10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2016

☐ 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)

Commission File Number 001-35683

California	90-0779788
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
818 West 7th Street, Suite 220 Los Angeles, California	90017
(Address of principal executive offices)	(Zip Code)

(213) 430-7000

(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  ☒    No  ☐

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

Indicate by check mark whether the registrant is a large accelerated filer, 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	☐

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

As of November 1, 2016 the number of shares outstanding of the registrant’s no par value Common Stock was 17,678,438.

Page 1 of 77

CU BANCORP

September 30, 2016 FORM 10-Q

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

	ITEM 1.	Financial Statements
		Consolidated Balance Sheets September 30, 2016 (Unaudited) and December 31, 2015	3
		Consolidated Statements of Income Three and Nine Months Ended September 30, 2016 and 2015 (Unaudited)	4
		Consolidated Statements of Comprehensive Income Three and Nine Months Ended September 30, 2016 and 2015 (Unaudited)	5
		Consolidated Statements of Changes in Shareholders’ Equity Nine Months Ended September 30, 2016 and 2015 (Unaudited)	6
		Consolidated Statements of Cash Flows Nine Months Ended September 30, 2016 and 2015 (Unaudited)	7
		Notes to the Consolidated Financial Statements (Unaudited)	9
	ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	42
		Overview	45
		Results of Operations	50
		Financial Condition	61
		Liquidity	66
		Dividends	68
		Regulatory Matters	69
	ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	72
	ITEM 4.	Controls and Procedures	74
PART II. OTHER INFORMATION
	ITEM 1.	Legal Proceedings	75
	ITEM 1A.	Risk Factors	75
	ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	75
	ITEM 3.	Defaults Upon Senior Securities	75
	ITEM 4.	Mine Safety Disclosures	75
	ITEM 5.	Other Information	76
	ITEM 6.	Exhibits	76
	Signatures		77

Page 2 of 77

CU BANCORP

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except share data)

	September 30, 2016			December 31, 2015
	(Unaudited)			(Audited)
ASSETS
Cash and due from banks	$	47,701		$	50,960
Interest earning deposits in other financial institutions		244,205			171,103
Total cash and cash equivalents		291,906			222,063
Certificates of deposit in other financial institutions		51,490			56,860
Investment securities available-for-sale, at fair value		375,094			315,785
Investment securities held-to-maturity, at amortized cost		40,073			42,036
Total investment securities		415,167			357,821
Loans		1,974,941			1,833,163
Allowance for loan loss		(18,371	)		(15,682	)
Net loans		1,956,570			1,817,481
Premises and equipment, net		4,354			5,139
Deferred tax assets, net		15,614			17,033
Other real estate owned, net		—			325
Goodwill		64,603			64,603
Core deposit and leasehold right intangibles, net		6,665			7,671
Bank owned life insurance		50,889			49,912
Accrued interest receivable and other assets		35,914			35,734
Total Assets	$	2,893,172		$	2,634,642
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES
Non-interest bearing demand deposits	$	1,399,320		$	1,288,085
Interest bearing transaction accounts		284,154			261,123
Money market and savings deposits		786,882			679,081
Certificates of deposit		35,033			58,502
Total deposits		2,505,389			2,286,791
Securities sold under agreements to repurchase		24,251			14,360
Subordinated debentures, net		9,817			9,697
Accrued interest payable and other liabilities		20,785			16,987
Total Liabilities		2,560,242			2,327,835
Commitments and Contingencies (Note 13)
SHAREHOLDERS’ EQUITY
Serial Preferred Stock – authorized, 50,000,000 shares: Series A, non-cumulative perpetual preferred stock, $1,000 per share liquidation preference, 16,400 shares authorized, 16,400 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively		17,021			16,995
Common stock – authorized, 75,000,000 shares no par value, 17,673,438 and 17,175,389 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively		234,383			230,688
Additional paid-in capital		24,847			23,017
Retained earnings		56,296			36,923
Accumulated other comprehensive income (loss)		383			(816	)
Total Shareholders’ Equity		332,930			306,807
Total Liabilities and Shareholders’ Equity	$	2,893,172		$	2,634,642

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

Page 3 of 77

CU BANCORP

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(Dollars in thousands, except per share data)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Interest Income
Interest and fees on loans	$	23,958	$	21,689	$	69,701	$	62,239
Interest on investment securities		1,419		1,124		4,066		3,355
Interest on interest bearing deposits in other financial institutions		478		293		1,334		741
Total Interest Income		25,855		23,106		75,101		66,335
Interest Expense
Interest on interest bearing transaction accounts		102		105		300		303
Interest on money market and savings deposits		524		427		1,519		1,218
Interest on certificates of deposit		46		53		110		150
Interest on securities sold under agreements to repurchase		13		9		38		21
Interest on subordinated debentures		122		110		359		326
Total Interest Expense		807		704		2,326		2,018
Net Interest Income		25,048		22,402		72,775		64,317
Provision for loan losses		697		705		2,382		2,831
Net Interest Income After Provision For Loan Losses		24,351		21,697		70,393		61,486
Non-Interest Income
Gain on sale of securities, net		141		—		141		—
Gain on sale of SBA loans, net		189		640		1,228		1,278
Deposit account service charge income		1,210		1,159		3,621		3,453
Other non-interest income		1,518		1,189		3,863		3,960
Total Non-Interest Income		3,058		2,988		8,853		8,691
Non-Interest Expense
Salaries and employee benefits (includes stock based compensation expense of $939 and $810 for the three months, and $2,664 and $2,130 for the nine months ended September 30, 2016 and 2015, respectively)		10,335		9,744		30,409		28,175
Occupancy		1,673		1,465		4,548		4,300
Data processing		657		596		1,910		1,872
Legal and professional		1,434		412		2,560		1,914
FDIC deposit assessment		389		370		1,098		1,054
Merger expenses		—		146		—		498
OREO loss and expenses		2		153		85		179
Office services expenses		413		383		1,136		1,204
Other operating expenses		1,864		1,798		5,297		5,696
Total Non-Interest Expense		16,767		15,067		47,043		44,892
Net Income Before Provision for Income Tax Expense		10,642		9,618		32,203		25,285
Provision for income tax expense		4,059		3,355		11,916		9,556
Net Income		6,583		6,263		20,287		15,729
Preferred stock dividends and discount accretion		304		293		914		877
Net Income available to common shareholders	$	6,279	$	5,970	$	19,373	$	14,852
Earnings Per Share
Basic earnings per share	$	0.36	$	0.36	$	1.13	$	0.90
Diluted earnings per share	$	0.36	$	0.35	$	1.11	$	0.88

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

Page 4 of 77

CU BANCORP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(Dollars in thousands)

	Three Months Ended September 30,					Nine Months Ended September 30,
	2016			2015		2016			2015
Net Income	$	6,583		$	6,263	$	20,287		$	15,729
Other Comprehensive Income, net of tax:
Net change in unrealized gain (loss) on available-for-sale investment securities, net of tax		(313	)		311		1,281			73
Reclassification of (gain) loss on investment securities available-for-sale to net income, net of tax		(82	)		—		(82	)		—
Other Comprehensive Income (Loss)		(395	)		311		1,199			73
Comprehensive Income	$	6,188		$	6,574	$	21,486		$	15,802

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

Page 5 of 77

CU BANCORP

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited)

(Dollars in thousands)

	Preferred Stock				Common Stock
	Issued and Outstanding Shares		Amount		Issued and Outstanding Shares			Amount		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Shareholders’ Equity
Balance at December 31, 2014		16,400	$	16,004		16,683,856		$	226,389	$	19,748		$	16,861		$	190		$	279,192
Net issuance of restricted stock		—		—		68,625			—		—			—			—			—
Exercise of stock options		—		—		158,315			1,434		—			—			—			1,434
Stock based compensation expense		—		—		—			—		2,130			—			—			2,130
Restricted stock repurchase		—		—		(39,860	)		—		(856	)		—			—			(856	)
Excess tax benefit – stock based compensation		—		—		—			—		788			—			—			788
Preferred stock dividends and discount accretion		—		735		—			—		—			(877	)		—			(142	)
Net income		—		—		—			—		—			15,729			—			15,729
Other comprehensive income		—		—		—			—		—			—			73			73
Balance at September 30, 2015		16,400	$	16,739		16,870,936		$	227,823	$	21,810		$	31,713		$	263		$	298,348
Balance at December 31, 2015		16,400	$	16,995		17,175,389		$	230,688	$	23,017		$	36,923		$	(816	)	$	306,807
Net issuance of restricted stock		—		—		121,434			—		—			—			—			—
Exercise of stock options		—		—		411,964			3,695		—			—			—			3,695
Stock based compensation expense		—		—		—			—		2,664			—			—			2,664
Restricted stock repurchase		—		—		(35,349	)		—		(834	)		—			—			(834	)
Excess tax benefit – stock based compensation		—		—		—			—		772			—			—			772
Reclassification of excess tax benefits (1)											(772	)								(772	)
Preferred stock dividends and discount accretion		—		26		—			—		—			(914	)		—			(888	)
Net income		—		—		—			—		—			20,287			—			20,287
Other comprehensive income		—		—		—			—		—			—			1,199			1,199
Balance at September 30, 2016		16,400	$	17,021		17,673,438		$	234,383	$	24,847		$	56,296		$	383		$	332,930

(1) Represents the reclassification from additional paid-in capital to provision for income tax expense during the first two quarters of 2016, related to the Company’s early adoption of ASU 2016-09. See Note 2, Recent Accounting Pronouncements, for additional information.

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

Page 6 of 77

CU BANCORP

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in thousands)

	Nine Months Ended September 30,
	2016			2015
Cash flows from operating activities:
Net income:	$	20,287		$	15,729
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		2,382			2,831
Provision for unfunded loan commitments		169			87
Stock based compensation expense		2,664			2,130
Depreciation		1,064			1,062
Net accretion of discounts/premiums for loans acquired and deferred loan fees/costs		(6,751	)		(6,553	)
Net amortization from investment securities		3,126			2,343
Increase in bank owned life insurance		(977	)		(947	)
Amortization of core deposit intangibles		961			1,262
Amortization of time deposit premium		(2	)		(10	)
Net (accretion) amortization of leasehold right intangible asset and liabilities		(174	)		4
Accretion of subordinated debenture discount		119			119
Loss on disposal of fixed assets		30			—
Valuation write-downs on OREO		—			133
Loss on sale of OREO		14			—
Gain on sale of securities, net		(141	)		—
Gain on sale of SBA loans, net		(1,228	)		(1,278	)
Decrease (increase) in deferred tax assets		549			(790	)
Decrease (increase) in accrued interest receivable and other assets		(180	)		2,484
Increase (decrease) in accrued interest payable and other liabilities		3,811			(327	)
Net excess in tax benefit on stock compensation		—			(788	)
Increase in fair value of derivative swap liability		35			591
Net cash provided by operating activities		25,758			18,082
Cash flows from investing activities:
Purchases of investment securities		(118,124	)		(57,597	)
Proceeds from sales of investment securities		4,519			—
Proceeds from repayment and maturities from investment securities		55,346			30,135
Loans originated, net of principal payments		(133,492	)		(139,844	)
Purchases of premises and equipment		(309	)		(666	)
Proceeds from sale of OREO		311			—
Net decrease in certificates of deposit in other financial institutions		5,370			17,759
Purchase of bank owned life insurance		—			(9,869	)
Net cash used in investing activities		(186,379	)		(160,082	)
Cash flows from financing activities:
Net increase in Non-interest bearing demand deposits		111,235			215,714
Net increase in Interest bearing transaction accounts		23,031			51,309
Net increase in Money market and savings deposits		107,801			47,617
Net decrease in Certificates of deposit		(23,467	)		(2,510	)
Net increase in Securities sold under agreements to repurchase		9,891			7,287
Net proceeds from stock options exercised		3,695			1,434
Restricted stock repurchase		(834	)		(856	)
Dividends paid on preferred stock		(888	)		(142	)
Net excess in tax benefit on stock compensation		—			788
Net cash provided by financing activities		230,464			320,641
Net increase in cash and cash equivalents		69,843			178,641
Cash and cash equivalents, beginning of period		222,063			132,586
Cash and cash equivalents, end of period	$	291,906		$	311,227

Page 7 of 77

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

CU BANCORP

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Unaudited)

(Dollars in thousands)

	Nine Months Ended September 30,
	2016		2015
Supplemental disclosures of cash flow information:
Cash paid for interest	$	2,469	$	2,127
Net cash paid for taxes	$	7,319	$	6,767
Supplemental disclosures of non-cash investing activities:
Net change in unrealized gain on available-for-sale investment securities, net of tax	$	1,199	$	73
Loans transferred to other real estate owned	$	—	$	575

Page 8 of 77

CU BANCORP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2016

(Unaudited)

Note 1 - Basis of Financial Statement Presentation

CU Bancorp (the “Company”) is a bank holding company whose operating subsidiary is California United Bank. 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 financial statements 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. Its current headquarters office is located in Los Angeles, California. As a state chartered non-member bank, the Bank is subject to regulation by the California Department of Business Oversight (“DBO”) 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 U.S. generally accepted accounting principles (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).

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. For more detail, see Note 8 – 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 the 2015 Annual Report on Form 10-K. In the opinion of management, the accompanying interim consolidated 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 periods presented.

Use of Estimates in the Preparation of Consolidated Financial Statements

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. In addition, these accounting principles require the disclosure of contingent assets and liabilities as of the date of the consolidated financial statements.

Estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan loss and various assets and liabilities measured at fair value. While management uses the most current available information to recognize losses on loans, future additions to the allowance for loan loss may be necessary based on, among other factors, changes in local economic conditions. In addition, regulatory agencies, as an integral part of their examination process, periodically review the Company’s allowance for loan loss. Regulatory agencies may require the Company to recognize changes to the allowance for loan loss based on their judgment about information available to them at the time of their examination.

Business Segments

The Company is organized and operates as a single reporting segment, principally engaged in commercial business banking. The Company conducts its lending and deposit operations through nine full service branch offices located in Los Angeles, Orange, Ventura and San Bernardino counties.

Page 9 of 77

Note 2 - Recent Accounting Pronouncements

Accounting Standards Adopted in 2016

In March 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, to reduce the complexity of certain aspects of the accounting for employee share-based payment transactions. As a result of this ASU, changes applicable to all entities include: 1) The threshold to qualify for equity classification would permit withholding up to the maximum individual statutory tax rate in the applicable jurisdictions. Also, the ASU provides that cash paid by an employer when directly withholding shares for tax-withholding purposes would be classified as a financing activity on the statement of cash flows; 2) An entity would be allowed to make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur; 3) All excess tax benefits and tax deficiencies would be recognized as income tax expense or benefit in the income statement. An entity also would recognize excess tax benefits regardless of whether the benefit reduces taxes payable in the current period. Further, excess tax benefits would not be separated from other income tax cash flows and thus would be classified along with other cash flows as an operating activity. ASU 2016-09 is effective for public entities for interim and annual periods beginning after December 15, 2016. In the third quarter of 2016, the Company elected the early adoption of this standard which requires the Company to reflect the adjustments resulting from the adoption effective January 1, 2016, the beginning of the annual period that includes the interim period of adoption. Adoption of this standard had the following impact on the Company’s consolidated financial statements:

• Excess tax benefits are recognized in the provision for income tax expense rather than through additional paid-in capital. The Company’s early adoption of ASU 2016-09 resulted in the reclassification of $772 thousand from additional paid-in capital to provision for income tax expense during the first two quarters of 2016. During the third quarter of 2016, the Company recognized a benefit of $142 thousand in provision for income tax expense for the excess tax benefits that occurred between July 1, 2016 and September 30, 2016. These tax benefits reduced the Company’s effective tax rate by 1.33% and 2.84% for the three months and nine months ended September 30, 2016. The Company had no previously unrecognized excess tax benefits.

• Excess tax benefits are presented as operating activities rather than as an inflow from financing activities and an outflow from operating activities in the consolidated statements of cash flows. The Company’s early adoption of ASU 2016-09 resulted in the prospective presentation of $914 thousand of excess tax benefits included in the change of accrued interest payable and other liabilities under operating activities in the consolidated statement of cash flows for the nine months ended September 30, 2016.

• Employee taxes paid when an employer withholds shares for tax-withholding purposes continue to be presented as financing activities in the consolidated statements of cash flows. The Company had no awards receiving liability treatment as a result of the guidance in effect prior to ASU 2016-09. Therefore, the change from minimum to up to maximum statutory rate on tax withholdings had no impact to the consolidated financial statements as a result of the early adoption. However, withheld taxes may be higher than the minimum tax rate beginning in July 2016.

• Forfeitures are accounted for when they occur.

Recent Accounting Standards Not Yet Effective

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which replaced existing revenue recognition guidance for contracts to provide goods or services to customers and amended existing guidance related to recognition of gains and losses on the sale of certain nonfinancial assets such as real estate. ASU 2014-09 established a principles-based approach to recognizing revenue that applies to all contracts other than those covered by other authoritative GAAP guidance. Quantitative and qualitative disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows were also required. ASU 2014-09 was to be effective for interim and annual periods beginning after December 15, 2016 and was to be applied on either a modified retrospective or full retrospective basis. In August 2015, the FASB issued ASU 2015-14 which defers the original effective date for all entities by one year. Public business entities should apply the guidance in ASU 2015-14 to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company is currently evaluating the impact of this ASU on its consolidated financial statements.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments–Overall: Recognition and Measurement of Financial Assets and Financial Liabilities. Changes to the current GAAP model primarily affect the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. In addition, the FASB clarified guidance related to the valuation allowance assessment when recognizing

Page 10 of 77

deferred tax assets resulting from unrealized losses on available-for-sale debt securities. The accounting for other financial instruments, such as loans, investments in debt securities, and financial liabilities is largely unchanged. The classification and measurement guidance will be effective for public business entities in fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Entities can early adopt the provision to record fair value changes for financial liabilities under the fair value option resulting from instrument-specific credit risk in other comprehensive income. Early adoption of these provisions can be elected for all financial statements of fiscal years and interim periods that have not yet been issued or that have not yet been made available for issuance. The Company is currently evaluating the impact of this ASU on its consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The most significant change for lessees is the requirement under the new guidance to recognize right-of-use assets and lease liabilities for all leases not considered short-term leases. By definition, a short-term lease is one in which: (a) the lease term is 12 months or less and (b) there is not an option to purchase the underlying asset that the lessee is reasonably certain to exercise. For short-term leases, lessees may elect an accounting policy by class of underlying asset under which right-of-use assets and lease liabilities are not recognized and lease payments are generally recognized as expense over the lease term on a straight-line basis. This change will result in lessees recognizing right-of-use assets and lease liabilities for most leases currently accounted for as operating leases under the legacy lease accounting guidance. Examples of changes in the new guidance affecting both lessees and lessors include: (a) defining initial direct costs to only include those incremental costs that would not have been incurred if the lease had not been entered into, (b) requiring related party leases to be accounted for based on their legally enforceable terms and conditions, (c) eliminating the additional requirements that must be applied today to leases involving real estate and (d) revising the circumstances under which the transfer contract in a sale-leaseback transaction should be accounted for as the sale of an asset by the seller-lessee and the purchase of an asset by the buyer-lessor. In addition, both lessees and lessors are subject to new disclosure requirements. ASU 2016-02 is effective for public entities for interim and annual periods beginning after December 15, 2018. The Company is currently evaluating the impact of this ASU on its consolidated financial statements.

In June, 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326), which introduces new guidance for the accounting for credit losses on instruments within its scope. The new guidance introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments. It also modifies the impairment model for available-for-sale (AFS) debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. Current expected credit losses (“CECL”) model, will apply to: (1) financial assets subject to credit losses and measured at amortized cost, and (2) certain off-balance sheet credit exposures. This includes loans, held-to-maturity debt securities, loan commitments, financial guarantees, and net investments in leases, as well as reinsurance and trade receivables. Upon initial recognition of the exposure, the CECL model requires an entity to estimate the credit losses expected over the life of an exposure (or pool of exposures). The estimate of expected credit losses (ECL) should consider historical information, current information, and reasonable and supportable forecasts, including estimates of prepayments. Financial instruments with similar risk characteristics should be grouped together when estimating ECL. ASU 2016-13 is effective for public entities for interim and annual periods beginning after December 15, 2019. Early application of the guidance will be permitted for all entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the impact of this ASU on its consolidated financial statements.

In August, 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the FASB Emerging Issues Task Force), which addresses eight classification issues related to the statement of cash flows:

• Debt prepayment of debt extinguishment costs

• Settlement of zero-coupon bonds

• Contingent consideration payments made after a business combination

• Proceeds from the settlement of insurance claims

• Proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies

• Distributions received from equity method investees

• Beneficial interests in securitization transactions

• Separately identifiable cash flows and application of the predominance principle

ASU 2016-15 is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company is currently evaluating the impact of this ASU on its consolidated financial statements.

Page 11 of 77

Note 3 - Computation of Book Value and Tangible Book Value per Common Share

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

	September 30, 2016		December 31, 2015
Total Shareholders’ Equity	$	332,930	$	306,807
Less: Preferred stock		17,021		16,995
Less: Goodwill		64,603		64,603
Less: Core deposit and leasehold right intangibles, net		6,665		7,671
Tangible common equity	$	244,641	$	217,538
Common shares issued and outstanding		17,673,438		17,175,389
Book value per common share	$	17.87	$	16.87
Tangible book value per common share	$	13.84	$	12.67

Note 4 - Computation of Earnings per Common Share

On July 1, 2016, and effective January 1, 2016, the Company early adopted ASU 2016-09 which provides improvements to the accounting for employee share-based payments. In calculating potential common shares used to determine diluted earnings per share, U.S. GAAP requires the Company to use the treasury stock method. The new standard requires that assumed proceeds under the treasury stock method be modified to exclude the amount of excess tax benefits that would have been recognized in additional paid-in capital. The early adoption had a favorable impact of $0.01 per share for both basic and diluted earnings per common share for the three months ended September 30, 2016, and a favorable impact of $0.06 and $0.05 per share for basic and diluted earnings per common share, respectively, for the nine months ended September 30, 2016. See Note 2. Recent Accounting Pronouncements for additional information.

Basic and diluted earnings per common share were determined by dividing net income available to common shareholders by the applicable basic and diluted weighted average common shares outstanding. The following table shows weighted average basic common shares outstanding, potential dilutive shares related to stock options, unvested restricted stock, and weighted average diluted shares for the periods indicated (dollars in thousands, except share and per share data):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Net Income	$	6,583	$	6,263	$	20,287	$	15,729
Less: Preferred stock dividends and discount accretion		304		293		914		877
Net Income available to common shareholders	$	6,279	$	5,970	$	19,373	$	14,852
Weighted average basic common shares outstanding		17,339,491		16,541,380		17,197,117		16,477,206
Dilutive effect of potential common share issuances from stock options and restricted stock		265,896		456,684		312,458		446,296
Weighted average diluted common shares outstanding		17,605,387		16,998,064		17,509,575		16,923,502
Income per common share
Basic	$	0.36	$	0.36	$	1.13	$	0.90
Diluted	$	0.36	$	0.35	$	1.11	$	0.88
Anti-dilutive shares not included in the calculation of diluted earnings per share		—		—		1,000		43,259

Page 12 of 77

Note 5 - Investment Securities

The investment securities portfolio has been classified into two categories: available-for-sale (“AFS”) and held-to-maturity (“HTM”).

The following tables present the amortized cost, gross unrealized gains and losses, and fair values of investment securities by major category as of the dates indicated (dollars in thousands):

			Gross Unrealized
September 30, 2016	Amortized Cost		Gains		Losses		Fair Market Value
Available-for-sale:
U.S. Govt Agency and Sponsored Agency - Note Securities	$	7,003	$	1	$	—	$	7,004
U.S. Govt Agency - SBA Securities		107,759		582		367		107,974
U.S. Govt Agency - GNMA Mortgage-Backed Securities		25,123		207		116		25,214
U.S. Govt Sponsored Agency - CMO & Mortgage-Backed Securities		146,632		1,030		424		147,238
Corporate Securities		501		1		—		502
Asset Backed Securities		7,303		—		281		7,022
U.S. Treasury Notes		80,112		65		37		80,140
Total available-for-sale		374,433		1,886		1,225		375,094
Held-to-maturity:
Municipal Securities		40,073		620		2		40,691
Total held-to-maturity		40,073		620		2		40,691
Total investment securities	$	414,506	$	2,506	$	1,227	$	415,785

			Gross Unrealized
December 31, 2015	Amortized Cost		Gains		Losses		Fair Market Value
Available-for-sale:
U.S. Govt Agency and Sponsored Agency - Note Securities	$	1,014	$	—	$	—	$	1,014
U.S. Govt Agency - SBA Securities		93,674		399		583		93,490
U.S. Govt Agency - GNMA Mortgage-Backed Securities		30,916		202		418		30,700
U.S. Govt Sponsored Agency - CMO & Mortgage-Backed Securities		97,693		250		789		97,154
Corporate Securities		4,016		7		—		4,023
Municipal Securities		1,010		1		—		1,011
Asset Backed Securities		7,890		—		243		7,647
U.S. Treasury Notes		80,981		—		235		80,746
Total available-for-sale		317,194		859		2,268		315,785
Held-to-maturity:
Municipal Securities		42,036		335		32		42,339
Total held-to-maturity		42,036		335		32		42,339
Total investment securities	$	359,230	$	1,194	$	2,300	$	358,124

Page 13 of 77

The Company’s investment securities portfolio at September 30, 2016 consists of A-rated or above investment-grade securities. At September 30, 2016 and December 31, 2015, securities with a market value of $194 million and $197 million, respectively, were pledged as collateral for securities sold under agreements to repurchase, public deposits, outstanding standby letters of credit, bankruptcy deposits, and other purposes as required by various statutes and agreements. See Note 8 – Borrowings and Subordinated Debentures.

The following tables present the gross unrealized losses and fair values of AFS and HTM investment securities that were in unrealized loss positions, summarized and classified according to the duration of the loss period as of the dates indicated (dollars in thousands).

	< 12 Continuous Months				> 12 Continuous Months				Total
September 30, 2016	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
Available-for-sale investment securities:
U.S. Govt. Agency SBA Securities	$	46,340	$	184	$	19,285	$	183	$	65,625	$	367
U.S. Govt. Agency – GNMA Mortgage-Backed Securities		2,521		27		8,878		89		11,399		116
U.S. Govt. Sponsored Agency – CMO & Mortgage-Backed Securities		41,497		292		11,498		132		52,995		424
Asset Backed Securities		—		—		7,022		281		7,022		281
U.S Treasury Notes		10,098		37		—		—		10,098		37
Total available-for-sale investment securities	$	100,456	$	540	$	46,683	$	685	$	147,139	$	1,225
Held-to-maturity investment securities:
Municipal Securities	$	700	$	1	$	313	$	1	$	1,013	$	2
Total held-to-maturity investment securities	$	700	$	1	$	313	$	1	$	1,013	$	2

	< 12 Continuous Months				> 12 Continuous Months				Total
December 31, 2015	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
Available-for-sale investment securities:
U.S. Govt. Agency SBA Securities	$	53,852	$	428	$	7,935	$	154	$	61,787	$	582
U.S. Govt. Agency – GNMA Mortgage-Backed Securities		5,417		47		14,296		371		19,713		418
U.S. Govt. Sponsored Agency – CMO & Mortgage-Backed Securities		67,475		564		10,024		225		77,499		789
Asset Backed Securities		2,928		54		4,719		190		7,647		244
U.S Treasury Notes		80,745		235		—		—		80,745		235
Total available-for-sale investment securities	$	210,417	$	1,328	$	36,974	$	940	$	247,391	$	2,268
Held-to-maturity investment securities:
Municipal Securities	$	5,669	$	16	$	2,392	$	16	$	8,061	$	32
Total held-to-maturity investment securities	$	5,669	$	16	$	2,392	$	16	$	8,061	$	32

The unrealized losses in each of the above categories are associated with the general fluctuation of market interest rates and are not an indication of any deterioration in the credit quality of the security issuers. Further, the Company does not intend to sell these securities and is not more-likely-than-not to be required to sell the securities before the recovery of its amortized cost basis. Accordingly, the Company had no securities that were classified as other-than-temporarily impaired at September 30, 2016 or December 31, 2015, and did not recognize any impairment charges in the consolidated statements of income.

Page 14 of 77

The amortized cost, fair value and the weighted average yield of debt securities at September 30, 2016, are reflected in the table below (dollars in thousands). Maturity categories are determined as follows:

• U.S. Govt. Agency, U.S. Treasury Notes 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, Asset Backed Securities and U.S. Gov. Agency SBA Securities – estimated cash flow taking into account estimated pre-payment speeds

• Investment grade Corporate Bonds and Municipal Securities – the earlier of the maturity date or the expected call date

Although, U.S. Government Agency and U.S. Government Sponsored Agency Mortgage-Backed and CMO securities have contractual maturities through 2048, the expected maturity will differ from the contractual maturities because borrowers or issuers may have the right to prepay such obligations without penalties.

	September 30, 2016
Maturities Schedule of Securities (Dollars in thousands)	Amortized Cost		Fair Value		Weighted Average Yield
Available-for-sale:
Due through one year	$	99,048	$	99,243		1.21	%
Due after one year through five years		170,285		170,343		1.45	%
Due after five years through ten years		79,234		79,523		1.93	%
Due after ten years		25,866		25,985		2.30	%
Total available-for-sale	$	374,433	$	375,094		1.54	%
Held-to-maturity:
Due through one year	$	2,950	$	2,956		1.49	%
Due after one year through five years		36,389		36,972		1.59	%
Due after five years through ten years		734		763		1.97	%
Total held-to-maturity	$	40,073	$	40,691		1.59	%
Total investment securities	$	414,506	$	415,785		1.55	%

The weighted average yields in the above table are based on effective rates of book balances at the end of the period.

Investment in Federal Home Loan Bank (FHLB) Common Stock

The Company’s investment in the common stock of the FHLB of San Francisco is carried at cost and was $9.2 million at September 30, 2016 and $8.0 million at December 31, 2015. The investment in FHLB stock is included in accrued interest receivable and other assets in the consolidated balance sheets and is periodically evaluated for impairment. Based on the capital adequacy of the FHLB and its overall financial condition, no impairment losses have been recorded.

See Note 8 - Borrowings and Subordinated Debentures for a detailed discussion regarding the Company’s borrowings and the related requirements to hold FHLB common stock.

Page 15 of 77

Note 6 - Loans

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

	September 30, 2016		December 31, 2015
Commercial and Industrial Loans:	$	499,439	$	537,368
Loans Secured by Real Estate:
Owner-Occupied Nonresidential Properties		430,218		407,979
Other Nonresidential Properties		610,267		533,168
Construction, Land Development and Other Land		172,441		125,832
1-4 Family Residential Properties		122,955		114,525
Multifamily Residential Properties		100,003		71,179
Total Loans Secured by Real Estate		1,435,884		1,252,683
Other Loans:		39,618		43,112
Total Loans	$	1,974,941	$	1,833,163

Loan balances in the table above include net deferred fees and net discounts for a total of $17 million and $22 million as of September 30, 2016 and December 31, 2015, respectively.

Small Business Administration Loans

Included in the loan portfolio is $31 million in loans that were originated under the guidelines of the Small Business Administration (“SBA”) program of which $5 million is guaranteed. The total portfolio of the SBA contractual loan balances serviced by the Company at September 30, 2016 was $109 million, of which $78 million has been sold.

At September 30, 2016, there were no loans classified as held for sale. At September 30, 2016, the balance of SBA 7a loans originated during the quarter is $425 thousand, of which $319 thousand is guaranteed by the SBA. The Company does not currently plan on selling these loans, but it may choose to do so in the future.

Page 16 of 77

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 September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Allowance for loan loss at beginning of period	$	18,476		$	14,124		$	15,682		$	12,610
Provision for loan losses		697			705			2,382			2,831
Net (charge-offs) recoveries:
Charge-offs		(807	)		(42	)		(827	)		(933	)
Recoveries		5			178			1,134			457
Net (charge-offs) recoveries		(802	)		136			307			(476	)
Allowance for loan loss at end of period	$	18,371		$	14,965		$	18,371		$	14,965
Net (charge-offs) recoveries to average loans		(0.04	)%		0.01	%		0.02	%		(0.03	)%

	September 30, 2016			December 31, 2015
Allowance for loan loss to total loans		0.93	%		0.86	%
Allowance for loan loss to total loans accounted for at historical cost, which excludes loans and the related allowance for loans acquired through acquisition		1.20	%		1.25	%

Page 17 of 77

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 September 30, 2016
Allowance for loan loss – Beginning balance	$	8,381		$	2,724	$	6,567		$	804		$	18,476
Provision for loan losses		(559	)		45		1,294			(83	)		697
Net (charge-offs) recoveries:
Charge-offs		(807	)		—		—			—			(807	)
Recoveries		3			—		2			—			5
Net (charge-offs) recoveries		(804	)		—		2			—			(802	)
Ending balance	$	7,018		$	2,769	$	7,863		$	721		$	18,371
Three Months Ended September 30, 2015
Allowance for loan loss – Beginning balance	$	6,244		$	1,607	$	5,799		$	474		$	14,124
Provision for loan losses		181			371		143			10			705
Net (charge-offs) recoveries:
Charge-offs		—			—		(42	)		—			(42	)
Recoveries		177			—		1			—			178
Net (charge-offs) recoveries		177			—		(41	)		—			136
Ending balance	$	6,602		$	1,978	$	5,901		$	484		$	14,965

	Commercial and Industrial			Construction, Land Development and Other Land		Commercial and Other Real Estate			Other			Total
Nine Months Ended September 30, 2016
Allowance for loan loss – Beginning balance	$	5,924		$	2,076	$	6,821		$	861		$	15,682
Provision for loan losses		791			693		1,038			(140	)		2,382
Net (charge-offs) recoveries:
Charge-offs		(827	)		—		—			—			(827	)
Recoveries		1,130			—		4			—			1,134
Net recoveries		303			—		4			—			307
Ending balance	$	7,018		$	2,769	$	7,863		$	721		$	18,371
Nine Months Ended September 30, 2015
Allowance for loan loss – Beginning balance	$	5,864		$	1,684	$	4,802		$	260		$	12,610
Provision for loan losses		1,176			294		1,137			224			2,831
Net (charge-offs) recoveries:
Charge-offs		(891	)		—		(42	)		—			(933	)
Recoveries		453			—		4			—			457
Net (charge-offs)		(438	)		—		(38	)		—			(476	)
Ending balance	$	6,602		$	1,978	$	5,901		$	484		$	14,965

Page 18 of 77

The following tables present both the allowance for loan loss and the associated loan balance classified by loan portfolio segment and by credit evaluation methodology (dollars in thousands):

	Commercial and Industrial		Construction, Land Development and Other Land		Commercial and Other Real Estate		Other		Total
September 30, 2016
Allowance for loan loss:
Individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—
Collectively evaluated for impairment		7,018		2,769		7,863		721		18,371
Purchased credit impaired (loans acquired with deteriorated credit quality)		—		—		—		—		—
Total Allowance for Loan Loss	$	7,018	$	2,769	$	7,863	$	721	$	18,371
Loans receivable:
Individually evaluated for impairment	$	456	$	—	$	252	$	—	$	708
Collectively evaluated for impairment		498,669		172,441		1,261,789		39,618		1,972,517
Purchased credit impaired (loans acquired with deteriorated credit quality)		314		—		1,402		—		1,716
Total Loans Receivable	$	499,439	$	172,441	$	1,263,443	$	39,618	$	1,974,941

	Commercial and Industrial		Construction, Land Development and Other Land		Commercial and Other Real Estate		Other		Total
December 31, 2015
Allowance for loan loss:
Individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—
Collectively evaluated for impairment		5,924		2,076		6,821		861		15,682
Purchased credit impaired (loans acquired with deteriorated credit quality)		—		—		—		—		—
Total Allowance for Loan Loss	$	5,924	$	2,076	$	6,821	$	861	$	15,682
Loans receivable:
Individually evaluated for impairment	$	558	$	—	$	649	$	—	$	1,207
Collectively evaluated for impairment		536,333		125,832		1,124,667		43,112		1,829,944
Purchased credit impaired (loans acquired with deteriorated credit quality)		477		—		1,535		—		2,012
Total Loans Receivable	$	537,368	$	125,832	$	1,126,851	$	43,112	$	1,833,163

Page 19 of 77

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. There are several different levels of Pass rated credits, including “Watch” which is considered a transitory grade for pass rated loans that require greater monitoring. 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
September 30, 2016
Pass	$	445,172	$	172,441	$	1,234,950	$	36,701	$	1,889,264
Special Mention		18,939		—		4,747		—		23,686
Substandard		35,328		—		23,746		2,917		61,991
Doubtful		—		—		—		—		—
Total	$	499,439	$	172,441	$	1,263,443	$	39,618	$	1,974,941
December 31, 2015
Pass	$	503,006	$	125,832	$	1,101,548	$	40,132	$	1,770,518
Special Mention		16,041		—		6,494		43		22,578
Substandard		18,321		—		18,809		2,937		40,067
Doubtful		—		—		—		—		—
Total	$	537,368	$	125,832	$	1,126,851	$	43,112	$	1,833,163

Page 20 of 77

Aging 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
September 30, 2016
Commercial and Industrial	$	—	$	—	$	—	$	—	$	769	$	498,670	$	499,439
Construction, Land Development and Other Land		—		—		—		—		—		172,441		172,441
Commercial and Other Real Estate		—		—		—		—		454		1,262,989		1,263,443
Other		—		—		—		—		—		39,618		39,618
Total	$	—	$	—	$	—	$	—	$	1,223	$	1,973,718	$	1,974,941

	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, 2015
Commercial and Industrial	$	—	$	—	$	—	$	—	$	1,032	$	536,336	$	537,368
Construction, Land Development and Other Land		—		—		—		—		—		125,832		125,832
Commercial and Other Real Estate		—		—		—		—		1,019		1,125,832		1,126,851
Other		—		—		—		—		—		43,112		43,112
Total	$	—	$	—	$	—	$	—	$	2,051	$	1,831,112	$	1,833,163

Page 21 of 77

Impaired Loans

A loan is identified as impaired when it is probable that interest and principal will not be collected according to the contractual terms of the original loan agreement. Generally, these loans are rated substandard or worse. Most impaired loans are classified as nonaccrual. However, there are some loans that are designated impaired due to doubt regarding collectability according to contractual terms, but are both fully secured by collateral and are current in their interest and principal payments. These impaired loans that are not classified as nonaccrual continue to pay as agreed. Impaired loans are measured for allowance requirements based on the present value of expected future cash flows discounted at the loan’s effective interest rate or, as a practical expedient, at the loan’s observable market price or the fair value of the collateral if the loan is collateral dependent. The amount of an impairment allowance, if any and any subsequent changes are charged against the allowance for loan loss. In certain cases, portions of impaired loans are charged-off to the fair value of the loan instead of establishing a valuation allowance and are included, when applicable, in the table below as impaired loans “with no specific allowance recorded.” The valuation allowance disclosed below is included in the allowance for loan loss reported in the consolidated balance sheets as of September 30, 2016 and December 31, 2015.

The following tables present, by loan portfolio segment, the recorded investment and unpaid principal balances for impaired loans with the associated allowance amount, if applicable, for the dates and periods indicated (dollars in thousands). This table excludes purchased credit impaired loans (loans acquired in acquisitions with deteriorated credit quality) of $1.7 million and $2.0 million at September 30, 2016 and December 31, 2015, respectively.

	September 30, 2016						December 31, 2015
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
With no specific allowance recorded:
Commercial and Industrial	$	456	$	1,402	$	—	$	558	$	1,027	$	—
Commercial and Other Real Estate		252		286		—		649		692		—
With an allowance recorded:
Commercial and Industrial		—		—		—		—		—		—
Total
Commercial and Industrial		456		1,402		—		558		1,027		—
Commercial and Other Real Estate		252		286		—		649		692		—
Total	$	708	$	1,688	$	—	$	1,207	$	1,719	$	—

	Three Months Ended September 30,								Nine Months Ended September 30,
	2016				2015				2016				2015
	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	$	418	$	—	$	2,118	$	—	$	396	$	—	$	1,757	$	—
Commercial and Other Real Estate		252		—		99		—		254		—		104		—
With a specific allowance recorded:
Commercial and Industrial		—		—		1,328		—		—		—		1,328		—
Commercial and Other Real Estate		—		—		413		—		—		—		550		—
Total:
Commercial and Industrial		418		—		3,446		—		396		—		3,085		—
Commercial and Other Real Estate		252		—		512		—		254		—		654		—
Total	$	670	$	—	$	3,958	$	—	$	650	$	—	$	3,739	$	—

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

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Interest foregone on impaired loans	$	22	$	81	$	68	$	238
Cash collections applied to reduce principal balance	$	230	$	23	$	282	$	186
Interest income recognized on cash collections	$	—	$	—	$	—	$	—

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 stated interest rate, payment extensions, principal forgiveness or other actions.

The modification process includes evaluation of impairment based on the present value of expected future cash flows, discounted at the effective 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.

The following tables include the recorded investment and unpaid principal balances for troubled debt restructured loans at September 30, 2016 and December 31, 2015 (dollars in thousands). These tables include TDR loans that were purchased credit impaired (“PCI”). TDR loans that are non-PCI loans are included in the Impaired Loans tables above. As of September 30, 2016, there were two PCI loans that are considered to be TDR loans with a recorded investment of $115 thousand and unpaid principal balances of $287 thousand.

	As of and for the Three Months Ended September 30, 2016						As of and for the Nine Months Ended September 30, 2016
	Recorded Investment		Unpaid Principal Balance		Interest Income Recognized		Recorded Investment		Unpaid Principal Balance		Interest Income Recognized
Commercial and Industrial	$	533	$	1,230	$	—	$	533	$	1,230	$	—
Total	$	533	$	1,230	$	—	$	533	$	1,230	$	—
	As of and for the Three Months Ended September 30, 2015						As of and for the Nine Months Ended September 30, 2015
	Recorded Investment		Unpaid Principal Balance		Interest Income Recognized		Recorded Investment		Unpaid Principal Balance		Interest Income Recognized
Commercial and Industrial	$	1,780	$	2,385	$	—	$	1,780	$	2,385	$	—
Commercial and Other Real Estate		99		105		—		99		105		—
Total	$	1,879	$	2,490	$	—	$	1,879	$	2,490	$	—

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	As of and for the Twelve Months Ended December 31, 2015
	Recorded Investment		Unpaid Principal Balance		Interest Income Recognized
Commercial and Industrial	$	627	$	1,363	$	—
Total	$	627	$	1,363	$	—

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

	Three Months Ended September 30,
	2016						2015
	Number of Loans		Pre- Modification Recorded Investment		Post- Modification Recorded Investment		Number of Loans		Pre- Modification Recorded Investment		Post- Modification Recorded Investment
Troubled Debt Restructured Loans:
Commercial and Industrial		1	$	650	$	184		3	$	1,335	$	1,335
Total		1	$	650	$	184		3	$	1,335	$	1,335

	Nine Months Ended September 30,
	2016						2015
	Number of Loans		Pre- Modification Recorded Investment		Post- Modification Recorded Investment		Number of Loans		Pre- Modification Recorded Investment		Post- Modification Recorded Investment
Troubled Debt Restructured Loans:
Commercial and Industrial		1	$	650	$	184		3	$	1,335	$	1,335
Total		1	$	650	$	184		3	$	1,335	$	1,335

There have been no payment defaults in the three or nine months ended September 30, 2016 or September 30, 2015 subsequent to modification on troubled debt restructured loans that have been 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.

There were no commitments to lend additional funds to borrowers whose terms have been modified in troubled debt restructurings at September 30, 2016 or December 31, 2015.

Loans Acquired Through Acquisition

The following table reflects the accretable net discount for acquired loans for the periods indicated (dollars in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Balance, beginning of period	$	11,928		$	18,255		$	14,610		$	21,402
Accretion, included in interest income		(1,229	)		(1,463	)		(3,879	)		(4,140	)
Reclassifications to non-accretable yield		—			(5	)		(32	)		(475	)
Balance, end of period	$	10,699		$	16,787		$	10,699		$	16,787

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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 Loans

PCI loans are acquired loans with evidence of deterioration of credit quality since origination and it is probable at the acquisition date, that the Company will not be able 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 PCI 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):

	September 30, 2016				December 31, 2015
	Unpaid Principal Balance		Carrying Value		Unpaid Principal Balance		Carrying Value
Commercial and Industrial	$	639	$	314	$	2,331	$	477
Commercial and Other Real Estate		2,007		1,402		2,250		1,535
Other		—		—		61		—
Total	$	2,646	$	1,716	$	4,642	$	2,012

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

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Balance, beginning of period	$	205		$	286		$	246		$	324
Accretion, included in interest income		(22	)		(20	)		(63	)		(58	)
Reclassifications from non-accretable yield		—			—			—			—
Balance, end of period	$	183		$	266		$	183		$	266

Note 7 – Qualified Affordable Housing Project Investments

The Company’s investment in Qualified Affordable Housing Projects that generate Low Income Housing Tax Credits (“LIHTC”) was $3.4 million at September 30, 2016 and $3.7 million at December 31, 2015. The funding liability for the LIHTC at September 30, 2016 was $647 thousand compared to $1.1 million at December 31, 2015. The amount of tax credits and other tax benefits recognized was $143 thousand and $436 thousand for the three and nine months ended September 30, 2016 and $146 thousand and $436 thousand for the three and nine months ended September 30, 2015, respectively. Further, the amount of amortization expense included in the provision for income taxes was $112 thousand and $336 thousand for the three and nine months ended September 30, 2016 and $114 thousand and $343 thousand for the three and nine months ended September 30, 2015, respectively. These investments and related tax credits are described more fully in Note 11 – Qualified Affordable Housing Project Investments in the Company’s Form 10-K for the year ended December 31, 2015.

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Note 8 - 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 and are routinely renewed.

As discussed in Note 5 – Investment Securities, the Company has pledged certain investments as collateral for these agreements. Securities with a fair value of $55 million and $47 million were pledged to secure the Repos at September 30, 2016 and December 31, 2015, respectively.

The tables below describe the terms and maturity of the Company’s securities sold under agreements to repurchase as of the dates indicated (dollars in thousands):

	September 30, 2016
Date Issued	Amount		Interest Rate		Original Term		Maturity Date
September 30, 2016	$	24,251		0.10% – 0.25%		3 days		October 3, 2016
Total	$	24,251		0.24%

	December 31, 2015
Date Issued	Amount		Interest Rate		Original Term		Maturity Date
December 31, 2015	$	14,360		0.08% – 0.25%		4 days		January 4, 2016
Total	$	14,360		0.19%

FHLB Borrowings

The Company maintains a secured credit facility with the FHLB, allowing the Company to borrow on an overnight and term basis. The Company’s credit facility with the FHLB is $694 million, which represents approximately 25% of the Bank’s total assets, as reported by the Bank in its June 30, 2016 Federal Financial Institution Examination Council (FFIEC) Call Report.

As of September 30, 2016, the Company had $953 million of loan collateral pledged with the FHLB which provides $633 million in borrowing capacity. The Company has $17 million in investment securities pledged with the FHLB to support this credit facility. In addition, the Company must maintain an investment in the capital stock of the FHLB. Under the FHLB Act, the FHLB has a statutory lien on the FHLB capital stock that the Company owns and the FHLB capital stock serves as further collateral under the borrowing line.

The Company had no outstanding advances (borrowings) with the FHLB as of September 30, 2016 or December 31, 2015.

Subordinated Debentures

The following table summarizes the terms of each issuance of subordinated debentures outstanding as of the dates indicated (dollars in thousands):

September 30, 2016
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	%		2.90	%		12/15/16
Trust II		3,093			12/23/05		03/15/36		3 month LIBOR + 1.75	%		2.60	%		12/15/16
Trust III		3,093			06/30/06		09/18/36		3 month LIBOR + 1.85	%		2.70	%		12/15/16
Subtotal		12,372
Unamortized fair value adjustment		(2,555	)
Net	$	9,817

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December 31, 2015
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	%		2.56	%		03/15/16
Trust II		3,093			12/23/05		03/15/36		3 month LIBOR + 1.75	%		2.26	%		03/15/16
Trust III		3,093			06/30/06		09/18/36		3 month LIBOR + 1.85	%		2.36	%		03/15/16
Subtotal		12,372
Unamortized fair value adjustment		(2,675	)
Net	$	9,697

The Company had an aggregate outstanding contractual balance of $12.4 million in subordinated debentures at September 30, 2016. 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 London Interbank Offered Rate (“LIBOR”) plus a margin (see tables above). All three subordinated debentures had their interest rates reset in September 2016 at the current three month LIBOR plus their index, and will continue to reprice quarterly through their maturity date. All three subordinated debentures are currently callable at par with no prepayment penalties.

Under Dodd Frank, trust preferred securities are excluded from Tier 1 capital, unless such securities were issued prior to May 19, 2010 by a bank holding company with less than $15 billion in assets. CU Bancorp assumed approximately $12.4 million of junior subordinated debt securities issued to various business trust subsidiaries of PC Bancorp and funded through the issuance of approximately $12.0 million of floating rate capital trust preferred securities. These junior subordinated debt securities were issued prior to May 19, 2010. Because CU Bancorp has less than $15 billion in assets, the trust preferred securities that CU Bancorp assumed from PC Bancorp continue to be included in Tier 1 capital, subject to a limit of 25% of Tier 1 capital elements.

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.

Note 9 - Derivative Financial Instruments

The Company is exposed to certain risks relating to its ongoing business operations and utilizes interest rate swap agreements (“swaps”) as part of its asset/liability management strategy to help manage its interest rate risk position. The Company has two counterparty banks.

Derivative Financial Instruments Acquired from 1^st Enterprise Bank

At September 30, 2016, the Company has twelve interest rate swap agreements with customers and twelve offsetting interest-rate swaps with a counterparty bank. The swap agreements are not designated as hedging instruments. The purpose of entering into offsetting derivatives not designated as a hedging instrument is to provide the Company a variable-rate loan receivable and provide the customer the financial effects of a fixed-rate loan without creating significant interest rate risk in the Company’s earnings.

The structure of the swaps is as follows: The Company enters into a swap with its customers to allow them to convert variable rate loans to fixed rate loans, and at the same time, the Company enters into a swap with the counterparty bank to allow the Company to pass on the interest-rate risk associated with fixed rate loans. The net effect of the transaction allows the Company to receive interest on the loan from the customer at a variable rate based on LIBOR plus a spread. The

Page 27 of 77

changes in the fair value of the swaps primarily offset each other and therefore should not have a significant impact on the Company’s results of operations. The interest rate swap derivatives acquired from 1^st Enterprise Bank are subject to a master netting arrangement with one counterparty bank. None of the derivative assets and liabilities are offset in the balance sheet.

The Company believes the risk of loss associated with counterparty borrowers relating to interest rate swaps is mitigated as the loans with swaps are underwritten to take into account potential additional exposure, although there can be no assurances in this regard since the performance of the swaps is subject to market and counterparty risk. At September 30, 2016 and December 31, 2015, the total notional amount of the Company’s swaps with the counterparty bank was $27 million and $28 million, respectively.

The following tables present the fair values of the asset and liability of the Company’s derivative instruments acquired from 1^st Enterprise Bank as of the dates and periods indicated (dollars in thousands):

	September 30, 2016		December 31, 2015
Interest rate swap contracts fair value	$	1,484	$	881
Balance sheet location		Accrued Interest Receivable and Other Assets		Accrued Interest Receivable and Other Assets
	September 30, 2016		December 31, 2015
Interest rate swap contracts fair value	$	1,484	$	881
Balance sheet location		Accrued Interest Payable and Other Liabilities		Accrued Interest Payable and Other Liabilities

Derivative Financial Instruments Acquired from PC Bancorp

At September 30, 2016, the Company also has sixteen pay-fixed, receive-variable, interest rate swaps with one counterparty bank that are designed to convert fixed rate loans into variable rate loans.

The following table presents the notional amount and the fair values of the asset and liability of the Company’s derivative instruments acquired from PC Bancorp as of the dates indicated (dollars in thousands):

	Fair Value Hedges
	September 30, 2016		December 31, 2015
Total interest rate contracts notional amount	$	22,001	$	25,938
Derivatives not designated as hedging instruments:
Interest rate swap contracts fair value	$	156	$	313
Derivatives designated as hedging instruments:
Interest rate swap contracts fair value		940		1,351
Total interest rate contracts fair value	$	1,096	$	1,664
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

The following table summarizes the effect of derivative financial instruments on the consolidated statements of income for the periods indicated (dollars in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Derivatives not designated as hedging instruments:
Interest rate swap contracts – loans
Increase in fair value of interest rate swap contracts	$	66		$	41		$	156		$	124
Payments on interest rate swap contracts on loans		(60	)		(66	)		(181	)		(198	)
Net decrease in other non-interest income		6			(25	)		(25	)		(74	)
Derivatives designated as hedging instruments:
Interest rate swap contracts – loans
Increase in fair value of interest rate swap contracts	$	249		$	142		$	412		$	583
Increase (decrease) in fair value of hedged loans		(68	)		191			215			279
Payment on interest rate swap contracts on loans		(202	)		(275	)		(657	)		(846	)
Net decrease in interest income on loans	$	(21	)	$	58		$	(30	)	$	16

Under all of the Company’s interest rate swap contracts, the Company is required to pledge and maintain collateral for the credit support under these agreements. At September 30, 2016, the Company has pledged $2.3 million in investment securities, $2.7 million in certificates of deposit, for a total of $5.0 million, as collateral under the swap agreements.

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Note 10 – Balance Sheet Offsetting

Assets and liabilities relating to certain financial instruments, including derivatives, and securities sold under repurchase agreements (“Repos”), may be eligible for offset in the consolidated balance sheets as permitted under accounting guidance. The Company’s interest rate swap derivatives are subject to a master bilateral netting and offsetting arrangement under specific conditions as defined within a master agreement governing all interest rate swap contracts that the Company and the counterparty banks have entered into. In addition, the master agreement under which the interest rate contracts have been written require the pledging of assets by the Company based on certain risk thresholds. The Company has pledged a certificate of deposit and investment securities as collateral under the swap agreements. The pledged collateral under the swap agreements are reported in the Company’s consolidated balance sheets, unless the Company defaults under the master agreement. The Company currently does not net or offset the interest rate swap contracts in its consolidated balance sheets, as reflected within the table below.

The Company’s securities sold under repurchase agreements represent transactions the Company has entered into with several deposit customers. These transactions represent the sale of securities on an overnight or on a term basis to our deposit customers under an agreement to repurchase the securities from the customers the next business day or at maturity. There is an individual contract for each customer with only one transaction per customer. There is no master agreement that provides for the netting arrangement or the offsetting of these individual transactions or for the netting of collateral positions. The Company does not net or offset the Repos in its consolidated balance sheets as reflected within the table below.

The table below presents the Company’s financial instruments that may be eligible for offsetting which include securities sold under agreements to repurchase that have no enforceable master netting arrangement and derivative securities that could be offset in the consolidated financial statements due to an enforceable master netting arrangement (dollars in thousands):

	Gross Amounts Recognized in the Consolidated Balance Sheets		Gross Amounts Offset in the Consolidated Balance Sheets		Net Amounts of Assets / Liabilities Presented in the Consolidated Balance Sheets		Gross Amounts Not Offset in the Consolidated Balance Sheets				Net Amount (Collateral over liability balance required to be pledged)
							Financial Instruments		Collateral Pledged
September 30, 2016
Financial Assets:
Interest rate swap contracts fair value (See Note 9 – Derivative Financial Instruments)	$	1,484	$	—	$	1,484	$	1,484	$	—	$	—
Total	$	1,484	$	—	$	1,484	$	1,484	$	—	$	—
Financial Liabilities:
Interest rate swap contracts fair value (See Note 9 – Derivative Financial Instruments)	$	2,580	$	—	$	2,580	$	2,580	$	5,041	$	2,461
Securities sold under agreements to repurchase (See Note 8 – Borrowings and Subordinated Debentures)		24,251		—		24,251		24,251		55,250		30,999
Total	$	26,831	$	—	$	26,831	$	26,831	$	60,291	$	33,460

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	Gross Amounts Recognized in the Consolidated Balance Sheets		Gross Amounts Offset in the Consolidated Balance Sheets		Net Amounts of Assets / Liabilities Presented in the Consolidated Balance Sheets		Gross Amounts Not Offset in the Consolidated Balance Sheets				Net Amount (Collateral over liability balance required to be pledged)
							Financial Instruments		Collateral Pledged
December 31, 2015
Financial Assets:
Interest rate swap contracts fair value (See Note 9 – Derivative Financial Instruments)	$	881	$	—	$	881	$	881	$	—	$	—
Total	$	881	$	—	$	881	$	881	$	—	$	—
Financial Liabilities:
Interest rate swap contracts fair value (See Note 9 – Derivative Financial Instruments)	$	2,545	$	—	$	2,545	$	2,545	$	4,759	$	2,214
Securities sold under agreements to repurchase (See Note 8 – Borrowings and Subordinated Debentures)		14,360		—		14,360		14,360		46,596		32,236
Total	$	16,905	$	—	$	16,905	$	16,905	$	51,355	$	34,450

Note 11 - Stock Options and Restricted Stock

Equity Compensation Plans

The Company’s 2007 Equity and Incentive Plan (“Equity Plan”) was adopted by the Company in 2007 and replaced two prior equity compensation plans. The Equity Plan provides for significant flexibility in determining the types and terms of awards that may be made to participants. The Equity Plan was revised and approved by the Company’s shareholders in 2011 and adopted by the Company as part of the Bank holding company reorganization. This plan is designed to promote the interest of the Company in aiding the Company to attract and retain employees, officers and non-employee directors who are expected to contribute to the future success of the organization. The Equity Plan is intended to provide participants with incentives to maximize their efforts on behalf of the Company through stock-based awards that provide an opportunity for stock ownership. This plan provides the Company with a flexible equity incentive compensation program, which allows the Company to grant stock options, restricted stock, restricted stock award units and performance units. Certain options and share awards provide for accelerated vesting, if there is a change in control, as defined in the Equity Plan. These plans are described more fully in Note 16 - Stock Options and Restricted Stock in the Company’s Form 10-K for the year ended December 31, 2015.

On July 1, 2016, and effective January 1, 2016, the Company early adopted ASU 2016-09 which provides improvements to the accounting for employee share-based payments. See Note 2. Recent Accounting Pronouncements for additional information.

At September 30, 2016, future compensation expense related to unvested restricted stock grants are reflected in the table below (dollars in thousands):

Future Restricted Stock Expense
Remainder of 2016	$	842
2017		1,910
2018		667
2019		185
Thereafter		36
Total	$	3,640

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At September 30, 2016, the weighted-average period over which the total compensation cost related to unvested restricted stock grants not yet recognized is 2.5 years. There was no future compensation expense related to unvested stock options as of September 30, 2016. All stock options outstanding at September 30, 2016 are vested.

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 (in thousands)
Outstanding stock options at December 31, 2015		557,471		$	10.57		0.8	$	8,248
Granted		—
Exercised		(411,964	)
Forfeited		—
Expired		(4,500	)
Outstanding stock options at September 30, 2016		141,007		$	14.87		0.8	$	1,121
Exercisable options at September 30, 2016		141,007		$	14.87		0.8	$	1,121
Unvested options at September 30, 2016		—		$	—		—	$	—

The total intrinsic value of options exercised during the three months ended September 30, 2016 and 2015 was $127 thousand and $606 thousand, respectively, and during the nine months ended September 30, 2016 and 2015, was $5.7 million and $1.9 million, respectively.

Restricted Stock

The weighted-average grant-date fair value per share in the table below is calculated by taking the total aggregate cost of the restricted shares issued divided by the number of shares of restricted stock 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 Equity Plan for the period indicated:

	Number of Shares			Weighted-Average Grant-Date Fair Value per Share
Restricted Stock:
Unvested at December 31, 2015		311,458		$	19.29
Granted		132,809			23.12
Vested		(87,031	)		17.53
Cancelled and forfeited		(11,375	)		20.88
Unvested at September 30, 2016		345,861		$	21.37

Restricted stock compensation expense was $939 thousand and $745 thousand for the three month period ended September 30, 2016 and 2015, respectively, and $2.7 million and $2.0 million for the nine month period ended September 30, 2016 and 2015, 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. In 2015, the Company granted 40 thousand shares of Restricted Stock Unit (“RSU”) under the Equity Plan to one of its executive officers. Such grant is reflected in the table above. The shares of common stock underlying the 40 thousand shares of RSU will not be issued until the RSUs vest and are not included in the Company’s shares issued and outstanding as of September 30, 2016. The RSUs 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.

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Note 12 - Shareholders’ Equity

Common Stock

Holders of shares of the Company’s common stock are entitled to one vote for each share held of record on all matters voted upon by shareholders. Furthermore, the holders of the Company’s common stock have no preemptive rights to subscribe for new issue securities, and shares of the Company’s common stock are not subject to redemption, conversion, or sinking fund provisions.

With respect to the payment of dividends, after the preferential dividends upon all other classes and series of stock entitled thereto have been paid or declared and set apart for payment, then the holders of the Company’s common stock are entitled to such dividends as may be declared by the Company’s board of directors out of funds legally available under the laws of the State of California.

Upon the Company’s liquidation or dissolution, the assets legally available for distribution to holders of the Company’s shares of common stock, after payment of all the Company’s obligations and payment of any liquidation preference of all other classes and series of stock entitled thereto, including the Company’s preferred stock, are distributable ratably among the holders of the Company’s common stock.

During 2016, the Company issued 411,964 shares of stock from the exercise of stock options for a total value of $3.7 million. The Company also issued 132,809 shares of restricted stock to the Company’s directors and employees, cancelled 11,375 shares of unvested restricted stock related to employee turnover and cancelled 35,349 shares that had a value of $834 thousand when employees elected to pay their tax obligation via the repurchase of the stock by the Company. The Equity Plan, as amended, allows employees to make an election to have a portion of their restricted stock that became vested during the year repurchased by the Company to provide funds to pay the employee’s tax obligation related to the vesting of the stock.

Preferred Stock

The Company completed the merger with 1^st Enterprise on November 30, 2014. As part of the Merger Agreement, 16,400 shares of preferred stock issued by 1^st Enterprise as part of the Small Business Lending Fund (SBLF) program of the United States Department of the Treasury was converted into 16,400 CU Bancorp preferred shares with substantially identical terms. CU Bancorp Preferred Stock has a liquidation preference amount of $1 thousand per share, designated as the Company’s Non-Cumulative Perpetual Preferred Stock, Series A. The U.S. Department of the Treasury is the sole holder of all outstanding shares of CU Bancorp Preferred Stock. The CU Bancorp Preferred Stock had an estimated life of four years and the fair value was $16 million at the merger date, resulting in a net discount of $479 thousand. The life-to-date and the year-to-date accretion on the net discount as of September 30, 2016 are $1.1 million and $26 thousand, respectively. The net carrying value of the CU Bancorp Preferred Stock is $17 million ($16 million plus of $0.6 million net premium) as of September 30, 2016.

Dividends on the Company’s Series A Preferred Stock are payable quarterly in arrears if authorized and declared by the Company’s board of directors out of legally available funds, on a non-cumulative basis, on the $1 thousand per share liquidation preference amount. Dividends are payable on January 1, April 1, July 1 and October 1 of each year. The current coupon dividend rate was adjusted to 9% on March 1, 2016 through perpetuity. However, the dividend yield through November 30, 2018 approximates 7% as a result of business combination accounting. Dividends on the Series A Preferred Stock are non-cumulative. There is no sinking fund with respect to dividends on the Series A Preferred Stock. So long as the Company’s Series A Preferred Stock remains outstanding, the Company may declare and pay dividends on the common stock only if full dividends on all outstanding shares of Series A Preferred Stock for the most recently completed dividend period have been or are contemporaneously declared and paid. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company, holders of the Series A Preferred Stock will be entitled to receive for each share of Series A Preferred Stock, out of the Company’s assets or proceeds available for distribution to the Company’s shareholders, subject to any rights of the Company’s creditors, before any distribution of assets or proceeds is made to or set aside for the holders of the common stock, payment of an amount equal to the sum of (i) the $1 thousand liquidation preference amount per share and (ii) the amount of any accrued and unpaid dividends on the Series A Preferred Stock. To the extent the assets or proceeds available for distribution to shareholders are not sufficient to fully pay the liquidation payments owing to the holders of the Series A Preferred Stock and the holders of any other class or series of the stock ranking equally with the Series A Preferred Stock, the holders of the Series A Preferred Stock and such the Company’s stock will share ratably in the distribution. Holders of the Series A Preferred Stock have no right to exchange or convert their shares into common stock or any other securities and do not have voting rights.

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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):

	Three Months Ended September 30,						Consolidated Statement of Income Line Item for Reclassified Items
	2016			2015
Beginning balance, net of tax	$	778		$	(48	)
Net unrealized gain (loss) arising during the period		(540	)		536
Related tax effect		227			(225	)
Reclassification of (gain) loss on investment securities available-for-sale to net income		(141	)		—		Gain on sale of securities, net
Related tax effect		59			—		Provision for income tax expense
Other Comprehensive Income (Loss)		(395	)		311
Ending balance	$	383		$	263
	Nine Months Ended September 30,						Consolidated Statement of Income Line Item for Reclassified Items
	2016			2015
Beginning balance, net of tax	$	(816	)	$	190
Net unrealized gain (loss) arising during the period		2,210			121
Related tax effect		(929	)		(48	)
Reclassification of (gain) loss on investment securities available-for-sale to net income		(141	)		—		Gain on sale of securities, net
Related tax effect		59			—		Provision for income tax expense
Other Comprehensive Income (Loss)		1,199			73
Ending balance	$	383		$	263

Note 13 - 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 material losses. As of September 30, 2016, 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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Financial Instruments with Off Balance Sheet Risk

See Note 21 – Commitments and Contingencies in the Company’s Form 10-K for the year ended December 31, 2015. Financial instruments with off balance sheet risk include commitments to extend credit of $920 million and $806 million at September 30, 2016 and December 31, 2015, respectively. Included in the aforementioned commitments were standby letters of credit outstanding of $87 million and $73 million at September 30, 2016 and December 31, 2015. The Company also has a reserve for estimated losses on unfunded loan commitments of $778 thousand and $608 thousand at September 30, 2016 and December 31, 2015, respectively. These reserves are included in other liabilities on the consolidated balance sheets.

Note 14 - Fair Value Information

Fair Value Measurement

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 those financial assets and financial liabilities that are not measured and reported at fair value on a recurring basis or on a non-recurring basis. The methodologies for estimating the fair value of financial assets and financial liabilities that are recorded at fair value, and those that are not recorded at fair value, 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 evaluation 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.

Cash and due from banks: The carrying amount is assumed to be the fair value because of the liquidity of these instruments.

Interest earning deposits in other financial institutions: The carrying amount is assumed to be the fair value given the short-term nature of these deposits.

Investment Securities Available-for-Sale and Held-to-Maturity: The fair value of securities available-for-sale and held-to-maturity may be determined by obtaining quoted prices in active markets, when available, from nationally recognized securities exchanges (Level 1 financial assets). If quoted market prices are not available, the fair value is determined by

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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 which are observable market inputs (Level 2 financial assets). 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 financial 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 an amount net of taxes as a separate component of accumulated other comprehensive income included in shareholders’ equity. Securities classified as held-to-maturity are accounted for at their amortized historical cost. As of each reporting date, both the available-for-sale and held-to-maturity securities are evaluated for OTTI on an individual basis.

The Company considers the inputs utilized to fair value the available-for-sale and held-to-maturity investment securities to be observable market inputs and classified these financial assets within the Level 2 fair value 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, the fair values are estimated using nationally recognized third-party vendor pricing models, of which 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 available-for-sale and held-to-maturity investment 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. 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 credit losses and estimated prepayments. The inputs utilized in determining the fair value of loans are unobservable and accordingly, these financial assets are classified within Level 3 of the fair value hierarchy.

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, less costs to sell, if the loan is collateral dependent, or based on the cash flows for non-collateral dependent loans discounted at the loan’s original effective rate. Collateral dependent loans may be secured by either 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 unobservable. For unsecured loans, the estimated future cash flows of the business or borrower, discounted at the loan’s original effective rate, are used in determining 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. The inputs utilized in determining the fair value of impaired loans are unobservable and accordingly, these financial assets are classified within Level 3 of the fair value hierarchy.

Interest Rate Swap Contracts:

The fair value of the interest rate swap contracts are provided by independent third party vendors that specialize in interest rate risk management and fair value analysis using a model that utilizes current market data to estimate cash flows of the interest rate swaps utilizing the future London Interbank Offered Rate (“LIBOR”) yield curve for accruing and the future Overnight Index Swap Rate (“OIS”) yield curve for discounting through the maturity date of the interest rate swap contract. The future LIBOR yield curve is the primary input in the valuation of the interest rate swap contracts. Both the LIBOR and OIS yield curves are readily observable in the marketplace. Accordingly, the interest rate swap contracts are classified within Level 2 of the fair value hierarchy.

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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 to sell. 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. The inputs utilized in determining the fair value of other real estate owned are unobservable and accordingly, these financial assets are classified within Level 3 of the fair value hierarchy.

SBA Servicing Asset: A servicing asset is recorded at fair value upon the sale of an SBA loan. The fair value of this asset is 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 contractual 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 inputs utilized in determining the fair value of SBA servicing asset are unobservable and accordingly, these financial assets are classified within Level 3 of the fair value hierarchy.

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 classified within Level 1 of the fair value hierarchy, 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 Company’s current certificates of deposit interest rates for similar term certificates. The inputs utilized in determining the fair value of maturing deposits are observable and accordingly, these financial liabilities are classified within Level 2 of the fair value hierarchy.

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 than 90 days is estimated based on the discounted value of the contractual future cash flows. The inputs utilized in determining the fair value of securities sold under agreements to repurchase are observable and accordingly, these financial liabilities are classified within Level 2 of the fair value hierarchy.

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 September 30, 2016, to the cash flows from the debentures, based on the actual interest rate the debentures were accruing at September 30, 2016. Because all three of the debentures re-priced on September 15, 2016 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 September 30, 2016, the current face value of the debentures and their calculated fair value are approximately equal. The inputs utilized in determining the fair value of subordinated debentures are observable and accordingly, these financial liabilities are classified within Level 2 of the fair value hierarchy.

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 September 30, 2016 and December 31, 2015.

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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):

	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets – September 30, 2016
Investment securities available-for-sale	$	375,094	$	—	$	375,094	$	—
Interest Rate Swap Contracts		1,484		—		1,484		—
Financial Liabilities – September 30, 2016
Interest Rate Swap Contracts	$	2,580	$	—	$	2,580	$	—
Financial Assets – December 31, 2015
Investment securities available-for-sale	$	315,785	$	—	$	315,785	$	—
Interest Rate Swap Contracts		881		—		881		—
Financial Liabilities – December 31, 2015
Interest Rate Swap Contracts	$	2,545	$	—	$	2,545	$	—

At September 30, 2016 and at December 31, 2015 the Company had no financial assets or liabilities that were measured at fair value on a recurring basis that required the use of significant unobservable inputs (Level 3). Additionally, there were no transfers of assets either between Level 1 and Level 2 nor in or out of Level 3 of the fair value hierarchy for assets measured on a recurring basis for the period ended September 30, 2016.

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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 fair value that were recognized at fair value below cost at the end of or during the period.

There were no transfers of assets either between Level 1 and Level 2 nor in or out of Level 3 of the fair value hierarchy for assets measured on a non-recurring basis during the three or nine months ended September 30, 2016.

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):

	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets – September 30, 2016
Collateral dependent impaired loans with specific valuation allowance and/or partial charge-offs (non-purchased credit impaired loans)	$	242	$	—	$	—	$	242
Other real estate owned		—		—		—		—
Total	$	242	$	—	$	—	$	242
Financial Assets – December 31, 2015
Collateral dependent impaired loans with specific valuation allowance and/or partial charge-offs (non-purchased credit impaired loans)	$	—	$	—	$	—	$	—
Other real estate owned		325		—		—		325
Total	$	325	$	—	$	—	$	325

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		Valuation Methodology	Valuation Model and/or Factors	Unobservable Input Values
Financial Assets – September 30, 2016
Collateral dependent impaired loans with specific valuation allowance and/or partial charge-off	$	58	Balance represents 100% guaranty by the SBA	Not Applicable	Not Applicable
		184	Assignment of expected proceeds from collateral sale	Not Applicable	Not Applicable
Total	$	242
Financial Assets – December 31, 2015
Collateral dependent impaired loans with specific valuation allowance and/or partial charge-off	$	—	—	—	—
Other real estate owned	$	325	Broker opinion of value	Sales approach Estimated selling costs	6%
Total	$	325

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Fair Value of Financial Assets and Liabilities

ASC Topic 825, “Financial Instruments,” requires disclosure of the estimated fair value of certain financial instruments and the methods and significant assumptions used to estimate such fair values. Additionally, certain financial instruments and all nonfinancial instruments are excluded from the applicable disclosure requirements. 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 September 30, 2016 and December 31, 2015. 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 financial assets and liabilities recorded at fair value and for those not recorded at fair value has been described above.

The table below presents the carrying values and estimated fair values of certain financial instruments based on their fair value hierarchy indicated (dollars in thousands):

					Fair Value Measurements
	Carrying Amount		Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
September 30, 2016
Financial Assets
Cash and due from banks	$	47,701	$	47,701	$	47,701	$	—	$	—
Interest earning deposits in other financial institutions		244,205		244,205		244,205		—		—
Investment securities available-for-sale		375,094		375,094		—		375,094		—
Investment securities held-to-maturity		40,073		40,691		—		40,691		—
Loans, net		1,956,570		1,993,667		—		—		1,993,667
Interest rate swap contracts		1,484		1,484		—		1,484		—
Financial Liabilities
Certificates of deposit		35,033		35,033		—		35,033		—
Securities sold under agreements to repurchase		24,251		24,251		—		24,251		—
Subordinated debentures		9,817		12,372		—		12,372		—
Interest rate swap contracts		2,580		2,580		—		2,580		—
December 31, 2015
Financial Assets
Cash and due from banks	$	50,960	$	50,960	$	50,960	$	—	$	—
Interest earning deposits in other financial institutions		171,103		171,103		171,103		—		—
Investment securities available-for-sale		315,785		315,785		—		315,785		—
Investment securities held-to-maturity		42,036		42,339		—		42,339		—
Loans, net		1,817,481		1,851,220		—		—		1,851,220
Interest rate swap contracts		881		881		—		881		—
Financial Liabilities										—
Certificates of deposit		58,502		58,502		—		58,502		—
Securities sold under agreements to repurchase		14,360		14,360		—		14,360		—
Subordinated debentures		9,697		12,372		—		12,372		—
Interest rate swap contracts		2,545		2,545		—		2,545		—

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Note 15 – Subsequent Events

We have evaluated events that have occurred subsequent to September 30, 2016 and have concluded there are no subsequent events that would require disclosure or recognition in the accompanying interim consolidated financial statements.

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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 2015 Annual Report on Form 10-K and with the unaudited financial statements and notes as set forth in this report.

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

PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

Statements contained in this Quarterly Report on Form 10-Q (this “Report”) that are not historical facts or that discuss our expectations, beliefs or views regarding our future operations or future financial performance, or financial or other trends in our business or in the markets in which we operate, constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). 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.

The Company’s forward-looking statements include descriptions of management’s plans or objectives for future operations, products or services, and forecasts of the Company’s revenues, earnings or other measures of economic performance. These forward-looking statements involve risks and uncertainties and are based on the beliefs and assumptions of management and on the information available to management at the time that this report was prepared and can be identified by the fact that they do not relate strictly to historical or current facts. They often include the words “believe,” “expect,” “intend,” “estimate,” “approximate,” “anticipate,” “project,” “assume,” “believe,” “plan,” “predict,” “likely,” or variations of these words as well as words of similar meaning, or future or conditional verbs such as “will,” “would,” “should,” “could,” or “may.”

Although we believe that management’s assumptions are reasonable, they are not guarantees of future performance and some will inevitably prove to be incorrect. As a result, our actual future results can be expected to differ from management’s expectations, and those differences may be material and adverse to the Company’s business, results of operations and financial condition. Accordingly, investors should use caution in relying on forward-looking statements to anticipate future results or trends.

We make forward-looking statements as set forth above and regarding projected sources of funds, availability of acquisition and growth opportunities, dividends, adequacy of our allowance for loan losses and provision for loan losses, our loan portfolio and subsequent charge-offs and our consent order with federal and state regulatory agencies (“Consent Order”). Forward-looking statements involve substantial risks and uncertainties, many of which are difficult to predict and are generally beyond our control. There are many factors that could cause actual results to differ materially from those contemplated by these forward-looking statements. Risks and uncertainties that could cause our financial performance to differ materially from our goals, plans, expectations and projections expressed in forward-looking statements include those set forth in our filings with the SEC, Item 1A of our Annual Report on Form 10-K, and the following:

• Current and future economic and market conditions in the United States generally or in the communities we serve, including the effects of declines in property values, high unemployment rates and overall slowdowns in economic growth should these events occur.

• The effects of trade, monetary and fiscal policies and laws.

• Possible losses of businesses and population in the Los Angeles, Orange, Ventura, San Bernardino or Riverside Counties.

• Loss of customer checking and money-market account deposits as customers pursue other higher-yield investments, particularly in a rising interest rate environment.

• Possible changes in consumer and business spending and saving habits and the related effect on our ability to increase assets and to attract deposits.

• Competitive market pricing factors.

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• Deterioration in economic conditions that could result in increased loan losses.

• Risks associated with concentrations in real estate related loans.

• Risks associated with concentrations in deposits.

• Loss of significant customers.

• Market interest rate volatility.

• Possible changes in the creditworthiness of customers and the possible impairment of the collectability of loans.

• Changes in the speed of loan prepayments, loan origination and sale volumes, loan loss provisions, charge offs or actual loan losses.

• Compression of our net interest margin.

• Stability of funding sources and continued availability of borrowings to the extent necessary.

• Changes in legal or regulatory requirements.

• The inability of our internal disclosure controls and procedures to prevent or detect all errors or fraudulent acts.

• Inability of our framework to manage risks associated with our business, including operational risk and credit risk, to mitigate all risk or loss to us.

• Our ability to keep pace with technological changes, including our ability to identify and address cyber-security risks such as data security breaches, “denial of service” attacks, “hacking” and identity theft.

• The effects of man-made and natural disasters, including, but not limited to earthquakes, floods, droughts, brush fires, tornadoes and hurricanes.

• The effect of labor and port slowdowns on small businesses.

• Risks of loss of funding for the Small Business Administration (“SBA”), or SBA loan programs, or changes in those programs.

• Lack of take-out financing or problems with sales or lease-up with respect to our construction loans.

• Our ability to recruit and retain key management and staff.

• Availability of, and competition for, acquisition opportunities.

• Significant decline in the market value of the Company that could result in an impairment of goodwill.

• Regulatory limits on the Bank’s ability to pay dividends to the Company.

• The uncertainty of obtaining regulatory approval for various merger and acquisition opportunities.

• New accounting pronouncements.

• The impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) and related rules and regulations on the Company’s business operations and competitiveness.

• Our ability to comply with applicable capital and liquidity requirements (including the finalized Basel III capital standards), including our ability to generate capital internally or raise capital on favorable terms.

• Increased regulation of the securities markets, including the securities of the Company, whether pursuant to the Sarbanes-Oxley Act of 2002, or otherwise.

• Our ability to demonstrate compliance with the Consent Order to the satisfaction of the FDIC and the California Department of Business Oversight (CDBO).

• The possibility that any expansionary activities or new products or services will be impeded while the FDIC and CDBO’s joint Consent Order remains outstanding.

• Our ability to employ and retain additional qualified BSA staff or third parties.

• Our ability to comply with the requirements set forth in the Consent Order

• The effects of any damage to our reputation resulting from developments related to any of the items identified above.

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Forward-looking statements speak only as of the date they are made. The Company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made or to reflect the occurrence of unanticipated events and specifically disclaims any obligation to revise or update such forward looking statements for any reason, except as may be required by applicable law. You should consider any forward looking statements in light of this explanation, and we caution you about relying on forward-looking statements.

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, 2015 and particularly, Item 1A, titled “Risk Factors.”

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OVERVIEW

CU Bancorp (the “Company”) is a bank holding company whose operating subsidiary is California United Bank. 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 financial statements 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 in Los Angeles, Orange, Ventura, San Bernardino and Riverside counties, 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 current headquarters office located in Los Angeles, California. As a state chartered non-member bank, the Bank is subject to regulation by the California Department of Business Oversight, (the “DBO”) and the Federal Deposit Insurance Corporation (“FDIC”). The deposits of the Bank are insured by the FDIC, to the maximum amount allowed by law.

Total assets increased $259 million or 10% from December 31, 2015 to $2.9 billion mainly due to deposit growth of $219 million and net income of $20 million. Loan growth during the nine months ended September 30, 2016 was concentrated primarily in Other Nonresidential Property loans of $77 million, Construction, Land Development and Other Land loans of $47 million, multifamily residential properties loans of $29 million and Owner-Occupied Nonresidential Properties loans of $22 million, offset by a $38 million decrease in Commercial and Industrial loans. At September 30, 2016, commercial and industrial loans, and owner-occupied real estate loans combined were $930 million or 47% of total loans, compared to $945 million or 52% of total loans.

Funding the Company’s loan growth for the nine months ended September 30, 2016 were increases in non-interest bearing demand deposits of $111 million and money market and savings deposits of $108 million. At both September 30, 2016 and December 31, 2015, non-interest bearing deposits represented 56% of total deposits. Tangible book value per common share was $13.84, $12.67 and $12.42 at September 30, 2016, December 31, 2015 and September 30, 2015, respectively.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The preparation of these consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities at the date of our financial statements. Actual results may differ from these estimates under different assumptions or conditions.

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 accounting for business combinations, evaluation of goodwill for impairment, methodologies that determine our allowance for loan loss, the valuation of impaired loans, the classification and valuation of investment securities, accounting for derivatives financial instruments and hedging activities, and accounting for income taxes.

Our critical accounting policies are described in greater detail in our 2015 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. 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:

Business Combinations

The Company has a number of fair value adjustments recorded within the consolidated financial statements that relate to the business combinations with California Oaks State Bank “COSB”, Premier Commercial Bancorp “PC Bancorp” and 1^st Enterprise Bank “1^st Enterprise” on December 31, 2010, July 31, 2012 and November 30, 2014, respectively. These fair value adjustments include goodwill, fair value adjustments on loans, core deposit intangible assets, other intangible

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assets, fair value adjustments to acquired lease obligations, fair value adjustments to certificates of deposit and fair value adjustments on derivatives. The assets and liabilities acquired through acquisitions have been accounted for at fair value as of the date of the acquisition. The goodwill that was recorded on the transactions represented the excess of the purchase price over the fair value of net assets acquired. Goodwill is not amortized and is reviewed for impairment on October 1st of each year. If an event occurs or circumstances change that result in the Company’s fair value declining below its book value, the Company would perform an impairment analysis at that time.

Based on the Company’s 2015 goodwill impairment analysis, no impairment to goodwill has occurred. The Company is a sole reporting unit for evaluation of goodwill.

The core deposit intangibles on non-maturing deposits, which represent the intangible value of depositor relationships resulting from deposit liabilities assumed through acquisitions, are being amortized over the projected useful lives of the deposits. The weighted average remaining life of the core deposit intangible is estimated at approximately 5 years at September 30, 2016. Core deposit intangibles are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

Loans acquired through acquisition are recorded at fair value at acquisition date without a carryover of the related Allowance. Purchased Credit Impaired (“PCI”) loans are acquired loans with evidence of deterioration of credit quality since origination and it is probable, at the acquisition date, that the Company will not be able 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 PCI 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. For non-PCI loans, loan fair value adjustments consist of an interest rate premium or discount and a credit component on each individual loan and are amortized to loan interest income based on the effective yield method over the remaining life of the loans. Subsequent decreases to the expected cash flows for both PCI and non-PCI loans will result in a provision for loan losses.

Allowance for Loan Loss

The allowance for loan loss (“Allowance”) is established by a provision for loan losses that is charged against income, increased by charges to expense and decreased by charge-offs (net of recoveries). Loan charge-offs are charged against the Allowance when management believes the collectability of loan principal becomes unlikely. Subsequent recoveries, if any, are credited to the Allowance.

The Allowance is an amount that management believes will be adequate to absorb estimated charge-offs related to specifically identified loans, as well as probable loan charge-offs inherent in the balance of the loan portfolio, based on an evaluation of the collectability of existing loans and prior loss experience. Management carefully monitors changing economic conditions, the concentrations of loan categories and collateral, the financial condition of the borrowers, the history of the loan portfolio, as well as historical peer group loan loss data to determine the adequacy of the Allowance. The Allowance is based upon estimates, and actual charge-offs may vary from the estimates. No assurance can be given that adverse future economic conditions will not lead to delinquent loans, increases in the provision for loan losses and/or charge-offs. These evaluations are inherently subjective, as they require estimates that are susceptible to significant revisions as conditions change. In addition, regulatory agencies, as an integral part of their examination process, may require changes to the Allowance based on their judgment about information available at the time of their examinations. Management believes that the Allowance as of September 30, 2016 is adequate to absorb known and probable losses in the loan portfolio.

The Allowance consists of specific and general components. The specific component relates to loans that are categorized as impaired. For loans that are categorized as impaired, a specific allowance is established when the fair value of the impaired loan is lower than the recorded investment of that loan. The general component covers non-impaired loans and is based on the type of loan and historical charge-off experience adjusted for qualitative factors.

While the general allowance covers all non-impaired loans and is based on historical loss experience adjusted for the various qualitative factors, the change in the Allowance from one reporting period to the next may not directly correlate to the rate of change of nonperforming loans for the following reasons:

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• A loan moving from the impaired performing status to an impaired non-performing status does not mandate an automatic increase in allowance. The individual loan is evaluated for a specific allowance requirement when the loan moves to the impaired status, not when the loan moves to non-performing status. In addition, the impaired loan is reevaluated at each subsequent reporting period. Impairment is measured based on the present value of the expected future cash flows discounted at the loan’s effective interest rate, except that as a practical expedient, the Company may measure impairment based on the loan’s observable market price or the fair value of the collateral if the loan is collateral dependent.

• Not all impaired loans require a specific allowance. The payment performance of the borrower may require an impaired classification, but the collateral evaluation may support adequate collateral coverage. For a number of impaired loans in which borrower performance is in question, the collateral coverage may be sufficient. In those instances, neither a general allowance nor a specific allowance is assessed.

Investment Securities

The Company currently classifies its investment securities under the available-for-sale and held-to-maturity classifications. 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 cost. Unrealized gains or losses are excluded from net income and reported as a separate component of accumulated other comprehensive income (loss) included in shareholders’ equity. Under the held-to-maturity classification, if the Company has the intent and the ability at the time of purchase to hold these securities until maturity, they are classified as held-to-maturity and are stated at amortized cost.

As of each reporting date, the Company evaluates the securities portfolio to determine if there has been an other-than-temporary impairment (“OTTI”) on each of the individual securities in the investment securities portfolio. If it is probable that the Company will be unable to collect all amounts due according to the contractual terms of a debt security not impaired at acquisition, an OTTI shall be considered to have occurred. Once an OTTI 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.

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 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) any financial guarantee and financial condition of the guarantor and (viii) the intent and ability of the Company to retain its investment in the issue for a period of time sufficient to allow for any anticipated recovery in fair value.

If it’s determined that an OTTI 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 the amount of the OTTI 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 impairment 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 the underlying collateral.

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 expected maturity term 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.

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Derivative Financial Instruments and Hedging Activities

All derivative instruments (interest rate swap contracts) were recognized on the consolidated balance sheet at their current 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. Accounting Standards Codification (“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 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 by the Company, 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. At inception and on an ongoing basis, the derivatives that are used in hedging transactions are evaluated as to how effective they are in offsetting changes in fair values or cash flows of hedged items.

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, 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 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.

Income Taxes

The Company provides for current federal and state income taxes payable and for deferred taxes that result from differences between financial accounting rules and tax laws governing the timing of recognition of various income and expense items. The Company recognizes deferred income tax assets and liabilities for the future tax effects of such temporary differences based on the difference between the financial statement and tax bases of the existing assets and liabilities using the statutory rate expected in the years in which the differences are expected to reverse. The effect on deferred taxes of any enacted change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is 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 for deductible temporary differences and loss carryforwards depends on having sufficient taxable income of an appropriate character within the carryback and carryforward period and that current tax law will allow for the realization of those tax benefits.

The Company is required to account for uncertainty associated with the tax positions it has taken or expects to be taken on past, current and future tax returns. Where there may be a degree of uncertainty as to the tax realization of an item, the Company may only record the tax effects (expense or benefits) from an uncertain tax position in the consolidated financial statements if, based on its merits, the position is more likely than not to be sustained on audit by the taxing authorities. Management does not believe that it has any material uncertain tax positions taken to date that are not more likely than not to be realized. Interest and penalties related to uncertain tax positions are recorded as part of other operating expense.

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Current Accounting Developments

In March 2016, the FASB issued ASU 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, to reduce the complexity of certain aspects of the accounting for employee share-based payment transactions. In the third quarter of 2016, the Company elected the early adoption of this standard which requires the Company to reflect the adjustments resulting from the adoption effective January 1, 2016, the beginning of the annual period that includes the interim period of adoption. The most significant impact of the new guidance resulted in recognition of excess tax benefits within the provision for income tax expense, which resulted in an increase to net income available to common shareholders and earnings per share. For additional information and the impact of the adoption, see Note 2, “Recent Accounting Pronouncements,” in Item 1. “Financial Statements.”

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RESULTS OF OPERATIONS

Key Performance Measures

The following table presents key performance measures for the periods indicated and the dollar and percentage changes between the periods (dollars in thousands, except per share data):

	Three Months Ended September 30,												Nine Months Ended September 30,
	Amounts						Increase (Decrease)						Amounts						Increase (Decrease)
	2016			2015			$			%			2016			2015			$			%
Net Income Available to Common Shareholders	$	6,279		$	5,970		$	309			5.18	%	$	19,373		$	14,852		$	4,521			30.44	%
Earnings per share
Basic	$	0.36		$	0.36		$	—			—	%	$	1.13		$	0.90		$	0.23			25.56	%
Diluted	$	0.36		$	0.35		$	0.01			2.86	%	$	1.11		$	0.88		$	0.23			26.14	%
Return on average assets (1)		0.87	%		0.93	%		(0.06	)%		(6.45	)%		0.93	%		0.82	%		0.11	%		13.41	%
Return on average tangible common equity (2)		10.30	%		11.48	%		(1.18	)%		(10.28	)%		11.10	%		9.95	%		1.15	%		11.56	%
Net interest margin (3)		3.72	%		3.79	%		(0.07	)%		(1.85	)%		3.77	%		3.87	%		(0.10	)%		(2.58	)%
Efficiency ratio (4)		59.96	%		59.34	%		0.62	%		1.04	%		57.73	%		61.49	%		(3.76	)%		(6.11	)%

(1) Return on average assets is calculated by dividing net income available to common shareholders by the average assets for the period.

(2) Return on average tangible common equity is calculated by dividing the Company’s net income available to common shareholders by average tangible common equity for the period. See the tables for return on average tangible common equity calculation and reconciliation to average common equity.

(3) Net interest margin represents net interest income as a percent of interest earning assets.

(4) Efficiency ratio represents non-interest expense as a percent of net interest income plus non-interest income, excluding gain on sale of securities, net.

Non-GAAP Financial Measure - Average Tangible Common Equity (TCE) Calculation and Reconciliation to Total Average Shareholders’ Equity

The Company utilizes the term TCE, a non-GAAP financial measure. The Company’s management believes TCE is useful because it is a measure utilized by both regulators and market analysts in evaluating the Company’s financial condition and capital strength. TCE represents common shareholders’ equity less goodwill and certain intangible assets. Return on Average Tangible Common Equity represents annualized net income available to common shareholders as a percent of average tangible common equity. A calculation of the Company’s Return on Average Tangible Common Equity is provided in the table below for the periods indicated (dollars in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Average Tangible Common Equity Calculation
Total average shareholders’ equity	$	331,024		$	295,189		$	322,056		$	288,719
Less: Average serial preferred stock		17,063			16,565			17,092			16,329
Less: Average goodwill		64,603			63,950			64,603			63,959
Less: Average core deposit and leasehold right intangibles		6,792			8,423			7,149			8,885
Average Tangible Common Equity	$	242,566		$	206,251		$	233,212		$	199,546
Annualized Net Income Available to Common Shareholders	$	24,980		$	23,685		$	25,878		$	19,857
Return on Average Tangible Common Equity		10.30	%		11.48	%		11.10	%		9.95	%

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Operations Performance Summary

Three Months Ended September 30, 2016 Compared to Three Months Ended September 30, 2015

Net income available to common shareholders for the three months ended September 30, 2016 was $6.3 million, or $0.36 per diluted share, compared to $6.0 million, or $0.35 per diluted share for the three months ended September 30, 2015. The $309 thousand increase, or 5.2%, was primarily due to a $2.3 million increase in loan interest income, which is the result of the Company’s strong organic loan growth since the prior period, offset by a $1.7 million, or 11.3% increase in non-interest expense. Included in the increase of non-interest expense were one-time expenses of $1.2 million in the three months ended September 30, 2016, of which $957 thousand were BSA compliance expenses related to the Consent Order, and $203 thousand in one-time expenses associated with the closing the Company’s Simi Valley administrative office. Salaries and other benefits expense increased $462 thousand, or 5.2%, as the Company’s active full-time equivalent employees grew to 285 at September 30, 2016, an increase of 19 from September 30, 2015. There were no merger expenses in the three months ended September 30, 2016, compared to $146 thousand in the year-ago period.

Nine Months Ended September 30, 2016 Compared to Nine Months Ended September 30, 2015

Net income available to common shareholders for the nine months ended September 30, 2016 was $19.4 million, or $1.11 per diluted share, compared to $14.9 million, or $0.88 per diluted share for the nine months ended September 30, 2015. The $4.5 million increase, or 30.4%, was primarily driven by an increase in interest income on loans of $7.5 million, or 12.0 %, which is the result of the Company’s strong organic loan growth since the prior period, offset by a $2.2 million increase in non-interest expense. Non-interest income increased slightly by $162 thousand or 1.9% while non-interest expense had an increase of $2.2 million, or 4.8%. Included in the increase of non-interest expense were one-time expenses of $1.2 million in the three months ended September 30, 2016, of which $957 thousand were BSA compliance expenses related to the Consent Order, and $203 thousand in one-time expenses associated with the closing the Company’s Simi Valley administrative office. Salaries and other benefits expense increased $1.7 million, or 6.5%, as the Company’s active full-time equivalent employees grew to 285 at September 30, 2016, an increase of 19 from September 30, 2015. Further, as a result of the early adoption of ASU 2016-09 on July 1, 2016, effective January 1, 2016, excess tax benefits of $914 thousand was recognized as a reduction to provision for income tax expense for the nine months ended September 30, 2016. For additional information and the impact of the adoption, see Note 2, “Recent Accounting Pronouncements,” in Item 1. “Financial Statements.”

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Average Balances, Interest Income and Expense, Yields and Rates

Three and Nine Months Ended September 30, 2016 and 2015

The following tables present 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
	September 30, 2016							September 30, 2015
	Average Balance		Interest		Average Yield/Rate (6)			Average Balance		Interest		Average Yield/Rate (6)
Interest Earning Assets:
Deposits in other financial institutions	$	317,678	$	478		0.59	%	$	329,640	$	293		0.35	%
Investment securities (1)		392,454		1,419		1.45	%		281,476		1,124		1.60	%
Loans (2)		1,965,509		23,958		4.85	%		1,735,977		21,689		4.96	%
Total interest earning assets		2,675,641		25,855		3.84	%		2,347,093		23,106		3.91	%
Non-interest earning assets		209,981							212,301
Total Assets	$	2,885,622						$	2,559,394
Interest Bearing Liabilities:
Interest bearing transaction accounts	$	278,983	$	102		0.14	%	$	268,877	$	105		0.15	%
Money market and savings deposits		789,208		524		0.26	%		701,189		427		0.24	%
Certificates of deposit		46,197		46		0.39	%		61,243		53		0.34	%
Total interest bearing deposits		1,114,388		672		0.24	%		1,031,309		585		0.23	%
Securities sold under agreements to repurchase		21,893		13		0.24	%		15,306		9		0.23	%
Subordinated debentures		9,831		122		4.86	%		9,703		110		4.44	%
Total interest bearing liabilities		1,146,112		807		0.28	%		1,056,318		704		0.26	%
Non-interest bearing demand deposits		1,389,196							1,190,170
Total funding sources		2,535,308							2,246,488
Non-interest bearing liabilities		19,290							17,717
Shareholders’ Equity		331,024							295,189
Total Liabilities and Shareholders’ Equity	$	2,885,622						$	2,559,394
Excess of interest earning assets over funding sources	$	140,333						$	100,605
Net interest income			$	25,048						$	22,402
Net interest rate spread (3)						3.56	%						3.65	%
Net interest margin (4)						3.72	%						3.79	%
Core net interest margin (5)						3.60	%						3.64	%

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

(2) Average balances of loans are calculated net of deferred loan fees and fair value discounts, but would include non-accrual loans which have a zero yield.

(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 net interest income by average total interest earning assets.

(5) Core net interest margin is computed by dividing annualized net interest income, excluding accelerated accretion of fair value discounts earned on early loan payoffs of acquired loans and interest recovered or reversed on non-accrual loans or other significant items based on management’s judgement, by average total interest-earning assets. See the reconciliation table for core net interest margin.

(6) Annualized.

Page 52 of 77

	Nine Months Ended
	September 30, 2016							September 30, 2015
	Average Balance		Interest		Average Yield/Rate (6)			Average Balance		Interest		Average Yield/Rate (6)
Interest Earning Assets:
Deposits in other financial institutions	$	297,943	$	1,334		0.59	%	$	264,560	$	741		0.37	%
Investment securities (1)		373,493		4,066		1.45	%		272,820		3,355		1.64	%
Loans (2)		1,908,097		69,701		4.88	%		1,686,967		62,239		4.93	%
Total interest earning assets		2,579,533		75,101		3.89	%		2,224,347		66,335		3.99	%
Non-interest earning assets		211,295							209,094
Total Assets	$	2,790,828						$	2,433,441
Interest Bearing Liabilities:
Interest bearing transaction accounts	$	279,386	$	300		0.14	%	$	254,092	$	303		0.16	%
Money market and savings deposits		752,138		1,519		0.27	%		681,852		1,218		0.24	%
Certificates of deposit		51,839		110		0.28	%		61,875		150		0.32	%
Total interest bearing deposits		1,083,363		1,929		0.24	%		997,819		1,671		0.22	%
Securities sold under agreements to repurchase		22,550		38		0.23	%		12,896		21		0.22	%
Subordinated debentures		9,770		359		4.83	%		9,624		326		4.47	%
Total interest bearing liabilities		1,115,683		2,326		0.28	%		1,020,339		2,018		0.26	%
Non-interest bearing demand deposits		1,335,878							1,106,491
Total funding sources		2,451,561							2,126,830
Non-interest bearing liabilities		17,211							17,892
Shareholders’ Equity		322,056							288,719
Total Liabilities and Shareholders’ Equity	$	2,790,828						$	2,433,441
Excess of interest earning assets over funding sources	$	127,972						$	97,517
Net interest income			$	72,775						$	64,317
Net interest rate spread (3)						3.61	%						3.73	%
Net interest margin (4)						3.77	%						3.87	%
Core net interest margin (5)						3.65	%						3.77	%

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

(2) Average balances of loans are calculated net of deferred loan fees and fair value discounts, but would include non-accrual loans which have a zero yield.

(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 net interest income by average total interest earning assets.

(5) Core net interest margin is computed by dividing annualized net interest income, excluding accelerated accretion of fair value discounts earned on early loan payoffs of acquired loans and interest recovered or reversed on non-accrual loans or other significant items based on management’s judgement, by average total interest-earning assets. See the reconciliation table for core net interest margin.

(6) Annualized.

Page 53 of 77

Net Changes in Average Balances, Composition, Yields and Rates

Three and Nine Months Ended September 30, 2016 and 2015

The following tables set 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, composition, and yield/rate between these respective periods (dollars in thousands):

	Three Months Ended September 30,
	2016								2015								Increase (Decrease)
	Average Balance		% of Total			Average Yield/ Rate (6)			Average Balance		% of Total			Average Yield/ Rate (6)			Average Balance			% of Total			Average Yield/ Rate (6)
Interest Earning Assets:
Deposits in other financial institutions	$	317,678		11.9	%		0.59	%	$	329,640		14.0	%		0.35	%	$	(11,962	)		(2.1	)%		0.24	%
Investment securities (1)		392,454		14.7	%		1.45	%		281,476		12.0	%		1.60	%		110,978			2.7	%		(0.15	)%
Loans (2)		1,965,509		73.4	%		4.85	%		1,735,977		74.0	%		4.96	%		229,532			(0.6	)%		(0.11	)%
Total interest earning assets	$	2,675,641		100	%		3.84	%	$	2,347,093		100.0	%		3.91	%	$	328,548						(0.07	)%
Interest Bearing Liabilities:
Non-interest bearing demand deposits	$	1,389,196		54.8	%				$	1,190,170		53.0	%				$	199,026			1.8	%
Interest bearing transaction accounts		278,983		11.0	%		0.14	%		268,877		12.0	%		0.15	%		10,106			(1.0	)%		(0.01	)%
Money market and savings deposits		789,208		31.1	%		0.26	%		701,189		31.2	%		0.24	%		88,019			(0.1	)%		0.02	%
Certificates of deposit		46,197		1.8	%		0.39	%		61,243		2.7	%		0.34	%		(15,046	)		(0.9	)%		0.05	%
Total deposits		2,503,584		98.7	%		0.11	%		2,221,479		98.9	%		0.10	%		282,105			(0.2	)%		0.01	%
Securities sold under agreements to repurchase		21,893		0.9	%		0.24	%		15,306		0.7	%		0.23	%		6,587			0.2	%		0.01	%
Subordinated debentures		9,831		0.4	%		4.86	%		9,703		0.4	%		4.44	%		128			—	%		0.42	%
Total borrowings		31,724		1.3	%		1.69	%		25,009		1.1	%		1.89	%		6,715			0.2	%		(0.20	)%
Total funding sources	$	2,535,308		100	%		0.13	%	$	2,246,488		100.0	%		0.12	%	$	288,820						0.01	%
Excess of interest earning assets over funding sources	$	140,333							$	100,605							$	39,728
Net interest rate spread (3)							3.56	%							3.65	%								(0.09	)%
Net interest margin (4)							3.72	%							3.79	%								(0.07	)%
Core net interest margin (5)							3.60	%							3.64	%								(0.04	)%

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

(2) Average balances of loans are calculated net of deferred loan fees and fair value discounts, but would include non-accrual loans which have a zero yield.

(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 net interest income by average total interest earning assets.

(5) Core net interest margin is computed by dividing annualized net interest income, excluding accelerated accretion of fair value discounts earned on early loan payoffs of acquired loans and interest recovered or reversed on non-accrual loans or other significant items based on management’s judgement, by average total interest-earning assets. See the reconciliation table for core net interest margin.

(6) Annualized.

Page 54 of 77

	Nine Months Ended September 30,
	2016								2015								Increase (Decrease)
	Average Balance		% of Total			Average Yield/ Rate (6)			Average Balance		% of Total			Average Yield/ Rate (6)			Average Balance			% of Total			Average Yield/ Rate (6)
Interest Earning Assets:
Deposits in other financial institutions	$	297,943		11.5	%		0.59	%	$	264,560		11.9	%		0.37	%	$	33,383			(0.4	)%		0.22	%
Investment securities (1)		373,493		14.5	%		1.45	%		272,820		12.3	%		1.64	%		100,673			2.2	%		(0.19	)%
Loans (2)		1,908,097		74.0	%		4.88	%		1,686,967		75.8	%		4.93	%		221,130			(1.8	)%		(0.05	)%
Total interest earning assets	$	2,579,533		100	%		3.89	%	$	2,224,347		100.0	%		3.99	%	$	355,186						(0.10	)%
Interest Bearing Liabilities:
Non-interest bearing demand deposits	$	1,335,878		54.5	%				$	1,106,491		52.0	%				$	229,387			2.5	%
Interest bearing transaction accounts		279,386		11.4	%		0.14	%		254,092		11.9	%		0.16	%		25,294			(0.5	)%		(0.02	)%
Money market and savings deposits		752,138		30.7	%		0.27	%		681,852		32.1	%		0.24	%		70,286			(1.4	)%		0.03	%
Certificates of deposit		51,839		2.1	%		0.28	%		61,875		2.9	%		0.32	%		(10,036	)		(0.8	)%		(0.04	)%
Total deposits		2,419,241		98.7	%		0.11	%		2,104,310		98.9	%		0.11	%		314,931			(0.2	)%		—	%
Securities sold under agreements to repurchase		22,550		0.9	%		0.23	%		12,896		0.6	%		0.22	%		9,654			0.3	%		(0.01	)%
Subordinated debentures		9,770		0.4	%		4.83	%		9,624		0.5	%		4.47	%		146			(0.1	)%		0.36	%
Total borrowings		32,320		1.3	%		1.64	%		22,520		1.1	%		2.06	%		9,800			0.2	%		(0.42	)%
Total funding sources	$	2,451,561		100	%		0.13	%	$	2,126,830		100.0	%		0.13	%	$	324,731						—	%
Excess of interest earning assets over funding sources	$	127,972							$	97,517							$	30,455
Net interest rate spread (3)							3.61	%							3.73	%								(0.12	)%
Net interest margin (4)							3.77	%							3.87	%								(0.10	)%
Core net interest margin (5)							3.65	%							3.77	%								(0.12	)%

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

(2) Average balances of loans are calculated net of deferred loan fees and fair value discounts, but would include non-accrual loans which have a zero yield.

(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 net interest income by average total interest earning assets.

(5) Core net interest margin is computed by dividing annualized net interest income, excluding accelerated accretion of fair value discounts earned on early loan payoffs of acquired loans and interest recovered or reversed on non-accrual loans or other significant items based on management’s judgement, by average total interest-earning assets. See the reconciliation table for core net interest margin.

(6) Annualized.

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Volume and Rate Variance Analysis of Net Interest Income

Three and Nine Months Ended September 30, 2016 and 2015

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 September 30, 2016 vs. 2015
	Increase (Decrease) Due To
	Volume			Rate			Total
Interest Income
Loans	$	2,797		$	(528	)	$	2,269
Deposits in other financial institutions		(9	)		194			185
Investment securities		440			(145	)		295
Total interest income		3,228			(479	)		2,749
Interest Expense
Interest bearing transaction accounts		4			(7	)		(3	)
Money market and savings deposits		56			41			97
Certificates of deposit		(13	)		6			(7	)
Total deposits		47			40			87
Securities sold under agreements to repurchase		3			1			4
Subordinated debentures, net		2			10			12
Total borrowings		5			11			16
Total interest expense		52			51			103
Net Interest Income	$	3,176		$	(530	)	$	2,646

	Nine Months Ended September 30, 2016 vs. 2015
	Increase (Decrease) Due To
	Volume			Rate			Total
Interest Income
Loans	$	8,178		$	(716	)	$	7,462
Deposits in other financial institutions		98			495			593
Investment securities		1,258			(547	)		711
Total interest income		9,534			(768	)		8,766
Interest Expense
Interest bearing transaction accounts		32			(35	)		(3	)
Money market and savings deposits		130			171			301
Certificates of deposit		(24	)		(16	)		(40	)
Total deposits		138			120			258
Securities sold under agreements to repurchase		15			2			17
Subordinated debentures, net		6			27			33
Total borrowings		21			29			50
Total interest expense		159			149			308
Net Interest Income	$	9,375		$	(917	)	$	8,458

Page 56 of 77

Non-GAAP Financial Measure - Reconciliation of Core Net Interest Margin to Net Interest Margin

The following table represents a reconciliation of GAAP net interest margin to core net interest margin (a non-GAAP financial measure) used by the Company. The table presents the information for the periods indicated (dollars in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Net Interest Income	$	25,048		$	22,402		$	72,775		$	64,317
Less:
Accelerated accretion of fair value adjustment on early loan payoffs and other associated payoff benefits on acquired loans		806			881			2,362			1,666
Core Net Interest Income	$	24,242		$	21,521		$	70,413		$	62,651
Net interest margin		3.72	%		3.79	%		3.77	%		3.87	%
Core net interest margin		3.60	%		3.64	%		3.65	%		3.77	%

Composition of Net Deferred Loan Fees, Costs and Fair Value Discounts

The following table reflects the composition of the net deferred loan fees, costs and fair value discounts at September 30, 2016 and December 31, 2015 (dollars in thousands):

	September 30, 2016		December 31, 2015
Accretable loan discount	$	10,882	$	14,856
Non-Accretable loan discount		424		2,061
Remaining loan discount on acquired loans		11,306		16,917
Net deferred loan fees on organic loans		5,548		4,575
Total	$	16,854	$	21,492

Three Months Ended September 30, 2016 Compared to Three Months Ended September 30, 2015

The net interest margin decreased 7 basis points to 3.72% for the three months ended September 30, 2016, compared to 3.79% for the three months ended September 30, 2015. The decrease in net interest margin is primarily due to average loans being a lower percentage of interest earning assets for the quarter ended September 30, 2016 than for the same quarter a year ago, due to strong growth in average deposits. Additionally, the existing low interest rate environment continues to contribute to the loan yield compression, as new loans have been originated at lower interest rates than those loans that have been paid off in 2015 and 2016. Loan yield compression has been mitigated as real estate loans become a higher percentage of the loan mix than commercial and industrial loans. Loan yields on real estate loans including construction loans are typically higher than the yields on commercial and industrial loans. The net interest margin for both quarters was positively impacted by the recognition of fair value discounts earned on early payoffs of acquired loans. For the quarter ended September 30, 2016, the Company recorded $629 thousand in discounts earned on early loan payoffs of acquired loans and other associated payoff benefits of $177 thousand, which had a positive impact on the net interest margin of 12 basis points. For the quarter ended September 30, 2015, the Company recorded $560 thousand in discounts earned on early loan payoffs of acquired loans and other associated payoff benefits of $321 thousand, which had a positive impact on the net interest margin of 15 basis points.

Nine Months Ended September 30, 2016 Compared to Nine Months Ended September 30, 2015

The net interest margin decreased 10 basis points to 3.77% for the nine months ended September 30, 2016, compared to 3.87% for the nine months ended September 30, 2015. The decrease in net interest margin is primarily due to average loans being a lower percentage of interest earning assets. The existing low interest rate environment continues to

Page 57 of 77

contribute to the loan yield compression, as new loans have been originated at lower interest rates than those loans that have been paid off in 2015 and 2016. For the nine months ended September 30, 2016, the Company recorded $1.9 million in discounts earned on early loan payoffs of acquired loans and other associated payoff benefits of $462 thousand, which had a positive impact on the net interest margin of 12 basis points. For the nine months ended September 30, 2015, the Company recorded $1.1 million in discounts earned on early loan payoffs of acquired loans and other associated payoff benefits of $522 thousand, which had a positive impact on the net interest margin of 11 basis points.

Provision for Loan Losses

Provision for loan losses for the three months ended September 30, 2016 was $697 thousand compared to $705 thousand for the three months ended September 30, 2015. The Company had $66 million of net organic loan growth for the quarter ended September 30, 2016, compared to $89 million for the same quarter a year ago. Net charge-offs for the three months ended September 30, 2016 were $802 thousand, compared to net recoveries of $136 thousand in 2015.

Provision for loan losses for the nine months ended September 30, 2016 was $2.4 million, compared to $2.8 million for the nine months ended September 30, 2015. The Company had $277 million of net organic loan growth for the nine months ended September 30, 2016, compared to $246 million for the nine months ended September 30, 2015. Net recoveries for the nine months ended September 30, 2016 were $307 thousand compared to net charge-offs of $476 thousand in 2015. See further discussion in Balance Sheet Analysis, Allowance for Loan Loss.

Non-Interest Income

The following table lists the major components of the Company’s non-interest income for the periods indicated (dollars in thousands):

	Three Months Ended September 30,				Increase (Decrease)						Nine Months Ended September 30,				Increase (Decrease)
	2016		2015		$			%			2016		2015		$			%
Gain on sale of securities, net	$	141		—	$	141			—	%	$	141	$	—	$	141			—	%
Gain on sale of SBA loans, net		189		640		(451	)		(70.5	)%		1,228		1,278		(50	)		(3.9	)%
Deposit account service charge income		1,210		1,159		51			4.4	%		3,621		3,453		168			4.9	%
Letters of credit income		279		187		92			49.2	%		844		506		338			66.8	%
Transaction referral income		278		—		278			100	%		308		408		(100	)		(24.5	)%
Dividend income in equity securities		222		409		(187	)		(45.7	)%		593		1,106		(513	)		(46.4	)%
BOLI income		328		333		(5	)		(1.5	)%		976		947		29			3.1	%
Other non-interest income		411		260		151			58.1	%		1,142		993		149			15.0	%
Total Non-Interest Income	$	3,058	$	2,988	$	70			2.3	%	$	8,853	$	8,691	$	162			1.9	%

Three Months Ended September 30, 2016 Compared to Three Months Ended September 30, 2015

Non-interest income increased $70 thousand or 2.3% to $3.1 million for the three months ended September 30, 2016 compared to $3.0 million for the three months ended September 30, 2015. The increase is primarily driven by a $278 thousand increase in transaction referral income, a $141 thousand of gain on sale of securities, a $92 thousand increase in letters of credit income, offset by a $451 thousand decrease in gain on sale of SBA loans. The $640 thousand gain on sale of SBA loans in the three months ended September 30, 2015 was the highest in Company history. The increase in non-interest income for the three months ended September 30, 2016 is further offset by a $187 thousand decrease in dividend income related to the Company’s investment in FHLB stock. In light of the consistent increase in the quarterly dividend rate from the FHLB in 2015, the Company began to accrue for the dividend as it was earned beginning in the third quarter of 2015. Previously the Company recorded the dividend as income in the period received; as a result, the accrual of $200 thousand for the dividend earned in the third quarter of 2015, which was received early in the fourth quarter of 2015, overlapped with the second quarter dividend payment of $200 thousand received and recorded as income early in the third quarter of 2015.

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Nine Months Ended September 30, 2016 Compared to Nine Months Ended September 30, 2015

Non-interest income increased $162 thousand or 1.9% to $8.9 million for the nine months ended September 30, 2016 compared to $8.7 million for the nine months ended September 30, 2015. This change was mainly due to a $338 thousand increase in letters of credit income, a $168 thousand increase in deposit account service charge income and a $141 increase in gain on sale of securities, offset by a $100 thousand decrease of transactional referral income and a $513 thousand decrease of dividend income related to the Company’s investment in FHLB stock. The decrease in dividend income is due to a $296 thousand special dividend received from the FHLB in the second quarter of 2015, coupled with the recognition of two quarters of dividend in the third quarter of 2015, as mentioned in the previous paragraph.

Non-Interest Expense

The following table lists the major components of the Company’s non-interest expense for the periods indicated (dollars in thousands):

	Three Months Ended September 30,				Increase (Decrease)						Nine Months Ended September 30,				Increase (Decrease)
	2016		2015		$			%			2016		2015		$			%
Salaries and employee benefits	$	9,396	$	8,934	$	462			5.2	%	$	27,745	$	26,045	$	1,700			6.5	%
Stock based compensation expense		939		810		129			15.9	%		2,664		2,130		534			25.1	%
Occupancy		1,673		1,465		208			14.2	%		4,548		4,300		248			5.8	%
Data processing		657		596		61			10.2	%		1,910		1,872		38			2.0	%
Legal and professional		1,434		412		1,022			248.1	%		2,560		1,914		646			33.8	%
FDIC deposit assessment		389		370		19			5.1	%		1,098		1,054		44			4.2	%
Merger related expenses		—		146		(146	)		(100	)%		—		498		(498	)		(100	)%
OREO loss and expenses		2		153		(151	)		(98.7	)%		85		179		(94	)		(52.5	)%
Office services expenses		413		383		30			7.8	%		1,136		1,204		(68	)		(5.6	)%
Core deposit intangible amortization		320		419		(99	)		(23.6	)%		961		1,262		(301	)		(23.9	)%
Other operating expenses		1,544		1,379		165			11.97	%		4,336		4,434		(98	)		(2.2	)%
Total Non-Interest Expense	$	16,767	$	15,067	$	1,700			11.3	%	$	47,043	$	44,892	$	2,151			4.8	%

Three Months Ended September 30, 2016 Compared to Three Months Ended September 30, 2015

Non-interest expense increased by $1.7 million or 11.3% to $16.8 million for the three months ended September 30, 2016 compared to $15.1 million for the three months ended September 30, 2015. The increase was largely related to the increases in salaries and employee benefits and legal and professional fees. The Company recorded one-time expenses of $1.2 million in the third quarter of 2016, of which $957 thousand were BSA expenses related to the Consent Order, and $203 thousand in one-time expenses associated with closing the Company’s Simi Valley administrative office. The following table shows the Company’s various non-recurring, non-interest expense related to the Consent Order and the Simi Valley office closure for the three months ended September 30, 2016:

Nonrecurring Costs Associated with BSA and Office Closure	Three Months Ended September 30, 2016
Non-Interest Expense
Salaries and employee benefits	$	106,090
Occupancy		246,673
Legal and professional		601,822
FDIC deposit assessment		15,000
Other operating expenses		190,717
Total Non-Interest Expense	$	1,160,302

Further, the increase in salaries and other benefits expense is attributable to the increase in the Company’s active full-time equivalent employees, which grew to 285 at September 30, 2016, an increase of 19 from September 30, 2015, with the majority of the increase attributable to the hiring of seven full-time equivalent employees near the end of the second quarter of 2016 and the hiring of an additional five in the third quarter of 2016. These hires were made in order to support the high level of customer service CUB provides, as well as address expanding regulatory and compliance requirements.

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There were no merger expenses in the three months ended September 30, 2016, compared to $146 thousand in the year-ago period.

Nine Months Ended September 30, 2016 Compared to Nine Months Ended September 30, 2015

Non-interest expense increased $2.1 million or 4.8% to $47.0 million for the nine months ended September 30, 2016 compared to $44.9 million for the nine months ended September 30, 2015. The increase was largely related to increases in salaries and employee benefits and legal and professional fees, offset by decreases in merger related expenses and core deposit intangible amortization. The following table shows the Company’s various non-recurring, non-interest expense related to the Consent Order and the Simi Valley office closure for the nine months ended September 30, 2016:

Nonrecurring Costs Associated with BSA and Office Closure	Nine Months Ended September 30, 2016
Non-Interest Expense
Salaries and employee benefits	$	106,090
Occupancy		246,673
Legal and professional		606,822
FDIC deposit assessment		15,000
Other operating expenses		288,485
Total Non-Interest Expense	$	1,263,070

Further, the increase in salaries and other benefits expense is attributable to the increase in the Company’s active full-time equivalent employees, which grew to 285 at September 30, 2016, an increase of 19 from September 30, 2015, with the majority of the increase attributable to the hiring of seven full-time equivalent employees near the end of the second quarter of 2016 and the hiring of an additional five in the third quarter of 2016. These hires were made in order to support the high level of customer service CUB provides, as well as address expanding regulatory and compliance requirements.

Income Taxes

The Company’s effective tax rate is impacted by BOLI income and interest income from tax exempt securities and loans which are excluded from taxable income, and beginning in 2016, deductions from excess tax benefits from the exercise or vesting of share-based awards. In the third quarter of 2016, the Company elected the early adoption of ASU 2016-09, retroactively effective as of January 1, 2016. As a result of this new standard, excess tax benefits from exercise or vesting of share-based awards are now included as a reduction in provision for income tax expense in the period in which the exercise or vesting occurs. The impact of such excess tax benefits reduced the Company’s effective tax rate from 39.5% to 38.1% for the three months ended September 30, 2016, and from 39.8% to 37.0% for the nine months ended September 30, 2016. For the three months and the nine months ended September 30, 2016, the number of options exercised were 15,000 and 411,964, respectively. The tax rate will have more volatility, depending on the volume of vestings and exercises as well as the associated excess tax benefits generated. For additional information and the impact of the adoption, see Note 2, “Recent Accounting Pronouncements,” in Item 1. “Financial Statements.” In addition, the Company has invested in Qualified Affordable Housing Projects “LIHTC” that generate tax credits and benefits for the Company.

The effective tax rate for the three months ended September 30, 2016 was 38.1% compared to 34.9% for the three months ended September 30, 2015. For the three months ended September 30, 2015, the Company recognized a combined one-time benefit of $465 thousand primarily relating to the filing of the final 1^st Enterprise tax returns and the CU Bancorp tax return for the year ended December 31, 2014. The effective tax rate for the nine months ended September 30, 2016 was 37.0% compared to 37.8% for the nine months ended September 30, 2015. The Company operates in the Federal and California jurisdictions and the blended statutory tax rate for Federal and California income taxes is 42.05%.

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FINANCIAL CONDITION

Balance Sheet Analysis

Total assets increased $259 million during the nine months ended September 30, 2016, to $2.9 billion with an increase of $70 million in cash and cash equivalents, an increase of $57 million in investment securities, and an increase of $142 million in loans. The increase in loans from the end of the prior year was due to organic loan growth. Net organic loan growth during the period was $277 million, partially offset by $135 million of pay downs in the acquired loan portfolios from the COSB, PC Bancorp acquisitions and 1^st Enterprise merger.

Funding the asset growth for the Company for the first nine months of 2016 was the growth in deposits of $219 million and net income of $20 million. Further, the deposit growth of $219 million is the result of a $111 million increase in non-interest bearing deposits and a $108 million increase in money market and savings deposits. Non-interest bearing deposits represented 56% of total deposits at both September 30, 2016, and December 31, 2015.

Lending

The following table presents the composition of the loan portfolio at the dates indicated (dollars in thousands):

	September 30, 2016					December 31, 2015
	Amount		% of Total			Amount		% of Total
Commercial and Industrial Loans:	$	499,439		25	%	$	537,368		29	%
Loans Secured by Real Estate:
Owner-Occupied Nonresidential Properties		430,218		22	%		407,979		23	%
Other Nonresidential Properties		610,267		31	%		533,168		29	%
Construction, Land Development and Other Land		172,441		9	%		125,832		7	%
1-4 Family Residential Properties		122,955		6	%		114,525		6	%
Multifamily Residential Properties		100,003		5	%		71,179		4	%
Total Loans Secured by Real Estate		1,435,884		73	%		1,252,683		69	%
Other Loans:		39,618		2	%		43,112		2	%
Total Loans	$	1,974,941		100	%	$	1,833,163		100	%

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

	September 30, 2016					December 31, 2015
	Amount		% of Total			Amount		% of Total
Real Estate	$	1,008,655		51	%	$	857,021		47	%
Manufacturing		172,659		9	%		174,773		10	%
Construction		161,393		8	%		161,618		9	%
Wholesale		115,546		6	%		134,093		7	%
Hotel/Lodging		119,200		6	%		105,741		6	%
Finance		95,212		5	%		87,734		5	%
Professional Services		56,646		3	%		60,952		3	%
Healthcare		50,091		3	%		47,293		3	%
Other Services		45,621		2	%		45,002		3	%
Retail		29,134		2	%		38,928		2	%
Restaurant/Food Service		24,109		1	%		26,226		1	%
Administrative Services		19,385		1	%		23,736		1	%
Transportation		17,739		1	%		22,237		1	%
Information		29,094		1	%		20,171		1	%
Education		8,671		—	%		9,244		1	%
Management		7,120		—	%		8,137		—	%
Entertainment		9,805		1	%		6,188		—	%
Other		4,861		—	%		4,069		—	%
Total Loans	$	1,974,941		100	%	$	1,833,163		100	%

The Company’s loan origination and lending activities continue to be focused primarily on direct contact with its borrowers through the Company’s relationship managers and/or executive officers. We continue to establish new relationships and expand our current business. Total loans were $2.0 billion at September 30, 2016, an increase of $142 million or 7.7%, from $1.8 billion at December 31, 2015. The Company had approximately $277 million of net organic loan growth, which was partially offset by approximately $135 million in loan pay downs from the acquired loan portfolios. The increase in total loans from the end of the prior year included a $22 million increase in the owner-occupied non-residential properties portfolio, a $77 million increase in the other nonresidential real estate properties portfolio, a $47 million increase in the construction, land development and other land portfolio, and a $29 million increase in the multifamily residential properties portfolio. These increases were offset by a decrease of $38 million in commercial and industrial loans. The yields on new loans originated during the first three quarters of 2016 have averaged 4.13%.

While commercial and industrial loans declined by $38 million from December 31, 2015, the Company’s commercial line of credit commitments have remained stable at $887 million at both September 30, 2016 and December 31, 2015, and the Company’s commercial and industrial line of credit utilization was 45% at September 30, 2016, and 46% as of December 31, 2015. The decrease in commercial and industrial loans was due to various reasons including the sale of two of our customer’s businesses during the second quarter of 2016, and the loss of two relationships in the third quarter, one which was risk rated substandard, and the other where a competitor offered an aggressive structure that we chose not to match. Due to the dynamic nature of commercial and industrial lending, actual credit utilization may experience ebbs and flows.

Commercial and industrial loans and owner-occupied real estate loans combined were $930 million or 47% of total loans at September 30, 2016, compared to $945 million or 52% at December 31, 2015. Of the total commercial and industrial loans, 19% was unsecured at both September 30, 2016 and December 31, 2015.

Other non-residential loans increased by $77 million from the end of the prior year, which included one new hotel loan near Disneyland of $15 million originated during the third quarter of 2016. The Company originates other non-residential loans with well-structured terms and guarantees, primarily collateralized by commercial buildings. Multifamily residential properties increased by $29 million, primarily related to three new loans totaling $18 million in Los Angeles County and one loan of $8 million in San Bernardino County.

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Included in loan growth from the end of the prior year was a $47 million increase in the construction lending portfolio, which primarily consists of 1-4 single family and multifamily construction projects in Los Angeles County undertaken by customers that have long-term relationships with the Company.

The Company had 55 commercial banking relationship managers and 9 commercial real estate relationship managers at September 30, 2016. This compares to 53 commercial banking relationship managers and 9 commercial real estate relationship managers at December 31, 2015.

The Company provides commercial loans, including working capital and equipment financing, real estate loans, including construction and consumer loans, generally to business principals, entrepreneurs and professionals. The Company currently does not offer residential mortgages to consumers other than home equity lines of credit. In addition, we have not made any loans to finance leveraged buyouts. The Company’s real estate construction loans are primarily short-term loans made to finance the construction of 1-4 single family and multifamily residential properties. On occasion, the Company originates loans to finance the construction of single family residences to established developers and owner-occupiers. The Company’s construction lending is to known relationships, doing projects the builder/developer has experience with, and the majority are with recourse and are rarely speculative in nature. 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 and guarantors, where applicable. The Company’s senior management is actively involved in its lending activities, collateral valuation and review process. The Company obtains independent third party appraisals of loans secured by real property as required by applicable federal law and regulations. There is also a Board of Directors Loan Committee (“BODLC”) comprised of senior management and outside directors that monitors the loan portfolio on at least a quarterly basis.

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

We do not have any concentrations in our loan portfolio except for the level of loans that are secured by real estate and the level of loans to the real estate industry as presented in the tables above. Although the Bank’s real estate concentration this quarter ending September 30, 2016 exceeds 300% of total risk based capital, the Company has maintained its relationship based approach to lending which has resulted in nominal charge-off experience in the real estate portfolio since the Company’s inception. Management plans to continue originating the same quality real estate loans that are currently included in its loan portfolio.

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Allowance for Loan Loss

The Allowance increased by $105 thousand, to $18 million during the quarter ended September 30, 2016, due to a provision for loan losses of $697 thousand with net charge-offs of $802 thousand. The Allowance as a percentage of total loans was 0.93% at September 30, 2016 and 0.86% at December 31, 2015. The increase in the allowance ratio is primarily due to net organic loan growth. The Allowance as a percentage of loans (excluding loan balances and the related Allowance on loans acquired through acquisition) was 1.20% and 1.25%, respectively, at September 30, 2016 and December 31, 2015. The decrease in the allowance ratio related to organic loans was directly attributable to the strong credit performance of the loan portfolio in 2016, which reflects the Company’s continuing commitment to prudent underwriting and credit management.

The Company’s management considered the following factors in evaluating the allowance for loan loss at September 30, 2016:

• During the nine months ended September 30, 2016 there were five loan charge-offs totaling $827 thousand and loan recoveries of $1.1 million. Of the $1.1 million recoveries, $800 thousand was related to an acquired construction loan.

• There were eleven non-accrual loans totaling $1.2 million with no specific allowance required at September 30, 2016

• The overall growth and composition of the loan portfolio

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

• Concentrations within the loan portfolio

• The remaining fair value adjustments on loans acquired through acquisition

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 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 Company analyzes historical net charge-offs in various loan portfolio segments when evaluating the allowance. For loan segments without a meaningful historical loss experience, the analysis is adjusted to consider regulatory peer group loss experience in those loan segments. The loss analysis is then adjusted for qualitative factors that may have an impact on loss experience in the particular loan segments.

The Allowance and the reserve for unfunded loan commitments are significant estimates that can and do change based on management’s process in analyzing the loan portfolio and on management’s assumptions about specific borrowers and applicable economic and environmental conditions, among other factors. In considering all of the above factors, management believes that the Allowance at September 30, 2016 is adequate. Although the Company maintains its Allowance at a level which it considers adequate to provide for probable loan 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 as of the dates and for the periods indicated (dollars in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Allowance for loan loss at beginning of period	$	18,476		$	14,124		$	15,682		$	12,610
Provision for loan losses		697			705			2,382			2,831
Net (charge-offs) recoveries:
Charge-offs		(807	)		(42	)		(827	)		(933	)
Recoveries		5			178			1,134			457
Net (charge-offs) recoveries		(802	)		136			307			(476	)
Allowance for loan loss at end of period	$	18,371		$	14,965		$	18,371		$	14,965
Net (charge-offs) recoveries to average loans		(0.04	)%		0.01	%		0.02	%		(0.03	)%

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The following is a summary of our asset quality data and key ratios at the dates indicated (dollars in thousands):

	September 30, 2016			December 31, 2015
Loans originated by the Bank on non-accrual	$	—		$	89
Loans acquired through acquisition that are on non-accrual		1,223			1,962
Total non-accrual loans		1,223			2,051
Other Real Estate Owned		—			325
Total non-performing assets	$	1,223		$	2,376
Net charge-offs (recoveries) year to date	$	(307	)	$	2,009
Non-accrual loans to total loans		0.06	%		0.11	%
Total non-performing assets to total assets		0.04	%		0.09	%
Allowance for loan losses to total loans		0.93	%		0.86	%
Allowance for loan losses to total loans accounted at historical cost, which excludes loans acquired by acquisition		1.20	%		1.25	%
Allowance for loan losses to non-accrual loans accounted at historical cost, which excludes non-accrual loans acquired by acquisition and related allowance		—			17583	%
Allowance for loan losses to total non-accrual loans		1503	%		764	%

Deposits

The following table presents the balance of each major category of deposits at the dates indicated (dollars in thousands):

	September 30, 2016					December 31, 2015
	Amount		% of Total			Amount		% of Total
Non-interest bearing demand deposits	$	1,399,320		56	%	$	1,288,085		56	%
Interest bearing transaction accounts		284,154		11	%		261,123		11	%
Money market and savings deposits		786,882		32	%		679,081		30	%
Certificates of deposit		35,033		1	%		58,502		3	%
Total deposits	$	2,505,389		100	%	$	2,286,791		100	%

Total deposits increased $219 million to $2.5 billion at September 30, 2016, primarily due to a $111 million increase in non-interest bearing demand deposits, a $108 million increase in money market and savings deposits, a $23 million increase in interest bearing transaction accounts, offset by a decrease of $23 million in certificates of deposit. The strong growth in deposits during this period came primarily from existing relationships. Non-interest bearing deposits represented 56% of total deposits at September 30, 2016 and December 31, 2015.

Management believes one of the strengths of the Company continues to be its core deposit franchise with a cost of deposits of 0.11% for the three and nine months ended September 30, 2016.

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LIQUIDITY

The following table provides a summary of the Bank’s primary and secondary liquidity levels at the dates indicated (dollars in thousands):

	September 30, 2016			December 31, 2015
	Amount			Amount
Primary Liquidity-On Balance Sheet:
Cash and due from banks	$	47,701		$	50,960
Interest earning deposits in other financial institutions		244,205			171,103
Investment securities available-for-sale		375,094			315,785
Less: pledged cash and due from banks		—			—
Less: pledged investment securities		(194,485	)		(197,251	)
Total primary liquidity	$	472,515		$	340,597
Ratio of primary liquidity to total deposits		18.9	%		14.9	%
Additional Liquidity Not Included In Primary Liquidity:
Certificates of deposit in other financial institutions	$	51,490		$	56,860
Less: Certificate of deposits pledged		(2,731	)		(2,731	)
Total additional liquidity	$	48,759		$	54,129
Secondary Liquidity-Off-Balance Sheet:
Available Borrowing Capacity:
Total secured borrowing capacity with FHLB	$	694,084		$	544,132
Fed Funds borrowing lines		72,000			72,000
Secured credit line with the FRBSF		7,802			18,708
Total secondary liquidity	$	773,886		$	634,840

As of September 30, 2016, the Company’s primary sources of liquidity consisted of the balances reflected in the table above. The Company’s primary overnight liquidity consisted of cash and due from banks and interest earning deposits at financial institutions. The amount of funds maintained directly with the Federal Reserve included in interest earning deposits in other financial institutions was $172 million and $102 million, at September 30, 2016 and December 31, 2015, respectively. The next source of liquidity is the money market accounts at other banks. Furthermore, the Company has collateralized borrowings and unsecured borrowing facilities. In addition, the Company has $49 million in unpledged certificates of deposits in other financial institutions where the average maturity is approximately 6 months that could be utilized over time to supplement the liquidity needs of the Company.

The Company’s long term source of funding has come from the liability side of the balance sheet and has historically been through the growth in non-interest bearing and interest bearing core deposits from new and existing customers. Additional sources of funds from the Company’s asset side of the balance sheet include 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 in the form of Fed Funds Borrowing Lines of $72 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 used, consecutively and in total during a month, $5 million of these credit facilities require the pledging of investment securities.

The Company has established a secured credit facility with the FHLB of San Francisco which allows the Bank to borrow up to 25% of the Bank’s total assets, which equates to a credit line of approximately $694 million at September 30, 2016. The Company currently has no outstanding borrowings with the FHLB. As of September 30, 2016, the Company had $953 million of loan collateral pledged with the FHLB. This level of loan collateral would provide the Company with $633 million in borrowing capacity. The Company also had $17 million in securities serving as collateral for an additional $16 million in borrowing capacity. Any amount of borrowings in excess of the $649 million, up to the Company’s borrowing capacity of $694 million, would require the Company to pledge additional collateral. In addition, the Company must

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maintain a certain investment in the common stock of the FHLB. The Company’s investment in the common stock of the FHLB is $9 million at September 30, 2016. This level of capital would allow the Company to borrow up to $340 million of the $649 million. Any advances from the FHLB in excess of the $340 million would require additional purchases of FHLB common stock.

The Company maintains a secured credit facility with the Federal Reserve Bank of San Francisco (“FRBSF”) which is collateralized by investment securities pledged with the FRBSF. At September 30, 2016, the Company’s available borrowing capacity was $8 million.

The Company maintains investments in short term certificates of deposit with other financial institutions, with an average remaining maturity of approximately 6 months, with various balances maturing monthly. The Company had balances of $51 million and $57 million at September 30, 2016 and December 31, 2015, respectively. At September 30, 2016, $2.7 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.

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 covenant violations as established in the loan agreement. 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 $920 million and $806 million at September 30, 2016 and December 31, 2015, respectively.

The holding company liquidity on a stand-alone basis was $8.7 million and $6.8 million, in cash on deposit at the Bank, at September 30, 2016 and December 31, 2015, respectively. Management believes this amount of cash is currently sufficient to fund the holding company’s cash flow needs over at least the next twelve to twenty-four months.

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DIVIDENDS

To date, the Company has not paid any cash dividends on its common stock. 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 the shareholder made during such period). In addition, the Bank may not pay dividends that would result in its capital being reduced below the minimum requirements for capital adequacy purposes.

The Company completed the merger with 1st Enterprise on November 30, 2014. As part of the Merger Agreement, 16,400 shares of preferred stock issued by 1st Enterprise as part of the Small Business Lending Fund (SBLF) program of the United States Department of the Treasury was converted into 16,400 CU Bancorp preferred shares with substantially identical terms. CU Bancorp Preferred Stock has a liquidation preference amount of $1 thousand per share, designated as the Company’s Non-Cumulative Perpetual Preferred Stock, Series A. The U.S. Department of the Treasury is the sole holder of all outstanding shares of CU Bancorp Preferred Stock.

Dividends on the Company’s Series A Preferred Stock are payable quarterly in arrears if authorized and declared by the Company’s board of directors out of legally available funds, on a non-cumulative basis, on the $1 thousand per share liquidation preference amount. Dividends are payable on January 1, April 1, July 1 and October 1 of each year. The current coupon dividend rate was adjusted to 9% on March 1, 2016 through perpetuity. However, the dividend yield through November 30, 2018 approximates 7% as a result of business combination accounting. The Company may from time to time evaluate if a partial or full payment to redeem the Preferred Stock is appropriate in capital management. Dividends on the Series A Preferred Stock are non-cumulative. There is no sinking fund with respect to dividends on the Series A Preferred Stock. So long as the Company’s Series A Preferred Stock remains outstanding, the Company may declare and pay dividends on the common stock only if full dividends on all outstanding shares of Series A Preferred Stock for the most recently completed dividend period have been or are contemporaneously declared and paid.

As of September 30, 2016, both CU Bancorp “the holding company” and the Bank had positive retained earnings and positive net income that would allow either of them to declare and pay a dividend as of September 30, 2016. However, neither the holding company nor the Bank has plans to declare and pay a cash dividend on the common stock at the current time.

The Company has a program to repurchase a portion of an employee’s outstanding restricted stock upon the vesting of this restricted stock, but only in amounts necessary to cover the employee tax withholding obligations at the option of the restricted stockholder (employee). Beginning in July 2016, withheld taxes may be higher than the minimum tax rate as a result of the Company’s early adoption of ASU 2016-09. 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 at the date of vesting. These transactions under the State of California Corporations Code are defined as distributions to shareholders.

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REGULATORY MATTERS

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 FRB and the FDIC. These guidelines relate primarily to the Tier 1 leverage ratio, the Common Equity Tier 1 Ratio (“CET1”), the Tier 1 risk-based capital ratio, and the Total risk-based capital ratio.

On October 26, 2015, the Company filed a Form S-3 registration statement for offerings up to $100 million of certain types of securities. If drawn on, proceeds from the offering could be used for general corporate purposes. The registration statement represents capital resources available to the Company as the registration statement is deemed to be effective by the Securities Exchange Commission (SEC) and will be available for three years.

At September 30, 2016, the respective capital ratios of the Company and the Bank exceeded the minimum percentage requirements to be deemed “well-capitalized” for Prompt Corrective Action (“PCA”) purpose and the Basel III minimum capital ratios with buffer (effective January 1, 2016) under the current capital guidelines. The following tables present the regulatory capital ratios requirements and the actual capitalization levels of the Company and the Bank as of the dates indicated (dollars in thousands):

CU Bancorp

	September 30, 2016			December 31, 2015			Well Capitalized			Basel III Minimum with Buffer
	Amount			Amount			(greater than or equal to)
Regulatory Capital Ratios:
Tier 1 leverage ratio		9.83	%		9.67	%		5.0	%		NA
Common Equity Tier 1 ratio		9.77	%		9.61	%		6.5	%		5.125	%
Total Tier 1 risk-based capital ratio		10.90	%		10.85	%		8.0	%		6.625	%
Total risk-based capital ratio		11.66	%		11.54	%		10.0	%		8.625	%
Regulatory Capital Data:
Common Equity Tier 1	$	248,219		$	223,977
Total Tier 1 capital		276,945			252,681
Total risk-based capital		296,094			268,971
Average total assets*		2,818,315			2,611,774
Risk-weighted assets		2,540,431			2,329,770

* Represents the average total assets for calculation of the leverage ratio

California United Bank

	September 30, 2016			December 31, 2015			Well Capitalized			Basel III Minimum with Buffer
	Amount			Amount			(greater than or equal to)
Regulatory Capital Ratios:
Tier 1 leverage ratio		9.46	%		9.34	%		5.0	%		NA
Common Equity Tier 1 ratio		10.50	%		10.47	%		6.5	%		5.125	%
Total Tier 1 risk-based capital ratio		10.50	%		10.47	%		8.0	%		6.625	%
Total risk-based capital ratio		11.25	%		11.17	%		10.0	%		8.625	%
Regulatory Capital Data:
Common Equity Tier 1	$	266,751		$	234,989
Tier 1 capital		266,751			243,989
Total risk-based capital		285,900			260,279
Average total assets*		2,818,604			2,612,206
Risk-weighted assets		2,541,033			2,329,798

* Represents the average total assets for calculation of the leverage ratio

Page 69 of 77

In July 2013, the federal bank regulatory agencies adopted final regulations which revised their risk-based and leverage capital requirements for banking organizations to meet requirements of Dodd-Frank and to implement international agreements reached by the Basel Committee on Banking Supervision intended to improve both the quality and quantity of banking organizations’ capital (“Basel III”). Dodd-Frank required the Federal Reserve to apply consolidated capital requirements to depository institution holding companies that are no less stringent than those currently applied to depository institutions.

The following are among the requirements that were phased-in beginning January 1, 2015 under the new capital rules:

• an increase in the minimum Tier 1 capital ratio from 4.00% to 6.00% of risk-weighted assets;

• a new category and a required 4.50% of risk-weighted assets ratio is established for CET1 as a subset of Tier 1 capital limited to common equity;

• a minimum non-risk-based leverage ratio is set at 4.00%;

• changes in the permitted composition of Tier 1 capital to exclude trust preferred securities (however, trust preferred securities issued prior to May 19, 2010 by a bank holding company with less than $15 billion in assets, such as CU Bancorp, continues to be included in Tier 1 capital, subject to a limit of 25% of Tier 1 capital elements; see further discussion below), mortgage servicing rights and certain deferred tax assets and include unrealized gains and losses on available-for-sale debt and equity securities;

• the risk-weights of certain assets for purposes of calculating the risk-based capital ratios are changed for high volatility commercial real estate acquisition, development and construction loans, certain past due non-residential mortgage loans and certain mortgage-backed and other securities exposures;

• an additional “countercyclical capital buffer” is required for larger and more complex institutions; and

• a new additional capital conservation buffer of 2.5% of risk weighted assets over the period from 2016 to 2019 must be met to avoid limitations on the ability of the Company and the Bank to pay dividends, repurchase shares or pay discretionary bonuses.

Including the capital conservation buffer of 2.5%, the new final capital rule will result in the following minimum ratios: (i) a Tier 1 capital ratio of 8.5%, (ii) a common equity Tier 1 capital ratio of 7.0%, and (iii) a total capital ratio of 10.5%. The new capital conservation buffer requirement phase-in began in January 2016 at 0.625% of risk-weighted assets and will increase each year by 0.625% until fully implemented in January 2019. While the final capital rule sets higher regulatory capital standards for the Company and the Bank, bank regulators may also continue their past policies of expecting banks to maintain additional capital beyond the new minimum requirements. The implementation of the final capital rules or more stringent requirements to maintain higher levels of capital or to maintain higher levels of liquid assets could adversely impact the Company’s net income and return on equity, restrict the ability to pay dividends or executive bonuses and require the raising of additional capital.

Under Dodd Frank, trust preferred securities are excluded from Tier 1 capital, unless such securities were issued prior to May 19, 2010 by a bank holding company with less than $15 billion in assets. CU Bancorp assumed approximately $12.4 million of junior subordinated debt securities issued to various business trust subsidiaries of Premier Commercial Bancorp and funded through the issuance of approximately $12.0 million of floating rate capital trust preferred securities. These junior subordinated debt securities were issued prior to May 19, 2010. Because CU Bancorp has less than $15 billion in assets, the trust preferred securities that CU Bancorp assumed from Premier Commercial Bancorp continues to be included in Tier 1 capital, subject to a limit of 25% of Tier 1 capital elements.

The Company also currently includes in its Tier 1 capital an amount of Non-Cumulative Perpetual Preferred Stock, Series A issued under the SBLF program. The U.S. Department of the Treasury is the sole holder of all outstanding shares of CU Bancorp Preferred Stock. Under the Final Rule, the CU Bancorp Preferred Stock continues to be included in Tier 1 Risk-Based Capital because non-cumulative perpetual preferred stock remained classified as Tier 1 capital following the enactment of Dodd Frank.

Dodd-Frank Wall Street Reform and Consumer Protection Act

For a discussion regarding the implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act, see the Company’s December 31, 2015 Form 10K, Part I, Item 1 – Business – Supervision and Regulation – Legislation and Regulatory Developments – Dodd Frank Wall Street Reform and Consumer Protection Act.

Page 70 of 77

Consent Order

On September 23, 2016, California United Bank (the “Bank”), the wholly owned subsidiary of CU Bancorp (the “Company”) entered into a Stipulation to the Issuance of a Consent Order with its bank regulatory agencies, the Federal Deposit Insurance Corporation (“FDIC”) and the California Department of Business Oversight (“CDBO”), consenting to the issuance of a consent order (the “Consent Order”) relating to weaknesses in the Bank’s Bank Secrecy Act and Anti-Money Laundering (collectively “BSA”) compliance program. In consenting to the issuance of the Consent Order, the Bank did not admit or deny any charges of unsafe or unsound banking practices related to the BSA compliance program.

Under the terms of the Consent Order the Bank and/or its Board of Directors is required to take certain actions which include, but are not limited to: a) Increasing Board supervision of the BSA compliance program; b) Notification to the regulatory agencies prior to appointment of a new BSA Officer or the executive to whom the BSA Officer reports; c) Formulation of a written action plan describing the actions to be taken to correct BSA/AML related deficiencies, a revised, written BSA/AML compliance program and review and enhancement of the Bank’s BSA risk assessment; d) Performance of a review of BSA staffing needs; e) Enhancement of internal controls to ensure full compliance with the BSA; f) Establishment of an independent testing program for compliance with the BSA rules and regulations; and g) Obtaining regulatory agency consent for expansionary activities such as new branches, offices, delivery channels, products and services.

The Consent Order is expected to result in additional BSA compliance expenses for the Bank and the Company. It may also have the effect of limiting or delaying the Bank’s and the Company’s ability to obtain regulatory approval for certain expansionary activities, to the extent desired by the Company. The Consent Order does not otherwise impact the Bank’s business activities outside of BSA. The Consent Order does not require the Bank to pay any civil money penalty or require additional capital. The Consent Order will remain in effect and be enforceable until it is modified, terminated, suspended or set aside by the FDIC and the CBDO. Management and the Board have expressed their full intention to comply with all parts of the Consent Order at the earliest possible date.

Number of Employees

The number of active full-time equivalent employees increased from 266 at December 31, 2015 to 285 at September 30, 2016.

Page 71 of 77

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 interest income from all interest earning assets and interest expense paid on all interest bearing liabilities reflected on the Company’s balance sheet. This sensitivity analysis is compared to the Company’s 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 400 basis point upward (maximum) and 300 basis point downward (maximum) shift in interest rates, in 100 basis point increments.

At September 30, 2016, the Company had sixteen pay-fixed, receive-variable interest rate contracts that were designed to convert fixed rate loans into variable rate loans. Fourteen of these swap contacts are designated as fair value hedges. For additional information on these interest rate contracts, see Note 9 – Derivative Financial Instruments located in Part I, Item 1.—Notes 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 September 30, 2016 (dollars in thousands):

Simulated Rate Changes	Estimated Net Interest Income Sensitivity
+ 400 basis points		32.1	%	$	28,769
+ 100 basis points		7.9	%	$	7,115
- 200 basis points (1)		(7.9	)%	$	(7,042	)

(1) The simulated rate change under the -200 basis points reflected above actually reflects only a maximum negative 50 basis points or less decline in actual rates based on the current targeted Fed Funds target rate by the government of 0.25% to 0.50%. The -200 simulation model reflects repricing of liabilities of less than 0.25% due to the Company paying significantly less than 25 basis points on its deposit accounts, and higher downward repricing of the Company’s interest earning assets in the -200 simulation model.

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. The effective duration of the Company’s investment securities portfolio is approximately 1.6 years at September 30, 2016, compared to 2.1 years at December 31, 2015. Management considers the current effective duration to be relatively low and future purchases may increase this measurement if doing so will provide increased earnings while keeping the duration near 2. 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 73% of the loan portfolio. Of the total variable rate loans, 53% are tied to the Prime index with $589 million subject to repricing within 30 days of a 25 basis point increase in Prime rate. However, the Company has floors on some of its loans. At September 30, 2016, 40% 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 remaining 47% of the variable rate loans are tied to other indexes with longer repricing frequencies such as the Treasury index and the LIBOR index. The increase in the LIBOR rate during 2016 has not had an effect on our loan yields as only 13% of our variable rate loans are tied to the LIBOR index.

Page 72 of 77

An additional tool used less frequently 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.

The Company’s static GAP as of September 30, 2016, is not materially different from that reported at December 31, 2015 and is thus not included in this 10-Q. See the Company’s Static Gap reports under “Item7A-Quantitative and Qualitative Disclosures about Market Risk” in the Company’s 2015 Annual Report on Form 10-K.

Page 73 of 77

ITEM 4. Controls and Procedures

a) Evaluation of disclosure controls and procedures

We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of our fiscal year. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective in ensuring that information required to be disclosed by us in reports that we file or submit under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer to allow timely decisions regarding required disclosure.

b) Changes in internal controls over financial reporting

There have been no changes in our internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) identified during the fiscal quarter that ended September 30, 2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Page 74 of 77

PART II – OTHER INFORMATION

ITEM 1. Legal Proceedings

From time to time the Company is involved in certain legal actions arising from normal business activities. The Company believes the ultimate resolution of all pending legal actions will not have a material effect on the financial statements of the Company.

ITEM 1A. Risk Factors

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the risk factors discussed under “Part I. Item 1A. Risk Factors” included in our 2015 Annual Report on Form 10-K for the year ended December 31, 2015. These risk factors could materially and adversely affect our business, financial condition, liquidity, results of operations and capital position, and could cause our actual results to differ materially from our historical results or the results contemplated by the forward-looking statements contained in this Quarterly Report on Form 10-Q. Additional Risk Factors have been set out below in this Quarterly Report on Form 10-Q relative to the Consent Order between the Bank and the FDIC and CDBO disclosed in the Company’s 8-K filing on September 26, 2016.

The Company and the Bank are operating under enhanced regulatory supervision that could materially and adversely affect our business.

On September 23, 2016, California United Bank (the “Bank”), the wholly owned subsidiary of the Company entered into a Stipulation to the Issuance of a Consent Order with its bank regulatory agencies, the Federal Deposit Insurance Corporation (“FDIC”) and the California Department of Business Oversight (“CDBO”), consenting to the issuance of a consent order (the “Consent Order”) relating to weaknesses in the Bank’s Bank Secrecy Act and Anti-Money Laundering (collectively “BSA”) compliance program.

Under the terms of the Consent Order the Bank and/or its Board of Directors is required to take certain actions which include, but are not limited to: a) Increasing Board supervision of the BSA compliance program; b) Notification to the regulatory agencies prior to appointment of a new BSA Officer or the executive to whom the BSA Officer reports; c) Formulation of a written action plan describing the actions to be taken to correct BSA/AML related deficiencies, a revised, written BSA/AML compliance program and review and enhancement of the Bank’s BSA risk assessment; d) Performance of a review of BSA staffing needs; e) Enhancement of internal controls to ensure full compliance with the BSA; f) Establishment of an independent testing program for compliance with the BSA rules and regulations; and g) Obtaining regulatory agency consent for expansionary activities such as new branches, offices, delivery channels, products and services.

The Consent Order is expected to result in additional BSA compliance expenses for the Bank and the Company. It may also have the effect of limiting or delaying the Bank’s and the Company’s ability to obtain regulatory approval for certain expansionary activities, to the extent desired by the Company.

Our failure to comply with the Consent Order may result in additional regulatory action, including civil money penalties against the Bank and its officers and directors or enforcement of the Consent Order through court proceedings, which could have a material and adverse effect on our business, results of operations, financial condition, cash flows and stock price.

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.

Page 75 of 77

ITEM 5. Other Information

(a) None.

(b) None.

ITEM 6. Exhibits

(a) Index to Exhibits

Exhibit Number	Description
3.2⌂	Amended and Restated Bylaws of California United Bank
31.1⌂	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2⌂	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1⌂	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS⌂	XBRL Instance Document
101.SCH⌂	XBRL Taxonomy Extension Schema Document
101.CAL⌂	XBRL Taxonomy Calculation Linkbase Document
101.LAB⌂	XBRL Taxonomy Label Linkbase Document
101 DEF⌂	XBRL Taxonomy Extension Definition Linkbase Document
101.PRE⌂	XBRL Taxonomy Presentation Linkbase Document

⌂ Attached hereto

Page 76 of 77

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: November 8, 2016	/s/ DAVID I. RAINER
	David I. Rainer
	Chief Executive Officer
Date: November 8, 2016	/s/ KAREN A. SCHOENBAUM
	Karen A. Schoenbaum
	Chief Financial Officer

Page 77 of 77

EX-3.2

Exhibit 3.2

AMENDED AND RESTATED BYLAWS

OF

CALIFORNIA UNITED BANK

AMENDED AND RESTATED BYLAWS OF

CALIFORNIA UNITED BANK

TABLE OF CONTENTS

		Page
ARTICLE I	CORPORATE OFFICES		1
1.1	PRINCIPAL OFFICE		1
1.2	OTHER OFFICES		1
ARTICLE II	MEETINGS OF SHAREHOLDERS		1
2.1	PLACE OF MEETINGS		1
2.2	ANNUAL MEETING		1
2.3	SPECIAL MEETINGS		1
2.4	NOTICE OF SHAREHOLDERS’ MEETINGS		2
2.5	MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE		2
2.6	QUORUM		3
2.7	ADJOURNED MEETING; NOTICE		3
2.8	VOTING		4
2.9	VALIDATION OF MEETINGS; WAIVER OF NOTICE; CONSENT		4
2.10	SHAREHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING		5
2.11	RECORD DATE FOR SHAREHOLDER NOTICE; VOTING; GIVING CONSENTS		5
2.12	PROXIES		6
2.13	INSPECTORS OF ELECTION		7
2.14	NOMINATION OF DIRECTORS		7
ARTICLE III	DIRECTORS		7
3.1	POWERS		7
3.2	NUMBER OF DIRECTORS		7
3.3	ELECTION AND TERM OF OFFICE OF DIRECTORS		8
3.4	REMOVAL		8
3.5	RESIGNATION AND VACANCIES		8
3.6	PLACE OF MEETINGS; MEETINGS BY TELEPHONE		9
3.7	REGULAR MEETINGS		9
3.8	SPECIAL MEETINGS; NOTICE		9
3.9	QUORUM		10
3.10	WAIVER OF NOTICE		10
3.11	ADJOURNMENT		10
3.12	NOTICE OF ADJOURNMENT		11
3.13	BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING		11

i

3.14	FEES AND COMPENSATION OF DIRECTORS	11
ARTICLE IV	COMMITTEES	11
4.1	COMMITTEES OF DIRECTORS	11
4.2	REQUIRED COMMITTEES	12
4.3	MEETINGS AND ACTIONS OF COMMITTEES	13
ARTICLE V	OFFICERS	13
5.1	OFFICERS	13
5.2	APPOINTMENT OF OFFICERS	13
5.3	SUBORDINATE OFFICERS	13
5.4	REMOVAL AND RESIGNATION OF OFFICERS	13
5.5	VACANCIES IN OFFICES	14
5.6	CHAIRMAN OF THE BOARD	14
5.7	VICE CHAIRMAN OF THE BOARD	14
5.8	CHIEF EXECUTIVE OFFICER	14
5.9	PRESIDENT	15
5.10	EXECUTIVE VICE PRESIDENTS	15
5.11	SECRETARY	15
5.12	CHIEF FINANCIAL OFFICER	15
5.13	CHIEF CREDIT OFFICER	16
ARTICLE VI	INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES, AND OTHER AGENTS	16
6.1	INDEMNIFICATION OF DIRECTORS	16
6.2	INDEMNIFICATION OF OTHERS	17
6.3	PAYMENT OF EXPENSES IN ADVANCE	18
6.4	INDEMNITY NOT EXCLUSIVE	18
6.5	INSURANCE INDEMNIFICATION	19
6.6	CONFLICTS	19
6.7	RIGHT TO BRING SUIT	19
6.8	INDEMNITY AGREEMENTS	20
6.9	AMENDMENT, REPEAL OR MODIFICATION	20
6.10	FEDERAL LAW	20
ARTICLE VII	RECORDS AND REPORTS	20
7.1	MANAGEMENT AND INSPECTION OF SHARE REGISTER	20
7.2	MAINTENANCE AND INSPECTION OF AMENDED AND RESTATED BYLAWS	21
7.3	MAINTENANCE AND INSPECTION OF OTHER CORPORATE RECORDS	21
7.4	INSPECTION BY DIRECTORS	21
7.5	ANNUAL REPORT TO SHAREHOLDERS; WAIVER	22
7.6	FINANCIAL STATEMENTS	22
7.7	REPRESENTATION OF SHARES OF OTHER CORPORATIONS	22

ii

ARTICLE VIII	GENERAL MATTERS	23
8.1	RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING	23
8.2	CHECKS; DRAFTS; EVIDENCES OF INDEBTEDNESS	23
8.3	CORPORATE CONTRACTS AND INSTRUMENTS; HOW EXECUTED	23
8.4	CERTIFICATES FOR SHARES	24
8.5	LOST CERTIFICATES	24
8.6	CONSTRUCTION; DEFINITIONS	24
ARTICLE IX	AMENDMENTS	24
9.1	AMENDMENT BY SHAREHOLDERS	24
9.2	AMENDMENT BY DIRECTORS	25
9.3	RECORD OF AMENDMENTS	25
ARTICLE X - INTERPRETATION		25

iii

Exhibit 3.2

AMENDED AND RESTATED BYLAWS

OF

CALIFORNIA UNITED BANK

ARTICLE I

CORPORATE OFFICES

1.1 PRINCIPAL OFFICE

The Board of Directors shall fix the location of the principal executive office of the corporation at any place within the State of California.

1.2 OTHER OFFICES

The Board of Directors may at any time establish branch or subordinate offices at any place or places.

ARTICLE II

MEETINGS OF SHAREHOLDERS

2.1 PLACE OF MEETINGS

Meetings of shareholders shall be held at any place within the State of California designated by the Board of Directors. In the absence of any such designation, shareholders’ meetings shall be held at the principal executive office of the corporation or at any place at which the Board of Directors holds a regularly scheduled or special meeting.

2.2 ANNUAL MEETING

The annual meeting of shareholders shall be held each year on a date and at a time designated by the Board of Directors. The annual meeting may also be held by unanimous written consent of the shareholders. At that meeting, directors shall be elected. Any other proper business may be transacted at the annual meeting of shareholders.

2.3 SPECIAL MEETINGS

Special meetings of the shareholders may be called at any time, subject to the provisions of Sections 2.4 and 2.5 of these Amended and Restated Bylaws, by the Board of Directors, the Chairman of the Board, the Lead Director of the Corporation’s parent company, the Chief Executive Officer or any three (3) members of the Board of Directors.

Notice of the call of a special meeting shall be provided personally, or sent by first class mail or by other written communication to the Corporate Secretary. Written communication shall include email, facsimile and all other forms of electronic media which records the communication but shall not include “texts”. The officer receiving the request forthwith shall cause notice to be given to the shareholders entitled to vote, in accordance with the provisions of Sections 2.4 and 2.5 of these Amended and Restated Bylaws, that a meeting will be held at the time requested by the person or persons calling the meeting, so long as that time is not less than thirty-five (35) nor more than sixty (60) days after the receipt of the request. If the notice is not given within twenty (20) days after receipt of the request, then the person or persons requesting the meeting may give the notice. Nothing contained in this paragraph of this Section 2.3 shall be construed as limiting, fixing or affecting the time when a meeting of shareholders called by action of the Board of Directors may be held.

2.4 NOTICE OF SHAREHOLDERS’ MEETINGS

All notices of meetings of shareholders shall be sent or otherwise given in accordance with Section 2.5 of these Amended and Restated Bylaws not less than ten (10) (or, if sent by third-class mail pursuant to Section 2.5 of these Amended and Restated Bylaws, not less than thirty (30)) nor more than sixty (60) days before the date of the meeting to each shareholder entitled to vote thereat. Such notice shall state the place, date, and hour of the meeting and (i) in the case of a special meeting, the general nature of the business to be transacted, and no business other than that specified in the notice may be transacted, or (ii) in the case of the annual meeting, those matters which the Board of Directors, at the time of the mailing of the notice, intends to present for action by the shareholders, but, subject to the provisions of the next paragraph of this Section 2.4, any proper matter may be presented at the meeting for such action. The notice of any meeting at which Directors are to be elected shall include the names of nominees intended at the time of the notice to be presented by the Board for election.

If action is proposed to be taken at any meeting for approval of (i) a contract or transaction in which a director has a direct or indirect financial interest, pursuant to Section 310 of the California Corporations Code (the “Code”), (ii) an amendment of the Articles of Incorporation, pursuant to Section 902 of the Code, (iii) a reorganization of the corporation, pursuant to Section 1201 of the Code, (iv) a voluntary dissolution of the corporation, pursuant to Section 1900 of the Code, or (v) a distribution in dissolution other than in accordance with the rights of any outstanding preferred shares, pursuant to Section 2007 of the Code, then the notice shall also state the general nature of that proposal.

2.5 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE

Notice of a shareholders’ meeting shall be given either personally, by first-class mail, or by other written communication. Written communication shall include email, facsimile and all other forms of electronic media which records the communication but shall not include “texts” as well as any other form of electronic communication allowed by the California Corporations Code, from time to time as may be amended.    The notice shall be deemed to have been given at the time when delivered personally or deposited in the mail or sent by other means of written communication.

2

If any notice (or any report referenced in Article VII of these Amended and Restated Bylaws) addressed to a shareholder at the address of such shareholder appearing on the books of the corporation is returned to the corporation by the United States Postal Service marked to indicate that the United States Postal Service is unable to deliver the notice to the shareholder at that address, all future notices or reports shall be deemed to have been duly given without further mailing if the same shall be available to the shareholder upon written demand of the shareholder at the principal executive office of the corporation for a period of one (1) year from the date of the giving of the notice.

An affidavit of mailing of any notice or report in accordance with the provisions of this Section 2.5, executed by the Secretary, Assistant Secretary or any transfer agent, shall be prima facie evidence of the giving of the notice or report.

2.6 QUORUM

Unless otherwise provided in the Articles of Incorporation of the corporation, a majority of the shares entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of the shareholders. The shareholders present at a duly called or held meeting at which a quorum is present may continue to transact business until adjournment notwithstanding the withdrawal of enough shareholders to leave less than a quorum, if any action taken (other than adjournment) is approved by at least a majority of the shares required to constitute a quorum.

In the absence of a quorum, any meeting of shareholders may be adjourned from time to time by the vote of a majority of the shares represented either in person or by proxy, but no other business may be transacted, except as provided in the last sentence of the preceding paragraph.

2.7 ADJOURNED MEETING; NOTICE

Any shareholders’ meeting, either annual or special, whether or not a quorum is present, may be adjourned from time to time by the vote of the majority of the shares represented at that meeting, either in person or by proxy.

When any meeting of shareholders, either annual or special, is adjourned to another time or place, notice need not be given of the adjourned meeting if its time and place are announced at the meeting at which the adjournment is taken. However, if the adjournment is for more than forty-five (45) days from the date set for the original meeting or if a new record date for the adjourned meeting is fixed, a notice of the adjourned meeting shall be given to each shareholder of record entitled to vote at the adjourned meeting in accordance with the provisions of Sections 2.4 and 2.5 of these Amended and Restated Bylaws. At any adjourned meeting the corporation may transact any business which might have been transacted at the original meeting.

3

2.8 VOTING

The shareholders entitled to vote at any meeting of shareholders shall be determined in accordance with the provisions of Section 2.11 of these Amended and Restated Bylaws, subject to the provisions of Sections 702 through 704 of the Code (relating to voting shares held by a fiduciary, in the name of a corporation, or in joint ownership).

Elections for directors and voting on any other matter at a shareholders’ meeting need not be by ballot unless a shareholder demands election by ballot at the meeting and before the voting begins.

Except as provided in the Articles of Incorporation, each outstanding share, regardless of class, shall be entitled to one vote on each matter submitted to a vote of the shareholders. Any holder of shares entitled to vote on any matter may vote part of the shares in favor of the proposal and refrain from voting the remaining shares or may vote them against the proposal other than elections to office, but, if the shareholder fails to specify the number of shares such shareholder is voting affirmatively, it will be conclusively presumed that the shareholder’s approving vote is with respect to all shares which the shareholder is entitled to vote.

The affirmative vote of the majority of the shares represented and voting at a duly held meeting at which a quorum is present (which shares voting affirmatively also constitute at least a majority of the required quorum) shall be the act of the shareholders, unless the vote of a greater number or voting by classes is required by the Code or by the Articles of Incorporation.

2.9 VALIDATION OF MEETINGS; WAIVER OF NOTICE; CONSENT

The transactions of any meeting of shareholders, either annual or special, however called and noticed, and wherever held, are as valid as though they had been taken at a meeting duly held after regular call and notice, if a quorum be present either in person or by proxy, and if, either before or after the meeting, each of the persons entitled to vote, not present in person or by proxy, signs a written waiver of notice or a consent to the holding of the meeting or an approval of the minutes thereof. Neither the business to be transacted at nor the purpose of any annual or special meeting of shareholders need be specified in any written waiver of notice or consent to the holding of the meeting or approval of the minutes thereof, except that if action is taken or proposed to be taken for approval of any of those matters specified in the second paragraph of Section 2.4 of these Amended and Restated Bylaws, the waiver of notice or consent or approval shall state the general nature of the proposal. All such waivers, consents, and approvals shall be filed with the corporate records or made a part of the minutes of the meeting.

Attendance of a person at a meeting shall constitute a waiver of notice of and presence at that meeting, except when the person objects, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened and except that attendance at a meeting is not a waiver of any right to object to the consideration of matters required by the Code to be included in the notice of such meeting but not so included, if such objection is expressly made at the meeting.

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2.10 SHAREHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING

Any action which may be taken at any annual or special meeting of shareholders may be taken without a meeting and without prior notice, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted.

Directors may not be elected by written consent except by unanimous written consent of all shares entitled to vote for the election of directors. However, a director may be elected at any time to fill any vacancy on the Board of Directors, provided that it was not created by removal of a director and that it has not been filled by the directors, by the written consent of the holders of a majority of the outstanding shares entitled to vote for the election of directors.

All such consents shall be maintained in the corporate records. Any shareholder giving a written consent, or the shareholder’s proxy holders, or a transferee of the shares, or a personal representative of the shareholder, or their respective proxy holders, may revoke the consent by a writing received by the Secretary of the corporation before written consents of the number of shares required to authorize the proposed action have been filed with the Secretary.

If the consents of all shareholders entitled to vote have not been solicited in writing, the Secretary shall give prompt notice of any corporate action approved by the shareholders without a meeting by less than unanimous written consent to those shareholders entitled to vote who have not consented in writing. Such notice shall be given in the manner specified in Section 2.5 of these Amended and Restated Bylaws. In the case of approval of (i) a contract or transaction in which a director has a direct or indirect financial interest, pursuant to Section 310 of the Code, (ii) indemnification of a corporate “agent,” pursuant to Section 317 of the Code, (iii) a reorganization of the corporation, pursuant to Section 1201 of the Code, and (iv) a distribution in dissolution other than in accordance with the rights of outstanding preferred shares, pursuant to Section 2007 of the Code, the notice shall be given at least ten (10) days before the consummation of any action authorized by that approval, unless the consents of all shareholders entitled to vote have been solicited in writing.

2.11 RECORD DATE FOR SHAREHOLDER NOTICE; VOTING; GIVING CONSENTS

In order that the corporation may determine the shareholders entitled to notice of any meeting or to vote, the Board of Directors may fix, in advance, a record date, which shall not be more than sixty (60) days nor less than ten (10) days prior to the date of such meeting nor more than sixty (60) days before any other action. Shareholders at the close of business on the record date are entitled to notice and to vote, as the case may be, notwithstanding any transfer of any shares on the books of the corporation after the record date, except as otherwise provided in the Articles of Incorporation or the Code.

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A determination of shareholders of record entitled to notice of or to vote at a meeting of shareholders shall apply to any adjournment of the meeting unless the Board of Directors fixes a new record date for the adjourned meeting, but the Board of Directors shall fix a new record date if the meeting is adjourned for more than forty-five (45) days from the date set for the original meeting.

If the Board of Directors does not so fix a record date:

(a) The record date for determining shareholders entitled to notice of or to vote at a meeting of shareholders shall be at the close of business on the business day next preceding the day on which notice is given or, if notice is waived, at the close of business on the business day next preceding the day on which the meeting is held.

(b) The record date for determining shareholders entitled to give consent to corporate action in writing without a meeting, (i) when no prior action by the Board has been taken, shall be the day on which the first written consent is given, or (ii) when prior action by the Board has been taken, shall be at the close of business on the day on which the Board adopts the resolution relating thereto, or the sixtieth (60th) day prior to the date of such other action, whichever is later.

The record date for any other purpose shall be as provided in Section 8.1 of these Amended and Restated Bylaws.

2.12 PROXIES

Every person entitled to vote for directors, or on any other matter, shall have the right to do so either in person or by one or more agents authorized by a written proxy signed by the person and filed with the Secretary of the corporation. A proxy shall be deemed signed if the shareholder’s name or other authorization is placed on the proxy (whether by manual signature, typewriting, telegraphic or electronic transmission or otherwise) by the shareholder or the shareholder’s attorney-in-fact. A validly executed proxy which does not state that it is irrevocable shall continue in full force and effect unless (i) the person who executed the proxy revokes it prior to the time of voting by delivering a writing to the corporation stating that the proxy is revoked or by executing a subsequent proxy and presenting it to the meeting or by attendance at such meeting and voting in person, or (ii) written notice of the death or incapacity of the maker of that proxy is received by the corporation before the vote pursuant to that proxy is counted; provided, however, that no proxy shall be valid after the expiration of eleven (11) months from the date thereof, unless otherwise provided in the proxy. The dates contained on the forms of proxy presumptively determine the order of execution, regardless of the postmark dates on the envelopes in which they are mailed. The revocability of a proxy that states on its face that it is irrevocable shall be governed by the provisions of Sections 705(e) and 705(f) of the Code.

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2.13 INSPECTORS OF ELECTION

In advance of any meeting of shareholders, the Board of Directors may appoint inspectors of election to act at the meeting and any adjournment thereof. If inspectors of election are not so appointed or designated or if any persons so appointed fail to appear or refuse to act, then the Chairman of the meeting may, and on the request of any shareholder or a shareholder’s proxy shall, appoint inspectors of election (or persons to replace those who so fail to appear) at the meeting. The number of inspectors shall be either one (1) or three (3). If appointed at a meeting on the request of one (1) or more shareholders or proxies, the majority of shares represented in person or by proxy shall determine whether one (1) or three (3) inspectors are to be appointed.

The inspectors of election shall determine the number of shares outstanding and the voting power of each, the shares represented at the meeting, the existence of a quorum, and the authenticity, validity, and effect of proxies, receive votes, ballots or consents, hear and determine all challenges and questions in any way arising in connection with the right to vote, count and tabulate all votes or consents, determine when the polls shall close, determine the result and do any other acts that may be proper to conduct the election or vote with fairness to all shareholders.

2.14 NOMINATION OF DIRECTORS

Nominations for election of members of the board of directors may be made by the board of directors or by any shareholder of any outstanding class of capital stock of the corporation entitled to vote for the election of directors.

ARTICLE III

DIRECTORS

3.1 POWERS

Subject to the provisions of the Code and any limitations in the Articles of Incorporation and these Amended and Restated Bylaws relating to action required to be approved by the shareholders or by the outstanding shares, the business and affairs of the corporation shall be managed and all corporate powers shall be exercised by or under the direction of the Board of Directors.

3.2 NUMBER OF DIRECTORS

The authorized number of directors of the corporation shall be not less than eight (8) nor more than fifteen (15) (which in no case shall be greater than two times the stated minimum minus one), and the exact number of directors shall be thirteen (13) until changed, within the limits specified above, by a resolution amending such exact number, duly adopted by the Board of Directors or by the shareholders. The minimum and maximum number of directors may be changed, or a definite number may be fixed without provision for an indefinite number, by a duly adopted amendment to the Articles of Incorporation or by an amendment to these Amended and Restated Bylaws duly adopted by the vote or written consent of holders of a majority of the outstanding shares entitled to vote; provided, however, that an amendment reducing the fixed

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number or the minimum number of directors to a number less than five (5) cannot be adopted if the votes cast against its adoption at a meeting, or the shares not consenting in the case of an action by written consent, are equal to more than sixteen and two-thirds percent (16-2/3%) of the outstanding shares entitled to vote thereon.

No reduction of the authorized number of directors shall have the effect of removing any director before that director’s term of office expires.

3.3 ELECTION AND TERM OF OFFICE OF DIRECTORS

At each annual meeting of shareholders, directors shall be elected to hold office until the next annual meeting. Each director, including a director elected to fill a vacancy, shall hold office until the expiration of the term for which elected and until a successor has been elected and qualified, except in the case of the death, resignation, or removal of such a director.

3.4 REMOVAL

The entire Board of Directors or any individual director may be removed from office without cause by the affirmative vote of a majority of the outstanding shares entitled to vote on such removal; provided, however, that unless the entire Board is removed, no individual director may be removed when the votes cast against such director’s removal, or not consenting in writing to such removal, would be sufficient to elect that director if voted cumulatively at an election at which the same total number of votes cast were cast (or, if such action is taken by written consent, all shares entitled to vote were voted) and the entire number of directors authorized at the time of such director’s most recent election were then being elected.

3.5 RESIGNATION AND VACANCIES

Any director may resign effective upon giving written notice to the Chairman of the Board, the Chief Executive Officer, the Secretary or the Board of Directors, unless the notice specifies a later time for the effectiveness of such resignation. If the resignation of a director is effective at a future time, the Board of Directors may elect a successor to take office when the resignation becomes effective.

Vacancies on the Board of Directors may be filled by a majority of the remaining directors, or if the number of directors then in office is less than a quorum by (i) unanimous written consent of the directors then in office, (ii) the affirmative vote of a majority of the directors then in office at a meeting held pursuant to notice or waivers of notice, or (iii) a sole remaining director; however, a vacancy created by the removal of a director by the vote or written consent of the shareholders or by court order may be filled only by the affirmative vote of a majority of the shares represented and voting at a duly held meeting at which a quorum is present (which shares voting affirmatively also constitute at least a majority of the required quorum), or by the unanimous written consent of all shares entitled to vote thereon. Each director so elected shall hold office until the next annual meeting of the shareholders and until a successor has been elected and qualified, or until his or her death, resignation or removal.

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A vacancy or vacancies in the Board of Directors shall be deemed to exist (i) in the event of the death, resignation or removal of any director, (ii) if the Board of Directors by resolution declares vacant the office of a director who has been declared of unsound mind by an order of court or convicted of a felony, (iii) if the exact number of directors is increased, or (iv) if the shareholders fail, at any meeting of shareholders at which any director or directors are elected, to elect the full exact number of directors to be elected at that meeting.

The shareholders may elect a director or directors at any time to fill any vacancy or vacancies not filled by the directors, but any such election by written consent, other than to fill a vacancy created by removal, shall require the consent of the holders of a majority of the outstanding shares entitled to vote thereon. A director may not be elected by written consent to fill a vacancy created by removal except by unanimous consent of all shares entitled to vote for the election of directors.

3.6 PLACE OF MEETINGS; MEETINGS BY TELEPHONE

Regular meetings of the Board of Directors may be held at any place within the State of California that has been designated from time to time by resolution of the Board or is included in the notice of the meeting. In the absence of such a designation, regular meetings shall be held at the principal executive office of the corporation. Special meetings of the Board may be held at any place within or outside the State of California that has been designated in the notice of the meeting or, if not stated in the notice or if there is no notice, at the principal executive office of the corporation.

Members of the Board may participate in a meeting through the use of conference telephone, video or audio conferencing or similar communications equipment to the broadest extent allowed in the California Corporations Code, so long as all directors participating in such meeting can hear and communicate with one another. Participation in a meeting pursuant to this paragraph constitutes presence in person at such meeting.

3.7 REGULAR MEETINGS

Regular meetings of the Board of Directors shall be held without notice if the time and place of such meetings are fixed by the Board of Directors.

3.8 SPECIAL MEETINGS; NOTICE

Subject to the provisions of the following paragraph, special meetings of the Board of Directors for any purpose or purposes may be called at any time by the Chairman of the Board, the Chief Executive Officer, the Lead Director (including the Lead Director of the Corporation’s parent company), the Secretary or any two (2) directors. Upon notice of the call of such a meeting the Secretary or Assistant Secretary of the Corporation shall give notice as set forth below.

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Notice of the time and place of special meetings shall be delivered personally or by telephone (including voice messaging systems) to each director or sent by first-class mail, telegram, charges prepaid, or other form of written communication addressed to each director at that director’s address as it is shown on the records of the corporation. Written communication shall include email, facsimile and all other forms of electronic media which records the communication but shall not include “texts” as well as any other form of electronic communication to the broadest extent allowed by the California Corporations Code, from time to time as may be amended. No prior consent from directors is required for the receipt of notice pursuant to such electronic communication. If the notice is mailed, it shall be deposited in the United States mail at least four (4) days before the time of the holding of the meeting. If the notice is delivered personally or by telephone or by telecopier, facsimile, email telegram or other electronic communication, it shall be delivered at least forty-eight (48) hours before the time of the holding of the meeting. Any oral notice given personally or by telephone may be communicated either to the director or to a person at the office of the director who the person giving the notice has reason to believe will promptly communicate it to the director. The notice need not specify the purpose of the meeting.

3.9 QUORUM

A majority of the exact number of directors shall constitute a quorum for the transaction of business, except to adjourn as provided in Section 3.11 of these Amended and Restated Bylaws. Every act or decision done or made by a majority of the directors present at a meeting duly held at which a quorum is present is the act of the Board of Directors, subject to the provisions of Section 310 of the Code (as to approval of contracts or transactions in which a director has a direct or indirect material financial interest), Section 311 of the Code (as to appointment of committees), Section 317(e) of the Code (as to indemnification of directors), the Articles of Incorporation, and other applicable law.

A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action taken is approved by at least a majority of the required quorum for such meeting.

3.10 WAIVER OF NOTICE

Notice of a meeting need not be given to any director who signs a waiver of notice or a consent to holding the meeting or an approval of the minutes thereof, whether before or after the meeting, or who attends the meeting without protesting, prior thereto or at its commencement, the lack of notice to such director. All such waivers, consents, and approvals shall be filed with the corporate records or made a part of the minutes of the meeting. A waiver of notice need not specify the purpose of any regular or special meeting of the Board of Directors.

3.11 ADJOURNMENT

A majority of the directors present, whether or not a quorum is present, may adjourn any meeting to another time and place.

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3.12 NOTICE OF ADJOURNMENT

If the meeting is adjourned for more than twenty-four (24) hours, notice of any adjournment to another time and place shall be given prior to the time of the adjourned meeting to the directors who were not present at the time of the adjournment.

3.13 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING

Any action required or permitted to be taken by the Board of Directors may be taken without a meeting, if all members of the Board individually or collectively consent in writing to such action. Such written consent or consents shall be filed with the minutes of the proceedings of the Board. Such action by written consent shall have the same force and effect as a unanimous vote of the Board of Directors.

3.14 FEES AND COMPENSATION OF DIRECTORS

Directors and members of committees may receive such compensation, if any, for their services and such reimbursement of expenses as may be fixed or determined by resolution of the Board of Directors. This Section 3.14 shall not be construed to preclude any director from serving the corporation in any other capacity as an officer, agent, employee or otherwise and receiving compensation for those services.

ARTICLE IV

COMMITTEES

4.1 COMMITTEES OF DIRECTORS

The Board of Directors may, by resolution adopted by a majority of the authorized number of directors, designate one or more committees, each consisting of two (2) or more directors, to serve at the pleasure of the Board. The Board may designate one or more directors as alternate members of any committee, who may replace any absent member at any meeting of the committee. The appointment of members or alternate members of a committee requires the vote of a majority of the authorized number of directors. Any such committee shall have authority to act in the manner and to the extent provided in the resolution of the Board and may have all the authority of the Board, except with respect to:

(a) The approval of any action which, under the Code, also requires shareholder approval or approval of the outstanding shares.

(b) The filling of vacancies on the Board of Directors or in any committee.

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(c) The fixing of compensation of the directors for serving on the Board or on any committee.

(d) The amendment or repeal of these Amended and Restated Bylaws or the adoption of new Bylaws.

(e) The amendment or repeal of any resolution of the Board of Directors which by its express terms is not so amendable or repealable.

(f) A distribution to the shareholders of the corporation, except at a rate, in a periodic amount or within a price range set forth in the Articles of Incorporation or determined by the Board of Directors.

(g) The appointment of any other committees of the Board of Directors or the members thereof.

4.2 REQUIRED COMMITTEES

The Board of Directors may from time to time, establish such Committees as it deems necessary and appropriate. The Board of Directors shall establish at the minimum, the following committees which shall be constituted as described:

(a) Loan Committee. There shall be a Loan Committee composed of at least three (3) directors. The Board of Directors shall adopt a Loan Committee Charter to set out the duties and powers of the Loan Committee.

(b) Audit Committee. There shall be an Audit Committee composed of at least three (3) independent directors (as that term is defined by the NASDAQ). The Audit Committee may be combined with such other Committees or functions as the Board of Directors may determine. The Audit Committee shall have the power to oversee the internal audit functions, and to retain and interface with the corporation’s independent certified public accountants. The Board of Directors shall adopt an Audit Committee Charter to set out the duties and powers of the Committee.

(c) Compensation, Committee. There shall be a Compensation Committee composed of at least three (3) independent directors (as that term is defined by the NASDAQ. The Compensation Committee may be combined with such other Committees or functions as the Board of Directors may determine. The Board of Directors shall adopt a Compensation Committee Charter to set out the duties and powers of the Committee.

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4.3 MEETINGS AND ACTION OF COMMITTEES

Meetings and actions of committees shall be governed by, and held and taken in accordance with, the provisions of Article III of these Amended and Restated Bylaws, Section 3.6 (place of meetings), Section 3.7 (regular meetings), Section 3.8 (special meetings and notice), Section 3.9 (quorum), Section 3.10 (waiver of notice), Section 3.11 (adjournment), Section 3.12 (notice of adjournment), and Section 3.13 (action without meeting), with such changes in the context of those Amended and Restated Bylaws as are necessary to substitute the committee and its members for the Board of Directors and its members; provided, however, that the time of regular meetings of committees may be determined either by resolution of the Board of Directors or by resolution of the committee, that special meetings of committees may also be called by resolution of the Board of Directors, and that notice of special meetings of committees shall also be given to all alternate members, who shall have the right to attend all meetings of the committee. The Board of Directors may adopt rules for the governance of any committee not inconsistent with the provisions of these Amended and Restated Bylaws.

ARTICLE V

OFFICERS

5.1 OFFICERS

The officers of the corporation shall be a Chief Executive Officer, a President, a Secretary, a Chief Financial Officer and a Chief Credit Officer. The corporation may also have, at the discretion of the Board of Directors, a Chairman of the Board, a Vice Chairman of the Board, one or more Vice Presidents, one or more Assistant Secretaries, and such other officers as may be appointed in accordance with the provisions of Section 5.3 of these Amended and Restated Bylaws. Any number of offices may be held by the same person.

5.2 APPOINTMENT OF OFFICERS

The officers of the corporation, except such officers as may be appointed in accordance with the provisions of Section 5.3 or Section 5.5 of these Amended and Restated Bylaws, shall be chosen by the Board and serve at the pleasure of the Board, subject to the rights, if any, of an officer under any contract of employment.

5.3 SUBORDINATE OFFICERS

The Board of Directors may appoint, or may empower the Chief Executive Officer to appoint, such other officers as the business of the corporation may require, each of whom shall hold office for such period, have such authority, and perform such duties as are provided in these Amended and Restated Bylaws or as the Board of Directors or Chief Executive Officer may from time to time determine.

5.4 REMOVAL AND RESIGNATION OF OFFICERS

Subject to the rights, if any, of an officer under any contract of employment, all officers serve at the pleasure of the Board of Directors and any officer may be removed, either with or without cause, by the Board of Directors at any regular or special meeting of the Board or, except in case of an officer chosen by the Board of Directors, by the Chief Executive Officer or any officer upon whom such power of removal may be conferred by the Board of Directors.

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Any officer may resign at any time by giving written notice to the corporation. Any resignation shall take effect at the date of the receipt of that notice or at any later time specified in that notice; and, unless otherwise specified in that notice, the acceptance of the resignation shall not be necessary to make it effective. Any resignation is without prejudice to the rights, if any, of the corporation under any contract to which the officer is a party.

5.5 VACANCIES IN OFFICES

A vacancy in any office because of death, resignation, removal, disqualification or any other cause shall be filled in the manner prescribed in these Amended and Restated Bylaws for regular appointments to that office.

5.6 CHAIRMAN OF THE BOARD

The Chairman of the Board, if such an officer be elected, shall, if present, preside at meetings of the Board of Directors and shareholders and exercise and perform such other powers and duties as may from time to time be assigned by the Board of Directors or as may be prescribed by these Amended and Restated Bylaws.

5.7 VICE CHAIRMAN OF THE BOARD

The Vice Chairman of the Board, if such an officer be elected, shall exercise and perform such other powers and duties as may from time to time be assigned by the Board of Directors, the Chairman of the Board, or as may be prescribed by these Amended and Restated Bylaws. If there is no Chairman of the Board or if the Chairman of the Board is unable to serve, the Vice Chairman of the Board shall also preside at meetings of the Board of Directors and shareholders.

5.8 CHIEF EXECUTIVE OFFICER

Subject to such supervisory powers, if any, as may be given by the Board of Directors to the Chairman of the Board and the Vice Chairman of the Board, if there be such officers, the Chief Executive Officer of the corporation shall, subject to the control of the Board of Directors, have general supervision, direction, and control of the business and the officers of the corporation. The Chief Executive Officer shall have the general powers and duties of management usually vested in the office of Chief Executive Officer of a corporation, and shall have such other powers and duties as may be prescribed by the Board of Directors or these Amended and Restated Bylaws.

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5.9 PRESIDENT

In the absence or disability of the Chief Executive Officer, the President , subject to approval of the Board, shall perform all the duties of the Chief Executive Officer and when so acting shall have all the powers of, and be subject to all the restrictions upon, the Chief Executive Officer. The President shall have such other powers and perform such other duties as from time to time may be prescribed for them respectively by the Board of Directors, these Amended and Restated Bylaws, or the Chief Executive Officer.

5.10 EXECUTIVE VICE PRESIDENTS

In the absence or disability of the Chief Executive Officer or the President, the Executive Vice Presidents, if any, in order of their rank as fixed by the Board of Directors or, if not ranked, an Executive Vice President designated by the Board of Directors, shall perform all the duties of the Chief Executive Officer and when so acting shall have all the powers of, and be subject to all the restrictions upon, the Chief Executive Officer. The Executive Vice Presidents shall have such other powers and perform such other duties as from time to time may be prescribed for them respectively by the Board of Directors, these Amended and Restated Bylaws, or the Chief Executive Officer.

5.11 SECRETARY

The Secretary shall keep or cause to be kept, at the principal executive office of the corporation or such other place as the Board of Directors may direct, a book of minutes of all meetings and actions of Directors, committees of directors and shareholders. The minutes shall show the time and place of each meeting, whether regular or special, the names of those present at directors’ meetings or committee meetings, the number of shares present or represented at shareholders’ meetings, and the proceedings thereof.

The Secretary shall keep, or cause to be kept, at the principal executive office of the corporation or at the office of the corporation’s transfer agent or registrar, as determined by resolution of the Board of Directors, a share register, or a duplicate share register, showing the names of all shareholders and their addresses, the number and classes of shares held by each, the number and date of certificates evidencing such shares, and the number and date of cancellation of every certificate surrendered for cancellation.

The Secretary shall give, or cause to be given, notice of all meetings of the shareholders and of the Board of Directors required to be given by law or by these Amended and Restated Bylaws. The Secretary shall keep the seal of the corporation, if one be adopted, in safe custody and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors or by these Amended and Restated Bylaws.

5.12 CHIEF FINANCIAL OFFICER

The Chief Financial Officer shall keep and maintain, or cause to be kept and maintained, adequate and correct books and records of accounts of the properties and business transactions of the corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital, retained earnings, and shares. The books of account shall at all reasonable times be open to inspection by any director.

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The Chief Financial Officer shall deposit all money and other valuables in the name and to the credit of the corporation with such depositories as may be designated by the Board of Directors or the Chief Executive Officer.    The Chief Financial Officer shall disburse the funds of the corporation pursuant to such policies as the Board of Directors may adopt and under the direction of the Chief Executive Officer, shall render to the Chief Executive Officer and Directors, whenever they request it, an account of all of his or her transactions as Chief Financial Officer and of the financial condition of the corporation, and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors, these Amended and Restated Bylaws, or the Chief Executive Officer.

5.13 CHIEF CREDIT OFFICER

The Chief Credit Officer shall be directly responsible for the safety and soundness of the loan portfolio. The Chief Credit Officer shall maintain current and relevant lending policies, provide for on-going training of lending and credit administration personnel and develop and operate appropriate systems and procedures to properly manage the loan portfolio. The Chief Credit Officer shall render reports as requested by the Board of Directors and the Chief Executive Officer. The Chief Credit Officer shall perform such other assignments as the Chief Executive Officer or the Board of Directors may prescribe.

ARTICLE VI

INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES,

AND OTHER AGENTS

6.1 INDEMNIFICATION OF DIRECTORS

The corporation shall, to the maximum extent and in the manner permitted by the Code, indemnify each of its directors against expenses (as defined in Section 317(a) of the Code), judgments, fines, settlements, and other amounts actually and reasonably incurred in connection with any proceeding (as defined in Section 317(a) of the Code), arising by reason of the fact that such person is or was a director of the corporation. For purposes of this Article VI, a “director” of the corporation includes any person (i) who is or was a director of the corporation, (ii) who is or was serving at the request of the corporation as a director of another foreign or domestic corporation, partnership, joint venture, trust or other enterprise, or (iii) who was a director of a corporation which was a predecessor corporation of the corporation or of another enterprise at the request of such predecessor corporation.

Any indemnification under this Section 6.1 shall be subject to applicable federal law, including but not limited to Section 18(k) of the Federal Deposit Insurance Act (12 U.S.C. Section 1828(k)) and Part 359 of the Federal Deposit Insurance Corporation’s Regulations (12 C.F.R. Sections 359.0 et seq.). In accordance with federal law, the corporation may indemnify its directors for reasonable expenses and costs associated with respect to an administrative proceeding or civil action initiated by any federal banking agency only if (i) the Board of

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Directors, in good faith, determines in writing after due investigation and consideration that the director acted in good faith and in a manner he or she believed to be in the best interests of the corporation and that the payment of such expenses will not materially adversely affect the corporation’s safety and soundness, (ii) the indemnification payments are not otherwise prohibited by this Section 6.1, and (iii) the director agrees in writing to reimburse the corporation, to the extent not covered by payments from insurance purchased pursuant to Section 6.5, for that portion of the advanced indemnification payments received under Section 6.3 which subsequently become prohibited pursuant to this Section 6.1.

Notwithstanding the above, the corporation is prohibited from paying or reimbursing a director for (a) any civil money penalty or judgment resulting from any administrative or civil action instituted by any federal banking agency, or (b) any other liability or legal expense with regard to any administrative proceeding or civil action instituted by any federal banking agency which results in a final order or settlement pursuant to which a director is (i) assessed a civil money penalty, (ii) removed from office or prohibited from participating in the affairs of the corporation, or (iii) required to cease and desist from or take an affirmative action described in Section 8(b) of the Federal Deposit Insurance Act (12 U.S.C. Section 1818(b)) with respect to the corporation. The corporation may, however, indemnify a director for legal or professional expenses specifically attributable to particular charges for which there has been a formal and final adjudication or finding in connection with a settlement that the director has not violated certain banking laws or regulations or has not engaged in certain unsafe or unsound banking practices or breaches of fiduciary duty, unless the administrative action or civil proceeding has resulted in a final prohibition order against the director.

6.2 INDEMNIFICATION OF OTHERS

The corporation shall have the power, to the extent and in the manner permitted by the Code, to indemnify each of its employees, officers, and agents (other than directors) against expenses (as defined in Section 317(a) of the Code), judgments, fines, settlements, and other amounts actually and reasonably incurred in connection with any proceeding (as defined in Section 317(a) of the Code), arising by reason of the fact that such person is or was an employee, officer, or agent of the corporation. For purposes of this Article VI, an “employee” or “officer” or “agent” of the corporation (other than a director) includes any person (i) who is or was an employee, officer, or agent of the corporation, (ii) who is or was serving at the request of the corporation as an employee, officer, or agent of another foreign or domestic corporation, partnership, joint venture, trust or other enterprise, or (iii) who was an employee, officer, or agent of a corporation which was a predecessor corporation of the corporation or of another enterprise at the request of such predecessor corporation.

Any indemnification under this Section 6.2 shall be subject to applicable federal law, including but not limited to Section 18(k) of the Federal Deposit Insurance Act (12 U.S.C. Section 1828(k)) and Part 359 of the Federal Deposit Insurance Corporation’s Regulations (12 C.F.R. Sections 359.0 et seq.). In accordance with federal law, the corporation may indemnify its employees, officers or agents for reasonable expenses and costs associated with respect to an administrative proceeding or civil action initiated by any federal banking agency only if (i) the

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Board of Directors, in good faith, determines in writing after due investigation and consideration that the employee, officer or agent acted in good faith and in a manner he or she believed to be in the best interests of the corporation and that the payment of such expenses will not materially adversely affect the corporation’s safety and soundness, (ii) the indemnification payments are not otherwise prohibited by this Section 6.2, and (iii) the employee, officer or agent agrees in writing to reimburse the corporation, to the extent not covered by payments from insurance purchased pursuant to Section 6.5, for that portion of the advanced indemnification payments received under Section 6.3 which subsequently become prohibited pursuant to this Section 6.2.

Notwithstanding the above, the corporation is prohibited from paying or reimbursing an employee, officer or agent (other than a director) for (a) any civil money penalty or judgment resulting from any administrative or civil action instituted by any federal banking agency, or (b) any other liability or legal expense with regard to any administrative proceeding or civil action instituted by any federal banking agency which results in a final order or settlement pursuant to which an employee, officer or agent is (i) assessed a civil money penalty, (ii) removed from office or prohibited from participating in the affairs of the corporation, or (iii) required to cease and desist from or take an affirmative action described in Section 8(b) of the Federal Deposit Insurance Act (12 U.S.C. Section 1818(b)) with respect to the corporation. The corporation may, however, indemnify an employee, officer or agent for legal or professional expenses specifically attributable to particular charges for which there has been a formal and final adjudication or finding in connection with a settlement that the employee, officer or agent has not violated certain banking laws or regulations or has not engaged in certain unsafe or unsound banking practices or breaches of fiduciary duty, unless the administrative action or civil proceeding has resulted in a final prohibition order against the employee, officer or agent.

6.3 PAYMENT OF EXPENSES IN ADVANCE

Expenses and attorneys’ fees incurred in defending any civil or criminal action or proceeding for which indemnification is required pursuant to Section 6.1, or if otherwise authorized by the Board of Directors, shall be paid by the corporation in advance of the final disposition of such action or proceeding upon receipt of an undertaking by or on behalf of the indemnified party to repay such amount if it shall ultimately be determined that the indemnified party is not entitled to be indemnified as authorized in this Article VI.

6.4 INDEMNITY NOT EXCLUSIVE

The indemnification provided by this Article VI shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under any Bylaw, agreement, vote of shareholders or directors or otherwise, both as to action in an official capacity and as to action in another capacity while holding such office. The rights to indemnity hereunder shall continue as to a person who has ceased to be a director, officer, employee, or agent and shall inure to the benefit of the heirs, executors, and administrators of the person.

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6.5 INSURANCE INDEMNIFICATION

Notwithstanding the provisions of Sections 6.1 and 6.2, the corporation shall have the power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation against any liability asserted against or incurred by such person in such capacity or arising out of that person’s status as such, whether or not the corporation would have the power to indemnify that person against such liability under the provisions of this Article VI, provided that such insurance policy shall not be used to pay or reimburse a director, employee, officer or agent for the cost of any judgment or civil money penalty assessed against such person in an administrative proceeding or civil action commenced by any federal banking agency, but may pay any legal or professional expenses incurred in connection with such proceeding or action or the amount of any restitution to the corporation.

6.6 CONFLICTS

No indemnification or advance shall be made under this Article VI, except where such indemnification or advance is mandated by law or the order, judgment or decree of any court of competent jurisdiction, in any circumstance where it appears:

(1) That it would be inconsistent with a provision of the Articles of Incorporation, these Amended and Restated Bylaws, a resolution of the shareholders or an agreement in effect at the time of the accrual of the alleged cause of the action asserted in the proceeding in which the expenses were incurred or other amounts were paid, which prohibits or otherwise limits indemnification; or

(2) That it would be inconsistent with any condition expressly imposed by a court in approving a settlement.

6.7 RIGHT TO BRING SUIT

If a claim under this Article is not paid in full by the corporation within 90 days after a written claim has been received by the corporation (either because the claim is denied or because no determination is made), the claimant may at any time thereafter bring suit against the corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall also be entitled to be paid the expenses of prosecuting such claim. The corporation shall be entitled to raise as a defense to any such action that the claimant has not met the standards of conduct that make it permissible under the Code or applicable federal law for the corporation to indemnify the claimant for the claim. Neither the failure of the corporation (including its Board of Directors, independent legal counsel, or its shareholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is permissible in the circumstances because he or she has met the applicable standard of conduct, if any, nor an actual determination by the corporation (including its Board of Directors, independent legal counsel, or its shareholders) that the claimant has not met the applicable standard of conduct, shall be a defense to such action or create a presumption for the purposes of such action that the claimant has not met the applicable standard of conduct.

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6.8 INDEMNITY AGREEMENTS

The Board of Directors is authorized to enter into a contract with any director, officer, employee or agent of the corporation, or any person who is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including employee benefit plans, or any person who was a director, officer, employee or agent of a corporation which was a predecessor corporation of the corporation or of another enterprise at the request of such predecessor corporation, providing for indemnification rights equivalent to or, if the Board of Directors so determines and to the extent permitted by applicable law, greater than, those provided for in this Article VI.

6.9 AMENDMENT, REPEAL OR MODIFICATION

Any amendment, repeal or modification of any provision of this Article VI shall not adversely affect any right or protection of a director or agent of the corporation existing at the time of such amendment, repeal or modification.

6.10 FEDERAL LAW

To the extent there is any conflict between state and federal law regarding any provision of this Article VI or such other provisions in these Amended and Restated Bylaws, federal law shall supercede and control.

ARTICLE VII

RECORDS AND REPORTS

7.1 MAINTENANCE AND INSPECTION OF SHARE REGISTER

The corporation shall keep either at its principal executive office or at the office of its transfer agent or registrar (if either be appointed), as determined by resolution of the Board of Directors, a record of its shareholders listing the names and addresses of all shareholders and the number and class of shares held by each shareholder.

A shareholder or shareholders of the corporation holding at least five percent (5%) in the aggregate of the outstanding voting shares of the corporation shall have an absolute right to do either or both of the following: (i) inspect and copy the record of shareholders’ names, addresses, and shareholdings during usual business hours upon five (5) days’ prior written demand upon the corporation; or (ii) obtain from the transfer agent for the corporation, upon written demand and upon the tender of such transfer agent’s usual charges for such list (the amount of which charges shall be stated to the shareholder by the transfer agent upon request), a list of the shareholders’ names and addresses who are entitled to vote for the election of directors, and their shareholdings, as of the most recent record date for which it has been compiled or as of a date specified by the shareholder subsequent to the date of demand. The list shall be made available on or before the later of five (5) business days after the demand is received or the date specified therein as the date as of which the list is to be compiled.

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The record of shareholders shall also be open to inspection and copying by any shareholder or holder of a voting trust certificate at any time during usual business hours upon written demand on the corporation, for a purpose reasonably related to the holder’s interests as a shareholder or holder of a voting trust certificate.

Any inspection and copying under this Section 7.1 may be made in person or by an agent or attorney of the shareholder or holder of a voting trust certificate making the demand.

7.2 MAINTENANCE AND INSPECTION OF AMENDED AND RESTATED BYLAWS

The corporation shall keep at its principal executive office or, if its principal executive office is not in the State of California, at its principal business office in California, the original or a copy of these Amended and Restated Bylaws as amended to date, which shall be open to inspection by the shareholders at all reasonable times during office hours. If the principal executive office of the corporation is outside the State of California and the corporation has no principal business office in such state, then it shall, upon the written request of any shareholder, furnish to such shareholder a copy of these Amended and Restated Bylaws as amended to date.

7.3 MAINTENANCE AND INSPECTION OF OTHER CORPORATE RECORDS

The accounting books and records and the minutes of proceedings of the shareholders and the Board of Directors, and committees of the Board of Directors shall be kept at such place or places as are designated by the Board of Directors or, in absence of such designation, at the principal executive office of the corporation. The minutes shall be kept in written form, and the accounting books and records shall be kept either in written form or in any other form capable of being converted into written form.

The minutes and accounting books and records shall be open to inspection upon the written demand on the corporation of any shareholder or holder of a voting trust certificate at any reasonable time during usual business hours, for a purpose reasonably related to such holder’s interests as a shareholder or as the holder of a voting trust certificate. Such inspection by a shareholder or holder of a voting trust certificate may be made in person or by an agent or attorney and the right of inspection includes the right to copy and make extracts. Such rights of inspection shall extend to the records of each subsidiary corporation of the corporation.

7.4 INSPECTION BY DIRECTORS

Subject to applicable law and regulation, every director shall have the absolute right at any reasonable time to inspect and copy all books, records, and documents of every kind and to inspect the physical properties of the corporation and each of its subsidiary corporations, domestic or foreign. Such inspection by a director may be made in person or by an agent or attorney and the right of inspection includes the right to copy and make extracts.

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7.5 ANNUAL REPORT TO SHAREHOLDERS; WAIVER

The Board of Directors shall cause an annual report to be sent to the shareholders not later than one hundred twenty (120) days after the close of the fiscal year adopted by the corporation. Such report shall be sent to the shareholders at least fifteen (15) (or, if sent by third-class mail, thirty-five (35)) days prior to the annual meeting of shareholders to be held during the next fiscal year and in the manner specified in Section 2.5 of these Bylaws for giving notice to shareholders of the corporation.

The annual report shall contain a balance sheet as of the end of the fiscal year and an income statement and statement of changes in financial position for the fiscal year, accompanied by any report thereon of independent accountants or, if there is no such report, the certificate of an authorized officer of the corporation that the statements were prepared without audit from the books and records of the corporation.

The foregoing requirement of an annual report shall be waived so long as the shares of the corporation are held by fewer than one hundred (100) holders of record.

7.6 FINANCIAL STATEMENTS

A shareholder or shareholders holding at least five percent (5%) of the outstanding shares of any class of the corporation may make a written request to the corporation for an income statement of the corporation for the three-month, six-month or nine-month period of the current fiscal year ended more than thirty (30) days prior to the date of the request and a balance sheet of the corporation as of the end of that period. The statements shall be delivered or mailed to the person making the request within thirty (30) days thereafter. A copy of the statements shall be kept on file in the principal office of the corporation for twelve (12) months and it shall be exhibited at all reasonable times to any shareholder demanding an examination of the statements or a copy shall be mailed to the shareholder. If the corporation has not sent to the shareholders its annual report for the last fiscal year, the statements referred to in the first paragraph of this Section 7.6 shall likewise be delivered or mailed to the shareholder or shareholders within thirty (30) days after the request.

The quarterly income statements and balance sheets referred to in this section shall be accompanied by the report thereon, if any, of any independent accountants engaged by the corporation or the certificate of an authorized officer of the corporation that the financial statements were prepared without audit from the books and records of the corporation.

7.7 REPRESENTATION OF SHARES OF OTHER CORPORATIONS

The Chairman of the Board, the Chief Executive Officer, the President, any Executive Vice President, or any other person authorized by the Board of Directors, is authorized to vote, represent, and exercise on behalf of this corporation all rights incident to any and all shares of any other corporation or corporations standing in the name of this corporation. The authority herein granted may be exercised either by such person directly or by any other person authorized to do so by proxy or power of attorney duly executed by such person having the authority.

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ARTICLE VIII

GENERAL MATTERS

8.1 RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING

For purposes of determining the shareholders entitled to receive payment of any dividend or other distribution or allotment of any rights or entitled to exercise any rights in respect of any other lawful action (other than with respect to notice or voting at a shareholders meeting or action by shareholders by written consent without a meeting), the Board of Directors may fix, in advance, a record date, which shall not be more than sixty (60) days prior to any such action. Only shareholders of record at the close of business on the record date are entitled to receive the dividend, distribution or allotment of rights, or to exercise the rights, as the case may be, notwithstanding any transfer of any shares on the books of the corporation after the record date, except as otherwise provided in the Articles of Incorporation or the Code.

If the Board of Directors does not so fix a record date, then the record date for determining shareholders for any such purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto or the sixtieth (60th) day prior to the date of that action, whichever is later.

8.2 CHECKS; DRAFTS; EVIDENCES OF INDEBTEDNESS

From time to time, the Board of Directors shall determine by resolution or policy which person or persons may sign or endorse all checks, drafts, other orders for payment of money, notes or other evidences of indebtedness that are issued in the name of or payable to the corporation, and only the persons so authorized shall sign or endorse those instruments.

8.3 CORPORATE CONTRACTS AND INSTRUMENTS: HOW EXECUTED

The Board of Directors, except as otherwise provided in these Amended and Restated Bylaws, may adopt policies to authorize any officer or officers, or agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the corporation; such authority may be general or confined to specific instances. Unless so authorized or ratified by the Board of Directors or within the agency power of an officer, no officer, agent or employee shall have any power or authority to bind the corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or for any amount.

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8.4 CERTIFICATES FOR SHARES

A certificate or certificates for shares of the corporation shall be issued to each shareholder when any of such shares are fully paid. All certificates shall be signed in the name of the corporation by the Chairman of the Board or the Vice Chairman of the Board or the Chief Executive Officer or the President or an Executive Vice President and by the Chief Financial Officer or an Assistant Treasurer or the Secretary or an Assistant Secretary, certifying the number of shares and the class or series of shares owned by the shareholder. Any or all of the signatures on the certificate may be by facsimile.

In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed on a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if that person were an officer, transfer agent or registrar at the date of issue.

8.5 LOST CERTIFICATES

Except as provided in this Section 8.5, no new certificates for shares shall be issued to replace a previously issued certificate unless the latter is surrendered to the corporation or its transfer agent or registrar and canceled at the same time. The Board of Directors, the Chief Executive Officer, or the General Counsel may, in case any share certificate or certificate for any other security is lost, stolen or destroyed (as evidenced by a written affidavit or affirmation of such fact), authorize the issuance of replacement certificates on such terms and conditions as the Board, the Chief Executive Officer, or the General Counsel may require; they may require indemnification of the corporation secured by a bond or other adequate security sufficient to protect the corporation against any claim that may be made against it, including any expense or liability, on account of the alleged loss, theft or destruction of the certificate or the issuance of the replacement certificate.

8.6 CONSTRUCTION; DEFINITIONS

Unless the context requires otherwise, the general provisions, rules of construction, and definitions in the Code shall govern the construction of these Amended and Restated Bylaws. Without limiting the generality of this provision, the singular number includes the plural, the plural number includes the singular, and the term “person” includes both a corporation and a natural person.

ARTICLE IX

AMENDMENTS

9.1 AMENDMENT BY SHAREHOLDERS

New Bylaws may be adopted or these Amended and Restated Bylaws may be amended or repealed by the vote or written consent of holders of a majority of the outstanding shares entitled to vote; provided, however, that if the Articles of Incorporation of the corporation set forth the number of authorized Directors of the corporation, then the authorized number of Directors may be changed only by an amendment of the Articles of Incorporation.

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9.2 AMENDMENT BY DIRECTORS

Subject to the rights of the shareholders as provided in Section 9.1 of these Amended and Restated Bylaws, Bylaws, other than a Bylaw or an amendment of a Bylaw changing the authorized number of directors (except to fix the authorized number of directors pursuant to a Bylaw providing for a variable number of directors), may be adopted, amended or repealed by the Board of Directors.

9.3 RECORD OF AMENDMENTS

Whenever an amendment or new Bylaw is adopted, it shall be copied in the book of minutes with the original Bylaws. If any Bylaw is repealed, the fact of repeal, with the date of the meeting at which the repeal was enacted or written consent was filed, shall be stated in said book.

ARTICLE X

INTERPRETATION

Reference in these Amended and Restated Bylaws to any provision of the California Corporations Code shall be deemed to include all amendments thereof.

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SECRETARY’S CERTIFICATE OF ADOPTION OF AMENDED AND RESTATED

BYLAWS

OF

CALIFORNIA UNITED BANK

I, the undersigned, do hereby certify:

1. That I am the duly elected and acting Secretary of California United Bank, a California corporation.

2. That the foregoing Amended and Restated Bylaws, comprising 26 pages, including this page, constitute the Amended and Restated Bylaws of said corporation as adopted by the directors of said corporation at a duly called and held meeting of the Board of Directors on                     , 2016.

IN WITNESS WHEREOF, I have hereunto subscribed my name this      day of                      2016.

                                                                                    , Secretary

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EX-31.1

Exhibit 31.1

CHIEF EXECUTIVE OFFICER SECTION 302 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 registrant, 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 fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

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

a. All significant deficiencies and material weaknesses in the design or operation of internal controls 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 controls over financial reporting.

DATE: November 8, 2016	/s/ DAVID I. RAINER
	DAVID I. RAINER
	Chief Executive Officer

EX-31.2

Exhibit 31.2

CHIEF FINANCIAL OFFICER SECTION 302 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 registrant, 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 fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

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

a. All significant deficiencies and material weaknesses in the design or operation of internal controls 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 controls over financial reporting.

DATE: November 8, 2016	/s/ KAREN A. SCHOENBAUM
	KAREN A. SCHOENBAUM
	Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of CU BANCORP (the “Company”) on Form 10-Q for the quarter ending September 30, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, David I. Rainer, Chief Executive Officer of the Company, and Karen A. Schoenbaum, Chief Financial Officer of the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of our knowledge, based on a review of the Report of the Company, and except as corrected or supplemented in a subsequent report:

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

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

DATE: November 8, 2016	/s/ DAVID I. RAINER
	DAVID I. RAINER
	Chief Executive Officer
DATE: November 8, 2016	/s/ KAREN A SCHOENBAUM
	KAREN A. SCHOENBAUM
	Chief Financial Officer

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Nov. 01, 2016
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q3
Trading Symbol	CUNB
Entity Registrant Name	CU Bancorp
Entity Central Index Key	0001543643
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		17,678,438

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
ASSETS
Cash and due from banks	$ 47,701	$ 50,960
Interest earning deposits in other financial institutions	244,205	171,103
Total cash and cash equivalents	291,906	222,063
Certificates of deposit in other financial institutions	51,490	56,860
Investment securities available-for-sale, at fair value	375,094	315,785
Investment securities held-to-maturity, at amortized cost	40,073	42,036
Total investment securities	415,167	357,821
Loans	1,974,941	1,833,163
Allowance for loan loss	(18,371)	(15,682)
Net loans	1,956,570	1,817,481
Premises and equipment, net	4,354	5,139
Deferred tax assets, net	15,614	17,033
Other real estate owned, net		325
Goodwill	64,603	64,603
Core deposit and leasehold right intangibles, net	6,665	7,671
Bank owned life insurance	50,889	49,912
Accrued interest receivable and other assets	35,914	35,734
Total Assets	2,893,172	2,634,642
LIABILITIES AND SHAREHOLDERS' EQUITY
Non-interest bearing demand deposits	1,399,320	1,288,085
Interest bearing transaction accounts	284,154	261,123
Money market and savings deposits	786,882	679,081
Certificates of deposit	35,033	58,502
Total deposits	2,505,389	2,286,791
Securities sold under agreements to repurchase	24,251	14,360
Subordinated debentures, net	9,817	9,697
Accrued interest payable and other liabilities	20,785	16,987
Total Liabilities	2,560,242	2,327,835
Commitments and Contingencies (Note 13)
SHAREHOLDERS' EQUITY
Serial Preferred Stock - authorized, 50,000,000 shares: Series A, non-cumulative perpetual preferred stock, $1,000 per share liquidation preference, 16,400 shares authorized, 16,400 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively	17,021	16,995
Common stock - authorized, 75,000,000 shares no par value, 17,673,438 and 17,175,389 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively	234,383	230,688
Additional paid-in capital	24,847	23,017
Retained earnings	56,296	36,923
Accumulated other comprehensive income (loss)	383	(816)
Total Shareholders' Equity	332,930	306,807
Total Liabilities and Shareholders' Equity	$ 2,893,172	$ 2,634,642

XML

Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2016	Dec. 31, 2015
Preferred stock, liquidation preference per share	$ 1,000
Preferred stock, authorized shares	50,000,000	50,000,000
Common stock, shares authorized	75,000,000	75,000,000
Common stock, no par value
Common stock, shares issued	17,673,438	17,175,389
Common stock, shares outstanding	17,673,438	17,175,389
Series A Preferred Stock
Preferred stock, liquidation preference per share	$ 1,000	$ 1,000
Preferred stock, authorized shares	16,400	16,400
Preferred stock, shares issued	16,400	16,400
Preferred stock, shares outstanding	16,400	16,400

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Consolidated Statements of Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Interest Income
Interest and fees on loans	$ 23,958	$ 21,689	$ 69,701	$ 62,239
Interest on investment securities	1,419	1,124	4,066	3,355
Interest on interest bearing deposits in other financial institutions	478	293	1,334	741
Total Interest Income	25,855	23,106	75,101	66,335
Interest Expense
Interest on interest bearing transaction accounts	102	105	300	303
Interest on money market and savings deposits	524	427	1,519	1,218
Interest on certificates of deposit	46	53	110	150
Interest on securities sold under agreements to repurchase	13	9	38	21
Interest on subordinated debentures	122	110	359	326
Total Interest Expense	807	704	2,326	2,018
Net Interest Income	25,048	22,402	72,775	64,317
Provision for loan losses	697	705	2,382	2,831
Net Interest Income After Provision For Loan Losses	24,351	21,697	70,393	61,486
Non-Interest Income
Gain on sale of securities, net	141		141
Gain on sale of SBA loans, net	189	640	1,228	1,278
Deposit account service charge income	1,210	1,159	3,621	3,453
Other non-interest income	1,518	1,189	3,863	3,960
Total Non-Interest Income	3,058	2,988	8,853	8,691
Non-Interest Expense
Salaries and employee benefits (includes stock based compensation expense of $939 and $810 for the three months, and $2,664 and $2,130 for the nine months ended September 30, 2016 and 2015, respectively)	10,335	9,744	30,409	28,175
Occupancy	1,673	1,465	4,548	4,300
Data processing	657	596	1,910	1,872
Legal and professional	1,434	412	2,560	1,914
FDIC deposit assessment	389	370	1,098	1,054
Merger expenses		146		498
OREO loss and expenses	2	153	85	179
Office services expenses	413	383	1,136	1,204
Other operating expenses	1,864	1,798	5,297	5,696
Total Non-Interest Expense	16,767	15,067	47,043	44,892
Net Income Before Provision for Income Tax Expense	10,642	9,618	32,203	25,285
Provision for income tax expense	4,059	3,355	11,916	9,556
Net Income	6,583	6,263	20,287	15,729
Preferred stock dividends and discount accretion	304	293	914	877
Net Income available to common shareholders	$ 6,279	$ 5,970	$ 19,373	$ 14,852
Earnings Per Share
Basic earnings per share	$ 0.36	$ 0.36	$ 1.13	$ 0.90
Diluted earnings per share	$ 0.36	$ 0.35	$ 1.11	$ 0.88

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Consolidated Statements of Income (Unaudited) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Income Statement [Abstract]
Stock based compensation expense	$ 939	$ 810	$ 2,664	$ 2,130

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Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Statement of Comprehensive Income [Abstract]
Net income	$ 6,583	$ 6,263	$ 20,287	$ 15,729
Other Comprehensive Income, net of tax:
Net change in unrealized gain (loss) on available-for-sale investment securities, net of tax	(313)	311	1,281	73
Reclassification of (gain) loss on investment securities available-for-sale to net income, net of tax	(82)		(82)
Other Comprehensive Income (Loss)	(395)	311	1,199	73
Comprehensive Income	$ 6,188	$ 6,574	$ 21,486	$ 15,802

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Consolidated Statements of Shareholders' Equity (Unaudited) - USD ($) $ in Thousands		Total	Restricted Stock Units (RSUs)	Preferred Stock	Common Stock	Common Stock Restricted Stock Units (RSUs)	Additional Paid-in Capital	Additional Paid-in Capital Restricted Stock Units (RSUs)	Retained Earnings	Accumulated Other Comprehensive Income (Loss)
Beginning Balance (in shares) at Dec. 31, 2014				16,400	16,683,856
Beginning Balance at Dec. 31, 2014		$ 279,192		$ 16,004	$ 226,389		$ 19,748		$ 16,861	$ 190
Net issuance of restricted stock					68,625
Exercise of stock options		1,434			$ 1,434
Exercise of stock options (in shares)					158,315
Stock based compensation expense		2,130					2,130
Restricted stock repurchase			$ (856)					$ (856)
Restricted stock repurchase (in shares)						(39,860)
Excess tax benefit - stock based compensation		788					788
Preferred stock dividends and discount accretion		(142)		$ 735					(877)
Net income		15,729							15,729
Other comprehensive income		73								73
Ending Balance (in shares) at Sep. 30, 2015				16,400	16,870,936
Ending balance at Sep. 30, 2015		298,348		$ 16,739	$ 227,823		21,810		31,713	263
Net income		6,263
Other comprehensive income		311
Ending Balance (in shares) at Sep. 30, 2015				16,400	16,870,936
Ending balance at Sep. 30, 2015		298,348		$ 16,739	$ 227,823		21,810		31,713	263
Beginning Balance (in shares) at Dec. 31, 2015				16,400	17,175,389
Beginning Balance at Dec. 31, 2015		306,807		$ 16,995	$ 230,688		23,017		36,923	(816)
Net issuance of restricted stock					121,434
Exercise of stock options		3,695			$ 3,695
Exercise of stock options (in shares)					411,964
Stock based compensation expense		2,664					2,664
Restricted stock repurchase			$ (834)					$ (834)
Restricted stock repurchase (in shares)						(35,349)
Excess tax benefit - stock based compensation		772					772
Reclassification of excess tax benefits	[1]	(772)					(772)
Preferred stock dividends and discount accretion		(888)		$ 26					(914)
Net income		20,287							20,287
Other comprehensive income		1,199								1,199
Ending Balance (in shares) at Sep. 30, 2016				16,400	17,673,438
Ending balance at Sep. 30, 2016		332,930		$ 17,021	$ 234,383		24,847		56,296	383
Net income		6,583
Other comprehensive income		(395)
Ending Balance (in shares) at Sep. 30, 2016				16,400	17,673,438
Ending balance at Sep. 30, 2016		$ 332,930		$ 17,021	$ 234,383		$ 24,847		$ 56,296	$ 383

[1] Represents the reclassification from additional paid-in capital to provision for income tax expense during the first two quarters of 2016, related to the Company's early adoption of ASU 2016-09. See Note 2, Recent Accounting Pronouncements, for additional information.

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Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Cash flows from operating activities:
Net income:	$ 20,287	$ 15,729
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	2,382	2,831
Provision for unfunded loan commitments	169	87
Stock based compensation expense	2,664	2,130
Depreciation	1,064	1,062
Net accretion of discounts/premiums for loans acquired and deferred loan fees/costs	(6,751)	(6,553)
Net amortization from investment securities	3,126	2,343
Increase in bank owned life insurance	(977)	(947)
Amortization of core deposit intangibles	961	1,262
Amortization of time deposit premium	(2)	(10)
Net (accretion) amortization of leasehold right intangible asset and liabilities	(174)	4
Accretion of subordinated debenture discount	119	119
Loss on disposal of fixed assets	30
Valuation write-downs on OREO		133
Loss on sale of OREO	14
Gain on sale of securities, net	(141)
Gain on sale of SBA loans, net	(1,228)	(1,278)
Decrease (increase) in deferred tax assets	549	(790)
Decrease (increase) in accrued interest receivable and other assets	(180)	2,484
Increase (decrease) in accrued interest payable and other liabilities	3,811	(327)
Net excess in tax benefit on stock compensation		(788)
Increase in fair value of derivative swap liability	35	591
Net cash provided by operating activities	25,758	18,082
Cash flows from investing activities:
Purchases of investment securities	(118,124)	(57,597)
Proceeds from sales of investment securities	4,519
Proceeds from repayment and maturities from investment securities	55,346	30,135
Loans originated, net of principal payments	(133,492)	(139,844)
Purchases of premises and equipment	(309)	(666)
Proceeds from sale of OREO	311
Net decrease in certificates of deposit in other financial institutions	5,370	17,759
Purchase of bank owned life insurance		(9,869)
Net cash used in investing activities	(186,379)	(160,082)
Cash flows from financing activities:
Net increase in Non-interest bearing demand deposits	111,235	215,714
Net increase in Interest bearing transaction accounts	23,031	51,309
Net increase in Money market and savings deposits	107,801	47,617
Net decrease in Certificates of deposit	(23,467)	(2,510)
Net increase in Securities sold under agreements to repurchase	9,891	7,287
Net proceeds from stock options exercised	3,695	1,434
Restricted stock repurchase	(834)	(856)
Dividends paid on preferred stock	(888)	(142)
Net excess in tax benefit on stock compensation		788
Net cash provided by financing activities	230,464	320,641
Net increase in cash and cash equivalents	69,843	178,641
Cash and cash equivalents, beginning of period	222,063	132,586
Cash and cash equivalents, end of period	291,906	311,227
Supplemental disclosures of cash flow information:
Cash paid for interest	2,469	2,127
Net cash paid for taxes	7,319	6,767
Supplemental disclosures of non-cash investing activities:
Net change in unrealized gain on available-for-sale investment securities, net of tax	$ 1,199	73
Loans transferred to other real estate owned		$ 575

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Basis of Financial Statement Presentation

9 Months Ended

Sep. 30, 2016

Accounting Policies [Abstract]

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. 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 financial statements 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. Its current headquarters office is located in Los Angeles, California. As a state chartered non-member bank, the Bank is subject to regulation by the California Department of Business Oversight (“DBO”) 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 U.S. generally accepted accounting principles (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).

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. For more detail, see Note 8 – 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 the 2015 Annual Report on Form 10-K. In the opinion of management, the accompanying interim consolidated 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 periods presented.

Use of Estimates in the Preparation of Consolidated Financial Statements

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. In addition, these accounting principles require the disclosure of contingent assets and liabilities as of the date of the consolidated financial statements.

Estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan loss and various assets and liabilities measured at fair value. While management uses the most current available information to recognize losses on loans, future additions to the allowance for loan loss may be necessary based on, among other factors, changes in local economic conditions. In addition, regulatory agencies, as an integral part of their examination process, periodically review the Company’s allowance for loan loss. Regulatory agencies may require the Company to recognize changes to the allowance for loan loss based on their judgment about information available to them at the time of their examination.

Business Segments

The Company is organized and operates as a single reporting segment, principally engaged in commercial business banking. The Company conducts its lending and deposit operations through nine full service branch offices located in Los Angeles, Orange, Ventura and San Bernardino counties.

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Recent Accounting Pronouncements

9 Months Ended

Sep. 30, 2016

Accounting Changes and Error Corrections [Abstract]

Recent Accounting Pronouncements

Note 2 - Recent Accounting Pronouncements

Accounting Standards Adopted in 2016

In March 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, to reduce the complexity of certain aspects of the accounting for employee share-based payment transactions. As a result of this ASU, changes applicable to all entities include: 1) The threshold to qualify for equity classification would permit withholding up to the maximum individual statutory tax rate in the applicable jurisdictions. Also, the ASU provides that cash paid by an employer when directly withholding shares for tax-withholding purposes would be classified as a financing activity on the statement of cash flows; 2) An entity would be allowed to make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur; 3) All excess tax benefits and tax deficiencies would be recognized as income tax expense or benefit in the income statement. An entity also would recognize excess tax benefits regardless of whether the benefit reduces taxes payable in the current period. Further, excess tax benefits would not be separated from other income tax cash flows and thus would be classified along with other cash flows as an operating activity. ASU 2016-09 is effective for public entities for interim and annual periods beginning after December 15, 2016. In the third quarter of 2016, the Company elected the early adoption of this standard which requires the Company to reflect the adjustments resulting from the adoption effective January 1, 2016, the beginning of the annual period that includes the interim period of adoption. Adoption of this standard had the following impact on the Company’s consolidated financial statements:

• Excess tax benefits are recognized in the provision for income tax expense rather than through additional paid-in capital. The Company’s early adoption of ASU 2016-09 resulted in the reclassification of $772 thousand from additional paid-in capital to provision for income tax expense during the first two quarters of 2016. During the third quarter of 2016, the Company recognized a benefit of $142 thousand in provision for income tax expense for the excess tax benefits that occurred between July 1, 2016 and September 30, 2016. These tax benefits reduced the Company’s effective tax rate by 1.33% and 2.84% for the three months and nine months ended September 30, 2016. The Company had no previously unrecognized excess tax benefits.

• Excess tax benefits are presented as operating activities rather than as an inflow from financing activities and an outflow from operating activities in the consolidated statements of cash flows. The Company’s early adoption of ASU 2016-09 resulted in the prospective presentation of $914 thousand of excess tax benefits included in the change of accrued interest payable and other liabilities under operating activities in the consolidated statement of cash flows for the nine months ended September 30, 2016.

• Employee taxes paid when an employer withholds shares for tax-withholding purposes continue to be presented as financing activities in the consolidated statements of cash flows. The Company had no awards receiving liability treatment as a result of the guidance in effect prior to ASU 2016-09. Therefore, the change from minimum to up to maximum statutory rate on tax withholdings had no impact to the consolidated financial statements as a result of the early adoption. However, withheld taxes may be higher than the minimum tax rate beginning in July 2016.

• Forfeitures are accounted for when they occur.

Recent Accounting Standards Not Yet Effective

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which replaced existing revenue recognition guidance for contracts to provide goods or services to customers and amended existing guidance related to recognition of gains and losses on the sale of certain nonfinancial assets such as real estate. ASU 2014-09 established a principles-based approach to recognizing revenue that applies to all contracts other than those covered by other authoritative GAAP guidance. Quantitative and qualitative disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows were also required. ASU 2014-09 was to be effective for interim and annual periods beginning after December 15, 2016 and was to be applied on either a modified retrospective or full retrospective basis. In August 2015, the FASB issued ASU 2015-14 which defers the original effective date for all entities by one year. Public business entities should apply the guidance in ASU 2015-14 to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company is currently evaluating the impact of this ASU on its consolidated financial statements.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments–Overall: Recognition and Measurement of Financial Assets and Financial Liabilities. Changes to the current GAAP model primarily affect the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. In addition, the FASB clarified guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. The accounting for other financial instruments, such as loans, investments in debt securities, and financial liabilities is largely unchanged. The classification and measurement guidance will be effective for public business entities in fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Entities can early adopt the provision to record fair value changes for financial liabilities under the fair value option resulting from instrument-specific credit risk in other comprehensive income. Early adoption of these provisions can be elected for all financial statements of fiscal years and interim periods that have not yet been issued or that have not yet been made available for issuance. The Company is currently evaluating the impact of this ASU on its consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The most significant change for lessees is the requirement under the new guidance to recognize right-of-use assets and lease liabilities for all leases not considered short-term leases. By definition, a short-term lease is one in which: (a) the lease term is 12 months or less and (b) there is not an option to purchase the underlying asset that the lessee is reasonably certain to exercise. For short-term leases, lessees may elect an accounting policy by class of underlying asset under which right-of-use assets and lease liabilities are not recognized and lease payments are generally recognized as expense over the lease term on a straight-line basis. This change will result in lessees recognizing right-of-use assets and lease liabilities for most leases currently accounted for as operating leases under the legacy lease accounting guidance. Examples of changes in the new guidance affecting both lessees and lessors include: (a) defining initial direct costs to only include those incremental costs that would not have been incurred if the lease had not been entered into, (b) requiring related party leases to be accounted for based on their legally enforceable terms and conditions, (c) eliminating the additional requirements that must be applied today to leases involving real estate and (d) revising the circumstances under which the transfer contract in a sale-leaseback transaction should be accounted for as the sale of an asset by the seller-lessee and the purchase of an asset by the buyer-lessor. In addition, both lessees and lessors are subject to new disclosure requirements. ASU 2016-02 is effective for public entities for interim and annual periods beginning after December 15, 2018. The Company is currently evaluating the impact of this ASU on its consolidated financial statements.

In June, 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326), which introduces new guidance for the accounting for credit losses on instruments within its scope. The new guidance introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments. It also modifies the impairment model for available-for-sale (AFS) debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. Current expected credit losses (“CECL”) model, will apply to: (1) financial assets subject to credit losses and measured at amortized cost, and (2) certain off-balance sheet credit exposures. This includes loans, held-to-maturity debt securities, loan commitments, financial guarantees, and net investments in leases, as well as reinsurance and trade receivables. Upon initial recognition of the exposure, the CECL model requires an entity to estimate the credit losses expected over the life of an exposure (or pool of exposures). The estimate of expected credit losses (ECL) should consider historical information, current information, and reasonable and supportable forecasts, including estimates of prepayments. Financial instruments with similar risk characteristics should be grouped together when estimating ECL. ASU 2016-13 is effective for public entities for interim and annual periods beginning after December 15, 2019. Early application of the guidance will be permitted for all entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the impact of this ASU on its consolidated financial statements.

In August, 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the FASB Emerging Issues Task Force), which addresses eight classification issues related to the statement of cash flows:

• Debt prepayment of debt extinguishment costs

• Settlement of zero-coupon bonds

• Contingent consideration payments made after a business combination

• Proceeds from the settlement of insurance claims

• Proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies

• Distributions received from equity method investees

• Beneficial interests in securitization transactions

• Separately identifiable cash flows and application of the predominance principle

ASU 2016-15 is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company is currently evaluating the impact of this ASU on its consolidated financial statements.

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Computation of Book Value and Tangible Book Value per Common Share

9 Months Ended

Sep. 30, 2016

Text Block [Abstract]

Computation of Book Value and Tangible Book Value per Common Share

Note 3 - Computation of Book Value and Tangible Book Value per Common Share

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

	September 30, 2016		December 31, 2015
Total Shareholders’ Equity	$	332,930	$	306,807
Less: Preferred stock		17,021		16,995
Less: Goodwill		64,603		64,603
Less: Core deposit and leasehold right intangibles, net		6,665		7,671
Tangible common equity	$	244,641	$	217,538
Common shares issued and outstanding		17,673,438		17,175,389
Book value per common share	$	17.87	$	16.87
Tangible book value per common share	$	13.84	$	12.67

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Computation of Earnings per Common Share

9 Months Ended

Sep. 30, 2016

Earnings Per Share [Abstract]

Computation of Earnings per Common Share

Note 4 - Computation of Earnings per Common Share

On July 1, 2016, and effective January 1, 2016, the Company early adopted ASU 2016-09 which provides improvements to the accounting for employee share-based payments. In calculating potential common shares used to determine diluted earnings per share, U.S. GAAP requires the Company to use the treasury stock method. The new standard requires that assumed proceeds under the treasury stock method be modified to exclude the amount of excess tax benefits that would have been recognized in additional paid-in capital. The early adoption had a favorable impact of $0.01 per share for both basic and diluted earnings per common share for the three months ended September 30, 2016, and a favorable impact of $0.06 and $0.05 per share for basic and diluted earnings per common share, respectively, for the nine months ended September 30, 2016. See Note 2. Recent Accounting Pronouncements for additional information.

Basic and diluted earnings per common share were determined by dividing net income available to common shareholders by the applicable basic and diluted weighted average common shares outstanding. The following table shows weighted average basic common shares outstanding, potential dilutive shares related to stock options, unvested restricted stock, and weighted average diluted shares for the periods indicated (dollars in thousands, except share and per share data):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Net Income	$	6,583	$	6,263	$	20,287	$	15,729
Less: Preferred stock dividends and discount accretion		304		293		914		877
Net Income available to common shareholders	$	6,279	$	5,970	$	19,373	$	14,852
Weighted average basic common shares outstanding		17,339,491		16,541,380		17,197,117		16,477,206
Dilutive effect of potential common share issuances from stock options and restricted stock		265,896		456,684		312,458		446,296
Weighted average diluted common shares outstanding		17,605,387		16,998,064		17,509,575		16,923,502
Income per common share
Basic	$	0.36	$	0.36	$	1.13	$	0.90
Diluted	$	0.36	$	0.35	$	1.11	$	0.88
Anti-dilutive shares not included in the calculation of diluted earnings per share		—		—		1,000		43,259

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Investment Securities

9 Months Ended

Sep. 30, 2016

Investments, Debt and Equity Securities [Abstract]

Investment Securities

Note 5 - Investment Securities

The investment securities portfolio has been classified into two categories: available-for-sale (“AFS”) and held-to-maturity (“HTM”).

The following tables present the amortized cost, gross unrealized gains and losses, and fair values of investment securities by major category as of the dates indicated (dollars in thousands):

			Gross Unrealized
September 30, 2016	Amortized Cost		Gains		Losses		Fair Market Value
Available-for-sale:
U.S. Govt Agency and Sponsored Agency - Note Securities	$	7,003	$	1	$	—	$	7,004
U.S. Govt Agency - SBA Securities		107,759		582		367		107,974
U.S. Govt Agency - GNMA Mortgage-Backed Securities		25,123		207		116		25,214
U.S. Govt Sponsored Agency - CMO & Mortgage-Backed Securities		146,632		1,030		424		147,238
Corporate Securities		501		1		—		502
Asset Backed Securities		7,303		—		281		7,022
U.S. Treasury Notes		80,112		65		37		80,140
Total available-for-sale		374,433		1,886		1,225		375,094
Held-to-maturity:
Municipal Securities		40,073		620		2		40,691
Total held-to-maturity		40,073		620		2		40,691
Total investment securities	$	414,506	$	2,506	$	1,227	$	415,785

			Gross Unrealized
December 31, 2015	Amortized Cost		Gains		Losses		Fair Market Value
Available-for-sale:
U.S. Govt Agency and Sponsored Agency - Note Securities	$	1,014	$	—	$	—	$	1,014
U.S. Govt Agency - SBA Securities		93,674		399		583		93,490
U.S. Govt Agency - GNMA Mortgage-Backed Securities		30,916		202		418		30,700
U.S. Govt Sponsored Agency - CMO & Mortgage-Backed Securities		97,693		250		789		97,154
Corporate Securities		4,016		7		—		4,023
Municipal Securities		1,010		1		—		1,011
Asset Backed Securities		7,890		—		243		7,647
U.S. Treasury Notes		80,981		—		235		80,746
Total available-for-sale		317,194		859		2,268		315,785
Held-to-maturity:
Municipal Securities		42,036		335		32		42,339
Total held-to-maturity		42,036		335		32		42,339
Total investment securities	$	359,230	$	1,194	$	2,300	$	358,124

The Company’s investment securities portfolio at September 30, 2016 consists of A-rated or above investment-grade securities. At September 30, 2016 and December 31, 2015, securities with a market value of $194 million and $197 million, respectively, were pledged as collateral for securities sold under agreements to repurchase, public deposits, outstanding standby letters of credit, bankruptcy deposits, and other purposes as required by various statutes and agreements. See Note 8 – Borrowings and Subordinated Debentures.

The following tables present the gross unrealized losses and fair values of AFS and HTM investment securities that were in unrealized loss positions, summarized and classified according to the duration of the loss period as of the dates indicated (dollars in thousands).

	< 12 Continuous Months				> 12 Continuous Months				Total
September 30, 2016	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
Available-for-sale investment securities:
U.S. Govt. Agency SBA Securities	$	46,340	$	184	$	19,285	$	183	$	65,625	$	367
U.S. Govt. Agency – GNMA Mortgage-Backed Securities		2,521		27		8,878		89		11,399		116
U.S. Govt. Sponsored Agency – CMO & Mortgage-Backed Securities		41,497		292		11,498		132		52,995		424
Asset Backed Securities		—		—		7,022		281		7,022		281
U.S Treasury Notes		10,098		37		—		—		10,098		37
Total available-for-sale investment securities	$	100,456	$	540	$	46,683	$	685	$	147,139	$	1,225
Held-to-maturity investment securities:
Municipal Securities	$	700	$	1	$	313	$	1	$	1,013	$	2
Total held-to-maturity investment securities	$	700	$	1	$	313	$	1	$	1,013	$	2

	< 12 Continuous Months				> 12 Continuous Months				Total
December 31, 2015	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
Available-for-sale investment securities:
U.S. Govt. Agency SBA Securities	$	53,852	$	428	$	7,935	$	154	$	61,787	$	582
U.S. Govt. Agency – GNMA Mortgage-Backed Securities		5,417		47		14,296		371		19,713		418
U.S. Govt. Sponsored Agency – CMO & Mortgage-Backed Securities		67,475		564		10,024		225		77,499		789
Asset Backed Securities		2,928		54		4,719		190		7,647		244
U.S Treasury Notes		80,745		235		—		—		80,745		235
Total available-for-sale investment securities	$	210,417	$	1,328	$	36,974	$	940	$	247,391	$	2,268
Held-to-maturity investment securities:
Municipal Securities	$	5,669	$	16	$	2,392	$	16	$	8,061	$	32
Total held-to-maturity investment securities	$	5,669	$	16	$	2,392	$	16	$	8,061	$	32

The unrealized losses in each of the above categories are associated with the general fluctuation of market interest rates and are not an indication of any deterioration in the credit quality of the security issuers. Further, the Company does not intend to sell these securities and is not more-likely-than-not to be required to sell the securities before the recovery of its amortized cost basis. Accordingly, the Company had no securities that were classified as other-than-temporarily impaired at September 30, 2016 or December 31, 2015, and did not recognize any impairment charges in the consolidated statements of income.

The amortized cost, fair value and the weighted average yield of debt securities at September 30, 2016, are reflected in the table below (dollars in thousands). Maturity categories are determined as follows:

• U.S. Govt. Agency, U.S. Treasury Notes 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, Asset Backed Securities and U.S. Gov. Agency SBA Securities – estimated cash flow taking into account estimated pre-payment speeds

• Investment grade Corporate Bonds and Municipal Securities – the earlier of the maturity date or the expected call date

Although, U.S. Government Agency and U.S. Government Sponsored Agency Mortgage-Backed and CMO securities have contractual maturities through 2048, the expected maturity will differ from the contractual maturities because borrowers or issuers may have the right to prepay such obligations without penalties.

	September 30, 2016
Maturities Schedule of Securities (Dollars in thousands)	Amortized Cost		Fair Value		Weighted Average Yield
Available-for-sale:
Due through one year	$	99,048	$	99,243		1.21	%
Due after one year through five years		170,285		170,343		1.45	%
Due after five years through ten years		79,234		79,523		1.93	%
Due after ten years		25,866		25,985		2.30	%
Total available-for-sale	$	374,433	$	375,094		1.54	%
Held-to-maturity:
Due through one year	$	2,950	$	2,956		1.49	%
Due after one year through five years		36,389		36,972		1.59	%
Due after five years through ten years		734		763		1.97	%
Total held-to-maturity	$	40,073	$	40,691		1.59	%
Total investment securities	$	414,506	$	415,785		1.55	%

The weighted average yields in the above table are based on effective rates of book balances at the end of the period.

Investment in Federal Home Loan Bank (FHLB) Common Stock

The Company’s investment in the common stock of the FHLB of San Francisco is carried at cost and was $9.2 million at September 30, 2016 and $8.0 million at December 31, 2015. The investment in FHLB stock is included in accrued interest receivable and other assets in the consolidated balance sheets and is periodically evaluated for impairment. Based on the capital adequacy of the FHLB and its overall financial condition, no impairment losses have been recorded.

See Note 8 - Borrowings and Subordinated Debentures for a detailed discussion regarding the Company’s borrowings and the related requirements to hold FHLB common stock.

XML

Loans

9 Months Ended

Sep. 30, 2016

Receivables [Abstract]

Loans

Note 6 - Loans

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

	September 30, 2016		December 31, 2015
Commercial and Industrial Loans:	$	499,439	$	537,368
Loans Secured by Real Estate:
Owner-Occupied Nonresidential Properties		430,218		407,979
Other Nonresidential Properties		610,267		533,168
Construction, Land Development and Other Land		172,441		125,832
1-4 Family Residential Properties		122,955		114,525
Multifamily Residential Properties		100,003		71,179
Total Loans Secured by Real Estate		1,435,884		1,252,683
Other Loans:		39,618		43,112
Total Loans	$	1,974,941	$	1,833,163

Loan balances in the table above include net deferred fees and net discounts for a total of $17 million and $22 million as of September 30, 2016 and December 31, 2015, respectively.

Small Business Administration Loans

Included in the loan portfolio is $31 million in loans that were originated under the guidelines of the Small Business Administration (“SBA”) program of which $5 million is guaranteed. The total portfolio of the SBA contractual loan balances serviced by the Company at September 30, 2016 was $109 million, of which $78 million has been sold.

At September 30, 2016, there were no loans classified as held for sale. At September 30, 2016, the balance of SBA 7a loans originated during the quarter is $425 thousand, of which $319 thousand is guaranteed by the SBA. The Company does not currently plan on selling these loans, but it may choose to do so in the future.

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 September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Allowance for loan loss at beginning of period	$	18,476		$	14,124		$	15,682		$	12,610
Provision for loan losses		697			705			2,382			2,831
Net (charge-offs) recoveries:
Charge-offs		(807	)		(42	)		(827	)		(933	)
Recoveries		5			178			1,134			457
Net (charge-offs) recoveries		(802	)		136			307			(476	)
Allowance for loan loss at end of period	$	18,371		$	14,965		$	18,371		$	14,965
Net (charge-offs) recoveries to average loans		(0.04	)%		0.01	%		0.02	%		(0.03	)%

	September 30, 2016			December 31, 2015
Allowance for loan loss to total loans		0.93	%		0.86	%
Allowance for loan loss to total loans accounted for at historical cost, which excludes loans and the related allowance for loans acquired through acquisition		1.20	%		1.25	%

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 September 30, 2016
Allowance for loan loss – Beginning balance	$	8,381		$	2,724	$	6,567		$	804		$	18,476
Provision for loan losses		(559	)		45		1,294			(83	)		697
Net (charge-offs) recoveries:
Charge-offs		(807	)		—		—			—			(807	)
Recoveries		3			—		2			—			5
Net (charge-offs) recoveries		(804	)		—		2			—			(802	)
Ending balance	$	7,018		$	2,769	$	7,863		$	721		$	18,371
Three Months Ended September 30, 2015
Allowance for loan loss – Beginning balance	$	6,244		$	1,607	$	5,799		$	474		$	14,124
Provision for loan losses		181			371		143			10			705
Net (charge-offs) recoveries:
Charge-offs		—			—		(42	)		—			(42	)
Recoveries		177			—		1			—			178
Net (charge-offs) recoveries		177			—		(41	)		—			136
Ending balance	$	6,602		$	1,978	$	5,901		$	484		$	14,965

	Commercial and Industrial			Construction, Land Development and Other Land		Commercial and Other Real Estate			Other			Total
Nine Months Ended September 30, 2016
Allowance for loan loss – Beginning balance	$	5,924		$	2,076	$	6,821		$	861		$	15,682
Provision for loan losses		791			693		1,038			(140	)		2,382
Net (charge-offs) recoveries:
Charge-offs		(827	)		—		—			—			(827	)
Recoveries		1,130			—		4			—			1,134
Net recoveries		303			—		4			—			307
Ending balance	$	7,018		$	2,769	$	7,863		$	721		$	18,371
Nine Months Ended September 30, 2015
Allowance for loan loss – Beginning balance	$	5,864		$	1,684	$	4,802		$	260		$	12,610
Provision for loan losses		1,176			294		1,137			224			2,831
Net (charge-offs) recoveries:
Charge-offs		(891	)		—		(42	)		—			(933	)
Recoveries		453			—		4			—			457
Net (charge-offs)		(438	)		—		(38	)		—			(476	)
Ending balance	$	6,602		$	1,978	$	5,901		$	484		$	14,965

The following tables present both the allowance for loan loss and the associated loan balance classified by loan portfolio segment and by credit evaluation methodology (dollars in thousands):

	Commercial and Industrial		Construction, Land Development and Other Land		Commercial and Other Real Estate		Other		Total
September 30, 2016
Allowance for loan loss:
Individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—
Collectively evaluated for impairment		7,018		2,769		7,863		721		18,371
Purchased credit impaired (loans acquired with deteriorated credit quality)		—		—		—		—		—
Total Allowance for Loan Loss	$	7,018	$	2,769	$	7,863	$	721	$	18,371
Loans receivable:
Individually evaluated for impairment	$	456	$	—	$	252	$	—	$	708
Collectively evaluated for impairment		498,669		172,441		1,261,789		39,618		1,972,517
Purchased credit impaired (loans acquired with deteriorated credit quality)		314		—		1,402		—		1,716
Total Loans Receivable	$	499,439	$	172,441	$	1,263,443	$	39,618	$	1,974,941

	Commercial and Industrial		Construction, Land Development and Other Land		Commercial and Other Real Estate		Other		Total
December 31, 2015
Allowance for loan loss:
Individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—
Collectively evaluated for impairment		5,924		2,076		6,821		861		15,682
Purchased credit impaired (loans acquired with deteriorated credit quality)		—		—		—		—		—
Total Allowance for Loan Loss	$	5,924	$	2,076	$	6,821	$	861	$	15,682
Loans receivable:
Individually evaluated for impairment	$	558	$	—	$	649	$	—	$	1,207
Collectively evaluated for impairment		536,333		125,832		1,124,667		43,112		1,829,944
Purchased credit impaired (loans acquired with deteriorated credit quality)		477		—		1,535		—		2,012
Total Loans Receivable	$	537,368	$	125,832	$	1,126,851	$	43,112	$	1,833,163

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. There are several different levels of Pass rated credits, including “Watch” which is considered a transitory grade for pass rated loans that require greater monitoring. 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
September 30, 2016
Pass	$	445,172	$	172,441	$	1,234,950	$	36,701	$	1,889,264
Special Mention		18,939		—		4,747		—		23,686
Substandard		35,328		—		23,746		2,917		61,991
Doubtful		—		—		—		—		—
Total	$	499,439	$	172,441	$	1,263,443	$	39,618	$	1,974,941
December 31, 2015
Pass	$	503,006	$	125,832	$	1,101,548	$	40,132	$	1,770,518
Special Mention		16,041		—		6,494		43		22,578
Substandard		18,321		—		18,809		2,937		40,067
Doubtful		—		—		—		—		—
Total	$	537,368	$	125,832	$	1,126,851	$	43,112	$	1,833,163

Aging 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
September 30, 2016
Commercial and Industrial	$	—	$	—	$	—	$	—	$	769	$	498,670	$	499,439
Construction, Land Development and Other Land		—		—		—		—		—		172,441		172,441
Commercial and Other Real Estate		—		—		—		—		454		1,262,989		1,263,443
Other		—		—		—		—		—		39,618		39,618
Total	$	—	$	—	$	—	$	—	$	1,223	$	1,973,718	$	1,974,941

	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, 2015
Commercial and Industrial	$	—	$	—	$	—	$	—	$	1,032	$	536,336	$	537,368
Construction, Land Development and Other Land		—		—		—		—		—		125,832		125,832
Commercial and Other Real Estate		—		—		—		—		1,019		1,125,832		1,126,851
Other		—		—		—		—		—		43,112		43,112
Total	$	—	$	—	$	—	$	—	$	2,051	$	1,831,112	$	1,833,163

Impaired Loans

A loan is identified as impaired when it is probable that interest and principal will not be collected according to the contractual terms of the original loan agreement. Generally, these loans are rated substandard or worse. Most impaired loans are classified as nonaccrual. However, there are some loans that are designated impaired due to doubt regarding collectability according to contractual terms, but are both fully secured by collateral and are current in their interest and principal payments. These impaired loans that are not classified as nonaccrual continue to pay as agreed. Impaired loans are measured for allowance requirements based on the present value of expected future cash flows discounted at the loan’s effective interest rate or, as a practical expedient, at the loan’s observable market price or the fair value of the collateral if the loan is collateral dependent. The amount of an impairment allowance, if any and any subsequent changes are charged against the allowance for loan loss. In certain cases, portions of impaired loans are charged-off to the fair value of the loan instead of establishing a valuation allowance and are included, when applicable, in the table below as impaired loans “with no specific allowance recorded.” The valuation allowance disclosed below is included in the allowance for loan loss reported in the consolidated balance sheets as of September 30, 2016 and December 31, 2015.

The following tables present, by loan portfolio segment, the recorded investment and unpaid principal balances for impaired loans with the associated allowance amount, if applicable, for the dates and periods indicated (dollars in thousands). This table excludes purchased credit impaired loans (loans acquired in acquisitions with deteriorated credit quality) of $1.7 million and $2.0 million at September 30, 2016 and December 31, 2015, respectively.

	September 30, 2016						December 31, 2015
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
With no specific allowance recorded:
Commercial and Industrial	$	456	$	1,402	$	—	$	558	$	1,027	$	—
Commercial and Other Real Estate		252		286		—		649		692		—
With an allowance recorded:
Commercial and Industrial		—		—		—		—		—		—
Total
Commercial and Industrial		456		1,402		—		558		1,027		—
Commercial and Other Real Estate		252		286		—		649		692		—
Total	$	708	$	1,688	$	—	$	1,207	$	1,719	$	—

	Three Months Ended September 30,								Nine Months Ended September 30,
	2016				2015				2016				2015
	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	$	418	$	—	$	2,118	$	—	$	396	$	—	$	1,757	$	—
Commercial and Other Real Estate		252		—		99		—		254		—		104		—
With a specific allowance recorded:
Commercial and Industrial		—		—		1,328		—		—		—		1,328		—
Commercial and Other Real Estate		—		—		413		—		—		—		550		—
Total:
Commercial and Industrial		418		—		3,446		—		396		—		3,085		—
Commercial and Other Real Estate		252		—		512		—		254		—		654		—
Total	$	670	$	—	$	3,958	$	—	$	650	$	—	$	3,739	$	—

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

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Interest foregone on impaired loans	$	22	$	81	$	68	$	238
Cash collections applied to reduce principal balance	$	230	$	23	$	282	$	186
Interest income recognized on cash collections	$	—	$	—	$	—	$	—

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 stated interest rate, payment extensions, principal forgiveness or other actions.

The modification process includes evaluation of impairment based on the present value of expected future cash flows, discounted at the effective 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.

The following tables include the recorded investment and unpaid principal balances for troubled debt restructured loans at September 30, 2016 and December 31, 2015 (dollars in thousands). These tables include TDR loans that were purchased credit impaired (“PCI”). TDR loans that are non-PCI loans are included in the Impaired Loans tables above. As of September 30, 2016, there were two PCI loans that are considered to be TDR loans with a recorded investment of $115 thousand and unpaid principal balances of $287 thousand.

	As of and for the Three Months Ended September 30, 2016						As of and for the Nine Months Ended September 30, 2016
	Recorded Investment		Unpaid Principal Balance		Interest Income Recognized		Recorded Investment		Unpaid Principal Balance		Interest Income Recognized
Commercial and Industrial	$	533	$	1,230	$	—	$	533	$	1,230	$	—
Total	$	533	$	1,230	$	—	$	533	$	1,230	$	—
	As of and for the Three Months Ended September 30, 2015						As of and for the Nine Months Ended September 30, 2015
	Recorded Investment		Unpaid Principal Balance		Interest Income Recognized		Recorded Investment		Unpaid Principal Balance		Interest Income Recognized
Commercial and Industrial	$	1,780	$	2,385	$	—	$	1,780	$	2,385	$	—
Commercial and Other Real Estate		99		105		—		99		105		—
Total	$	1,879	$	2,490	$	—	$	1,879	$	2,490	$	—

	As of and for the Twelve Months Ended December 31, 2015
	Recorded Investment		Unpaid Principal Balance		Interest Income Recognized
Commercial and Industrial	$	627	$	1,363	$	—
Total	$	627	$	1,363	$	—

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

	Three Months Ended September 30,
	2016						2015
	Number of Loans		Pre- Modification Recorded Investment		Post- Modification Recorded Investment		Number of Loans		Pre- Modification Recorded Investment		Post- Modification Recorded Investment
Troubled Debt Restructured Loans:
Commercial and Industrial		1	$	650	$	184		3	$	1,335	$	1,335
Total		1	$	650	$	184		3	$	1,335	$	1,335

	Nine Months Ended September 30,
	2016						2015
	Number of Loans		Pre- Modification Recorded Investment		Post- Modification Recorded Investment		Number of Loans		Pre- Modification Recorded Investment		Post- Modification Recorded Investment
Troubled Debt Restructured Loans:
Commercial and Industrial		1	$	650	$	184		3	$	1,335	$	1,335
Total		1	$	650	$	184		3	$	1,335	$	1,335

There have been no payment defaults in the three or nine months ended September 30, 2016 or September 30, 2015 subsequent to modification on troubled debt restructured loans that have been 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.

There were no commitments to lend additional funds to borrowers whose terms have been modified in troubled debt restructurings at September 30, 2016 or December 31, 2015.

Loans Acquired Through Acquisition

The following table reflects the accretable net discount for acquired loans for the periods indicated (dollars in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Balance, beginning of period	$	11,928		$	18,255		$	14,610		$	21,402
Accretion, included in interest income		(1,229	)		(1,463	)		(3,879	)		(4,140	)
Reclassifications to non-accretable yield		—			(5	)		(32	)		(475	)
Balance, end of period	$	10,699		$	16,787		$	10,699		$	16,787

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 Loans

PCI loans are acquired loans with evidence of deterioration of credit quality since origination and it is probable at the acquisition date, that the Company will not be able 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 PCI 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):

	September 30, 2016				December 31, 2015
	Unpaid Principal Balance		Carrying Value		Unpaid Principal Balance		Carrying Value
Commercial and Industrial	$	639	$	314	$	2,331	$	477
Commercial and Other Real Estate		2,007		1,402		2,250		1,535
Other		—		—		61		—
Total	$	2,646	$	1,716	$	4,642	$	2,012

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

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Balance, beginning of period	$	205		$	286		$	246		$	324
Accretion, included in interest income		(22	)		(20	)		(63	)		(58	)
Reclassifications from non-accretable yield		—			—			—			—
Balance, end of period	$	183		$	266		$	183		$	266

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Qualified Affordable Housing Project Investments

9 Months Ended

Sep. 30, 2016

Federal Home Loan Banks [Abstract]

Qualified Affordable Housing Project Investments

Note 7 – Qualified Affordable Housing Project Investments

The Company’s investment in Qualified Affordable Housing Projects that generate Low Income Housing Tax Credits (“LIHTC”) was $3.4 million at September 30, 2016 and $3.7 million at December 31, 2015. The funding liability for the LIHTC at September 30, 2016 was $647 thousand compared to $1.1 million at December 31, 2015. The amount of tax credits and other tax benefits recognized was $143 thousand and $436 thousand for the three and nine months ended September 30, 2016 and $146 thousand and $436 thousand for the three and nine months ended September 30, 2015, respectively. Further, the amount of amortization expense included in the provision for income taxes was $112 thousand and $336 thousand for the three and nine months ended September 30, 2016 and $114 thousand and $343 thousand for the three and nine months ended September 30, 2015, respectively. These investments and related tax credits are described more fully in Note 11 – Qualified Affordable Housing Project Investments in the Company’s Form 10-K for the year ended December 31, 2015.

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Borrowings and Subordinated Debentures

9 Months Ended

Sep. 30, 2016

Brokers and Dealers [Abstract]

Borrowings and Subordinated Debentures

Note 8 - 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 and are routinely renewed.

As discussed in Note 5 – Investment Securities, the Company has pledged certain investments as collateral for these agreements. Securities with a fair value of $55 million and $47 million were pledged to secure the Repos at September 30, 2016 and December 31, 2015, respectively.

The tables below describe the terms and maturity of the Company’s securities sold under agreements to repurchase as of the dates indicated (dollars in thousands):

	September 30, 2016
Date Issued	Amount		Interest Rate		Original Term		Maturity Date
September 30, 2016	$	24,251		0.10% – 0.25%		3 days		October 3, 2016
Total	$	24,251		0.24%

	December 31, 2015
Date Issued	Amount		Interest Rate		Original Term		Maturity Date
December 31, 2015	$	14,360		0.08% – 0.25%		4 days		January 4, 2016
Total	$	14,360		0.19%

FHLB Borrowings

The Company maintains a secured credit facility with the FHLB, allowing the Company to borrow on an overnight and term basis. The Company’s credit facility with the FHLB is $694 million, which represents approximately 25% of the Bank’s total assets, as reported by the Bank in its June 30, 2016 Federal Financial Institution Examination Council (FFIEC) Call Report.

As of September 30, 2016, the Company had $953 million of loan collateral pledged with the FHLB which provides $633 million in borrowing capacity. The Company has $17 million in investment securities pledged with the FHLB to support this credit facility. In addition, the Company must maintain an investment in the capital stock of the FHLB. Under the FHLB Act, the FHLB has a statutory lien on the FHLB capital stock that the Company owns and the FHLB capital stock serves as further collateral under the borrowing line.

The Company had no outstanding advances (borrowings) with the FHLB as of September 30, 2016 or December 31, 2015.

Subordinated Debentures

The following table summarizes the terms of each issuance of subordinated debentures outstanding as of the dates indicated (dollars in thousands):

September 30, 2016
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	%		2.90	%		12/15/16
Trust II		3,093			12/23/05		03/15/36		3 month LIBOR + 1.75	%		2.60	%		12/15/16
Trust III		3,093			06/30/06		09/18/36		3 month LIBOR + 1.85	%		2.70	%		12/15/16
Subtotal		12,372
Unamortized fair value adjustment		(2,555	)
Net	$	9,817

December 31, 2015
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	%		2.56	%		03/15/16
Trust II		3,093			12/23/05		03/15/36		3 month LIBOR + 1.75	%		2.26	%		03/15/16
Trust III		3,093			06/30/06		09/18/36		3 month LIBOR + 1.85	%		2.36	%		03/15/16
Subtotal		12,372
Unamortized fair value adjustment		(2,675	)
Net	$	9,697

The Company had an aggregate outstanding contractual balance of $12.4 million in subordinated debentures at September 30, 2016. 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 London Interbank Offered Rate (“LIBOR”) plus a margin (see tables above). All three subordinated debentures had their interest rates reset in September 2016 at the current three month LIBOR plus their index, and will continue to reprice quarterly through their maturity date. All three subordinated debentures are currently callable at par with no prepayment penalties.

Under Dodd Frank, trust preferred securities are excluded from Tier 1 capital, unless such securities were issued prior to May 19, 2010 by a bank holding company with less than $15 billion in assets. CU Bancorp assumed approximately $12.4 million of junior subordinated debt securities issued to various business trust subsidiaries of PC Bancorp and funded through the issuance of approximately $12.0 million of floating rate capital trust preferred securities. These junior subordinated debt securities were issued prior to May 19, 2010. Because CU Bancorp has less than $15 billion in assets, the trust preferred securities that CU Bancorp assumed from PC Bancorp continue to be included in Tier 1 capital, subject to a limit of 25% of Tier 1 capital elements.

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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Derivative Financial Instruments

9 Months Ended

Sep. 30, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

Note 9 - Derivative Financial Instruments

The Company is exposed to certain risks relating to its ongoing business operations and utilizes interest rate swap agreements (“swaps”) as part of its asset/liability management strategy to help manage its interest rate risk position. The Company has two counterparty banks.

Derivative Financial Instruments Acquired from 1^st Enterprise Bank

At September 30, 2016, the Company has twelve interest rate swap agreements with customers and twelve offsetting interest-rate swaps with a counterparty bank. The swap agreements are not designated as hedging instruments. The purpose of entering into offsetting derivatives not designated as a hedging instrument is to provide the Company a variable-rate loan receivable and provide the customer the financial effects of a fixed-rate loan without creating significant interest rate risk in the Company’s earnings.

The structure of the swaps is as follows: The Company enters into a swap with its customers to allow them to convert variable rate loans to fixed rate loans, and at the same time, the Company enters into a swap with the counterparty bank to allow the Company to pass on the interest-rate risk associated with fixed rate loans. The net effect of the transaction allows the Company to receive interest on the loan from the customer at a variable rate based on LIBOR plus a spread. The changes in the fair value of the swaps primarily offset each other and therefore should not have a significant impact on the Company’s results of operations. The interest rate swap derivatives acquired from 1^st Enterprise Bank are subject to a master netting arrangement with one counterparty bank. None of the derivative assets and liabilities are offset in the balance sheet.

The Company believes the risk of loss associated with counterparty borrowers relating to interest rate swaps is mitigated as the loans with swaps are underwritten to take into account potential additional exposure, although there can be no assurances in this regard since the performance of the swaps is subject to market and counterparty risk. At September 30, 2016 and December 31, 2015, the total notional amount of the Company’s swaps with the counterparty bank was $27 million and $28 million, respectively.

The following tables present the fair values of the asset and liability of the Company’s derivative instruments acquired from 1^st Enterprise Bank as of the dates and periods indicated (dollars in thousands):

	September 30, 2016		December 31, 2015
Interest rate swap contracts fair value	$	1,484	$	881
Balance sheet location		Accrued Interest Receivable and Other Assets		Accrued Interest Receivable and Other Assets
	September 30, 2016		December 31, 2015
Interest rate swap contracts fair value	$	1,484	$	881
Balance sheet location		Accrued Interest Payable and Other Liabilities		Accrued Interest Payable and Other Liabilities

Derivative Financial Instruments Acquired from PC Bancorp

At September 30, 2016, the Company also has sixteen pay-fixed, receive-variable, interest rate swaps with one counterparty bank that are designed to convert fixed rate loans into variable rate loans.

The following table presents the notional amount and the fair values of the asset and liability of the Company’s derivative instruments acquired from PC Bancorp as of the dates indicated (dollars in thousands):

	Fair Value Hedges
	September 30, 2016		December 31, 2015
Total interest rate contracts notional amount	$	22,001	$	25,938
Derivatives not designated as hedging instruments:
Interest rate swap contracts fair value	$	156	$	313
Derivatives designated as hedging instruments:
Interest rate swap contracts fair value		940		1,351
Total interest rate contracts fair value	$	1,096	$	1,664
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

The following table summarizes the effect of derivative financial instruments on the consolidated statements of income for the periods indicated (dollars in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Derivatives not designated as hedging instruments:
Interest rate swap contracts – loans
Increase in fair value of interest rate swap contracts	$	66		$	41		$	156		$	124
Payments on interest rate swap contracts on loans		(60	)		(66	)		(181	)		(198	)
Net decrease in other non-interest income		6			(25	)		(25	)		(74	)
Derivatives designated as hedging instruments:
Interest rate swap contracts – loans
Increase in fair value of interest rate swap contracts	$	249		$	142		$	412		$	583
Increase (decrease) in fair value of hedged loans		(68	)		191			215			279
Payment on interest rate swap contracts on loans		(202	)		(275	)		(657	)		(846	)
Net decrease in interest income on loans	$	(21	)	$	58		$	(30	)	$	16

Under all of the Company’s interest rate swap contracts, the Company is required to pledge and maintain collateral for the credit support under these agreements. At September 30, 2016, the Company has pledged $2.3 million in investment securities, $2.7 million in certificates of deposit, for a total of $5.0 million, as collateral under the swap agreements.

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Balance Sheet Offsetting

9 Months Ended

Sep. 30, 2016

Text Block [Abstract]

Balance Sheet Offsetting

Note 10 – Balance Sheet Offsetting

Assets and liabilities relating to certain financial instruments, including derivatives, and securities sold under repurchase agreements (“Repos”), may be eligible for offset in the consolidated balance sheets as permitted under accounting guidance. The Company’s interest rate swap derivatives are subject to a master bilateral netting and offsetting arrangement under specific conditions as defined within a master agreement governing all interest rate swap contracts that the Company and the counterparty banks have entered into. In addition, the master agreement under which the interest rate contracts have been written require the pledging of assets by the Company based on certain risk thresholds. The Company has pledged a certificate of deposit and investment securities as collateral under the swap agreements. The pledged collateral under the swap agreements are reported in the Company’s consolidated balance sheets, unless the Company defaults under the master agreement. The Company currently does not net or offset the interest rate swap contracts in its consolidated balance sheets, as reflected within the table below.

The Company’s securities sold under repurchase agreements represent transactions the Company has entered into with several deposit customers. These transactions represent the sale of securities on an overnight or on a term basis to our deposit customers under an agreement to repurchase the securities from the customers the next business day or at maturity. There is an individual contract for each customer with only one transaction per customer. There is no master agreement that provides for the netting arrangement or the offsetting of these individual transactions or for the netting of collateral positions. The Company does not net or offset the Repos in its consolidated balance sheets as reflected within the table below.

The table below presents the Company’s financial instruments that may be eligible for offsetting which include securities sold under agreements to repurchase that have no enforceable master netting arrangement and derivative securities that could be offset in the consolidated financial statements due to an enforceable master netting arrangement (dollars in thousands):

	Gross Amounts Recognized in the Consolidated Balance Sheets		Gross Amounts Offset in the Consolidated Balance Sheets		Net Amounts of Assets / Liabilities Presented in the Consolidated Balance Sheets		Gross Amounts Not Offset in the Consolidated Balance Sheets				Net Amount (Collateral over liability balance required to be pledged)
							Financial Instruments		Collateral Pledged
September 30, 2016
Financial Assets:
Interest rate swap contracts fair value (See Note 9 – Derivative Financial Instruments)	$	1,484	$	—	$	1,484	$	1,484	$	—	$	—
Total	$	1,484	$	—	$	1,484	$	1,484	$	—	$	—
Financial Liabilities:
Interest rate swap contracts fair value (See Note 9 – Derivative Financial Instruments)	$	2,580	$	—	$	2,580	$	2,580	$	5,041	$	2,461
Securities sold under agreements to repurchase (See Note 8 – Borrowings and Subordinated Debentures)		24,251		—		24,251		24,251		55,250		30,999
Total	$	26,831	$	—	$	26,831	$	26,831	$	60,291	$	33,460

	Gross Amounts Recognized in the Consolidated Balance Sheets		Gross Amounts Offset in the Consolidated Balance Sheets		Net Amounts of Assets / Liabilities Presented in the Consolidated Balance Sheets		Gross Amounts Not Offset in the Consolidated Balance Sheets				Net Amount (Collateral over liability balance required to be pledged)
							Financial Instruments		Collateral Pledged
December 31, 2015
Financial Assets:
Interest rate swap contracts fair value (See Note 9 – Derivative Financial Instruments)	$	881	$	—	$	881	$	881	$	—	$	—
Total	$	881	$	—	$	881	$	881	$	—	$	—
Financial Liabilities:
Interest rate swap contracts fair value (See Note 9 – Derivative Financial Instruments)	$	2,545	$	—	$	2,545	$	2,545	$	4,759	$	2,214
Securities sold under agreements to repurchase (See Note 8 – Borrowings and Subordinated Debentures)		14,360		—		14,360		14,360		46,596		32,236
Total	$	16,905	$	—	$	16,905	$	16,905	$	51,355	$	34,450

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Stock Options and Restricted Stock

9 Months Ended

Sep. 30, 2016

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

Stock Options and Restricted Stock

Note 11 - Stock Options and Restricted Stock

Equity Compensation Plans

The Company’s 2007 Equity and Incentive Plan (“Equity Plan”) was adopted by the Company in 2007 and replaced two prior equity compensation plans. The Equity Plan provides for significant flexibility in determining the types and terms of awards that may be made to participants. The Equity Plan was revised and approved by the Company’s shareholders in 2011 and adopted by the Company as part of the Bank holding company reorganization. This plan is designed to promote the interest of the Company in aiding the Company to attract and retain employees, officers and non-employee directors who are expected to contribute to the future success of the organization. The Equity Plan is intended to provide participants with incentives to maximize their efforts on behalf of the Company through stock-based awards that provide an opportunity for stock ownership. This plan provides the Company with a flexible equity incentive compensation program, which allows the Company to grant stock options, restricted stock, restricted stock award units and performance units. Certain options and share awards provide for accelerated vesting, if there is a change in control, as defined in the Equity Plan. These plans are described more fully in Note 16 - Stock Options and Restricted Stock in the Company’s Form 10-K for the year ended December 31, 2015.

On July 1, 2016, and effective January 1, 2016, the Company early adopted ASU 2016-09 which provides improvements to the accounting for employee share-based payments. See Note 2. Recent Accounting Pronouncements for additional information.

At September 30, 2016, future compensation expense related to unvested restricted stock grants are reflected in the table below (dollars in thousands):

Future Restricted Stock Expense
Remainder of 2016	$	842
2017		1,910
2018		667
2019		185
Thereafter		36
Total	$	3,640

At September 30, 2016, the weighted-average period over which the total compensation cost related to unvested restricted stock grants not yet recognized is 2.5 years. There was no future compensation expense related to unvested stock options as of September 30, 2016. All stock options outstanding at September 30, 2016 are vested.

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 (in thousands)
Outstanding stock options at December 31, 2015		557,471		$	10.57		0.8	$	8,248
Granted		—
Exercised		(411,964	)
Forfeited		—
Expired		(4,500	)
Outstanding stock options at September 30, 2016		141,007		$	14.87		0.8	$	1,121
Exercisable options at September 30, 2016		141,007		$	14.87		0.8	$	1,121
Unvested options at September 30, 2016		—		$	—		—	$	—

The total intrinsic value of options exercised during the three months ended September 30, 2016 and 2015 was $127 thousand and $606 thousand, respectively, and during the nine months ended September 30, 2016 and 2015, was $5.7 million and $1.9 million, respectively.

Restricted Stock

The weighted-average grant-date fair value per share in the table below is calculated by taking the total aggregate cost of the restricted shares issued divided by the number of shares of restricted stock 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 Equity Plan for the period indicated:

	Number of Shares			Weighted-Average Grant-Date Fair Value per Share
Restricted Stock:
Unvested at December 31, 2015		311,458		$	19.29
Granted		132,809			23.12
Vested		(87,031	)		17.53
Cancelled and forfeited		(11,375	)		20.88
Unvested at September 30, 2016		345,861		$	21.37

Restricted stock compensation expense was $939 thousand and $745 thousand for the three month period ended September 30, 2016 and 2015, respectively, and $2.7 million and $2.0 million for the nine month period ended September 30, 2016 and 2015, 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. In 2015, the Company granted 40 thousand shares of Restricted Stock Unit (“RSU”) under the Equity Plan to one of its executive officers. Such grant is reflected in the table above. The shares of common stock underlying the 40 thousand shares of RSU will not be issued until the RSUs vest and are not included in the Company’s shares issued and outstanding as of September 30, 2016. The RSUs 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.

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Shareholders' Equity

9 Months Ended

Sep. 30, 2016

Equity [Abstract]

Shareholders' Equity

Note 12 - Shareholders’ Equity

Common Stock

Holders of shares of the Company’s common stock are entitled to one vote for each share held of record on all matters voted upon by shareholders. Furthermore, the holders of the Company’s common stock have no preemptive rights to subscribe for new issue securities, and shares of the Company’s common stock are not subject to redemption, conversion, or sinking fund provisions.

With respect to the payment of dividends, after the preferential dividends upon all other classes and series of stock entitled thereto have been paid or declared and set apart for payment, then the holders of the Company’s common stock are entitled to such dividends as may be declared by the Company’s board of directors out of funds legally available under the laws of the State of California.

Upon the Company’s liquidation or dissolution, the assets legally available for distribution to holders of the Company’s shares of common stock, after payment of all the Company’s obligations and payment of any liquidation preference of all other classes and series of stock entitled thereto, including the Company’s preferred stock, are distributable ratably among the holders of the Company’s common stock.

During 2016, the Company issued 411,964 shares of stock from the exercise of stock options for a total value of $3.7 million. The Company also issued 132,809 shares of restricted stock to the Company’s directors and employees, cancelled 11,375 shares of unvested restricted stock related to employee turnover and cancelled 35,349 shares that had a value of $834 thousand when employees elected to pay their tax obligation via the repurchase of the stock by the Company. The Equity Plan, as amended, allows employees to make an election to have a portion of their restricted stock that became vested during the year repurchased by the Company to provide funds to pay the employee’s tax obligation related to the vesting of the stock.

Preferred Stock

The Company completed the merger with 1^st Enterprise on November 30, 2014. As part of the Merger Agreement, 16,400 shares of preferred stock issued by 1^st Enterprise as part of the Small Business Lending Fund (SBLF) program of the United States Department of the Treasury was converted into 16,400 CU Bancorp preferred shares with substantially identical terms. CU Bancorp Preferred Stock has a liquidation preference amount of $1 thousand per share, designated as the Company’s Non-Cumulative Perpetual Preferred Stock, Series A. The U.S. Department of the Treasury is the sole holder of all outstanding shares of CU Bancorp Preferred Stock. The CU Bancorp Preferred Stock had an estimated life of four years and the fair value was $16 million at the merger date, resulting in a net discount of $479 thousand. The life-to-date and the year-to-date accretion on the net discount as of September 30, 2016 are $1.1 million and $26 thousand, respectively. The net carrying value of the CU Bancorp Preferred Stock is $17 million ($16 million plus of $0.6 million net premium) as of September 30, 2016.

Dividends on the Company’s Series A Preferred Stock are payable quarterly in arrears if authorized and declared by the Company’s board of directors out of legally available funds, on a non-cumulative basis, on the $1 thousand per share liquidation preference amount. Dividends are payable on January 1, April 1, July 1 and October 1 of each year. The current coupon dividend rate was adjusted to 9% on March 1, 2016 through perpetuity. However, the dividend yield through November 30, 2018 approximates 7% as a result of business combination accounting. Dividends on the Series A Preferred Stock are non-cumulative. There is no sinking fund with respect to dividends on the Series A Preferred Stock. So long as the Company’s Series A Preferred Stock remains outstanding, the Company may declare and pay dividends on the common stock only if full dividends on all outstanding shares of Series A Preferred Stock for the most recently completed dividend period have been or are contemporaneously declared and paid. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company, holders of the Series A Preferred Stock will be entitled to receive for each share of Series A Preferred Stock, out of the Company’s assets or proceeds available for distribution to the Company’s shareholders, subject to any rights of the Company’s creditors, before any distribution of assets or proceeds is made to or set aside for the holders of the common stock, payment of an amount equal to the sum of (i) the $1 thousand liquidation preference amount per share and (ii) the amount of any accrued and unpaid dividends on the Series A Preferred Stock. To the extent the assets or proceeds available for distribution to shareholders are not sufficient to fully pay the liquidation payments owing to the holders of the Series A Preferred Stock and the holders of any other class or series of the stock ranking equally with the Series A Preferred Stock, the holders of the Series A Preferred Stock and such the Company’s stock will share ratably in the distribution. Holders of the Series A Preferred Stock have no right to exchange or convert their shares into common stock or any other securities and do not have voting rights.

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):

	Three Months Ended September 30,						Consolidated Statement of Income Line Item for Reclassified Items
	2016			2015
Beginning balance, net of tax	$	778		$	(48	)
Net unrealized gain (loss) arising during the period		(540	)		536
Related tax effect		227			(225	)
Reclassification of (gain) loss on investment securities available-for-sale to net income		(141	)		—		Gain on sale of securities, net
Related tax effect		59			—		Provision for income tax expense
Other Comprehensive Income (Loss)		(395	)		311
Ending balance	$	383		$	263
	Nine Months Ended September 30,						Consolidated Statement of Income Line Item for Reclassified Items
	2016			2015
Beginning balance, net of tax	$	(816	)	$	190
Net unrealized gain (loss) arising during the period		2,210			121
Related tax effect		(929	)		(48	)
Reclassification of (gain) loss on investment securities available-for-sale to net income		(141	)		—		Gain on sale of securities, net
Related tax effect		59			—		Provision for income tax expense
Other Comprehensive Income (Loss)		1,199			73
Ending balance	$	383		$	263

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 13 - 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 material losses. As of September 30, 2016, 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.

Financial Instruments with Off Balance Sheet Risk

See Note 21 – Commitments and Contingencies in the Company’s Form 10-K for the year ended December 31, 2015. Financial instruments with off balance sheet risk include commitments to extend credit of $920 million and $806 million at September 30, 2016 and December 31, 2015, respectively. Included in the aforementioned commitments were standby letters of credit outstanding of $87 million and $73 million at September 30, 2016 and December 31, 2015. The Company also has a reserve for estimated losses on unfunded loan commitments of $778 thousand and $608 thousand at September 30, 2016 and December 31, 2015, respectively. These reserves are included in other liabilities on the consolidated balance sheets.

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Fair Value Information

9 Months Ended

Sep. 30, 2016

Fair Value Disclosures [Abstract]

Fair Value Information

Note 14 - Fair Value Information

Fair Value Measurement

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 those financial assets and financial liabilities that are not measured and reported at fair value on a recurring basis or on a non-recurring basis. The methodologies for estimating the fair value of financial assets and financial liabilities that are recorded at fair value, and those that are not recorded at fair value, 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 evaluation 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.

Cash and due from banks: The carrying amount is assumed to be the fair value because of the liquidity of these instruments.

Interest earning deposits in other financial institutions: The carrying amount is assumed to be the fair value given the short-term nature of these deposits.

Investment Securities Available-for-Sale and Held-to-Maturity: The fair value of securities available-for-sale and held-to-maturity may be determined by obtaining quoted prices in active markets, when available, from nationally recognized securities exchanges (Level 1 financial assets). If quoted market prices are not available, the fair value is determined by 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 which are observable market inputs (Level 2 financial assets). 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 financial 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 an amount net of taxes as a separate component of accumulated other comprehensive income included in shareholders’ equity. Securities classified as held-to-maturity are accounted for at their amortized historical cost. As of each reporting date, both the available-for-sale and held-to-maturity securities are evaluated for OTTI on an individual basis.

The Company considers the inputs utilized to fair value the available-for-sale and held-to-maturity investment securities to be observable market inputs and classified these financial assets within the Level 2 fair value 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, the fair values are estimated using nationally recognized third-party vendor pricing models, of which 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 available-for-sale and held-to-maturity investment 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. 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 credit losses and estimated prepayments. The inputs utilized in determining the fair value of loans are unobservable and accordingly, these financial assets are classified within Level 3 of the fair value hierarchy.

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, less costs to sell, if the loan is collateral dependent, or based on the cash flows for non-collateral dependent loans discounted at the loan’s original effective rate. Collateral dependent loans may be secured by either 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 unobservable. For unsecured loans, the estimated future cash flows of the business or borrower, discounted at the loan’s original effective rate, are used in determining 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. The inputs utilized in determining the fair value of impaired loans are unobservable and accordingly, these financial assets are classified within Level 3 of the fair value hierarchy.

Interest Rate Swap Contracts:

The fair value of the interest rate swap contracts are provided by independent third party vendors that specialize in interest rate risk management and fair value analysis using a model that utilizes current market data to estimate cash flows of the interest rate swaps utilizing the future London Interbank Offered Rate (“LIBOR”) yield curve for accruing and the future Overnight Index Swap Rate (“OIS”) yield curve for discounting through the maturity date of the interest rate swap contract. The future LIBOR yield curve is the primary input in the valuation of the interest rate swap contracts. Both the LIBOR and OIS yield curves are readily observable in the marketplace. Accordingly, the interest rate swap contracts are classified within Level 2 of the fair value hierarchy.

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 to sell. 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. The inputs utilized in determining the fair value of other real estate owned are unobservable and accordingly, these financial assets are classified within Level 3 of the fair value hierarchy.

SBA Servicing Asset: A servicing asset is recorded at fair value upon the sale of an SBA loan. The fair value of this asset is 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 contractual 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 inputs utilized in determining the fair value of SBA servicing asset are unobservable and accordingly, these financial assets are classified within Level 3 of the fair value hierarchy.

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 classified within Level 1 of the fair value hierarchy, 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 Company’s current certificates of deposit interest rates for similar term certificates. The inputs utilized in determining the fair value of maturing deposits are observable and accordingly, these financial liabilities are classified within Level 2 of the fair value hierarchy.

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 than 90 days is estimated based on the discounted value of the contractual future cash flows. The inputs utilized in determining the fair value of securities sold under agreements to repurchase are observable and accordingly, these financial liabilities are classified within Level 2 of the fair value hierarchy.

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 September 30, 2016, to the cash flows from the debentures, based on the actual interest rate the debentures were accruing at September 30, 2016. Because all three of the debentures re-priced on September 15, 2016 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 September 30, 2016, the current face value of the debentures and their calculated fair value are approximately equal. The inputs utilized in determining the fair value of subordinated debentures are observable and accordingly, these financial liabilities are classified within Level 2 of the fair value hierarchy.

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 September 30, 2016 and December 31, 2015.

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):

	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets – September 30, 2016
Investment securities available-for-sale	$	375,094	$	—	$	375,094	$	—
Interest Rate Swap Contracts		1,484		—		1,484		—
Financial Liabilities – September 30, 2016
Interest Rate Swap Contracts	$	2,580	$	—	$	2,580	$	—
Financial Assets – December 31, 2015
Investment securities available-for-sale	$	315,785	$	—	$	315,785	$	—
Interest Rate Swap Contracts		881		—		881		—
Financial Liabilities – December 31, 2015
Interest Rate Swap Contracts	$	2,545	$	—	$	2,545	$	—

At September 30, 2016 and at December 31, 2015 the Company had no financial assets or liabilities that were measured at fair value on a recurring basis that required the use of significant unobservable inputs (Level 3). Additionally, there were no transfers of assets either between Level 1 and Level 2 nor in or out of Level 3 of the fair value hierarchy for assets measured on a recurring basis for the period ended September 30, 2016.

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 fair value that were recognized at fair value below cost at the end of or during the period.

There were no transfers of assets either between Level 1 and Level 2 nor in or out of Level 3 of the fair value hierarchy for assets measured on a non-recurring basis during the three or nine months ended September 30, 2016.

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):

	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets – September 30, 2016
Collateral dependent impaired loans with specific valuation allowance and/or partial charge-offs (non-purchased credit impaired loans)	$	242	$	—	$	—	$	242
Other real estate owned		—		—		—		—
Total	$	242	$	—	$	—	$	242
Financial Assets – December 31, 2015
Collateral dependent impaired loans with specific valuation allowance and/or partial charge-offs (non-purchased credit impaired loans)	$	—	$	—	$	—	$	—
Other real estate owned		325		—		—		325
Total	$	325	$	—	$	—	$	325

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		Valuation Methodology	Valuation Model and/or Factors	Unobservable Input Values
Financial Assets – September 30, 2016
Collateral dependent impaired loans with specific valuation allowance and/or partial charge-off	$	58	Balance represents 100% guaranty by the SBA	Not Applicable	Not Applicable
		184	Assignment of expected proceeds from collateral sale	Not Applicable	Not Applicable
Total	$	242
Financial Assets – December 31, 2015
Collateral dependent impaired loans with specific valuation allowance and/or partial charge-off	$	—	—	—	—
Other real estate owned	$	325	Broker opinion of value	Sales approach Estimated selling costs	6%
Total	$	325

Fair Value of Financial Assets and Liabilities

ASC Topic 825, “Financial Instruments,” requires disclosure of the estimated fair value of certain financial instruments and the methods and significant assumptions used to estimate such fair values. Additionally, certain financial instruments and all nonfinancial instruments are excluded from the applicable disclosure requirements. 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 September 30, 2016 and December 31, 2015. 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 financial assets and liabilities recorded at fair value and for those not recorded at fair value has been described above.

The table below presents the carrying values and estimated fair values of certain financial instruments based on their fair value hierarchy indicated (dollars in thousands):

					Fair Value Measurements
	Carrying Amount		Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
September 30, 2016
Financial Assets
Cash and due from banks	$	47,701	$	47,701	$	47,701	$	—	$	—
Interest earning deposits in other financial institutions		244,205		244,205		244,205		—		—
Investment securities available-for-sale		375,094		375,094		—		375,094		—
Investment securities held-to-maturity		40,073		40,691		—		40,691		—
Loans, net		1,956,570		1,993,667		—		—		1,993,667
Interest rate swap contracts		1,484		1,484		—		1,484		—
Financial Liabilities
Certificates of deposit		35,033		35,033		—		35,033		—
Securities sold under agreements to repurchase		24,251		24,251		—		24,251		—
Subordinated debentures		9,817		12,372		—		12,372		—
Interest rate swap contracts		2,580		2,580		—		2,580		—
December 31, 2015
Financial Assets
Cash and due from banks	$	50,960	$	50,960	$	50,960	$	—	$	—
Interest earning deposits in other financial institutions		171,103		171,103		171,103		—		—
Investment securities available-for-sale		315,785		315,785		—		315,785		—
Investment securities held-to-maturity		42,036		42,339		—		42,339		—
Loans, net		1,817,481		1,851,220		—		—		1,851,220
Interest rate swap contracts		881		881		—		881		—
Financial Liabilities										—
Certificates of deposit		58,502		58,502		—		58,502		—
Securities sold under agreements to repurchase		14,360		14,360		—		14,360		—
Subordinated debentures		9,697		12,372		—		12,372		—
Interest rate swap contracts		2,545		2,545		—		2,545		—

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Subsequent Events

9 Months Ended

Sep. 30, 2016

Subsequent Events [Abstract]

Subsequent Events

Note 15 – Subsequent Events

We have evaluated events that have occurred subsequent to September 30, 2016 and have concluded there are no subsequent events that would require disclosure or recognition in the accompanying interim consolidated financial statements.

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Basis of Financial Statement Presentation (Policies)

9 Months Ended

Sep. 30, 2016

Accounting Policies [Abstract]

Use of Estimates in the Preparation of Consolidated Financial Statements

Use of Estimates in the Preparation of Consolidated Financial Statements

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. In addition, these accounting principles require the disclosure of contingent assets and liabilities as of the date of the consolidated financial statements.

Estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan loss and various assets and liabilities measured at fair value. While management uses the most current available information to recognize losses on loans, future additions to the allowance for loan loss may be necessary based on, among other factors, changes in local economic conditions. In addition, regulatory agencies, as an integral part of their examination process, periodically review the Company’s allowance for loan loss. Regulatory agencies may require the Company to recognize changes to the allowance for loan loss based on their judgment about information available to them at the time of their examination.

Business Segments

Business Segments

The Company is organized and operates as a single reporting segment, principally engaged in commercial business banking. The Company conducts its lending and deposit operations through nine full service branch offices located in Los Angeles, Orange, Ventura and San Bernardino counties.

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Computation of Book Value and Tangible Book Value per Common Share (Tables)

9 Months Ended

Sep. 30, 2016

Text Block [Abstract]

Computation of Book Value and Tangible Book Value per Common Share

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

	September 30, 2016		December 31, 2015
Total Shareholders’ Equity	$	332,930	$	306,807
Less: Preferred stock		17,021		16,995
Less: Goodwill		64,603		64,603
Less: Core deposit and leasehold right intangibles, net		6,665		7,671
Tangible common equity	$	244,641	$	217,538
Common shares issued and outstanding		17,673,438		17,175,389
Book value per common share	$	17.87	$	16.87
Tangible book value per common share	$	13.84	$	12.67

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Computation of Earnings per Common Share (Tables)

9 Months Ended

Sep. 30, 2016

Earnings Per Share [Abstract]

Basic and Diluted Earnings Per Common Share Computations

The following table shows weighted average basic common shares outstanding, potential dilutive shares related to stock options, unvested restricted stock, and weighted average diluted shares for the periods indicated (dollars in thousands, except share and per share data):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Net Income	$	6,583	$	6,263	$	20,287	$	15,729
Less: Preferred stock dividends and discount accretion		304		293		914		877
Net Income available to common shareholders	$	6,279	$	5,970	$	19,373	$	14,852
Weighted average basic common shares outstanding		17,339,491		16,541,380		17,197,117		16,477,206
Dilutive effect of potential common share issuances from stock options and restricted stock		265,896		456,684		312,458		446,296
Weighted average diluted common shares outstanding		17,605,387		16,998,064		17,509,575		16,923,502
Income per common share
Basic	$	0.36	$	0.36	$	1.13	$	0.90
Diluted	$	0.36	$	0.35	$	1.11	$	0.88
Anti-dilutive shares not included in the calculation of diluted earnings per share		—		—		1,000		43,259

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Investment Securities (Tables)

9 Months Ended

Sep. 30, 2016

Investments, Debt and Equity Securities [Abstract]

Amortized Cost, Gross Unrealized Gains and Losses, and Fair Values of Investment Securities

The following tables present the amortized cost, gross unrealized gains and losses, and fair values of investment securities by major category as of the dates indicated (dollars in thousands):

			Gross Unrealized
September 30, 2016	Amortized Cost		Gains		Losses		Fair Market Value
Available-for-sale:
U.S. Govt Agency and Sponsored Agency - Note Securities	$	7,003	$	1	$	—	$	7,004
U.S. Govt Agency - SBA Securities		107,759		582		367		107,974
U.S. Govt Agency - GNMA Mortgage-Backed Securities		25,123		207		116		25,214
U.S. Govt Sponsored Agency - CMO & Mortgage-Backed Securities		146,632		1,030		424		147,238
Corporate Securities		501		1		—		502
Asset Backed Securities		7,303		—		281		7,022
U.S. Treasury Notes		80,112		65		37		80,140
Total available-for-sale		374,433		1,886		1,225		375,094
Held-to-maturity:
Municipal Securities		40,073		620		2		40,691
Total held-to-maturity		40,073		620		2		40,691
Total investment securities	$	414,506	$	2,506	$	1,227	$	415,785

			Gross Unrealized
December 31, 2015	Amortized Cost		Gains		Losses		Fair Market Value
Available-for-sale:
U.S. Govt Agency and Sponsored Agency - Note Securities	$	1,014	$	—	$	—	$	1,014
U.S. Govt Agency - SBA Securities		93,674		399		583		93,490
U.S. Govt Agency - GNMA Mortgage-Backed Securities		30,916		202		418		30,700
U.S. Govt Sponsored Agency - CMO & Mortgage-Backed Securities		97,693		250		789		97,154
Corporate Securities		4,016		7		—		4,023
Municipal Securities		1,010		1		—		1,011
Asset Backed Securities		7,890		—		243		7,647
U.S. Treasury Notes		80,981		—		235		80,746
Total available-for-sale		317,194		859		2,268		315,785
Held-to-maturity:
Municipal Securities		42,036		335		32		42,339
Total held-to-maturity		42,036		335		32		42,339
Total investment securities	$	359,230	$	1,194	$	2,300	$	358,124

Gross Unrealized Losses and Fair Values of AFS and HTM Investment Securities that were in Unrealized Loss Positions

The following tables present the gross unrealized losses and fair values of AFS and HTM investment securities that were in unrealized loss positions, summarized and classified according to the duration of the loss period as of the dates indicated (dollars in thousands).

	< 12 Continuous Months				> 12 Continuous Months				Total
September 30, 2016	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
Available-for-sale investment securities:
U.S. Govt. Agency SBA Securities	$	46,340	$	184	$	19,285	$	183	$	65,625	$	367
U.S. Govt. Agency – GNMA Mortgage-Backed Securities		2,521		27		8,878		89		11,399		116
U.S. Govt. Sponsored Agency – CMO & Mortgage-Backed Securities		41,497		292		11,498		132		52,995		424
Asset Backed Securities		—		—		7,022		281		7,022		281
U.S Treasury Notes		10,098		37		—		—		10,098		37
Total available-for-sale investment securities	$	100,456	$	540	$	46,683	$	685	$	147,139	$	1,225
Held-to-maturity investment securities:
Municipal Securities	$	700	$	1	$	313	$	1	$	1,013	$	2
Total held-to-maturity investment securities	$	700	$	1	$	313	$	1	$	1,013	$	2

	< 12 Continuous Months				> 12 Continuous Months				Total
December 31, 2015	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
Available-for-sale investment securities:
U.S. Govt. Agency SBA Securities	$	53,852	$	428	$	7,935	$	154	$	61,787	$	582
U.S. Govt. Agency – GNMA Mortgage-Backed Securities		5,417		47		14,296		371		19,713		418
U.S. Govt. Sponsored Agency – CMO & Mortgage-Backed Securities		67,475		564		10,024		225		77,499		789
Asset Backed Securities		2,928		54		4,719		190		7,647		244
U.S Treasury Notes		80,745		235		—		—		80,745		235
Total available-for-sale investment securities	$	210,417	$	1,328	$	36,974	$	940	$	247,391	$	2,268
Held-to-maturity investment securities:
Municipal Securities	$	5,669	$	16	$	2,392	$	16	$	8,061	$	32
Total held-to-maturity investment securities	$	5,669	$	16	$	2,392	$	16	$	8,061	$	32

Maturities Schedule of Securities

	September 30, 2016
Maturities Schedule of Securities (Dollars in thousands)	Amortized Cost		Fair Value		Weighted Average Yield
Available-for-sale:
Due through one year	$	99,048	$	99,243		1.21	%
Due after one year through five years		170,285		170,343		1.45	%
Due after five years through ten years		79,234		79,523		1.93	%
Due after ten years		25,866		25,985		2.30	%
Total available-for-sale	$	374,433	$	375,094		1.54	%
Held-to-maturity:
Due through one year	$	2,950	$	2,956		1.49	%
Due after one year through five years		36,389		36,972		1.59	%
Due after five years through ten years		734		763		1.97	%
Total held-to-maturity	$	40,073	$	40,691		1.59	%
Total investment securities	$	414,506	$	415,785		1.55	%

XML

Loans (Tables)

9 Months Ended

Sep. 30, 2016

Receivables [Abstract]

Composition of Loan Portfolio

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

	September 30, 2016		December 31, 2015
Commercial and Industrial Loans:	$	499,439	$	537,368
Loans Secured by Real Estate:
Owner-Occupied Nonresidential Properties		430,218		407,979
Other Nonresidential Properties		610,267		533,168
Construction, Land Development and Other Land		172,441		125,832
1-4 Family Residential Properties		122,955		114,525
Multifamily Residential Properties		100,003		71,179
Total Loans Secured by Real Estate		1,435,884		1,252,683
Other Loans:		39,618		43,112
Total Loans	$	1,974,941	$	1,833,163

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 September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Allowance for loan loss at beginning of period	$	18,476		$	14,124		$	15,682		$	12,610
Provision for loan losses		697			705			2,382			2,831
Net (charge-offs) recoveries:
Charge-offs		(807	)		(42	)		(827	)		(933	)
Recoveries		5			178			1,134			457
Net (charge-offs) recoveries		(802	)		136			307			(476	)
Allowance for loan loss at end of period	$	18,371		$	14,965		$	18,371		$	14,965
Net (charge-offs) recoveries to average loans		(0.04	)%		0.01	%		0.02	%		(0.03	)%

	September 30, 2016			December 31, 2015
Allowance for loan loss to total loans		0.93	%		0.86	%
Allowance for loan loss to total loans accounted for at historical cost, which excludes loans and the related allowance for loans acquired through acquisition		1.20	%		1.25	%

Changes in Allowance for Loan Loss

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 September 30, 2016
Allowance for loan loss – Beginning balance	$	8,381		$	2,724	$	6,567		$	804		$	18,476
Provision for loan losses		(559	)		45		1,294			(83	)		697
Net (charge-offs) recoveries:
Charge-offs		(807	)		—		—			—			(807	)
Recoveries		3			—		2			—			5
Net (charge-offs) recoveries		(804	)		—		2			—			(802	)
Ending balance	$	7,018		$	2,769	$	7,863		$	721		$	18,371
Three Months Ended September 30, 2015
Allowance for loan loss – Beginning balance	$	6,244		$	1,607	$	5,799		$	474		$	14,124
Provision for loan losses		181			371		143			10			705
Net (charge-offs) recoveries:
Charge-offs		—			—		(42	)		—			(42	)
Recoveries		177			—		1			—			178
Net (charge-offs) recoveries		177			—		(41	)		—			136
Ending balance	$	6,602		$	1,978	$	5,901		$	484		$	14,965

	Commercial and Industrial			Construction, Land Development and Other Land		Commercial and Other Real Estate			Other			Total
Nine Months Ended September 30, 2016
Allowance for loan loss – Beginning balance	$	5,924		$	2,076	$	6,821		$	861		$	15,682
Provision for loan losses		791			693		1,038			(140	)		2,382
Net (charge-offs) recoveries:
Charge-offs		(827	)		—		—			—			(827	)
Recoveries		1,130			—		4			—			1,134
Net recoveries		303			—		4			—			307
Ending balance	$	7,018		$	2,769	$	7,863		$	721		$	18,371
Nine Months Ended September 30, 2015
Allowance for loan loss – Beginning balance	$	5,864		$	1,684	$	4,802		$	260		$	12,610
Provision for loan losses		1,176			294		1,137			224			2,831
Net (charge-offs) recoveries:
Charge-offs		(891	)		—		(42	)		—			(933	)
Recoveries		453			—		4			—			457
Net (charge-offs)		(438	)		—		(38	)		—			(476	)
Ending balance	$	6,602		$	1,978	$	5,901		$	484		$	14,965

Schedule Represents both Allowance for Loan Loss and Associated Loan Balance Classified by Loan Portfolio Segment and by Credit Evaluation Methodology

The following tables present both the allowance for loan loss and the associated loan balance classified by loan portfolio segment and by credit evaluation methodology (dollars in thousands):

	Commercial and Industrial		Construction, Land Development and Other Land		Commercial and Other Real Estate		Other		Total
September 30, 2016
Allowance for loan loss:
Individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—
Collectively evaluated for impairment		7,018		2,769		7,863		721		18,371
Purchased credit impaired (loans acquired with deteriorated credit quality)		—		—		—		—		—
Total Allowance for Loan Loss	$	7,018	$	2,769	$	7,863	$	721	$	18,371
Loans receivable:
Individually evaluated for impairment	$	456	$	—	$	252	$	—	$	708
Collectively evaluated for impairment		498,669		172,441		1,261,789		39,618		1,972,517
Purchased credit impaired (loans acquired with deteriorated credit quality)		314		—		1,402		—		1,716
Total Loans Receivable	$	499,439	$	172,441	$	1,263,443	$	39,618	$	1,974,941

	Commercial and Industrial		Construction, Land Development and Other Land		Commercial and Other Real Estate		Other		Total
December 31, 2015
Allowance for loan loss:
Individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—
Collectively evaluated for impairment		5,924		2,076		6,821		861		15,682
Purchased credit impaired (loans acquired with deteriorated credit quality)		—		—		—		—		—
Total Allowance for Loan Loss	$	5,924	$	2,076	$	6,821	$	861	$	15,682
Loans receivable:
Individually evaluated for impairment	$	558	$	—	$	649	$	—	$	1,207
Collectively evaluated for impairment		536,333		125,832		1,124,667		43,112		1,829,944
Purchased credit impaired (loans acquired with deteriorated credit quality)		477		—		1,535		—		2,012
Total Loans Receivable	$	537,368	$	125,832	$	1,126,851	$	43,112	$	1,833,163

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
September 30, 2016
Pass	$	445,172	$	172,441	$	1,234,950	$	36,701	$	1,889,264
Special Mention		18,939		—		4,747		—		23,686
Substandard		35,328		—		23,746		2,917		61,991
Doubtful		—		—		—		—		—
Total	$	499,439	$	172,441	$	1,263,443	$	39,618	$	1,974,941
December 31, 2015
Pass	$	503,006	$	125,832	$	1,101,548	$	40,132	$	1,770,518
Special Mention		16,041		—		6,494		43		22,578
Substandard		18,321		—		18,809		2,937		40,067
Doubtful		—		—		—		—		—
Total	$	537,368	$	125,832	$	1,126,851	$	43,112	$	1,833,163

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
September 30, 2016
Commercial and Industrial	$	—	$	—	$	—	$	—	$	769	$	498,670	$	499,439
Construction, Land Development and Other Land		—		—		—		—		—		172,441		172,441
Commercial and Other Real Estate		—		—		—		—		454		1,262,989		1,263,443
Other		—		—		—		—		—		39,618		39,618
Total	$	—	$	—	$	—	$	—	$	1,223	$	1,973,718	$	1,974,941

	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, 2015
Commercial and Industrial	$	—	$	—	$	—	$	—	$	1,032	$	536,336	$	537,368
Construction, Land Development and Other Land		—		—		—		—		—		125,832		125,832
Commercial and Other Real Estate		—		—		—		—		1,019		1,125,832		1,126,851
Other		—		—		—		—		—		43,112		43,112
Total	$	—	$	—	$	—	$	—	$	2,051	$	1,831,112	$	1,833,163

Recorded Investment and Unpaid Principal Balances for Impaired Loans

The following tables present, by loan portfolio segment, the recorded investment and unpaid principal balances for impaired loans with the associated allowance amount, if applicable, for the dates and periods indicated (dollars in thousands). This table excludes purchased credit impaired loans (loans acquired in acquisitions with deteriorated credit quality) of $1.7 million and $2.0 million at September 30, 2016 and December 31, 2015, respectively.

	September 30, 2016						December 31, 2015
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
With no specific allowance recorded:
Commercial and Industrial	$	456	$	1,402	$	—	$	558	$	1,027	$	—
Commercial and Other Real Estate		252		286		—		649		692		—
With an allowance recorded:
Commercial and Industrial		—		—		—		—		—		—
Total
Commercial and Industrial		456		1,402		—		558		1,027		—
Commercial and Other Real Estate		252		286		—		649		692		—
Total	$	708	$	1,688	$	—	$	1,207	$	1,719	$	—

	Three Months Ended September 30,								Nine Months Ended September 30,
	2016				2015				2016				2015
	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	$	418	$	—	$	2,118	$	—	$	396	$	—	$	1,757	$	—
Commercial and Other Real Estate		252		—		99		—		254		—		104		—
With a specific allowance recorded:
Commercial and Industrial		—		—		1,328		—		—		—		1,328		—
Commercial and Other Real Estate		—		—		413		—		—		—		550		—
Total:
Commercial and Industrial		418		—		3,446		—		396		—		3,085		—
Commercial and Other Real Estate		252		—		512		—		254		—		654		—
Total	$	670	$	—	$	3,958	$	—	$	650	$	—	$	3,739	$	—

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 September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Interest foregone on impaired loans	$	22	$	81	$	68	$	238
Cash collections applied to reduce principal balance	$	230	$	23	$	282	$	186
Interest income recognized on cash collections	$	—	$	—	$	—	$	—

Recorded Investment and Unpaid Principal Balances for Troubled Debt Restructured Loans

The following tables include the recorded investment and unpaid principal balances for troubled debt restructured loans at September 30, 2016 and December 31, 2015 (dollars in thousands). These tables include TDR loans that were purchased credit impaired (“PCI”). TDR loans that are non-PCI loans are included in the Impaired Loans tables above. As of September 30, 2016, there were two PCI loans that are considered to be TDR loans with a recorded investment of $115 thousand and unpaid principal balances of $287 thousand.

	As of and for the Three Months Ended September 30, 2016						As of and for the Nine Months Ended September 30, 2016
	Recorded Investment		Unpaid Principal Balance		Interest Income Recognized		Recorded Investment		Unpaid Principal Balance		Interest Income Recognized
Commercial and Industrial	$	533	$	1,230	$	—	$	533	$	1,230	$	—
Total	$	533	$	1,230	$	—	$	533	$	1,230	$	—
	As of and for the Three Months Ended September 30, 2015						As of and for the Nine Months Ended September 30, 2015
	Recorded Investment		Unpaid Principal Balance		Interest Income Recognized		Recorded Investment		Unpaid Principal Balance		Interest Income Recognized
Commercial and Industrial	$	1,780	$	2,385	$	—	$	1,780	$	2,385	$	—
Commercial and Other Real Estate		99		105		—		99		105		—
Total	$	1,879	$	2,490	$	—	$	1,879	$	2,490	$	—

	As of and for the Twelve Months Ended December 31, 2015
	Recorded Investment		Unpaid Principal Balance		Interest Income Recognized
Commercial and Industrial	$	627	$	1,363	$	—
Total	$	627	$	1,363	$	—

Pre and Post Modification Recorded Investment in TDR Loans

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

	Three Months Ended September 30,
	2016						2015
	Number of Loans		Pre- Modification Recorded Investment		Post- Modification Recorded Investment		Number of Loans		Pre- Modification Recorded Investment		Post- Modification Recorded Investment
Troubled Debt Restructured Loans:
Commercial and Industrial		1	$	650	$	184		3	$	1,335	$	1,335
Total		1	$	650	$	184		3	$	1,335	$	1,335

	Nine Months Ended September 30,
	2016						2015
	Number of Loans		Pre- Modification Recorded Investment		Post- Modification Recorded Investment		Number of Loans		Pre- Modification Recorded Investment		Post- Modification Recorded Investment
Troubled Debt Restructured Loans:
Commercial and Industrial		1	$	650	$	184		3	$	1,335	$	1,335
Total		1	$	650	$	184		3	$	1,335	$	1,335

Accretable Yield for Acquired Loans

The following table reflects the accretable net discount for acquired loans for the periods indicated (dollars in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Balance, beginning of period	$	11,928		$	18,255		$	14,610		$	21,402
Accretion, included in interest income		(1,229	)		(1,463	)		(3,879	)		(4,140	)
Reclassifications to non-accretable yield		—			(5	)		(32	)		(475	)
Balance, end of period	$	10,699		$	16,787		$	10,699		$	16,787

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):

	September 30, 2016				December 31, 2015
	Unpaid Principal Balance		Carrying Value		Unpaid Principal Balance		Carrying Value
Commercial and Industrial	$	639	$	314	$	2,331	$	477
Commercial and Other Real Estate		2,007		1,402		2,250		1,535
Other		—		—		61		—
Total	$	2,646	$	1,716	$	4,642	$	2,012

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 September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Balance, beginning of period	$	205		$	286		$	246		$	324
Accretion, included in interest income		(22	)		(20	)		(63	)		(58	)
Reclassifications from non-accretable yield		—			—			—			—
Balance, end of period	$	183		$	266		$	183		$	266

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Borrowings and Subordinated Debentures (Tables)

9 Months Ended

Sep. 30, 2016

Brokers and Dealers [Abstract]

Terms and Maturity of Bank's Securities Sold under Agreements

The tables below describe the terms and maturity of the Company’s securities sold under agreements to repurchase as of the dates indicated (dollars in thousands):

	September 30, 2016
Date Issued	Amount		Interest Rate		Original Term		Maturity Date
September 30, 2016	$	24,251		0.10% – 0.25%		3 days		October 3, 2016
Total	$	24,251		0.24%

	December 31, 2015
Date Issued	Amount		Interest Rate		Original Term		Maturity Date
December 31, 2015	$	14,360		0.08% – 0.25%		4 days		January 4, 2016
Total	$	14,360		0.19%

Terms of Issuance Subordinated Debentures Outstanding

The following table summarizes the terms of each issuance of subordinated debentures outstanding as of the dates indicated (dollars in thousands):

September 30, 2016
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	%		2.90	%		12/15/16
Trust II		3,093			12/23/05		03/15/36		3 month LIBOR + 1.75	%		2.60	%		12/15/16
Trust III		3,093			06/30/06		09/18/36		3 month LIBOR + 1.85	%		2.70	%		12/15/16
Subtotal		12,372
Unamortized fair value adjustment		(2,555	)
Net	$	9,817

December 31, 2015
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	%		2.56	%		03/15/16
Trust II		3,093			12/23/05		03/15/36		3 month LIBOR + 1.75	%		2.26	%		03/15/16
Trust III		3,093			06/30/06		09/18/36		3 month LIBOR + 1.85	%		2.36	%		03/15/16
Subtotal		12,372
Unamortized fair value adjustment		(2,675	)
Net	$	9,697

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Derivative Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2016

Effect of Derivative Instruments on Consolidated Statements of Income

The following table summarizes the effect of derivative financial instruments on the consolidated statements of income for the periods indicated (dollars in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Derivatives not designated as hedging instruments:
Interest rate swap contracts – loans
Increase in fair value of interest rate swap contracts	$	66		$	41		$	156		$	124
Payments on interest rate swap contracts on loans		(60	)		(66	)		(181	)		(198	)
Net decrease in other non-interest income		6			(25	)		(25	)		(74	)
Derivatives designated as hedging instruments:
Interest rate swap contracts – loans
Increase in fair value of interest rate swap contracts	$	249		$	142		$	412		$	583
Increase (decrease) in fair value of hedged loans		(68	)		191			215			279
Payment on interest rate swap contracts on loans		(202	)		(275	)		(657	)		(846	)
Net decrease in interest income on loans	$	(21	)	$	58		$	(30	)	$	16

1st Enterprise Bank

Balance Sheet Classification of Derivative Financial Instruments

The following tables present the fair values of the asset and liability of the Company’s derivative instruments acquired from 1^st Enterprise Bank as of the dates and periods indicated (dollars in thousands):

	September 30, 2016		December 31, 2015
Interest rate swap contracts fair value	$	1,484	$	881
Balance sheet location		Accrued Interest Receivable and Other Assets		Accrued Interest Receivable and Other Assets
	September 30, 2016		December 31, 2015
Interest rate swap contracts fair value	$	1,484	$	881
Balance sheet location		Accrued Interest Payable and Other Liabilities		Accrued Interest Payable and Other Liabilities

PC Bancorp

Balance Sheet Classification of Derivative Financial Instruments

The following table presents the notional amount and the fair values of the asset and liability of the Company’s derivative instruments acquired from PC Bancorp as of the dates indicated (dollars in thousands):

	Fair Value Hedges
	September 30, 2016		December 31, 2015
Total interest rate contracts notional amount	$	22,001	$	25,938
Derivatives not designated as hedging instruments:
Interest rate swap contracts fair value	$	156	$	313
Derivatives designated as hedging instruments:
Interest rate swap contracts fair value		940		1,351
Total interest rate contracts fair value	$	1,096	$	1,664
Balance sheet location		Accrued Interest Payable and Other Liabilities		Accrued Interest Payable and Other Liabilities

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Balance Sheet Offsetting (Tables)

9 Months Ended

Sep. 30, 2016

Text Block [Abstract]

Securities Sold under Repurchase Agreements and Derivatives Securities Offset in Consolidated Financial Statements Due to an Enforceable Master Netting Arrangement

The table below presents the Company’s financial instruments that may be eligible for offsetting which include securities sold under agreements to repurchase that have no enforceable master netting arrangement and derivative securities that could be offset in the consolidated financial statements due to an enforceable master netting arrangement (dollars in thousands):

	Gross Amounts Recognized in the Consolidated Balance Sheets		Gross Amounts Offset in the Consolidated Balance Sheets		Net Amounts of Assets / Liabilities Presented in the Consolidated Balance Sheets		Gross Amounts Not Offset in the Consolidated Balance Sheets				Net Amount (Collateral over liability balance required to be pledged)
							Financial Instruments		Collateral Pledged
September 30, 2016
Financial Assets:
Interest rate swap contracts fair value (See Note 9 – Derivative Financial Instruments)	$	1,484	$	—	$	1,484	$	1,484	$	—	$	—
Total	$	1,484	$	—	$	1,484	$	1,484	$	—	$	—
Financial Liabilities:
Interest rate swap contracts fair value (See Note 9 – Derivative Financial Instruments)	$	2,580	$	—	$	2,580	$	2,580	$	5,041	$	2,461
Securities sold under agreements to repurchase (See Note 8 – Borrowings and Subordinated Debentures)		24,251		—		24,251		24,251		55,250		30,999
Total	$	26,831	$	—	$	26,831	$	26,831	$	60,291	$	33,460

	Gross Amounts Recognized in the Consolidated Balance Sheets		Gross Amounts Offset in the Consolidated Balance Sheets		Net Amounts of Assets / Liabilities Presented in the Consolidated Balance Sheets		Gross Amounts Not Offset in the Consolidated Balance Sheets				Net Amount (Collateral over liability balance required to be pledged)
							Financial Instruments		Collateral Pledged
December 31, 2015
Financial Assets:
Interest rate swap contracts fair value (See Note 9 – Derivative Financial Instruments)	$	881	$	—	$	881	$	881	$	—	$	—
Total	$	881	$	—	$	881	$	881	$	—	$	—
Financial Liabilities:
Interest rate swap contracts fair value (See Note 9 – Derivative Financial Instruments)	$	2,545	$	—	$	2,545	$	2,545	$	4,759	$	2,214
Securities sold under agreements to repurchase (See Note 8 – Borrowings and Subordinated Debentures)		14,360		—		14,360		14,360		46,596		32,236
Total	$	16,905	$	—	$	16,905	$	16,905	$	51,355	$	34,450

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Stock Options and Restricted Stock (Tables)

9 Months Ended

Sep. 30, 2016

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

Future Compensation Expense Related to Unvested Restricted Stock Grants

At September 30, 2016, future compensation expense related to unvested restricted stock grants are reflected in the table below (dollars in thousands):

Future Restricted Stock Expense
Remainder of 2016	$	842
2017		1,910
2018		667
2019		185
Thereafter		36
Total	$	3,640

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 (in thousands)
Outstanding stock options at December 31, 2015		557,471		$	10.57		0.8	$	8,248
Granted		—
Exercised		(411,964	)
Forfeited		—
Expired		(4,500	)
Outstanding stock options at September 30, 2016		141,007		$	14.87		0.8	$	1,121
Exercisable options at September 30, 2016		141,007		$	14.87		0.8	$	1,121
Unvested options at September 30, 2016		—		$	—		—	$	—

Restricted Stock Activity

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

	Number of Shares			Weighted-Average Grant-Date Fair Value per Share
Restricted Stock:
Unvested at December 31, 2015		311,458		$	19.29
Granted		132,809			23.12
Vested		(87,031	)		17.53
Cancelled and forfeited		(11,375	)		20.88
Unvested at September 30, 2016		345,861		$	21.37

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Shareholders' Equity (Tables)

9 Months Ended

Sep. 30, 2016

Equity [Abstract]

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):

	Three Months Ended September 30,						Consolidated Statement of Income Line Item for Reclassified Items
	2016			2015
Beginning balance, net of tax	$	778		$	(48	)
Net unrealized gain (loss) arising during the period		(540	)		536
Related tax effect		227			(225	)
Reclassification of (gain) loss on investment securities available-for-sale to net income		(141	)		—		Gain on sale of securities, net
Related tax effect		59			—		Provision for income tax expense
Other Comprehensive Income (Loss)		(395	)		311
Ending balance	$	383		$	263
	Nine Months Ended September 30,						Consolidated Statement of Income Line Item for Reclassified Items
	2016			2015
Beginning balance, net of tax	$	(816	)	$	190
Net unrealized gain (loss) arising during the period		2,210			121
Related tax effect		(929	)		(48	)
Reclassification of (gain) loss on investment securities available-for-sale to net income		(141	)		—		Gain on sale of securities, net
Related tax effect		59			—		Provision for income tax expense
Other Comprehensive Income (Loss)		1,199			73
Ending balance	$	383		$	263

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Fair Value Information (Tables)

9 Months Ended

Sep. 30, 2016

Fair Value Disclosures [Abstract]

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):

	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets – September 30, 2016
Investment securities available-for-sale	$	375,094	$	—	$	375,094	$	—
Interest Rate Swap Contracts		1,484		—		1,484		—
Financial Liabilities – September 30, 2016
Interest Rate Swap Contracts	$	2,580	$	—	$	2,580	$	—
Financial Assets – December 31, 2015
Investment securities available-for-sale	$	315,785	$	—	$	315,785	$	—
Interest Rate Swap Contracts		881		—		881		—
Financial Liabilities – December 31, 2015
Interest Rate Swap Contracts	$	2,545	$	—	$	2,545	$	—

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):

	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets – September 30, 2016
Collateral dependent impaired loans with specific valuation allowance and/or partial charge-offs (non-purchased credit impaired loans)	$	242	$	—	$	—	$	242
Other real estate owned		—		—		—		—
Total	$	242	$	—	$	—	$	242
Financial Assets – December 31, 2015
Collateral dependent impaired loans with specific valuation allowance and/or partial charge-offs (non-purchased credit impaired loans)	$	—	$	—	$	—	$	—
Other real estate owned		325		—		—		325
Total	$	325	$	—	$	—	$	325

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

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		Valuation Methodology	Valuation Model and/or Factors	Unobservable Input Values
Financial Assets – September 30, 2016
Collateral dependent impaired loans with specific valuation allowance and/or partial charge-off	$	58	Balance represents 100% guaranty by the SBA	Not Applicable	Not Applicable
		184	Assignment of expected proceeds from collateral sale	Not Applicable	Not Applicable
Total	$	242
Financial Assets – December 31, 2015
Collateral dependent impaired loans with specific valuation allowance and/or partial charge-off	$	—	—	—	—
Other real estate owned	$	325	Broker opinion of value	Sales approach Estimated selling costs	6%
Total	$	325

Level in Fair Value Hierarchy for Financial Instruments Estimated Fair Values

The table below presents the carrying values and estimated fair values of certain financial instruments based on their fair value hierarchy indicated (dollars in thousands):

					Fair Value Measurements
	Carrying Amount		Estimated Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
September 30, 2016
Financial Assets
Cash and due from banks	$	47,701	$	47,701	$	47,701	$	—	$	—
Interest earning deposits in other financial institutions		244,205		244,205		244,205		—		—
Investment securities available-for-sale		375,094		375,094		—		375,094		—
Investment securities held-to-maturity		40,073		40,691		—		40,691		—
Loans, net		1,956,570		1,993,667		—		—		1,993,667
Interest rate swap contracts		1,484		1,484		—		1,484		—
Financial Liabilities
Certificates of deposit		35,033		35,033		—		35,033		—
Securities sold under agreements to repurchase		24,251		24,251		—		24,251		—
Subordinated debentures		9,817		12,372		—		12,372		—
Interest rate swap contracts		2,580		2,580		—		2,580		—
December 31, 2015
Financial Assets
Cash and due from banks	$	50,960	$	50,960	$	50,960	$	—	$	—
Interest earning deposits in other financial institutions		171,103		171,103		171,103		—		—
Investment securities available-for-sale		315,785		315,785		—		315,785		—
Investment securities held-to-maturity		42,036		42,339		—		42,339		—
Loans, net		1,817,481		1,851,220		—		—		1,851,220
Interest rate swap contracts		881		881		—		881		—
Financial Liabilities										—
Certificates of deposit		58,502		58,502		—		58,502		—
Securities sold under agreements to repurchase		14,360		14,360		—		14,360		—
Subordinated debentures		9,697		12,372		—		12,372		—
Interest rate swap contracts		2,545		2,545		—		2,545		—

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Basis of Financial Statement Presentation - Additional Information (Detail)	Sep. 30, 2016 Office
Accounting Policies [Abstract]
Full service branch offices	9

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Recent Accounting Pronouncements - Additional Information (Detail) - USD ($)		3 Months Ended	9 Months Ended
		Sep. 30, 2016	Sep. 30, 2016	Sep. 30, 2015
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Reclassification from additional paid-in capital to provision for income taxes	[1]		$ 772,000
Net excess in tax benefit on stock compensation				$ 788,000
Adjustments for New Accounting Principle, Early Adoption
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Reclassification from additional paid-in capital to provision for income taxes			772,000
Recognized benefit tax benefit			$ 142,000
Reduced rate of effective tax		1.33%	2.84%
Previously unrecognized excess tax benefits		$ 0	$ 0
Net excess in tax benefit on stock compensation			$ 914,000

[1] Represents the reclassification from additional paid-in capital to provision for income tax expense during the first two quarters of 2016, related to the Company's early adoption of ASU 2016-09. See Note 2, Recent Accounting Pronouncements, for additional information.

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Computation of Book Value and Tangible Book Value per Common Share (Detail) - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015	Sep. 30, 2015	Dec. 31, 2014
Equity [Abstract]
Total Shareholders' Equity	$ 332,930	$ 306,807	$ 298,348	$ 279,192
Less: Preferred stock	17,021	16,995
Less: Goodwill	64,603	64,603
Less: Core deposit and leasehold right intangibles, net	6,665	7,671
Tangible common equity	$ 244,641	$ 217,538
Common shares issued	17,673,438	17,175,389
Common shares outstanding	17,673,438	17,175,389
Book value per common share	$ 17.87	$ 16.87
Tangible book value per common share	$ 13.84	$ 12.67

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Computation of Earnings per Common Share - Additional Information (Detail) - $ / shares	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Earnings Per Share [Line Items]
Earnings per share, basic	$ 0.36	$ 0.36	$ 1.13	$ 0.90
Earnings per share, diluted	0.36	$ 0.35	1.11	$ 0.88
Adjustments for New Accounting Principle, Early Adoption
Earnings Per Share [Line Items]
Earnings per share, basic and diluted	$ 0.01
Earnings per share, basic			0.06
Earnings per share, diluted			$ 0.05

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Basic and Diluted Earnings Per Common Share Computations (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Earnings Per Share [Abstract]
Net income	$ 6,583	$ 6,263	$ 20,287	$ 15,729
Less: Preferred stock dividends and discount accretion	304	293	914	877
Net Income available to common shareholders	$ 6,279	$ 5,970	$ 19,373	$ 14,852
Weighted average basic common shares outstanding	17,339,491	16,541,380	17,197,117	16,477,206
Dilutive effect of potential common share issuances from stock options and restricted stock	265,896	456,684	312,458	446,296
Weighted average diluted common shares outstanding	17,605,387	16,998,064	17,509,575	16,923,502
Basic income (loss) per share	$ 0.36	$ 0.36	$ 1.13	$ 0.90
Diluted income (loss) per share	$ 0.36	$ 0.35	$ 1.11	$ 0.88
Anti-dilutive shares not included in the calculation of diluted earnings per share			1,000	43,259

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Amortized Cost, Gross Unrealized Gains and Losses, and Fair Values of Investment Securities (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Available-for-sale Securities, Amortized Cost	$ 374,433	$ 317,194
Available-for-sale Securities, Gross Unrealized Gains	1,886	859
Available-for-sale Securities, Gross Unrealized Losses	1,225	2,268
Fair Market Value	375,094	315,785
Held-to-maturity Securities, Amortized Cost	40,073	42,036
Held-to-maturity Securities, Gross Unrealized Gain	620	335
Held-to-maturity Securities, Gross Unrealized Losses	2	32
Fair Market Value	40,691	42,339
Available-for-sale Securities and Held-to-maturity Securities, Amortized Cost	414,506	359,230
Available-for-sale Securities and Held-to-maturity Securities, Gross Unrealized Gain	2,506	1,194
Available-for-sale Securities and Held-to-maturity Securities, Gross Unrealized Losses	1,227	2,300
Available-for-sale Securities and Held-to-maturity Securities, Fair Market Value	415,785	358,124
U.S. Govt Agency and Sponsored Agency - Note Securities
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Available-for-sale Securities, Amortized Cost	7,003	1,014
Available-for-sale Securities, Gross Unrealized Gains	1
Fair Market Value	7,004	1,014
U.S. Govt Agency - SBA Securities
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Available-for-sale Securities, Amortized Cost	107,759	93,674
Available-for-sale Securities, Gross Unrealized Gains	582	399
Available-for-sale Securities, Gross Unrealized Losses	367	583
Fair Market Value	107,974	93,490
U.S. Govt Agency - GNMA Mortgage-Backed Securities
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Available-for-sale Securities, Amortized Cost	25,123	30,916
Available-for-sale Securities, Gross Unrealized Gains	207	202
Available-for-sale Securities, Gross Unrealized Losses	116	418
Fair Market Value	25,214	30,700
U.S. Govt Sponsored Agency - CMO & Mortgage-Backed Securities
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Available-for-sale Securities, Amortized Cost	146,632	97,693
Available-for-sale Securities, Gross Unrealized Gains	1,030	250
Available-for-sale Securities, Gross Unrealized Losses	424	789
Fair Market Value	147,238	97,154
Corporate Securities
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Available-for-sale Securities, Amortized Cost	501	4,016
Available-for-sale Securities, Gross Unrealized Gains	1	7
Fair Market Value	502	4,023
Municipal Securities
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Available-for-sale Securities, Amortized Cost		1,010
Available-for-sale Securities, Gross Unrealized Gains		1
Fair Market Value		1,011
Held-to-maturity Securities, Amortized Cost	40,073	42,036
Held-to-maturity Securities, Gross Unrealized Gain	620	335
Held-to-maturity Securities, Gross Unrealized Losses	2	32
Fair Market Value	40,691	42,339
Asset Backed Securities
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Available-for-sale Securities, Amortized Cost	7,303	7,890
Available-for-sale Securities, Gross Unrealized Losses	281	243
Fair Market Value	7,022	7,647
U. S. Treasury Notes
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Available-for-sale Securities, Amortized Cost	80,112	80,981
Available-for-sale Securities, Gross Unrealized Gains	65
Available-for-sale Securities, Gross Unrealized Losses	37	235
Fair Market Value	$ 80,140	$ 80,746

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Investment Securities - Additional Information (Detail) - USD ($)	9 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Schedule of Trading Securities and Other Trading Assets [Line Items]
Securities classified as other-than-temporarily impaired	$ 0	$ 0
Company's investment in the common stock of the FHLB	9,200,000	8,000,000
Other-than-temporary impairment losses	0
Securities sold under agreements to repurchase
Schedule of Trading Securities and Other Trading Assets [Line Items]
Market value of securities pledged to secure securities sold under agreements to repurchase	$ 194,000,000	$ 197,000,000

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Gross Unrealized Losses and Fair Values of AFS and HTM Investment Securities that were in Unrealized Loss Positions (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Schedule Of Available For Sale Securities And Held To Maturity Securities [Line Items]
Temporarily-impaired available-for-sale investment securities, Less than 12 Continuous Months, Fair Value	$ 100,456	$ 210,417
Temporarily-impaired available-for-sale investment securities, Less than 12 Continuous Months, Gross Unrealized Loss	540	1,328
Temporarily-impaired available-for-sale investment securities, More than 12 Continuous Months, Fair Value	46,683	36,974
Temporarily-impaired available-for-sale investment securities, More than 12 Continuous Months, Gross Unrealized Loss	685	940
Temporarily-impaired available-for-sale investment securities, Total, Fair Value	147,139	247,391
Temporarily-impaired available-for-sale investment securities, Total, Gross Unrealized Loss	1,225	2,268
Temporarily-impaired held-to-maturity investment securities, Less than 12 months, Fair Value	700	5,669
Temporarily-impaired held-to-maturity investment securities, Less than 12 months, Gross Unrealized Loss	1	16
Temporarily-impaired held-to-maturity investment securities, More than 12 months, Fair Value	313	2,392
Temporarily-impaired held-to-maturity investment securities, More than 12 months, Gross Unrealized Loss	1	16
Temporarily-impaired held-to-maturity investment securities, Fair Value	1,013	8,061
Temporarily-impaired held-to-maturity investment securities, Gross Unrealized Loss	2	32
U.S. Govt Agency - SBA Securities
Schedule Of Available For Sale Securities And Held To Maturity Securities [Line Items]
Temporarily-impaired available-for-sale investment securities, Less than 12 Continuous Months, Fair Value	46,340	53,852
Temporarily-impaired available-for-sale investment securities, Less than 12 Continuous Months, Gross Unrealized Loss	184	428
Temporarily-impaired available-for-sale investment securities, More than 12 Continuous Months, Fair Value	19,285	7,935
Temporarily-impaired available-for-sale investment securities, More than 12 Continuous Months, Gross Unrealized Loss	183	154
Temporarily-impaired available-for-sale investment securities, Total, Fair Value	65,625	61,787
Temporarily-impaired available-for-sale investment securities, Total, Gross Unrealized Loss	367	582
U.S. Govt Agency - GNMA Mortgage-Backed Securities
Schedule Of Available For Sale Securities And Held To Maturity Securities [Line Items]
Temporarily-impaired available-for-sale investment securities, Less than 12 Continuous Months, Fair Value	2,521	5,417
Temporarily-impaired available-for-sale investment securities, Less than 12 Continuous Months, Gross Unrealized Loss	27	47
Temporarily-impaired available-for-sale investment securities, More than 12 Continuous Months, Fair Value	8,878	14,296
Temporarily-impaired available-for-sale investment securities, More than 12 Continuous Months, Gross Unrealized Loss	89	371
Temporarily-impaired available-for-sale investment securities, Total, Fair Value	11,399	19,713
Temporarily-impaired available-for-sale investment securities, Total, Gross Unrealized Loss	116	418
U.S. Govt Sponsored Agency - CMO & Mortgage-Backed Securities
Schedule Of Available For Sale Securities And Held To Maturity Securities [Line Items]
Temporarily-impaired available-for-sale investment securities, Less than 12 Continuous Months, Fair Value	41,497	67,475
Temporarily-impaired available-for-sale investment securities, Less than 12 Continuous Months, Gross Unrealized Loss	292	564
Temporarily-impaired available-for-sale investment securities, More than 12 Continuous Months, Fair Value	11,498	10,024
Temporarily-impaired available-for-sale investment securities, More than 12 Continuous Months, Gross Unrealized Loss	132	225
Temporarily-impaired available-for-sale investment securities, Total, Fair Value	52,995	77,499
Temporarily-impaired available-for-sale investment securities, Total, Gross Unrealized Loss	424	789
Asset Backed Securities
Schedule Of Available For Sale Securities And Held To Maturity Securities [Line Items]
Temporarily-impaired available-for-sale investment securities, Less than 12 Continuous Months, Fair Value		2,928
Temporarily-impaired available-for-sale investment securities, Less than 12 Continuous Months, Gross Unrealized Loss		54
Temporarily-impaired available-for-sale investment securities, More than 12 Continuous Months, Fair Value	7,022	4,719
Temporarily-impaired available-for-sale investment securities, More than 12 Continuous Months, Gross Unrealized Loss	281	190
Temporarily-impaired available-for-sale investment securities, Total, Fair Value	7,022	7,647
Temporarily-impaired available-for-sale investment securities, Total, Gross Unrealized Loss	281	244
U. S. Treasury Notes
Schedule Of Available For Sale Securities And Held To Maturity Securities [Line Items]
Temporarily-impaired available-for-sale investment securities, Less than 12 Continuous Months, Fair Value	10,098	80,745
Temporarily-impaired available-for-sale investment securities, Less than 12 Continuous Months, Gross Unrealized Loss	37	235
Temporarily-impaired available-for-sale investment securities, Total, Fair Value	10,098	80,745
Temporarily-impaired available-for-sale investment securities, Total, Gross Unrealized Loss	37	235
Municipal Securities
Schedule Of Available For Sale Securities And Held To Maturity Securities [Line Items]
Temporarily-impaired held-to-maturity investment securities, Less than 12 months, Fair Value	700	5,669
Temporarily-impaired held-to-maturity investment securities, Less than 12 months, Gross Unrealized Loss	1	16
Temporarily-impaired held-to-maturity investment securities, More than 12 months, Fair Value	313	2,392
Temporarily-impaired held-to-maturity investment securities, More than 12 months, Gross Unrealized Loss	1	16
Temporarily-impaired held-to-maturity investment securities, Fair Value	1,013	8,061
Temporarily-impaired held-to-maturity investment securities, Gross Unrealized Loss	$ 2	$ 32

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Maturities Schedule of Securities (Detail) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Available-for-sale, Amortized Cost
Due through one year	$ 99,048
Due after one year through five years	170,285
Due after five years through ten years	79,234
Due after ten years	25,866
Available-for-sale Securities, Amortized Cost	374,433	$ 317,194
Held-to-maturity, Amortized Cost
Due through one year	2,950
Due after one year through five years	36,389
Due after five years through ten years	734
Held-to-maturity Securities, Amortized Cost	40,073	42,036
Available-for-sale Securities and Held-to-maturity Securities, Amortized Cost	414,506	359,230
Available-for-sale, Fair Value
Due through one year	99,243
Due after one year through five years	170,343
Due after five years through ten years	79,523
Due after ten years	25,985
Total available-for-sale	375,094	315,785
Held-to-maturity, Fair Value
Due through one year	2,956
Due after one year through five years	36,972
Due after five years through ten years	763
Total held-to-maturity	40,691	42,339
Total investment securities	$ 415,785	$ 358,124
Available-for-sale, Weighted Average Yield
Due through one year	1.21%
Due after one year through five years	1.45%
Due after five years through ten years	1.93%
Due after ten years	2.30%
Total available-for-sale	1.54%
Held-to-maturity, Weighted Average Yield
Due through one year	1.49%
Due after one year through five years	1.59%
Due after five years through ten years	1.97%
Total held-to-maturity	1.59%
Total investment securities	1.55%

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Composition of Loan Portfolio (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commercial and Industrial Loans:	$ 499,439	$ 537,368
Loans Secured by Real Estate:
Loans Secured by Real Estate	1,435,884	1,252,683
Other Loans:	39,618	43,112
Total Loans	1,974,941	1,833,163
Owner-Occupied Nonresidential Properties
Loans Secured by Real Estate:
Loans Secured by Real Estate	430,218	407,979
Other Nonresidential Properties
Loans Secured by Real Estate:
Loans Secured by Real Estate	610,267	533,168
Construction, Land Development and Other Land
Loans Secured by Real Estate:
Loans Secured by Real Estate	172,441	125,832
Total Loans	172,441	125,832
1-4 Family Residential Properties
Loans Secured by Real Estate:
Loans Secured by Real Estate	122,955	114,525
Multifamily Residential Properties
Loans Secured by Real Estate:
Loans Secured by Real Estate	$ 100,003	$ 71,179

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Loans - Additional Information (Detail)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2016 USD ($) Loan	Sep. 30, 2015 USD ($) Loan	Sep. 30, 2016 USD ($) Loan	Sep. 30, 2015 USD ($) Loan	Dec. 31, 2015 USD ($)
Accounts, Notes, Loans and Financing Receivable [Line Items]
Net deferred fees and net discounts included in total loans	$ 17,000,000		$ 17,000,000		$ 22,000,000
Loans held for sale	0		0
Credit purchase impaired loan			1,700,000		2,000,000
Recorded Investment	708,000		708,000		1,207,000
Unpaid Principal Balance	$ 1,688,000		$ 1,688,000		1,719,000
Number of Loans | Loan	1	3	1	3
Payment defaults subsequent to modification on troubled debt restructured loans	$ 0	$ 0	$ 0	$ 0
Commitment to lend borrowers	0		0		0
Troubled Debt Restructuring
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment	533,000	1,879,000	533,000	1,879,000	627,000
Unpaid Principal Balance	1,230,000	$ 2,490,000	1,230,000	$ 2,490,000	1,363,000
PCI loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment	1,716,000		1,716,000		2,012,000
Unpaid Principal Balance	2,646,000		2,646,000		$ 4,642,000
PCI loans | Troubled Debt Restructuring
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment	115,000		115,000
Unpaid Principal Balance	287,000		$ 287,000
Number of Loans | Loan			2
SBA Servicing Asset
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, net	109,000,000		$ 109,000,000
Loan balances sold	78,000,000		78,000,000
SBA 7a Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, net	425,000		425,000
Loans guaranteed	319,000		319,000
Debt Instrument Remaining Loans | SBA Servicing Asset
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, net	31,000,000		31,000,000
Debt Instrument Guaranteed Loans | SBA Servicing Asset
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, net	$ 5,000,000		$ 5,000,000

XML

Summary of Activity for Allowance for Loan Loss (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Receivables [Abstract]
Allowance for loan loss at beginning of period	$ 18,476	$ 14,124	$ 15,682	$ 12,610	$ 12,610
Provision for loan losses	697	705	2,382	2,831
Net (charge-offs) recoveries:
Charge-offs	(807)	(42)	(827)	(933)
Recoveries	5	178	1,134	457
Net (charge-offs) recoveries	(802)	136	307	(476)
Allowance for loan loss at end of period	$ 18,371	$ 14,965	$ 18,371	$ 14,965	$ 15,682
Net (charge-offs) recoveries to average loans	(0.04%)	0.01%	0.02%	(0.03%)
Allowance for loan loss to total loans	0.93%		0.93%		0.86%
Allowance for loan loss to total loans accounted for at historical cost, which excludes loans and the related allowance for loans acquired through acquisition			1.20%		1.25%

XML

Changes in Allowance for Loan Loss (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan loss at beginning of period	$ 18,476	$ 14,124	$ 15,682	$ 12,610
Provision for loan losses	697	705	2,382	2,831
Net (charge-offs) recoveries:
Charge-offs	(807)	(42)	(827)	(933)
Recoveries	5	178	1,134	457
Net (charge-offs) recoveries	(802)	136	307	(476)
Allowance for loan loss at end of period	18,371	14,965	18,371	14,965
Commercial and Industrial
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan loss at beginning of period	8,381	6,244	5,924	5,864
Provision for loan losses	(559)	181	791	1,176
Net (charge-offs) recoveries:
Charge-offs	(807)		(827)	(891)
Recoveries	3	177	1,130	453
Net (charge-offs) recoveries	(804)	177	303	(438)
Allowance for loan loss at end of period	7,018	6,602	7,018	6,602
Construction, Land Development and Other Land
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan loss at beginning of period	2,724	1,607	2,076	1,684
Provision for loan losses	45	371	693	294
Net (charge-offs) recoveries:
Allowance for loan loss at end of period	2,769	1,978	2,769	1,978
Commercial and Other Real Estate
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan loss at beginning of period	6,567	5,799	6,821	4,802
Provision for loan losses	1,294	143	1,038	1,137
Net (charge-offs) recoveries:
Charge-offs		(42)		(42)
Recoveries	2	1	4	4
Net (charge-offs) recoveries	2	(41)	4	(38)
Allowance for loan loss at end of period	7,863	5,901	7,863	5,901
Other
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan loss at beginning of period	804	474	861	260
Provision for loan losses	(83)	10	(140)	224
Net (charge-offs) recoveries:
Allowance for loan loss at end of period	$ 721	$ 484	$ 721	$ 484

XML

Schedule Represents both Allowance for Loan Loss and Associated Loan Balance Classified by Loan Portfolio Segment and by Credit Evaluation Methodology (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Jun. 30, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Dec. 31, 2014
Financing Receivable, Allowance for Credit Losses [Line Items]
Individually evaluated for impairment	$ 0		$ 0
Collectively evaluated for impairment	18,371		15,682
Total Allowance for Loan Loss	18,371	$ 18,476	15,682	$ 14,965	$ 14,124	$ 12,610
Loans receivable:
Individually evaluated for impairment	708		1,207
Collectively evaluated for impairment	1,972,517		1,829,944
Total Loans	1,974,941		1,833,163
Loans Acquired with Deteriorated Credit Quality
Financing Receivable, Allowance for Credit Losses [Line Items]
Purchased credit impaired (loans acquired with deteriorated credit quality)	0		0
Loans receivable:
Purchased credit impaired (loans acquired with deteriorated credit quality)	1,716		2,012
Commercial and Industrial
Financing Receivable, Allowance for Credit Losses [Line Items]
Individually evaluated for impairment	0		0
Collectively evaluated for impairment	7,018		5,924
Total Allowance for Loan Loss	7,018	8,381	5,924	6,602	6,244	5,864
Loans receivable:
Individually evaluated for impairment	456		558
Collectively evaluated for impairment	498,669		536,333
Total Loans	499,439		537,368
Commercial and Industrial | Loans Acquired with Deteriorated Credit Quality
Financing Receivable, Allowance for Credit Losses [Line Items]
Purchased credit impaired (loans acquired with deteriorated credit quality)	0		0
Loans receivable:
Purchased credit impaired (loans acquired with deteriorated credit quality)	314		477
Construction, Land Development and Other Land
Financing Receivable, Allowance for Credit Losses [Line Items]
Individually evaluated for impairment	0		0
Collectively evaluated for impairment	2,769		2,076
Total Allowance for Loan Loss	2,769	2,724	2,076	1,978	1,607	1,684
Loans receivable:
Collectively evaluated for impairment	172,441		125,832
Total Loans	172,441		125,832
Construction, Land Development and Other Land | Loans Acquired with Deteriorated Credit Quality
Financing Receivable, Allowance for Credit Losses [Line Items]
Purchased credit impaired (loans acquired with deteriorated credit quality)	0		0
Commercial and Other Real Estate
Financing Receivable, Allowance for Credit Losses [Line Items]
Individually evaluated for impairment	0		0
Collectively evaluated for impairment	7,863		6,821
Total Allowance for Loan Loss	7,863		6,821
Loans receivable:
Individually evaluated for impairment	252		649
Collectively evaluated for impairment	1,261,789		1,124,667
Total Loans	1,263,443		1,126,851
Commercial and Other Real Estate | Loans Acquired with Deteriorated Credit Quality
Financing Receivable, Allowance for Credit Losses [Line Items]
Purchased credit impaired (loans acquired with deteriorated credit quality)	0		0
Loans receivable:
Purchased credit impaired (loans acquired with deteriorated credit quality)	1,402		1,535
Other
Financing Receivable, Allowance for Credit Losses [Line Items]
Individually evaluated for impairment	0		0
Collectively evaluated for impairment	721		861
Total Allowance for Loan Loss	721	$ 804	861	$ 484	$ 474	$ 260
Loans receivable:
Collectively evaluated for impairment	39,618		43,112
Total Loans	39,618		43,112
Other | Loans Acquired with Deteriorated Credit Quality
Financing Receivable, Allowance for Credit Losses [Line Items]
Purchased credit impaired (loans acquired with deteriorated credit quality)	$ 0		$ 0

XML

Risk Category of Loans by Class of Loans (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commercial and Industrial	$ 499,439	$ 537,368
Construction, Land Development and Other Land	172,441	125,832
Commercial and Other Real Estate	1,263,443	1,126,851
Other	39,618	43,112
Total Loans	1,974,941	1,833,163
Pass
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commercial and Industrial	445,172	503,006
Construction, Land Development and Other Land	172,441	125,832
Commercial and Other Real Estate	1,234,950	1,101,548
Other	36,701	40,132
Total Loans	1,889,264	1,770,518
Special Mention
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commercial and Industrial	18,939	16,041
Commercial and Other Real Estate	4,747	6,494
Other		43
Total Loans	23,686	22,578
Substandard
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commercial and Industrial	35,328	18,321
Commercial and Other Real Estate	23,746	18,809
Other	2,917	2,937
Total Loans	$ 61,991	$ 40,067

XML

Aging Analysis of Recorded Investment (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due and Accruing	$ 0	$ 0
Total Non-Accrual	1,223	2,051
Current	1,973,718	1,831,112
Total Loans	1,974,941	1,833,163
Commercial and Industrial
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due and Accruing	0	0
Total Non-Accrual	769	1,032
Current	498,670	536,336
Total Loans	499,439	537,368
Construction, Land Development and Other Land
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due and Accruing	0	0
Current	172,441	125,832
Total Loans	172,441	125,832
Commercial and Other Real Estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due and Accruing	0	0
Total Non-Accrual	454	1,019
Current	1,262,989	1,125,832
Total Loans	1,263,443	1,126,851
Other
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due and Accruing	0	0
Current	39,618	43,112
Total Loans	39,618	43,112
Loans 31 to 60 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due and Accruing	0	0
Loans 31 to 60 Days Past Due | Commercial and Industrial
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due and Accruing	0	0
Loans 31 to 60 Days Past Due | Construction, Land Development and Other Land
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due and Accruing	0	0
Loans 31 to 60 Days Past Due | Commercial and Other Real Estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due and Accruing	0	0
Loans 31 to 60 Days Past Due | Other
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due and Accruing	0	0
Loans 61 to 90 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due and Accruing	0	0
Loans 61 to 90 Days Past Due | Commercial and Industrial
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due and Accruing	0	0
Loans 61 to 90 Days Past Due | Construction, Land Development and Other Land
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due and Accruing	0	0
Loans 61 to 90 Days Past Due | Commercial and Other Real Estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due and Accruing	0	0
Loans 61 to 90 Days Past Due | Other
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due and Accruing	0	0
Loans 90 Days Or More Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due and Accruing	0	0
Loans 90 Days Or More Past Due | Commercial and Industrial
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due and Accruing	0	0
Loans 90 Days Or More Past Due | Construction, Land Development and Other Land
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due and Accruing	0	0
Loans 90 Days Or More Past Due | Commercial and Other Real Estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due and Accruing	0	0
Loans 90 Days Or More Past Due | Other
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due and Accruing	$ 0	$ 0

XML

Recorded Investment and Unpaid Principal Balances for Impaired Loans (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Financing Receivable, Impaired [Line Items]
Related Allowance, With a specific allowance recorded	$ 0		$ 0		$ 0
Recorded Investment	708		708		1,207
Unpaid Principal Balance	1,688		1,688		1,719
Related Allowance, With a specific allowance recorded	0		0		0
Average Recorded Investment	670	$ 3,958	650	$ 3,739
Interest Income Recognized	0	0	0	0
Commercial and Industrial
Financing Receivable, Impaired [Line Items]
Recorded Investment, With no specific allowance recorded	456		456		558
Recorded Investment, With a specific allowance recorded	0		0		0
Unpaid Principal Balance, With no specific allowance recorded	1,402		1,402		1,027
Unpaid Principal Balance, With a specific allowance recorded	0		0		0
Related Allowance, With a specific allowance recorded	0		0		0
Recorded Investment	456		456		558
Unpaid Principal Balance	1,402		1,402		1,027
Related Allowance, With a specific allowance recorded	0		0		0
Average Recorded Investment, With no specific allowance recorded	418	2,118	396	1,757
Interest Income Recognized, With no specific allowance recorded	0	0	0	0
Average Recorded Investment, With a specific allowance recorded		1,328		1,328
Interest Income Recognized, With a specific allowance recorded	0	0	0	0
Average Recorded Investment	418	3,446	396	3,085
Interest Income Recognized	0	0	0	0
Commercial and Other Real Estate
Financing Receivable, Impaired [Line Items]
Recorded Investment, With no specific allowance recorded	252		252		649
Unpaid Principal Balance, With no specific allowance recorded	286		286		692
Related Allowance, With a specific allowance recorded	0		0		0
Recorded Investment	252		252		649
Unpaid Principal Balance	286		286		692
Related Allowance, With a specific allowance recorded	0		0		$ 0
Average Recorded Investment, With no specific allowance recorded	252	99	254	104
Interest Income Recognized, With no specific allowance recorded	0	0	0	0
Average Recorded Investment, With a specific allowance recorded		413		550
Interest Income Recognized, With a specific allowance recorded	0	0	0	0
Average Recorded Investment	252	512	254	654
Interest Income Recognized	$ 0	$ 0	$ 0	$ 0

XML

Additional Information on Impaired Loans (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Receivables [Abstract]
Interest foregone on impaired loans	$ 22	$ 81	$ 68	$ 238
Cash collections applied to reduce principal balance	230	23	282	186
Interest income recognized on cash collections	$ 0	$ 0	$ 0	$ 0

XML

Recorded Investment and Unpaid Principal Balances for Troubled Debt Restructured Loans (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Financing Receivable, Modifications [Line Items]
Recorded Investment	$ 708		$ 708		$ 1,207
Unpaid Principal Balance	1,688		1,688		1,719
Interest Income Recognized	0	$ 0	0	$ 0
Commercial and Industrial
Financing Receivable, Modifications [Line Items]
Recorded Investment	456		456		558
Unpaid Principal Balance	1,402		1,402		1,027
Interest Income Recognized	0	0	0	0
Commercial and Other Real Estate
Financing Receivable, Modifications [Line Items]
Recorded Investment	252		252		649
Unpaid Principal Balance	286		286		692
Interest Income Recognized	0	0	0	0
Troubled Debt Restructuring
Financing Receivable, Modifications [Line Items]
Recorded Investment	533	1,879	533	1,879	627
Unpaid Principal Balance	1,230	2,490	1,230	2,490	1,363
Interest Income Recognized	0	0	0	0	0
Troubled Debt Restructuring | Commercial and Industrial
Financing Receivable, Modifications [Line Items]
Recorded Investment	533	1,780	533	1,780	627
Unpaid Principal Balance	1,230	2,385	1,230	2,385	1,363
Interest Income Recognized	$ 0	0	$ 0	0	$ 0
Troubled Debt Restructuring | Commercial and Other Real Estate
Financing Receivable, Modifications [Line Items]
Recorded Investment		99		99
Unpaid Principal Balance		105		105
Interest Income Recognized		$ 0		$ 0

XML

Pre and Post Modification Recorded Investment in TDR Loans (Detail) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016 USD ($) Loan	Sep. 30, 2015 USD ($) Loan	Sep. 30, 2016 USD ($) Loan	Sep. 30, 2015 USD ($) Loan
Financing Receivable, Modifications [Line Items]
Number of Loans | Loan	1	3	1	3
Pre-Modification Recorded Investment	$ 650	$ 1,335	$ 650	$ 1,335
Post-Modification Recorded Investment	$ 184	$ 1,335	$ 184	$ 1,335
Reduced Interest Rate | Commercial and Industrial
Financing Receivable, Modifications [Line Items]
Number of Loans | Loan	1	3	1	3
Pre-Modification Recorded Investment	$ 650	$ 1,335	$ 650	$ 1,335
Post-Modification Recorded Investment	$ 184	$ 1,335	$ 184	$ 1,335

XML

Accretable Yield for Acquired Loans (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Receivables [Abstract]
Balance, beginning of period	$ 11,928	$ 18,255	$ 14,610	$ 21,402
Accretion, included in interest income	(1,229)	(1,463)	(3,879)	(4,140)
Reclassifications to non-accretable yield		(5)	(32)	(475)
Balance, end of period	$ 10,699	$ 16,787	$ 10,699	$ 16,787

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Carrying Value of Purchased Credit Impaired Loans (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	$ 1,688	$ 1,719
Carrying Value	708	1,207
PCI loans
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	2,646	4,642
Carrying Value	1,716	2,012
PCI loans | Commercial and Industrial
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	639	2,331
Carrying Value	314	477
PCI loans | Commercial and Other Real Estate
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	2,007	2,250
Carrying Value	$ 1,402	1,535
PCI loans | Other
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance		$ 61

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Accretable Net Discount of Purchased Credit Impaired Loans (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Acquired Impaired Loans Change In Accretable Yield [Line Items]
Balance, beginning of period	$ 11,928	$ 18,255	$ 14,610	$ 21,402
Accretion, included in interest income	(1,229)	(1,463)	(3,879)	(4,140)
Balance, end of period	10,699	16,787	10,699	16,787
PCI loans
Acquired Impaired Loans Change In Accretable Yield [Line Items]
Balance, beginning of period	205	286	246	324
Accretion, included in interest income	(22)	(20)	(63)	(58)
Reclassifications from non-accretable yield	0	0	0	0
Balance, end of period	$ 183	$ 266	$ 183	$ 266

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Qualified Affordable Housing Project Investments - Additional Information (Detail) - Low Income Housing Tax Credits - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Investment Holdings [Line Items]
Investment cost	$ 3,400		$ 3,400		$ 3,700
Investment in funding obligation	647		647		$ 1,100
Tax credits and other tax benefits	143	$ 146	436	$ 436
Amortization expense	$ 112	$ 114	$ 336	$ 343

XML

Borrowings and Subordinated Debentures - Additional Information (Detail)		9 Months Ended
	May 19, 2010 USD ($)	Sep. 30, 2016 USD ($) Debentures	Jun. 30, 2016 USD ($)	Dec. 31, 2015 USD ($)
Debt Instrument [Line Items]
Securities with a fair value		$ 55,000,000		$ 47,000,000
Subordinated debentures		$ 12,372,000		12,372,000
Issuance maturity period from its date of issue		30 years
Number of debentures | Debentures		3
Trust preferred securities tier one capital		25.00%
Maximum proceeds from issuance of trust preferred securities	$ 15,000,000,000
Proceeds from issuance of trust preferred securities	12,000,000
Junior Subordinated Debt
Debt Instrument [Line Items]
Proceeds from issuance of debt securities	$ 12,400,000
Federal Home Loan Bank of San Francisco
Debt Instrument [Line Items]
Credit facility, percentage of Bank's total assets			25.00%
Credit facility, maximum borrowing capacity			$ 694,000,000
Credit facility, loan collateral pledge		$ 953,000,000
Maximum advances by FHLB		633,000,000
Investment securities pledged with FHLB		17,000,000
Outstanding advances (borrowings) with FHLB		0		0
PC Bancorp
Debt Instrument [Line Items]
Subordinated debentures		$ 12,400,000
Subordinated Debentures
Debt Instrument [Line Items]
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.
Trust I
Debt Instrument [Line Items]
Subordinated debentures		$ 6,186,000		6,186,000
Prepayment penalties		0
Trust II
Debt Instrument [Line Items]
Subordinated debentures		3,093,000		3,093,000
Prepayment penalties		0
Trust III
Debt Instrument [Line Items]
Subordinated debentures		3,093,000		$ 3,093,000
Prepayment penalties		$ 0
Minimum
Debt Instrument [Line Items]
Repurchase maturity date		1 day
Maximum
Debt Instrument [Line Items]
Repurchase maturity date		180 days

XML

Terms and Maturity of Bank's Securities Sold under Agreements (Detail) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Financial Instruments Owned and Pledged as Collateral [Line Items]
Amount	$ 24,251	$ 14,360
Interest Rate	0.24%	0.19%
September 30, 2016
Financial Instruments Owned and Pledged as Collateral [Line Items]
Amount	$ 24,251
Term	3 days
Maturity Date	Oct. 03, 2016
September 30, 2016 | Minimum
Financial Instruments Owned and Pledged as Collateral [Line Items]
Interest Rate	0.10%
September 30, 2016 | Maximum
Financial Instruments Owned and Pledged as Collateral [Line Items]
Interest Rate	0.25%
December 31, 2015
Financial Instruments Owned and Pledged as Collateral [Line Items]
Amount		$ 14,360
Term		4 days
Maturity Date		Jan. 04, 2016
December 31, 2015 | Minimum
Financial Instruments Owned and Pledged as Collateral [Line Items]
Interest Rate		0.08%
December 31, 2015 | Maximum
Financial Instruments Owned and Pledged as Collateral [Line Items]
Interest Rate		0.25%

XML

Subordinated Debentures Outstanding (Detail) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Financial Instruments Owned and Pledged as Collateral [Line Items]
Amount, gross	$ 12,372	$ 12,372
Unamortized fair value adjustment	(2,555)	(2,675)
Net	9,817	9,697
Trust I
Financial Instruments Owned and Pledged as Collateral [Line Items]
Amount, gross	$ 6,186	$ 6,186
Issuance Date	Dec. 10, 2004	Dec. 10, 2004
Maturity Date	Mar. 15, 2035	Mar. 15, 2035
Rate Index	3 month LIBOR + 2.05 %	3 month LIBOR + 2.05 %
Current Rate	2.90%	2.56%
Next Reset Date	Dec. 15, 2016	Mar. 15, 2016
Trust II
Financial Instruments Owned and Pledged as Collateral [Line Items]
Amount, gross	$ 3,093	$ 3,093
Issuance Date	Dec. 23, 2005	Dec. 23, 2005
Maturity Date	Mar. 15, 2036	Mar. 15, 2036
Rate Index	3 month LIBOR + 1.75 %	3 month LIBOR + 1.75 %
Current Rate	2.60%	2.26%
Next Reset Date	Dec. 15, 2016	Mar. 15, 2016
Trust III
Financial Instruments Owned and Pledged as Collateral [Line Items]
Amount, gross	$ 3,093	$ 3,093
Issuance Date	Jun. 30, 2006	Jun. 30, 2006
Maturity Date	Sep. 18, 2036	Sep. 18, 2036
Rate Index	3 month LIBOR + 1.85 %	3 month LIBOR + 1.85 %
Current Rate	2.70%	2.36%
Next Reset Date	Dec. 15, 2016	Mar. 15, 2016

XML

Derivative Financial Instruments - Additional Information (Detail)	9 Months Ended
	Sep. 30, 2016 USD ($) Agreement Derivative Financial_Institution	Dec. 31, 2015 USD ($)
Derivative [Line Items]
Number of pay-fixed, receive-variable interest rate swap agreements | Agreement	16
Investment securities	$ 415,167,000	$ 357,821,000
Interest rate swap contracts fair value
Derivative [Line Items]
Certificates of deposit with other financial institutions pledged	2,300,000
Investment securities	2,700,000
Trading securities eligible for use as collateral	$ 5,000,000
1st Enterprise Bank
Derivative [Line Items]
Number of counterparty banks | Financial_Institution	2
Derivative assets liabilities offset	$ 0
Total notional amount of swaps	$ 27,000,000	$ 28,000,000
Derivatives not Designated as Hedging Instruments | 1st Enterprise Bank | Interest rate swap contracts fair value
Derivative [Line Items]
Swap contracts acquired | Derivative	12
Offsetting interest-rate swaps acquired | Derivative	12

XML

Balance Sheet Classification of Derivative Financial Instruments (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Derivative [Line Items]
Asset Derivatives	$ 1,484	$ 881
Fair Value Hedges	2,580	2,545
1st Enterprise Bank | Accrued Interest Payable and Other Liabilities | Interest rate swap contracts fair value
Derivative [Line Items]
Fair Value Hedges	1,484	881
1st Enterprise Bank | Accrued Interest Receivable and Other Assets | Interest rate swap contracts fair value
Derivative [Line Items]
Asset Derivatives	1,484	881
PC Bancorp | Accrued Interest Payable and Other Liabilities
Derivative [Line Items]
Fair Value Hedges	1,096	1,664
PC Bancorp | Accrued Interest Payable and Other Liabilities | Interest Rate Contracts
Derivative [Line Items]
Fair Value Hedges	22,001	25,938
Derivatives not Designated as Hedging Instruments | PC Bancorp | Accrued Interest Payable and Other Liabilities | Interest rate swap contracts fair value
Derivative [Line Items]
Fair Value Hedges	156	313
Derivatives Designated as Hedging Instruments | PC Bancorp | Accrued Interest Payable and Other Liabilities | Interest rate swap contracts fair value
Derivative [Line Items]
Fair Value Hedges	$ 940	$ 1,351

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Effect of Derivative Instruments on Consolidated Statements of Income (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Derivative [Line Items]
Net decrease in other non-interest income	$ 6	$ (25)	$ (25)	$ (74)
Net decrease in interest income on loans	(21)	58	(30)	16
Derivatives not Designated as Hedging Instruments | Loans, net
Derivative [Line Items]
Increase in fair value of interest rate swap contracts	66	41	156	124
Payments on interest rate swap contracts on loans and subordinated debentures	(60)	(66)	(181)	(198)
Derivatives Designated as Hedging Instruments | Loans, net
Derivative [Line Items]
Increase (decrease) in fair value of hedged loans	(68)	191	215	279
Payments on interest rate swap contracts on loans and subordinated debentures	(202)	(275)	(657)	(846)
Derivatives Designated as Hedging Instruments | Subordinated Debentures
Derivative [Line Items]
Increase in fair value of interest rate swap contracts	$ 249	$ 142	$ 412	$ 583

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Securities Sold under Repurchase Agreements and Derivatives Securities Offset in Consolidated Financial Statements Due to an Enforceable Master Netting Arrangement (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Offsetting [Abstract]
Interest rate swap contracts fair value - Gross Amounts Recognized in the Consolidated Balance Sheets	$ 1,484	$ 881
Interest rate swap contracts fair value - Gross Amounts Offset in the Consolidated Balance Sheets	0	0
Interest rate swap contracts fair value - Net Amounts of Assets Presented in the Consolidated Balance Sheets	1,484	881
Interest rate swap contracts fair value - Gross Amounts Not Offset in the Consolidated Balance Sheets - Financial Instruments	1,484	881
Interest rate swap contracts fair value - Gross Amounts Not Offset in the Consolidated Balance Sheets - Collateral Pledged	0	0
Interest rate swap contracts fair value - Net Amount (Collateral over liability balance required to be pledged)	0	0
Total - Gross Amounts Recognized in the Consolidated Balance Sheets	1,484	881
Total - Gross Amounts Offset in the Consolidated Balance Sheets	0	0
Total - Net Amounts of Assets Presented in the Consolidated Balance Sheets	1,484	881
Total - Gross Amounts Not Offset in the Consolidated Balance Sheets - Financial Instruments	1,484	881
Total - Gross Amounts Not Offset in the Consolidated Balance Sheets - Collateral Pledged	0	0
Total - Net Amount (Collateral over liability balance required to be pledged)	0	0
Interest rate swap contracts fair value - Gross Amounts Recognized in the Consolidated Balance Sheets	2,580	2,545
Interest rate swap contracts fair value - Gross Amounts Offset in the Consolidated Balance Sheets	0	0
Interest rate swap contracts fair value - Net Amounts of Liabilities Presented in the Consolidated Balance Sheets	2,580	2,545
Interest rate swap contracts fair value - Gross Amounts Not Offset in the Consolidated Balance Sheets - Financial Instruments	2,580	2,545
Interest rate swap contracts fair value - Gross Amounts Not Offset in the Consolidated Balance Sheets - Collateral Pledged	5,041	4,759
Interest rate swap contracts fair value - Net Amount (Collateral over liability balance required to be pledged)	2,461	2,214
Securities sold under agreements to repurchase - Gross Amounts Recognized in the Consolidated Balance Sheets	24,251	14,360
Securities sold under agreements to repurchase - Gross Amounts Offset in the Consolidated Balance Sheets	0	0
Securities sold under agreements to repurchase - Net Amounts of Liabilities Presented in the Consolidated Balance Sheets	24,251	14,360
Securities sold under agreements to repurchase - Gross Amounts Not Offset in the Consolidated Balance Sheets - Financial Instruments	24,251	14,360
Securities sold under agreements to repurchase - Gross Amounts Not Offset in the Consolidated Balance Sheets - Collateral Pledged	55,250	46,596
Securities sold under agreements to repurchase - Net Amount (Collateral over liability balance required to be pledged)	30,999	32,236
Total - Gross Amounts Recognized in the Consolidated Balance Sheets	26,831	16,905
Total - Gross Amounts Offset in the Consolidated Balance Sheets	0	0
Total - Net Amounts of Assets /Liabilities Presented in the Consolidated Balance Sheets	26,831	16,905
Total - Gross Amounts Not Offset in the Consolidated Balance Sheets - Financial Instruments	26,831	16,905
Total - Gross Amounts Not Offset in the Consolidated Balance Sheets - Collateral Pledged	60,291	51,355
Total - Net Amount (Collateral over liability balance required to be pledged)	$ 33,460	$ 34,450

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Future Compensation Expense Related to Unvested Restricted Stock Grants (Detail) - Restricted Stock $ in Thousands	9 Months Ended
	Sep. 30, 2016 USD ($)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Remainder of 2016	$ 842
2017	1,910
2018	667
2019	185
Thereafter	36
Total	$ 3,640

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Stock Options and Restricted Stock - Additional Information (Detail) - USD ($) shares in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted-average period over which the total compensation cost related to unvested restricted stock grants not yet recognized			2 years 6 months
Total intrinsic value of options exercised	$ 127,000	$ 606,000	$ 5,700,000	$ 1,900,000
Stock-based compensation expense	939,000	810,000	2,664,000	2,130,000
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Future compensation expense related to unvested stock options			3,640,000
Restricted Stock | Equity Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based compensation, options granted					40
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Future compensation expense related to unvested stock options			0
Stock-based compensation expense	$ 939,000	$ 745,000	$ 2,700,000	$ 2,000,000

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Share Option Activity (Detail) - Equity Plan - Stock Options - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Shares
Outstanding stock options at beginning, Shares	557,471
Granted, Shares	0
Exercised, Shares	(411,964)
Forfeited, Shares	0
Expired, Shares	(4,500)
Outstanding stock options at ending, Shares	141,007	557,471
Exercisable options at September 30, 2016, Shares	141,007
Unvested options at September 30, 2016, Shares	0
Weighted Average Exercise Price
Outstanding stock options at beginning, Weighted Average Exercise Price	$ 10.57
Granted, Weighted Average Exercise Price	0
Exercised, Weighted Average Exercise Price	0
Forfeited, Weighted Average Exercise Price	0
Expired, Weighted Average Exercise Price	0
Outstanding stock options at end, Weighted Average Exercise Price	14.87	$ 10.57
Exercisable options at end, Weighted Average Exercise Price	14.87
Unvested options at end, Weighted Average Exercise Price	$ 0
Weighted Average Remaining Contractual Term
Outstanding stock options at September 30, 2016	9 months 18 days	9 months 18 days
Exercisable options at end, Weighted Average Remaining Contractual Term	9 months 18 days
Aggregate Intrinsic Value
Outstanding stock options at beginning, Aggregate Intrinsic Value	$ 8,248
Outstanding stock options at end, Aggregate Intrinsic Value	1,121	$ 8,248
Exercisable options at end, Aggregate Intrinsic Value	1,121
Unvested options at end, Aggregate Intrinsic Value	$ 0

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Restricted Stock Activity (Detail) - Restricted Stock	9 Months Ended
	Sep. 30, 2016 $ / shares shares
Number of Shares
Unvested, at beginning, Number of Shares | shares	311,458
Granted, Number of Shares | shares	132,809
Vested, Number of Shares | shares	(87,031)
Cancelled and forfeited, Number of Shares | shares	(11,375)
Unvested, at end, Number of Shares | shares	345,861
Weighted-Average Grant-Date Fair Value per Share
Unvested, at beginning, Weighted-Average Grant-Date Fair Value per Share | $ / shares	$ 19.29
Granted, Weighted-Average Grant-Date Fair Value per Share | $ / shares	23.12
Vested, Weighted-Average Grant-Date Fair Value per Share | $ / shares	17.53
Cancelled and forfeited, Weighted-Average Grant-Date Fair Value per Share | $ / shares	20.88
Unvested, at end, Weighted-Average Grant-Date Fair Value per Share | $ / shares	$ 21.37

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Shareholders' Equity - Additional Information (Detail) - USD ($) $ / shares in Thousands, $ in Thousands			9 Months Ended		22 Months Ended
	Nov. 30, 2018	Nov. 30, 2014	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Dec. 31, 2015
Class of Stock [Line Items]
Shares issued during period upon exercise of stock options for total value			$ 3,695	$ 1,434
Shares repurchased of restricted stock value			$ 834
Preferred stock, liquidation preference per share		$ 1	$ 1		$ 1
Carrying value of preferred stock			$ 17,021		$ 17,021	$ 16,995
Coupon dividend rate			9.00%
Coupon dividend rate, description			The current coupon dividend rate was adjusted to 9% on March 1, 2016 through perpetuity.
Scenario, Forecast
Class of Stock [Line Items]
Dividend yield from business combination accounting	7.00%
1st Enterprise Bank
Class of Stock [Line Items]
Number of Non-Cumulative Perpetual Preferred Stock, Series D converted to Non-Cumulative Perpetual Preferred Stock, Series A		16,400
Preferred stock estimated period			4 years
Preferred stock net discount			$ 479
Preferred stock accretion on net discount			1,100		26
Carrying value of preferred stock			17,000		17,000
Preferred stock value, gross			16,000		$ 16,000
Preferred stock value net premium			$ 600
1st Enterprise Bank | Preferred Stock
Class of Stock [Line Items]
Fair value of preferred stock		$ 16,000
1st Enterprise Bank | SBLF
Class of Stock [Line Items]
Preferred stock issued		16,400
Restricted Stock
Class of Stock [Line Items]
Shares issued during period upon exercise of stock options			411,964
Shares issued during period upon exercise of stock options for total value			$ 3,700
Shares of restricted stock issued to employees and directors			132,809
Share based compensation, unvested restricted shares cancelled			35,349
Unvested Restricted Stock
Class of Stock [Line Items]
Share based compensation, unvested restricted shares cancelled			11,375

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Changes in Accumulated Other Comprehensive Income (Loss) (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Components Of Other Comprehensive Income Loss [Line Items]
Beginning Balance			$ 306,807	$ 279,192
Net unrealized gain (loss) arising during the period	$ (313)	$ 311	1,281	73
Related tax effect	227	(225)	(929)	(48)
Reclassification of (gain) loss on investment securities available-for-sale to net income	(141)		(141)
Related tax effect	59		59
Other Comprehensive Income (Loss)	(395)	311	1,199	73
Ending balance	332,930	298,348	332,930	298,348
Unrealized Gains (Losses) on Investment Securities
Components Of Other Comprehensive Income Loss [Line Items]
Beginning Balance	778	(48)	(816)	190
Net unrealized gain (loss) arising during the period	(540)	536	2,210	121
Ending balance	$ 383	$ 263	$ 383	$ 263

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Commitments and Contingencies - Additional Information (Detail) - USD ($)	9 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Other Commitments [Line Items]
Legal proceedings against the company	$ 0
Allowance for losses on unfunded loan commitments	778,000	$ 608,000
Commitments to Extend Credit
Other Commitments [Line Items]
Financial instruments with off balance sheet risk	920,000,000	806,000,000
Commitments to Extend Credit | Standby Letters of Credit
Other Commitments [Line Items]
Financial instruments with off balance sheet risk	$ 87,000,000	$ 73,000,000

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Financial Assets and Financial Liabilities Measured at Fair Value on Recurring Basis (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available-for-sale	$ 375,094	$ 315,785
Interest Rate Swap Contracts	1,484	881
Interest Rate Swap Contracts	2,580	2,545
Interest rate swap contracts fair value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Interest Rate Swap Contracts	1,484	881
Interest Rate Swap Contracts	2,580	2,545
Significant Other Observable Inputs (Level 2)
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available-for-sale	375,094	315,785
Significant Other Observable Inputs (Level 2) | Interest rate swap contracts fair value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Interest Rate Swap Contracts	1,484	881
Interest Rate Swap Contracts	$ 2,580	$ 2,545

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Fair Value Information - Additional Information (Detail) - USD ($)	3 Months Ended	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2016	Dec. 31, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial assets measured at fair value on recurring basis	$ 0	$ 0	$ 0
Financial liabilities measured at fair value on recurring basis	0	0	$ 0
Fair Value Hierarchy for Assets Measured on Recurring Basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Transfer of assets in or out of Level 3		0
Fair value assets transfer from level 1 to level 2	0	0
Fair value assets transfer from level 2 to level 1	0	0
Fair Value Hierarchy for Asset Measured on Non-recurring Basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Transfer of assets in or out of Level 3	0	0
Fair value assets transfer from level 1 to level 2	0	0
Fair value assets transfer from level 2 to level 1	$ 0	$ 0

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Balances of Assets and Liabilities Measured at Fair Value on Non-Recurring Basis (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total	$ 242	$ 325
Fair Value Hierarchy for Asset Measured on Non-recurring Basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans with specific valuation allowance and/or partial charge-offs (non-purchased credit impaired loans)	242
Other real estate owned		325
Total	242	325
Significant Unobservable Inputs (Level 3) | Fair Value Hierarchy for Asset Measured on Non-recurring Basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans with specific valuation allowance and/or partial charge-offs (non-purchased credit impaired loans)	242
Other real estate owned		325
Total	$ 242	$ 325

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Significant Unobservable Inputs Used in Fair Value Measurements for Level 3 Assets and Liabilities Measured at Fair Value on Recurring or Non-Recurring Basis (Detail) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Assets, fair value	$ 242	$ 325
Other Real Estate Owned | Broker Opinion of Value
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Valuation Model and/or Factors	Sales approach Estimated selling costs
Estimated selling costs		6.00%
Other Real Estate Owned | Residential Real Estate Appraisal
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Assets, fair value		$ 325
Collateral Dependent Impaired Loans With Specific Valuation Allowance And/Or Partial Charge-Off
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Assets, fair value	$ 58
Collateral Dependent Impaired Loans With Specific Valuation Allowance And/Or Partial Charge-Off | Auction Estimate
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Assets, fair value	$ 184
Collateral Dependent Impaired Loans With Specific Valuation Allowance And/Or Partial Charge-Off | Balance Represents Hundred Percentage Guaranty By SBA
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Valuation Model and/or Factors	Not Applicable
Collateral Dependent Impaired Loans With Specific Valuation Allowance And/Or Partial Charge-Off | Assignment Of Expected Proceeds From Collateral Sale
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Valuation Model and/or Factors	Not Applicable

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Significant Unobservable Inputs Used in Fair Value Measurements for Level 3 Assets and Liabilities Measured at Fair Value on Recurring or Non-Recurring Basis (Parenthetical) (Detail)	9 Months Ended
	Sep. 30, 2016
Fair Value Disclosures [Abstract]
Percentage of guarantee by small business administration	100.00%

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Level in Fair Value Hierarchy for Financial Instruments Estimated Fair Values (Detail) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and due from banks	$ 47,701	$ 50,960
Cash and due from banks	47,701	50,960
Interest earning deposits in other financial institutions	244,205	171,103
Interest earning deposits in other financial institutions	244,205	171,103
Investment securities available-for-sale	375,094	315,785
Investment securities held-to-maturity, Carrying Amount	40,073	42,036
Investment securities held-to-maturity	40,691	42,339
Loans, net, Carrying Amount	1,956,570	1,817,481
Loans, net, Fair Value	1,993,667	1,851,220
Interest rate swap contracts, Carrying Amount	1,484	881
Interest rate swap contracts, Fair Value	1,484	881
Certificates of deposit, Carrying Amount	35,033	58,502
Certificates of deposit, Fair Value	35,033	58,502
Securities sold under agreements to repurchase, Carrying Amount	24,251	14,360
Securities sold under agreements to repurchase, Fair Value	24,251	14,360
Subordinated debentures, Carrying Amount	9,817	9,697
Subordinated debentures, Fair Value	12,372	12,372
Interest rate swap contracts, Carrying Amount	2,580	2,545
Interest rate swap contracts, Fair Value	2,580	2,545
Carrying (Reported) Amount, Estimated Fair Value Disclosure
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and due from banks	47,701	50,960
Interest earning deposits in other financial institutions	244,205	171,103
Investment securities available-for-sale	375,094	315,785
Investment securities held-to-maturity, Carrying Amount	40,073	42,036
Loans, net, Carrying Amount	1,956,570	1,817,481
Interest rate swap contracts, Carrying Amount	1,484	881
Certificates of deposit, Carrying Amount	35,033	58,502
Securities sold under agreements to repurchase, Carrying Amount	24,251	14,360
Subordinated debentures, Carrying Amount	9,817	9,697
Interest rate swap contracts, Carrying Amount	2,580	2,545
Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and due from banks	47,701	50,960
Interest earning deposits in other financial institutions	244,205	171,103
Significant Other Observable Inputs (Level 2)
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available-for-sale	375,094	315,785
Investment securities held-to-maturity	40,691	42,339
Interest rate swap contracts, Fair Value	1,484	881
Certificates of deposit, Fair Value	35,033	58,502
Securities sold under agreements to repurchase, Fair Value	24,251	14,360
Subordinated debentures, Fair Value	12,372	12,372
Interest rate swap contracts, Fair Value	2,580	2,545
Significant Unobservable Inputs (Level 3)
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Loans, net, Fair Value	$ 1,993,667	$ 1,851,220