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 June 30, 2017

☐ 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	☐
		Emerging Growth Company	☒

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

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

As of August 1, 2017 the number of shares outstanding of the registrant’s no par value Common Stock was 17,827,381.

Page 1 of 77

CU BANCORP

June 30, 2017 FORM 10-Q

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

	ITEM 1.	Financial Statements
		Consolidated Balance Sheets June  30, 2017 (Unaudited) and December 31, 2016	3
		Consolidated Statements of Income Three Months and Six Months Ended June 30, 2017 and 2016 (Unaudited)	4
		Consolidated Statements of Comprehensive Income Three Months and Six Months Ended June 30, 2017 and 2016 (Unaudited)	5
		Consolidated Statements of Changes in Shareholders’ Equity Six Months Ended June 30, 2017 and 2016 (Unaudited)	6
		Consolidated Statements of Cash Flows Six Months Ended June  30, 2017 and 2016 (Unaudited)	7
		Notes to the Consolidated Financial Statements (Unaudited)	9
	ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	43
		Overview	45
		Results of Operations	49
		Financial Condition	60
		Liquidity	65
		Dividends	67
		Regulatory Matters	68
	ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	71
	ITEM 4.	Controls and Procedures	73
PART II. OTHER INFORMATION
	ITEM 1.	Legal Proceedings	74
	ITEM 1A.	Risk Factors	74
	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	75
	ITEM 6.	Exhibits	76
	Signatures		77

Page 2 of 77

CU BANCORP

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except share data)

	June 30, 2017			December 31, 2016
	(Unaudited)			(Audited)
ASSETS
Cash and due from banks	$	56,382		$	41,281
Interest earning deposits in other financial institutions		111,852			167,789
Total cash and cash equivalents		168,234			209,070
Certificates of deposit in other financial institutions		47,325			51,245
Investment securities available-for-sale, at fair value		453,952			469,950
Investment securities held-to-maturity, at amortized cost		39,992			42,027
Total investment securities		493,944			511,977
Loans		2,151,593			2,050,226
Allowance for loan loss		(20,326	)		(19,374	)
Net loans		2,131,267			2,030,852
Premises and equipment, net		3,806			4,184
Deferred tax assets, net		16,291			17,181
Goodwill		64,603			64,603
Core deposit and leasehold right intangibles, net		5,641			6,300
Bank owned life insurance		61,536			51,216
Accrued interest receivable and other assets		45,478			48,132
Total Assets	$	3,038,125		$	2,994,760
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES
Non-interest bearing demand deposits	$	1,459,553		$	1,400,097
Interest bearing transaction accounts		328,156			332,702
Money market and savings deposits		820,832			845,110
Certificates of deposit		29,725			29,480
Total deposits		2,638,266			2,607,389
Securities sold under agreements to repurchase		12,180			18,816
Subordinated debentures, net		9,936			9,856
Accrued interest payable and other liabilities		20,167			20,514
Total Liabilities		2,680,549			2,656,575
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 June 30, 2017 and December 31, 2016, respectively		16,818			16,955
Common stock – authorized, 75,000,000 shares no par value, 17,831,131 and 17,759,006 shares issued and outstanding at June 30, 2017 and December 31, 2016, respectively		236,308			235,873
Additional paid-in capital		26,254			25,213
Retained earnings		79,654			63,163
Accumulated other comprehensive loss, net of tax		(1,458	)		(3,019	)
Total Shareholders’ Equity		357,576			338,185
Total Liabilities and Shareholders’ Equity	$	3,038,125		$	2,994,760

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 June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Interest Income
Interest and fees on loans	$	24,695	$	23,165	$	49,127	$	45,743
Interest on investment securities		2,153		1,415		4,194		2,647
Interest on interest bearing deposits in other financial institutions		615		417		1,325		856
Total Interest Income		27,463		24,997		54,646		49,246
Interest Expense
Interest on interest bearing transaction accounts		146		99		303		198
Interest on money market and savings deposits		699		484		1,369		995
Interest on certificates of deposit		35		31		61		64
Interest on securities sold under agreements to repurchase		7		14		16		25
Interest on subordinated debentures		136		120		266		237
Total Interest Expense		1,023		748		2,015		1,519
Net Interest Income		26,440		24,249		52,631		47,727
Provision for loan losses		701		1,063		701		1,685
Net Interest Income After Provision For Loan Losses		25,739		23,186		51,930		46,042
Non-Interest Income
Gain on sale of securities, net		—		—		141		—
Gain on sale of SBA loans, net		552		485		754		1,039
Deposit account service charge income		1,210		1,222		2,370		2,411
Other non-interest income		3,865		1,268		5,197		2,345
Total Non-Interest Income		5,627		2,975		8,462		5,795
Non-Interest Expense
Salaries and employee benefits (includes stock based compensation expense of $837 and $891 for the three months, and $1,610 and $1,725 for the six months ended June 30, 2017 and 2016, respectively)		10,642		9,921		21,703		20,074
Occupancy		1,450		1,439		2,939		2,875
Data processing		670		635		1,326		1,253
Legal and professional		460		651		1,469		1,126
FDIC deposit assessment		391		359		837		709
Merger related expense		1,471		—		1,471		—
OREO loss and expenses		—		4		—		83
Office services expenses		363		320		743		723
Other operating expenses		1,673		1,760		3,325		3,433
Total Non-Interest Expense		17,120		15,089		33,813		30,276
Net Income Before Provision for Income Tax Expense		14,246		11,072		26,579		21,561
Provision for income tax expense		4,937		3,952		9,487		7,857
Net Income		9,309		7,120		17,092		13,704
Preferred stock dividends and discount accretion or premium amortization		300		307		601		610
Net Income available to common shareholders	$	9,009	$	6,813	$	16,491	$	13,094
Earnings Per Share
Basic earnings per share	$	0.51	$	0.40	$	0.94	$	0.77
Diluted earnings per share	$	0.51	$	0.39	$	0.93	$	0.75

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 June 30,				Six Months Ended June 30,
	2017		2016		2017			2016
Net Income	$	9,309	$	7,120	$	17,092		$	13,704
Other Comprehensive Income, net of tax:
Net change in unrealized loss on available-for-sale investment securities, net of tax		1,396		825		1,643			1,594
Reclassification of gain on investment securities available-for-sale to net income, net of tax		—		—		(82	)		—
Other Comprehensive Income		1,396		825		1,561			1,594
Comprehensive Income	$	10,705	$	7,945	$	18,653		$	15,298

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, 2015		16,400	$	16,995			17,175,389		$	230,688	$	23,017		$	36,923		$	(816	)	$	306,807
Net issuance of restricted stock		—		—			109,809			—		—			—			—			—
Exercise of stock options		—		—			396,964			3,453		—			—			—			3,453
Stock based compensation expense		—		—			—			—		1,725			—			—			1,725
Restricted stock repurchase		—		—			(13,781	)		—		(305	)		—			—			(305	)
Preferred stock dividends and discount accretion		—		91			—			—		—			(610	)		—			(519	)
Net income		—		—			—			—		—			13,704			—			13,704
Other comprehensive income		—		—			—			—		—			—			1,594			1,594
Balance at June 30, 2016		16,400	$	17,086			17,668,381		$	234,141	$	24,437		$	50,017		$	778		$	326,459
Balance at December 31, 2016		16,400	$	16,955			17,759,006		$	235,873	$	25,213		$	63,163		$	(3,019	)	$	338,185
Net issuance of restricted stock		—		—			58,681			—		—			—			—			—
Exercise of stock options		—		—			27,942			435		—			—			—			435
Stock based compensation expense		—		—			—			—		1,610			—			—			1,610
Restricted stock repurchase		—		—			(14,498	)		—		(569	)		—			—			(569	)
Preferred stock dividends and net premium amortization		—		(137	)		—			—		—			(601	)		—			(738	)
Net income		—		—			—			—		—			17,092			—			17,092
Other comprehensive income		—		—			—			—		—			—			1,561			1,561
Balance at June 30, 2017		16,400	$	16,818			17,831,131		$	236,308	$	26,254		$	79,654		$	(1,458	)	$	357,576

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)

	Six Months Ended June 30,
	2017			2016
Cash flows from operating activities:
Net income:	$	17,092		$	13,704
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		701			1,685
Provision for unfunded loan commitments		—			117
Stock based compensation expense		1,610			1,725
Depreciation		678			717
Net accretion of discounts/premiums for loans acquired and deferred loan fees/costs		(3,721	)		(4,392	)
Net amortization from investment securities		3,009			1,991
Decrease (increase) in bank owned life insurance		1,680			(649	)
Gain from death benefit claims from bank owned life insurance		(2,388	)		—
Amortization of core deposit intangibles		568			642
Amortization of time deposit premium		—			(2	)
Net accretion of leasehold right intangible asset and liabilities		(68	)		(57	)
Accretion of subordinated debenture discount		80			80
Loss on sale of OREO		—			14
Gain on sale of securities, net		(141	)		—
Gain on sale of SBA loans, net		(754	)		(1,039	)
Decrease (increase) in deferred tax assets		(243	)		1,421
Decrease (increase) in accrued interest receivable and other assets		2,845			(408	)
Increase in accrued interest payable and other liabilities		172			1,135
Increase (decrease) in fair value of derivative swap liability		(360	)		588
Net cash provided by operating activities		20,760			17,272
Cash flows from investing activities:
Purchases of investment securities		(46,487	)		(51,924	)
Proceeds from sales of investment securities		10,601			—
Proceeds from repayment and maturities of investment securities		53,746			35,799
Loans originated, net of principal payments		(96,642	)		(111,409	)
Purchases of premises and equipment		(300	)		(225	)
Proceeds from sale of OREO		—			311
Net decrease in certificates of deposit in other financial institutions		3,920			2,450
Purchase of bank owned life insurance		(12,000	)		—
Proceeds from death benefit payments		2,197			—
Net cash used in investing activities		(84,965	)		(124,998	)
Cash flows from financing activities:
Net increase in non-interest bearing demand deposits		59,456			49,465
Net decrease in interest bearing transaction accounts		(4,546	)		(2,020	)
Net increase (decrease) in money market and savings deposits		(24,278	)		68,409
Net increase (decrease) in certificates of deposit		245			(6,902	)
Net increase (decrease) in securities sold under agreements to repurchase		(6,636	)		11,422
Net proceeds from stock options exercised		435			3,453
Restricted stock repurchase		(569	)		(305	)
Dividends paid on preferred stock		(738	)		(519	)
Net cash provided by financing activities		23,369			123,003
Net increase (decrease) in cash and cash equivalents		(40,836	)		15,277
Cash and cash equivalents, beginning of period		209,070			222,063
Cash and cash equivalents, end of period	$	168,234		$	237,340

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

Page 7 of 77

CU BANCORP

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Unaudited)

(Dollars in thousands)

	Six Months Ended June 30,
	2017		2016
Supplemental disclosures of cash flow information:
Cash paid for interest	$	1,945	$	1,574
Net cash paid for taxes	$	8,324	$	2,347
Supplemental disclosures of non-cash investing activities:
Net change in unrealized loss on available-for-sale investment securities, net of tax	$	1,643	$	1,594

Page 8 of 77

CU BANCORP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2017

(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 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. 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 2016 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.

On April 5, 2017, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with PacWest Bancorp (“PacWest”), wherein CU Bancorp will merge with and into PacWest (the “Merger”), with PacWest surviving the Merger. Immediately following the Merger, CU Bancorp’s wholly-owned bank subsidiary, California United Bank, will merge with and into PacWest’s wholly-owned bank subsidiary, Pacific Western Bank (the “Bank Merger”). Pacific Western Bank will be the surviving bank in the Bank Merger. The Merger Agreement was approved and adopted by the Board of Directors of each of CU Bancorp and PacWest. Closing of the transaction, which is expected to occur in the fourth quarter of 2017, is contingent upon shareholder approval and receipt of necessary regulatory approvals, along with the satisfaction of other customary closing conditions. On June 27, 2017, PacWest received regulatory approval from the DBO.

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 on a recurring and nonrecurring basis. 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.

Page 9 of 77

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.

Note 2 - Recent Accounting Pronouncements

Recent Accounting Standards Not Yet Effective

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606), which replaced almost all existing revenue recognition guidance in current GAAP. However, the effects of the new revenue recognition guidance on the financial statements of reporting entities in the financial institution industry will be somewhat limited because, for the most part, financial instruments and related contractual rights and obligations are excluded from its scope. As such, it is anticipated that interest income recognition and measurement, the largest source of revenue for the Company, will not be impacted by Accounting Standards Codification (“ASC”) Topic 606. However, the recognition and measurement of certain non-interest income items such as gain on sale of other real estate owned and deposit-related fees, could be affected by ASC Topic 606.

Under current GAAP, when full consideration is not expected and financing is required by the buyer to purchase the property, there are very prescriptive requirements in determining when foreclosed real estate property sold by an institution should be derecognized and a gain or loss be recognized. The new guidance that will be applied to these sales is more principles based. For example, as it pertains to the criteria for determining how a contract should be accounted for under the new guidance, judgment will need to be exercised in evaluating if: (a) a commitment on the buyer’s part exists, (b) collection is probable in circumstances where the initial investment is minimal and (c) the buyer has obtained control of the asset, including the significant risks and rewards of the ownership. If there is no commitment on the buyer’s part, collection is not probable or the buyer has not obtained control of the asset, then a gain cannot be recognized under the new guidance. The initial investment requirement for the buyer along with the various methods for profit recognition are no longer applicable when the new guidance goes into effect. The Company will revise its current policy on the recognition and measurement of gain on sale of other real estate owned to be consistent with the new guidance, but does not expect the new guidance to have a significant impact on the consolidated financial statements of the Company when adopted. Since the inception of the Company, the level of other real estate owned has been very low and in almost all cases, full consideration was received at the time of sale and financing by the Company was not provided.

For deposit-related fees, considering the straightforward nature of the arrangements with the Company’s deposit customers, the Company does not expect the recognition and measurement outcomes of deposit-related fees to be significantly different under the new guidance compared to current GAAP.

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 does not expect this ASU to have a material impact on the Company’s consolidated financial statements when adopted on January 1, 2018.

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. The most far-reaching ramification of this ASU is the elimination of the available-for-sale classification for equity securities and the requirement to carry most equity securities at fair value through net income. 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

Page 10 of 77

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 does not have any equity securities in its available-for-sale portfolio, but only investments in the common stock of Pacific Coast Banker’s Bank (“PCBB”), Texas Independent Bank (“TIB”) and Federal Home Loan Bank (“FHLB”), the Company’s correspondent banks. Under the current accounting policy, the Company’s investments in these common stocks are carried at cost because a readily determinable fair value does not exist for these investments. Under ASU 2016-01, investment in FHLB is specifically excluded from the requirement that equity securities are to be measured at fair value with unrealized holding gains and losses reflected in net income. Furthermore, the ASU allows entities to make an irrevocable practicality exception whereby entities can make an election, on a security-by-security basis, to account for equity securities that do not have readily determinable fair value at cost, with adjustments to fair value when an observable price change occurs or impairment is identified. As such, the Company intends to continue to measure its investments in PCBB, TIB and the FHLB common stock at cost upon adoption on January 1, 2018. The Company does not expect this ASU to have a material impact on the Company’s consolidated financial statements when adopted.

In February 2016, the FASB issued ASU 2016-02, Leases. 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. Furthermore, 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.

As of June 30, 2017, the Company has 10 operating leases for 10 locations under contract with a term greater than 12 months with future lease payments totaling $15 million. At adoption date, January 1, 2019, the Company will recognize a lease liability for the present value of future lease commitments and a right of use asset. The recognized right of use asset relating to operating leases will consist of the present value of future lease commitments, unamortized initial direct costs, prepaid rent, and the related unamortized balance of lease incentives.    The discount rate used to present value future lease payments will be the Company’s incremental borrowing rate at the time of adoption. The Company will take a modified retrospective transition approach with application in all comparative periods presented. The Company does not expect this ASU to have a material impact on the Company’s consolidated financial statements when adopted.

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. Upon adoption, the Company expects the level of ECL will likely be higher, however, the Company is still in the early stages of developing an implementation plan and evaluating the magnitude of the increase and the impact of this ASU on its consolidated financial statements.

Page 11 of 77

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 does not expect the adoption of this ASU to have a material effect on its consolidated financial statements.

In November 2016, the FASB issued ASU 2016-18, Statement of Cash flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues Task Force). The new standard requires that the statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Entities will also be required to reconcile such total to amounts on the balance sheet and disclose the nature of the restrictions. ASU 2016-18 is effective for public business entities for financial statements issued 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 does not expect the adoption of this ASU to have a material effect on its consolidated financial statements.

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of Business, which provides guidance on evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The new standard clarifies that when substantially all of the fair value of gross assets acquired is concentrated in a single asset, or a group of similar assets, the asset acquired would not represent a business. The new ASU introduces this initial required screen, if met, eliminates the need for further assessment. For public business entities with a calendar year end, the standard is effective in 2018. Early adoption is permitted, including adoption in an interim period. The amendments can be applied to transactions occurring before the guidance was issued, as long as the applicable financial statements have not been issued. The Company does not expect the adoption of this ASU to have a material effect on its consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles–Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which simplifies the accounting for goodwill impairment. ASU 2017-04 eliminates step two from the goodwill impairment test, which measures the amount of impairment loss, if any. Instead, an entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. The loss recognized should not exceed the total amount of goodwill allocated to such reporting unit. For public business entities with a calendar year end, the standard is effective for annual and any interim impairment tests for periods beginning after December 15, 2019. The Company does not expect the adoption of this ASU to have a material effect on its consolidated financial statements.

In March 2017, the FASB issued ASU 2017-08, Receivables–Nonrefundable Fees and Other Costs (Topic 310): Premium Amortization on Purchased Callable Debt Securities, which shortens the period of amortization of the premium on certain callable debt securities to the earliest call date. ASU 2017-08 applies to securities that have explicit, non-contingent call features that are callable at fixed prices and on preset dates. Securities purchased at a discount and mortgage-backed securities in which early repayment is based on prepayment of the underlying assets of the security are outside the scope of ASU 2017-08. For public business entities, the standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted, including adoption in an interim period, and applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company does not expect the adoption of this ASU to have a material effect on its consolidated financial statements.

Page 12 of 77

In May 2017, the FASB issued ASU 2017-09, Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting, which provides clarity and reduces both diversity in practice, and costs and complexity when applying the guidance in Topic 718 to a change to the terms or conditions of a share-based payment award. Under ASU 2017-09, an entity should account for the effects of a modification unless all the following are met: (1) the fair value of the modified award is the same as the fair value of the original award immediately before the original award is modified, (2) the vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified and (3) the classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The amendments in this ASU are effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted. The amendments in this ASU should be applied prospectively to an award modified on or after the adoption date. The Company does not expect the adoption of this ASU to have a material effect on its consolidated financial statements.

Page 13 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):

	June 30, 2017		December 31, 2016
Total Shareholders’ Equity	$	357,576	$	338,185
Less: Preferred stock		16,818		16,955
Less: Goodwill		64,603		64,603
Less: Core deposit and leasehold right intangibles, net		5,641		6,300
Tangible common equity	$	270,514	$	250,327
Common shares issued and outstanding		17,831,131		17,759,006
Book value per common share	$	19.11	$	18.09
Tangible book value per common share	$	15.17	$	14.10

Note 4 - Computation of Earnings per Common Share

In calculating potential common shares used to determine diluted earnings per share, U.S. GAAP requires that assumed proceeds under the treasury stock method to exclude the amount of excess tax benefits that would have been recognized in additional paid-in capital.

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 June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Net Income	$	9,309	$	7,120	$	17,092	$	13,704
Less: Preferred stock dividends and discount accretion		300		307		601		610
Net Income available to common shareholders	$	9,009	$	6,813	$	16,491	$	13,094
Weighted average basic common shares outstanding		17,583,888		17,210,433		17,557,996		17,125,930
Dilutive effect of potential common share issuances from stock options and restricted stock		187,349		295,744		205,850		335,739
Weighted average diluted common shares outstanding		17,771,237		17,506,177		17,763,846		17,461,669
Income per common share
Basic	$	0.51	$	0.40	$	0.94	$	0.77
Diluted	$	0.51	$	0.39	$	0.93	$	0.75
Anti-dilutive shares not included in the calculation of diluted earnings per share		—		—		2,075		1,500

Page 14 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
June 30, 2017	Amortized Cost		Gains		Losses		Fair Market Value
Available-for-sale investment securities:
U.S. Govt Agency and Sponsored Agency - Note Securities	$	10,000	$	—	$	42	$	9,958
U.S. Govt Agency - SBA Securities		117,224		372		214		117,382
U.S. Govt Agency - GNMA Mortgage-Backed Securities		19,949		62		229		19,782
U.S. Govt Sponsored Agency - CMO & Mortgage-Backed Securities		250,522		321		2,530		248,313
Asset Backed Securities		6,696		4		108		6,592
U.S. Treasury Notes		52,077		—		152		51,925
Total available-for-sale		456,468		759		3,275		453,952
Held-to-maturity investment securities:
Municipal Securities		39,992		509		1		40,500
Total held-to-maturity		39,992		509		1		40,500
Total investment securities	$	496,460	$	1,268	$	3,276	$	494,452

			Gross Unrealized
December 31, 2016	Amortized Cost		Gains		Losses		Fair Market Value
Available-for-sale investment securities:
U.S. Govt Agency and Sponsored Agency - Note Securities	$	10,000	$	—	$	31	$	9,969
U.S. Govt Agency - SBA Securities		123,224		365		739		122,850
U.S. Govt Agency - GNMA Mortgage-Backed Securities		22,565		70		265		22,370
U.S. Govt Sponsored Agency - CMO & Mortgage-Backed Securities		243,159		92		4,351		238,900
Asset Backed Securities		7,111		—		215		6,896
U.S. Treasury Notes		69,101		7		143		68,965
Total available-for-sale		475,160		534		5,744		469,950
Held-to-maturity investment securities:
Municipal Securities		42,027		69		159		41,937
Total held-to-maturity		42,027		69		159		41,937
Total investment securities	$	517,187	$	603	$	5,903	$	511,887

Page 15 of 77

The Company’s investment securities portfolio at June 30, 2017 consists of A-rated or above investment-grade securities. At June 30, 2017 and December 31, 2016, securities with a market value of $208 million and $205 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
June 30, 2017	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
Available-for-sale investment securities:
U.S. Govt Agency and Sponsored Agency – Note Securities	$	9,958	$	41	$	—	$	—	$	9,958	$	41
U.S. Govt. Agency SBA Securities		28,878		96		26,427		119		55,305		215
U.S. Govt. Agency – GNMA Mortgage-Backed Securities		7,822		66		8,128		163		15,950		229
U.S. Govt. Sponsored Agency – CMO & Mortgage-Backed Securities		183,262		2,390		14,571		140		197,833		2,530
Asset Backed Securities		—		—		4,817		108		4,817		108
U.S Treasury Notes		51,925		152		—		—		51,925		152
Total available-for-sale	$	281,845	$	2,745	$	53,943	$	530	$	335,788	$	3,275
Held-to-maturity investment securities:
Municipal Securities	$	2,136	$	1	$	—	$	—	$	2,136	$	1
Total held-to-maturity	$	2,136	$	1	$	—	$	—	$	2,136	$	1

	< 12 Continuous Months				> 12 Continuous Months				Total
December 31, 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 and Sponsored Agency – Note Securities	$	9,969	$	31	$	—	$	—	$	9,969	$	31
U.S. Govt Agency – SBA Securities		54,302	$	451		39,322		288		93,624		739
U.S. Govt Agency – GNMA Mortgage-Backed Securities		6,652		98		8,264		167		14,916		265
U.S. Govt Sponsored Agency – CMO & Mortgage-Backed Securities		215,138		4,172		10,879		179		226,017		4,351
Asset Backed Securities		—		—		6,896		215		6,896		215
U.S. Treasury Notes		51,972		143		—		—		51,972		143
Total available-for-sale	$	338,033	$	4,895	$	65,361	$	849	$	403,394	$	5,744
Held-to-maturity investment securities:
Municipal Securities	$	28,673	$	158	$	310	$	1	$	28,983	$	159
Total held-to-maturity	$	28,673	$	158	$	310	$	1	$	28,983	$	159

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 June 30, 2017 or December 31, 2016, and did not recognize any impairment charges in the consolidated statements of income.

Page 16 of 77

The amortized cost, fair value and the weighted average yield of debt securities at June 30, 2017, 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 – the earlier of maturity date or expected call 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 average life

• Municipal Securities – maturity 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.

	June 30, 2017
Maturities Schedule of Securities (Dollars in thousands)	Amortized Cost		Fair Value		Weighted Average Yield
Available-for-sale investment securities:
Due through one year	$	37,728	$	37,698		0.77	%
Due after one year through five years		359,613		357,732		1.85	%
Due after five years through ten years		59,127		58,522		2.32	%
Due after ten years		—		—		—	%
Total available-for-sale	$	456,468	$	453,952		1.82	%
Held-to-maturity investment securities:
Due through one year	$	1,616	$	1,617		0.82	%
Due after one year through five years		34,990		35,389		1.64	%
Due after five years through ten years		1,916		1,957		1.89	%
Due after ten years		1,470		1,537		3.36	%
Total held-to-maturity	$	39,992	$	40,500		1.68	%
Total investment securities	$	496,460	$	494,452		1.81	%

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 $11.9 million at June 30, 2017 and $9.1 million at December 31, 2016. 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 17 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):

	June 30, 2017
	Principal		Net Unaccreted Discounts, Net Deferred Fees			Total
Commercial and Industrial Loans:	$	497,854	$	(2,222	)	$	495,632
Loans Secured by Real Estate:
Owner-Occupied Nonresidential Properties		451,153		(3,371	)		447,782
Other Nonresidential Properties		715,878		(5,424	)		710,454
Construction, Land Development and Other Land		206,877		(1,032	)		205,845
1-4 Family Residential Properties		124,088		(1,532	)		122,556
Multifamily Residential Properties		125,889		(496	)		125,393
Total Loans Secured by Real Estate		1,623,885		(11,855	)		1,612,030
Other Loans:		44,104		(173	)		43,931
Total Loans	$	2,165,843	$	(14,250	)	$	2,151,593

	December 31, 2016
	Principal		Net Unaccreted Discounts, Net Deferred Fees			Total
Commercial and Industrial Loans:	$	505,374	$	(2,737	)	$	502,637
Loans Secured by Real Estate:
Owner-Occupied Nonresidential Properties		455,120		(3,798	)		451,322
Other Nonresidential Properties		635,856		(5,693	)		630,163
Construction, Land Development and Other Land		195,215		(1,156	)		194,059
1-4 Family Residential Properties		129,261		(2,097	)		127,164
Multifamily Residential Properties		110,336		(478	)		109,858
Total Loans Secured by Real Estate		1,525,788		(13,222	)		1,512,566
Other Loans:		35,246		(223	)		35,023
Total Loans	$	2,066,408	$	(16,182	)	$	2,050,226

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 $6 million is guaranteed. The total portfolio of the SBA contractual loan balances serviced by the Company at June 30, 2017 was $108 million, of which $77 million has been sold.

At June 30, 2017, there were no loans classified as held for sale. At June 30, 2017, the balance of SBA 7a loans originated during 2017 is $893 thousand, of which $671 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 18 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 June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Allowance for loan loss at beginning of period	$	19,605		$	16,545		$	19,374		$	15,682
Provision for loan losses		701			1,063			701			1,685
Net (charge-offs) recoveries:
Charge-offs		(2	)		(20	)		(2	)		(20	)
Recoveries		22			888			253			1,129
Net recoveries		20			868			251			1,109
Allowance for loan loss at end of period	$	20,326		$	18,476		$	20,326		$	18,476
Net (charge-offs) recoveries to average loans		0.00	%		0.05	%		0.01	%		0.06	%

	June 30, 2017			December 31, 2016
Allowance for loan loss to total loans		0.94	%		0.94	%

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):

Three Months Ended June 30, 2017	Commercial and Industrial			Construction, Land Development and Other Land		Commercial and Other Real Estate			Other		Total
Allowance for loan loss – Beginning balance	$	6,862		$	3,147	$	9,228		$	368	$	19,605
Provision for loan losses		522			86		(71	)		164		701
Net (charge-offs) recoveries:
Charge-offs		(2	)		—		—			—		(2	)
Recoveries		6			—		16			—		22
Net recoveries		4			—		16			—		20
Ending balance	$	7,388		$	3,233	$	9,173		$	532	$	20,326

Three Months Ended June 30, 2016	Commercial and Industrial			Construction, Land Development and Other Land		Commercial and Other Real Estate		Other		Total
Allowance for loan loss – Beginning balance	$	6,725		$	2,711	$	6,374	$	735	$	16,545
Provision for loan losses		789			13		192		69		1,063
Net (charge-offs) recoveries:
Charge-offs		(20	)		—		—		—		(20	)
Recoveries		887			—		1		—		888
Net recoveries		867			—		1		—		868
Ending balance	$	8,381		$	2,724	$	6,567	$	804	$	18,476

Page 19 of 77

Six Months Ended June 30, 2017	Commercial and Industrial			Construction, Land Development and Other Land		Commercial and Other Real Estate		Other			Total
Allowance for loan loss – Beginning balance	$	7,130		$	3,084	$	8,487	$	673		$	19,374
Provision for loan losses		25			149		668		(141	)		701
Net (charge-offs) recoveries:
Charge-offs		(2	)		—		—		—			(2	)
Recoveries		235			—		18		—			253
Net recoveries		233			—		18		—			251
Ending balance	$	7,388		$	3,233	$	9,173	$	532		$	20,326

Six Months Ended June 30, 2016	Commercial and Industrial			Construction, Land Development and Other Land		Commercial and Other Real Estate			Other			Total
Allowance for loan loss – Beginning balance	$	5,924		$	2,076	$	6,821		$	861		$	15,682
Provision for loan losses		1,350			648		(256	)		(57	)		1,685
Net (charge-offs) recoveries:
Charge-offs		(20	)		—		—			—			(20	)
Recoveries		1,127			—		2			—			1,129
Net recoveries		1,107			—		2			—			1,109
Ending balance	$	8,381		$	2,724	$	6,567		$	804		$	18,476

Page 20 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
June 30, 2017
Allowance for loan loss:
Individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—
Collectively evaluated for impairment		7,388		3,233		9,173		532		20,326
Purchased credit impaired (loans acquired with deteriorated credit quality)		—		—		—		—		—
Total Allowance for Loan Loss	$	7,388	$	3,233	$	9,173	$	532	$	20,326
Loans receivable:
Individually evaluated for impairment	$	231	$	—	$	231	$	—	$	462
Collectively evaluated for impairment		495,136		205,845		1,404,717		43,931		2,149,629
Purchased credit impaired (loans acquired with deteriorated credit quality)		265		—		1,237		—		1,502
Total Loans Receivable	$	495,632	$	205,845	$	1,406,185	$	43,931	$	2,151,593

	Commercial and Industrial		Construction, Land Development and Other Land		Commercial and Other Real Estate		Other		Total
December 31, 2016
Allowance for loan loss:
Individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—
Collectively evaluated for impairment		7,130		3,084		8,487		673		19,374
Purchased credit impaired (loans acquired with deteriorated credit quality)		—		—		—		—		—
Total Allowance for Loan Loss	$	7,130	$	3,084	$	8,487	$	673	$	19,374
Loans receivable:
Individually evaluated for impairment	$	378	$	—	$	245	$	—	$	623
Collectively evaluated for impairment		501,960		194,059		1,316,849		35,023		2,047,891
Purchased credit impaired (loans acquired with deteriorated credit quality)		299		—		1,413		—		1,712
Total Loans Receivable	$	502,637	$	194,059	$	1,318,507	$	35,023	$	2,050,226

Page 21 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
June 30, 2017
Pass	$	450,109	$	205,845	$	1,384,154	$	43,808	$	2,083,916
Special Mention		14,784		—		5,588		34		20,406
Substandard		30,739		—		16,443		89		47,271
Doubtful		—		—		—		—		—
Total	$	495,632	$	205,845	$	1,406,185	$	43,931	$	2,151,593

	Commercial and Industrial		Construction, Land Development and Other Land		Commercial and Other Real Estate		Other		Total
December 31, 2016
Pass	$	456,885	$	194,059	$	1,288,154	$	32,128	$	1,971,226
Special Mention		12,774		—		7,557		—		20,331
Substandard		32,978		—		22,796		2,895		58,669
Doubtful		—		—		—		—		—
Total	$	502,637	$	194,059	$	1,318,507	$	35,023	$	2,050,226

Page 22 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
June 30, 2017
Commercial and Industrial	$	259	$	—	$	—	$	259	$	495	$	494,878	$	495,632
Construction, Land Development and Other Land		—		—		—		—		—		205,845		205,845
Commercial and Other Real Estate		443		—		—		443		231		1,405,511		1,406,185
Other		—		—		—		—		—		43,931		43,931
Total	$	702	$	—	$	—	$	702	$	726	$	2,150,165	$	2,151,593

	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, 2016
Commercial and Industrial	$	—	$	—	$	—	$	—	$	675	$	501,962	$	502,637
Construction, Land Development and Other Land		—		—		—		—		—		194,059		194,059
Commercial and Other Real Estate		212		—		—		212		447		1,317,848		1,318,507
Other		—		—		—		—		—		35,023		35,023
Total	$	212	$	—	$	—	$	212	$	1,122	$	2,048,892	$	2,050,226

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.

A valuation allowance is established for an impaired loan when the fair value of the loan is less than the recorded investment. In certain cases, portions of impaired loans are charged-off to 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 June 30, 2017 and December 31, 2016.

Page 23 of 77

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 $1.5 million and $1.7 million at June 30, 2017 and December 31, 2016, respectively.

	June 30, 2017						December 31, 2016
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
With no specific allowance recorded:
Commercial and Industrial	$	231	$	632	$	—	$	378	$	1,383	$	—
Commercial and Other Real Estate		231		272		—		245		282		—
With an allowance recorded:
Commercial and Industrial		—		—		—		—		—		—
Commercial and Other Real Estate		—		—		—		—		—		—
Total
Commercial and Industrial		231		632		—		378		1,383		—
Commercial and Other Real Estate		231		272		—		245		282		—
Total	$	462	$	904	$	—	$	623	$	1,665	$	—

	Three Months Ended June 30,								Six Months Ended June 30,
	2017				2016				2017				2016
	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	$	237	$	3	$	545	$	—	$	241	$	3	$	400	$	—
Commercial and Other Real Estate		235		—		256		—		238		—		461		—
With a specific allowance recorded:
Commercial and Industrial		—		—		316		—		—		—		158		—
Commercial and Other Real Estate		—		—		—		—		—		—		—		—
Total:
Commercial and Industrial		237		3		861		—		241		3		558		—
Commercial and Other Real Estate		235		—		256		—		238		—		461		—
Total	$	472	$	3	$	1,117	$	—	$	479	$	3	$	1,019	$	—

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Interest foregone on impaired loans	$	13	$	22	$	26	$	46
Cash collections applied to reduce principal balance	$	24	$	28	$	45	$	52
Interest income recognized on cash collections	$	3	$	—	$	3	$	—

Page 24 of 77

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 June 30, 2017 and December 31, 2016 (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 June 30, 2017, there were two PCI loans that are considered to be TDR loans with a recorded investment of $84 thousand and unpaid principal balances of $244 thousand.

	As of and for the Three Months Ended June 30, 2017						As of and for the Six Months Ended June 30, 2017
	Recorded Investment		Unpaid Principal Balance		Interest Income Recognized		Recorded Investment		Unpaid Principal Balance		Interest Income Recognized
Commercial and Industrial	$	302	$	518	$	—	$	302	$	518	$	—
Total	$	302	$	518	$	—	$	302	$	518	$	—

	As of and for the Three Months Ended June 30, 2016						As of and for the Six Months Ended June 30, 2016
	Recorded Investment		Unpaid Principal Balance		Interest Income Recognized		Recorded Investment		Unpaid Principal Balance		Interest Income Recognized
Commercial and Industrial	$	377	$	591	$	—	$	377	$	591	$	—
Total	$	377	$	591	$	—	$	377	$	591	$	—
							As of and for the Twelve Months Ended December 31, 2016
							Recorded Investment		Unpaid Principal Balance		Interest Income Recognized
Commercial and Industrial							$	408	$	1,174	$	—
Total							$	408	$	1,174	$	—

There were no loans modified or restructured during the three or six months ended June 30, 2017 or June 30, 2016. There was one commercial and industrial loan that was restructured during the twelve months ended December 31, 2016 with a pre-modification recorded investment of $650 thousand and a post-modification recorded investment of $184 thousand.

There have been no payment defaults in the three or six months ended June 30, 2017 or June 30, 2016 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.

Page 25 of 77

There were no commitments to lend additional funds to borrowers whose terms have been modified in troubled debt restructurings at June 30, 2017 or December 31, 2016.

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 June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Balance, beginning of period	$	8,496		$	13,470		$	9,611		$	14,610
Accretion, included in interest income		(637	)		(1,517	)		(1,752	)		(2,650	)
Reclassifications to non-accretable yield		—			(25	)		—			(32	)
Balance, end of period	$	7,859		$	11,928		$	7,859		$	11,928

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):

	June 30, 2017				December 31, 2016
	Unpaid Principal Balance		Carrying Value		Unpaid Principal Balance		Carrying Value
Commercial and Industrial	$	579	$	265	$	622	$	299
Commercial and Other Real Estate		1,587		1,237		1,997		1,413
Total	$	2,166	$	1,502	$	2,619	$	1,712

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

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Balance, beginning of period	$	138		$	226		$	161		$	246
Accretion, included in interest income		(23	)		(21	)		(46	)		(41	)
Reclassifications from non-accretable yield		—			—			—			—
Balance, end of period	$	115		$	205		$	115		$	205

Page 26 of 77

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 $6.0 million at June 30, 2017 and $6.2 million at December 31, 2016. The funding liability for the LIHTC at June 30, 2017 and December 31, 2016 was $3.3 and $3.4 million, respectively. The amount of tax credits and other tax benefits recognized was $205 thousand and $345 thousand for the three and six months ended June 30, 2017 and $143 thousand and $287 thousand for the three and six months ended June 30, 2016, respectively. Further, the amount of amortization expense included in the provision for income taxes was $163 thousand and $273 thousand for the three and six months ended June 30, 2017 and $112 thousand and $224 thousand for the three and six months ended June 30, 2016, respectively.

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 $42 million and $48 million were pledged to secure the Repos at June 30, 2017 and December 31, 2016, 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):

	June 30, 2017
Date Issued	Amount		Interest Rate		Original Term		Maturity Date
June 30, 2017	$	12,180		0.20% – 0.25%		3 days		July 3, 2017
Total	$	12,180		0.24%
	December 31, 2016
Date Issued	Amount		Interest Rate		Original Term		Maturity Date
December 31, 2016	$	18,816		0.20% – 0.25%		4 days		January 4, 2017
Total	$	18,816		0.25%

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 $786 million, which represents approximately 25% of the Bank’s total assets, as reported by the Bank in its March 31, 2016 Federal Financial Institution Examination Council (“FFIEC”) Call Report.

As of June 30, 2017, the Company had $1 billion of loan collateral pledged with the FHLB which provides $720 million in borrowing capacity. The Company also has $14 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 June 30, 2017 or December 31, 2016.

Page 27 of 77

Subordinated Debentures

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

June 30, 2017

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%

3.29

%

09/15/17

Trust II

3,093

12/23/05

03/15/36

3 month LIBOR + 1.75%

2.99

%

09/15/17

Trust III

3,093

06/30/06

09/18/36

3 month LIBOR + 1.85%

3.09

%

09/15/17

Subtotal

12,372

Unamortized fair value adjustment

(2,436

)

Net

$

9,936

December 31, 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%

3.01

%

03/15/17

Trust II

3,093

12/23/05

03/15/36

3 month LIBOR + 1.75%

2.71

%

03/15/17

Trust III

3,093

06/30/06

09/18/36

3 month LIBOR + 1.85%

2.81

%

03/15/17

Subtotal

12,372

Unamortized fair value adjustment

(2,516

)

Net

$

9,856

The Company had an aggregate outstanding contractual balance of $12.4 million in subordinated debentures at June 30, 2017. 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 June 2017 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.

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.

Page 28 of 77

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 June 30, 2017, the Company has eleven interest rate swap agreements with customers and eleven 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 both June 30, 2017 and December 31, 2016, the total notional amount of the Company’s swaps with the counterparty bank was $24 million. The outstanding swaps have remaining maturities of up to 7 years as of June 30, 2017.

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):

	Asset Derivatives
	June 30, 2017		December 31, 2016
Interest rate swap contracts fair value	$	441	$	523
Balance sheet location		Accrued Interest Receivable and Other Assets		Accrued Interest Receivable and Other Assets
	Liability Derivatives
	June 30, 2017		December 31, 2016
Interest rate swap contracts fair value	$	441	$	523
Balance sheet location		Accrued Interest Payable and Other Liabilities		Accrued Interest Payable and Other Liabilities

Page 29 of 77

Derivative Financial Instruments Acquired from PC Bancorp

At June 30, 2017, the Company also has nine 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):

	Liability Derivatives
	June 30, 2017		December 31, 2016
Fair Value Hedges
Total interest rate contracts notional amount	$	7,721	$	17,642
Derivatives not designated as hedging instruments:
Interest rate swap contracts fair value	$	—	$	95
Derivatives designated as hedging instruments:
Interest rate swap contracts fair value		406		589
Total interest rate contracts fair value	$	406	$	684
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 June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Derivatives not designated as hedging instruments:
Interest rate swap contracts – loans
Increase in fair value of interest rate swap contracts	$	40		$	52		$	95		$	91
Payments on interest rate swap contracts on loans		(39	)		(60	)		(92	)		(122	)
Net increase (decrease) in other non-interest income	$	1		$	(8	)	$	3		$	(31	)
Derivatives designated as hedging instruments:
Interest rate swap contracts – loans
Increase in fair value of interest rate swap contracts	$	62		$	139		$	183		$	162
Increase in fair value of hedged loans		48			71			36			284
Payment on interest rate swap contracts on loans		(91	)		(224	)		(205	)		(454	)
Net increase (decrease) in interest income on loans	$	19		$	(14	)	$	14		$	(8	)

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 June 30, 2017, the Company has pledged $602 thousand in investment securities and $2.7 million in certificates of deposit, for a total of $3.3 million, as collateral under the swap agreements.

Page 30 of 77

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
June 30, 2017
Financial Assets:
Interest rate swap contracts fair value (See Note 9 – Derivative Financial Instruments)	$	441	$	—	$	441	$	441	$	—	$	—
Total	$	441	$	—	$	441	$	441	$	—	$	—
Financial Liabilities:
Interest rate swap contracts fair value (See Note 9 – Derivative Financial Instruments)	$	847	$	—	$	847	$	847	$	3,336	$	2,489
Securities sold under agreements to repurchase (See Note 8 – Borrowings and Subordinated Debentures)		12,180		—		12,180		12,180		41,727		29,547
Total	$	13,027	$	—	$	13,027	$	13,027	$	45,063	$	32,036

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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, 2016
Financial Assets:
Interest rate swap contracts fair value (See Note 9 – Derivative Financial Instruments)	$	523	$	—	$	523	$	523	$	—	$	—
Total	$	523	$	—	$	523	$	523	$	—	$	—
Financial Liabilities:
Interest rate swap contracts fair value (See Note 9 – Derivative Financial Instruments)	$	1,207	$	—	$	1,207	$	1,207	$	4,555	$	3,348
Securities sold under agreements to repurchase (See Note 8 – Borrowings and Subordinated Debentures)		18,816		—		18,816		18,816		48,204		29,388
Total	$	20,023	$	—	$	20,023	$	20,023	$	52,759	$	32,736

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 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. 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.

At June 30, 2017 future compensation expense related to unvested restricted stock grants are reflected in the table below (dollars in thousands):

Future Restricted Stock Expense
Remainder of 2017	$	1,577
2018		1,584
2019		534
2020		169
Thereafter		21
Total	$	3,885

At June 30, 2017, the weighted-average period over which the total compensation cost related to unvested restricted stock grants not yet recognized is 2.62 years.

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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, 2016		47,697		$	12.69		1.43	$	1,102
Granted		—
Exercised		(27,942	)
Forfeited		—
Expired		—
Outstanding stock options at June 30, 2017		19,755		$	8.67		1.88	$	19,755
Exercisable options at June 30, 2017		19,755		$	8.67		1.88	$	19,755
Unvested options at June 30, 2017		—

The total intrinsic value of options exercised during the three months ended June 30, 2017 and 2016 was zero and $2.7 million, and during the six months ended June 30, 2017 and 2016 was $642 thousand and $5.6 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, 2016		282,082		$	21.98
Granted		65,615			38.04
Vested		(35,082	)		20.98
Forfeited		(6,934	)		22.66
Unvested at June 30, 2017		305,681		$	25.84

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 meet certain conditions as stipulated in the RSU agreement and are not included in the Company’s shares issued and outstanding as of June 30, 2017. 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 2017, the Company issued 27,942 shares of stock from the exercise of stock options for a total value of $435 thousand. The Company also issued 65,615 shares of restricted stock to the Company’s directors and employees, 6,934 shares of unvested restricted stock were forfeited related to employee turnover and 14,498 shares that had a value of $569 thousand were repurchased 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 accretion/amortization on the net discount as of June 30, 2017 is $900 thousand. The net carrying value of the CU Bancorp Preferred Stock is $17 million ($16 million plus of $0.5 million net premium) as of June 30, 2017.

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 June 30,						Consolidated Statement of Income Line Item for Reclassified Items
	2017			2016
Beginning balance, net of tax	$	(2,854	)	$	(47	)
Net unrealized gain arising during the period		2,409			1,423
Related tax effect		(1,013	)		(598	)
Reclassification of gain on investment securities available-for-sale to net income		—			—		Gain on sale of securities, net
Related tax effect		—			—		Provision for income tax expense
Other Comprehensive Income		1,396			825
Ending balance	$	(1,458	)	$	778

	Six Months Ended June 30,						Consolidated Statement of Income Line Item for Reclassified Items
	2017			2016
Beginning balance, net of tax	$	(3,019	)	$	(816	)
Net unrealized gain arising during the period		2,835			2,751
Related tax effect		(1,192	)		(1,157	)
Reclassification of gain 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		1,561			1,594
Ending balance	$	(1,458	)	$	778

Page 35 of 77

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 June 30, 2017, there were no legal proceedings in the ordinary course of business 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.

However, two shareholder class action lawsuits have been filed against the Company in connection with the pending merger with PacWest. The first action, Parshall v. CU Bancorp et al., was filed on June 9, 2017 and the second action, Klein v. CU Bancorp et al., was filed on June 12, 2017. Both complaints allege that the members of the CU Bancorp board of directors violated Sections 14(a) and 20(a) of the Securities Exchange Act of 1934, based upon alleged omissions and misrepresentations in the initial S-4 registration statement filed by PacWest with the SEC on May 26, 2017, by approving the proposed merger for inadequate consideration and by entering into the merger agreement containing preclusive deal protection devices. The plaintiffs in both of these actions seek injunctive relief prohibiting consummation of the merger, rescission and damages in the event the merger is consummated, an accounting of damages suffered by the plaintiff and the putative class, attorneys’ fees and costs and other and further relief. The Company is unable to state whether the likelihood of an unfavorable outcome of the lawsuits is probable or remote. The Company is also unable to provide an estimate of the range or amount of potential loss if the outcome should be unfavorable.

Financial Instruments with Off Balance Sheet Risk

Financial instruments with off balance sheet risk include commitments to extend credit of $936 million and $1 billion at June 30, 2017 and December 31, 2016, respectively. Included in the aforementioned commitments were standby letters of credit outstanding of $73 million and $85 million at June 30, 2017 and December 31, 2016, respectively. The Company also has a reserve for estimated losses on unfunded loan commitments of $886 thousand at June 30, 2017 and December 31, 2016. These balances are included in other liabilities on the consolidated balance sheets.

Note 14 - Fair Value Information

Fair Value Hierarchy

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. 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.

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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.

Securities available-for-sale and interest rate swaps are recorded at fair value on a recurring basis. Additionally, certain assets 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, such as other real estate owned, SBA servicing asset and impaired loans that are collateral dependent.

The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is required to develop the estimates of fair value. Accordingly, the estimates presented below are not necessarily indicative of the amounts the Company could have realized in a current market exchange as of June 30, 2017. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

Recurring Fair Value Measurements

The valuation methodologies for estimating the fair value of financial assets and financial liabilities measured and reported at fair value on a recurring basis are discussed below.

Investment Securities Available-for-Sale: The fair value of investment securities available-for-sale are primarily based on price indications provided by nationally recognized, independent pricing sources utilized by the Company’s bond accounting system provider. The fair value of investment securities may be determined by obtaining quoted prices for identical assets in active markets at measurement date (Level 1 financial assets). The Company’s investments in U.S. Treasury Notes are Level 1 financial assets. For the Company’s investments in U.S. Agency and U.S. Sponsored Agency issued debt securities (callable and non-callable notes), mortgage backed securities guaranteed by those agencies, collateralized mortgage obligations issued by those agencies and corporate bond securities, the fair value may be determined by obtaining quoted market prices for similar assets in active markets at measurement date (Level 2 financial assets), or if quoted market prices are not available, the pricing sources may determine fair value by matrix pricing. Matrix pricing 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). The pricing sources may also determine the fair value of certain debt securities by using an option adjusted spread model with observable inputs such as the treasury yield curve and other interest rate assumptions. Other observable inputs utilized in these alternative valuation techniques or models when quoted prices are not available include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, benchmark securities, bids, offers and reference data. In cases where significant credit valuation adjustments are incorporated into the estimation of fair value, reported amounts are classified as Level 3 financial assets.

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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The following table presents 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 – June 30, 2017
Investment securities available-for-sale:
U.S. Govt Agency and Sponsored Agency – Note Securities	$	9,958	$	—	$	9,958		—
U.S. Govt Agency – SBA Securities		117,382		—		117,382		—
U.S. Govt Agency – GNMA Mortgage-Backed Securities		19,782		—		19,782		—
U.S. Govt Sponsored Agency – CMO & Mortgage-Backed Securities		248,313		—		248,313		—
Asset Backed Securities		6,592		—		6,592		—
U.S. Treasury Notes		51,925		51,925		—		—
Interest Rate Swap Contracts		441		—		441		—
	$	454,393	$	51,925	$	402,468	$	—
Financial Liabilities – June 30, 2017
Interest Rate Swap Contracts	$	847	$	—	$	847	$	—
Financial Assets – December 31, 2016
Investment securities available-for-sale:
U.S. Govt Agency and Sponsored Agency – Note Securities	$	9,969	$	—	$	9,969		—
U.S. Govt Agency – SBA Securities		122,850		—		122,850		—
U.S. Govt Agency – GNMA Mortgage-Backed Securities		22,370		—		22,370		—
U.S. Govt Sponsored Agency – CMO & Mortgage-Backed Securities		238,900		—		238,900		—
Asset Backed Securities		6,896		—		6,896		—
U.S. Treasury Notes		68,965		68,965		—		—
Interest Rate Swap Contracts		523		—		523		—
	$	470,473	$	68,965	$	401,508	$	—
Financial Liabilities – December 31, 2016
Interest Rate Swap Contracts	$	1,207	$	—	$	1,207	$	—

At June 30, 2017 and December 31, 2016, 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). Furthermore, 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 periods ended June 30, 2017 or December 31, 2016.

Page 38 of 77

Nonrecurring Fair Value Measurements

The valuation methodologies for estimating the fair value of certain assets measured and reported at fair value on a nonrecurring basis are discussed below.

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: The SBA servicing asset is amortized over the estimated life of the loans based on an effective yield approach. In addition, the Company’s servicing asset is evaluated regularly for impairment by discounting the estimated future cash flows using market-based discount rates and prepayment speeds. 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 determined based on the historical prepayments of the Company’s SBA loans. The prepayment speeds determine the timing of the cash flows. 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. 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.

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 discounted cash flows for non-collateral dependent loans. Collateral on collateral dependent loans may be real estate and/or business assets including equipment, inventory and/or accounts receivable and is determined based on appraisals performed by qualified licensed appraisers hired by the Company. Appraised and reported values may be discounted based on management’s historical knowledge, changes in market conditions from the time of valuation, and/or management’s expertise and knowledge of the client and client’s business. Such discounts are typically significant and unobservable. For unsecured loans, the estimated future discounted cash flows of the business or borrower, are used in evaluating the fair value. Impaired loans are reviewed and evaluated on at least a quarterly basis for additional impairment and adjusted accordingly, based on the same factors identified above. 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.

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

	Net Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets – June 30, 2017
SBA Servicing Asset	$	901	$	—	$	—	$	901
Total	$	901	$	—	$	—	$	901

	Net Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets – December 31, 2016
Collateral dependent impaired loans with specific valuation allowance and/or partial charge-offs (non-purchased credit impaired loans)	$	73	$	—	$	—	$	73
SBA Servicing Asset		940		—		—		940
Total	$	1,013	$	—	$	—	$	1,013

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 for the periods ended June 30, 2017 or December 31, 2016.

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

	Fair Value		Valuation Methodology	Unobservable Valuation Inputs	Unobservable Valuation Input Values
Financial Assets – June 30, 2017
				Discount Rates	13%
SBA Servicing Asset	$	901	Discounted Cash Flow	Estimated Average Remaining Life of SBA Portfolio	39 months
Total	$	901
	Fair Value		Valuation Methodology	Unobservable Valuation Inputs	Unobservable Valuation Input Values
Financial Assets – December 31, 2016
Collateral dependent impaired loans with specific valuation allowance and/or partial charge-off	$	73	Credit loss estimate of aged accounts receivable collateral	Credit loss factors on aging of accounts receivable collateral	20%
				Discount Rates	13%
SBA Servicing Asset		940	Discounted Cash Flow	Estimated Average Remaining Life of SBA Portfolio	39 months
Total	$	1,013

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Fair Value of Financial Instruments

The following are the valuation methodologies utilized for estimating the fair value of certain financial instruments presented in the tables below.

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 Held-to-Maturity: The fair value of investment securities held-to-maturity are based on price indications provided by nationally recognized, independent pricing sources utilized by the Company’s bond accounting system provider. The Company’s held-to-maturity portfolio consists of municipal securities only. The fair value of the municipal securities are calculated using proprietary pricing models or matrices with inputs such as market information (MSRB reported trade data, bids, offers, new issue data) and benchmark curves (Treasury, Swap, Libor and AAA municipal yield curve). These inputs are observable and as such, municipal securities are classified within the Level 2 fair value hierarchy.

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 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.

Bank owned life insurance: The carrying amount of bank owned life insurance represents the total cash surrender value of each policy, which approximates fair value.

FHLB Stock: FHLB stock has no trading market, and is required as part of membership and is redeemable at par. FHLB is recorded at cost, which approximates fair value.

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 June 30, 2017, to the cash flows from the debentures, based on the actual interest rate the debentures were accruing at June 30, 2017. Because all three of the debentures re-priced on June 15, 2017 based on the current three month LIBOR index rate plus the index margin at that date, and with relatively little to no change in the three month LIBOR index rate from the re-pricing date through June 30, 2017, 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.

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Fair Value of Commitments: Loan commitments that are priced on an index plus a margin to a market rate of interest are reported at the carrying value of the loan commitment. Loan commitments on which the committed fixed interest rate is less than the current market rate were insignificant at June 30, 2017 and December 31, 2016.

The table below presents the carrying amounts and 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)
June 30, 2017
Financial Assets
Cash and due from banks	$	56,382	$	56,382	$	56,382	$	—	$	—
Interest earning deposits in other financial institutions		111,852		111,852		111,852		—		—
Investment securities held-to-maturity		39,992		40,500		—		40,500		—
Loans, net		2,131,267		2,151,147		—		—		2,151,147
Bank owned life insurance		61,536		61,536		—		—		61,536
FHLB Stock		11,902		11,902		—		—		11,902
Financial Liabilities
Certificates of deposit		29,725		29,727		—		29,727		—
Securities sold under agreements to repurchase		12,180		12,180		—		12,180		—
Subordinated debentures		9,936		12,372		—		12,372		—
December 31, 2016
Financial Assets
Cash and due from banks	$	41,281	$	41,281	$	41,281	$	—	$	—
Interest earning deposits in other financial institutions		167,789		167,789		167,789		—		—
Investment securities held-to-maturity		42,027		41,937		—		41,937		—
Loans, net		2,030,852		2,054,701		—		—		2,054,701
Bank owned life insurance		51,216		51,216		—		—		51,216
FHLB Stock		9,182		9,182		—		—		9,182
Financial Liabilities
Certificates of deposit		29,480		29,480		—		29,480		—
Securities sold under agreements to repurchase		18,816		18,816		—		18,816		—
Subordinated debentures		9,856		12,372		—		12,372		—

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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 2016 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

In addition to the historical information, this Quarterly Report on Form 10-Q (this “Report”)includes 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”). Those sections of the Securities Act and the Exchange Act provide a “safe harbor” for forward-looking statements to encourage companies to provide prospective information about their financial performance so long as they provide meaningful, cautionary statements identifying important factors that could cause actual results to differ significantly from projected results.

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,” “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.”

We make forward-looking statements as set forth above and regarding projected sources of funds, the pending merger between the Company and PacWest Bancorp, dividends, adequacy of our allowance for loan loss and provision for loan loss, our loan portfolio and subsequent charge-offs. 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:

• The ability to complete the proposed merger between the Company and PacWest Bancorp, including obtaining regulatory approvals and approval by the shareholders of the Company within expected time-frames or at all.

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

• Changes in PacWest Bancorp’s stock price before completion of the merger, including as a result of the financial performance of PacWest Bancorp before closing.

• The reaction of our customers, employees and counterparties to the pending PacWest Bancorp acquisition;

• 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.

• Our ability to comply with the requirements of the Consent Orders, and the impact on our earnings and financial condition of increased operating expenses required to effect full compliance.

• 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.

• 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, including but not limited to concentration in real estate related loans and concentrations in deposits.

• Loss of significant customers.

• A low interest rate environment or 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.

• The inability of our risk management controls to prevent or detect all errors or fraudulent acts.

• Inability of our framework to manage risks associated with our business, including but not limited to operational risk, regulatory risk, cyber risk, liquidity risk, customer 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”, account takeover, ransomware and identity theft.

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

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

• 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.

• The impact on our financial statements of new accounting pronouncements.

• The impact of changes in legal or regulatory requirements and federal and state laws 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.

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

For a more detailed discussion of some of these risks and uncertainties, see the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 and particularly, Item 1A, titled “Risk Factors.”

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.

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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, to business principals and entrepreneurs, and to the professional community, including attorneys, certified public accountants, financial advisors, healthcare providers, investors and also to non-profit organizations in Los Angeles, Orange, Ventura, San Bernardino and Riverside counties. 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.

Recent Developments

On April 5, 2017, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with PacWest Bancorp (“PacWest”), wherein CU Bancorp will merge with and into PacWest (the “Merger”), with PacWest surviving the Merger. Immediately following the Merger, CU Bancorp’s wholly-owned bank subsidiary, California United Bank, will merge with and into PacWest’s wholly-owned bank subsidiary, Pacific Western Bank (the “Bank Merger”). Pacific Western Bank will be the surviving bank in the Bank Merger. The Merger Agreement was approved and adopted by the Board of Directors of each of CU Bancorp and PacWest. Under terms of the agreement, CU Bancorp shareholders will receive 0.5308 shares of PacWest common stock and $12.00 in cash for each share of CU Bancorp. Closing of the transaction, which is expected to occur in the fourth quarter of 2017, is contingent upon shareholder approval and receipt of all necessary regulatory approvals, along with the satisfaction of other customary closing conditions. On June 27, 2017, PacWest received regulatory approval from the DBO.

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 2016 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 at June 30, 2017 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 fair value adjustments on loans, core deposit intangible assets, other

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intangible assets, fair value adjustments to acquired lease obligations, 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 2016 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 June 30, 2017. 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 additions to the Allowance based on their judgment about information available at the time of their examinations. Management believes that the Allowance as of June 30, 2017 is adequate to absorb known and probable losses inherent 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 realizable 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.

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While the general allowance covers all non-impaired loans and is based on historical loss experience adjusted for the various qualitative factors as discussed in Note 6 – Loans, 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:

• 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, a specific allowance is not 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. If the Company has the intent and the ability at the time of purchase to hold certain 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 securities in an unrealized loss position individually. 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) are recognized on the consolidated balance sheet at their current fair value. Every derivative instrument (including certain derivative instruments embedded in other contracts) is required to 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 assessed for effectiveness 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. The Company 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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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 June 30,												Six Months Ended June 30,
	Amounts						Increase (Decrease)						Amounts						Increase (Decrease)
	2017			2016			$			%			2017			2016			$			%
Net Income Available to Common Shareholders	$	9,009		$	6,813		$	2,196			32.23	%	$	16,491		$	13,094		$	3,397			25.94	%
Earnings per share
Basic	$	0.51		$	0.40		$	0.11			27.50	%	$	0.94		$	0.77		$	0.17			22.08	%
Diluted	$	0.51		$	0.39		$	0.12			30.77	%	$	0.93		$	0.75		$	0.18			24.00	%
Return on average assets (1)		1.18	%		0.99	%		0.19	%		19.19	%		1.08	%		0.96	%		0.12	%		12.50	%
Return on average tangible common equity (2)		13.68	%		11.75	%		1.93	%		16.43	%		12.80	%		11.52	%		1.28	%		11.11	%
Net interest margin (3)		3.75	%		3.81	%		(0.06	)%		(1.57	)%		3.71	%		3.79	%		(0.08	)%		(2.11	)%
Efficiency ratio (4)		53.39	%		55.42	%		(2.03	)%		(3.66	)%		55.47	%		56.56	%		(1.09	)%		(1.93	)%

(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 quarterly or year-to-date 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 June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Average Tangible Common Equity Calculation
Total average shareholders’ equity	$	351,336		$	322,030		$	347,299		$	317,522
Less: Average serial preferred stock		16,860			17,126			16,895			17,107
Less: Average goodwill		64,603			64,603			64,603			64,603
Less: Average core deposit and leasehold right intangibles		5,818			7,144			5,974			7,330
Average Tangible Common Equity	$	264,055		$	233,157		$	259,827		$	228,482
Net Income Available to Common Shareholders	$	9,009		$	6,813		$	16,491		$	13,094
Return on Average Tangible Common Equity		13.68	%		11.75	%		12.80	%		11.52	%

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Operations Performance Summary

Three Months Ended June 30, 2017 Compared to Three Months Ended June 30, 2016

Net income available to common shareholders for the three months ended June 30, 2017 was $9.0 million, or $0.51 per diluted share, compared to $6.8 million, or $0.39 per diluted share for the three months ended June 30, 2016. The $2.2 million increase, or 32%, was primarily due to a $2.2 million increase in net interest income, which is primarily the result of the Company’s strong loan growth since the prior period, as well as a $2.7 million increase in non-interest income, primarily related to death benefit claims from bank owned life insurance. Non-interest expense increased by $2.0 million, compared to the three months ended June 30, 2016; the increase was primarily due to $1.5 million in merger expenses.

Six Months Ended June 30, 2017 Compared to Six Months Ended June 30, 2016

Net income available to common shareholders for the six months ended June 30, 2017 was $16 million, or $0.93 per diluted share, compared to $13 million, or $0.75 per diluted share for the six months ended June 30, 2016. The $3.4 million increase, or 26%, was primarily due to a $4.9 million increase in net interest income, which is primarily the result of the Company’s strong loan growth since the prior period, as well as a $2.7 million increase in non-interest income, primarily related to death benefit claims from bank owned life insurance. Non-interest expense increased by $3.5 million which included $1.5 million in merger expenses; the same period of the prior year had no merger expenses. Salaries and other benefits expense increased $1.6 million as the average full-time equivalent employees grew to 291 as of June 30, 2017, compared to an average of 274 full-time equivalent employees in the year-ago period.

Page 50 of 77

Average Balances, Interest Income and Expense, Yields and Rates

Three and Six Months Ended June 30, 2017 and 2016

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
	June 30, 2017							June 30, 2016
	Average Balance		Interest		Average Yield/Rate (5)			Average Balance		Interest		Average Yield/Rate (5)
Interest Earning Assets:
Loans (1)	$	2,087,997	$	24,695		4.74	%	$	1,908,945	$	23,165		4.88	%
Investment securities (2)		514,470		2,153		1.67	%		374,888		1,415		1.51	%
Deposits in other financial institutions		229,161		615		1.06	%		274,531		417		0.60	%
Total interest earning assets		2,831,628		27,463		3.89	%		2,558,364		24,997		3.93	%
Non-interest earning assets		221,270							209,342
Total Assets	$	3,052,898						$	2,767,706
Interest Bearing Liabilities:
Interest bearing transaction accounts	$	327,589	$	146		0.18	%	$	288,384	$	99		0.14	%
Money market and savings deposits		841,831		699		0.33	%		740,117		484		0.26	%
Certificates of deposit		30,156		35		0.47	%		53,460		31		0.23	%
Total interest bearing deposits		1,199,576		880		0.29	%		1,081,961		614		0.23	%
Securities sold under agreements to repurchase		12,465		7		0.23	%		25,223		14		0.22	%
Subordinated debentures		9,920		136		5.42	%		9,758		120		4.86	%
Total borrowings		22,385		143		2.56	%		34,981		134		1.54	%
Total interest bearing liabilities		1,221,961		1,023		0.34	%		1,116,942		748		0.27	%
Non-interest bearing demand deposits		1,461,342							1,312,833
Total funding sources		2,683,303							2,429,775
Non-interest bearing liabilities		18,259							15,901
Shareholders’ Equity		351,336							322,030
Total Liabilities and Shareholders’ Equity	$	3,052,898						$	2,767,706
Excess of interest earning assets over funding sources	$	148,325						$	128,589
Net interest income			$	26,440						$	24,249
Net interest margin (3)						3.75	%						3.81	%
Core net interest margin (4)						3.73	%						3.67	%

(1) 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.

(2) 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.

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

(4) 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.

(5) Annualized.

Page 51 of 77

	Six Months Ended
	June 30, 2017							June 30, 2016
	Average Balance		Interest		Average Yield/Rate (5)			Average Balance		Interest		Average Yield/Rate (5)
Interest Earning Assets:
Loans (1)	$	2,065,967	$	49,127		4.80	%	$	1,879,074	$	45,743		4.90	%
Investment securities (2)		516,376		4,194		1.62	%		363,909		2,647		1.45	%
Deposits in other financial institutions		281,619		1,325		0.94	%		287,967		856		0.59	%
Total interest earning assets		2,863,962		54,646		3.85	%		2,530,950		49,246		3.91	%
Non-interest earning assets		219,911							211,959
Total Assets	$	3,083,873						$	2,742,909
Interest Bearing Liabilities:
Interest bearing transaction accounts	$	333,377	$	303		0.18	%	$	279,590	$	198		0.14	%
Money market and savings deposits		859,833		1,369		0.32	%		733,399		995		0.27	%
Certificates of deposit		29,892		61		0.41	%		54,690		64		0.24	%
Total interest bearing deposits		1,223,102		1,733		0.29	%		1,067,679		1,257		0.24	%
Securities sold under agreements to repurchase		13,734		16		0.23	%		22,882		25		0.22	%
Subordinated debentures		9,898		266		5.35	%		9,739		237		4.81	%
Total borrowings		23,632		282		2.41	%		32,621		262		1.62	%
Total interest bearing liabilities		1,246,734		2,015		0.33	%		1,100,300		1,519		0.27	%
Non-interest bearing demand deposits		1,470,802							1,308,925
Total funding sources		2,717,536							2,409,225
Non-interest bearing liabilities		19,038							16,162
Shareholders’ Equity		347,299							317,522
Total Liabilities and Shareholders’ Equity	$	3,083,873						$	2,742,909
Excess of interest earning assets over funding sources	$	146,426						$	121,725
Net interest income			$	52,631						$	47,727
Net interest margin (3)						3.71	%						3.79	%
Core net interest margin (4)						3.63	%						3.67	%

(1) 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.

(2) 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.

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

(4) 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.

(5) Annualized.

Page 52 of 77

Net Changes in Average Balances, Composition, Yields and Rates

Three and Six Months Ended June 30, 2017 and 2016

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 June 30,
	2017								2016								Increase (Decrease)
	Average Balance		% of Total			Average Yield/ Rate (5)			Average Balance		% of Total			Average Yield/ Rate (5)			Average Balance			% of Total			Average Yield/ Rate (5)
Interest Earning Assets:
Loans (1)	$	2,087,997		73.7	%		4.74	%	$	1,908,945		74.6	%		4.88	%	$	179,052			(0.9	)%		(0.14	)%
Investment securities (2)		514,470		18.2	%		1.67	%		374,888		14.7	%		1.51	%		139,582			3.5	%		0.16	%
Deposits in other financial institutions		229,161		8.1	%		1.06	%		274,531		10.7	%		0.60	%		(45,370	)		(2.6	)%		0.46	%
Total interest earning assets	$	2,831,628		100.0	%		3.89	%	$	2,558,364		100	%		3.93	%	$	273,264						(0.04	)%
Interest Bearing Liabilities:
Non-interest bearing demand deposits	$	1,461,342		54.5	%		—		$	1,312,833		54.0	%		—		$	148,509			0.5	%		—
Interest bearing transaction accounts		327,589		12.2	%		0.18	%		288,384		11.9	%		0.14	%		39,205			0.3	%		0.04	%
Money market and savings deposits		841,831		31.4	%		0.33	%		740,117		30.5	%		0.26	%		101,714			0.9	%		0.07	%
Certificates of deposit		30,156		1.0	%		0.47	%		53,460		2.2	%		0.23	%		(23,304	)		(1.2	)%		0.24	%
Total deposits		2,660,918		99.1	%		0.13	%		2,394,794		98.6	%		0.10	%		266,124			0.5	%		0.03	%
Securities sold under agreements to repurchase		12,465		0.5	%		0.23	%		25,223		1.0	%		0.22	%		(12,758	)		(0.5	)%		0.01	%
Subordinated debentures		9,920		0.4	%		5.42	%		9,758		0.4	%		4.86	%		162			—	%		0.56	%
Total borrowings		22,385		0.9	%		2.56	%		34,981		1.4	%		1.54	%		(12,596	)		(0.5	)%		1.02	%
Total funding sources	$	2,683,303		100.0	%		0.15	%	$	2,429,775		100.0	%		0.12	%	$	253,528						0.03	%
Excess of interest earning assets over funding sources	$	148,325							$	128,589							$	19,736
Net interest margin (3)							3.75	%							3.81	%								(0.06	)%
Core net interest margin (4)							3.73	%							3.67	%								0.06	%

(1) 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.

(2) 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.

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

(4) 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.

(5) Annualized.

Page 53 of 42

	Six Months Ended June 30,
	2017								2016								Increase (Decrease)
	Average Balance		% of Total			Average Yield/ Rate (5)			Average Balance		% of Total			Average Yield/ Rate (5)			Average Balance			% of Total			Average Yield/ Rate (5)
Interest Earning Assets:
Loans (1)	$	2,065,967		72.2	%		4.80	%	$	1,879,074		74.2	%		4.90	%	$	186,893			(2.0	)%		(0.10	)%
Investment securities (2)		516,376		18.0	%		1.62	%		363,909		14.4	%		1.45	%		152,467			3.6	%		0.17	%
Deposits in other financial institutions		281,619		9.8	%		0.94	%		287,967		11.4	%		0.59	%		(6,348	)		(1.6	)%		0.35	%
Total interest earning assets	$	2,863,962		100.0	%		3.85	%	$	2,530,950		100.0	%		3.91	%	$	333,012						(0.06	)%
Interest Bearing Liabilities:
Non-interest bearing demand deposits	$	1,470,802		54.1	%		—		$	1,308,925		54.3	%		—		$	161,877			(0.2	)%
Interest bearing transaction accounts		333,377		12.3	%		0.18	%		279,590		11.6	%		0.14	%		53,787			0.7	%		0.04	%
Money market and savings deposits		859,833		31.6	%		0.32	%		733,399		30.4	%		0.27	%		126,434			1.2	%		0.05	%
Certificates of deposit		29,892		1.1	%		0.41	%		54,690		2.3	%		0.24	%		(24,798	)		(1.2	)%		0.17	%
Total deposits		2,693,904		99.1	%		0.13	%		2,376,604		98.6	%		0.11	%		317,300			0.5	%		0.02	%
Securities sold under agreements to repurchase		13,734		0.5	%		0.23	%		22,882		1.0	%		0.22	%		(9,148	)		(0.5	)%		0.01	%
Subordinated debentures		9,898		0.4	%		5.35	%		9,739		0.4	%		4.81	%		159			—	%		0.54	%
Total borrowings		23,632		0.9	%		2.41	%		32,621		1.4	%		1.62	%		(8,989	)		(0.5	)%		0.79	%
Total funding sources	$	2,717,536		100.0	%		0.15	%	$	2,409,225		100.0	%		0.13	%	$	308,311						0.02	%
Excess of interest earning assets over funding sources	$	146,426							$	121,725							$	24,701
Net interest margin (3)							3.71	%							3.79	%								(0.08	)%
Core net interest margin (4)							3.63	%							3.67	%								(0.04	)%

(1) 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.

(2) 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.

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

(4) 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.

(5) Annualized.

Page 54 of 77

Volume and Rate Variance Analysis of Net Interest Income

Three and Six Months Ended June 30, 2017 and 2016

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

	Three Months Ended June 30, 2017 vs. 2016
	Increase (Decrease) Due To
	Volume			Rate			Total
Interest Income
Loans	$	2,341		$	(811	)	$	1,530
Investment securities		531			207			738
Deposits in other financial institutions		(67	)		265			198
Total interest income		2,805			(339	)		2,466
Interest Expense
Interest bearing transaction accounts		15			32			47
Money market and savings deposits		67			148			215
Certificates of deposit		(14	)		18			4
Total deposits		68			198			266
Securities sold under agreements to repurchase		(7	)		—			(7	)
Subordinated debentures, net		2			14			16
Total borrowings		(5	)		14			9
Total interest expense		63			212			275
Net Interest Income	$	2,742		$	(551	)	$	2,191

	Six Months Ended June 30, 2017 vs. 2016
	Increase (Decrease) Due To
	Volume			Rate			Total
Interest Income
Loans	$	4,354		$	(970	)	$	3,384
Investment securities		1,107			440			1,547
Deposits in other financial institutions		(19	)		488			469
Total interest income		5,442			(42	)		5,400
Interest Expense
Interest bearing transaction accounts		38			67			105
Money market and savings deposits		164			210			374
Certificates of deposit		(30	)		27			(3	)
Total deposits		172			304			476
Securities sold under agreements to repurchase		(10	)		1			(9	)
Subordinated debentures, net		3			26			29
Total borrowings		(7	)		27			20
Total interest expense		165			331			496
Net Interest Income	$	5,277		$	(373	)	$	4,904

Page 55 of 77

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

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

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Net Interest Income	$	26,440		$	24,249		$	52,631		$	47,727
Less:
Accelerated accretion of fair value adjustment on early loan payoffs and other associated payoff benefits on acquired loans		98			546			786			1,074
Income recognition due to early payoff of organic loans		—			359			306			482
Core Net Interest Income	$	27,365		$	23,344		$	48,035		$	46,171
Net interest margin		3.75	%		3.81	%		3.71	%		3.79	%
Core net interest margin		3.73	%		3.67	%		3.63	%		3.67	%

Composition of Net Deferred Loan Fees and Net Fair Value Discounts

The following table reflects the composition of the net deferred loan fees, costs and fair value discounts at June 30, 2017 and December 31, 2016 (dollars in thousands):

	June 30, 2017		December 31, 2016
Accretable loan discount	$	7,974	$	9,772
Non-Accretable loan discount		335		390
Remaining loan discount on acquired loans		8,309		10,162
Net deferred loan fees on organic loans		5,906		5,830
Total	$	14,215	$	15,992

Three Months Ended June 30, 2017 Compared to Three Months Ended June 30, 2016

The net interest margin decreased 6 basis points to 3.75% for the three months ended June 30, 2017, compared to 3.81% for the three months ended June 30, 2016. The decrease was primarily driven by a decrease of $808 thousand in discounts earned on early loan payoffs and other associated payoff benefits in the second quarter of 2017, compared to the year ago period. For the quarter ended June 30, 2017, the Company recorded $98 thousand in discounts earned on early loan payoffs of acquired loans, which had a positive impact on the net interest margin of 2 basis points. In the second quarter of 2016, the Company recorded both $546 thousand in discounts earned on early loan payoffs of acquired loans and other associated payoff benefits of $359 thousand, which had a positive impact on the net interest margin of 14 basis points.

Six Months Ended June 30, 2017 Compared to Six Months Ended June 30, 2016

The net interest margin decreased 8 basis points to 3.71% for the six months ended June 30, 2017, compared to 3.79% for the six months ended June 30, 2016. The decrease in net interest margin is primarily due to average loans being a lower percentage of interest earning assets and a decrease of $464 thousand in discounts earned on early loan payoffs and other associated payoff benefits for the period ended June 30, 2017, compared to the year ago period. For the six months ended June 30, 2017, the Company recorded both $786 thousand in discounts earned on early loan payoffs of acquired loans and other associated payoff benefits of $306 thousand, which had a positive impact on the net interest margin of 8 basis points. For the six months ended June 30, 2016, the Company recorded $1.1 million in discounts earned on early loan payoffs of acquired loans and other associated payoff benefits of $482 thousand, which had a positive impact on the net interest margin of 12 basis points.

Page 56 of 77

Provision for Loan Losses

Provision for loan losses for the three months ended June 30, 2017 was $701 thousand compared to $1.1 million for the three months ended June 30, 2016. The Company had $124 million of net organic loan growth for the quarter ended June 30, 2017, compared to $121 million for the same quarter a year ago. Net recoveries for the three months ended June 30, 2017 were $20 thousand, compared to net recoveries of $868 thousand in 2016. The loan loss provision in the second quarter of 2017 reflects strong organic loan growth, with the benefit of a very low level of non-performing loans and net recoveries year to date. In the second quarter of 2016, the Company recorded a specific reserve of $594 thousand for an impaired loan.

Provision for loan losses for the six months ended June 30, 2017 was $701 thousand, compared to $1.7 million for the six months ended June 30, 2016. The Company had $157 million of net organic loan growth for the six months ended June 30, 2017, compared to $212 million for the six months ended June 30, 2016. Net recoveries for the six months ended June 30, 2017 were $251 thousand compared to net recoveries of $1.1 million in 2016. The loan loss provision reflects organic loan growth, with the benefit of a very low level of non-performing loans and net recoveries year to date. 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 June 30,				Increase (Decrease)						Six Months Ended June 30,				Increase (Decrease)
	2017		2016		$			%			2017		2016		$			%
Gain on sale of securities, net	$	—	$	—	$	—			—	%	$	141	$	—	$	141			100.0	%
Gain on sale of SBA loans, net		552		485		67			13.8	%		754		1,039		(285	)		(27.4	)%
Deposit account service charge income		1,210		1,222		(12	)		(1.0	)%		2,370		2,411		(41	)		(1.7	)%
Letters of credit income		277		295		(18	)		(6.1	)%		563		565		(2	)		(0.4	)%
Interchange fees		155		141		14			9.9	%		302		254		48			18.9	%
Transaction referral income		73		29		44			151.7	%		73		29		44			151.7	%
Dividend income in equity securities		243		219		24			11.0	%		456		370		86			23.2	%
BOLI income		2,797		325		2,472			760.6	%		3,176		648		2,528			390.1	%
Other non-interest income		320		259		61			23.6	%		627		479		148			30.9	%
Total Non-Interest Income	$	5,627	$	2,975	$	2,652			89.1	%	$	8,462	$	5,795	$	2,667			46.0	%

Three Months Ended June 30, 2017 Compared to Three Months Ended June 30, 2016

Non-interest income increased by $2.7 million or 89.1% to $5.6 million for the three months ended June 30, 2017 compared to $3.0 million for the three months ended June 30, 2016. The increase was primarily due to $2.4 million of death benefit claims from bank owned life insurance. Gain on sale of SBA loans increased $67 thousand in the second quarter of 2017, compared to the year-ago quarter.

Six Months Ended June 30, 2017 Compared to Six Months Ended June 30, 2016

Non-interest income increased by $2.7 million or 46% to $8.5 million for the six months ended June 30, 2017 compared to $5.8 million for the six months ended June 30, 2016. This change was mainly due to a $2.4 million increase in in death benefit claims from bank owned life insurance, a $141 thousand increase in gain on sale of securities. This was offset by a $285 thousand decrease in gain on sale of SBA loans as the average loan size was smaller and there were two less loans sold.

Page 57 of 77

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 June 30,				Increase (Decrease)						Six Months Ended June 30,				Increase (Decrease)
	2017		2016		$			%			2017		2016		$			%
Salaries and employee benefits	$	9,805	$	9,030	$	775			8.6	%	$	20,093	$	18,349	$	1,744			9.5	%
Stock based compensation expense		837		891		(54	)		(6.1	)%		1,610		1,725		(115	)		(6.7	)%
Occupancy		1,450		1,439		11			0.8	%		2,939		2,875		64			2.2	%
Data processing		670		635		35			5.5	%		1,326		1,253		73			5.8	%
Legal and professional		460		651		(191	)		(29.3	)%		1,469		1,126		343			30.5	%
FDIC deposit assessment		391		359		32			8.9	%		837		709		128			18.1	%
Merger related expenses		1,471		—		1,471			100.0	%		1,471		—		1,471			100.0	%
OREO loss and expenses		—		4		(4	)		(100.0	)%		—		83		(83	)		(100.0	)%
Office services expenses		363		320		43			13.4	%		743		723		20			2.8	%
Core deposit intangible amortization		284		321		(37	)		(11.5	)%		568		642		(74	)		(11.5	)%
Other operating expenses		1,389		1,439		(50	)		(3.5	)%		2,757		2,791		(34	)		(1.2	)%
Total Non-Interest Expense	$	17,120	$	15,089	$	2,031			13.5	%	$	33,813	$	30,276	$	3,537			11.7	%

Three Months Ended June 30, 2017 Compared to Three Months Ended June 30, 2016

Non-interest expense increased by $2.0 million or 13.5% to $17 million for the three months ended June 30, 2017 compared to $15 million for the three months ended June 30, 2016. The increase was largely related to $1.5 million in merger expenses; the same period of the prior year had no merger expenses. Salaries and employee benefits increased by $775 thousand over the second quarter of 2016, as average full-time equivalent employees grew to 290 for the period ending June 30, 2017, compared to an average of 277 full-time equivalent employees in the year-ago period. The majority of the increase was BSA related. Additionally, the Bank’s annual merit increases were effective early in the second quarter of 2017.

Six Months Ended June 30, 2017 Compared to Six Months Ended June 30, 2016

Non-interest expense increased by $3.5 million or 11.7% to $34 million for the six months ended June 30, 2017 compared to $30 million for the six months ended June 30, 2016. In the second quarter of 2017 the Company recorded $1.5 million in merger expenses; in the year-ago period the Company recorded no merger expenses. Salaries and employee benefits increased by $1.7 million, as average full-time equivalent employees grew to 291 for the period ending June 30, 2017, compared to an average of 274 full-time equivalent employees in the year-ago period. The majority of the increase was BSA related.

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Income Taxes

The effective tax rate for the three month ended June 30, 2017 was 34.7% compared to 35.7% for the three months ended June 30, 2016. The effective tax rate for the six months ended June 30, 2017 was 35.7% compared to 36.4% for the six months ended June 30, 2016. 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 excess tax benefits from exercise or vesting of share-based awards are included as a reduction in provision for income tax expense in the period in which the exercise or vesting occurs. The tax rate will have more volatility, depending on the closing share price and the volume of vestings and exercises that impact the associated excess tax benefits. The amount of excess tax benefits were $29 thousand and $475 thousand for the three months ended June 30, 2017 and 2016, respectively, and $453 thousand and $772 thousand for the six months ended June 30, 2017 and 2016, respectively. For both the three months and the six months ended June 30, 2017, the Company’s effective tax rate is further impacted by non-deductible merger expenses of $564 thousand and the tax-exempt death benefit claims of $1 million from the Company’s bank owned life insurance which are excluded from taxable income. In addition, the Company has invested in Qualified Affordable Housing Projects “LIHTC” that generate tax credits and benefits for the Company. Without the tax-exempt death benefit claims, the excess tax benefits and the additional impact as a result of the non-deductible merger expenses, the effective tax rate would have been 39%.

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 modestly by $43 million or 1% from December 31, 2016 to $3.0 billion mainly due to deposit growth of $31 million and net income of $17.1 million.    During the six months ended June 30, 2017, the Company had $157 million of net organic loan production. Pay downs in the acquired loan portfolios were approximately $56 million during the same period. Loan growth during the six months ended June 30, 2017 was concentrated primarily in loans secured by real estate which grew $99 million from December 31, 2016, with an $80 million increase in the other nonresidential properties portfolio. At June 30, 2017, commercial and industrial loans, and owner-occupied real estate loans combined were $921 million or 45% of total loans, compared to $943 million or 44% of total loans at December 31, 2016.

Funding the Company’s asset growth for the six months ended June 30, 2017 was an increase in total deposits of $31 million. After three consecutive quarters in which deposit growth was more than $100 million per quarter, in the second quarter of 2017 the Company experienced a drawdown in deposits of $117 million. This was not totally unexpected, as the Company anticipated withdrawals related to taxes in the second quarter. Deposit growth for the six months ended June 30, 2017 also included an increase of $59 million in non-interest bearing demand deposits which increased to 55% of total deposits at June 30, 2017, from 54% of total deposits at December 31, 2016. Tangible book value per common share was $15.17, $14.10 and $13.46 at June 30, 2017, December 31, 2016 and June 30, 2016, respectively.

Lending

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

	June 30, 2017					December 31, 2016
	Amount		% of Total			Amount		% of Total
Commercial and Industrial Loans:	$	495,632		23	%	$	502,637		25	%
Loans Secured by Real Estate:
Owner-Occupied Nonresidential Properties		447,782		21	%		451,322		22	%
Other Nonresidential Properties		710,454		33	%		630,163		31	%
Construction, Land Development and Other Land		205,845		9	%		194,059		9	%
1-4 Family Residential Properties		122,556		6	%		127,164		6	%
Multifamily Residential Properties		125,393		6	%		109,858		5	%
Total Loans Secured by Real Estate		1,612,030		74	%		1,512,566		73	%
Other Loans:		43,931		2	%		35,023		2	%
Total Loans	$	2,151,593		100	%	$	2,050,226		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):

	June 30, 2017					December 31, 2016
	Amount		% of Total			Amount		% of Total
Real Estate	$	1,231,276		57	%	$	1,096,377		53	%
Manufacturing		158,321		7	%		180,217		9	%
Construction		138,052		6	%		140,270		7	%
Hotel/Lodging		129,663		6	%		120,760		6	%
Wholesale		120,293		6	%		117,444		6	%
Finance		83,209		4	%		83,061		4	%
Professional Services		46,412		2	%		58,766		3	%
Other Services		48,869		2	%		50,425		2	%
Healthcare		42,642		2	%		46,184		2	%
Information		32,359		2	%		32,014		2	%
Retail		29,344		1	%		28,938		1	%
Restaurant/Food Service		23,970		1	%		24,118		1	%
Transportation		20,274		1	%		19,857		1	%
Administrative Services		13,236		1	%		17,090		1	%
Entertainment		12,149		1	%		13,569		1	%
Education		10,997		1	%		10,370		1	%
Management		5,639		—	%		6,455		—	%
Other		4,888		—	%		4,311		—	%
Total Loans	$	2,151,593		100	%	$	2,050,226		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 $2.2 billion at June 30, 2017, an increase of $101 million or 5%, from $2.1 billion at December 31, 2016. The Company had $157 million of net organic loan production, which was offset by approximately $56 million in loan payoffs/paydowns from the acquired loan portfolios. The increase in total loans from the end of the prior year included an $80 million increase in the other nonresidential real estate properties portfolio, a $12 million increase in the construction, land development and other land portfolio, and a $16 million increase in the multifamily residential properties portfolio. The yields on new loans originated during the first two quarters of 2017 have averaged 4.31%.

While the Company’s total commercial line of credit commitments decreased by $27 million from December 31, 2016, disbursements increased by $12 million from December 31, 2016, resulting in an increased utilization rate of 43%, up from 40% at December 31, 2016. 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 $943 million or 44% of total loans at June 30, 2017, compared to $954 million or 47% at December 31, 2016. Of the total commercial and industrial loans, 19% was unsecured at June 30, 2017 and December 31, 2016.

Other non-residential loans increased by $80 million from the end of the prior year, the largest of which included one new hotel loan located in Fresno for $9 million and six new loans for a total of $50 million on diverse types of non-residential facilities located in Los Angeles County and Orange County with the highest loan to value of 65%. The Company originates other non-residential loans with well-structured terms and guarantees, primarily collateralized by commercial buildings.

The Company had 52 commercial banking relationship managers and 9 commercial real estate relationship managers at June 30, 2017. This compares to 57 commercial banking relationship managers and 9 commercial real estate relationship managers at December 31, 2016 as the Bank experienced some retirements and one death in 2017.

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The Company provides commercial loans, including working capital and equipment financing, real estate loans, including residential and 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 June 30, 2017 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.

Allowance for Loan Loss

The Allowance increased by $952 thousand, to $20 million from December 31, 2016, due to a provision for loan losses of $701 thousand and the benefit of net recoveries of $251 thousand. The Allowance as a percentage of total loans was 0.94% at June 30, 2017 and December 31, 2016. The Allowance as a percentage of loans (excluding loan balances and the related Allowance on loans acquired through acquisition) was 1.13% and 1.18%, respectively, at June 30, 2017 and December 31, 2016. During the first six months of 2017, net organic loan production was $157 million offset by $56 million of payoffs/paydowns in the acquired loan portfolios.

The Company’s management considered the following factors in evaluating the allowance for loan loss at June 30, 2017:

• During the six months ended June 30, 2017 there were $2 thousand in loan charge-offs and loan recoveries of $253 thousand

• There were eight non-accrual loans totaling $726 thousand with no specific allowance required at June 30, 2017, with none individually exceeding $250 thousand

• Reduced level of substandard loans from December 31, 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,

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management believes that the Allowance at June 30, 2017 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 June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Allowance for loan loss at beginning of period	$	19,605		$	16,545		$	19,374		$	15,682
Provision for loan losses		701			1,063			701			1,685
Net (charge-offs) recoveries:
Charge-offs		(2	)		(20	)		(2	)		(20	)
Recoveries		22			888			253			1,129
Net (charge-offs) recoveries		20			868			251			1,109
Allowance for loan loss at end of period	$	20,326		$	18,476		$	20,326		$	18,476
Net (charge-offs) recoveries to average loans		0.00	%		0.05	%		0.01	%		0.06	%

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

	June 30, 2017			December 31, 2016
Loans originated by the Bank on non-accrual	$	—		$	—
Loans acquired through acquisition on non-accrual		726			1,122
Total non-accrual loans		726			1,122
Other Real Estate Owned		—			—
Total non-performing assets	$	726		$	1,122
Net charge-offs (recoveries) year to date	$	(251	)	$	(428	)
Net charge-offs (recoveries) to average outstanding loans, year to date		(0.01	)		(0.02	)
Non-accrual loans to total loans		0.03	%		0.05	%
Total non-performing assets to total assets		0.02	%		0.04	%
Allowance for loan losses to total loans		0.94	%		0.94	%
Allowance for loan losses to total loans accounted at historical cost, which excludes loans acquired by acquisition		1.13	%		1.18	%
Allowance for loan losses to non-accrual loans accounted at historical cost, which excludes non-accrual loans acquired by acquisition and related allowance		—			—
Allowance for loan losses to total non-accrual loans		2798	%		1726	%

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Deposits

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

	June 30, 2017					December 31, 2016
	Amount		% of Total			Amount		% of Total
Non-interest bearing demand deposits	$	1,459,553		55	%	$	1,400,097		54	%
Interest bearing transaction accounts		328,156		13	%		332,702		13	%
Money market and savings deposits		820,832		31	%		845,110		32	%
Certificates of deposit		29,725		1	%		29,480		1	%
Total deposits	$	2,638,266		100	%	$	2,607,389		100	%

Total deposits increased $31 million to $2.6 billion at June 30, 2017, primarily due to a $59 million increase in non-interest bearing demand deposits, offset by a $24 million decrease in money market and savings deposits and a $4 million decrease in interest bearing transaction accounts. Certificates of deposit remained stable. The $31 million growth in deposits during the six months ended June 30, 2017 is the net result of a $148 million increase in the first quarter of 2017 and a $117 million decrease in the second quarter of 2017. The buildup of deposits during the first quarter was likely related to customers accumulating cash in anticipation of federal and state income taxes, as well as property taxes in California. In the second quarter, anticipated withdrawals related to taxes took place and additionally, a number of clients made distributions to their investment partners. The average balance per account declined from year-end for interest bearing non-maturing deposits. Non-interest bearing deposits represented 55% of total deposits at June 30, 2017 and 54 % at December 31, 2016.

Management believes one of the strengths of the Company continues to be its core deposit franchise with a cost of deposits of 0.13% for the six months ended June 30, 2017, compared to 0.11% for the six months ended June 30, 2016. The small year-over-year increase reflects the strength of the Bank’s core deposit base, despite three prime rate increases since March 2016. Another strength is the higher average deposits per branch of $293 million at June 30, 2017.

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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):

	June 30, 2017			December 31, 2016
	Amount			Amount
Primary Liquidity-On Balance Sheet:
Cash and due from banks	$	56,383		$	41,281
Interest earning deposits in other financial institutions		111,852			167,789
Investment securities available-for-sale		453,952			469,950
Less: pledged cash and due from banks		—			—
Less: pledged investment securities		(202,874	)		(204,855	)
Total primary liquidity	$	419,313		$	474,165
Ratio of primary liquidity to total deposits		15.89	%		18.19	%
Additional Liquidity Not Included In Primary Liquidity:
Certificates of deposit in other financial institutions	$	47,325		$	51,245
Less: Certificate of deposits pledged		(2,731	)		(2,731	)
Total additional liquidity	$	44,594		$	48,514
Secondary Liquidity-Off Balance Sheet:
Available Borrowing Capacity:
Total secured borrowing capacity with FHLB	$	719,592		$	657,955
Fed Funds borrowing lines		72,000			72,000
Secured credit line with the FRBSF		23,871			25,489
Total secondary liquidity	$	815,463		$	755,444

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 $56 million and $90 million, at June 30, 2017 and December 31, 2016, 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 $45 million in unpledged certificates of deposits in other financial institutions where the average maturity is approximately 5 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 $786 million at June 30, 2017. The Company currently has no outstanding borrowings with the FHLB. As of June 30, 2017, the Company had $1 billion of loan collateral pledged with the FHLB. This level of loan collateral would provide the Company with $720 million in borrowing capacity. The Company also had $15 million in securities pledged with the FHLB serving as collateral for an additional $14 million in borrowing capacity. Any amount of borrowings in excess of $720 million, up to the Company’s borrowing capacity of $786 million, would require the Company to pledge additional collateral. In addition, the Company

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must maintain a certain investment in the common stock of the FHLB. The Company’s investment in the common stock of the FHLB is $12 million at June 30, 2017. This level of capital would allow the Company to borrow up to $441 million of the $786 million. Any advances from the FHLB in excess of the $441 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 June 30, 2017, the Company’s available borrowing capacity was $24 million.

The Company maintains investments in short term certificates of deposit with other financial institutions, with an average remaining maturity of approximately 5 months, with various balances maturing monthly. The Company had balances of $47 million and $51 million at June 30, 2017 and December 31, 2016, respectively. At June 30, 2017, $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 $935 million and $1 billion at June 30, 2017 and December 31, 2016, respectively.

The holding company liquidity on a stand-alone basis was $7.1 million and $9.7 million, in cash on deposit at the Bank, at June 30, 2017 and December 31, 2016, 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 June 30, 2017, 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 June 30, 2017. 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). 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 June 30, 2017, 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 the phase-in 2017 buffer 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

	June 30, 2017			December 31, 2016			Well Capitalized			Basel III Minimum with Buffer
	Amount			Amount			(greater than or equal to)
Regulatory Capital Ratios:
Tier 1 leverage ratio		10.16	%		9.72	%		5.0	%		NA
Common Equity Tier 1 ratio		9.92	%		9.61	%		6.5	%		5.75	%
Total Tier 1 risk-based capital ratio		10.96	%		10.68	%		8.0	%		7.25	%
Total risk-based capital ratio		11.73	%		11.44	%		10.0	%		9.25	%
Regulatory Capital Data:
Common Equity Tier 1	$	274,536		$	257,105
Total Tier 1 capital		303,292			285,843
Total risk-based capital		324,504			306,103
Average total assets*		2,985,218			2,940,790
Risk-weighted assets		2,767,189			2,675,987

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

California United Bank

	June 30, 2017			December 31, 2016			Well Capitalized			Basel III Minimum with Buffer
	Amount			Amount			(greater than or equal to)
Regulatory Capital Ratios:
Tier 1 leverage ratio		9.86	%		9.35	%		5.0	%		NA
Common Equity Tier 1 ratio		10.64	%		10.28	%		6.5	%		5.75	%
Total Tier 1 risk-based capital ratio		10.64	%		10.28	%		8.0	%		7.25	%
Total risk-based capital ratio		11.41	%		11.04	%		10.0	%		9.25	%
Regulatory Capital Data:
Common Equity Tier 1	$	294,530		$	275,151
Tier 1 capital		294,530			275,151
Total risk-based capital		315,742			295,411
Average total assets*		2,985,896			2,941,253
Risk-weighted assets		2,767,565			2,677,030

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

Page 68 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 resulted 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, 2016 Form 10K, Part I, Item 1 – Business – Supervision and Regulation – Legislation and Regulatory Developments – Dodd Frank Wall Street Reform and Consumer Protection Act.

Page 69 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 resulted 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 decreased from 288 at December 31, 2016 to 280 at June30, 2017.

Page 70 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 June 30, 2017, the Company had nine pay-fixed, receive-variable interest rate contracts that were designed to convert fixed rate loans into variable rate loans. All of these swap contracts 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 June 30, 2017 (dollars in thousands):

Simulated Rate Changes	Estimated Net Interest Income Sensitivity
+ 400 basis points		24.2	%	$	25,235
+ 200 basis points		12.1	%	$	12,594
+ 100 basis points		6.1	%	$	6,353
- 200 basis points (1)		(13.9	)%	$	(14,455	)

(1) The simulated rate change under the -200 basis points reflected in the table above reflects an average negative 56 basis points on interest earning assets primarily due to floors on loans and reflects repricing of liabilities of a negative 5 bps due to the Company paying an average of less than 25 basis points on its deposit accounts.

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 2.0 years at June 30, 2017, compared to 2.6 years at December 31, 2016. 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 risk low. 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 74% of the loan portfolio. Of the total variable rate loans, 51% are tied to the Prime index with $784 million subject to repricing within 30 days of a 25 basis point increase in Prime rate. The remaining 49% of the variable rate loans are tied to other indexes with longer repricing frequencies such as the Treasury index at 38% and the LIBOR index at 11%. Other variable rate assets are the $104 million of SBA variable rate investment securities, tied to Prime, and interest-bearing due-from accounts of $112 million tied to the Fed Funds rate.

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.

Page 71 of 77

The Company’s static GAP as of June 30, 2017, is not materially different from that reported at December 31, 2016 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 2016 Annual Report on Form 10-K.

Page 72 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 June 30, 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Page 73 of 77

PART II – OTHER INFORMATION

ITEM 1. Legal Proceedings

Certain lawsuits and claims arising in the ordinary course of business have been filed or are pending against the Company, some of which may be styled as “class action” or representative cases. Where appropriate, the Company establishes reserves in accordance with GAAP over loss contingencies. The outcome of litigation and other legal and regulatory matters is inherently uncertain, however, and it is possible that one or more of the legal matters currently pending or threatened could have a material adverse effect on the Company’s liquidity, consolidated financial position, and/or results of operations. As of June 30, 2017, the Company did not have any material litigation reserves.

Two putative shareholder class action lawsuits have been filed against the Company in connection with the pending merger with PacWest in the United States District Court for the Central District of California. The first action, Parshall v. CU Bancorp et al., Case No. 2:17-cv-04303, was filed on June 9, 2017 and the second action, Klein v. CU Bancorp et al., Case No. 2:17-cv-04353, was filed on June 12, 2017. Both complaints allege that the members of the CUB board of directors violated Sections 14(a) and 20(a) of the Securities Exchange Act of 1934, based upon alleged omissions and misrepresentations in the initial S-4 registration statement filed by PacWest with the SEC on May 26, 2017, by approving the proposed merger for inadequate consideration and by entering into the merger agreement containing preclusive deal protection devices. The plaintiffs in both of these actions seek injunctive relief prohibiting consummation of the merger, rescission and damages in the event the merger is consummated, an accounting of damages suffered by the plaintiff and the putative class, attorneys’ fees and costs and other, and further relief. At this stage, it is not possible to assess the outcome of these proceedings or their impact on the Company or the merger.

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 2016 Annual Report on Form 10-K for the year ended December 31, 2016. 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.

Page 74 of 77

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

None.

ITEM 3. Defaults upon Senior Securities

None.

ITEM 4. Mine Safety Disclosures

Not applicable.

ITEM 5. Other Information

(a) None.

(b) None.

Page 75 of 77

ITEM 6. Exhibits

Index to Exhibits

Exhibit Number	Description
2.1	Agreement and Plan of Merger, dated as of April 5, 2017, by and between PacWest Bancorp and CU Bancorp1
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

¹  Incorporated by reference from Exhibit 2.1 to CU Bancorp Current Report on Form 8-K filed April 7, 2017.

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: August 8, 2017	/s/ DAVID I. RAINER
	David I. Rainer
	Chief Executive Officer
Date: August 8, 2017	/s/ KAREN A. SCHOENBAUM
	Karen A. Schoenbaum
	Chief Financial Officer

Page 77 of 77

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: August 8, 2017	/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: August 8, 2017	/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 June 30, 2017 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: August 8, 2017	/s/ DAVID I. RAINER
	DAVID I. RAINER
	Chief Executive Officer
DATE: August 8, 2017	/s/ KAREN A SCHOENBAUM
	KAREN A. SCHOENBAUM
	Chief Financial Officer

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2017	Aug. 01, 2017
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q2
Trading Symbol	CUNB
Entity Registrant Name	CU Bancorp
Entity Central Index Key	0001543643
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		17,827,381

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
ASSETS
Cash and due from banks	$ 56,382	$ 41,281
Interest earning deposits in other financial institutions	111,852	167,789
Total cash and cash equivalents	168,234	209,070
Certificates of deposit in other financial institutions	47,325	51,245
Investment securities available-for-sale, at fair value	453,952	469,950
Investment securities held-to-maturity, at amortized cost	39,992	42,027
Total investment securities	493,944	511,977
Loans	2,151,593	2,050,226
Allowance for loan loss	(20,326)	(19,374)
Net loans	2,131,267	2,030,852
Premises and equipment, net	3,806	4,184
Deferred tax assets, net	16,291	17,181
Goodwill	64,603	64,603
Core deposit and leasehold right intangibles, net	5,641	6,300
Bank owned life insurance	61,536	51,216
Accrued interest receivable and other assets	45,478	48,132
Total Assets	3,038,125	2,994,760
LIABILITIES AND SHAREHOLDERS' EQUITY
Non-interest bearing demand deposits	1,459,553	1,400,097
Interest bearing transaction accounts	328,156	332,702
Money market and savings deposits	820,832	845,110
Certificates of deposit	29,725	29,480
Total deposits	2,638,266	2,607,389
Securities sold under agreements to repurchase	12,180	18,816
Subordinated debentures, net	9,936	9,856
Accrued interest payable and other liabilities	20,167	20,514
Total Liabilities	2,680,549	2,656,575
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 June 30, 2017 and December 31, 2016, respectively	16,818	16,955
Common stock - authorized, 75,000,000 shares no par value, 17,831,131 and 17,759,006 shares issued and outstanding at June 30, 2017 and December 31, 2016, respectively	236,308	235,873
Additional paid-in capital	26,254	25,213
Retained earnings	79,654	63,163
Accumulated other comprehensive loss, net of tax	(1,458)	(3,019)
Total Shareholders' Equity	357,576	338,185
Total Liabilities and Shareholders' Equity	$ 3,038,125	$ 2,994,760

XML

Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2017	Dec. 31, 2016
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	17,831,131	17,759,006
Common stock, shares outstanding	17,831,131	17,759,006
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

XML

Consolidated Statements of Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Interest Income
Interest and fees on loans	$ 24,695	$ 23,165	$ 49,127	$ 45,743
Interest on investment securities	2,153	1,415	4,194	2,647
Interest on interest bearing deposits in other financial institutions	615	417	1,325	856
Total Interest Income	27,463	24,997	54,646	49,246
Interest Expense
Interest on interest bearing transaction accounts	146	99	303	198
Interest on money market and savings deposits	699	484	1,369	995
Interest on certificates of deposit	35	31	61	64
Interest on securities sold under agreements to repurchase	7	14	16	25
Interest on subordinated debentures	136	120	266	237
Total Interest Expense	1,023	748	2,015	1,519
Net Interest Income	26,440	24,249	52,631	47,727
Provision for loan losses	701	1,063	701	1,685
Net Interest Income After Provision For Loan Losses	25,739	23,186	51,930	46,042
Non-Interest Income
Gain on sale of securities, net			141
Gain on sale of SBA loans, net	552	485	754	1,039
Deposit account service charge income	1,210	1,222	2,370	2,411
Other non-interest income	3,865	1,268	5,197	2,345
Total Non-Interest Income	5,627	2,975	8,462	5,795
Non-Interest Expense
Salaries and employee benefits (includes stock based compensation expense of $837 and $891 for the three months, and $1,610 and $1,725 for the six months ended June 30, 2017 and 2016, respectively)	10,642	9,921	21,703	20,074
Occupancy	1,450	1,439	2,939	2,875
Data processing	670	635	1,326	1,253
Legal and professional	460	651	1,469	1,126
FDIC deposit assessment	391	359	837	709
Merger related expense	1,471		1,471
OREO loss and expenses		4		83
Office services expenses	363	320	743	723
Other operating expenses	1,673	1,760	3,325	3,433
Total Non-Interest Expense	17,120	15,089	33,813	30,276
Net Income Before Provision for Income Tax Expense	14,246	11,072	26,579	21,561
Provision for income tax expense	4,937	3,952	9,487	7,857
Net Income	9,309	7,120	17,092	13,704
Preferred stock dividends and discount accretion or premium amortization	300	307	601	610
Net Income available to common shareholders	$ 9,009	$ 6,813	$ 16,491	$ 13,094
Earnings Per Share
Basic earnings per share	$ 0.51	$ 0.40	$ 0.94	$ 0.77
Diluted earnings per share	$ 0.51	$ 0.39	$ 0.93	$ 0.75

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Consolidated Statements of Income (Unaudited) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Income Statement [Abstract]
Stock based compensation expense	$ 837	$ 891	$ 1,610	$ 1,725

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Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Statement of Comprehensive Income [Abstract]
Net Income	$ 9,309	$ 7,120	$ 17,092	$ 13,704
Other Comprehensive Income, net of tax:
Net change in unrealized loss on available-for-sale investment securities, net of tax	1,396	825	1,643	1,594
Reclassification of gain on investment securities available-for-sale to net income, net of tax			(82)
Other Comprehensive Income	1,396	825	1,561	1,594
Comprehensive Income	$ 10,705	$ 7,945	$ 18,653	$ 15,298

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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, 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				109,809
Exercise of stock options	3,453			$ 3,453
Exercise of stock options (in shares)				396,964
Stock based compensation expense	1,725					1,725
Restricted stock repurchase		$ (305)					$ (305)
Restricted stock repurchase (in shares)					(13,781)
Preferred stock dividends, discount accretion and net premium amortization	(519)		$ 91					(610)
Net Income	13,704							13,704
Other comprehensive income	1,594								1,594
Ending Balance (in shares) at Jun. 30, 2016			16,400	17,668,381
Ending Balance at Jun. 30, 2016	326,459		$ 17,086	$ 234,141		24,437		50,017	778
Net Income	7,120
Other comprehensive income	825
Ending Balance (in shares) at Jun. 30, 2016			16,400	17,668,381
Ending Balance at Jun. 30, 2016	326,459		$ 17,086	$ 234,141		24,437		50,017	778
Beginning Balance (in shares) at Dec. 31, 2016			16,400	17,759,006
Beginning Balance at Dec. 31, 2016	338,185		$ 16,955	$ 235,873		25,213		63,163	(3,019)
Net issuance of restricted stock				58,681
Exercise of stock options	$ 435			$ 435
Exercise of stock options (in shares)	27,942			27,942
Stock based compensation expense	$ 1,610					1,610
Restricted stock repurchase		$ (569)					$ (569)
Restricted stock repurchase (in shares)					(14,498)
Preferred stock dividends, discount accretion and net premium amortization	(738)		$ (137)					(601)
Net Income	17,092							17,092
Other comprehensive income	1,561								1,561
Ending Balance (in shares) at Jun. 30, 2017			16,400	17,831,131
Ending Balance at Jun. 30, 2017	357,576		$ 16,818	$ 236,308		26,254		79,654	(1,458)
Net Income	9,309
Other comprehensive income	1,396
Ending Balance (in shares) at Jun. 30, 2017			16,400	17,831,131
Ending Balance at Jun. 30, 2017	$ 357,576		$ 16,818	$ 236,308		$ 26,254		$ 79,654	$ (1,458)

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Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Cash flows from operating activities:
Net income:	$ 17,092	$ 13,704
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	701	1,685
Provision for unfunded loan commitments		117
Stock based compensation expense	1,610	1,725
Depreciation	678	717
Net accretion of discounts/premiums for loans acquired and deferred loan fees/costs	(3,721)	(4,392)
Net amortization from investment securities	3,009	1,991
Decrease (increase) in bank owned life insurance	1,680	(649)
Gain from death benefit claims from bank owned life insurance	(2,388)
Amortization of core deposit intangibles	568	642
Amortization of time deposit premium		(2)
Net accretion of leasehold right intangible asset and liabilities	(68)	(57)
Accretion of subordinated debenture discount	80	80
Loss on sale of OREO		14
Gain on sale of securities, net	(141)
Gain on sale of SBA loans, net	(754)	(1,039)
Decrease (increase) in deferred tax assets	(243)	1,421
Decrease (increase) in accrued interest receivable and other assets	2,845	(408)
Increase in accrued interest payable and other liabilities	172	1,135
Increase (decrease) in fair value of derivative swap liability	(360)	588
Net cash provided by operating activities	20,760	17,272
Cash flows from investing activities:
Purchases of investment securities	(46,487)	(51,924)
Proceeds from sales of investment securities	10,601
Proceeds from repayment and maturities of investment securities	53,746	35,799
Loans originated, net of principal payments	(96,642)	(111,409)
Purchases of premises and equipment	(300)	(225)
Proceeds from sale of OREO		311
Net decrease in certificates of deposit in other financial institutions	3,920	2,450
Purchase of bank owned life insurance	(12,000)
Proceeds from death benefit payments	2,197
Net cash used in investing activities	(84,965)	(124,998)
Cash flows from financing activities:
Net increase in non-interest bearing demand deposits	59,456	49,465
Net decrease in interest bearing transaction accounts	(4,546)	(2,020)
Net increase (decrease) in money market and savings deposits	(24,278)	68,409
Net increase (decrease) in certificates of deposit	245	(6,902)
Net increase (decrease) in securities sold under agreements to repurchase	(6,636)	11,422
Net proceeds from stock options exercised	435	3,453
Restricted stock repurchase	(569)	(305)
Dividends paid on preferred stock	(738)	(519)
Net cash provided by financing activities	23,369	123,003
Net increase (decrease) in cash and cash equivalents	(40,836)	15,277
Cash and cash equivalents, beginning of period	209,070	222,063
Cash and cash equivalents, end of period	168,234	237,340
Supplemental disclosures of cash flow information:
Cash paid for interest	1,945	1,574
Net cash paid for taxes	8,324	2,347
Supplemental disclosures of non-cash investing activities:
Net change in unrealized loss on available-for-sale investment securities, net of tax	$ 1,643	$ 1,594

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Basis of Financial Statement Presentation

6 Months Ended

Jun. 30, 2017

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 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. 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 2016 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.

On April 5, 2017, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with PacWest Bancorp (“PacWest”), wherein CU Bancorp will merge with and into PacWest (the “Merger”), with PacWest surviving the Merger. Immediately following the Merger, CU Bancorp’s wholly-owned bank subsidiary, California United Bank, will merge with and into PacWest’s wholly-owned bank subsidiary, Pacific Western Bank (the “Bank Merger”). Pacific Western Bank will be the surviving bank in the Bank Merger. The Merger Agreement was approved and adopted by the Board of Directors of each of CU Bancorp and PacWest. Closing of the transaction, which is expected to occur in the fourth quarter of 2017, is contingent upon shareholder approval and receipt of necessary regulatory approvals, along with the satisfaction of other customary closing conditions. On June 27, 2017, PacWest received regulatory approval from the DBO.

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 on a recurring and nonrecurring basis. 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.

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

6 Months Ended

Jun. 30, 2017

Accounting Changes and Error Corrections [Abstract]

Recent Accounting Pronouncements

Note 2 - Recent Accounting Pronouncements

Recent Accounting Standards Not Yet Effective

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606), which replaced almost all existing revenue recognition guidance in current GAAP. However, the effects of the new revenue recognition guidance on the financial statements of reporting entities in the financial institution industry will be somewhat limited because, for the most part, financial instruments and related contractual rights and obligations are excluded from its scope. As such, it is anticipated that interest income recognition and measurement, the largest source of revenue for the Company, will not be impacted by Accounting Standards Codification (“ASC”) Topic 606. However, the recognition and measurement of certain non-interest income items such as gain on sale of other real estate owned and deposit-related fees, could be affected by ASC Topic 606.

Under current GAAP, when full consideration is not expected and financing is required by the buyer to purchase the property, there are very prescriptive requirements in determining when foreclosed real estate property sold by an institution should be derecognized and a gain or loss be recognized. The new guidance that will be applied to these sales is more principles based. For example, as it pertains to the criteria for determining how a contract should be accounted for under the new guidance, judgment will need to be exercised in evaluating if: (a) a commitment on the buyer’s part exists, (b) collection is probable in circumstances where the initial investment is minimal and (c) the buyer has obtained control of the asset, including the significant risks and rewards of the ownership. If there is no commitment on the buyer’s part, collection is not probable or the buyer has not obtained control of the asset, then a gain cannot be recognized under the new guidance. The initial investment requirement for the buyer along with the various methods for profit recognition are no longer applicable when the new guidance goes into effect. The Company will revise its current policy on the recognition and measurement of gain on sale of other real estate owned to be consistent with the new guidance, but does not expect the new guidance to have a significant impact on the consolidated financial statements of the Company when adopted. Since the inception of the Company, the level of other real estate owned has been very low and in almost all cases, full consideration was received at the time of sale and financing by the Company was not provided.

For deposit-related fees, considering the straightforward nature of the arrangements with the Company’s deposit customers, the Company does not expect the recognition and measurement outcomes of deposit-related fees to be significantly different under the new guidance compared to current GAAP.

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 does not expect this ASU to have a material impact on the Company’s consolidated financial statements when adopted on January 1, 2018.

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. The most far-reaching ramification of this ASU is the elimination of the available-for-sale classification for equity securities and the requirement to carry most equity securities at fair value through net income. 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 does not have any equity securities in its available-for-sale portfolio, but only investments in the common stock of Pacific Coast Banker’s Bank (“PCBB”), Texas Independent Bank (“TIB”) and Federal Home Loan Bank (“FHLB”), the Company’s correspondent banks. Under the current accounting policy, the Company’s investments in these common stocks are carried at cost because a readily determinable fair value does not exist for these investments. Under ASU 2016-01, investment in FHLB is specifically excluded from the requirement that equity securities are to be measured at fair value with unrealized holding gains and losses reflected in net income. Furthermore, the ASU allows entities to make an irrevocable practicality exception whereby entities can make an election, on a security-by-security basis, to account for equity securities that do not have readily determinable fair value at cost, with adjustments to fair value when an observable price change occurs or impairment is identified. As such, the Company intends to continue to measure its investments in PCBB, TIB and the FHLB common stock at cost upon adoption on January 1, 2018. The Company does not expect this ASU to have a material impact on the Company’s consolidated financial statements when adopted.

In February 2016, the FASB issued ASU 2016-02, Leases. 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. Furthermore, 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.

As of June 30, 2017, the Company has 10 operating leases for 10 locations under contract with a term greater than 12 months with future lease payments totaling $15 million. At adoption date, January 1, 2019, the Company will recognize a lease liability for the present value of future lease commitments and a right of use asset. The recognized right of use asset relating to operating leases will consist of the present value of future lease commitments, unamortized initial direct costs, prepaid rent, and the related unamortized balance of lease incentives.    The discount rate used to present value future lease payments will be the Company’s incremental borrowing rate at the time of adoption. The Company will take a modified retrospective transition approach with application in all comparative periods presented. The Company does not expect this ASU to have a material impact on the Company’s consolidated financial statements when adopted.

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. Upon adoption, the Company expects the level of ECL will likely be higher, however, the Company is still in the early stages of developing an implementation plan and evaluating the magnitude of the increase and 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 does not expect the adoption of this ASU to have a material effect on its consolidated financial statements.

In November 2016, the FASB issued ASU 2016-18, Statement of Cash flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues Task Force). The new standard requires that the statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Entities will also be required to reconcile such total to amounts on the balance sheet and disclose the nature of the restrictions. ASU 2016-18 is effective for public business entities for financial statements issued 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 does not expect the adoption of this ASU to have a material effect on its consolidated financial statements.

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of Business, which provides guidance on evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The new standard clarifies that when substantially all of the fair value of gross assets acquired is concentrated in a single asset, or a group of similar assets, the asset acquired would not represent a business. The new ASU introduces this initial required screen, if met, eliminates the need for further assessment. For public business entities with a calendar year end, the standard is effective in 2018. Early adoption is permitted, including adoption in an interim period. The amendments can be applied to transactions occurring before the guidance was issued, as long as the applicable financial statements have not been issued. The Company does not expect the adoption of this ASU to have a material effect on its consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles–Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which simplifies the accounting for goodwill impairment. ASU 2017-04 eliminates step two from the goodwill impairment test, which measures the amount of impairment loss, if any. Instead, an entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. The loss recognized should not exceed the total amount of goodwill allocated to such reporting unit. For public business entities with a calendar year end, the standard is effective for annual and any interim impairment tests for periods beginning after December 15, 2019. The Company does not expect the adoption of this ASU to have a material effect on its consolidated financial statements.

In March 2017, the FASB issued ASU 2017-08, Receivables–Nonrefundable Fees and Other Costs (Topic 310): Premium Amortization on Purchased Callable Debt Securities, which shortens the period of amortization of the premium on certain callable debt securities to the earliest call date. ASU 2017-08 applies to securities that have explicit, non-contingent call features that are callable at fixed prices and on preset dates. Securities purchased at a discount and mortgage-backed securities in which early repayment is based on prepayment of the underlying assets of the security are outside the scope of ASU 2017-08. For public business entities, the standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted, including adoption in an interim period, and applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company does not expect the adoption of this ASU to have a material effect on its consolidated financial statements.

In May 2017, the FASB issued ASU 2017-09, Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting, which provides clarity and reduces both diversity in practice, and costs and complexity when applying the guidance in Topic 718 to a change to the terms or conditions of a share-based payment award. Under ASU 2017-09, an entity should account for the effects of a modification unless all the following are met: (1) the fair value of the modified award is the same as the fair value of the original award immediately before the original award is modified, (2) the vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified and (3) the classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The amendments in this ASU are effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted. The amendments in this ASU should be applied prospectively to an award modified on or after the adoption date. The Company does not expect the adoption of this ASU to have a material effect on its consolidated financial statements.

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Computation of Book Value and Tangible Book Value per Common Share

6 Months Ended

Jun. 30, 2017

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):

	June 30, 2017		December 31, 2016
Total Shareholders’ Equity	$	357,576	$	338,185
Less: Preferred stock		16,818		16,955
Less: Goodwill		64,603		64,603
Less: Core deposit and leasehold right intangibles, net		5,641		6,300
Tangible common equity	$	270,514	$	250,327
Common shares issued and outstanding		17,831,131		17,759,006
Book value per common share	$	19.11	$	18.09
Tangible book value per common share	$	15.17	$	14.10

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Computation of Earnings per Common Share

6 Months Ended

Jun. 30, 2017

Earnings Per Share [Abstract]

Computation of Earnings per Common Share

Note 4 - Computation of Earnings per Common Share

In calculating potential common shares used to determine diluted earnings per share, U.S. GAAP requires that assumed proceeds under the treasury stock method to exclude the amount of excess tax benefits that would have been recognized in additional paid-in capital.

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 June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Net Income	$	9,309	$	7,120	$	17,092	$	13,704
Less: Preferred stock dividends and discount accretion		300		307		601		610
Net Income available to common shareholders	$	9,009	$	6,813	$	16,491	$	13,094
Weighted average basic common shares outstanding		17,583,888		17,210,433		17,557,996		17,125,930
Dilutive effect of potential common share issuances from stock options and restricted stock		187,349		295,744		205,850		335,739
Weighted average diluted common shares outstanding		17,771,237		17,506,177		17,763,846		17,461,669
Income per common share
Basic	$	0.51	$	0.40	$	0.94	$	0.77
Diluted	$	0.51	$	0.39	$	0.93	$	0.75
Anti-dilutive shares not included in the calculation of diluted earnings per share		—		—		2,075		1,500

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Investment Securities

6 Months Ended

Jun. 30, 2017

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
June 30, 2017	Amortized Cost		Gains		Losses		Fair Market Value
Available-for-sale investment securities:
U.S. Govt Agency and Sponsored Agency - Note Securities	$	10,000	$	—	$	42	$	9,958
U.S. Govt Agency - SBA Securities		117,224		372		214		117,382
U.S. Govt Agency - GNMA Mortgage-Backed Securities		19,949		62		229		19,782
U.S. Govt Sponsored Agency - CMO & Mortgage-Backed Securities		250,522		321		2,530		248,313
Asset Backed Securities		6,696		4		108		6,592
U.S. Treasury Notes		52,077		—		152		51,925
Total available-for-sale		456,468		759		3,275		453,952
Held-to-maturity investment securities:
Municipal Securities		39,992		509		1		40,500
Total held-to-maturity		39,992		509		1		40,500
Total investment securities	$	496,460	$	1,268	$	3,276	$	494,452

			Gross Unrealized
December 31, 2016	Amortized Cost		Gains		Losses		Fair Market Value
Available-for-sale investment securities:
U.S. Govt Agency and Sponsored Agency - Note Securities	$	10,000	$	—	$	31	$	9,969
U.S. Govt Agency - SBA Securities		123,224		365		739		122,850
U.S. Govt Agency - GNMA Mortgage-Backed Securities		22,565		70		265		22,370
U.S. Govt Sponsored Agency - CMO & Mortgage-Backed Securities		243,159		92		4,351		238,900
Asset Backed Securities		7,111		—		215		6,896
U.S. Treasury Notes		69,101		7		143		68,965
Total available-for-sale		475,160		534		5,744		469,950
Held-to-maturity investment securities:
Municipal Securities		42,027		69		159		41,937
Total held-to-maturity		42,027		69		159		41,937
Total investment securities	$	517,187	$	603	$	5,903	$	511,887

The Company’s investment securities portfolio at June 30, 2017 consists of A-rated or above investment-grade securities. At June 30, 2017 and December 31, 2016, securities with a market value of $208 million and $205 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
June 30, 2017	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
Available-for-sale investment securities:
U.S. Govt Agency and Sponsored Agency – Note Securities	$	9,958	$	41	$	—	$	—	$	9,958	$	41
U.S. Govt. Agency SBA Securities		28,878		96		26,427		119		55,305		215
U.S. Govt. Agency – GNMA Mortgage-Backed Securities		7,822		66		8,128		163		15,950		229
U.S. Govt. Sponsored Agency – CMO & Mortgage-Backed Securities		183,262		2,390		14,571		140		197,833		2,530
Asset Backed Securities		—		—		4,817		108		4,817		108
U.S Treasury Notes		51,925		152		—		—		51,925		152
Total available-for-sale	$	281,845	$	2,745	$	53,943	$	530	$	335,788	$	3,275
Held-to-maturity investment securities:
Municipal Securities	$	2,136	$	1	$	—	$	—	$	2,136	$	1
Total held-to-maturity	$	2,136	$	1	$	—	$	—	$	2,136	$	1

	< 12 Continuous Months				> 12 Continuous Months				Total
December 31, 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 and Sponsored Agency – Note Securities	$	9,969	$	31	$	—	$	—	$	9,969	$	31
U.S. Govt Agency – SBA Securities		54,302	$	451		39,322		288		93,624		739
U.S. Govt Agency – GNMA Mortgage-Backed Securities		6,652		98		8,264		167		14,916		265
U.S. Govt Sponsored Agency – CMO & Mortgage-Backed Securities		215,138		4,172		10,879		179		226,017		4,351
Asset Backed Securities		—		—		6,896		215		6,896		215
U.S. Treasury Notes		51,972		143		—		—		51,972		143
Total available-for-sale	$	338,033	$	4,895	$	65,361	$	849	$	403,394	$	5,744
Held-to-maturity investment securities:
Municipal Securities	$	28,673	$	158	$	310	$	1	$	28,983	$	159
Total held-to-maturity	$	28,673	$	158	$	310	$	1	$	28,983	$	159

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 June 30, 2017 or December 31, 2016, 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 June 30, 2017, 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 – the earlier of maturity date or expected call 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 average life

• Municipal Securities – maturity 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.

	June 30, 2017
Maturities Schedule of Securities (Dollars in thousands)	Amortized Cost		Fair Value		Weighted Average Yield
Available-for-sale investment securities:
Due through one year	$	37,728	$	37,698		0.77	%
Due after one year through five years		359,613		357,732		1.85	%
Due after five years through ten years		59,127		58,522		2.32	%
Due after ten years		—		—		—	%
Total available-for-sale	$	456,468	$	453,952		1.82	%
Held-to-maturity investment securities:
Due through one year	$	1,616	$	1,617		0.82	%
Due after one year through five years		34,990		35,389		1.64	%
Due after five years through ten years		1,916		1,957		1.89	%
Due after ten years		1,470		1,537		3.36	%
Total held-to-maturity	$	39,992	$	40,500		1.68	%
Total investment securities	$	496,460	$	494,452		1.81	%

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 $11.9 million at June 30, 2017 and $9.1 million at December 31, 2016. 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.

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Loans

6 Months Ended

Jun. 30, 2017

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):

	June 30, 2017
	Principal		Net Unaccreted Discounts, Net Deferred Fees			Total
Commercial and Industrial Loans:	$	497,854	$	(2,222	)	$	495,632
Loans Secured by Real Estate:
Owner-Occupied Nonresidential Properties		451,153		(3,371	)		447,782
Other Nonresidential Properties		715,878		(5,424	)		710,454
Construction, Land Development and Other Land		206,877		(1,032	)		205,845
1-4 Family Residential Properties		124,088		(1,532	)		122,556
Multifamily Residential Properties		125,889		(496	)		125,393
Total Loans Secured by Real Estate		1,623,885		(11,855	)		1,612,030
Other Loans:		44,104		(173	)		43,931
Total Loans	$	2,165,843	$	(14,250	)	$	2,151,593

	December 31, 2016
	Principal		Net Unaccreted Discounts, Net Deferred Fees			Total
Commercial and Industrial Loans:	$	505,374	$	(2,737	)	$	502,637
Loans Secured by Real Estate:
Owner-Occupied Nonresidential Properties		455,120		(3,798	)		451,322
Other Nonresidential Properties		635,856		(5,693	)		630,163
Construction, Land Development and Other Land		195,215		(1,156	)		194,059
1-4 Family Residential Properties		129,261		(2,097	)		127,164
Multifamily Residential Properties		110,336		(478	)		109,858
Total Loans Secured by Real Estate		1,525,788		(13,222	)		1,512,566
Other Loans:		35,246		(223	)		35,023
Total Loans	$	2,066,408	$	(16,182	)	$	2,050,226

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 $6 million is guaranteed. The total portfolio of the SBA contractual loan balances serviced by the Company at June 30, 2017 was $108 million, of which $77 million has been sold.

At June 30, 2017, there were no loans classified as held for sale. At June 30, 2017, the balance of SBA 7a loans originated during 2017 is $893 thousand, of which $671 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 June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Allowance for loan loss at beginning of period	$	19,605		$	16,545		$	19,374		$	15,682
Provision for loan losses		701			1,063			701			1,685
Net (charge-offs) recoveries:
Charge-offs		(2	)		(20	)		(2	)		(20	)
Recoveries		22			888			253			1,129
Net recoveries		20			868			251			1,109
Allowance for loan loss at end of period	$	20,326		$	18,476		$	20,326		$	18,476
Net (charge-offs) recoveries to average loans		0.00	%		0.05	%		0.01	%		0.06	%

	June 30, 2017			December 31, 2016
Allowance for loan loss to total loans		0.94	%		0.94	%

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):

Three Months Ended June 30, 2017	Commercial and Industrial			Construction, Land Development and Other Land		Commercial and Other Real Estate			Other		Total
Allowance for loan loss – Beginning balance	$	6,862		$	3,147	$	9,228		$	368	$	19,605
Provision for loan losses		522			86		(71	)		164		701
Net (charge-offs) recoveries:
Charge-offs		(2	)		—		—			—		(2	)
Recoveries		6			—		16			—		22
Net recoveries		4			—		16			—		20
Ending balance	$	7,388		$	3,233	$	9,173		$	532	$	20,326

Three Months Ended June 30, 2016	Commercial and Industrial			Construction, Land Development and Other Land		Commercial and Other Real Estate		Other		Total
Allowance for loan loss – Beginning balance	$	6,725		$	2,711	$	6,374	$	735	$	16,545
Provision for loan losses		789			13		192		69		1,063
Net (charge-offs) recoveries:
Charge-offs		(20	)		—		—		—		(20	)
Recoveries		887			—		1		—		888
Net recoveries		867			—		1		—		868
Ending balance	$	8,381		$	2,724	$	6,567	$	804	$	18,476

Six Months Ended June 30, 2017	Commercial and Industrial			Construction, Land Development and Other Land		Commercial and Other Real Estate		Other			Total
Allowance for loan loss – Beginning balance	$	7,130		$	3,084	$	8,487	$	673		$	19,374
Provision for loan losses		25			149		668		(141	)		701
Net (charge-offs) recoveries:
Charge-offs		(2	)		—		—		—			(2	)
Recoveries		235			—		18		—			253
Net recoveries		233			—		18		—			251
Ending balance	$	7,388		$	3,233	$	9,173	$	532		$	20,326

Six Months Ended June 30, 2016	Commercial and Industrial			Construction, Land Development and Other Land		Commercial and Other Real Estate			Other			Total
Allowance for loan loss – Beginning balance	$	5,924		$	2,076	$	6,821		$	861		$	15,682
Provision for loan losses		1,350			648		(256	)		(57	)		1,685
Net (charge-offs) recoveries:
Charge-offs		(20	)		—		—			—			(20	)
Recoveries		1,127			—		2			—			1,129
Net recoveries		1,107			—		2			—			1,109
Ending balance	$	8,381		$	2,724	$	6,567		$	804		$	18,476

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
June 30, 2017
Allowance for loan loss:
Individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—
Collectively evaluated for impairment		7,388		3,233		9,173		532		20,326
Purchased credit impaired (loans acquired with deteriorated credit quality)		—		—		—		—		—
Total Allowance for Loan Loss	$	7,388	$	3,233	$	9,173	$	532	$	20,326
Loans receivable:
Individually evaluated for impairment	$	231	$	—	$	231	$	—	$	462
Collectively evaluated for impairment		495,136		205,845		1,404,717		43,931		2,149,629
Purchased credit impaired (loans acquired with deteriorated credit quality)		265		—		1,237		—		1,502
Total Loans Receivable	$	495,632	$	205,845	$	1,406,185	$	43,931	$	2,151,593

	Commercial and Industrial		Construction, Land Development and Other Land		Commercial and Other Real Estate		Other		Total
December 31, 2016
Allowance for loan loss:
Individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—
Collectively evaluated for impairment		7,130		3,084		8,487		673		19,374
Purchased credit impaired (loans acquired with deteriorated credit quality)		—		—		—		—		—
Total Allowance for Loan Loss	$	7,130	$	3,084	$	8,487	$	673	$	19,374
Loans receivable:
Individually evaluated for impairment	$	378	$	—	$	245	$	—	$	623
Collectively evaluated for impairment		501,960		194,059		1,316,849		35,023		2,047,891
Purchased credit impaired (loans acquired with deteriorated credit quality)		299		—		1,413		—		1,712
Total Loans Receivable	$	502,637	$	194,059	$	1,318,507	$	35,023	$	2,050,226

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
June 30, 2017
Pass	$	450,109	$	205,845	$	1,384,154	$	43,808	$	2,083,916
Special Mention		14,784		—		5,588		34		20,406
Substandard		30,739		—		16,443		89		47,271
Doubtful		—		—		—		—		—
Total	$	495,632	$	205,845	$	1,406,185	$	43,931	$	2,151,593

	Commercial and Industrial		Construction, Land Development and Other Land		Commercial and Other Real Estate		Other		Total
December 31, 2016
Pass	$	456,885	$	194,059	$	1,288,154	$	32,128	$	1,971,226
Special Mention		12,774		—		7,557		—		20,331
Substandard		32,978		—		22,796		2,895		58,669
Doubtful		—		—		—		—		—
Total	$	502,637	$	194,059	$	1,318,507	$	35,023	$	2,050,226

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
June 30, 2017
Commercial and Industrial	$	259	$	—	$	—	$	259	$	495	$	494,878	$	495,632
Construction, Land Development and Other Land		—		—		—		—		—		205,845		205,845
Commercial and Other Real Estate		443		—		—		443		231		1,405,511		1,406,185
Other		—		—		—		—		—		43,931		43,931
Total	$	702	$	—	$	—	$	702	$	726	$	2,150,165	$	2,151,593

	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, 2016
Commercial and Industrial	$	—	$	—	$	—	$	—	$	675	$	501,962	$	502,637
Construction, Land Development and Other Land		—		—		—		—		—		194,059		194,059
Commercial and Other Real Estate		212		—		—		212		447		1,317,848		1,318,507
Other		—		—		—		—		—		35,023		35,023
Total	$	212	$	—	$	—	$	212	$	1,122	$	2,048,892	$	2,050,226

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.

A valuation allowance is established for an impaired loan when the fair value of the loan is less than the recorded investment. In certain cases, portions of impaired loans are charged-off to 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 June 30, 2017 and December 31, 2016.

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 $1.5 million and $1.7 million at June 30, 2017 and December 31, 2016, respectively.

	June 30, 2017						December 31, 2016
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
With no specific allowance recorded:
Commercial and Industrial	$	231	$	632	$	—	$	378	$	1,383	$	—
Commercial and Other Real Estate		231		272		—		245		282		—
With an allowance recorded:
Commercial and Industrial		—		—		—		—		—		—
Commercial and Other Real Estate		—		—		—		—		—		—
Total
Commercial and Industrial		231		632		—		378		1,383		—
Commercial and Other Real Estate		231		272		—		245		282		—
Total	$	462	$	904	$	—	$	623	$	1,665	$	—

	Three Months Ended June 30,								Six Months Ended June 30,
	2017				2016				2017				2016
	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	$	237	$	3	$	545	$	—	$	241	$	3	$	400	$	—
Commercial and Other Real Estate		235		—		256		—		238		—		461		—
With a specific allowance recorded:
Commercial and Industrial		—		—		316		—		—		—		158		—
Commercial and Other Real Estate		—		—		—		—		—		—		—		—
Total:
Commercial and Industrial		237		3		861		—		241		3		558		—
Commercial and Other Real Estate		235		—		256		—		238		—		461		—
Total	$	472	$	3	$	1,117	$	—	$	479	$	3	$	1,019	$	—

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Interest foregone on impaired loans	$	13	$	22	$	26	$	46
Cash collections applied to reduce principal balance	$	24	$	28	$	45	$	52
Interest income recognized on cash collections	$	3	$	—	$	3	$	—

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 June 30, 2017 and December 31, 2016 (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 June 30, 2017, there were two PCI loans that are considered to be TDR loans with a recorded investment of $84 thousand and unpaid principal balances of $244 thousand.

	As of and for the Three Months Ended June 30, 2017						As of and for the Six Months Ended June 30, 2017
	Recorded Investment		Unpaid Principal Balance		Interest Income Recognized		Recorded Investment		Unpaid Principal Balance		Interest Income Recognized
Commercial and Industrial	$	302	$	518	$	—	$	302	$	518	$	—
Total	$	302	$	518	$	—	$	302	$	518	$	—

	As of and for the Three Months Ended June 30, 2016						As of and for the Six Months Ended June 30, 2016
	Recorded Investment		Unpaid Principal Balance		Interest Income Recognized		Recorded Investment		Unpaid Principal Balance		Interest Income Recognized
Commercial and Industrial	$	377	$	591	$	—	$	377	$	591	$	—
Total	$	377	$	591	$	—	$	377	$	591	$	—
							As of and for the Twelve Months Ended December 31, 2016
							Recorded Investment		Unpaid Principal Balance		Interest Income Recognized
Commercial and Industrial							$	408	$	1,174	$	—
Total							$	408	$	1,174	$	—

There were no loans modified or restructured during the three or six months ended June 30, 2017 or June 30, 2016. There was one commercial and industrial loan that was restructured during the twelve months ended December 31, 2016 with a pre-modification recorded investment of $650 thousand and a post-modification recorded investment of $184 thousand.

There have been no payment defaults in the three or six months ended June 30, 2017 or June 30, 2016 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 June 30, 2017 or December 31, 2016.

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 June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Balance, beginning of period	$	8,496		$	13,470		$	9,611		$	14,610
Accretion, included in interest income		(637	)		(1,517	)		(1,752	)		(2,650	)
Reclassifications to non-accretable yield		—			(25	)		—			(32	)
Balance, end of period	$	7,859		$	11,928		$	7,859		$	11,928

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):

	June 30, 2017				December 31, 2016
	Unpaid Principal Balance		Carrying Value		Unpaid Principal Balance		Carrying Value
Commercial and Industrial	$	579	$	265	$	622	$	299
Commercial and Other Real Estate		1,587		1,237		1,997		1,413
Total	$	2,166	$	1,502	$	2,619	$	1,712

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

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Balance, beginning of period	$	138		$	226		$	161		$	246
Accretion, included in interest income		(23	)		(21	)		(46	)		(41	)
Reclassifications from non-accretable yield		—			—			—			—
Balance, end of period	$	115		$	205		$	115		$	205

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Qualified Affordable Housing Project Investments

6 Months Ended

Jun. 30, 2017

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 $6.0 million at June 30, 2017 and $6.2 million at December 31, 2016. The funding liability for the LIHTC at June 30, 2017 and December 31, 2016 was $3.3 and $3.4 million, respectively. The amount of tax credits and other tax benefits recognized was $205 thousand and $345 thousand for the three and six months ended June 30, 2017 and $143 thousand and $287 thousand for the three and six months ended June 30, 2016, respectively. Further, the amount of amortization expense included in the provision for income taxes was $163 thousand and $273 thousand for the three and six months ended June 30, 2017 and $112 thousand and $224 thousand for the three and six months ended June 30, 2016, respectively.

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Borrowings and Subordinated Debentures

6 Months Ended

Jun. 30, 2017

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 $42 million and $48 million were pledged to secure the Repos at June 30, 2017 and December 31, 2016, 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):

	June 30, 2017
Date Issued	Amount		Interest Rate		Original Term		Maturity Date
June 30, 2017	$	12,180		0.20% – 0.25%		3 days		July 3, 2017
Total	$	12,180		0.24%
	December 31, 2016
Date Issued	Amount		Interest Rate		Original Term		Maturity Date
December 31, 2016	$	18,816		0.20% – 0.25%		4 days		January 4, 2017
Total	$	18,816		0.25%

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 $786 million, which represents approximately 25% of the Bank’s total assets, as reported by the Bank in its March 31, 2016 Federal Financial Institution Examination Council (“FFIEC”) Call Report.

As of June 30, 2017, the Company had $1 billion of loan collateral pledged with the FHLB which provides $720 million in borrowing capacity. The Company also has $14 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 June 30, 2017 or December 31, 2016.

Subordinated Debentures

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

June 30, 2017

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%

3.29

%

09/15/17

Trust II

3,093

12/23/05

03/15/36

3 month LIBOR + 1.75%

2.99

%

09/15/17

Trust III

3,093

06/30/06

09/18/36

3 month LIBOR + 1.85%

3.09

%

09/15/17

Subtotal

12,372

Unamortized fair value adjustment

(2,436

)

Net

$

9,936

December 31, 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%

3.01

%

03/15/17

Trust II

3,093

12/23/05

03/15/36

3 month LIBOR + 1.75%

2.71

%

03/15/17

Trust III

3,093

06/30/06

09/18/36

3 month LIBOR + 1.85%

2.81

%

03/15/17

Subtotal

12,372

Unamortized fair value adjustment

(2,516

)

Net

$

9,856

The Company had an aggregate outstanding contractual balance of $12.4 million in subordinated debentures at June 30, 2017. 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 June 2017 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.

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

6 Months Ended

Jun. 30, 2017

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 June 30, 2017, the Company has eleven interest rate swap agreements with customers and eleven 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 both June 30, 2017 and December 31, 2016, the total notional amount of the Company’s swaps with the counterparty bank was $24 million. The outstanding swaps have remaining maturities of up to 7 years as of June 30, 2017.

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):

	Asset Derivatives
	June 30, 2017		December 31, 2016
Interest rate swap contracts fair value	$	441	$	523
Balance sheet location		Accrued Interest Receivable and Other Assets		Accrued Interest Receivable and Other Assets
	Liability Derivatives
	June 30, 2017		December 31, 2016
Interest rate swap contracts fair value	$	441	$	523
Balance sheet location		Accrued Interest Payable and Other Liabilities		Accrued Interest Payable and Other Liabilities

Derivative Financial Instruments Acquired from PC Bancorp

At June 30, 2017, the Company also has nine 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):

	Liability Derivatives
	June 30, 2017		December 31, 2016
Fair Value Hedges
Total interest rate contracts notional amount	$	7,721	$	17,642
Derivatives not designated as hedging instruments:
Interest rate swap contracts fair value	$	—	$	95
Derivatives designated as hedging instruments:
Interest rate swap contracts fair value		406		589
Total interest rate contracts fair value	$	406	$	684
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 June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Derivatives not designated as hedging instruments:
Interest rate swap contracts – loans
Increase in fair value of interest rate swap contracts	$	40		$	52		$	95		$	91
Payments on interest rate swap contracts on loans		(39	)		(60	)		(92	)		(122	)
Net increase (decrease) in other non-interest income	$	1		$	(8	)	$	3		$	(31	)
Derivatives designated as hedging instruments:
Interest rate swap contracts – loans
Increase in fair value of interest rate swap contracts	$	62		$	139		$	183		$	162
Increase in fair value of hedged loans		48			71			36			284
Payment on interest rate swap contracts on loans		(91	)		(224	)		(205	)		(454	)
Net increase (decrease) in interest income on loans	$	19		$	(14	)	$	14		$	(8	)

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 June 30, 2017, the Company has pledged $602 thousand in investment securities and $2.7 million in certificates of deposit, for a total of $3.3 million, as collateral under the swap agreements.

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Balance Sheet Offsetting

6 Months Ended

Jun. 30, 2017

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
June 30, 2017
Financial Assets:
Interest rate swap contracts fair value (See Note 9 – Derivative Financial Instruments)	$	441	$	—	$	441	$	441	$	—	$	—
Total	$	441	$	—	$	441	$	441	$	—	$	—
Financial Liabilities:
Interest rate swap contracts fair value (See Note 9 – Derivative Financial Instruments)	$	847	$	—	$	847	$	847	$	3,336	$	2,489
Securities sold under agreements to repurchase (See Note 8 – Borrowings and Subordinated Debentures)		12,180		—		12,180		12,180		41,727		29,547
Total	$	13,027	$	—	$	13,027	$	13,027	$	45,063	$	32,036

	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, 2016
Financial Assets:
Interest rate swap contracts fair value (See Note 9 – Derivative Financial Instruments)	$	523	$	—	$	523	$	523	$	—	$	—
Total	$	523	$	—	$	523	$	523	$	—	$	—
Financial Liabilities:
Interest rate swap contracts fair value (See Note 9 – Derivative Financial Instruments)	$	1,207	$	—	$	1,207	$	1,207	$	4,555	$	3,348
Securities sold under agreements to repurchase (See Note 8 – Borrowings and Subordinated Debentures)		18,816		—		18,816		18,816		48,204		29,388
Total	$	20,023	$	—	$	20,023	$	20,023	$	52,759	$	32,736

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Stock Options and Restricted Stock

6 Months Ended

Jun. 30, 2017

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 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. 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.

At June 30, 2017 future compensation expense related to unvested restricted stock grants are reflected in the table below (dollars in thousands):

Future Restricted Stock Expense
Remainder of 2017	$	1,577
2018		1,584
2019		534
2020		169
Thereafter		21
Total	$	3,885

At June 30, 2017, the weighted-average period over which the total compensation cost related to unvested restricted stock grants not yet recognized is 2.62 years.

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, 2016		47,697		$	12.69		1.43	$	1,102
Granted		—
Exercised		(27,942	)
Forfeited		—
Expired		—
Outstanding stock options at June 30, 2017		19,755		$	8.67		1.88	$	19,755
Exercisable options at June 30, 2017		19,755		$	8.67		1.88	$	19,755
Unvested options at June 30, 2017		—

The total intrinsic value of options exercised during the three months ended June 30, 2017 and 2016 was zero and $2.7 million, and during the six months ended June 30, 2017 and 2016 was $642 thousand and $5.6 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, 2016		282,082		$	21.98
Granted		65,615			38.04
Vested		(35,082	)		20.98
Forfeited		(6,934	)		22.66
Unvested at June 30, 2017		305,681		$	25.84

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 meet certain conditions as stipulated in the RSU agreement and are not included in the Company’s shares issued and outstanding as of June 30, 2017. 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

6 Months Ended

Jun. 30, 2017

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 2017, the Company issued 27,942 shares of stock from the exercise of stock options for a total value of $435 thousand. The Company also issued 65,615 shares of restricted stock to the Company’s directors and employees, 6,934 shares of unvested restricted stock were forfeited related to employee turnover and 14,498 shares that had a value of $569 thousand were repurchased 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 accretion/amortization on the net discount as of June 30, 2017 is $900 thousand. The net carrying value of the CU Bancorp Preferred Stock is $17 million ($16 million plus of $0.5 million net premium) as of June 30, 2017.

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 June 30,						Consolidated Statement of Income Line Item for Reclassified Items
	2017			2016
Beginning balance, net of tax	$	(2,854	)	$	(47	)
Net unrealized gain arising during the period		2,409			1,423
Related tax effect		(1,013	)		(598	)
Reclassification of gain on investment securities available-for-sale to net income		—			—		Gain on sale of securities, net
Related tax effect		—			—		Provision for income tax expense
Other Comprehensive Income		1,396			825
Ending balance	$	(1,458	)	$	778

	Six Months Ended June 30,						Consolidated Statement of Income Line Item for Reclassified Items
	2017			2016
Beginning balance, net of tax	$	(3,019	)	$	(816	)
Net unrealized gain arising during the period		2,835			2,751
Related tax effect		(1,192	)		(1,157	)
Reclassification of gain 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		1,561			1,594
Ending balance	$	(1,458	)	$	778

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2017

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 June 30, 2017, there were no legal proceedings in the ordinary course of business 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.

However, two shareholder class action lawsuits have been filed against the Company in connection with the pending merger with PacWest. The first action, Parshall v. CU Bancorp et al., was filed on June 9, 2017 and the second action, Klein v. CU Bancorp et al., was filed on June 12, 2017. Both complaints allege that the members of the CU Bancorp board of directors violated Sections 14(a) and 20(a) of the Securities Exchange Act of 1934, based upon alleged omissions and misrepresentations in the initial S-4 registration statement filed by PacWest with the SEC on May 26, 2017, by approving the proposed merger for inadequate consideration and by entering into the merger agreement containing preclusive deal protection devices. The plaintiffs in both of these actions seek injunctive relief prohibiting consummation of the merger, rescission and damages in the event the merger is consummated, an accounting of damages suffered by the plaintiff and the putative class, attorneys’ fees and costs and other and further relief. The Company is unable to state whether the likelihood of an unfavorable outcome of the lawsuits is probable or remote. The Company is also unable to provide an estimate of the range or amount of potential loss if the outcome should be unfavorable.

Financial Instruments with Off Balance Sheet Risk

Financial instruments with off balance sheet risk include commitments to extend credit of $936 million and $1 billion at June 30, 2017 and December 31, 2016, respectively. Included in the aforementioned commitments were standby letters of credit outstanding of $73 million and $85 million at June 30, 2017 and December 31, 2016, respectively. The Company also has a reserve for estimated losses on unfunded loan commitments of $886 thousand at June 30, 2017 and December 31, 2016. These balances are included in other liabilities on the consolidated balance sheets.

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Fair Value Information

6 Months Ended

Jun. 30, 2017

Fair Value Disclosures [Abstract]

Fair Value Information

Note 14 - Fair Value Information

Fair Value Hierarchy

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. 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.

Securities available-for-sale and interest rate swaps are recorded at fair value on a recurring basis. Additionally, certain assets 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, such as other real estate owned, SBA servicing asset and impaired loans that are collateral dependent.

The estimated fair value amounts have been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is required to develop the estimates of fair value. Accordingly, the estimates presented below are not necessarily indicative of the amounts the Company could have realized in a current market exchange as of June 30, 2017. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

Recurring Fair Value Measurements

The valuation methodologies for estimating the fair value of financial assets and financial liabilities measured and reported at fair value on a recurring basis are discussed below.

Investment Securities Available-for-Sale: The fair value of investment securities available-for-sale are primarily based on price indications provided by nationally recognized, independent pricing sources utilized by the Company’s bond accounting system provider. The fair value of investment securities may be determined by obtaining quoted prices for identical assets in active markets at measurement date (Level 1 financial assets). The Company’s investments in U.S. Treasury Notes are Level 1 financial assets. For the Company’s investments in U.S. Agency and U.S. Sponsored Agency issued debt securities (callable and non-callable notes), mortgage backed securities guaranteed by those agencies, collateralized mortgage obligations issued by those agencies and corporate bond securities, the fair value may be determined by obtaining quoted market prices for similar assets in active markets at measurement date (Level 2 financial assets), or if quoted market prices are not available, the pricing sources may determine fair value by matrix pricing. Matrix pricing 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). The pricing sources may also determine the fair value of certain debt securities by using an option adjusted spread model with observable inputs such as the treasury yield curve and other interest rate assumptions. Other observable inputs utilized in these alternative valuation techniques or models when quoted prices are not available include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, benchmark securities, bids, offers and reference data. In cases where significant credit valuation adjustments are incorporated into the estimation of fair value, reported amounts are classified as Level 3 financial assets.

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.

The following table presents 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 – June 30, 2017
Investment securities available-for-sale:
U.S. Govt Agency and Sponsored Agency – Note Securities	$	9,958	$	—	$	9,958		—
U.S. Govt Agency – SBA Securities		117,382		—		117,382		—
U.S. Govt Agency – GNMA Mortgage-Backed Securities		19,782		—		19,782		—
U.S. Govt Sponsored Agency – CMO & Mortgage-Backed Securities		248,313		—		248,313		—
Asset Backed Securities		6,592		—		6,592		—
U.S. Treasury Notes		51,925		51,925		—		—
Interest Rate Swap Contracts		441		—		441		—
	$	454,393	$	51,925	$	402,468	$	—
Financial Liabilities – June 30, 2017
Interest Rate Swap Contracts	$	847	$	—	$	847	$	—
Financial Assets – December 31, 2016
Investment securities available-for-sale:
U.S. Govt Agency and Sponsored Agency – Note Securities	$	9,969	$	—	$	9,969		—
U.S. Govt Agency – SBA Securities		122,850		—		122,850		—
U.S. Govt Agency – GNMA Mortgage-Backed Securities		22,370		—		22,370		—
U.S. Govt Sponsored Agency – CMO & Mortgage-Backed Securities		238,900		—		238,900		—
Asset Backed Securities		6,896		—		6,896		—
U.S. Treasury Notes		68,965		68,965		—		—
Interest Rate Swap Contracts		523		—		523		—
	$	470,473	$	68,965	$	401,508	$	—
Financial Liabilities – December 31, 2016
Interest Rate Swap Contracts	$	1,207	$	—	$	1,207	$	—

At June 30, 2017 and December 31, 2016, 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). Furthermore, 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 periods ended June 30, 2017 or December 31, 2016.

Nonrecurring Fair Value Measurements

The valuation methodologies for estimating the fair value of certain assets measured and reported at fair value on a nonrecurring basis are discussed below.

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: The SBA servicing asset is amortized over the estimated life of the loans based on an effective yield approach. In addition, the Company’s servicing asset is evaluated regularly for impairment by discounting the estimated future cash flows using market-based discount rates and prepayment speeds. 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 determined based on the historical prepayments of the Company’s SBA loans. The prepayment speeds determine the timing of the cash flows. 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. 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.

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 discounted cash flows for non-collateral dependent loans. Collateral on collateral dependent loans may be real estate and/or business assets including equipment, inventory and/or accounts receivable and is determined based on appraisals performed by qualified licensed appraisers hired by the Company. Appraised and reported values may be discounted based on management’s historical knowledge, changes in market conditions from the time of valuation, and/or management’s expertise and knowledge of the client and client’s business. Such discounts are typically significant and unobservable. For unsecured loans, the estimated future discounted cash flows of the business or borrower, are used in evaluating the fair value. Impaired loans are reviewed and evaluated on at least a quarterly basis for additional impairment and adjusted accordingly, based on the same factors identified above. 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.

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

	Net Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets – June 30, 2017
SBA Servicing Asset	$	901	$	—	$	—	$	901
Total	$	901	$	—	$	—	$	901

	Net Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets – December 31, 2016
Collateral dependent impaired loans with specific valuation allowance and/or partial charge-offs (non-purchased credit impaired loans)	$	73	$	—	$	—	$	73
SBA Servicing Asset		940		—		—		940
Total	$	1,013	$	—	$	—	$	1,013

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 for the periods ended June 30, 2017 or December 31, 2016.

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

	Fair Value		Valuation Methodology	Unobservable Valuation Inputs	Unobservable Valuation Input Values
Financial Assets – June 30, 2017
				Discount Rates	13%
SBA Servicing Asset	$	901	Discounted Cash Flow	Estimated Average Remaining Life of SBA Portfolio	39 months
Total	$	901
	Fair Value		Valuation Methodology	Unobservable Valuation Inputs	Unobservable Valuation Input Values
Financial Assets – December 31, 2016
Collateral dependent impaired loans with specific valuation allowance and/or partial charge-off	$	73	Credit loss estimate of aged accounts receivable collateral	Credit loss factors on aging of accounts receivable collateral	20%
				Discount Rates	13%
SBA Servicing Asset		940	Discounted Cash Flow	Estimated Average Remaining Life of SBA Portfolio	39 months
Total	$	1,013

Fair Value of Financial Instruments

The following are the valuation methodologies utilized for estimating the fair value of certain financial instruments presented in the tables below.

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 Held-to-Maturity: The fair value of investment securities held-to-maturity are based on price indications provided by nationally recognized, independent pricing sources utilized by the Company’s bond accounting system provider. The Company’s held-to-maturity portfolio consists of municipal securities only. The fair value of the municipal securities are calculated using proprietary pricing models or matrices with inputs such as market information (MSRB reported trade data, bids, offers, new issue data) and benchmark curves (Treasury, Swap, Libor and AAA municipal yield curve). These inputs are observable and as such, municipal securities are classified within the Level 2 fair value hierarchy.

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 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.

Bank owned life insurance: The carrying amount of bank owned life insurance represents the total cash surrender value of each policy, which approximates fair value.

FHLB Stock: FHLB stock has no trading market, and is required as part of membership and is redeemable at par. FHLB is recorded at cost, which approximates fair value.

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 June 30, 2017, to the cash flows from the debentures, based on the actual interest rate the debentures were accruing at June 30, 2017. Because all three of the debentures re-priced on June 15, 2017 based on the current three month LIBOR index rate plus the index margin at that date, and with relatively little to no change in the three month LIBOR index rate from the re-pricing date through June 30, 2017, 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 June 30, 2017 and December 31, 2016.

The table below presents the carrying amounts and 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)
June 30, 2017
Financial Assets
Cash and due from banks	$	56,382	$	56,382	$	56,382	$	—	$	—
Interest earning deposits in other financial institutions		111,852		111,852		111,852		—		—
Investment securities held-to-maturity		39,992		40,500		—		40,500		—
Loans, net		2,131,267		2,151,147		—		—		2,151,147
Bank owned life insurance		61,536		61,536		—		—		61,536
FHLB Stock		11,902		11,902		—		—		11,902
Financial Liabilities
Certificates of deposit		29,725		29,727		—		29,727		—
Securities sold under agreements to repurchase		12,180		12,180		—		12,180		—
Subordinated debentures		9,936		12,372		—		12,372		—
December 31, 2016
Financial Assets
Cash and due from banks	$	41,281	$	41,281	$	41,281	$	—	$	—
Interest earning deposits in other financial institutions		167,789		167,789		167,789		—		—
Investment securities held-to-maturity		42,027		41,937		—		41,937		—
Loans, net		2,030,852		2,054,701		—		—		2,054,701
Bank owned life insurance		51,216		51,216		—		—		51,216
FHLB Stock		9,182		9,182		—		—		9,182
Financial Liabilities
Certificates of deposit		29,480		29,480		—		29,480		—
Securities sold under agreements to repurchase		18,816		18,816		—		18,816		—
Subordinated debentures		9,856		12,372		—		12,372		—

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Basis of Financial Statement Presentation (Policies)

6 Months Ended

Jun. 30, 2017

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 on a recurring and nonrecurring basis. 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.

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)

6 Months Ended

Jun. 30, 2017

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):

	June 30, 2017		December 31, 2016
Total Shareholders’ Equity	$	357,576	$	338,185
Less: Preferred stock		16,818		16,955
Less: Goodwill		64,603		64,603
Less: Core deposit and leasehold right intangibles, net		5,641		6,300
Tangible common equity	$	270,514	$	250,327
Common shares issued and outstanding		17,831,131		17,759,006
Book value per common share	$	19.11	$	18.09
Tangible book value per common share	$	15.17	$	14.10

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Computation of Earnings per Common Share (Tables)

6 Months Ended

Jun. 30, 2017

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 June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Net Income	$	9,309	$	7,120	$	17,092	$	13,704
Less: Preferred stock dividends and discount accretion		300		307		601		610
Net Income available to common shareholders	$	9,009	$	6,813	$	16,491	$	13,094
Weighted average basic common shares outstanding		17,583,888		17,210,433		17,557,996		17,125,930
Dilutive effect of potential common share issuances from stock options and restricted stock		187,349		295,744		205,850		335,739
Weighted average diluted common shares outstanding		17,771,237		17,506,177		17,763,846		17,461,669
Income per common share
Basic	$	0.51	$	0.40	$	0.94	$	0.77
Diluted	$	0.51	$	0.39	$	0.93	$	0.75
Anti-dilutive shares not included in the calculation of diluted earnings per share		—		—		2,075		1,500

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Investment Securities (Tables)

6 Months Ended

Jun. 30, 2017

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
June 30, 2017	Amortized Cost		Gains		Losses		Fair Market Value
Available-for-sale investment securities:
U.S. Govt Agency and Sponsored Agency - Note Securities	$	10,000	$	—	$	42	$	9,958
U.S. Govt Agency - SBA Securities		117,224		372		214		117,382
U.S. Govt Agency - GNMA Mortgage-Backed Securities		19,949		62		229		19,782
U.S. Govt Sponsored Agency - CMO & Mortgage-Backed Securities		250,522		321		2,530		248,313
Asset Backed Securities		6,696		4		108		6,592
U.S. Treasury Notes		52,077		—		152		51,925
Total available-for-sale		456,468		759		3,275		453,952
Held-to-maturity investment securities:
Municipal Securities		39,992		509		1		40,500
Total held-to-maturity		39,992		509		1		40,500
Total investment securities	$	496,460	$	1,268	$	3,276	$	494,452

			Gross Unrealized
December 31, 2016	Amortized Cost		Gains		Losses		Fair Market Value
Available-for-sale investment securities:
U.S. Govt Agency and Sponsored Agency - Note Securities	$	10,000	$	—	$	31	$	9,969
U.S. Govt Agency - SBA Securities		123,224		365		739		122,850
U.S. Govt Agency - GNMA Mortgage-Backed Securities		22,565		70		265		22,370
U.S. Govt Sponsored Agency - CMO & Mortgage-Backed Securities		243,159		92		4,351		238,900
Asset Backed Securities		7,111		—		215		6,896
U.S. Treasury Notes		69,101		7		143		68,965
Total available-for-sale		475,160		534		5,744		469,950
Held-to-maturity investment securities:
Municipal Securities		42,027		69		159		41,937
Total held-to-maturity		42,027		69		159		41,937
Total investment securities	$	517,187	$	603	$	5,903	$	511,887

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
June 30, 2017	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
Available-for-sale investment securities:
U.S. Govt Agency and Sponsored Agency – Note Securities	$	9,958	$	41	$	—	$	—	$	9,958	$	41
U.S. Govt. Agency SBA Securities		28,878		96		26,427		119		55,305		215
U.S. Govt. Agency – GNMA Mortgage-Backed Securities		7,822		66		8,128		163		15,950		229
U.S. Govt. Sponsored Agency – CMO & Mortgage-Backed Securities		183,262		2,390		14,571		140		197,833		2,530
Asset Backed Securities		—		—		4,817		108		4,817		108
U.S Treasury Notes		51,925		152		—		—		51,925		152
Total available-for-sale	$	281,845	$	2,745	$	53,943	$	530	$	335,788	$	3,275
Held-to-maturity investment securities:
Municipal Securities	$	2,136	$	1	$	—	$	—	$	2,136	$	1
Total held-to-maturity	$	2,136	$	1	$	—	$	—	$	2,136	$	1

	< 12 Continuous Months				> 12 Continuous Months				Total
December 31, 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 and Sponsored Agency – Note Securities	$	9,969	$	31	$	—	$	—	$	9,969	$	31
U.S. Govt Agency – SBA Securities		54,302	$	451		39,322		288		93,624		739
U.S. Govt Agency – GNMA Mortgage-Backed Securities		6,652		98		8,264		167		14,916		265
U.S. Govt Sponsored Agency – CMO & Mortgage-Backed Securities		215,138		4,172		10,879		179		226,017		4,351
Asset Backed Securities		—		—		6,896		215		6,896		215
U.S. Treasury Notes		51,972		143		—		—		51,972		143
Total available-for-sale	$	338,033	$	4,895	$	65,361	$	849	$	403,394	$	5,744
Held-to-maturity investment securities:
Municipal Securities	$	28,673	$	158	$	310	$	1	$	28,983	$	159
Total held-to-maturity	$	28,673	$	158	$	310	$	1	$	28,983	$	159

Maturities Schedule of Securities

	June 30, 2017
Maturities Schedule of Securities (Dollars in thousands)	Amortized Cost		Fair Value		Weighted Average Yield
Available-for-sale investment securities:
Due through one year	$	37,728	$	37,698		0.77	%
Due after one year through five years		359,613		357,732		1.85	%
Due after five years through ten years		59,127		58,522		2.32	%
Due after ten years		—		—		—	%
Total available-for-sale	$	456,468	$	453,952		1.82	%
Held-to-maturity investment securities:
Due through one year	$	1,616	$	1,617		0.82	%
Due after one year through five years		34,990		35,389		1.64	%
Due after five years through ten years		1,916		1,957		1.89	%
Due after ten years		1,470		1,537		3.36	%
Total held-to-maturity	$	39,992	$	40,500		1.68	%
Total investment securities	$	496,460	$	494,452		1.81	%

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Loans (Tables)

6 Months Ended

Jun. 30, 2017

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):

	June 30, 2017
	Principal		Net Unaccreted Discounts, Net Deferred Fees			Total
Commercial and Industrial Loans:	$	497,854	$	(2,222	)	$	495,632
Loans Secured by Real Estate:
Owner-Occupied Nonresidential Properties		451,153		(3,371	)		447,782
Other Nonresidential Properties		715,878		(5,424	)		710,454
Construction, Land Development and Other Land		206,877		(1,032	)		205,845
1-4 Family Residential Properties		124,088		(1,532	)		122,556
Multifamily Residential Properties		125,889		(496	)		125,393
Total Loans Secured by Real Estate		1,623,885		(11,855	)		1,612,030
Other Loans:		44,104		(173	)		43,931
Total Loans	$	2,165,843	$	(14,250	)	$	2,151,593

	December 31, 2016
	Principal		Net Unaccreted Discounts, Net Deferred Fees			Total
Commercial and Industrial Loans:	$	505,374	$	(2,737	)	$	502,637
Loans Secured by Real Estate:
Owner-Occupied Nonresidential Properties		455,120		(3,798	)		451,322
Other Nonresidential Properties		635,856		(5,693	)		630,163
Construction, Land Development and Other Land		195,215		(1,156	)		194,059
1-4 Family Residential Properties		129,261		(2,097	)		127,164
Multifamily Residential Properties		110,336		(478	)		109,858
Total Loans Secured by Real Estate		1,525,788		(13,222	)		1,512,566
Other Loans:		35,246		(223	)		35,023
Total Loans	$	2,066,408	$	(16,182	)	$	2,050,226

Summary of Activity for Allowance for Loan Loss

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

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Allowance for loan loss at beginning of period	$	19,605		$	16,545		$	19,374		$	15,682
Provision for loan losses		701			1,063			701			1,685
Net (charge-offs) recoveries:
Charge-offs		(2	)		(20	)		(2	)		(20	)
Recoveries		22			888			253			1,129
Net recoveries		20			868			251			1,109
Allowance for loan loss at end of period	$	20,326		$	18,476		$	20,326		$	18,476
Net (charge-offs) recoveries to average loans		0.00	%		0.05	%		0.01	%		0.06	%

	June 30, 2017			December 31, 2016
Allowance for loan loss to total loans		0.94	%		0.94	%

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):

Three Months Ended June 30, 2017	Commercial and Industrial			Construction, Land Development and Other Land		Commercial and Other Real Estate			Other		Total
Allowance for loan loss – Beginning balance	$	6,862		$	3,147	$	9,228		$	368	$	19,605
Provision for loan losses		522			86		(71	)		164		701
Net (charge-offs) recoveries:
Charge-offs		(2	)		—		—			—		(2	)
Recoveries		6			—		16			—		22
Net recoveries		4			—		16			—		20
Ending balance	$	7,388		$	3,233	$	9,173		$	532	$	20,326

Three Months Ended June 30, 2016	Commercial and Industrial			Construction, Land Development and Other Land		Commercial and Other Real Estate		Other		Total
Allowance for loan loss – Beginning balance	$	6,725		$	2,711	$	6,374	$	735	$	16,545
Provision for loan losses		789			13		192		69		1,063
Net (charge-offs) recoveries:
Charge-offs		(20	)		—		—		—		(20	)
Recoveries		887			—		1		—		888
Net recoveries		867			—		1		—		868
Ending balance	$	8,381		$	2,724	$	6,567	$	804	$	18,476

Six Months Ended June 30, 2017	Commercial and Industrial			Construction, Land Development and Other Land		Commercial and Other Real Estate		Other			Total
Allowance for loan loss – Beginning balance	$	7,130		$	3,084	$	8,487	$	673		$	19,374
Provision for loan losses		25			149		668		(141	)		701
Net (charge-offs) recoveries:
Charge-offs		(2	)		—		—		—			(2	)
Recoveries		235			—		18		—			253
Net recoveries		233			—		18		—			251
Ending balance	$	7,388		$	3,233	$	9,173	$	532		$	20,326

Six Months Ended June 30, 2016	Commercial and Industrial			Construction, Land Development and Other Land		Commercial and Other Real Estate			Other			Total
Allowance for loan loss – Beginning balance	$	5,924		$	2,076	$	6,821		$	861		$	15,682
Provision for loan losses		1,350			648		(256	)		(57	)		1,685
Net (charge-offs) recoveries:
Charge-offs		(20	)		—		—			—			(20	)
Recoveries		1,127			—		2			—			1,129
Net recoveries		1,107			—		2			—			1,109
Ending balance	$	8,381		$	2,724	$	6,567		$	804		$	18,476

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
June 30, 2017
Allowance for loan loss:
Individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—
Collectively evaluated for impairment		7,388		3,233		9,173		532		20,326
Purchased credit impaired (loans acquired with deteriorated credit quality)		—		—		—		—		—
Total Allowance for Loan Loss	$	7,388	$	3,233	$	9,173	$	532	$	20,326
Loans receivable:
Individually evaluated for impairment	$	231	$	—	$	231	$	—	$	462
Collectively evaluated for impairment		495,136		205,845		1,404,717		43,931		2,149,629
Purchased credit impaired (loans acquired with deteriorated credit quality)		265		—		1,237		—		1,502
Total Loans Receivable	$	495,632	$	205,845	$	1,406,185	$	43,931	$	2,151,593

	Commercial and Industrial		Construction, Land Development and Other Land		Commercial and Other Real Estate		Other		Total
December 31, 2016
Allowance for loan loss:
Individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—
Collectively evaluated for impairment		7,130		3,084		8,487		673		19,374
Purchased credit impaired (loans acquired with deteriorated credit quality)		—		—		—		—		—
Total Allowance for Loan Loss	$	7,130	$	3,084	$	8,487	$	673	$	19,374
Loans receivable:
Individually evaluated for impairment	$	378	$	—	$	245	$	—	$	623
Collectively evaluated for impairment		501,960		194,059		1,316,849		35,023		2,047,891
Purchased credit impaired (loans acquired with deteriorated credit quality)		299		—		1,413		—		1,712
Total Loans Receivable	$	502,637	$	194,059	$	1,318,507	$	35,023	$	2,050,226

Risk Category of Loans by Class of Loans

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

	Commercial and Industrial		Construction, Land Development and Other Land		Commercial and Other Real Estate		Other		Total
June 30, 2017
Pass	$	450,109	$	205,845	$	1,384,154	$	43,808	$	2,083,916
Special Mention		14,784		—		5,588		34		20,406
Substandard		30,739		—		16,443		89		47,271
Doubtful		—		—		—		—		—
Total	$	495,632	$	205,845	$	1,406,185	$	43,931	$	2,151,593

	Commercial and Industrial		Construction, Land Development and Other Land		Commercial and Other Real Estate		Other		Total
December 31, 2016
Pass	$	456,885	$	194,059	$	1,288,154	$	32,128	$	1,971,226
Special Mention		12,774		—		7,557		—		20,331
Substandard		32,978		—		22,796		2,895		58,669
Doubtful		—		—		—		—		—
Total	$	502,637	$	194,059	$	1,318,507	$	35,023	$	2,050,226

Aging Analysis of Recorded Investment

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

	31-60 Days Past Due		61-90 Days Past Due		Greater than 90 Days Past Due and Accruing		Total Past Due and Accruing		Total Non Accrual		Current		Total Loans
June 30, 2017
Commercial and Industrial	$	259	$	—	$	—	$	259	$	495	$	494,878	$	495,632
Construction, Land Development and Other Land		—		—		—		—		—		205,845		205,845
Commercial and Other Real Estate		443		—		—		443		231		1,405,511		1,406,185
Other		—		—		—		—		—		43,931		43,931
Total	$	702	$	—	$	—	$	702	$	726	$	2,150,165	$	2,151,593

	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, 2016
Commercial and Industrial	$	—	$	—	$	—	$	—	$	675	$	501,962	$	502,637
Construction, Land Development and Other Land		—		—		—		—		—		194,059		194,059
Commercial and Other Real Estate		212		—		—		212		447		1,317,848		1,318,507
Other		—		—		—		—		—		35,023		35,023
Total	$	212	$	—	$	—	$	212	$	1,122	$	2,048,892	$	2,050,226

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 $1.5 million and $1.7 million at June 30, 2017 and December 31, 2016, respectively.

	June 30, 2017						December 31, 2016
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
With no specific allowance recorded:
Commercial and Industrial	$	231	$	632	$	—	$	378	$	1,383	$	—
Commercial and Other Real Estate		231		272		—		245		282		—
With an allowance recorded:
Commercial and Industrial		—		—		—		—		—		—
Commercial and Other Real Estate		—		—		—		—		—		—
Total
Commercial and Industrial		231		632		—		378		1,383		—
Commercial and Other Real Estate		231		272		—		245		282		—
Total	$	462	$	904	$	—	$	623	$	1,665	$	—

	Three Months Ended June 30,								Six Months Ended June 30,
	2017				2016				2017				2016
	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	$	237	$	3	$	545	$	—	$	241	$	3	$	400	$	—
Commercial and Other Real Estate		235		—		256		—		238		—		461		—
With a specific allowance recorded:
Commercial and Industrial		—		—		316		—		—		—		158		—
Commercial and Other Real Estate		—		—		—		—		—		—		—		—
Total:
Commercial and Industrial		237		3		861		—		241		3		558		—
Commercial and Other Real Estate		235		—		256		—		238		—		461		—
Total	$	472	$	3	$	1,117	$	—	$	479	$	3	$	1,019	$	—

Additional Information on Impaired Loans

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Interest foregone on impaired loans	$	13	$	22	$	26	$	46
Cash collections applied to reduce principal balance	$	24	$	28	$	45	$	52
Interest income recognized on cash collections	$	3	$	—	$	3	$	—

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 June 30, 2017 and December 31, 2016 (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 June 30, 2017, there were two PCI loans that are considered to be TDR loans with a recorded investment of $84 thousand and unpaid principal balances of $244 thousand.

	As of and for the Three Months Ended June 30, 2017						As of and for the Six Months Ended June 30, 2017
	Recorded Investment		Unpaid Principal Balance		Interest Income Recognized		Recorded Investment		Unpaid Principal Balance		Interest Income Recognized
Commercial and Industrial	$	302	$	518	$	—	$	302	$	518	$	—
Total	$	302	$	518	$	—	$	302	$	518	$	—

	As of and for the Three Months Ended June 30, 2016						As of and for the Six Months Ended June 30, 2016
	Recorded Investment		Unpaid Principal Balance		Interest Income Recognized		Recorded Investment		Unpaid Principal Balance		Interest Income Recognized
Commercial and Industrial	$	377	$	591	$	—	$	377	$	591	$	—
Total	$	377	$	591	$	—	$	377	$	591	$	—
							As of and for the Twelve Months Ended December 31, 2016
							Recorded Investment		Unpaid Principal Balance		Interest Income Recognized
Commercial and Industrial							$	408	$	1,174	$	—
Total							$	408	$	1,174	$	—

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 June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Balance, beginning of period	$	8,496		$	13,470		$	9,611		$	14,610
Accretion, included in interest income		(637	)		(1,517	)		(1,752	)		(2,650	)
Reclassifications to non-accretable yield		—			(25	)		—			(32	)
Balance, end of period	$	7,859		$	11,928		$	7,859		$	11,928

Carrying Value of Purchased Credit Impaired Loans

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

	June 30, 2017				December 31, 2016
	Unpaid Principal Balance		Carrying Value		Unpaid Principal Balance		Carrying Value
Commercial and Industrial	$	579	$	265	$	622	$	299
Commercial and Other Real Estate		1,587		1,237		1,997		1,413
Total	$	2,166	$	1,502	$	2,619	$	1,712

Accretable Net Discount of Purchased Credit Impaired Loans

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

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Balance, beginning of period	$	138		$	226		$	161		$	246
Accretion, included in interest income		(23	)		(21	)		(46	)		(41	)
Reclassifications from non-accretable yield		—			—			—			—
Balance, end of period	$	115		$	205		$	115		$	205

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Borrowings and Subordinated Debentures (Tables)

6 Months Ended

Jun. 30, 2017

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):

	June 30, 2017
Date Issued	Amount		Interest Rate		Original Term		Maturity Date
June 30, 2017	$	12,180		0.20% – 0.25%		3 days		July 3, 2017
Total	$	12,180		0.24%
	December 31, 2016
Date Issued	Amount		Interest Rate		Original Term		Maturity Date
December 31, 2016	$	18,816		0.20% – 0.25%		4 days		January 4, 2017
Total	$	18,816		0.25%

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):

June 30, 2017

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%

3.29

%

09/15/17

Trust II

3,093

12/23/05

03/15/36

3 month LIBOR + 1.75%

2.99

%

09/15/17

Trust III

3,093

06/30/06

09/18/36

3 month LIBOR + 1.85%

3.09

%

09/15/17

Subtotal

12,372

Unamortized fair value adjustment

(2,436

)

Net

$

9,936

December 31, 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%

3.01

%

03/15/17

Trust II

3,093

12/23/05

03/15/36

3 month LIBOR + 1.75%

2.71

%

03/15/17

Trust III

3,093

06/30/06

09/18/36

3 month LIBOR + 1.85%

2.81

%

03/15/17

Subtotal

12,372

Unamortized fair value adjustment

(2,516

)

Net

$

9,856

XML

Derivative Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2017

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 June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Derivatives not designated as hedging instruments:
Interest rate swap contracts – loans
Increase in fair value of interest rate swap contracts	$	40		$	52		$	95		$	91
Payments on interest rate swap contracts on loans		(39	)		(60	)		(92	)		(122	)
Net increase (decrease) in other non-interest income	$	1		$	(8	)	$	3		$	(31	)
Derivatives designated as hedging instruments:
Interest rate swap contracts – loans
Increase in fair value of interest rate swap contracts	$	62		$	139		$	183		$	162
Increase in fair value of hedged loans		48			71			36			284
Payment on interest rate swap contracts on loans		(91	)		(224	)		(205	)		(454	)
Net increase (decrease) in interest income on loans	$	19		$	(14	)	$	14		$	(8	)

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):

	Asset Derivatives
	June 30, 2017		December 31, 2016
Interest rate swap contracts fair value	$	441	$	523
Balance sheet location		Accrued Interest Receivable and Other Assets		Accrued Interest Receivable and Other Assets
	Liability Derivatives
	June 30, 2017		December 31, 2016
Interest rate swap contracts fair value	$	441	$	523
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):

	Liability Derivatives
	June 30, 2017		December 31, 2016
Fair Value Hedges
Total interest rate contracts notional amount	$	7,721	$	17,642
Derivatives not designated as hedging instruments:
Interest rate swap contracts fair value	$	—	$	95
Derivatives designated as hedging instruments:
Interest rate swap contracts fair value		406		589
Total interest rate contracts fair value	$	406	$	684
Balance sheet location		Accrued Interest Payable and Other Liabilities		Accrued Interest Payable and Other Liabilities

XML

Balance Sheet Offsetting (Tables)

6 Months Ended

Jun. 30, 2017

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
June 30, 2017
Financial Assets:
Interest rate swap contracts fair value (See Note 9 – Derivative Financial Instruments)	$	441	$	—	$	441	$	441	$	—	$	—
Total	$	441	$	—	$	441	$	441	$	—	$	—
Financial Liabilities:
Interest rate swap contracts fair value (See Note 9 – Derivative Financial Instruments)	$	847	$	—	$	847	$	847	$	3,336	$	2,489
Securities sold under agreements to repurchase (See Note 8 – Borrowings and Subordinated Debentures)		12,180		—		12,180		12,180		41,727		29,547
Total	$	13,027	$	—	$	13,027	$	13,027	$	45,063	$	32,036

	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, 2016
Financial Assets:
Interest rate swap contracts fair value (See Note 9 – Derivative Financial Instruments)	$	523	$	—	$	523	$	523	$	—	$	—
Total	$	523	$	—	$	523	$	523	$	—	$	—
Financial Liabilities:
Interest rate swap contracts fair value (See Note 9 – Derivative Financial Instruments)	$	1,207	$	—	$	1,207	$	1,207	$	4,555	$	3,348
Securities sold under agreements to repurchase (See Note 8 – Borrowings and Subordinated Debentures)		18,816		—		18,816		18,816		48,204		29,388
Total	$	20,023	$	—	$	20,023	$	20,023	$	52,759	$	32,736

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Stock Options and Restricted Stock (Tables)

6 Months Ended

Jun. 30, 2017

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

Future Compensation Expense Related to Unvested Restricted Stock Grants

At June 30, 2017 future compensation expense related to unvested restricted stock grants are reflected in the table below (dollars in thousands):

Future Restricted Stock Expense
Remainder of 2017	$	1,577
2018		1,584
2019		534
2020		169
Thereafter		21
Total	$	3,885

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, 2016		47,697		$	12.69		1.43	$	1,102
Granted		—
Exercised		(27,942	)
Forfeited		—
Expired		—
Outstanding stock options at June 30, 2017		19,755		$	8.67		1.88	$	19,755
Exercisable options at June 30, 2017		19,755		$	8.67		1.88	$	19,755
Unvested options at June 30, 2017		—

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, 2016		282,082		$	21.98
Granted		65,615			38.04
Vested		(35,082	)		20.98
Forfeited		(6,934	)		22.66
Unvested at June 30, 2017		305,681		$	25.84

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Shareholders' Equity (Tables)

6 Months Ended

Jun. 30, 2017

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 June 30,						Consolidated Statement of Income Line Item for Reclassified Items
	2017			2016
Beginning balance, net of tax	$	(2,854	)	$	(47	)
Net unrealized gain arising during the period		2,409			1,423
Related tax effect		(1,013	)		(598	)
Reclassification of gain on investment securities available-for-sale to net income		—			—		Gain on sale of securities, net
Related tax effect		—			—		Provision for income tax expense
Other Comprehensive Income		1,396			825
Ending balance	$	(1,458	)	$	778

	Six Months Ended June 30,						Consolidated Statement of Income Line Item for Reclassified Items
	2017			2016
Beginning balance, net of tax	$	(3,019	)	$	(816	)
Net unrealized gain arising during the period		2,835			2,751
Related tax effect		(1,192	)		(1,157	)
Reclassification of gain 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		1,561			1,594
Ending balance	$	(1,458	)	$	778

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Fair Value Information (Tables)

6 Months Ended

Jun. 30, 2017

Fair Value Disclosures [Abstract]

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

The following table presents 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 – June 30, 2017
Investment securities available-for-sale:
U.S. Govt Agency and Sponsored Agency – Note Securities	$	9,958	$	—	$	9,958		—
U.S. Govt Agency – SBA Securities		117,382		—		117,382		—
U.S. Govt Agency – GNMA Mortgage-Backed Securities		19,782		—		19,782		—
U.S. Govt Sponsored Agency – CMO & Mortgage-Backed Securities		248,313		—		248,313		—
Asset Backed Securities		6,592		—		6,592		—
U.S. Treasury Notes		51,925		51,925		—		—
Interest Rate Swap Contracts		441		—		441		—
	$	454,393	$	51,925	$	402,468	$	—
Financial Liabilities – June 30, 2017
Interest Rate Swap Contracts	$	847	$	—	$	847	$	—
Financial Assets – December 31, 2016
Investment securities available-for-sale:
U.S. Govt Agency and Sponsored Agency – Note Securities	$	9,969	$	—	$	9,969		—
U.S. Govt Agency – SBA Securities		122,850		—		122,850		—
U.S. Govt Agency – GNMA Mortgage-Backed Securities		22,370		—		22,370		—
U.S. Govt Sponsored Agency – CMO & Mortgage-Backed Securities		238,900		—		238,900		—
Asset Backed Securities		6,896		—		6,896		—
U.S. Treasury Notes		68,965		68,965		—		—
Interest Rate Swap Contracts		523		—		523		—
	$	470,473	$	68,965	$	401,508	$	—
Financial Liabilities – December 31, 2016
Interest Rate Swap Contracts	$	1,207	$	—	$	1,207	$	—

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

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

	Net Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets – June 30, 2017
SBA Servicing Asset	$	901	$	—	$	—	$	901
Total	$	901	$	—	$	—	$	901

	Net Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets – December 31, 2016
Collateral dependent impaired loans with specific valuation allowance and/or partial charge-offs (non-purchased credit impaired loans)	$	73	$	—	$	—	$	73
SBA Servicing Asset		940		—		—		940
Total	$	1,013	$	—	$	—	$	1,013

Significant Unobservable Inputs Used in Fair Value Measurements for Level 3 Assets 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 measured at fair value on a non-recurring basis as of the dates indicated (dollars in thousands):

	Fair Value		Valuation Methodology	Unobservable Valuation Inputs	Unobservable Valuation Input Values
Financial Assets – June 30, 2017
				Discount Rates	13%
SBA Servicing Asset	$	901	Discounted Cash Flow	Estimated Average Remaining Life of SBA Portfolio	39 months
Total	$	901
	Fair Value		Valuation Methodology	Unobservable Valuation Inputs	Unobservable Valuation Input Values
Financial Assets – December 31, 2016
Collateral dependent impaired loans with specific valuation allowance and/or partial charge-off	$	73	Credit loss estimate of aged accounts receivable collateral	Credit loss factors on aging of accounts receivable collateral	20%
				Discount Rates	13%
SBA Servicing Asset		940	Discounted Cash Flow	Estimated Average Remaining Life of SBA Portfolio	39 months
Total	$	1,013

Level in Fair Value Hierarchy for Financial Instruments Estimated Fair Values

The table below presents the carrying amounts and 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)
June 30, 2017
Financial Assets
Cash and due from banks	$	56,382	$	56,382	$	56,382	$	—	$	—
Interest earning deposits in other financial institutions		111,852		111,852		111,852		—		—
Investment securities held-to-maturity		39,992		40,500		—		40,500		—
Loans, net		2,131,267		2,151,147		—		—		2,151,147
Bank owned life insurance		61,536		61,536		—		—		61,536
FHLB Stock		11,902		11,902		—		—		11,902
Financial Liabilities
Certificates of deposit		29,725		29,727		—		29,727		—
Securities sold under agreements to repurchase		12,180		12,180		—		12,180		—
Subordinated debentures		9,936		12,372		—		12,372		—
December 31, 2016
Financial Assets
Cash and due from banks	$	41,281	$	41,281	$	41,281	$	—	$	—
Interest earning deposits in other financial institutions		167,789		167,789		167,789		—		—
Investment securities held-to-maturity		42,027		41,937		—		41,937		—
Loans, net		2,030,852		2,054,701		—		—		2,054,701
Bank owned life insurance		51,216		51,216		—		—		51,216
FHLB Stock		9,182		9,182		—		—		9,182
Financial Liabilities
Certificates of deposit		29,480		29,480		—		29,480		—
Securities sold under agreements to repurchase		18,816		18,816		—		18,816		—
Subordinated debentures		9,856		12,372		—		12,372		—

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Basis of Financial Statement Presentation - Additional Information (Detail)	6 Months Ended
	Jun. 30, 2017 Office
Summary Of Significant Accounting Policies [Line Items]
Full service branch offices	9
PacWest Bancorp Merger Agreement
Summary Of Significant Accounting Policies [Line Items]
Date of merger agreement	Apr. 05, 2017

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Recent Accounting Pronouncements - Additional Information (Detail) $ in Millions	1 Months Ended	6 Months Ended
	Feb. 29, 2016	Jun. 30, 2017 USD ($) Leases Location
Maximum
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Short tem lease, Term of contract	12 months
ASU 2016-02, Leases
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Number of operating leases | Leases		10
Operating leases by location | Location		10
Operating leases term of contract		12 months
Operating lease future payments | $		$ 15

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Computation of Book Value and Tangible Book Value per Common Share (Detail) - USD ($) $ / shares in Units, $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2017	Dec. 31, 2016	Jun. 30, 2016	Dec. 31, 2015
Equity [Abstract]
Total Shareholders' Equity	$ 357,576	$ 338,185	$ 326,459	$ 306,807
Less: Preferred stock	16,818	16,955
Less: Goodwill	64,603	64,603
Less: Core deposit and leasehold right intangibles, net	5,641	6,300
Tangible common equity	$ 270,514	$ 250,327
Common shares issued	17,831,131	17,759,006
Common shares outstanding	17,831,131	17,759,006
Book value per common share	$ 19.11	$ 18.09
Tangible book value per common share	$ 15.17	$ 14.10

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Basic and Diluted Earnings Per Common Share Computations (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Earnings Per Share [Abstract]
Net Income	$ 9,309	$ 7,120	$ 17,092	$ 13,704
Less: Preferred stock dividends and discount accretion	300	307	601	610
Net Income available to common shareholders	$ 9,009	$ 6,813	$ 16,491	$ 13,094
Weighted average basic common shares outstanding	17,583,888	17,210,433	17,557,996	17,125,930
Dilutive effect of potential common share issuances from stock options and restricted stock	187,349	295,744	205,850	335,739
Weighted average diluted common shares outstanding	17,771,237	17,506,177	17,763,846	17,461,669
Basic income (loss) per share	$ 0.51	$ 0.40	$ 0.94	$ 0.77
Diluted income (loss) per share	$ 0.51	$ 0.39	$ 0.93	$ 0.75
Anti-dilutive shares not included in the calculation of diluted earnings per share			2,075	1,500

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Amortized Cost, Gross Unrealized Gains and Losses, and Fair Values of Investment Securities (Detail) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Available-for-sale Investment Securities, Amortized Cost	$ 456,468	$ 475,160
Available-for-sale Investment Securities, Gross Unrealized Gains	759	534
Available-for-sale Investment Securities, Gross Unrealized Losses	3,275	5,744
Fair Market Value	453,952	469,950
Held-to-maturity Investment Securities, Amortized Cost	39,992	42,027
Held-to-maturity Investment Securities, Gross Unrealized Gain	509	69
Held-to-maturity Investment Securities, Gross Unrealized Losses	1	159
Fair Market Value	40,500	41,937
Available-for-sale Investment Securities and Held-to-maturity Investment Securities, Amortized Cost	496,460	517,187
Available-for-sale Investment Securities and Held-to-maturity Investment Securities, Gross Unrealized Gain	1,268	603
Available-for-sale Investment Securities and Held-to-maturity Investment Securities, Gross Unrealized Losses	3,276	5,903
Available-for-sale Investment Securities and Held-to-maturity Investment Securities, Fair Market Value	494,452	511,887
U.S. Govt Agency and Sponsored Agency - Note Securities
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Available-for-sale Investment Securities, Amortized Cost	10,000	10,000
Available-for-sale Investment Securities, Gross Unrealized Losses	42	31
Fair Market Value	9,958	9,969
U.S. Govt Agency - SBA Securities
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Available-for-sale Investment Securities, Amortized Cost	117,224	123,224
Available-for-sale Investment Securities, Gross Unrealized Gains	372	365
Available-for-sale Investment Securities, Gross Unrealized Losses	214	739
Fair Market Value	117,382	122,850
U.S. Govt Agency - GNMA Mortgage-Backed Securities
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Available-for-sale Investment Securities, Amortized Cost	19,949	22,565
Available-for-sale Investment Securities, Gross Unrealized Gains	62	70
Available-for-sale Investment Securities, Gross Unrealized Losses	229	265
Fair Market Value	19,782	22,370
U.S. Govt Sponsored Agency - CMO & Mortgage-Backed Securities
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Available-for-sale Investment Securities, Amortized Cost	250,522	243,159
Available-for-sale Investment Securities, Gross Unrealized Gains	321	92
Available-for-sale Investment Securities, Gross Unrealized Losses	2,530	4,351
Fair Market Value	248,313	238,900
Municipal Securities
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Held-to-maturity Investment Securities, Amortized Cost	39,992	42,027
Held-to-maturity Investment Securities, Gross Unrealized Gain	509	69
Held-to-maturity Investment Securities, Gross Unrealized Losses	1	159
Fair Market Value	40,500	41,937
Asset Backed Securities
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Available-for-sale Investment Securities, Amortized Cost	6,696	7,111
Available-for-sale Investment Securities, Gross Unrealized Gains	4
Available-for-sale Investment Securities, Gross Unrealized Losses	108	215
Fair Market Value	6,592	6,896
U. S. Treasury Notes
Schedule Of Available For Sale And Held To Maturity Securities [Line Items]
Available-for-sale Investment Securities, Amortized Cost	52,077	69,101
Available-for-sale Investment Securities, Gross Unrealized Gains		7
Available-for-sale Investment Securities, Gross Unrealized Losses	152	143
Fair Market Value	$ 51,925	$ 68,965

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Investment Securities - Additional Information (Detail) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Schedule of Trading Securities and Other Trading Assets [Line Items]
Other-than-temporary impairment losses	$ 0	$ 0
Company's investment in the common stock of the FHLB	11,902,000	9,182,000
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	208,000,000	$ 205,000,000
Accrued Interest Receivable and Other Assets | Federal Home Loan Bank of San Francisco
Schedule of Trading Securities and Other Trading Assets [Line Items]
FHLB stock impairment losses	$ 0

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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	Jun. 30, 2017	Dec. 31, 2016
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	$ 281,845	$ 338,033
Temporarily-impaired available-for-sale investment securities, Less than 12 Continuous Months, Gross Unrealized Loss	2,745	4,895
Temporarily-impaired available-for-sale investment securities, More than 12 Continuous Months, Fair Value	53,943	65,361
Temporarily-impaired available-for-sale investment securities, More than 12 Continuous Months, Gross Unrealized Loss	530	849
Temporarily-impaired available-for-sale investment securities, Total, Fair Value	335,788	403,394
Temporarily-impaired available-for-sale investment securities, Total, Gross Unrealized Loss	3,275	5,744
Temporarily-impaired held-to-maturity investment securities, Less than 12 months, Fair Value	2,136	28,673
Temporarily-impaired held-to-maturity investment securities, Less than 12 months, Gross Unrealized Loss	1	158
Temporarily-impaired held-to-maturity investment securities, More than 12 months, Fair Value		310
Temporarily-impaired held-to-maturity investment securities, More than 12 months, Gross Unrealized Loss		1
Temporarily-impaired held-to-maturity investment securities, Fair Value	2,136	28,983
Temporarily-impaired held-to-maturity investment securities, Gross Unrealized Loss	1	159
U.S. Govt Agency and Sponsored Agency - Note 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	9,958	9,969
Temporarily-impaired available-for-sale investment securities, Less than 12 Continuous Months, Gross Unrealized Loss	41	31
Temporarily-impaired available-for-sale investment securities, Total, Fair Value	9,958	9,969
Temporarily-impaired available-for-sale investment securities, Total, Gross Unrealized Loss	41	31
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	28,878	54,302
Temporarily-impaired available-for-sale investment securities, Less than 12 Continuous Months, Gross Unrealized Loss	96	451
Temporarily-impaired available-for-sale investment securities, More than 12 Continuous Months, Fair Value	26,427	39,322
Temporarily-impaired available-for-sale investment securities, More than 12 Continuous Months, Gross Unrealized Loss	119	288
Temporarily-impaired available-for-sale investment securities, Total, Fair Value	55,305	93,624
Temporarily-impaired available-for-sale investment securities, Total, Gross Unrealized Loss	215	739
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	7,822	6,652
Temporarily-impaired available-for-sale investment securities, Less than 12 Continuous Months, Gross Unrealized Loss	66	98
Temporarily-impaired available-for-sale investment securities, More than 12 Continuous Months, Fair Value	8,128	8,264
Temporarily-impaired available-for-sale investment securities, More than 12 Continuous Months, Gross Unrealized Loss	163	167
Temporarily-impaired available-for-sale investment securities, Total, Fair Value	15,950	14,916
Temporarily-impaired available-for-sale investment securities, Total, Gross Unrealized Loss	229	265
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	183,262	215,138
Temporarily-impaired available-for-sale investment securities, Less than 12 Continuous Months, Gross Unrealized Loss	2,390	4,172
Temporarily-impaired available-for-sale investment securities, More than 12 Continuous Months, Fair Value	14,571	10,879
Temporarily-impaired available-for-sale investment securities, More than 12 Continuous Months, Gross Unrealized Loss	140	179
Temporarily-impaired available-for-sale investment securities, Total, Fair Value	197,833	226,017
Temporarily-impaired available-for-sale investment securities, Total, Gross Unrealized Loss	2,530	4,351
Asset Backed Securities
Schedule Of Available For Sale Securities And Held To Maturity Securities [Line Items]
Temporarily-impaired available-for-sale investment securities, More than 12 Continuous Months, Fair Value	4,817	6,896
Temporarily-impaired available-for-sale investment securities, More than 12 Continuous Months, Gross Unrealized Loss	108	215
Temporarily-impaired available-for-sale investment securities, Total, Fair Value	4,817	6,896
Temporarily-impaired available-for-sale investment securities, Total, Gross Unrealized Loss	108	215
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	51,925	51,972
Temporarily-impaired available-for-sale investment securities, Less than 12 Continuous Months, Gross Unrealized Loss	152	143
Temporarily-impaired available-for-sale investment securities, Total, Fair Value	51,925	51,972
Temporarily-impaired available-for-sale investment securities, Total, Gross Unrealized Loss	152	143
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	2,136	28,673
Temporarily-impaired held-to-maturity investment securities, Less than 12 months, Gross Unrealized Loss	1	158
Temporarily-impaired held-to-maturity investment securities, More than 12 months, Fair Value		310
Temporarily-impaired held-to-maturity investment securities, More than 12 months, Gross Unrealized Loss		1
Temporarily-impaired held-to-maturity investment securities, Fair Value	2,136	28,983
Temporarily-impaired held-to-maturity investment securities, Gross Unrealized Loss	$ 1	$ 159

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Maturities Schedule of Securities (Detail) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Available-for-sale investment securities, Amortized Cost
Due through one year	$ 37,728
Due after one year through five years	359,613
Due after five years through ten years	59,127
Due after ten years	0
Available-for-sale Investment Securities, Amortized Cost	456,468	$ 475,160
Held-to-maturity investment securities, Amortized Cost
Due through one year	1,616
Due after one year through five years	34,990
Due after five years through ten years	1,916
Due after ten years	1,470
Held-to-maturity Investment Securities, Amortized Cost	39,992	42,027
Available-for-sale Investment Securities and Held-to-maturity Investment Securities, Amortized Cost	496,460	517,187
Available-for-sale investment securities, Fair Value
Due through one year	37,698
Due after one year through five years	357,732
Due after five years through ten years	58,522
Due after ten years	0
Total available-for-sale	453,952	469,950
Held-to-maturity investment securities, Fair Value
Due through one year	1,617
Due after one year through five years	35,389
Due after five years through ten years	1,957
Due after ten years	1,537
Total held-to-maturity	40,500	41,937
Total investment securities	$ 494,452	$ 511,887
Available-for-sale investment securities, Weighted Average Yield
Due through one year	0.77%
Due after one year through five years	1.85%
Due after five years through ten years	2.32%
Due after ten years	0.00%
Total available-for-sale	1.82%
Held-to-maturity investment securities, Weighted Average Yield
Due through one year	0.82%
Due after one year through five years	1.64%
Due after five years through ten years	1.89%
Due after ten years	3.36%
Total held-to-maturity	1.68%
Total investment securities	1.81%

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Composition of Loan Portfolio (Detail) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Accounts, Notes, Loans and Financing Receivable [Line Items]
Principal	$ 2,165,843	$ 2,066,408
Net Unaccreted Discounts, Net Deferred Fees	(14,250)	(16,182)
Total Loans	2,151,593	2,050,226
Commercial and Industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Principal	497,854	505,374
Net Unaccreted Discounts, Net Deferred Fees	(2,222)	(2,737)
Total Loans	495,632	502,637
Commercial and Other Real Estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	1,406,185	1,318,507
Construction, Land Development and Other Land
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	205,845	194,059
Other Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Principal	44,104	35,246
Net Unaccreted Discounts, Net Deferred Fees	(173)	(223)
Total Loans	43,931	35,023
Loans Secured by Real Estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Principal	1,623,885	1,525,788
Net Unaccreted Discounts, Net Deferred Fees	(11,855)	(13,222)
Total Loans	1,612,030	1,512,566
Loans Secured by Real Estate | Construction, Land Development and Other Land
Accounts, Notes, Loans and Financing Receivable [Line Items]
Principal	206,877	195,215
Net Unaccreted Discounts, Net Deferred Fees	(1,032)	(1,156)
Total Loans	205,845	194,059
Owner-Occupied Nonresidential Properties | Loans Secured by Real Estate | Commercial and Other Real Estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Principal	451,153	455,120
Net Unaccreted Discounts, Net Deferred Fees	(3,371)	(3,798)
Total Loans	447,782	451,322
Other Nonresidential Properties | Loans Secured by Real Estate | Commercial and Other Real Estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Principal	715,878	635,856
Net Unaccreted Discounts, Net Deferred Fees	(5,424)	(5,693)
Total Loans	710,454	630,163
1-4 Family Residential Properties | Loans Secured by Real Estate | Commercial and Other Real Estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Principal	124,088	129,261
Net Unaccreted Discounts, Net Deferred Fees	(1,532)	(2,097)
Total Loans	122,556	127,164
Multifamily Residential Properties | Loans Secured by Real Estate | Commercial and Other Real Estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Principal	125,889	110,336
Net Unaccreted Discounts, Net Deferred Fees	(496)	(478)
Total Loans	$ 125,393	$ 109,858

XML

Loans - Additional Information (Detail)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2017 USD ($) Loan	Jun. 30, 2016 USD ($) Loan	Jun. 30, 2017 USD ($) Loan	Jun. 30, 2016 USD ($) Loan	Dec. 31, 2016 USD ($) Loan
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans held for sale	$ 0		$ 0
Credit purchase impaired loan	462,000		462,000		$ 623,000
Recorded Investment	302,000	$ 377,000	302,000	$ 377,000	408,000
Unpaid Principal Balance	$ 518,000	$ 591,000	$ 518,000	$ 591,000	1,174,000
Loans modified or restructured | Loan	0	0	0	0
Payment defaults subsequent to modification on troubled debt restructured loans	$ 0	$ 0	$ 0	$ 0
Commitment to lend borrowers	0		0		0
SBA Servicing Asset
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, net	108,000,000		108,000,000
Loan balances sold	77,000,000		77,000,000
SBA 7a Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, net	893,000		893,000
Commercial and Industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Credit purchase impaired loan	231,000		231,000		378,000
Recorded Investment	302,000	377,000	302,000	377,000	408,000
Unpaid Principal Balance	518,000	$ 591,000	518,000	$ 591,000	$ 1,174,000
Number of Loans | Loan					1
Pre-Modification Recorded Investment					$ 650,000
Post-Modification Recorded Investment					184,000
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	6,000,000		6,000,000
Debt Instrument Guaranteed Loans | SBA 7a Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans, net	671,000		671,000
PCI Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Credit purchase impaired loan	1,502,000		1,502,000		1,712,000
Recorded Investment	84,000		84,000
Unpaid Principal Balance			$ 244,000
Number of Loans | Loan			2
PCI Loans | Commercial and Industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Credit purchase impaired loan	$ 265,000		$ 265,000		$ 299,000

XML

Summary of Activity for Allowance for Loan Loss (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Receivables [Abstract]
Allowance for loan loss at beginning of period	$ 19,605	$ 16,545	$ 19,374	$ 15,682
Provision for loan losses	701	1,063	701	1,685
Net (charge-offs) recoveries:
Charge-offs	(2)	(20)	(2)	(20)
Recoveries	22	888	253	1,129
Net recoveries	20	868	251	1,109
Allowance for loan loss at end of period	$ 20,326	$ 18,476	$ 20,326	$ 18,476
Net (charge-offs) recoveries to average loans	0.00%	0.05%	0.01%	0.06%
Allowance for loan loss to total loans	0.94%		0.94%		0.94%

XML

Changes in Allowance for Loan Loss (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan loss at beginning of period	$ 19,605	$ 16,545	$ 19,374	$ 15,682
Provision for loan losses	701	1,063	701	1,685
Net (charge-offs) recoveries:
Charge-offs	(2)	(20)	(2)	(20)
Recoveries	22	888	253	1,129
Net recoveries	20	868	251	1,109
Allowance for loan loss at end of period	20,326	18,476	20,326	18,476
Commercial and Industrial
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan loss at beginning of period	6,862	6,725	7,130	5,924
Provision for loan losses	522	789	25	1,350
Net (charge-offs) recoveries:
Charge-offs	(2)	(20)	(2)	(20)
Recoveries	6	887	235	1,127
Net recoveries	4	867	233	1,107
Allowance for loan loss at end of period	7,388	8,381	7,388	8,381
Construction, Land Development and Other Land
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan loss at beginning of period	3,147	2,711	3,084	2,076
Provision for loan losses	86	13	149	648
Net (charge-offs) recoveries:
Allowance for loan loss at end of period	3,233	2,724	3,233	2,724
Commercial and Other Real Estate
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan loss at beginning of period	9,228	6,374	8,487	6,821
Provision for loan losses	(71)	192	668	(256)
Net (charge-offs) recoveries:
Recoveries	16	1	18	2
Net recoveries	16	1	18	2
Allowance for loan loss at end of period	9,173	6,567	9,173	6,567
Other Loans
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan loss at beginning of period	368	735	673	861
Provision for loan losses	164	69	(141)	(57)
Net (charge-offs) recoveries:
Allowance for loan loss at end of period	$ 532	$ 804	$ 532	$ 804

XML

Allowance for Loan Loss and Associated Loan Balance Classified by Loan Portfolio Segment and by Credit Evaluation Methodology (Detail) - USD ($) $ in Thousands	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015
Financing Receivable, Allowance for Credit Losses [Line Items]
Individually evaluated for impairment	$ 0		$ 0
Collectively evaluated for impairment	20,326		19,374
Total Allowance for Loan Loss	20,326	$ 19,605	19,374	$ 18,476	$ 16,545	$ 15,682
Loans receivable:
Individually evaluated for impairment	462		623
Collectively evaluated for impairment	2,149,629		2,047,891
Total Loans	2,151,593		2,050,226
PCI Loans
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)	1,502		1,712
Commercial and Industrial
Financing Receivable, Allowance for Credit Losses [Line Items]
Individually evaluated for impairment	0		0
Collectively evaluated for impairment	7,388		7,130
Total Allowance for Loan Loss	7,388	6,862	7,130	8,381	6,725	5,924
Loans receivable:
Individually evaluated for impairment	231		378
Collectively evaluated for impairment	495,136		501,960
Total Loans	495,632		502,637
Commercial and Industrial | PCI Loans
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)	265		299
Construction, Land Development and Other Land
Financing Receivable, Allowance for Credit Losses [Line Items]
Individually evaluated for impairment	0		0
Collectively evaluated for impairment	3,233		3,084
Total Allowance for Loan Loss	3,233	3,147	3,084	2,724	2,711	2,076
Loans receivable:
Collectively evaluated for impairment	205,845		194,059
Total Loans	205,845		194,059
Construction, Land Development and Other Land | PCI Loans
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	9,173		8,487
Total Allowance for Loan Loss	9,173	9,228	8,487	6,567	6,374	6,821
Loans receivable:
Individually evaluated for impairment	231		245
Collectively evaluated for impairment	1,404,717		1,316,849
Total Loans	1,406,185		1,318,507
Commercial and Other Real Estate | PCI Loans
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)	1,237		1,413
Other Loans
Financing Receivable, Allowance for Credit Losses [Line Items]
Individually evaluated for impairment	0		0
Collectively evaluated for impairment	532		673
Total Allowance for Loan Loss	532	$ 368	673	$ 804	$ 735	$ 861
Loans receivable:
Collectively evaluated for impairment	43,931		35,023
Total Loans	43,931		35,023
Other Loans | PCI Loans
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	Jun. 30, 2017	Dec. 31, 2016
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	$ 2,151,593	$ 2,050,226
Commercial and Industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	495,632	502,637
Construction, Land Development and Other Land
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	205,845	194,059
Commercial and Other Real Estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	1,406,185	1,318,507
Other Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	43,931	35,023
Pass
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	2,083,916	1,971,226
Pass | Commercial and Industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	450,109	456,885
Pass | Construction, Land Development and Other Land
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	205,845	194,059
Pass | Commercial and Other Real Estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	1,384,154	1,288,154
Pass | Other Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	43,808	32,128
Special Mention
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	20,406	20,331
Special Mention | Commercial and Industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	14,784	12,774
Special Mention | Commercial and Other Real Estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	5,588	7,557
Special Mention | Other Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	34
Substandard
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	47,271	58,669
Substandard | Commercial and Industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	30,739	32,978
Substandard | Commercial and Other Real Estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	16,443	22,796
Substandard | Other Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	$ 89	$ 2,895

XML

Aging Analysis of Recorded Investment (Detail) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due and Accruing	$ 702	$ 212
Total Non-Accrual	726	1,122
Current	2,150,165	2,048,892
Total Loans	2,151,593	2,050,226
Commercial and Industrial
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due and Accruing	259
Total Non-Accrual	495	675
Current	494,878	501,962
Total Loans	495,632	502,637
Construction, Land Development and Other Land
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	205,845	194,059
Total Loans	205,845	194,059
Commercial and Other Real Estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due and Accruing	443	212
Total Non-Accrual	231	447
Current	1,405,511	1,317,848
Total Loans	1,406,185	1,318,507
Other Loans
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	43,931	35,023
Total Loans	43,931	35,023
Loans 31 to 60 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due and Accruing	702	212
Loans 31 to 60 Days Past Due | Commercial and Industrial
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due and Accruing	259
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	$ 443	$ 212

XML

Recorded Investment and Unpaid Principal Balances for Impaired Loans (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Financing Receivable, Impaired [Line Items]
Recorded Investment	$ 462		$ 462		$ 623
Unpaid Principal Balance	904		904		1,665
Related Allowance, With a specific allowance recorded	0		0		0
Average Recorded Investment	472	$ 1,117	479	$ 1,019
Interest Income Recognized	3		3
Commercial and Industrial
Financing Receivable, Impaired [Line Items]
Recorded Investment, With no specific allowance recorded	231		231		378
Recorded Investment, With a specific allowance recorded	0		0		0
Recorded Investment	231		231		378
Unpaid Principal Balance, With no specific allowance recorded	632		632		1,383
Unpaid Principal Balance, With a specific allowance recorded	0		0		0
Unpaid Principal Balance	632		632		1,383
Related Allowance, With a specific allowance recorded	0		0		0
Average Recorded Investment, With no specific allowance recorded	237	545	241	400
Average Recorded Investment, With a specific allowance recorded		316		158
Average Recorded Investment	237	861	241	558
Interest Income Recognized, With no specific allowance recorded	3		3
Interest Income Recognized, With a specific allowance recorded	0	0	0	0
Interest Income Recognized	3		3
Commercial and Other Real Estate
Financing Receivable, Impaired [Line Items]
Recorded Investment, With no specific allowance recorded	231		231		245
Recorded Investment, With a specific allowance recorded	0		0		0
Recorded Investment	231		231		245
Unpaid Principal Balance, With no specific allowance recorded	272		272		282
Unpaid Principal Balance, With a specific allowance recorded	0		0		0
Unpaid Principal Balance	272		272		282
Related Allowance, With a specific allowance recorded	0		0		$ 0
Average Recorded Investment, With no specific allowance recorded	235	256	238	461
Average Recorded Investment	235	256	238	461
Interest Income Recognized, With a specific allowance recorded	$ 0	$ 0	$ 0	$ 0

XML

Additional Information on Impaired Loans (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Receivables [Abstract]
Interest foregone on impaired loans	$ 13	$ 22	$ 26	$ 46
Cash collections applied to reduce principal balance	24	$ 28	45	$ 52
Interest income recognized on cash collections	$ 3		$ 3

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Recorded Investment and Unpaid Principal Balances for Troubled Debt Restructured Loans (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Financing Receivable, Modifications [Line Items]
Recorded Investment	$ 302	$ 377	$ 302	$ 377	$ 408
Unpaid Principal Balance	518	591	518	591	1,174
Interest Income Recognized	0	0	0	0	0
Commercial and Industrial
Financing Receivable, Modifications [Line Items]
Recorded Investment	302	377	302	377	408
Unpaid Principal Balance	518	591	518	591	1,174
Interest Income Recognized	$ 0	$ 0	$ 0	$ 0	$ 0

XML

Accretable Yield for Acquired Loans (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Receivables [Abstract]
Balance, beginning of period	$ 8,496	$ 13,470	$ 9,611	$ 14,610
Accretion, included in interest income	(637)	(1,517)	(1,752)	(2,650)
Reclassifications to non-accretable yield		(25)		(32)
Balance, end of period	$ 7,859	$ 11,928	$ 7,859	$ 11,928

XML

Carrying Value of Purchased Credit Impaired Loans (Detail) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	$ 904	$ 1,665
Carrying Value	462	623
Commercial and Industrial
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	632	1,383
Carrying Value	231	378
Commercial and Other Real Estate
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	272	282
Carrying Value	231	245
PCI Loans
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	2,166	2,619
Carrying Value	1,502	1,712
PCI Loans | Commercial and Industrial
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	579	622
Carrying Value	265	299
PCI Loans | Commercial and Other Real Estate
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance	1,587	1,997
Carrying Value	$ 1,237	$ 1,413

XML

Accretable Net Discount of Purchased Credit Impaired Loans (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Acquired Impaired Loans Change In Accretable Yield [Line Items]
Balance, beginning of period	$ 8,496	$ 13,470	$ 9,611	$ 14,610
Accretion, included in interest income	(637)	(1,517)	(1,752)	(2,650)
Balance, end of period	7,859	11,928	7,859	11,928
PCI Loans
Acquired Impaired Loans Change In Accretable Yield [Line Items]
Balance, beginning of period	138	226	161	246
Accretion, included in interest income	(23)	(21)	(46)	(41)
Reclassifications from non-accretable yield	0	0	0	0
Balance, end of period	$ 115	$ 205	$ 115	$ 205

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Qualified Affordable Housing Project Investments - Additional Information (Detail) - Low Income Housing Tax Credits - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Investment Holdings [Line Items]
Investment cost	$ 6,000		$ 6,000		$ 6,200
Investment in funding obligation	3,300		3,300		$ 3,400
Tax credits and other tax benefits	205	$ 143	345	$ 287
Amortization expense	$ 163	$ 112	$ 273	$ 224

XML

Borrowings and Subordinated Debentures - Additional Information (Detail)	6 Months Ended
	Jun. 30, 2017 USD ($) Debentures	Dec. 31, 2016 USD ($)	Mar. 31, 2016 USD ($)
Debt Instrument [Line Items]
Securities with a fair value	$ 42,000,000	$ 48,000,000
Issuance maturity period from its date of issue	30 years
PC Bancorp
Debt Instrument [Line Items]
Subordinated debentures	$ 12,400,000
Subordinated Debentures
Debt Instrument [Line Items]
Number of debentures | Debentures	3
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.
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			$ 786,000,000
Credit facility, loan collateral pledge	$ 1,000,000,000
Maximum advances by FHLB	720,000,000
Investment securities pledged with FHLB	14,000,000
Outstanding advances (borrowings) with FHLB	0	$ 0
Trust I | Subordinated Debentures
Debt Instrument [Line Items]
Prepayment penalties	0
Trust II | Subordinated Debentures
Debt Instrument [Line Items]
Prepayment penalties	0
Trust III | Subordinated Debentures
Debt Instrument [Line Items]
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	6 Months Ended	12 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Financial Instruments Owned and Pledged as Collateral [Line Items]
Amount	$ 12,180	$ 18,816
Interest Rate	0.24%	0.25%
June 30, 2017
Financial Instruments Owned and Pledged as Collateral [Line Items]
Amount	$ 12,180
Term	3 days
Maturity Date	Jul. 03, 2017
June 30, 2017 | Minimum
Financial Instruments Owned and Pledged as Collateral [Line Items]
Interest Rate	0.20%
June 30, 2017 | Maximum
Financial Instruments Owned and Pledged as Collateral [Line Items]
Interest Rate	0.25%
December 31, 2016
Financial Instruments Owned and Pledged as Collateral [Line Items]
Amount		$ 18,816
December 31, 2016 | Minimum
Financial Instruments Owned and Pledged as Collateral [Line Items]
Interest Rate		0.20%
Term		4 days
Maturity Date		Jan. 04, 2017
December 31, 2016 | Maximum
Financial Instruments Owned and Pledged as Collateral [Line Items]
Interest Rate		0.25%

XML

Subordinated Debentures Outstanding (Detail) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Financial Instruments Owned and Pledged as Collateral [Line Items]
Amount, gross	$ 12,372	$ 12,372
Unamortized fair value adjustment	(2,436)	(2,516)
Net	9,936	9,856
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	3.29%	3.01%
Next Reset Date	Sep. 15, 2017	Mar. 15, 2017
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	2.99%	2.71%
Next Reset Date	Sep. 15, 2017	Mar. 15, 2017
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	3.09%	2.81%
Next Reset Date	Sep. 15, 2017	Mar. 15, 2017

XML

Derivative Financial Instruments - Additional Information (Detail)	6 Months Ended
	Jun. 30, 2017 USD ($) Agreement Derivative Financial_Institution	Dec. 31, 2016 USD ($)
Interest rate swap contracts fair value
Derivative [Line Items]
Required collateral	$ 3,300,000
Investment Securities | Interest rate swap contracts fair value
Derivative [Line Items]
Required collateral	602,000
Certificates of Deposits Pledged as Collateral | Interest rate swap contracts fair value
Derivative [Line Items]
Required collateral	$ 2,700,000
1st Enterprise Bank
Derivative [Line Items]
Number of counterparty banks | Financial_Institution	2
Derivative assets liabilities offset	$ 0
Total notional amount of swaps	$ 24,000,000	$ 24,000,000
1st Enterprise Bank | Maximum
Derivative [Line Items]
Outstanding swaps remaining maturity period	7 years
Derivatives not Designated as Hedging Instruments | 1st Enterprise Bank | Interest rate swap contracts fair value
Derivative [Line Items]
Swap contracts acquired | Derivative	11
Offsetting interest-rate swaps acquired | Derivative	11
Derivatives Designated as Hedging Instruments | PC Bancorp
Derivative [Line Items]
Number of pay-fixed, receive-variable interest rate swap agreements | Agreement	9

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Balance Sheet Classification of Derivative Financial Instruments (Detail) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Derivative [Line Items]
Asset Derivatives	$ 441	$ 523
Liability Derivatives	847	1,207
1st Enterprise Bank | Accrued Interest Payable and Other Liabilities | Interest rate swap contracts fair value
Derivative [Line Items]
Liability Derivatives	441	523
1st Enterprise Bank | Accrued Interest Receivable and Other Assets | Interest rate swap contracts fair value
Derivative [Line Items]
Asset Derivatives	441	523
PC Bancorp | Accrued Interest Payable and Other Liabilities
Derivative [Line Items]
Liability Derivatives	406	684
PC Bancorp | Accrued Interest Payable and Other Liabilities | Interest Rate Contracts
Derivative [Line Items]
Liability Derivatives	7,721	17,642
Derivatives not Designated as Hedging Instruments | PC Bancorp | Accrued Interest Payable and Other Liabilities | Interest rate swap contracts fair value
Derivative [Line Items]
Liability Derivatives		95
Derivatives Designated as Hedging Instruments | PC Bancorp | Accrued Interest Payable and Other Liabilities | Interest rate swap contracts fair value
Derivative [Line Items]
Liability Derivatives	$ 406	$ 589

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Effect of Derivative Instruments on Consolidated Statements of Income (Detail) - Loans Payable - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Derivatives not Designated as Hedging Instruments
Derivative [Line Items]
Increase in fair value of interest rate swap contracts	$ 40	$ 52	$ 95	$ 91
Payments on interest rate swap contracts on loans and subordinated debentures	(39)	(60)	(92)	(122)
Derivatives not Designated as Hedging Instruments | Other Non-Interest Income
Derivative [Line Items]
Net increase (decrease) in income	1	(8)	3	(31)
Derivatives Designated as Hedging Instruments
Derivative [Line Items]
Increase in fair value of interest rate swap contracts	62	139	183	162
Increase in fair value of hedged loans	48	71	36	284
Payments on interest rate swap contracts on loans and subordinated debentures	(91)	(224)	(205)	(454)
Derivatives Designated as Hedging Instruments | Interest Income
Derivative [Line Items]
Net increase (decrease) in income	$ 19	$ (14)	$ 14	$ (8)

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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	Jun. 30, 2017	Dec. 31, 2016
Offsetting [Abstract]
Interest rate swap contracts fair value - Gross Amounts Recognized in the Consolidated Balance Sheets	$ 441	$ 523
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 / Liabilities Presented in the Consolidated Balance Sheets	441	523
Interest rate swap contracts fair value - Gross Amounts Not Offset in the Consolidated Balance Sheets - Financial Instruments	441	523
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	441	523
Total - Gross Amounts Offset in the Consolidated Balance Sheets	0	0
Total - Net Amounts of Assets / Liabilities Presented in the Consolidated Balance Sheets	441	523
Total - Gross Amounts Not Offset in the Consolidated Balance Sheets - Financial Instruments	441	523
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	847	1,207
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 / Liabilities Presented in the Consolidated Balance Sheets	847	1,207
Interest rate swap contracts fair value - Gross Amounts Not Offset in the Consolidated Balance Sheets - Financial Instruments	847	1,207
Interest rate swap contracts fair value - Gross Amounts Not Offset in the Consolidated Balance Sheets - Collateral Pledged	3,336	4,555
Interest rate swap contracts fair value - Net Amount (Collateral over liability balance required to be pledged)	2,489	3,348
Securities sold under agreements to repurchase - Gross Amounts Recognized in the Consolidated Balance Sheets	12,180	18,816
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 Assets / Liabilities Presented in the Consolidated Balance Sheets	12,180	18,816
Securities sold under agreements to repurchase - Gross Amounts Not Offset in the Consolidated Balance Sheets - Financial Instruments	12,180	18,816
Securities sold under agreements to repurchase - Gross Amounts Not Offset in the Consolidated Balance Sheets - Collateral Pledged	41,727	48,204
Securities sold under agreements to repurchase - Net Amount (Collateral over liability balance required to be pledged)	29,547	29,388
Total - Gross Amounts Recognized in the Consolidated Balance Sheets	13,027	20,023
Total - Gross Amounts Offset in the Consolidated Balance Sheets	0	0
Total - Net Amounts of Assets Presented in the Consolidated Balance Sheets	13,027	20,023
Total - Gross Amounts Not Offset in the Consolidated Balance Sheets - Financial Instruments	13,027	20,023
Total - Gross Amounts Not Offset in the Consolidated Balance Sheets - Collateral Pledged	45,063	52,759
Total - Net Amount (Collateral over liability balance required to be pledged)	$ 32,036	$ 32,736

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Future Compensation Expense Related to Unvested Restricted Stock Grants (Detail) - Restricted Stock $ in Thousands	6 Months Ended
	Jun. 30, 2017 USD ($)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Remainder of 2017	$ 1,577
2018	1,584
2019	534
2020	169
Thereafter	21
Total	$ 3,885

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Stock Options and Restricted Stock - Additional Information (Detail) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
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 7 months 13 days
Total intrinsic value of options exercised	$ 0	$ 2,700	$ 642	$ 5,600
Restricted Stock Units (RSUs) | Equity Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based compensation, options granted			40

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Share Option Activity (Detail) - USD ($) $ / shares in Units, $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Shares
Exercised, Shares	(27,942)
Equity Plan | Stock Options
Shares
Outstanding stock options at beginning, Shares	47,697
Granted, Shares	0
Exercised, Shares	(27,942)
Forfeited, Shares	0
Expired, Shares	0
Outstanding stock options at ending, Shares	19,755	47,697
Exercisable options at June 30, 2017, Shares	19,755
Unvested options at June 30, 2017, Shares	0
Weighted Average Exercise Price
Outstanding stock options at beginning, Weighted Average Exercise Price	$ 12.69
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	8.67	$ 12.69
Exercisable options at end, Weighted Average Exercise Price	8.67
Unvested options at end, Weighted Average Exercise Price	$ 0
Weighted Average Remaining Contractual Term
Outstanding stock options at June 30, 2017	1 year 10 months 17 days	1 year 5 months 5 days
Exercisable options at end, Weighted Average Remaining Contractual Term	1 year 10 months 17 days
Aggregate Intrinsic Value
Outstanding stock options at beginning, Aggregate Intrinsic Value	$ 19,755	$ 1,102
Exercisable options at end, Aggregate Intrinsic Value	19,755
Unvested options at end, Aggregate Intrinsic Value	$ 0

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Restricted Stock Activity (Detail) - Restricted Stock	6 Months Ended
	Jun. 30, 2017 $ / shares shares
Number of Shares
Unvested, at beginning, Number of Shares | shares	282,082
Granted, Number of Shares | shares	65,615
Vested, Number of Shares | shares	(35,082)
Forfeited, Number of Shares | shares	(6,934)
Unvested, at end, Number of Shares | shares	305,681
Weighted-Average Grant-Date Fair Value per Share
Unvested, at beginning, Weighted-Average Grant-Date Fair Value per Share | $ / shares	$ 21.98
Granted, Weighted-Average Grant-Date Fair Value per Share | $ / shares	38.04
Vested, Weighted-Average Grant-Date Fair Value per Share | $ / shares	20.98
Forfeited, Weighted-Average Grant-Date Fair Value per Share | $ / shares	22.66
Unvested, at end, Weighted-Average Grant-Date Fair Value per Share | $ / shares	$ 25.84

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Shareholders' Equity - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands				6 Months Ended
	Nov. 30, 2018	Mar. 01, 2016	Nov. 30, 2014	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Class of Stock [Line Items]
Shares issued during period upon exercise of stock options				27,942
Shares issued during period upon exercise of stock options for total value				$ 435	$ 3,453
Preferred stock, liquidation preference per share			$ 1,000	$ 1,000
Carrying value of preferred stock				$ 16,818		$ 16,955
Series A Preferred Stock
Class of Stock [Line Items]
Preferred stock, liquidation preference per share				$ 1,000		$ 1,000
Coupon dividend rate		9.00%
Series A Preferred Stock | 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/amortization on net discount				900,000
Carrying value of preferred stock				17,000
Preferred stock value, gross				16,000
Preferred stock value net premium				$ 500
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 of restricted stock issued to employees and directors				65,615
Share based compensation, unvested restricted shares forfeited				14,498
Shares repurchased of restricted stock value				$ 569
Unvested Restricted Stock
Class of Stock [Line Items]
Share based compensation, unvested restricted shares forfeited				6,934

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Changes in Accumulated Other Comprehensive Income (Loss) (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance			$ 338,185	$ 306,807
Related tax effect	$ (1,013)	$ (598)	(1,192)	(1,157)
Reclassification of gain on investment securities available-for-sale to net income			(141)
Related tax effect			59
Other Comprehensive Income	1,396	825	1,561	1,594
Ending Balance	357,576	326,459	357,576	326,459
Unrealized Gains (Losses) on Investment Securities
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance	(2,854)	(47)	(3,019)	(816)
Net unrealized gain arising during the period	2,409	1,423	2,835	2,751
Ending Balance	$ (1,458)	$ 778	$ (1,458)	$ 778

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Commitments and Contingencies - Additional Information (Detail)	6 Months Ended
	Jun. 30, 2017 USD ($) Lawsuit	Dec. 31, 2016 USD ($)
Other Commitments [Line Items]
Legal proceedings against the company	$ 0
Number of shareholder class action lawsuits | Lawsuit	2
Allowance for losses on unfunded loan commitments	$ 886,000	$ 886,000
Commitments to Extend Credit
Other Commitments [Line Items]
Financial instruments with off balance sheet risk	936,000,000	1,000,000,000
Commitments to Extend Credit | Standby Letters of Credit
Other Commitments [Line Items]
Financial instruments with off balance sheet risk	$ 73,000,000	$ 85,000,000

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Financial Assets and Financial Liabilities Measured at Fair Value on Recurring Basis (Detail) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available-for-sale	$ 453,952	$ 469,950
Financial assets measured at fair value on recurring basis	454,393	470,473
Interest Rate Swap Contracts	847	1,207
U.S. Govt Agency and Sponsored Agency - Note Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available-for-sale	9,958	9,969
U.S. Govt Agency - SBA Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available-for-sale	117,382	122,850
U.S. Govt Agency - GNMA Mortgage-Backed Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available-for-sale	19,782	22,370
U.S. Govt Sponsored Agency - CMO & Mortgage-Backed Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available-for-sale	248,313	238,900
Asset Backed Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available-for-sale	6,592	6,896
U. S. Treasury Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available-for-sale	51,925	68,965
Interest rate swap contracts fair value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial assets measured at fair value on recurring basis	441	523
Interest Rate Swap Contracts	847	1,207
Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial assets measured at fair value on recurring basis	51,925	68,965
Quoted Prices in Active Markets for Identical Assets (Level 1) | U. S. Treasury Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available-for-sale	51,925	68,965
Significant Other Observable Inputs (Level 2)
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial assets measured at fair value on recurring basis	402,468	401,508
Significant Other Observable Inputs (Level 2) | U.S. Govt Agency and Sponsored Agency - Note Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available-for-sale	9,958	9,969
Significant Other Observable Inputs (Level 2) | U.S. Govt Agency - SBA Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available-for-sale	117,382	122,850
Significant Other Observable Inputs (Level 2) | U.S. Govt Agency - GNMA Mortgage-Backed Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available-for-sale	19,782	22,370
Significant Other Observable Inputs (Level 2) | U.S. Govt Sponsored Agency - CMO & Mortgage-Backed Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available-for-sale	248,313	238,900
Significant Other Observable Inputs (Level 2) | Asset Backed Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities available-for-sale	6,592	6,896
Significant Other Observable Inputs (Level 2) | Interest rate swap contracts fair value
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial assets measured at fair value on recurring basis	441	523
Interest Rate Swap Contracts	$ 847	$ 1,207

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Fair Value Information - Additional Information (Detail) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial assets measured at fair value on recurring basis	$ 454,393,000	$ 470,473,000
Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial assets measured at fair value on recurring basis	0	0
Financial liabilities measured at fair value on recurring basis	0	0
Fair Value Hierarchy for Assets Measured on Recurring Basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
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 Assets Measured on Recurring Basis | Significant Unobservable Inputs (Level 3)
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 Hierarchy for Asset Measured on Non-recurring Basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
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 | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Transfer of assets in or out of Level 3	$ 0	$ 0

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Balances of Assets Measured at Fair Value on Non-Recurring Basis (Detail) - Fair Value Hierarchy for Asset Measured on Non-recurring Basis - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
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)		$ 73
SBA Servicing Asset	$ 901	940
Total	901	1,013
Significant Unobservable Inputs (Level 3)
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)		73
SBA Servicing Asset	901	940
Total	$ 901	$ 1,013

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Significant Unobservable Inputs Used in Fair Value Measurements for Level 3 Assets Measured at Fair Value on Recurring or Non-Recurring Basis (Detail) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Fair Value Hierarchy for Asset Measured on Non-recurring Basis
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Assets, fair value	$ 901	$ 1,013
Collateral Dependent Impaired Loans With Specific Valuation Allowance And/Or Partial Charge-Off | Fair Value Hierarchy for Asset Measured on Non-recurring Basis
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Assets, fair value		$ 73
Collateral Dependent Impaired Loans With Specific Valuation Allowance And/Or Partial Charge-Off | Credit Loss Estimate of Aged Accounts Receivable Collateral
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Credit loss factors on aging of accounts receivable collateral		20.00%
Valuation Model and/or Factors		Credit loss factors on aging of accounts receivable collateral
SBA Servicing Assets | Fair Value Hierarchy for Asset Measured on Non-recurring Basis
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Assets, fair value	$ 901	$ 940
SBA Servicing Assets | Discounted Cash Flow
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Discount Rates	13.00%	13.00%
Estimated average remaining life of SBA portfolio	39 months	39 months
SBA Servicing Assets | Discounted Cash Flow - Discount Rates
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Valuation Model and/or Factors	Discount Rates	Discount Rates
SBA Servicing Assets | Discounted Cash Flow - Prepayment Speed
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Valuation Model and/or Factors	Estimated Average Remaining Life of SBA Portfolio	Estimated Average Remaining Life of SBA Portfolio

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Level in Fair Value Hierarchy for Financial Instruments Estimated Fair Values (Detail) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and due from banks	$ 56,382	$ 41,281
Interest earning deposits in other financial institutions	111,852	167,789
Investment securities held-to-maturity, Carrying Amount	39,992	42,027
Loans, net, Carrying Amount	2,131,267	2,030,852
Bank owned life insurance, Carrying Amount	61,536	51,216
FHLB Stock, Carrying Amount	11,902	9,182
Certificates of deposit, Carrying Amount	29,725	29,480
Securities sold under agreements to repurchase, Carrying Amount	12,180	18,816
Subordinated debentures, Carrying Amount	9,936	9,856
Cash and due from banks	56,382	41,281
Interest earning deposits in other financial institutions	111,852	167,789
Investment securities held-to-maturity	40,500	41,937
Loans, net, Fair Value	2,151,147	2,054,701
Bank owned life insurance, Fair Value	61,536	51,216
FHLB Stock, Fair Value	11,902	9,182
Certificates of deposit, Fair Value	29,727	29,480
Securities sold under agreements to repurchase, Fair Value	12,180	18,816
Subordinated debentures, Fair Value	12,372	12,372
Carrying (Reported) Amount, Fair Value Disclosure
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and due from banks	56,382	41,281
Interest earning deposits in other financial institutions	111,852	167,789
Investment securities held-to-maturity, Carrying Amount	39,992	42,027
Loans, net, Carrying Amount	2,131,267	2,030,852
Bank owned life insurance, Carrying Amount	61,536	51,216
FHLB Stock, Carrying Amount	11,902	9,182
Certificates of deposit, Carrying Amount	29,725	29,480
Securities sold under agreements to repurchase, Carrying Amount	12,180	18,816
Subordinated debentures, Carrying Amount	9,936	9,856
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	56,382	41,281
Interest earning deposits in other financial institutions	111,852	167,789
Significant Other Observable Inputs (Level 2)
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investment securities held-to-maturity	40,500	41,937
Certificates of deposit, Fair Value	29,727	29,480
Securities sold under agreements to repurchase, Fair Value	12,180	18,816
Subordinated debentures, Fair Value	12,372	12,372
Significant Unobservable Inputs (Level 3)
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Loans, net, Fair Value	2,151,147	2,054,701
Bank owned life insurance, Fair Value	61,536	51,216
FHLB Stock, Fair Value	$ 11,902	$ 9,182