (dollars in thousands). This table excludes purchased credit impaired loans (loans acquired with deteriorated credit quality) of $4.3 million and $6.9 million at June 30, 2013 and December 31, 2012, respectively.

	June 30, 2013						December 31, 2012
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
With no specific allowance recorded:
Commercial and Industrial	$	1,986	$	2,041	$	0	$	677	$	1,490	$	0
Construction, Land Development and Other Land		1,159		2,791		0		1,201		2,791		0
Commercial and Other Real Estate		3,340		4,370		0		3,498		4,331		0
With a specific allowance recorded:
Commercial and Industrial		695		1,420		9		208		463		11
Construction, Land Development and Other Land		0		0		0		0		0		0
Commercial and Other Real Estate		0		0		0		0		0		0
Total
Commercial and Industrial		2,681		3,461		9		885		1,953		11
Construction, Land Development and Other Land		1,159		2,791		0		1,201		2,791		0
Commercial and Other Real Estate		3,340		4,370		0		3,498		4,331		0
Total	$	7,180	$	10,622	$	9	$	5,584	$	9,075	$	11

	Three Months Ended June 30,								Six Months Ended June 30,
	2013				2012				2013				2012
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no specific allowance recorded:
Commercial and Industrial	$	1,500	$	0	$	586	$	0	$	994	$	0	$	587	$	0
Construction, Land Development and Other Land		1,159		0		1,249		0		1,179		0		1,260		0
Commercial and Other Real Estate		3,340		0		131		0		3,398		0		65		0
With a specific allowance recorded:
Commercial and Industrial		488		0		200		0		319		0		200		0
Construction, Land Development and Other Land		0		0		0		0		0		0		0		0
Commercial and Other Real Estate		0		0		1,064		0		0		0		1,064		0
Total:
Commercial and Industrial		1,988		0		786		0		1,313		0		787		0
Construction, Land Development and Other Land		1,159		0		1,249		0		1,179		0		1,260		0
Commercial and Other Real Estate		3,340		0		1,195		0		3,398		0		1,130		0
Total	$	6,487	$	0	$	3,230	$	0	$	5,890	$	0	$	3,176	$	0

Additional Information on Impaired Loans

The following is a summary of additional information pertaining to impaired loans for the periods indicated (dollars in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012
Interest foregone on impaired loans	$	141	$	86	$	230	$	160
Cash collections applied to reduce principal balance	$	110	$	22	$	152	$	43
Interest income recognized on cash collections	$	0	$	0	$	0	$	0

Accretable Yield for Loans Acquired

The following table reflects the accretable net discount for loans acquired through acquisition accounted for under ASC 310 “Receivables” for the periods indicated (dollars in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
Balance, beginning of period	$	11,269		$	2,193		$	12,189		$	2,585
Accretion, included in interest income		(1,139	)		(361	)		(2,083	)		(753	)
Reclassifications (to) from non-accretable yield		0			0			24			0
Balance, end of period	$	10,130		$	1,832		$	10,130		$	1,832

Carrying Value of Purchased Credit Impaired Loans

The following table reflects the outstanding balance and related carrying value of PCI loans as of the dates indicated (dollars in thousands):

	June 30, 2013				December 31, 2012
	Unpaid Principal Balance		Carrying Value		Unpaid Principal Balance		Carrying Value
Commercial and Industrial	$	1,613	$	1,095	$	1,221	$	770
Commercial and Other Real Estate		6,053		3,270		9,424		6,130
Other		0		0		73		4
Total	$	7,666	$	4,365	$	10,718	$	6,904

Accretable Net Discount of Purchased Credit Impaired Loans

The following table reflects the activities in the accretable net discount for PCI loans for the period indicated (dollars in thousands):

	Three Months Ended June 30,					Six Months Ended June 30,
	2013			2012		2013			2012
Balance, beginning of period	$	9		$	0	$	9		$	0
Accretion, included in interest income		(9	)		0		(9	)		0
Reclassifications (to) from non-accretable yield		428			0		428			0
Balance, end of period	$	428		$	0	$	428		$	0

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Recorded Investment and Unpaid Principal Balances for TDR Loans (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Financing Receivable, Modifications [Line Items]
Recorded Investment	$ 7,180	$ 5,584
Unpaid Principal Balance	10,622	9,075
Commercial and Industrial
Financing Receivable, Modifications [Line Items]
Recorded Investment	2,681	885
Unpaid Principal Balance	3,461	1,953
Construction, Land Development and Other Land
Financing Receivable, Modifications [Line Items]
Recorded Investment	1,159	1,201
Unpaid Principal Balance	2,791	2,791
Commercial and Other Real Estate
Financing Receivable, Modifications [Line Items]
Recorded Investment	3,340	3,498
Unpaid Principal Balance	4,370	4,331
Troubled Debt Restructuring
Financing Receivable, Modifications [Line Items]
Recorded Investment	4,006	5,707
Unpaid Principal Balance	6,480	8,291
Interest Income Recognized	1	37
Troubled Debt Restructuring | Commercial and Industrial
Financing Receivable, Modifications [Line Items]
Recorded Investment	611	314
Unpaid Principal Balance	904	626
Interest Income Recognized	1	5
Troubled Debt Restructuring | Construction, Land Development and Other Land
Financing Receivable, Modifications [Line Items]
Recorded Investment	1,159	1,200
Unpaid Principal Balance	2,791	2,791
Interest Income Recognized	0	0
Troubled Debt Restructuring | Commercial and Other Real Estate
Financing Receivable, Modifications [Line Items]
Recorded Investment	2,236	4,193
Unpaid Principal Balance	2,785	4,874
Interest Income Recognized	$ 0	$ 32

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Basic and Diluted Earnings per Common Share Computations (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Earnings Per Share [Line Items]
Net Income	$ 2,321	$ 525	$ 4,476	$ 1,031	$ 1,727
Basic weighted average common shares outstanding	10,502	6,732	10,494	6,722
Dilutive effect of potential common share issuances from stock options and restricted stock	158	161	195	141
Diluted weighted average common shares outstanding	10,660	6,893	10,689	6,863
Income per common share
Basic	$ 0.22	$ 0.08	$ 0.43	$ 0.15
Diluted	$ 0.22	$ 0.08	$ 0.42	$ 0.15
Anti-dilutive shares not included in the calculation of diluted earnings per share	23	246	134	246

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Company's Gross Loans, Stratified by Industry Concentration of Borrower (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Loans Receivable [Line Items]
Gross loans	$ 885,027	$ 854,885
Real Estate
Loans Receivable [Line Items]
Gross loans	342,048	312,625
Hotel/Lodging
Loans Receivable [Line Items]
Gross loans	72,905	82,483
Manufacturing
Loans Receivable [Line Items]
Gross loans	77,656	77,203
Construction
Loans Receivable [Line Items]
Gross loans	67,133	55,385
Wholesale
Loans Receivable [Line Items]
Gross loans	52,270	54,218
Finance
Loans Receivable [Line Items]
Gross loans	44,721	59,791
Healthcare
Loans Receivable [Line Items]
Gross loans	42,378	41,857
Professional Services
Loans Receivable [Line Items]
Gross loans	40,660	44,714
Restaurant/Food Service
Loans Receivable [Line Items]
Gross loans	35,383	24,105
Retail
Loans Receivable [Line Items]
Gross loans	25,160	30,302
Other Services
Loans Receivable [Line Items]
Gross loans	24,030	23,239
Administrative Management
Loans Receivable [Line Items]
Gross loans	21,188	19,078
Information
Loans Receivable [Line Items]
Gross loans	12,151	4,492
Transportation
Loans Receivable [Line Items]
Gross loans	9,521	11,431
Entertainment
Loans Receivable [Line Items]
Gross loans	6,250	8,132
Other
Loans Receivable [Line Items]
Gross loans	$ 11,573	$ 5,830

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Additional Information on Impaired Loans (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Financing Receivable, Impaired [Line Items]
Interest foregone on impaired loans	$ 141	$ 86	$ 230	$ 160
Cash collections applied to reduce principal balance	110	22	152	43
Interest income recognized on cash collections	$ 0	$ 0	$ 0	$ 0

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Derivative Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2013

Fair Values Derivatives Instruments on Consolidated Balance Sheets

The location of the asset and liability derivative instruments as of June 30, 2013 and December 31, 2012, and the amount of income, expense and gain or loss recognized for the three and six months ended June 30, 2013 and 2012 are presented in the tables below (dollars in thousands):

	Liability Derivatives
	June 30, 2013		December 31, 2012
Fair Value Hedges
Interest rate contacts notional amount	$	32,458	$	35,990
Derivatives not designated as hedging instruments under ASC 815:
Interest rate swap contracts fair value	$	827	$	1,114
Derivatives designated as hedging instruments under ASC 815:
Interest rate swap contracts fair value		3,729		4,924
Total interest rate contracts fair value	$	4,556	$	6,038
Balance sheet location		Accrued Interest Payable and Other Liabilities		Accrued Interest Payable and Other Liabilities

Effect of Derivative Instruments on Consolidated Statements of Income

The Effect of Derivative Instruments on the Consolidated Statements of Income
	Three Months Ended June 30,					Six Months Ended June 30,
	2013			2012		2013			2012
Derivatives not designated as hedging instruments:
Interest rate swap contracts – loans
Increase in fair value of interest rate swap contracts	$	155		$	0	$	217		$	0
Payments (paid) on interest rate swap contracts on loans		(69	)		0		(156	)		0
Net increase in other non-interest income		86			0		61			0
Interest rate swap contracts – subordinated debenture
Increase in fair value of interest rate swap contracts		0			0		70			0
Payments (paid) on interest rate swap contracts on subordinated debentures		0			0		(70	)		0
Net increase in other non-interest income		0			0		0			0
Total net increase in other non-interest income	$	86		$	0	$	61		$	0
Derivatives designated as hedging instruments:
Interest rate swap contracts – loans
Increase in fair value of interest rate swap contracts	$	851		$	0	$	1,196		$	0
Decrease in fair value of hedged loans		(521	)		0		(590	)		0
Payment (paid) on interest rate swap contracts on loans		(331	)		0		(633	)		0
Net (decrease) in interest income on loans	$	(1	)	$	0	$	(27	)	$	0

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Fair Value of Assets and Liabilities - Additional Information (Detail) (USD $)	3 Months Ended		6 Months Ended		3 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Mar. 31, 2013 Collateralized Mortgage Obligations
Fair Value of Financial Instruments [Line Items]
Net gain from sale of securities	$ 0	$ 0	$ 5,000	$ 0	$ 4,600

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Effect of Derivative Instruments on Consolidated Statements of Income (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Not Designated as Hedging Instrument
Derivative [Line Items]
Net increase/(decrease) in interest and other non-interest income	$ 86	$ 0	$ 61	$ 0
Not Designated as Hedging Instrument | Loans
Derivative [Line Items]
Increase in fair value of interest rate swap contracts	155	0	217	0
Payments (paid) on interest rate swap contracts on loans	(69)	0	(156)	0
Net increase/(decrease) in interest and other non-interest income	86	0	61	0
Not Designated as Hedging Instrument | Subordinated debentures
Derivative [Line Items]
Increase in fair value of interest rate swap contracts	0	0	70	0
Payments (paid) on interest rate swap contracts on loans	0	0	(70)	0
Net increase/(decrease) in interest and other non-interest income	0	0	0	0
Designated as Hedging Instrument | Loans
Derivative [Line Items]
Increase in fair value of interest rate swap contracts	851	0	1,196	0
Decrease in fair value of hedged loans	(521)	0	(590)	0
Payments (paid) on interest rate swap contracts on loans	(331)	0	(633)	0
Net increase/(decrease) in interest and other non-interest income	$ (1)	$ 0	$ (27)	$ 0

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Financial Assets and Financial Liabilities Measured at Fair Value on Recurring Basis (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available-for-sale	$ 109,955	$ 118,153
Interest Rate Swap Contracts	4,556	6,038
Fair Value, Inputs, Level 1
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available-for-sale	0	0
Interest Rate Swap Contracts	0	0
Fair Value, Inputs, Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available-for-sale	109,955	115,243
Interest Rate Swap Contracts	4,556	6,038
Fair Value, Inputs, Level 3
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available-for-sale	0	2,910
Interest Rate Swap Contracts	$ 0	$ 0

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Changes in Allowance for Loan Loss and Recorded Investment (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Allowance For Credit Losses And Finance Receivables By Portfolio Individually And Collectively Evaluated For Impairment [Line Items]
Beginning balance	$ 8,841	$ 7,512	$ 8,803	$ 7,495
Provision for loan losses	1,153	380	1,287	380
Net (charge-offs) recoveries:
Charge-offs	(616)	(586)	(737)	(589)
Recoveries	34	23	59	43
Net (charge-offs) recoveries	(582)	(563)	(678)	(546)
Ending balance	9,412	7,329	9,412	7,329
Ending balance: Individually evaluated for impairment	158		158		11
Ending balance: Collectively evaluated for impairment	9,244		9,244		8,783
Ending balance: Purchased credit impaired (loans acquired with deteriorated credit quality)	10		10		9
Total Allowance for Loan Loss	9,412		9,412		8,803
Loans receivable:
Ending balance: Individually evaluated for impairment	7,180		7,180		5,584
Ending balance: Collectively evaluated for impairment	873,482		873,482		842,397
Ending balance: Purchased credit impaired (loans acquired with deteriorated credit quality)	4,365		4,365		6,904
Total Loans Receivable	885,027		885,027		854,885
Commercial and Industrial
Allowance For Credit Losses And Finance Receivables By Portfolio Individually And Collectively Evaluated For Impairment [Line Items]
Beginning balance	4,187	3,837	4,572	3,541
Provision for loan losses	1,014	747	650	1,026
Net (charge-offs) recoveries:
Charge-offs	(569)	(443)	(612)	(443)
Recoveries	27	20	49	37
Net (charge-offs) recoveries	(542)	(423)	(563)	(406)
Ending balance	4,659	4,161	4,659	4,161
Ending balance: Individually evaluated for impairment	158		158		11
Ending balance: Collectively evaluated for impairment	4,491		4,491		4,552
Ending balance: Purchased credit impaired (loans acquired with deteriorated credit quality)	10		10		9
Total Allowance for Loan Loss	4,659		4,659		4,572
Loans receivable:
Ending balance: Individually evaluated for impairment	2,681		2,681		885
Ending balance: Collectively evaluated for impairment	273,300		273,300		260,982
Ending balance: Purchased credit impaired (loans acquired with deteriorated credit quality)	1,095		1,095		770
Total Loans Receivable	277,076		277,076		262,637
Construction, Land Development and Other Land
Allowance For Credit Losses And Finance Receivables By Portfolio Individually And Collectively Evaluated For Impairment [Line Items]
Beginning balance	2,147	805	2,035	752
Provision for loan losses	213	(142)	325	(89)
Net (charge-offs) recoveries:
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Net (charge-offs) recoveries	0	0	0	0
Ending balance	2,360	663	2,360	663
Ending balance: Individually evaluated for impairment	0		0		0
Ending balance: Collectively evaluated for impairment	2,360		2,360		2,035
Ending balance: Purchased credit impaired (loans acquired with deteriorated credit quality)	0		0		0
Total Allowance for Loan Loss	2,360		2,360		2,035
Loans receivable:
Ending balance: Individually evaluated for impairment	1,159		1,159		1,200
Ending balance: Collectively evaluated for impairment	55,302		55,302		47,328
Ending balance: Purchased credit impaired (loans acquired with deteriorated credit quality)	0		0		0
Total Loans Receivable	56,461		56,461		48,528
Commercial and Other Real Estate
Allowance For Credit Losses And Finance Receivables By Portfolio Individually And Collectively Evaluated For Impairment [Line Items]
Beginning balance	2,400	2,626	2,084	2,911
Provision for loan losses	(6)	(225)	379	(510)
Net (charge-offs) recoveries:
Charge-offs	(47)	(136)	(117)	(136)
Recoveries	4	0	5	0
Net (charge-offs) recoveries	(43)	(136)	(112)	(136)
Ending balance	2,351	2,265	2,351	2,265
Ending balance: Individually evaluated for impairment	0		0		0
Ending balance: Collectively evaluated for impairment	2,351		2,351		2,084
Ending balance: Purchased credit impaired (loans acquired with deteriorated credit quality)	0		0		0
Total Allowance for Loan Loss	2,351		2,351		2,084
Loans receivable:
Ending balance: Individually evaluated for impairment	3,340		3,340		3,499
Ending balance: Collectively evaluated for impairment	531,752		531,752		512,312
Ending balance: Purchased credit impaired (loans acquired with deteriorated credit quality)	3,270		3,270		6,130
Total Loans Receivable	538,362		538,362		521,941
Other
Allowance For Credit Losses And Finance Receivables By Portfolio Individually And Collectively Evaluated For Impairment [Line Items]
Beginning balance	107	244	112	291
Provision for loan losses	(68)	0	(67)	(47)
Net (charge-offs) recoveries:
Charge-offs	0	(7)	(8)	(10)
Recoveries	3	3	5	6
Net (charge-offs) recoveries	3	(4)	(3)	(4)
Ending balance	42	240	42	240
Ending balance: Individually evaluated for impairment	0		0		0
Ending balance: Collectively evaluated for impairment	42		42		112
Ending balance: Purchased credit impaired (loans acquired with deteriorated credit quality)	0		0		0
Total Allowance for Loan Loss	42		42		112
Loans receivable:
Ending balance: Individually evaluated for impairment	0		0		0
Ending balance: Collectively evaluated for impairment	13,128		13,128		21,775
Ending balance: Purchased credit impaired (loans acquired with deteriorated credit quality)	0		0		4
Total Loans Receivable	$ 13,128		$ 13,128		$ 21,779

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Carrying Amounts and Fair Values of Financial Instruments (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available-for-sale, Carrying Amount	$ 109,955	$ 118,153
Loans, net, Carrying Amount	875,615	846,082
Certificates of deposit, Carrying Amount	60,192	81,336
Securities sold under agreements to repurchase, Carrying Amount	29,612	22,857
Subordinated debentures, Carrying Amount	9,283	9,169
Interest rate swap contracts, Carrying Amount	4,556	6,038
Investment securities available-for-sale, Fair Value	109,955	118,153
Loans, net, Fair Value	878,242	848,146
Certificates of deposit, Fair Value	60,310	81,648
Securities sold under agreements to repurchase, Fair Value	29,612	22,857
Subordinated debentures, Fair Value	12,372	12,372
Interest rate swap contracts, Fair Value	4,556	6,038
Fair Value, Inputs, Level 1
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available-for-sale, Fair Value	0	0
Loans, net, Fair Value	0	0
Certificates of deposit, Fair Value	0	0
Securities sold under agreements to repurchase, Fair Value	0	0
Subordinated debentures, Fair Value	0	0
Interest rate swap contracts, Fair Value	0	0
Fair Value, Inputs, Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available-for-sale, Fair Value	109,955	115,243
Loans, net, Fair Value	0	0
Certificates of deposit, Fair Value	60,310	81,648
Securities sold under agreements to repurchase, Fair Value	29,612	22,857
Subordinated debentures, Fair Value	0	0
Interest rate swap contracts, Fair Value	4,556	6,038
Fair Value, Inputs, Level 3
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available-for-sale, Fair Value	0	2,910
Loans, net, Fair Value	878,242	848,146
Certificates of deposit, Fair Value	0	0
Securities sold under agreements to repurchase, Fair Value	0	0
Subordinated debentures, Fair Value	12,372	12,372
Interest rate swap contracts, Fair Value	$ 0	$ 0

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Investment Securities (Tables)

6 Months Ended

Jun. 30, 2013

Amortized Cost and Estimated Fair Values of Investment Securities

The following tables present the amortized cost and estimated fair values of investment securities as of the dates indicated (dollars in thousands):

			Gross Unrealized
June 30, 2013 – Available-for-sale:	Amortized Cost		Gains		Losses		Net Non-credit Gains on Other– than- temporarily Impaired Securities		Estimated Fair Value
U.S. Govt Agency and Sponsored Agency - Note Securities	$	7,265	$	7	$	5	$	0	$	7,267
U.S. Govt Agency - SBA Securities		44,383		1,054		149		0		45,288
U.S. Govt Agency - GNMA Mortgage-Backed Securities		25,649		331		585		0		25,395
U.S. Govt Sponsored Agency - CMO & Mortgage-Backed Securities		17,735		472		291		0		17,916
Corporate Securities		9,239		182		0		0		9,421
Municipal Securities		4,688		2		22		0		4,668
Total investment securities	$	108,959	$	2,048	$	1,052	$	0	$	109,955
December 31, 2012 – Available-for-sale:
U.S. Govt Agency and Sponsored Agency - Note Securities	$	18,888	$	24	$	1	$	0	$	18,911
U.S. Govt Agency - SBA Securities		42,308		703		32		0		42,979
U.S. Govt Agency - GNMA Mortgage-Backed Securities		22,237		728		5		0		22,960
U.S. Govt Sponsored Agency - CMO & Mortgage-Backed Securities		12,335		696		0		0		13,031
Corporate Securities		10,311		235		0		0		10,546
Municipal Securities		6,831		3		18		0		6,816
Private Issue CMO Securities		2,874		0		0		36		2,910
Total investment securities	$	115,784	$	2,389	$	56	$	36	$	118,153

Investment Securities with Unrealized Losses that are considered to be Temporarily Impaired or Other than Temporarily Impaired

Presented below are investment securities with unrealized losses that are considered to be temporarily-impaired or other-than-temporarily impaired. They are summarized and classified according to the duration of the loss period as of the dates indicated as follows (dollars in thousands):

	< 12 Continuous Months				> 12 Continuous Months				Total
	Fair Value		Net Unrealized Loss		Fair Value		Net Unrealized Loss		Fair Value		Net Unrealized Loss
June 30, 2013
Temporarily-impaired available-for-sale investment securities:
U.S. Govt. - Agency and Sponsored Agency Note Securities	$	10,022	$	153	$	707	$	1	$	10,729	$	154
U.S. Govt. Sponsored Agency CMO & Mortgage-Backed Securities		22,470		876		0		0		22,470		876
Municipal Securities		3,151		22		0		0		3,151		22
Total temporarily-impaired available-for-sale investment securities	$	35,643	$	1,051	$	707	$	1	$	36,350	$	1,052
December 31, 2012
Temporarily-impaired available-for-sale investment securities:
U.S. Govt. - Agency and Sponsored Agency Note Securities	$	2,209	$	1	$	0	$	0	$	2,209	$	1
U.S. Govt. Agency SBA Securities		5,124		32		0		0		5,124		32
U.S. Govt. Sponsored Agency CMO & Mortgage-Backed Securities		2,126		5		0		0		2,126		5
Municipal Securities		6,293		18		0		0		6,293		18
Total temporarily-impaired available-for-sale investment securities	$	15,752	$	56	$	0	$	0	$	15,752	$	56
Other-than-temporarily impaired available-for-sale investment securities:
Private Issue CMO Securities		0		0		1,235		65		1,235		65
Total temporarily-impaired and other-than-temporarily impaired available-for-sale investment securities	$	15,752	$	56	$	1,235	$	65	$	16,987	$	121

Maturities Schedule of Securities

	June 30, 2013
Maturities Schedule of Securities	Amortized Cost		Fair Value		Weighted Average Yield
Due through one year	$	20,091	$	20,472		1.63	%
Due after one year through five years		43,638		44,301		1.80	%
Due after five years through ten years		23,537		23,545		2.39	%
Due after ten years		21,693		21,637		2.66	%
Total	$	108,959	$	109,955		2.06	%

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Consolidated Statements of Comprehensive Income (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Net Income	$ 2,321	$ 525	$ 4,476	$ 1,031
Other Comprehensive Income, net of tax:
Non-credit portion of other-than-temporary impairments arising during the period	0	70	(22)	190
Net unrealized (losses) on investment securities arising during the period	(734)	(54)	(786)	(77)
Net other comprehensive income (loss)	(734)	16	(808)	113
Comprehensive Income	$ 1,587	$ 541	$ 3,668	$ 1,144

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Consolidated Statements Of Shareholders' Equity (Parenthetical) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012
Issuance of Stock for Purchase of PC Bancorp, Net issuance costs	$ 199

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Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2013

Recent Accounting Pronouncements

Note 2 - Recent Accounting Pronouncements

In February 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2013-02, Other Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. The amendments in this update supersede and replace the presentation requirements for reclassifications out of accumulated other comprehensive income in ASUs 2011-05 (issued in June 2011) and 2011-12 (issued in December 2011). These amendments do not change the current requirements for reporting net income or other comprehensive income in financial statements. However, the amendments require an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. These amendments are effective prospectively for reporting periods beginning after December 15, 2012. The Company adopted the original ASU in the first quarter of 2012. The additional presentation requirements have been implemented and are disclosed in Note 8 herein.

In February 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2013-04, Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation is Fixed at the Reporting Date. The amendments in this update provide guidance for the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation is fixed at the reporting date, except for obligations addressed within existing guidance in U.S. GAAP. This guidance requires an entity to measure those obligations as the sum of the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors and any additional amount the reporting entity expects to pay on behalf of its co-obligors. This ASU also requires an entity to disclose the nature and amount of the obligation, as well as other information about those obligations. The amendments are effective upon issuance. The adoption of this ASU did not have an impact on the Company’s financial position or results of operations.

In January 2013, the FASB issued ASU 2013-01, Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities. This update amends ASU 2011-11, Balance Sheet (Topic 210): Disclosures about offsetting Assets and Liabilities. The amendment clarifies that the scope of ASU 2011-11 applies to derivatives accounted for in accordance with Topic 815, Derivatives and Hedging, including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions that are either offset in accordance with Section 210-20-45 or Section 815-10-45 or subject to an enforceable master netting arrangement or similar agreement. The amendments are effective for fiscal and interim periods beginning on or after January 1, 2013. The adoption of this ASU did not have an impact on the Company’s financial position or results of operations.

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Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Cash flows from operating activities:
Net income:	$ 4,476	$ 1,031
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	1,287	380
Provision for unfunded loan commitments	34	0
Stock based compensation expense	475	486
Depreciation	568	474
Net accretion of discounts for loans acquired and deferred loan fees/costs	(3,071)	(1,118)
Net amortization from investment securities	840	603
Increase in Bank Owned Life Insurance	(308)	0
OREO valuation write-downs	0	232
Net other-than-temporary impairment losses recognized in operations	0	60
Gain on sale of securities, net	(5)	0
Gain on sale of SBA loans, net	(410)	0
Amortization of core deposit intangible	166	69
Amortization of time deposit premium	(106)	0
Accretion of subordinated debenture discount	114	0
(Increase) decrease in deferred tax assets	1,228	(11)
(Increase) decrease in accrued interest receivable and other assets	(389)	293
Decrease in accrued interest payable and other liabilities	(1,454)	(287)
Net cash provided by operating activities	3,445	2,212
Cash flows from investing activities:
Purchases of available-for-sale investment securities	(20,395)	0
Proceeds from sales of investment securities	2,854	0
Proceeds from repayment and maturities from investment securities	23,531	10,674
Loans originated, net of principal payments	(27,339)	1,589
Purchases of premises and equipment	(339)	(703)
Net (increase) decrease in certificates of deposit in other financial institutions	(1,298)	11,716
Net purchase (redemption) of Federal Home Loan Bank and other bank stock	150	(37)
Net cash provided by (used in) investing activities	(22,836)	23,239
Cash flows from financing activities:
Net increase in Non-interest bearing demand deposits	27,518	65,667
Net increase in Interest bearing transaction accounts	14,838	24,676
Net increase (decrease) in Money market and savings deposits	(1,581)	15,623
Net (decrease) in Certificates of deposit	(21,038)	(2,367)
Net increase in Securities sold under agreements to repurchase	6,755	3,205
Excess tax benefits on stock compensation	31	0
Net proceeds from stock option exercised	53	0
Restricted stock repurchase/dividends	(283)	(224)
Net cash provided by financing activities	26,293	106,580
Net increase in cash and cash equivalents	6,902	132,031
Cash and cash equivalents, beginning of year	182,896	134,230
Cash and cash equivalents, end of period	189,798	266,261
Supplemental disclosures of cash flow information:
Cash paid during the year for interest	1,074	473
Cash paid during the year for taxes	1,304	1,300
Supplemental disclosures of non-cash investing activities:
Net increase (decrease) in unrealized gain (loss) on investment securities, net of tax	$ (808)	$ 113

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Loans - Additional Information (Detail) (USD $)	3 Months Ended		6 Months Ended					6 Months Ended						6 Months Ended	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012	Jun. 30, 2013 Financing Receivable Troubled Debt Restructurings	Jun. 30, 2013 Financing Receivable Troubled Debt Restructurings Interest Only Payments	Jun. 30, 2013 Debt Instrument Guaranteed Loans	Jun. 30, 2013 SBA Servicing Asset	Jun. 30, 2013 SBA Servicing Asset Commercial and Industrial	Jun. 30, 2013 SBA Servicing Asset Debt Instrument Remaining Loans	Jun. 30, 2013 SBA Servicing Asset Sales of loans	Jun. 30, 2013 SBA Servicing Asset Debt Instrument Guaranteed Loans	Jun. 30, 2013 Credit Quality Portion	Dec. 31, 2012 Credit Quality Portion
Loans Receivable [Line Items]
Total loans									$ 105,000,000	$ 1,600,000
Loans sold									71,000,000		34,000,000	9,000,000	25,000,000
Loans sold								4,000,000
Net gain on sale of loan	60,000	0	410,000	0				410,000
Recorded investment	885,027,000		885,027,000		854,885,000	97,850
Unpaid loan principle amount						157,377
Pre and post modification recorded investment							310,000
Loan modified through troubled debt restructuring	66,000		66,000
Credit purchase impaired loan														$ 4,400,000	$ 6,900,000

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Other Comprehensive Income (Loss) (Tables)

6 Months Ended

Jun. 30, 2013

Changes in Accumulated Other Comprehensive Income (Loss)

The following table presents the changes in accumulated other comprehensive income (loss) by component for the periods indicated (dollars in thousands):

	Before Tax			Tax Effect			Net of Tax
Three Months Ended – June 30, 2013
Net unrealized gains (losses) on investment securities:
Beginning balance	$	2,243		$	923		$	1,320
Non-credit portion of other-than-temporary impairments arising during the period		0			0			0
Net unrealized losses arising during the period		(1,247	)		(513	)		(734	)
Net other comprehensive loss		(1,247	)		(513	)		(734	)
Ending balance	$	996		$	410		$	586
Three Months Ended – June 30, 2012
Net unrealized gains (losses) on investment securities:
Beginning balance	$	1,678		$	691		$	987
Non-credit portion of other-than-temporary impairments arising during the period		110			40			70
Net unrealized losses arising during the period		(82	)		(28	)		(54	)
Net other comprehensive income		28			12			16
Ending balance	$	1,706		$	703		$	1,003

	Before Tax			Tax Effect			Net of Tax
Six Months Ended – June 30, 2013
Net unrealized gains (losses) on investment securities:
Beginning balance	$	2,369		$	975		$	1,394
Non-credit portion of other-than-temporary impairments arising during the period		(32	)		(13	)		(19	)
Net unrealized losses arising during the period		(1,336	)		(550	)		(786	)
Other comprehensive loss before reclassifications		(1,368	)		(563	)		(805	)
Reclassification adjustment for gains realized in net income		(5	)		(2	)		(3	)
Net other comprehensive loss		(1,373	)		(565	)		(808	)
Ending balance	$	996		$	410		$	586
Six Months Ended – June 30, 2012
Net unrealized gains (losses) on investment securities:
Beginning balance	$	1,536		$	646		$	890
Non-credit portion of other-than-temporary impairments arising during the period		286			96			190
Net unrealized losses arising during the period		(116	)		(39	)		(77	)
Net other comprehensive income		170			57			113
Ending balance	$	1,706		$	703		$	1,003

Components of Accumulated Other Comprehensive Income (Loss)

The table below presents the components of accumulated other comprehensive income (loss) as of the dates indicated (dollars in thousands):

	June 30, 2013			June 30, 2012
Net unrealized gain on non other-than-temporarily impaired investment securities	$	996		$	2,150
Net unrealized gain (loss) on other-than-temporarily impaired investment securities		0			(444	)
Total net unrealized gain on investment securities		996			1,706
Tax expense		(410	)		(703	)
Total accumulated other comprehensive income	$	586		$	1,003

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Basis of Financial Statement Presentation - Additional Information (Detail)	6 Months Ended
	Jun. 30, 2013
Basis of Presentation [Line Items]
Estimated income tax rate	41.00%

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Fair Values Derivatives Instruments on Consolidated Balance Sheets (Detail) (Accrued Interest Payable and Other Liabilities, USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Derivative [Line Items]
Liability Derivatives	$ 4,556	$ 6,038
Interest Rate Contract
Derivative [Line Items]
Liability Derivatives	32,458	35,990
Not Designated as Hedging Instrument | Interest Rate Swap
Derivative [Line Items]
Liability Derivatives	827	1,114
Designated as Hedging Instrument | Interest Rate Swap
Derivative [Line Items]
Liability Derivatives	$ 3,729	$ 4,924

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Investment Securities with Unrealized Losses Considered to be Temporarily Impaired or Other than Temporarily Impaired (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Schedule of Available-for-sale Securities [Line Items]
Temporarily-impaired available-for-sale investment securities, Fair Value	$ 36,350	$ 15,752
Temporarily-impaired available-for-sale investment securities, Net Unrealized Loss	1,052	56
Other-than-temporarily impaired available-for-sale investment securities, Net Unrealized Loss		121
Total temporarily-impaired and other-than-temporarily impaired available-for-sale investment securities		16,987
US Government and Government Agencies and Authorities
Schedule of Available-for-sale Securities [Line Items]
Temporarily-impaired available-for-sale investment securities, Fair Value	10,729	2,209
Temporarily-impaired available-for-sale investment securities, Net Unrealized Loss	154	1
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises
Schedule of Available-for-sale Securities [Line Items]
Temporarily-impaired available-for-sale investment securities, Fair Value	22,470	2,126
Temporarily-impaired available-for-sale investment securities, Net Unrealized Loss	876	5
Municipal Securities
Schedule of Available-for-sale Securities [Line Items]
Temporarily-impaired available-for-sale investment securities, Fair Value	3,151	6,293
Temporarily-impaired available-for-sale investment securities, Net Unrealized Loss	22	18
U S Government Agency S B A Securities
Schedule of Available-for-sale Securities [Line Items]
Temporarily-impaired available-for-sale investment securities, Fair Value		5,124
Temporarily-impaired available-for-sale investment securities, Net Unrealized Loss		32
Collateralized Mortgage Obligations
Schedule of Available-for-sale Securities [Line Items]
Other-than-temporarily impaired available-for-sale investment securities, Fair Value		1,235
Other-than-temporarily impaired available-for-sale investment securities, Net Unrealized Loss		65
Less Than Twelve Months
Schedule of Available-for-sale Securities [Line Items]
Temporarily-impaired available-for-sale investment securities, Fair Value	35,643	15,752
Temporarily-impaired available-for-sale investment securities, Net Unrealized Loss	1,051	56
Other-than-temporarily impaired available-for-sale investment securities, Net Unrealized Loss		56
Total temporarily-impaired and other-than-temporarily impaired available-for-sale investment securities		15,752
Less Than Twelve Months | US Government and Government Agencies and Authorities
Schedule of Available-for-sale Securities [Line Items]
Temporarily-impaired available-for-sale investment securities, Fair Value	10,022	2,209
Temporarily-impaired available-for-sale investment securities, Net Unrealized Loss	153	1
Less Than Twelve Months | Mortgage-backed Securities, Issued by US Government Sponsored Enterprises
Schedule of Available-for-sale Securities [Line Items]
Temporarily-impaired available-for-sale investment securities, Fair Value	22,470	2,126
Temporarily-impaired available-for-sale investment securities, Net Unrealized Loss	876	5
Less Than Twelve Months | Municipal Securities
Schedule of Available-for-sale Securities [Line Items]
Temporarily-impaired available-for-sale investment securities, Fair Value	3,151	6,293
Temporarily-impaired available-for-sale investment securities, Net Unrealized Loss	22	18
Less Than Twelve Months | U S Government Agency S B A Securities
Schedule of Available-for-sale Securities [Line Items]
Temporarily-impaired available-for-sale investment securities, Fair Value		5,124
Temporarily-impaired available-for-sale investment securities, Net Unrealized Loss		32
Less Than Twelve Months | Collateralized Mortgage Obligations
Schedule of Available-for-sale Securities [Line Items]
Other-than-temporarily impaired available-for-sale investment securities, Fair Value		0
Other-than-temporarily impaired available-for-sale investment securities, Net Unrealized Loss		0
More Than Twelve Months
Schedule of Available-for-sale Securities [Line Items]
Temporarily-impaired available-for-sale investment securities, Fair Value	707	0
Temporarily-impaired available-for-sale investment securities, Net Unrealized Loss	1	0
Other-than-temporarily impaired available-for-sale investment securities, Net Unrealized Loss		65
Total temporarily-impaired and other-than-temporarily impaired available-for-sale investment securities		1,235
More Than Twelve Months | US Government and Government Agencies and Authorities
Schedule of Available-for-sale Securities [Line Items]
Temporarily-impaired available-for-sale investment securities, Fair Value	707	0
Temporarily-impaired available-for-sale investment securities, Net Unrealized Loss	1	0
More Than Twelve Months | Mortgage-backed Securities, Issued by US Government Sponsored Enterprises
Schedule of Available-for-sale Securities [Line Items]
Temporarily-impaired available-for-sale investment securities, Fair Value	0	0
Temporarily-impaired available-for-sale investment securities, Net Unrealized Loss	0	0
More Than Twelve Months | Municipal Securities
Schedule of Available-for-sale Securities [Line Items]
Temporarily-impaired available-for-sale investment securities, Fair Value	0	0
Temporarily-impaired available-for-sale investment securities, Net Unrealized Loss	0	0
More Than Twelve Months | U S Government Agency S B A Securities
Schedule of Available-for-sale Securities [Line Items]
Temporarily-impaired available-for-sale investment securities, Fair Value		0
Temporarily-impaired available-for-sale investment securities, Net Unrealized Loss		0
More Than Twelve Months | Collateralized Mortgage Obligations
Schedule of Available-for-sale Securities [Line Items]
Other-than-temporarily impaired available-for-sale investment securities, Fair Value		1,235
Other-than-temporarily impaired available-for-sale investment securities, Net Unrealized Loss		$ 65

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Derivative Financial Instruments - Additional Information (Detail) (USD $)	3 Months Ended	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2013
Derivative [Line Items]
Number of pay-fixed, receive-variable interest rate swap agreements	23	23
Outstanding swaps maturity period		10 years
Certificates of deposit with other financial institutions pledged	$ 4,300,000	$ 4,300,000
Due from bank	2,100,000	2,100,000
Interest Rate Swap
Derivative [Line Items]
Change in the fair value of derivative instruments	(1,006,000)	(1,483,000)
Loans
Derivative [Line Items]
Change in the fair value of derivative instruments	(521,000)	(590,000)
Interest Rate Swaption
Derivative [Line Items]
Interest paid in interest rate swap	$ 400,000	$ 859,000

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Subordinated Debentures Outstanding (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Financial Instruments Owned and Pledged as Collateral [Line Items]
Amount	$ 9,283	$ 9,169
Carrying (Reported) Amount, Fair Value Disclosure
Financial Instruments Owned and Pledged as Collateral [Line Items]
Amount	12,372
Carrying Fair Value
Financial Instruments Owned and Pledged as Collateral [Line Items]
Amount	(3,089)
Trust One
Financial Instruments Owned and Pledged as Collateral [Line Items]
Amount	6,186
Issuance Date	Dec. 10, 2004
Maturity Date	03-15-2035
Rate Index	3 month LIBOR + 2.05%
Current Rate	2.32%
Next Reset Date	Sep. 16, 2013
Trust Two
Financial Instruments Owned and Pledged as Collateral [Line Items]
Amount	3,093
Issuance Date	Dec. 23, 2005
Maturity Date	03-15-2036
Rate Index	3 month LIBOR + 1.75%
Current Rate	2.02%
Next Reset Date	Sep. 16, 2013
Trust Three
Financial Instruments Owned and Pledged as Collateral [Line Items]
Amount	$ 3,093
Issuance Date	Jun. 30, 2006
Maturity Date	09-15-2036
Rate Index	3 month LIBOR + 1.85%
Current Rate	2.12%
Next Reset Date	Sep. 16, 2013

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Accretable Yield for Loans Acquired (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Financing Receivable, Impaired [Line Items]
Balance, beginning of period	$ 11,269	$ 2,193	$ 12,189	$ 2,585
Accretion, included in interest income	(1,139)	(361)	(2,083)	(753)
Reclassifications (to) from non-accretable yield	24	0	24	0
Balance, end of period	$ 10,130	$ 1,832	$ 10,130	$ 1,832

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Aging Analysis of Recorded Investment (Detail) (USD $)	Jun. 30, 2013	Dec. 31, 2012
Loans Receivable [Line Items]
31-60 Days Past Due	$ 246,000	$ 3,909,000
61-90 Days Past Due	963,000	0
Greater than 90 Days Past Due and Accruing	0	0
Total Past Due and Accruing	1,209,000	3,909,000
Total Non Accrual	10,469,000	10,530,000
Current	873,349,000	840,446,000
Total Loans	885,027,000	854,885,000
Commercial and Industrial
Loans Receivable [Line Items]
31-60 Days Past Due	246,000	1,025,000
61-90 Days Past Due	961,000	0
Greater than 90 Days Past Due and Accruing	0	0
Total Past Due and Accruing	1,207,000	1,025,000
Total Non Accrual	3,771,000	1,583,000
Current	272,098,000	260,029,000
Total Loans	277,076,000	262,637,000
Construction, Land Development and Other Land
Loans Receivable [Line Items]
31-60 Days Past Due	0	0
61-90 Days Past Due	0	0
Greater than 90 Days Past Due and Accruing	0	0
Total Past Due and Accruing	0	0
Total Non Accrual	1,159,000	1,200,000
Current	55,302,000	47,328,000
Total Loans	56,461,000	48,528,000
Commercial and Other Real Estate
Loans Receivable [Line Items]
31-60 Days Past Due	0	2,884,000
61-90 Days Past Due	0	0
Greater than 90 Days Past Due and Accruing	0	0
Total Past Due and Accruing	0	2,884,000
Total Non Accrual	5,539,000	7,742,000
Current	532,823,000	511,315,000
Total Loans	538,362,000	521,941,000
Other
Loans Receivable [Line Items]
31-60 Days Past Due	0	0
61-90 Days Past Due	2,000	0
Greater than 90 Days Past Due and Accruing	0	0
Total Past Due and Accruing	2,000	0
Total Non Accrual	0	5,000
Current	13,126,000	21,774,000
Total Loans	$ 13,128,000	$ 21,779,000

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Consolidated Balance Sheets (Parenthetical) (USD $)	Jun. 30, 2013	Dec. 31, 2012
Preferred Stock, authorized shares	50,000,000	50,000,000
Preferred stock, No par value	$ 0	$ 0
Preferred Stock, Shares issued	0	0
Preferred Stock, Shares outstanding	0	0
Common stock, Shares authorized	75,000,000	75,000,000
Common stock, no par value	$ 0	$ 0
Common stock, Shares issued	10,734,250	10,758,674
Common stock, Shares outstanding	10,734,250	10,758,674

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Investment Securities

6 Months Ended

Jun. 30, 2013

Investment Securities

Note 5 - Investment Securities

The investment securities portfolio has been classified as available-for-sale, and as such is recorded at estimated fair value.

The following tables present the amortized cost and estimated fair values of investment securities as of the dates indicated (dollars in thousands):

			Gross Unrealized
June 30, 2013 – Available-for-sale:	Amortized Cost		Gains		Losses		Net Non-credit Gains on Other– than- temporarily Impaired Securities		Estimated Fair Value
U.S. Govt Agency and Sponsored Agency - Note Securities	$	7,265	$	7	$	5	$	0	$	7,267
U.S. Govt Agency - SBA Securities		44,383		1,054		149		0		45,288
U.S. Govt Agency - GNMA Mortgage-Backed Securities		25,649		331		585		0		25,395
U.S. Govt Sponsored Agency - CMO & Mortgage-Backed Securities		17,735		472		291		0		17,916
Corporate Securities		9,239		182		0		0		9,421
Municipal Securities		4,688		2		22		0		4,668
Total investment securities	$	108,959	$	2,048	$	1,052	$	0	$	109,955
December 31, 2012 – Available-for-sale:
U.S. Govt Agency and Sponsored Agency - Note Securities	$	18,888	$	24	$	1	$	0	$	18,911
U.S. Govt Agency - SBA Securities		42,308		703		32		0		42,979
U.S. Govt Agency - GNMA Mortgage-Backed Securities		22,237		728		5		0		22,960
U.S. Govt Sponsored Agency - CMO & Mortgage-Backed Securities		12,335		696		0		0		13,031
Corporate Securities		10,311		235		0		0		10,546
Municipal Securities		6,831		3		18		0		6,816
Private Issue CMO Securities		2,874		0		0		36		2,910
Total investment securities	$	115,784	$	2,389	$	56	$	36	$	118,153

The Company’s investment securities portfolio at June 30, 2013 consists of U.S. Agency and U.S. Sponsored Agency issued AAA and AA rated “investment grade” securities, investment grade corporate bond securities and municipal securities. Securities with a market value of $30.2 million and $23.3 million were pledged to secure securities sold under agreements to repurchase at June 30, 2013 and December 31, 2012, respectively. See Note 7 “Borrowings and Subordinated Debentures.” Securities with a market value of $11 million were pledged to secure a certificate of deposit of $10.0 million with the State of California Treasurer’s office at both June 30, 2013 and December 31, 2012. Securities with a market value of $4.2 million and $12 million were pledged to secure a credit facility with the Federal Reserve Bank of San Francisco at June 30, 2013 and December 31, 2012, respectively. Securities with a market value of $19.7 million and $16.0 million were pledged to secure outstanding standby letters of credit confirmed/issued by a correspondent bank for the benefit of the Company’s customers in the amount of $13.4 million and $12.7 million at June 30, 2013 and December 31, 2012, respectively. Securities with a market value of $1.5 million and $281,000 were pledged to secure local agency deposits at June 30, 2013 and December 31, 2012, respectively.

Presented below are investment securities with unrealized losses that are considered to be temporarily-impaired or other-than-temporarily impaired. They are summarized and classified according to the duration of the loss period as of the dates indicated as follows (dollars in thousands):

	< 12 Continuous Months				> 12 Continuous Months				Total
	Fair Value		Net Unrealized Loss		Fair Value		Net Unrealized Loss		Fair Value		Net Unrealized Loss
June 30, 2013
Temporarily-impaired available-for-sale investment securities:
U.S. Govt. - Agency and Sponsored Agency Note Securities	$	10,022	$	153	$	707	$	1	$	10,729	$	154
U.S. Govt. Sponsored Agency CMO & Mortgage-Backed Securities		22,470		876		0		0		22,470		876
Municipal Securities		3,151		22		0		0		3,151		22
Total temporarily-impaired available-for-sale investment securities	$	35,643	$	1,051	$	707	$	1	$	36,350	$	1,052
December 31, 2012
Temporarily-impaired available-for-sale investment securities:
U.S. Govt. - Agency and Sponsored Agency Note Securities	$	2,209	$	1	$	0	$	0	$	2,209	$	1
U.S. Govt. Agency SBA Securities		5,124		32		0		0		5,124		32
U.S. Govt. Sponsored Agency CMO & Mortgage-Backed Securities		2,126		5		0		0		2,126		5
Municipal Securities		6,293		18		0		0		6,293		18
Total temporarily-impaired available-for-sale investment securities	$	15,752	$	56	$	0	$	0	$	15,752	$	56
Other-than-temporarily impaired available-for-sale investment securities:
Private Issue CMO Securities		0		0		1,235		65		1,235		65
Total temporarily-impaired and other-than-temporarily impaired available-for-sale investment securities	$	15,752	$	56	$	1,235	$	65	$	16,987	$	121

The amortized cost, estimated fair value and average yield of debt securities at June 30, 2013, are presented in the table below (dollars in thousands). Maturity categories are determined as follows:

• U.S. Govt. Agency and U.S. Govt. Sponsored Agency bonds and notes – maturity date

• U.S. Govt. Sponsored Agency CMO or Mortgage-Backed Securities, U.S. Govt. Agency GNMA Mortgage-Backed Securities and U.S. Gov. Agency SBA Securities – estimated cash flow taking into account estimated pre-payment speeds

• Corporate Bonds and Municipal Securities – maturity date

Although mortgage-backed and U.S. Government Agency securities have contractual maturities through 2050, the expected maturity will differ from the contractual maturities because borrowers or issuers may have the right to prepay such obligations without penalties.

	June 30, 2013
Maturities Schedule of Securities	Amortized Cost		Fair Value		Weighted Average Yield
Due through one year	$	20,091	$	20,472		1.63	%
Due after one year through five years		43,638		44,301		1.80	%
Due after five years through ten years		23,537		23,545		2.39	%
Due after ten years		21,693		21,637		2.66	%
Total	$	108,959	$	109,955		2.06	%

The weighted average yields in the above table are based on effective rates of book balances at the end of the period. Yields are derived by dividing interest income, adjusted for amortization of premiums and accretion of discounts, by total amortized cost.

On each reporting date, the Company evaluates the securities portfolio to determine if there has been an other-than-temporary impairment on each of the individual securities in the investment securities portfolio. In estimating whether an other-than-temporary impairment loss has occurred, management considers, among other things, (i) the length of time and the extent to which the fair value has been less than cost, (ii) the financial condition and near-term prospects of the issuer, (iii) the current liquidity and volatility of the market for each of the individual security categories, (iv) the current slope and shape of the Treasury yield curve, along with where the economy is in the current interest rate cycle, (v) the current spread between Treasuries and the specific security categories, and the spread differential between the current spread and the long-term average spread for that security category, (vi) the projected cash flows from the specific security type, (vii) the financial guarantee and financial rating of the issuer and (viii) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

If it’s determined that an other-than-temporary impairment exists on a debt security, the Company then determines if (a) it intends to sell the security or (b) it is more likely than not that it will be required to sell the security before its anticipated recovery. If either of the conditions is met, the Company will recognize an other-than-temporary impairment in earnings equal to the difference between the security’s fair value and its adjusted cost basis. If neither of the conditions is met, the Company determines (a) the amount of the impairment related to credit loss and (b) the amount of the impairment due to all other factors. The difference between the present value of the cash flows expected to be collected and the amortized cost basis is the credit loss. The credit loss is the portion of the other-than-temporary impairments that is recognized in earnings and is a reduction to the cost basis of the security. The portion of total impairment related to all other factors is included in other comprehensive income. Significant judgment is required in this analysis that includes, but is not limited to, assumptions regarding the collectability of principal and interest, future default rates, future prepayment speeds, the amount of current delinquencies that will result in defaults and the amount of eventual recoveries expected on these defaulted loans through the foreclosure process.

In January of 2013, the Company sold all of its private issue CMO securities at a net gain of $4,600. The Company has had no other sales of investment securities through the six months ended June 30, 2013, and as of that date owned no investment securities that have other-than-temporary impairment.

Investments in FHLB Common Stock

The Company’s investment in the common stock of the FHLB is carried at cost and was $4.7 million and $4.9 million as of June 30, 2013 and December 31, 2012 respectively. See Note 7 “Borrowings and Subordinated Debentures” for a detailed discussion regarding the Company’s FHLB borrowings and the requirements to purchase FHLB common stock.

The Company’s investment in FHLB stock is included in other assets on the accompanying balance sheets.

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Consolidated Statements Of Income (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Stock based compensation expense	$ 217	$ 221	$ 475	$ 486

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Future Compensation Expense Related to Non-Vested Stock Option and Restricted Stock Grants (Detail) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Remainder of 2013	$ 411
2014	488
2015	169
2016	53
2017	2
Thereafter	0
Total	1,123
Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Remainder of 2013	9
2014	10
2015	1
2016	0
2017	0
Thereafter	0
Total	20
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Remainder of 2013	402
2014	478
2015	168
2016	53
2017	2
Thereafter	0
Total	$ 1,103

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
ASSETS
Cash and due from banks	$ 28,246	$ 25,181
Interest earning deposits in other financial institutions	161,552	157,715
Total Cash and Cash Equivalents	189,798	182,896
Certificates of deposit in other financial institutions	28,304	27,006
Investment securities available-for-sale, at fair value	109,955	118,153
Loans	885,027	854,885
Allowance for loan loss	(9,412)	(8,803)
Net loans	875,615	846,082
Premises and equipment, net	3,193	3,422
Deferred tax assets, net	13,155	13,818
Other real estate owned, net	3,112	3,112
Goodwill	12,292	12,292
Core deposit intangibles	1,581	1,747
Bank owned life insurance	20,891	20,583
Accrued interest receivable and other assets	20,765	20,526
Total Assets	1,278,661	1,249,637
LIABILITIES AND SHAREHOLDERS' EQUITY
Non-interest bearing demand deposits	571,045	543,527
Interest bearing transaction accounts	127,585	112,747
Money market and savings deposits	338,885	340,466
Certificates of deposit	60,192	81,336
Total deposits	1,097,707	1,078,076
Securities sold under agreements to repurchase	29,612	22,857
Subordinated debentures, net	9,283	9,169
Accrued interest payable and other liabilities	12,492	13,912
Total Liabilities	1,149,094	1,124,014
Commitments and Contingencies (Note 11)	0	0
SHAREHOLDERS' EQUITY
Serial Preferred Stock - authorized, 50,000,000 shares no par value, no shares issued or outstanding	0	0
Common stock - authorized, 75,000,000 shares no par value, 10,734,250 and 10,758,674 shares issued and outstanding at June 30, 2013 and December 31, 2012, respectively	118,938	118,885
Additional paid-in capital	7,275	7,052
Retained earnings (deficit)	2,768	(1,708)
Accumulated other comprehensive income	586	1,394
Total Shareholders' Equity	129,567	125,623
Total Liabilities and Shareholders' Equity	$ 1,278,661	$ 1,249,637

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Carrying Value of Purchased Credit Impaired Loans (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Debt Outstanding [Line Items]
Unpaid Principal Balance	$ 10,622	$ 9,075
Carrying Value	7,180	5,584
Purchased Credit Impaired loans
Debt Outstanding [Line Items]
Unpaid Principal Balance	7,666	10,718
Carrying Value	4,365	6,904
Purchased Credit Impaired loans | Commercial and Industrial
Debt Outstanding [Line Items]
Unpaid Principal Balance	1,613	1,221
Carrying Value	1,095	770
Purchased Credit Impaired loans | Commercial and Other Real Estate
Debt Outstanding [Line Items]
Unpaid Principal Balance	6,053	9,424
Carrying Value	3,270	6,130
Purchased Credit Impaired loans | Other
Debt Outstanding [Line Items]
Unpaid Principal Balance	0	73
Carrying Value	$ 0	$ 4

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Stock Options and Restricted Stock (Tables)

6 Months Ended

Jun. 30, 2013

Future Compensation Expense Related to Non-Vested Stock Option and Restricted Stock Grants

At June 30, 2013, future compensation expense related to non-vested stock option and restricted stock grants is reflected in the table below (dollars in thousands):

Future Stock Based Compensation Expense	Stock Options		Restricted Stock		Total
Remainder of 2013	$	9	$	402	$	411
2014		10		478		488
2015		1		168		169
2016		0		53		53
2017		0		2		2
Thereafter		0		0		0
Total	$	20	$	1,103	$	1,123

Share Option Activity

The following table summarizes the share option activity under the plans as of the date and for the period indicated:

	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in Years)		Aggregate Intrinsic Value
							(thousands)
Outstanding stock options at December 31, 2012		734,896	$	12.44		2.8	$	966
Granted		0
Exercised		5,625
Forfeited		625
Expired		10,000
Outstanding stock options at June 30, 2013		718,646	$	12.39		2.3	$	3,078
Exercisable options at June 30, 2013		698,371	$	12.40		2.3	$	3,001
Unvested options at June 30, 2013		20,275	$	12.01		3.2	$	77
Outstanding, vested and expected to vest at June 30, 2013		718,646	$	12.39		2.3	$	3,078

Restricted Stock Activity

The following table summarizes the restricted stock activity under the plans for the period indicated:

	Number of Shares		Weighted-Average Grant- Date Fair  Value per Share
Restricted Stock:
Unvested, at December 31, 2012		290,550	$	11.99
Granted		2,500		12.74
Vested		64,200		12.15
Cancelled and forfeited		10,600		11.00
Unvested, at June 30, 2013		218,250	$	12.00

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Computation of Tangible Book Value per Common Share (Tables)

6 Months Ended

Jun. 30, 2013

Computation of Tangible Book Value per Common Share

The tables below present the computation of tangible book value per common share as of the dates indicated (in thousands, except share data):

	June 30, 2013		December 31, 2012
Total Shareholders’ Equity	$	129,567	$	125,623
Less: Goodwill and core deposit intangibles		13,873		14,039
Tangible shareholders’ equity	$	115,694	$	111,584
Common shares issued and outstanding		10,734,250		10,758,674
Tangible book value per common share	$	10.78	$	10.37

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Risk Category of Loans by Class of Loans (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Loans Receivable [Line Items]
Commercial and Industrial	$ 277,076	$ 262,637
Construction, Land Development and Other Land	56,461	48,528
Commercial and Other Real Estate	538,362	521,941
Other	13,128	21,779
Total	885,027	854,885
Pass
Loans Receivable [Line Items]
Commercial and Industrial	265,362	250,624
Construction, Land Development and Other Land	55,302	47,328
Commercial and Other Real Estate	513,055	493,768
Other	13,125	21,655
Total	846,844	813,375
Special Mention
Loans Receivable [Line Items]
Commercial and Industrial	1,428	4,602
Construction, Land Development and Other Land	0	0
Commercial and Other Real Estate	3,037	5,300
Other	0	0
Total	4,465	9,902
Substandard
Loans Receivable [Line Items]
Commercial and Industrial	9,741	7,411
Construction, Land Development and Other Land	1,159	1,200
Commercial and Other Real Estate	22,270	22,873
Other	3	119
Total	33,173	31,603
Doubtful
Loans Receivable [Line Items]
Commercial and Industrial	545	0
Construction, Land Development and Other Land	0	0
Commercial and Other Real Estate	0	0
Other	0	5
Total	$ 545	$ 5

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Terms and Maturity of Company's Repos (Detail) (USD $) In Thousands, unless otherwise specified	6 Months Ended	12 Months Ended
	Jun. 30, 2013	Dec. 31, 2012
Financial Instruments Owned and Pledged as Collateral [Line Items]
Amount	$ 29,612	$ 22,857
Interest Rate	0.30%	0.21%
June 4, 2013
Financial Instruments Owned and Pledged as Collateral [Line Items]
Amount	950
Interest Rate	0.125%
Original Term	62 days
Maturity Date	August 5, 2013
June 28, 2013
Financial Instruments Owned and Pledged as Collateral [Line Items]
Amount	28,662
Original Term	3 days
Maturity Date	July 1, 2013
June 28, 2013 | Minimum
Financial Instruments Owned and Pledged as Collateral [Line Items]
Interest Rate	0.10%
June 28, 2013 | Maximum
Financial Instruments Owned and Pledged as Collateral [Line Items]
Interest Rate	0.40%
November 5, 2012
Financial Instruments Owned and Pledged as Collateral [Line Items]
Amount		1,020
Interest Rate		0.15%
Original Term		91 days
Maturity Date		February 4, 2013
December 31, 2012
Financial Instruments Owned and Pledged as Collateral [Line Items]
Amount		$ 21,837
Original Term		1 day
Maturity Date		January 2, 2013
December 31, 2012 | Minimum
Financial Instruments Owned and Pledged as Collateral [Line Items]
Interest Rate		0.10%
December 31, 2012 | Maximum
Financial Instruments Owned and Pledged as Collateral [Line Items]
Interest Rate		0.40%

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Roll-Forward of All Assets and Liabilities and Additional Information about Financial Assets Measured at Fair Value (Detail) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Changes In Level 3 Assets And Liabilities Measured At Fair Value On Recurring Basis [Line Items]
Fair Value Measurement With Unobservable Inputs Reconciliation Non Recurring Basis Asset Value	$ 2,910	$ 5,154
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Gain (Loss) Included in Earnings	(20)	(52)
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Gain (Loss) Included in Other Comprehensive Income (Loss)	0	293
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases, Sales, Issues, Settlements	(2,890)	(654)
Fair Value Measurement with Unobservable Inputs Reconciliation Recurring Basis Asset Transfers out of or into Level 3	0	0
Fair Value Measurement With Unobservable Inputs Reconciliation Non Recurring Basis Asset Value	0	4,741
Private Issue CMO Securities
Changes In Level 3 Assets And Liabilities Measured At Fair Value On Recurring Basis [Line Items]
Fair Value Measurement With Unobservable Inputs Reconciliation Non Recurring Basis Asset Value	2,910	2,775
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Gain (Loss) Included in Earnings	(20)	(51)
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Gain (Loss) Included in Other Comprehensive Income (Loss)	0	287
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases, Sales, Issues, Settlements	(2,890)	(252)
Fair Value Measurement with Unobservable Inputs Reconciliation Recurring Basis Asset Transfers out of or into Level 3	0	0
Fair Value Measurement With Unobservable Inputs Reconciliation Non Recurring Basis Asset Value	0	2,759
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises
Changes In Level 3 Assets And Liabilities Measured At Fair Value On Recurring Basis [Line Items]
Fair Value Measurement With Unobservable Inputs Reconciliation Non Recurring Basis Asset Value		2,379
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Gain (Loss) Included in Earnings		(1)
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Gain (Loss) Included in Other Comprehensive Income (Loss)		6
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases, Sales, Issues, Settlements		(402)
Fair Value Measurement with Unobservable Inputs Reconciliation Recurring Basis Asset Transfers out of or into Level 3		0
Fair Value Measurement With Unobservable Inputs Reconciliation Non Recurring Basis Asset Value		$ 1,982

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Composition of Gross Loan Portfolio (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Loans Receivable [Line Items]
Commercial and Industrial Loans:	$ 277,076	$ 262,637
Loans Secured by Real Estate:
Commercial and Other Real Estate	538,362	521,941
Other Loans:	13,128	21,779
Total	885,027	854,885
Construction, Land Development and Other Land
Loans Secured by Real Estate:
Loans Secured by Real Estate	56,461	48,528
Owner-Occupied Nonresidential Properties
Loans Secured by Real Estate:
Loans Secured by Real Estate	180,483	181,844
Other Nonresidential Properties
Loans Secured by Real Estate:
Loans Secured by Real Estate	260,902	246,450
1-4 Family Residential Properties
Loans Secured by Real Estate:
Loans Secured by Real Estate	64,765	62,037
Multifamily Residential Properties
Loans Secured by Real Estate:
Loans Secured by Real Estate	$ 32,212	$ 31,610

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Amortized Cost and Estimated Fair Values of Investment Securities (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Schedule of Available-for-sale Securities [Line Items]
Available For Sale Securities Amortized Cost Total	$ 108,959	$ 115,784
Available-for-sale Securities, Gross Unrealized Gains	2,048	2,389
Available-for-sale Securities, Gross Unrealized Losses	1,052	56
Available-for-sale Securities, Net Non-credit Gains on Other-than-temporarily Impaired Securities	0	36
Investment securities available-for-sale	109,955	118,153
Government National Mortgage Association Certificates and Obligations (GNMA)
Schedule of Available-for-sale Securities [Line Items]
Available For Sale Securities Amortized Cost Total	25,649	22,237
Available-for-sale Securities, Gross Unrealized Gains	331	728
Available-for-sale Securities, Gross Unrealized Losses	585	5
Available-for-sale Securities, Net Non-credit Gains on Other-than-temporarily Impaired Securities	0	0
Investment securities available-for-sale	25,395	22,960
Corporate Debt Securities
Schedule of Available-for-sale Securities [Line Items]
Available For Sale Securities Amortized Cost Total	9,239	10,311
Available-for-sale Securities, Gross Unrealized Gains	182	235
Available-for-sale Securities, Gross Unrealized Losses	0	0
Available-for-sale Securities, Net Non-credit Gains on Other-than-temporarily Impaired Securities	0	0
Investment securities available-for-sale	9,421	10,546
Municipal Debt Securities
Schedule of Available-for-sale Securities [Line Items]
Available For Sale Securities Amortized Cost Total	4,688	6,831
Available-for-sale Securities, Gross Unrealized Gains	2	3
Available-for-sale Securities, Gross Unrealized Losses	22	18
Available-for-sale Securities, Net Non-credit Gains on Other-than-temporarily Impaired Securities	0	0
Investment securities available-for-sale	4,668	6,816
US Government and Government Agencies and Authorities
Schedule of Available-for-sale Securities [Line Items]
Available For Sale Securities Amortized Cost Total	7,265	18,888
Available-for-sale Securities, Gross Unrealized Gains	7	24
Available-for-sale Securities, Gross Unrealized Losses	5	1
Available-for-sale Securities, Net Non-credit Gains on Other-than-temporarily Impaired Securities	0	0
Investment securities available-for-sale	7,267	18,911
U S Government Agency S B A Securities
Schedule of Available-for-sale Securities [Line Items]
Available For Sale Securities Amortized Cost Total	44,383	42,308
Available-for-sale Securities, Gross Unrealized Gains	1,054	703
Available-for-sale Securities, Gross Unrealized Losses	149	32
Available-for-sale Securities, Net Non-credit Gains on Other-than-temporarily Impaired Securities	0	0
Investment securities available-for-sale	45,288	42,979
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises
Schedule of Available-for-sale Securities [Line Items]
Available For Sale Securities Amortized Cost Total	17,735	12,335
Available-for-sale Securities, Gross Unrealized Gains	472	696
Available-for-sale Securities, Gross Unrealized Losses	291	0
Available-for-sale Securities, Net Non-credit Gains on Other-than-temporarily Impaired Securities	0	0
Investment securities available-for-sale	17,916	13,031
Collateralized Mortgage Obligations
Schedule of Available-for-sale Securities [Line Items]
Available For Sale Securities Amortized Cost Total		2,874
Available-for-sale Securities, Gross Unrealized Gains		0
Available-for-sale Securities, Gross Unrealized Losses		0
Available-for-sale Securities, Net Non-credit Gains on Other-than-temporarily Impaired Securities		36
Investment securities available-for-sale		$ 2,910

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Investment Securities - Additional Information (Detail) (USD $)	3 Months Ended		6 Months Ended			1 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012	Jan. 31, 2013 Collateralized Mortgage Obligations
Schedule of Trading Securities and Other Trading Assets [Line Items]
Market value of securities pledged to secure securities sold under agreements to repurchase	$ 30,200,000		$ 30,200,000		$ 23,300,000
Market value of securities pledged to secure a certificate of deposit	11,000,000		11,000,000		11,000,000
Certificate of deposit	10,000,000		10,000,000		10,000,000
Market value of securities pledged to secure a credit facility	4,200,000		4,200,000		12,000,000
Market value of Securities pledged to secure standby letters of credit	19,700,000		19,700,000		16,000,000
Outstanding standby letters	13,400,000		13,400,000		12,700,000
Market value of securities pledged to secure local agency deposits	1,500,000		1,500,000		281,000
Net gain from sale of securities	0	0	5,000	0		4,600
Other than temporary impairment credit loss	0	30,000	0	60,000
The Company's investment in the common stock of the FHLB	$ 4,700,000		$ 4,700,000		$ 4,900,000

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Computation of Earnings per Common Share

6 Months Ended

Jun. 30, 2013

Computation of Earnings per Common Share

Note 4 - Computation of Earnings per Common Share

Basic and diluted earnings per common share were determined by dividing the net income by the applicable basic and diluted weighted average common shares outstanding. The table below presents the basic and diluted earnings per common share computations for the periods indicated (dollars and shares in thousands, except per share data):

	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012
Net Income	$	2,321	$	525	$	4,476	$	1,031
Basic weighted average common shares outstanding		10,502		6,732		10,494		6,722
Dilutive effect of potential common share issuances from stock options and restricted stock		158		161		195		141
Diluted weighted average common shares outstanding		10,660		6,893		10,689		6,863
Income per common share
Basic	$	0.22	$	0.08	$	0.43	$	0.15
Diluted	$	0.22	$	0.08	$	0.42	$	0.15
Anti-dilutive shares not included in the calculation of diluted earnings per share		23		246		134		246

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Common Stock - Additional Information (Detail) (USD $)	6 Months Ended	12 Months Ended	6 Months Ended	12 Months Ended		1 Months Ended
	Jun. 30, 2013	Dec. 31, 2012	Jun. 30, 2013 Restricted Stock	Dec. 31, 2012 Restricted Stock	Dec. 31, 2012 Directors and Employees	Jul. 31, 2012 PC Bancorp
Shareholders Equity [Line Items]
Common shares issued						3,721,382
Share based compensation, restricted shares issued	(24,424)	109,800			117,300
Shares of restricted stock issued to employees	2,500		2,500
Shares issued during period upon exercise of stock options	5,625	0
Share based compensation, unvested restricted shares cancelled	10,600	7,500
Share based compensation, unvested restricted shares retired			22,049	21,921
Share based compensation, amount of unvested restricted shares retired			$ 283,000	$ 228,000

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Fair Value of Assets and Liabilities (Tables)

6 Months Ended

Jun. 30, 2013

Financial Assets and Financial Liabilities Measured at Fair Value on Recurring Basis

The following table summarizes the financial assets and financial liabilities measured at fair value on a recurring basis as of the dates indicated, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value (dollars in thousands):

	Total Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets – June 30, 2013
Investment securities available-for-sale	$	109,955	$	0	$	109,955	$	0
Financial Liabilities – June 30, 2013
Interest Rate Swap Contracts	$	4,556	$	0	$	4,556	$	0
Financial Assets – December 31, 2012
Investment securities available-for-sale	$	118,153	$	0	$	115,243	$	2,910
Financial Liabilities – December 31, 2012
Interest Rate Swap Contracts	$	6,038	$	0	$	6,038	$	0

Roll-Forward of All Assets and Liabilities and Additional Information about Financial Assets Measured at Fair Value

The following table below presents a roll-forward of all assets and liabilities and additional information about the financial assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the periods presented (dollars in thousands):

	Balance at January 1,		Included in Earnings			Included in Other Comprehensive Income (Loss)		Purchases, Issuances, (Sales) Settlements			Transfers into (out of) Level 3		Balance at June 30,
Financial Assets – Measured at Fair Value using Level 3 – June 30, 2013
Private Issue CMO Securities	$	2,910	$	(20	)	$	0	$	(2,890	)	$	0	$	0
Total	$	2,910	$	(20	)	$	0	$	(2,890	)	$	0	$	0
Financial Assets – Measured at Fair Value using Level 3 – June 30, 2012
Private Issue CMO Securities	$	2,775	$	(51	)	$	287	$	(252	)	$	0	$	2,759
U.S. Government Sponsored Agency CMO Securities		2,379		(1	)		6		(402	)		0		1,982
Total	$	5,154	$	(52	)	$	293	$	(654	)	$	0	$	4,741

Balances of Assets and Liabilities Measured at Fair Value on Non-Recurring Basis

The following table presents the balances of assets and liabilities measured at fair value on a non-recurring basis by caption and by level within the fair value hierarchy as of the dates indicated (dollars in thousands):

	Carrying Value at end of period		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable  Inputs (Level 3)
Financial Assets – June 30, 2013
Collateral dependent impaired loans with specific valuation allowance and/or partial charge-offs	$	1,957	$	0	$	0	$	1,940
Other real estate owned		3,112		0		0		3,112
Total	$	5,069	$	0	$	0	$	5,052
Financial Assets – December 31, 2012
Collateral dependent impaired loans with specific valuation allowance and/or partial charge-offs	$	2,056	$	0	$	0	$	2,269
Other real estate owned		3,112		0		0		3,112
Total	$	5,168	$	0	$	0	$	5,381

Significant Unobservable Inputs Used in the Fair Value Measurements for Level 3 Assets and Liabilities Measured at Fair Value on a Recurring or Non-Recurring

The following table presents the significant unobservable inputs used in the fair value measurements for Level 3 assets and liabilities measured at fair value on a recurring or non-recurring basis as of the dates indicated (dollars in thousands):

	Fair Value at June  30, 2013		Valuation Technique	Significant Unobservable Inputs	Significant Unobservable Input Values
Financial Assets – June 30, 2013
Collateral dependent impaired loans with specific valuation allowance and/or partial charge-offs (2)	$	1,545	Commercial Real Estate building and land appraisals	Real Estate appraisal valuations	$	1,640
		395	Accounts Receivable aging valuation and Inventory liquidation valuation	Accounts Receivable valuation estimates and Inventory liquidation values		429
				Less estimated selling costs		(129)
Total - Collateral dependent impaired loans	$	1,940		Net Valuation	$	1,940
Other real estate owned	$	3,112	Purchase and sale agreement (1)	Contract	$	3,190
				Less estimated selling costs		(78	)
				Net Valuation	$	3,112

(1) The Company has entered into a non-publicly disclosed purchase and sales agreement to sell this parcel of real estate to a private third party. The purchase price was a negotiated amount based on a number of both public and non-public economic factors.

(2) The Company has established a specific valuation allowance of $150,000 to cover the potential for any possible shortfall in the collateral values supporting these loans.

Carrying Amounts and Fair Values of Financial Instruments

The table below presents the carrying amounts and fair values of financial instruments as of the dates indicated (dollars in thousands):

					Fair Value Measurements
	Carrying Amount		Fair Value		Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
June 30, 2013
Financial Assets
Investment securities available-for-sale	$	109,955	$	109,955	$	0	$	109,955	$	0
Loans, net		875,615		878,242		0		0		878,242
Financial Liabilities
Certificates of deposit		60,192		60,310		0		60,310		0
Securities sold under agreements to repurchase		29,612		29,612		0		29,612		0
Subordinated debentures		9,283		12,372		0		0		12,372
Interest rate swap contracts		4,556		4,556		0		4,556		0
December 31, 2012
Financial Assets
Investment securities available-for-sale	$	118,153	$	118,153	$	0	$	115,243	$	2,910
Loans, net		846,082		848,146		0		0		848,146
Financial Liabilities
Certificates of deposit		81,336		81,648		0		81,648		0
Securities sold under agreements to repurchase		22,857		22,857		0		22,857		0
Subordinated debentures		9,169		12,372		0		0		12,372
Interest rate swap contracts		6,038		6,038		0		6,038		0

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Summary of Activity for Allowance for Loan Loss (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan loss at beginning of period	$ 8,841	$ 7,512	$ 8,803	$ 7,495	$ 7,495
Provision for loan losses	1,153	380	1,287	380
Net (charge-offs) recoveries:
Charge-offs	(616)	(586)	(737)	(589)
Recoveries	34	23	59	43
Net (charge-offs) recoveries	(582)	(563)	(678)	(546)
Allowance for loan loss at end of period	$ 9,412	$ 7,329	$ 9,412	$ 7,329	$ 8,803
Net (charge-offs) to average loans	(0.07%)	(0.12%)	(0.08%)	(0.12%)
Allowance for loan loss to total loans	1.06%		1.06%		1.03%
Allowance for loan loss to total loans accounted for at historical cost, which excludes loan balances and the related allowance for loans acquired through acquisition			1.50%		1.54%

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Borrowings and Subordinated Debentures

6 Months Ended

Jun. 30, 2013

Borrowings and Subordinated Debentures

Note 7 - Borrowings and Subordinated Debentures

Securities Sold Under Agreements to Repurchase

The Company enters into certain transactions, the legal form of which are sales of securities under agreements to repurchase (“Repos”) at a later date at a set price. Securities sold under agreements to repurchase generally mature within 1 day to 180 days from the issue date.

As discussed in Note 5 – Investment Securities, the Company has pledged certain investments as collateral for these agreements. Securities with a fair value of $30.2 million and $23.3 million were pledged to secure the Repos at June 30, 2013 and December 31, 2012, respectively. The Company segregates both the principal and accrued interest on these securities with the Company’s third party safekeeping custodians. All principal and interest payments on the investment securities that are pledged as collateral on the Repo program are received directly by the safekeeping custodian.

The tables below describe the terms and maturity of the Company’s Repos as of the dates indicated (dollars in thousands):

	June 30, 2013
Date Issued	Amount		Interest Rate			Original Term	Maturity Date
June 4, 2013	$	950		0.125	%	62 days	August 5, 2013
June 28, 2013		28,662		0.10% – 0.40	%	3 days	July 1, 2013
Total	$	29,612		0.30	%

	December 31, 2012
Date Issued	Amount		Interest Rate			Original Term	Maturity Date
November 5, 2012	$	1,020		0.15	%	91 days	February 4, 2013
December 31, 2012		21,837		0.10% – 0.40	%	1 day	January 2, 2013
Total	$	22,857		0.21	%

Federal Home Loan Bank Borrowings

As of June 30, 2013, the Company had no outstanding advances (borrowings) from the Federal Home Loan Bank “FHLB”.

The Company’s credit facility with the FHLB is $316 million, which represents approximately 25% of the Bank’s total assets, as reported by the Bank in its March 31, 2013 FFIEC Call Report.

As of June 30, 2013, the Company had $748 million of loan collateral pledged with the FHLB which provides $288 million in borrowing capacity. The Company is required to purchase FHLB common stock to support its FHLB advances. At June 30, 2013 and December 31, 2012, the Company had $4.7 million and $4.9 million of FHLB common stock. The current value of the FHLB common stock of $4.7 million would support FHLB advances up to $101 million. Any advances from the FHLB in excess of $101 million would require additional purchases of FHLB common stock. The FHLB has historically repurchased all of its excess capital stock from each bank where the level of capital stock is in excess of that bank’s current average borrowings. The FHLB repurchased $150,000 and $187,000 of the Company’s FHLB capital stock during the six months ending June 30, 2013 and twelve months ending December 31, 2012, respectively.

Subordinated Debentures

The following table summarizes the terms of each issuance of the subordinated debentures outstanding as of June 30, 2013:

Series	Amount (in  thousands)			Issuance Date	Maturity Date	Rate Index	Current Rate			Next Reset Date
Trust I	$	6,186		12/10/04	03/15/35	3 month LIBOR + 2.05%		2.32	%	9/16/2013
Trust II		3,093		12/23/05	03/15/36	3 month LIBOR + 1.75%		2.02	%	9/16/2013
Trust III		3,093		06/30/06	09/15/36	3 month LIBOR + 1.85%		2.12	%	9/16/2013
Subtotal		12,372
Fair value adjustment		(3,089	)
Total	$	9,283

The Company had an aggregate outstanding balance of $12.4 million in subordinated debentures at June 30, 2013. These subordinated debentures were acquired as part of the PC Bancorp merger and were issued to trusts originally established by PC Bancorp, which in turn issued trust preferred securities.

These subordinated debentures were issued in three separate series. Each issuance had a maturity of 30 years from their approximate date of issue. All three subordinated debentures are variable rate instruments that reprice quarterly based on the three month LIBOR plus a margin (see tables above). All three subordinated debentures had their interest rates reset in June of 2013 and are set to reprice again in September 2013 at the current three month LIBOR plus their index, and will continue to reprice quarterly through their maturity date. Trust I and Trust II are currently callable at par with no prepayment penalties. Trust III has a prepayment penalty equal to 100.501% of the outstanding principal through September 15, 2013. After this date Trust III would be callable at par with no prepayment penalties.

The Company currently includes in Tier 1 capital an amount of subordinated debentures equal to no more than 25% of the sum of all core capital elements, which is generally defined as shareholders’ equity less goodwill, core deposit intangibles and a portion of the SBA servicing assets. The Company’s existing subordinated debentures were grandfathered as Tier 1 capital under the Dodd-Frank Wall Street Reform and Consumer Protection Act. However, in June of 2012, the U.S. federal banking agencies issued three notices of proposed rulemaking (“NPR’s”) that would revise and replace the current regulatory capital requirements to make them consistent with the Basel III Capital Standards established by the Basel Committee on Banking Supervision and certain provisions of the Dodd Frank Wall Street Reform and Consumer Protection Act. Under the Basel III NPR, the Company’s existing subordinated debentures would have been phased out of Tier 1 capital over a period of 10 years. However, on July 2, 2013, the Federal Reserve Board issued a final regulatory capital rule which minimizes the burden on smaller less complex financial institutions. One of the key changes made to the originally issued NPR’s will allow the Company’s existing subordinated debentures to be grandfathered into tier one capital (subject to a limit of 25 percent of tier 1 capital).

Interest payments made by the Company on subordinated debentures are considered dividend payments under FRB regulations. Notification to the FRB is required prior to the Company declaring and paying a dividend during any period in which the Company’s quarterly net earnings are insufficient to fund the dividend amount. This notification requirement is included in regulatory guidance regarding safety and soundness surrounding capital and includes other non-financial measures such as asset quality, financial condition, capital adequacy, liquidity, future earnings projections, capital planning and credit concentrations. Should the FRB object to the dividend payments, the Company would be precluded from paying interest on the subordinated debentures after giving notice within 15 days before the payment date. Payments would not commence until approval is received or the Company no longer needs to provide notice under applicable guidance. The Company has the right, assuming no default has occurred, to defer payments of interest on the subordinated debentures at any time for a period not to exceed 20 consecutive quarters. The Company has not deferred any interest payments.

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Computation of Tangible Book Value per Common Share

6 Months Ended

Jun. 30, 2013

Computation of Tangible Book Value per Common Share

Note 3 - Computation of Tangible Book Value per Common Share

Tangible book value per common share was calculated by dividing total shareholders’ equity by the number of common shares issued. The tables below present the computation of tangible book value per common share as of the dates indicated (in thousands, except share data):

	June 30, 2013		December 31, 2012
Total Shareholders’ Equity	$	129,567	$	125,623
Less: Goodwill and core deposit intangibles		13,873		14,039
Tangible shareholders’ equity	$	115,694	$	111,584
Common shares issued and outstanding		10,734,250		10,758,674
Tangible book value per common share	$	10.78	$	10.37

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Consolidated Statements Of Shareholders' Equity (USD $) In Thousands, except Share data	Total	Common Stock	Additional Paid in Capital	Retained Earnings (Deficit)	Accumulated Other Comprehensive Income (Loss)
Beginning Balance at Dec. 31, 2011	$ 80,844	$ 77,225	$ 6,164	$ (3,435)	$ 890
Beginning Balance (in shares) at Dec. 31, 2011		6,950,000
Net Issuance (forfeiture) of Restricted Stock (in shares)	109,800	110,000
Net Issuance (forfeiture) of Restricted Stock	0	0	0	0	0
Issuance of Stock for Purchase of PC Bancorp, net of $199 in issuance costs (in shares)		3,721,000
Issuance of Stock for Purchase of PC Bancorp, net of $199 in issuance costs	41,660	41,660	0	0	0
Stock based compensation expense related to employee stock options and restricted stock	1,120	0	1,120	0	0
Restricted stock repurchase/dividend, shares		(22,000)
Restricted Stock Repurchase/Dividend	(228)	0	(228)	0	0
Excess tax deficiency - Stock based compensation	(4)	0	(4)	0	0
Exercise of Stock Options, shares	0
Net Income	1,727	0	0	1,727	0
Other Comprehensive Income (Loss)	504	0	0	0	504
Ending Balance at Dec. 31, 2012	125,623	118,885	7,052	(1,708)	1,394
Ending Balance (in shares) at Dec. 31, 2012		10,759,000
Net Issuance (forfeiture) of Restricted Stock (in shares)	(24,424)	(9,000)
Net Issuance (forfeiture) of Restricted Stock	0	0	0	0	0
Stock based compensation expense related to employee stock options and restricted stock	475	0	475	0	0
Restricted stock repurchase/dividend, shares		(22,000)
Restricted Stock Repurchase/Dividend	(283)	0	(283)	0	0
Excess tax benefit - Stock based compensation	31	0	31	0	0
Exercise of Stock Options	53	53	0	0	0
Exercise of Stock Options, shares	5,625	6,000
Net Income	4,476	0	0	4,476	0
Other Comprehensive Income (Loss)	(808)	0	0	0	(808)
Ending Balance at Jun. 30, 2013	$ 129,567	$ 118,938	$ 7,275	$ 2,768	$ 586
Ending Balance (in shares) at Jun. 30, 2013		10,734,000

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Accretable Net Discount of Purchased Credit Impaired Loans (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Acquired Impaired Loans Change In Accretable Yield [Line Items]
Accretion, included in interest income	$ (1,139)	$ (361)	$ (2,083)	$ (753)
Reclassifications (to) from non-accretable yield	24	0	24	0
Purchased Credit Impaired loans
Acquired Impaired Loans Change In Accretable Yield [Line Items]
Balance, beginning of period	9	0	9	0
Accretion, included in interest income	(9)	0	(9)	0
Reclassifications (to) from non-accretable yield	428	0	428	0
Balance, end of period	$ 428	$ 0	$ 428	$ 0

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Pre and Post Modification Recorded Investment in TDR loans (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013 Loan	Jun. 30, 2012 Loan	Jun. 30, 2013 Loan	Jun. 30, 2012 Loan
Financing Receivable, Modifications [Line Items]
Number of loans	0	0	1	0
Pre-modification recorded investment	$ 0	$ 0	$ 310	$ 0
Post-modification recorded investment	0	0	310	0
Reduced Interest Rate | Construction, Land Development and Other Land
Financing Receivable, Modifications [Line Items]
Number of loans	0	0	0	0
Pre-modification recorded investment	0	0	0	0
Post-modification recorded investment	0	0	0	0
Lengthened Amortization
Financing Receivable, Modifications [Line Items]
Number of loans	0	0	0	0
Pre-modification recorded investment	0	0	0	0
Post-modification recorded investment	0	0	0	0
Lengthened Amortization | Commercial and Industrial
Financing Receivable, Modifications [Line Items]
Number of loans	0	0	1	0
Pre-modification recorded investment	0	0	310	0
Post-modification recorded investment	0	0	310	0
Lengthened Amortization | Commercial Real Estate
Financing Receivable, Modifications [Line Items]
Number of loans	0	0	0	0
Pre-modification recorded investment	0	0	0	0
Post-modification recorded investment	$ 0	$ 0	$ 0	$ 0

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Computation of Tangible Book Value per Common Share (Detail) (USD $) In Thousands, except Share data, unless otherwise specified	6 Months Ended	12 Months Ended
	Jun. 30, 2013	Dec. 31, 2012
Common Equity [Line Items]
Total Shareholders' Equity	$ 129,567	$ 125,623
Less: Goodwill and core deposit intangibles	13,873	14,039
Tangible shareholders' equity	$ 115,694	$ 111,584
Common shares issued and outstanding	10,734,250	10,758,674
Tangible book value per common share	$ 10.78	$ 10.37

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Balances of Assets and Liabilities Measured at Fair Value on Non-Recurring Basis (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Line Items]
Collateral dependent impaired loans with specific valuation allowance and/or partial charge-offs	$ 1,957	$ 2,056
Other real estate owned	3,112	3,112
Total	5,069	5,168
Fair Value, Inputs, Level 1
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Line Items]
Collateral dependent impaired loans with specific valuation allowance and/or partial charge-offs	0	0
Other real estate owned	0	0
Total	0	0
Fair Value, Inputs, Level 2
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Line Items]
Collateral dependent impaired loans with specific valuation allowance and/or partial charge-offs	0	0
Other real estate owned	0	0
Total	0	0
Fair Value, Inputs, Level 3
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Line Items]
Collateral dependent impaired loans with specific valuation allowance and/or partial charge-offs	1,940	2,269
Other real estate owned	3,112	3,112
Total	$ 5,052	$ 5,381

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Stock Option Activity (Detail) (USD $) In Thousands, except Share data, unless otherwise specified	6 Months Ended	12 Months Ended
	Jun. 30, 2013	Dec. 31, 2012
Shares
Outstanding stock options at beginning, Shares	734,896
Granted, Shares	0
Exercised, Shares	5,625	0
Forfeited, Shares	625
Expired, Shares	10,000
Outstanding stock options at end, Shares	718,646	734,896
Exercisable options at June 30, 2013, Shares	698,371
Unvested options at June 30, 2013, Shares	20,275
Outstanding, vested and expected to vest at June 30, 2013, Shares	718,646
Weighted Average Exercise Price
Outstanding stock options at beginning, Weighted Average Exercise Price	$ 12.44
Outstanding stock options at end, Weighted Average Exercise Price	$ 12.39	$ 12.44
Exercisable options at June 30, 2013, Weighted Average Exercise Price	$ 12.40
Unvested options at June 30, 2013 , Weighted Average Exercise Price	$ 12.01
Outstanding, vested and expected to vest at June 30, 2013, Weighted Average Exercise Price	$ 12.39
Weighted Average Remaining Contractual Term
Outstanding stock options at beginning, Weighted Average Remaining Contractual Term	2 years 9 months 18 days
Outstanding stock options at end, Weighted Average Remaining Contractual Term	2 years 3 months 18 days	2 years 9 months 18 days
Exercisable options at June 30, 2013, Weighted Average Remaining Contractual Term	2 years 3 months 18 days
Unvested options at June 30, 2013, Weighted Average Remaining Contractual Term	3 years 2 months 12 days
Outstanding, vested and expected to vest at June 30, 2013, Weighted Average Remaining Contractual Term	2 years 3 months 18 days
Aggregate intrinsic value
Outstanding stock options at December 31, 2012, Aggregate Intrinsic Value	$ 966
Outstanding stock options at June 30, 2013, Aggregate Intrinsic Value	3,078	966
Exercisable options at June 30, 2013	3,001
Unvested options at June 30, 2013	77
Outstanding, vested and expected to vest at June 30, 2013	$ 3,078

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Common Stock

6 Months Ended

Jun. 30, 2013

Common Stock

Note 10 - Common Stock

As part of the merger with PC Bancorp, the Company initially issued 3,721,382 shares of common stock on July 31, 2012 to the shareholders of PC Bancorp.

During 2012, 117,300 shares of restricted stock were issued to the Company’s Directors and employees. During the six months ending June 30, 2013, the Company issued 2,500 shares of restricted stock to a Company employee. In addition, the Company issued 5,625 shares and 0 shares of stock from the exercise of employee stock options for the six months ending June 30, 2013 and for the twelve months ending December 31, 2012, respectively. The Company cancelled 10,600 and 7,500 shares of unvested restricted stock during the six months of 2013 and for the full year of 2012, respectively, related to employee turnover. Net issuance (forfeiture) of stock for the six months of 2013 and for the twelve months of 2012 was (24,424) shares and 109,800 shares, respectively. See Note 9 – “Stock Options and Restricted Stock” for a more detailed analysis related to the issuances of these shares.

The Company has a program that allows employees to make an election to have a portion of their restricted stock that became vested during the year, redeemed by the Company to provide funds to pay the employee’s tax obligation related to the vesting of the stock. During the six months of 2013 and during the full year of 2012, a number of the Company’s employees elected to participate in this program. A total of 22,049 and 21,921 shares of employee unvested restricted stock were retired under this program for a total value of $283,000 and $228,000 during the six months of 2013, and for the full year of 2012, respectively. The retirement of these shares upon vesting is accounted for as a dividend.

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Loans

6 Months Ended

Jun. 30, 2013

Loans

Note 6 - Loans

The following table presents the composition of the Company’s loan portfolio as of the dates indicated (dollars in thousands):

	June 30,		December 31,
	2013		2012
Commercial and Industrial Loans:	$	277,076	$	262,637
Loans Secured by Real Estate:
Construction, Land Development and Other Land		56,461		48,528
Owner-Occupied Nonresidential Properties		180,483		181,844
Other Nonresidential Properties		260,902		246,450
1-4 Family Residential Properties		64,765		62,037
Multifamily Residential Properties		32,212		31,610
Total Commercial and Other Real Estate		538,362		521,941
Other Loans:		13,128		21,779
Total Loans	$	885,027	$	854,885

The following table is a breakout of the Company’s loan portfolio stratified by the industry concentration of the borrower by their respective NAICS code as of the dates indicated (dollars in thousands):

	June 30,		December 31,
	2013		2012
Real Estate	$	342,048	$	312,625
Hotel/Lodging		72,905		82,483
Manufacturing		77,656		77,203
Construction		67,133		55,385
Wholesale		52,270		54,218
Finance		44,721		59,791
Healthcare		42,378		41,857
Professional Services		40,660		44,714
Restaurant/Food Service		35,383		24,105
Retail		25,160		30,302
Other Services		24,030		23,239
Administrative Management		21,188		19,078
Information		12,151		4,492
Transportation		9,521		11,431
Entertainment		6,250		8,132
Other		11,573		5,830
Total	$	885,027	$	854,885

SBA Loans

As part of the acquisition of PC Bancorp, the Company acquired loans that were originated under the guidelines of the Small Business Administration (“SBA”) program. Furthermore, the Company continues to originate SBA loans. The total portfolio of the SBA contractual loan balances being serviced by the Company at June 30, 2013 was $105 million, of which $71 million has been sold. Of the $34 million remaining on the Company’s books, $9 million is un-guaranteed and $25 million is guaranteed by the SBA.

For SBA guaranteed loans, a secondary market exists to purchase the guaranteed portion of these loans with the Company continuing to “service” the entire loan. The secondary market for guaranteed loans is comprised of investors seeking long term assets with yields that adapt to the prevailing interest rates. These investors are typically financial institutions, insurance companies, pension funds, unions and other types of investors specializing in the acquisition of this product. When a decision to sell the guaranteed portion of an SBA loan is made by the Company, bids are solicited from secondary market investors and the loan is normally sold to the highest bidder.

The Company currently plans to maintain and grow the SBA loan portfolio and is planning on selling some of the guaranteed portion of SBA loans generated during future quarters. While there were no loans classified as held for sale at June 30, 2013, the Company has recently originated approximately $1.6 million in commercial and industrial SBA loans. While the Company does not currently plan on selling these loans, it may choose to do so in the future. The Company sold approximately $4.0 million of the guaranteed portion of its SBA loans during the six months ended June 30, 2013 and recorded a net gain on sale of $410,000.

Allowance for Loan Loss

The following table is a summary of the activity for the allowance for loan loss for the periods indicated (dollars in thousands):

	Three Months Ended June  30,						Six Months Ended June 30,
	2013			2012			2013			2012
Allowance for loan loss at beginning of period	$	8,841		$	7,512		$	8,803		$	7,495
Provision for loan losses		1,153			380			1,287			380
Net (charge-offs) recoveries:
Charge-offs		(616	)		(586	)		(737	)		(589	)
Recoveries		34			23			59			43
Net (charge-offs)		(582	)		(563	)		(678	)		(546	)
Allowance for loan loss at end of period	$	9,412		$	7,329		$	9,412		$	7,329
Net (charge-offs) to average loans		(0.07	)%		(0.12	)%		(0.08	)%		(0.12	)%

	June 30, 2013			December 31, 2012
Allowance for loan loss to total loans		1.06	%		1.03	%
Allowance for loan loss to total loans accounted for at historical cost, which excludes loan balances and the related allowance for loans acquired through acquisition		1.50	%		1.54	%

The following tables present, by portfolio segment, the changes in the allowance for loan loss and the recorded investment in loans as of the dates and for the periods indicated (dollars in thousands):

	Commercial and Industrial			Construction, Land Development and Other Land			Commercial and Other Real Estate			Other			Total
Three Months Ended June 30, 2013
Beginning balance	$	4,187		$	2,147		$	2,400		$	107		$	8,841
Provision for loan losses		1,014			213			(6	)		(68	)		1,153
Net (charge-offs) recoveries:
Charge-offs		(569	)		(0	)		(47	)		(0	)		(616	)
Recoveries		27			0			4			3			34
Net (charge-offs) recoveries		(542	)		0			(43	)		3			(582	)
Ending balance	$	4,659		$	2,360		$	2,351		$	42		$	9,412
Three Months Ended June 30, 2012
Beginning balance	$	3,837		$	805		$	2,626		$	244		$	7,512
Provision for loan losses		747			(142	)		(225	)		0			380
Net (charge-offs) recoveries:
Charge-offs		(443	)		0			(136	)		(7	)		(586	)
Recoveries		20			0			0			3			23
Net (charge-offs) recoveries		(423	)		0			(136	)		(4	)		(563	)
Ending balance	$	4,161		$	663		$	2,265		$	240		$	7,329

	Commercial and Industrial			Construction, Land Development and Other Land			Commercial and Other Real Estate			Other			Total
Six Months Ended June 30, 2013
Beginning balance	$	4,572		$	2,035		$	2,084		$	112		$	8,803
Provision for loan losses		650			325			379			(67	)		1,287
Net (charge-offs) recoveries:
Charge-offs		(612	)		(0	)		(117	)		(8	)		(737	)
Recoveries		49			0			5			5			59
Net (charge-offs) recoveries		(563	)		0			(112	)		(3	)		(678	)
Ending balance	$	4,659		$	2,360		$	2,351		$	42		$	9,412
Six Months Ended June 30, 2012
Beginning balance	$	3,541		$	752		$	2,911		$	291		$	7,495
Provision for loan losses		1,026			(89	)		(510	)		(47	)		380
Net (charge-offs) recoveries:
Charge-offs		(443	)		0			(136	)		(10	)		(589	)
Recoveries		37			0			0			6			43
Net (charge-offs) recoveries		(406	)		0			(136	)		(4	)		(546	)
Ending balance	$	4,161		$	663		$	2,265		$	240		$	7,329

	Commercial and Industrial		Construction, Land Development and Other Land		Commercial and Other Real Estate		Other		Total
June 30, 2013
Allowance for Loan Loss – Ending balance:
Individually evaluated for impairment	$	158	$	0	$	0	$	0	$	158
Collectively evaluated for impairment		4,491		2,360		2,351		42		9,244
Purchased credit impaired (loans acquired with deteriorated credit quality)		10		0		0		0		10
Total Allowance for Loan Loss	$	4,659	$	2,360	$	2,351	$	42	$	9,412
Loans receivable – Ending balance:
Individually evaluated for impairment	$	2,681	$	1,159	$	3,340	$	0	$	7,180
Collectively evaluated for impairment		273,300		55,302		531,752		13,128		873,482
Purchased credit impaired (loans acquired with deteriorated credit quality)		1,095		0		3,270		0		4,365
Total Loans Receivable	$	277,076	$	56,461	$	538,362	$	13,128	$	885,027
December 31, 2012
Allowance for Loan Loss – Ending balance:
Individually evaluated for impairment	$	11	$	0	$	0	$	0	$	11
Collectively evaluated for impairment		4,552		2,035		2,084		112		8,783
Purchased credit impaired (loans acquired with deteriorated credit quality)		9		0		0		0		9
Total Allowance for Loan Loss	$	4,572	$	2,035	$	2,084	$	112	$	8,803
Loans receivable – Ending balance:
Individually evaluated for impairment	$	885	$	1,200	$	3,499	$	0	$	5,584
Collectively evaluated for impairment		260,982		47,328		512,312	$	21,775		842,397
Purchased credit impaired (loans acquired with deteriorated credit quality)		770		0		6,130	$	4		6,904
Total Loans Receivable	$	262,637	$	48,528	$	521,941	$	21,779	$	854,885

Credit Quality of Loans

The Company utilizes an internal loan classification system as a means of reporting problem and potential problem loans. Under the Company’s loan risk rating system, loans are classified as “Pass,” with problem and potential problem loans as “Special Mention,” “Substandard” “Doubtful” and “Loss”. Individual loan risk ratings are updated continuously or at any time the situation warrants. In addition, management regularly reviews problem loans to determine whether any loan requires a classification change, in accordance with the Company’s policy and applicable regulations. The grading analysis estimates the capability of the borrower to repay the contractual obligations of the loan agreements as scheduled or at all. The internal loan classification risk grading system is based on experiences with similarly graded loans.

The Company’s internally assigned grades are as follows:

• Pass – loans which are protected by the current net worth and paying capacity of the obligor or by the value of the underlying collateral. Loans not meeting the criteria of special mention, substandard, doubtful or loss that have been analyzed individually as part of the above described process are considered to be pass-rated loans.

• Special Mention – loans where a potential weakness or risk exists, which could cause a more serious problem if not corrected. Special Mention loans do not currently expose the Company to sufficient risk to warrant classification as a Substandard, Doubtful or Loss classification, but possess weaknesses that deserve management’s close attention.

• Substandard – loans that have a well-defined weakness based on objective evidence and can be characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

• Doubtful – loans classified as doubtful have all the weaknesses inherent in those classified as substandard with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable.

• Loss – loans classified as a loss are considered uncollectible, or of such value that continuance as an asset is not warranted.

The following tables present the risk category of loans by class of loans based on the most recent internal loan classification as of the dates indicated (dollars in thousands):

	Commercial and Industrial		Construction, Land Development and Other Land		Commercial and Other Real Estate		Other		Total
June 30, 2013
Pass	$	265,362	$	55,302	$	513,055	$	13,125	$	846,844
Special Mention		1,428		0		3,037		0		4,465
Substandard		9,741		1,159		22,270		3		33,173
Doubtful		545		0		0		0		545
Total	$	277,076	$	56,461	$	538,362	$	13,128	$	885,027
December 31, 2012
Pass	$	250,624	$	47,328	$	493,768	$	21,655	$	813,375
Special Mention		4,602		0		5,300		0		9,902
Substandard		7,411		1,200		22,873		119		31,603
Doubtful		0		0		0		5		5
Total	$	262,637	$	48,528	$	521,941	$	21,779	$	854,885

Age Analysis of Past Due and Non-Accrual Loans

The following tables present an aging analysis of the recorded investment of past due loans and non-accrual loans as of the dates indicated (dollars in thousands):

	31-60 Days Past Due		61-90 Days Past Due		Greater than 90 Days Past Due and Accruing		Total Past Due and Accruing		Total Non Accrual		Current		Total Loans
June 30, 2013
Commercial and Industrial	$	246	$	961	$	0	$	1,207	$	3,771	$	272,098	$	277,076
Construction, Land Development and Other Land		0		0		0		0		1,159		55,302		56,461
Commercial and Other Real Estate		0		0		0		0		5,539		532,823		538,362
Other		0		2		0		2		0		13,126		13,128
Total	$	246	$	963	$	0	$	1,209	$	10,469	$	873,349	$	885,027

	31-60 Days Past Due		61-90 Days Past Due		Greater than 90 Days Past Due and Accruing		Total Past Due and Accruing		Total Non Accrual		Current		Total Loans
December 31, 2012
Commercial and Industrial	$	1,025	$	0	$	0	$	1,025	$	1,583	$	260,029	$	262,637
Construction, Land Development and Other Land		0		0		0		0		1,200		47,328		48,528
Commercial and Other Real Estate		2,884		0		0		2,884		7,742		511,315		521,941
Other		0		0		0		0		5		21,774		21,779
Total	$	3,909	$	0	$	0	$	3,909	$	10,530	$	840,446	$	854,885

Troubled Debt Restructuring

The Company’s loan portfolio contains certain loans that have been modified in a Troubled Debt Restructuring (“TDR”), where economic concessions have been granted to borrowers experiencing financial difficulties. Loans are restructured in an effort to maximize collections. Economic concessions can include: reductions to the interest rate, payment extensions, forgiveness of principal or other actions.

The modification process includes evaluation of impairment based on the present value of expected future cash flows, discounted at the contractual interest rate of the original loan agreement, except when the sole (remaining) source of repayment for the loan is the operation or liquidation of the loan collateral. In these cases, management uses the current fair value of the collateral, less selling costs, to evaluate the loan for impairment. If management determines that the value of the modified loan is less than the recorded investment in the loan (net of previous charge-offs and unamortized premium or discount), impairment is recognized through a specific allowance or a charge-off.

Impairment analyses are performed on troubled debt restructured loans in conjunction with the normal allowance for loan loss process.

The following tables include the recorded investment and unpaid principal balances for TDR loans for the dates and periods indicated (dollars in thousands). This table includes two commercial and industrial TDR loans that were purchased credit impaired (“PCI”). As of June 30, 2013, these two TDR PCI loans had a recorded investment of $97,850 and unpaid principal balances of $157,377. Both of these loans had been performing in compliance with their restructured agreements, and were returned to accrual status during the fourth quarter of 2012. One loan is still accruing and performing in compliance with its restructured agreement, the other had to be placed on non-accrual status during the second quarter of 2013.

	Recorded Investment		Unpaid Principal Balance		Interest Income Recognized
Period ended June 30, 2013
Commercial and Industrial	$	611	$	904	$	1
Construction, Land Development and Other Land		1,159		2,791		0
Commercial and Other Real Estate		2,236		2,785		0
Total	$	4,006	$	6,480	$	1

	Recorded Investment		Unpaid Principal Balance		Interest Income Recognized
Year ended December 31, 2012
Commercial and Industrial	$	314	$	626	$	5
Construction, Land Development and Other Land		1,200		2,791		0
Commercial and Other Real Estate		4,193		4,874		32
Total	$	5,707	$	8,291	$	37

The following table shows the pre- and post-modification recorded investment in TDR loans by type of modification and loan segment that have occurred during the periods indicated (dollars in thousands):

	Three Months Ended June 30, 2013						Three Months Ended June 30, 2012
	Number of Loans		Pre- Modification Recorded Investment		Post- Modification Recorded Investment		Number of Loans		Pre- Modification Recorded Investment		Post- Modification Recorded Investment
Reduced Interest Rate:
Construction, Land Development and Other Land		0	$	0	$	0		0	$	0	$	0
Lengthened Amortization:
Commercial and Industrial		0		0		0		0		0		0
Commercial and Other Real Estate		0		0		0		0		0		0
		0		0		0		0		0		0
Total		0	$	0	$	0		0	$	0	$	0

	Six Months Ended June 30, 2013						Six Months Ended June 30, 2012
	Number of Loans		Pre- Modification Recorded Investment		Post- Modification Recorded Investment		Number of Loans		Pre- Modification Recorded Investment		Post- Modification Recorded Investment
Reduced Interest Rate:
Construction, Land Development and Other Land		0	$	0	$	0		0	$	0	$	0
Lengthened Amortization:
Commercial and Industrial		1		310		310		0		0		0
Commercial and Other Real Estate		0		0		0		0		0		0
		0		0		0		0		0		0
Total		1	$	310	$	310		0	$	0	$	0

There was no financial impact for specific reserves or from charge-offs for the modified loans included in the table above.

The Company restructured one new TDR loan during the six months ended June 30, 2013; interest only payments were extended on a commercial and industrial SBA 7a loan with a pre and post modification recorded investment of $310,000.

Payments were not received as scheduled on the one new TDR loan that was restructured during the six months ended June 30, 2013. This borrower is in negotiation for a further modification of payments going forward. In addition, an accruing TDR loan which was originally PCI, with a recorded investment of approximately $66,000, was placed on non-accrual status when the borrower filed Chapter 7 bankruptcy. Aside from these two loans, there have been no other payment defaults in 2013, subsequent to modification on troubled debt restructured loans modified within the last twelve months.

Loans are restructured in an effort to maximize collections. Impairment analyses are performed on the Company’s troubled debt restructured loans in conjunction with the normal allowance for loan loss process. The Company’s troubled debt restructured loans are analyzed to ensure adequate cash flow or collateral supports the outstanding loan balance.

Impaired Loans

Impaired loans are evaluated by comparing the fair value of the collateral, if the loan is collateral dependent, and the present value of the expected future cash flows discounted at the loan’s effective interest rate, if the loan is not collateral dependent. The Company recognizes interest income from impaired loans on an accrual basis, unless the loan is on non-accrual status. There were no loans greater than 90 days past due and still accruing interest at June 30, 2013 or December 31, 2012.

A valuation allowance is established for an impaired loan when the fair value of the loan is less than the recorded investment. In certain cases, portions of impaired loans are charged-off to realizable value instead of establishing a valuation allowance and are included, when applicable in the table above as “Impaired loans without specific valuation allowance.” The valuation allowance disclosed below is included in the allowance for loan loss reported in the consolidated balance sheets as of June 30, 2013 and December 31, 2012.

The following tables present, by loan category, the recorded investment and unpaid principal balances for impaired loans with the associated allowance amount, if applicable, as of the dates and for the periods indicated (dollars in thousands). This table excludes purchased credit impaired loans (loans acquired with deteriorated credit quality) of $4.4 million and $6.9 million at June 30, 2013 and December 31, 2012, respectively.

	June 30, 2013						December 31, 2012
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
With no specific allowance recorded:
Commercial and Industrial	$	1,986	$	2,041	$	0	$	677	$	1,490	$	0
Construction, Land Development and Other Land		1,159		2,791		0		1,201		2,791		0
Commercial and Other Real Estate		3,340		4,370		0		3,498		4,331		0
With a specific allowance recorded:
Commercial and Industrial		695		1,420		9		208		463		11
Construction, Land Development and Other Land		0		0		0		0		0		0
Commercial and Other Real Estate		0		0		0		0		0		0
Total
Commercial and Industrial		2,681		3,461		9		885		1,953		11
Construction, Land Development and Other Land		1,159		2,791		0		1,201		2,791		0
Commercial and Other Real Estate		3,340		4,370		0		3,498		4,331		0
Total	$	7,180	$	10,622	$	9	$	5,584	$	9,075	$	11

	Three Months Ended June 30,								Six Months Ended June 30,
	2013				2012				2013				2012
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no specific allowance recorded:
Commercial and Industrial	$	1,500	$	0	$	586	$	0	$	994	$	0	$	587	$	0
Construction, Land Development and Other Land		1,159		0		1,249		0		1,179		0		1,260		0
Commercial and Other Real Estate		3,340		0		131		0		3,398		0		65		0
With a specific allowance recorded:
Commercial and Industrial		488		0		200		0		319		0		200		0
Construction, Land Development and Other Land		0		0		0		0		0		0		0		0
Commercial and Other Real Estate		0		0		1,064		0		0		0		1,064		0
Total:
Commercial and Industrial		1,988		0		786		0		1,313		0		787		0
Construction, Land Development and Other Land		1,159		0		1,249		0		1,179		0		1,260		0
Commercial and Other Real Estate		3,340		0		1,195		0		3,398		0		1,130		0
Total	$	6,487	$	0	$	3,230	$	0	$	5,890	$	0	$	3,176	$	0

The following is a summary of additional information pertaining to impaired loans for the periods indicated (dollars in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012
Interest foregone on impaired loans	$	141	$	86	$	230	$	160
Cash collections applied to reduce principal balance	$	110	$	22	$	152	$	43
Interest income recognized on cash collections	$	0	$	0	$	0	$	0

Loans Acquired Through Acquisition

The following table reflects the accretable net discount for loans acquired through acquisition accounted for under ASC 310 “Receivables” for the periods indicated (dollars in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
Balance, beginning of period	$	11,269		$	2,193		$	12,189		$	2,585
Accretion, included in interest income		(1,139	)		(361	)		(2,083	)		(753	)
Reclassifications (to) from non-accretable yield		0			0			24			0
Balance, end of period	$	10,130		$	1,832		$	10,130		$	1,832

The above table reflects the fair value adjustment on the loans acquired from mergers that will be amortized to loan interest income based on the effective yield method over the remaining life of the loans. These amounts do not include the fair value adjustments on the purchased credit impaired loans acquired from mergers.

Purchased Credit Impaired (“PCI”) Loans

We evaluated loans acquired through acquisition in accordance with guidance in ASC 310-30 related to loans acquired with deteriorated credit quality. Acquired loans are considered credit-impaired if there is evidence of deterioration of credit quality since origination and it is probable, at the acquisition date, that we will be unable to collect all contractually required amounts.

When the timing and/or amounts of expected cash flows on such loans are not reasonably estimable, no interest is accreted and the loan is reported as a non-accrual loan; otherwise, if the timing and amounts of expected cash flows for purchased credit-impaired loans are reasonably estimable, then interest is accreted and the loans are reported as accruing loans.

The non-accretable difference represents the difference between the undiscounted contractual cash flows and the undiscounted expected cash flows, and also reflects the estimated credit losses in the acquired loan portfolio at the acquisition date and can fluctuate due to changes in expected cash flows during the life of the PCI loans.

The following table reflects the outstanding balance and related carrying value of PCI loans as of the dates indicated (dollars in thousands):

	June 30, 2013				December 31, 2012
	Unpaid Principal Balance		Carrying Value		Unpaid Principal Balance		Carrying Value
Commercial and Industrial	$	1,613	$	1,095	$	1,221	$	770
Commercial and Other Real Estate		6,053		3,270		9,424		6,130
Other		0		0		73		4
Total	$	7,666	$	4,365	$	10,718	$	6,904

The following table reflects the activities in the accretable net discount for PCI loans for the period indicated (dollars in thousands):

	Three Months Ended June 30,					Six Months Ended June 30,
	2013			2012		2013			2012
Balance, beginning of period	$	9		$	0	$	9		$	0
Accretion, included in interest income		(9	)		0		(9	)		0
Reclassifications (to) from non-accretable yield		428			0		428			0
Balance, end of period	$	428		$	0	$	428		$	0

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Significant Unobservable Inputs Used in Fair Value Measurements for Level Three Assets and Liabilities Measured at Fair Value on Recurring or Non-Recurring Basis (Parenthetical) (Detail) (USD $)	Jun. 30, 2013
Quantitative Information About Significant Unobservable Inputs [Line Items]
Specific valuation allowance	$ 150,000

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Derivative Financial Instruments

6 Months Ended

Jun. 30, 2013

Derivative Financial Instruments

Note 13 - Derivative Financial Instruments

The Company acquired interest rate swap contracts (“swaps”) on July 31, 2012 as a result of the merger with PC Bancorp. The Company has incorporated these instruments into its asset liability program when monitoring its interest rate risk position. All of the interest rate swap contracts are with the same counterparty bank.

At June 30, 2013, the Company had twenty three pay-fixed, receive-variable interest rate contracts that were designed to convert fixed rate loans into variable rate loans. In addition, the Company had one pay-fixed, receive-variable interest rate swap contract at the holding company that was settled during the first quarter of 2013. Twenty one of the twenty three swap contracts are designated as interest rate hedges at June 30, 2013. The interest rate swaps function as economic hedges of the associated fixed rate loans. The outstanding swaps have maturities of up to 10 years.

The location of the asset and liability derivative instruments as of June 30, 2013 and December 31, 2012, and the amount of income, expense and gain or loss recognized for the three and six months ended June 30, 2013 and 2012 are presented in the tables below (dollars in thousands):

	Liability Derivatives
	June 30, 2013		December 31, 2012
Fair Value Hedges
Interest rate contacts notional amount	$	32,458	$	35,990
Derivatives not designated as hedging instruments under ASC 815:
Interest rate swap contracts fair value	$	827	$	1,114
Derivatives designated as hedging instruments under ASC 815:
Interest rate swap contracts fair value		3,729		4,924
Total interest rate contracts fair value	$	4,556	$	6,038
Balance sheet location		Accrued Interest Payable and Other Liabilities		Accrued Interest Payable and Other Liabilities

	The Effect of Derivative Instruments on the Consolidated Statements of Income
	Three Months Ended June 30,					Six Months Ended June 30,
	2013			2012		2013			2012
Derivatives not designated as hedging instruments:
Interest rate swap contracts – loans
Increase in fair value of interest rate swap contracts	$	155		$	0	$	217		$	0
Payments (paid) on interest rate swap contracts on loans		(69	)		0		(156	)		0
Net increase in other non-interest income		86			0		61			0
Interest rate swap contracts – subordinated debenture
Increase in fair value of interest rate swap contracts		0			0		70			0
Payments (paid) on interest rate swap contracts on subordinated debentures		0			0		(70	)		0
Net increase in other non-interest income		0			0		0			0
Total net increase in other non-interest income	$	86		$	0	$	61		$	0
Derivatives designated as hedging instruments:
Interest rate swap contracts – loans
Increase in fair value of interest rate swap contracts	$	851		$	0	$	1,196		$	0
Decrease in fair value of hedged loans		(521	)		0		(590	)		0
Payment (paid) on interest rate swap contracts on loans		(331	)		0		(633	)		0
Net (decrease) in interest income on loans	$	(1	)	$	0	$	(27	)	$	0

The total amount of interest paid on all interest rate swap contracts by the Company for the three and six months ended June 30, 2013 was $400,000 and $859,000, respectively. The total change for the three and six months ended June 30, 2013 in the fair value of the interest rate swap contracts was an increase in value of $1,006,000 and an increase in value of $1,483,000, respectively, resulting in a decline in the recorded liability of the swap contracts. In addition the net change in the fair value of the hedged loans reflected a decline in value of $521,000 and a decline in value of $590,000, respectively. The net decline in the recorded liability of the interest rate swap contracts and the net decline in the fair value of the hedged loans during the quarter ended June 30, 2013, was the direct result of the increase in the interest rate futures market on both the 5 year and 10 year treasury yields. The increase in the treasury yield increased the value of the swap contracts, thus reducing the negative value of the swap liability recorded by the Company. The interest rate swap contract originally associated with the subordinated debenture that was scheduled to mature in June 2013 was liquidated prior to maturity during the first quarter of 2013. The final payment associated with the liquidation of this swap agreement was completely offset by the liquidation of the fair value liability associated with the interest rate swap contract, resulting in no impact to non-interest income during the first quarter of 2013.

The amount of interest recognized in earnings due to the amount of the interest rate swap contracts that are ineffective was considered insignificant during the first and second quarters of 2013.

Under the interest rate swap contracts, the Company is required to pledge and maintain collateral for the credit support under these agreements. At June 30, 2013, the Company had $4.3 million in certificates of deposit pledged to support the interest rate swap contracts and $2.1 million of due from bank balances with the counterparty to the interest rate swap contracts.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2013

Commitments and Contingencies

Note 11 - Commitments and Contingencies

Litigation

From time to time the Company is a party to claims and legal proceedings arising in the ordinary course of business. The Company accrues for any probable loss contingencies that are estimable and discloses any possible losses in accordance with Accounting Standards Codification (“ASC”) 450, “Contingencies”. As of June 30, 2013, there were no legal proceedings against the Company the outcome of which are expected to have a material adverse impact on the Company’s financial position, results of operations or cash flows, as a whole.

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Document and Entity Information	6 Months Ended
	Jun. 30, 2013	Aug. 09, 2013
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q2
Trading Symbol	CUNB
Entity Registrant Name	CU Bancorp
Entity Central Index Key	0001543643
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		10,738,921

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Fair Value of Assets and Liabilities

6 Months Ended

Jun. 30, 2013

Fair Value of Assets and Liabilities

Note 12 - Fair Value of Assets and Liabilities

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for an asset or liability in an orderly transaction between market participants at the measurement date. ASC Topic 825 requires disclosure of the fair value of financial assets and financial liabilities, including both those financial assets and financial liabilities that are measured and reported at fair value on a recurring basis and a non-recurring basis. The methodologies for estimating the fair value of financial assets and financial liabilities that are measured at fair value on a recurring or non-recurring basis are discussed below.

In accordance with accounting guidance, the Company groups its financial assets and financial liabilities measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are as follows:

• Level 1 – Observable unadjusted quoted market prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date

• Level 2 – Significant other observable market based inputs, other than Level 1 prices such as quoted prices for similar assets or liabilities or unobservable inputs that are corroborated by market data. This includes quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data, either directly or indirectly. This would include those financial instruments that are valued using models or other valuation methodologies where substantially all of the assumptions are observable in the marketplace, can be derived from observable market data or are supported by observable levels at which transactions are executed in the marketplace.

• Level 3 – Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. Assets measured utilizing level 3 are for positions that are not traded in active markets or are subject to transfer restrictions, and or where valuations are adjusted to reflect illiquidity and or non-transferability. These assumptions are not corroborated by market data. This is comprised of financial instruments whose fair value is estimated based on internally developed models or methodologies utilizing significant inputs that are generally less readily observable from objective sources. Management uses a combination of reviews of the underlying financial statements, appraisals and management’s judgment regarding credit quality to determine the value of the financial asset or liability.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Management maximizes the use of observable inputs and attempts to minimize the use of unobservable inputs when determining fair value measurements. The following is a description of both the general and specific valuation methodologies used for certain instruments measured at fair value, as well as the general classification of these instruments pursuant to the valuation hierarchy.

Investment Securities Available-for-Sale: The fair value of securities available for sale may be determined by obtaining quoted prices in active markets, when available, from nationally recognized securities exchanges (Level 1 inputs). If quoted market prices are not available, the fair value is determined by a matrix pricing, which is a mathematical technique widely used in the securities industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs). Debt securities’ pricing is generally obtained from one of the matrix pricing models developed from one of the three national pricing agencies. In cases where significant credit valuation adjustments are incorporated into the estimation of fair value, reported amounts are classified as Level 3 inputs.

Securities classified as available-for-sale are accounted for at their current fair value rather than amortized historical cost. Unrealized gains or losses are excluded from net income and reported as an amount net of taxes as a separate component of accumulated other comprehensive income included in shareholders’ equity.

The Company considers the inputs utilized to fair value the U.S. Agency and U.S. Sponsored Agency issued debt securities (callable and non-callable notes), mortgage backed securities guaranteed by those agencies, collateralized mortgage obligations issued by those agencies, corporate bond securities, and municipal securities within level 2 of the valuation hierarchy. Management bases the fair value for these investments primarily on third party price indications provided by independent pricing sources utilized by the Company’s bond accounting system to obtain market pricing on its individual securities. Vining Sparks, who provides the Company with its bond accounting system, utilizes pricing from three independent third party pricing sources for pricing of securities. These third party pricing sources utilize, quoted market prices or when quoted market prices are not available, then fair values are estimated using nationally recognized third-party vendor pricing models that would also be classified within the level 2 valuation hierarchy because the inputs are observable. However, the fair value reported may not be indicative of the amounts that could be realized in an actual market exchange.

The fair value of the Company’s U.S. Agency and U.S. Sponsored Agency callable and non-callable agency securities, mortgage backed securities guaranteed by those agencies, and collateralized mortgage obligations issued by those agencies, corporate bond securities, and municipal securities are calculated using an option adjusted spread model from one of the nationally recognized third-party pricing models. Depending on the assumptions used and the treasury yield curve and other interest rate assumptions, the fair value could vary significantly in the near term.

Loans: The fair value for loans is estimated by discounting the expected future cash flows using current interest rates at which similar loans would be made to borrowers with similar credit ratings for the same remaining maturities, adjusted for the allowance for loan loss. Loans are segregated by type such as commercial and industrial, commercial real estate, construction and other loans with similar credit characteristics and are further segmented into fixed and variable interest rate loan categories. Expected future cash flows are projected based on contractual cash flows, adjusted for estimated prepayments.

Impaired Loans: The fair value of impaired loans is determined based on an evaluation at the time the loan is originally identified as impaired, and periodically thereafter, at the lower of cost or fair value. Fair value on impaired loans is measured based on the value of the collateral securing these loans, if the loan is collateral dependent, or based on the discounted cash flows for non collateral dependent loans, and are classified at a level 3 in the fair value hierarchy. Collateral on collateral dependent loans may be real estate and/or business assets including equipment, inventory and/or accounts receivable and is determined based on appraisals performed by qualified licensed appraisers hired by the Company. Appraised and reported values may be discounted based on management’s historical knowledge, changes in market conditions from the time of valuation, and/or management’s expertise and knowledge of the client and client’s business. Such discounts are typically significant and result in a Level 3 classification of the inputs for determining fair value. For unsecured loans, the estimated future discounted cash flows of the business or borrower, are used in evaluating the fair value. Impaired loans are reviewed and evaluated on at least a quarterly basis for additional impairment and adjusted accordingly, based on the same factors identified above.

Interest Rate Swap Contracts: The fair value of the interest rate swap contracts are provided by an independent third party vendor that specializes in interest rate risk management and fair value analysis using a system that utilizes current market data to estimate cash flows of the interest rate swaps utilizing the future LIBOR yield curve through the maturity date of the interest rate swap contract. The forward LIBOR yield curve is the primary factor in the valuation of the interest rate swap contracts. Accordingly, the interest rate swap contracts are categorized as a level 2 valuation.

Other Real Estate Owned: The fair value of other real estate owned is generally based on real estate appraisals (unless more current market information is available) less estimated costs of sale. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are typically significant and result in a Level 3 classification of the inputs for determining fair value.

SBA Servicing Asset: The Company acquired an SBA servicing asset with the PC Bancorp merger. This servicing asset was initially fair valued at the merger date based on an evaluation by a third party who specializes in fair value analysis. The fair value of this asset was based on the estimated discounted future cash flows utilizing market based discount rates and estimated prepayment speeds. The discount rate was based on the current U.S. Treasury yield curve, plus a spread for marketplace risk associated with these assets. Prepayment speeds were selected based on the historical prepayments of similar SBA pools. The prepayment speeds determine the timing of the cash flows. The SBA servicing asset is amortized over the estimated life of the loans based on an effective yield approach. In addition, the Company’s servicing asset is evaluated regularly for impairment by discounting the estimated future cash flows using market-based discount rates and prepayment speeds. If the calculated present value of the servicing asset declines below the Company’s current carrying value, the servicing asset is written down to its present value. Based on the Company’s methodology in its valuation of the SBA servicing asset, the current carrying value is estimated to approximate the fair value. The valuation inputs required in valuing the SBA servicing asset are considered to be level 3 inputs.

Non-Maturing Deposits: The fair values for non-maturing deposits (deposits with no contractual termination date), which include non-interest bearing demand deposits, interest bearing transaction accounts, money market deposits and savings accounts are equal to their carrying amounts, which represent the amounts payable on demand. Because the carrying value and fair value are by definition identical, and accordingly non-maturity deposits are categorized as a level 1 valuation, these balances are not listed in the following tables.

Maturing Deposits: The fair values of fixed maturity certificates of deposit (time deposits) are estimated using a discounted cash flow calculation that applies current market deposit interest rates to the Bank’s current certificate of deposit interest rates for similar term certificates. The rates being paid on certificates of deposit not acquired from PC Bancorp at June 30, 2013 and December 31, 2012, were generally identical to the market interest rates for comparable terms and thus both the carry amount and fair value are generally considered approximately identical as of the reporting dates. The deposits acquired from PC Bancorp were initially adjusted to their fair value at the date of acquisition. The interest rates used to calculate the fair value adjustments on the PCB certificates were considered to be the market rates at the date of acquisition. Maturing deposits are categorized as level 2 valuations.

Securities Sold under Agreements to Repurchase (“Repos”): The fair value of securities sold under agreements to repurchase is estimated based on the discounted value of future cash flows expected to be paid on the deposits. The carrying amounts of Repos with maturities of 90 days or less approximate their fair values. The fair value of Repos with maturities greater that 90 days is estimated based on the discounted value of the contractual future cash flows. Securities sold under agreements to repurchase are categorized as a level 1 valuation.

Subordinated Debentures: The fair value of the three variable rate subordinated debentures (“debentures”) is estimated using a discounted cash flow calculation that applies the three month LIBOR plus the margin index at June 30, 2013, to the cash flows from the debentures, based on the actual interest rate the debentures were accruing at June 30, 2013. Because all three of the debentures re-priced on June 17, 2013 based on the current three month LIBOR index rate plus the index margin at that date, and with relatively little to no change in the three month LIBOR index rate from the re-pricing date through June 30, 2013, the current face value of the debentures and their calculated market value are approximately equal.

Fair value of commitments: Loan commitments that are priced on an index plus a margin to a market rate of interest are reported at the carrying value of the loan commitment. Loan commitments on which the committed fixed interest rate is less than the current market rate were insignificant at June 30, 2013 and December 31, 2012.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table summarizes the financial assets and financial liabilities measured at fair value on a recurring basis as of the dates indicated, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value (dollars in thousands):

	Total Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets – June 30, 2013
Investment securities available-for-sale	$	109,955	$	0	$	109,955	$	0
Financial Liabilities – June 30, 2013
Interest Rate Swap Contracts	$	4,556	$	0	$	4,556	$	0
Financial Assets – December 31, 2012
Investment securities available-for-sale	$	118,153	$	0	$	115,243	$	2,910
Financial Liabilities – December 31, 2012
Interest Rate Swap Contracts	$	6,038	$	0	$	6,038	$	0

The investment securities that comprise the balances reflected in the “Significant Unobservable Inputs (Level 3)” as of December 31, 2012 include private issue CMO securities. These securities were sold during the first quarter of 2013 for a net gain of $4,600.

The private issue CMO securities were valued at December 31, 2012 utilizing pricing obtained from the national market pricing services that are utilized in the Company’s bond accounting system. Due to the price volatility associated with these securities, the Company had classified them as level 3. All of these securities were sold in the first quarter of 2013. The roll forward of these securities is listed in the table below.

The following table below presents a roll-forward of all assets and liabilities and additional information about the financial assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the periods presented (dollars in thousands):

	Balance at January 1,		Included in Earnings			Included in Other Comprehensive Income (Loss)		Purchases, Issuances, (Sales) Settlements			Transfers into (out of) Level 3		Balance at June 30,
Financial Assets – Measured at Fair Value using Level 3 – June 30, 2013
Private Issue CMO Securities	$	2,910	$	(20	)	$	0	$	(2,890	)	$	0	$	0
Total	$	2,910	$	(20	)	$	0	$	(2,890	)	$	0	$	0
Financial Assets – Measured at Fair Value using Level 3 – June 30, 2012
Private Issue CMO Securities	$	2,775	$	(51	)	$	287	$	(252	)	$	0	$	2,759
U.S. Government Sponsored Agency CMO Securities		2,379		(1	)		6		(402	)		0		1,982
Total	$	5,154	$	(52	)	$	293	$	(654	)	$	0	$	4,741

Assets Measured at Fair Value on a Non-recurring Basis

The Company may be required periodically, to measure certain financial assets and financial liabilities at fair value on a nonrecurring basis, that is, the instruments are not measured at fair value on an ongoing basis, but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). These include assets that are measured at the lower of cost or market value that were recognized at fair value below cost at the end of or during the period.

The following table presents the balances of assets and liabilities measured at fair value on a non-recurring basis by caption and by level within the fair value hierarchy as of the dates indicated (dollars in thousands):

	Carrying Value at end of period		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable  Inputs (Level 3)
Financial Assets – June 30, 2013
Collateral dependent impaired loans with specific valuation allowance and/or partial charge-offs	$	1,957	$	0	$	0	$	1,940
Other real estate owned		3,112		0		0		3,112
Total	$	5,069	$	0	$	0	$	5,052
Financial Assets – December 31, 2012
Collateral dependent impaired loans with specific valuation allowance and/or partial charge-offs	$	2,056	$	0	$	0	$	2,269
Other real estate owned		3,112		0		0		3,112
Total	$	5,168	$	0	$	0	$	5,381

The following table presents the significant unobservable inputs used in the fair value measurements for Level 3 assets and liabilities measured at fair value on a recurring or non-recurring basis as of the dates indicated (dollars in thousands):

	Fair Value at June  30, 2013		Valuation Technique	Significant Unobservable Inputs	Significant Unobservable Input Values
Financial Assets – June 30, 2013
Collateral dependent impaired loans with specific valuation allowance and/or partial charge-offs (2)	$	1,545	Commercial Real Estate building and land appraisals	Real Estate appraisal valuations	$	1,640
		395	Accounts Receivable aging valuation and Inventory liquidation valuation	Accounts Receivable valuation estimates and Inventory liquidation values		429
				Less estimated selling costs		(129)
Total - Collateral dependent impaired loans	$	1,940		Net Valuation	$	1,940
Other real estate owned	$	3,112	Purchase and sale agreement (1)	Contract	$	3,190
				Less estimated selling costs		(78	)
				Net Valuation	$	3,112

(1) The Company has entered into a non-publicly disclosed purchase and sales agreement to sell this parcel of real estate to a private third party. The purchase price was a negotiated amount based on a number of both public and non-public economic factors.

(2) The Company has established a specific valuation allowance of $150,000 to cover the potential for any possible shortfall in the collateral values supporting these loans.

Fair Value of Financial Asset and Liability Table

ASC Topic 825 requires disclosure of the fair value of financial assets and financial liabilities, including those financial assets and financial liabilities that are not measured and reported at fair value on a recurring basis or non-recurring basis. The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is required to develop the estimates of fair value. Accordingly, the estimates presented below are not necessarily indicative of the amounts the Company could have realized in a current market exchange as of June 30, 2013 and December 31, 2012. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. The description of the valuation methodologies used for assets and liabilities measured at fair value and for estimating fair value for financial instruments not recorded at fair value has been described above.

The table below presents the carrying amounts and fair values of financial instruments as of the dates indicated (dollars in thousands):

					Fair Value Measurements
	Carrying Amount		Fair Value		Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
June 30, 2013
Financial Assets
Investment securities available-for-sale	$	109,955	$	109,955	$	0	$	109,955	$	0
Loans, net		875,615		878,242		0		0		878,242
Financial Liabilities
Certificates of deposit		60,192		60,310		0		60,310		0
Securities sold under agreements to repurchase		29,612		29,612		0		29,612		0
Subordinated debentures		9,283		12,372		0		0		12,372
Interest rate swap contracts		4,556		4,556		0		4,556		0
December 31, 2012
Financial Assets
Investment securities available-for-sale	$	118,153	$	118,153	$	0	$	115,243	$	2,910
Loans, net		846,082		848,146		0		0		848,146
Financial Liabilities
Certificates of deposit		81,336		81,648		0		81,648		0
Securities sold under agreements to repurchase		22,857		22,857		0		22,857		0
Subordinated debentures		9,169		12,372		0		0		12,372
Interest rate swap contracts		6,038		6,038		0		6,038		0

XML

Restricted Stock Activity (Detail) (USD $)	6 Months Ended
	Jun. 30, 2013
Number of Shares
Unvested, at December 31, 2012	290,550
Granted	2,500
Vested	64,200
Cancelled and forfeited	10,600
Unvested, at June 30, 2013	218,250
Weighted-Average Grant date Fair value Per share
Unvested, at December 31, 2012	$ 11.99
Granted	$ 12.74
Vested	$ 12.15
Cancelled and forfeited	$ 11.00
Unvested, at June 30, 2013	$ 12.00

XML

Stock Options and Restricted Stock - Additional Information (Detail) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Stock Option Activity And Changes [Line Items]
Stock based compensation expense	$ 3,000	$ 12,000	$ 13,000	$ 30,000
Shares of restricted stock issued	2,500
Restricted Stock
Stock Option Activity And Changes [Line Items]
Stock-based compensation expense	$ 214,000	$ 463,000	$ 208,000	$ 456,000