10-Q 1 bbcn-3311610q.htm 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________________________________
FORM 10-Q
______________________________________________
(Mark One)

x | Quarterly report pursuant to section 13 or 15 (d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2016
or

o | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to
Commission File Number: 000-50245
______________________________________________
BBCN BANCORP, INC.
(Exact name of registrant as specified in its charter)
______________________________________________

Delaware |  | 95-4849715
(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification Number)
3731 Wilshire Boulevard, Suite 1000, Los Angeles, California |  | 90010
(Address of principal executive offices) |  | (ZIP Code)

(213) 639-1700
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
______________________________________________
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer | x |  | Accelerated filer | o
Non-accelerated filer | o |  | Smaller Reporting Company | o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
As of May 5, 2016, there were 79,604,188 outstanding shares of the issuer’s common stock, $0.001 par value.

Table of Contents

|  | Page
PART I FINANCIAL INFORMATION |
| Forward-Looking Statements | 3
Item 1. | FINANCIAL STATEMENTS |
| Condensed Consolidated Statements of Financial Condition - March 31, 2016 (Unaudited) and December 31, 2015 | 4
| Condensed Consolidated Statements of Income - Three Months Ended March 31, 2016 and 2015 (Unaudited) | 6
| Condensed Consolidated Statements of Comprehensive Income - Three Months Ended March 31, 2016 and 2015 (Unaudited) | 7
| Condensed Consolidated Statements of Changes in Stockholders’ Equity - Three Months Ended March 31, 2016 and 2015 (Unaudited) | 8
| Condensed Consolidated Statements of Cash Flows - Three Months Ended March 31, 2016 and 2015 (Unaudited) | 9
| Notes to Condensed Consolidated Financial Statements (Unaudited) | 10
Item 2 | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 51
Item 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 70
Item 4. | CONTROLS AND PROCEDURES | 71
PART II OTHER INFORMATION |
Item 1. | Legal Proceedings | 72
Item 1A. | Risk Factors | 72
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 72
Item 3. | Defaults Upon Senior Securities | 72
Item 4. | Mine Safety Disclosures | 72
Item 5. | Other Information | 72
Item 6. | Exhibits | 72
| Signatures | 73
| Index to Exhibits | 74

2

Table of Contents
Forward-Looking Statements
Some statements in this Quarterly Report on Form 10-Q constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements relate to, among other things, expectations regarding the business environment in which we operate, projections of future performance, perceived opportunities in the market and statements regarding our business strategies, objectives and vision. Forward-looking statements include, but are not limited to, statements preceded by, followed by or that include the words “will,” “believes,” “expects,” “anticipates,” “intends,” “plans,” “estimates” or similar expressions. With respect to any such forward-looking statements, the Company claims the protection provided for in the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties. Our actual results, performance or achievements may differ significantly from the results, performance or achievements expressed or implied in any forward-looking statements. The risks and uncertainties include: possible deterioration in economic conditions in our areas of operation; interest rate risk associated with volatile interest rates and related asset-liability matching risk; liquidity risks; risk of significant non-earning assets, and net credit losses that could occur, particularly in times of weak economic conditions or times of rising interest rates; risks associated with failure to close the currently pending merger with Wilshire Bancorp, Inc. or to successfully integrate and operate the combined banking franchise assuming the merger closes; and regulatory risks associated with current and future regulations. For additional information concerning these and other risk factors, see Part II, Item 1A. Risk Factors contained herein and Part I, Item 1A. Risk Factors contained in our Annual Report on Form 10-K for the year ended December 31, 2015.
The Company does not undertake, and specifically disclaims any obligation, to update any forward looking statements to reflect the occurrence of events or circumstances after the date of such statements except as required by law.
3

Table of Contents
PART I
FINANCIAL INFORMATION

Item 1. | Financial Statements

BBCN BANCORP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
| (Unaudited) |  |
| March 31, 2016 |  | December 31, 2015
ASSETS | (In thousands, except share data)
Cash and cash equivalents: |  |  |
Cash and due from banks | $ | 82,945 |  |  | $ | 94,934 |
Interest bearing deposits in other banks | 153,156 |  |  | 203,455 |
Total cash and cash equivalents | 236,101 |  |  | 298,389 |
Other investments | 49,365 |  |  | 47,895 |
Securities available for sale, at fair value | 1,087,897 |  |  | 1,010,556 |
Loans held for sale, at the lower of cost or fair value | 13,843 |  |  | 8,273 |
Loans receivable (net of allowance for loan losses of $76,856 and $76,408 at March 31, 2016 and December 31, 2015, respectively) | 6,295,079 |  |  | 6,171,933 |
Other real estate owned (“OREO”), net | 19,794 |  |  | 21,035 |
Federal Home Loan Bank (“FHLB”) stock, at cost | 18,964 |  |  | 18,964 |
Premises and equipment (net of accumulated depreciation and amortization of $37,513 and $35,792 at March 31, 2016 and December 31, 2015, respectively) | 35,134 |  |  | 34,575 |
Accrued interest receivable | 15,660 |  |  | 15,195 |
Deferred tax assets, net | 53,564 |  |  | 67,004 |
Customers’ liabilities on acceptances | 2,769 |  |  | 1,463 |
Bank owned life insurance (“BOLI”) | 47,292 |  |  | 47,018 |
Investments in affordable housing partnerships | 24,379 |  |  | 25,014 |
Goodwill | 105,401 |  |  | 105,401 |
Core deposit intangible assets, net | 2,607 |  |  | 2,820 |
Servicing assets | 11,856 |  |  | 12,000 |
Other assets | 44,047 |  |  | 25,113 |
Total assets | $ | 8,063,752 |  |  | $ | 7,912,648 |
(Continued) |

4

Table of Contents

BBCN BANCORP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
| (Unaudited) |  |
| March 31, 2016 |  | December 31, 2015
LIABILITIES AND STOCKHOLDERS’ EQUITY | (In thousands, except share data)
LIABILITIES: |  |  |
Deposits: |  |  |
Noninterest bearing | $ | 1,695,040 |  |  | $ | 1,694,427 |
Interest bearing: |  |  |
Money market and NOW accounts | 1,951,561 |  |  | 1,983,250 |
Savings deposits | 181,779 |  |  | 187,498 |
Time deposits of $100,000 or more | 1,885,842 |  |  | 1,772,984 |
Other time deposits | 753,189 |  |  | 702,817 |
Total deposits | 6,467,411 |  |  | 6,340,976 |
FHLB advances | 530,495 |  |  | 530,591 |
Subordinated debentures | 42,371 |  |  | 42,327 |
Accrued interest payable | 6,746 |  |  | 6,007 |
Acceptances outstanding | 2,769 |  |  | 1,463 |
Other liabilities | 51,978 |  |  | 53,189 |
Total liabilities | 7,101,770 |  |  | 6,974,553 |
STOCKHOLDERS’ EQUITY: |  |  |
Common stock, $0.001 par value; authorized 150,000,000 shares at March 31, 2016 and December 31, 2015; issued and outstanding, 79,597,106 and 79,566,356 shares at March 31, 2016 and December 31, 2015, respectively | 80 |  |  | 80 |
Additional paid-in capital | 541,625 |  |  | 541,596 |
Retained earnings | 413,122 |  |  | 398,251 |
Accumulated other comprehensive income (loss), net | 7,155 |  |  | (1,832 | )
Total stockholders’ equity | 961,982 |  |  | 938,095 |
Total liabilities and stockholders’ equity | $ | 8,063,752 |  |  | $ | 7,912,648 |

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
5

Table of Contents

BBCN BANCORP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
| Three Months Ended March 31,
| 2016 |  | 2015
| (In thousands, except per share data)
INTEREST INCOME: |  |  |
Interest and fees on loans | $ | 77,118 |  |  | $ | 69,639 |
Interest on securities | 5,677 |  |  | 4,207 |
Interest on federal funds sold and other investments | 666 |  |  | 708 |
Total interest income | 83,461 |  |  | 74,554 |
INTEREST EXPENSE: |  |  |
Interest on deposits | 9,907 |  |  | 7,754 |
Interest on FHLB advances | 1,523 |  |  | 1,297 |
Interest on other borrowings | 424 |  |  | 380 |
Total interest expense | 11,854 |  |  | 9,431 |
NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES | 71,607 |  |  | 65,123 |
PROVISION FOR LOAN LOSSES | 500 |  |  | 1,500 |
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES | 71,107 |  |  | 63,623 |
NONINTEREST INCOME: |  |  |
Service fees on deposit accounts | 2,683 |  |  | 3,062 |
International service fees | 776 |  |  | 814 |
Loan servicing fees, net | 690 |  |  | 720 |
Wire transfer fees | 914 |  |  | 763 |
Other income and fees | 1,887 |  |  | 2,039 |
Net gains on sales of SBA loans | 1,825 |  |  | 3,044 |
Net gains on sales of other loans | — |  |  | 182 |
Net gains on sales of securities available for sale | — |  |  | 424 |
Total noninterest income | 8,775 |  |  | 11,048 |
NONINTEREST EXPENSE: |  |  |
Salaries and employee benefits | 21,569 |  |  | 21,181 |
Occupancy | 4,817 |  |  | 4,692 |
Furniture and equipment | 2,287 |  |  | 2,263 |
Advertising and marketing | 1,136 |  |  | 1,391 |
Data processing and communication | 2,171 |  |  | 2,349 |
Professional fees | 1,083 |  |  | 1,424 |
FDIC assessments | 1,038 |  |  | 1,112 |
Credit related expenses | 421 |  |  | 855 |
OREO expense | 1,428 |  |  | 1,177 |
Merger and integration expense | 1,207 |  |  | 52 |
Other | 2,892 |  |  | 2,581 |
Total noninterest expense | 40,049 |  |  | 39,077 |
INCOME BEFORE INCOME TAX PROVISION | 39,833 |  |  | 35,594 |
INCOME TAX PROVISION | 16,210 |  |  | 14,236 |
NET INCOME | $ | 23,623 |  |  | $ | 21,358 |
EARNINGS PER COMMON SHARE |  |  |
Basic | $ | 0.30 |  |  | $ | 0.27 |
Diluted | $ | 0.30 |  |  | $ | 0.27 |

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
6

Table of Contents

BBCN BANCORP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
| Three Months Ended March 31,
| 2016 |  | 2015
| (In thousands)
Net income | $ | 23,623 |  |  | $ | 21,358 |
Other comprehensive income: |  |  |
Unrealized gains on securities available for sale and interest only strips | 15,592 |  |  | 5,255 |
Reclassification adjustments for gains realized in income | — |  |  | (424 | )
Tax expense | 6,605 |  |  | 2,048 |
Change in unrealized gains or losses on securities available for sale and interest only strips | 8,987 |  |  | 2,783 |
Total comprehensive income | $ | 32,610 |  |  | $ | 24,141 |

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
7

Table of Contents

BBCN BANCORP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Unaudited)
|  | Common stock |  |  |  |  |  |
|  | Shares |  | Amount |  | Additional paid-in capital |  | Retained earnings |  | Accumulated other comprehensive (loss) income, net
| (Dollars in thousands, except share data)
BALANCE, JANUARY 1, 2015 |  | 79,503,552 |  |  | $ | 79 |  |  | $ | 541,589 |  |  | $ | 339,400 |  |  | $ | 1,705 |
Issuance of additional shares pursuant to various stock plans |  | 38,769 |  |  |  |  |  |  |  |  |  |
Stock-based compensation |  |  |  |  |  | 235 |  |  |  |  |
Cash dividends declared on common stock |  |  |  |  |  |  |  | (7,951 | ) |  |
Comprehensive income: |  |  |  |  |  |  |  |  |  |
Net income |  |  |  |  |  |  |  | 21,358 |  |  |
Other comprehensive income |  |  |  |  |  |  |  |  |  | 2,783 |
BALANCE, MARCH 31, 2015 |  | 79,542,321 |  |  | $ | 79 |  |  | $ | 541,824 |  |  | $ | 352,807 |  |  | $ | 4,488 |
BALANCE, JANUARY 1, 2016 |  | 79,566,356 |  |  | $ | 80 |  |  | $ | 541,596 |  |  | $ | 398,251 |  |  | $ | (1,832 | )
Issuance of additional shares pursuant to various stock plans |  | 30,750 |  |  |  |  | 7 |  |  |  |  |  |  |
Stock-based compensation |  |  |  |  |  |  |  | 22 |  |  |  |  |  |  |
Cash dividends declared on common stock |  |  |  |  |  |  |  |  |  |  | (8,752 | ) |  |  |
Comprehensive income: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net income |  |  |  |  |  |  |  |  |  |  | 23,623 |  |  |  |
Other comprehensive income |  |  |  |  |  |  |  |  |  |  |  |  |  | 8,987 |
BALANCE, MARCH 31, 2016 |  | 79,597,106 |  |  | $ | 80 |  |  | $ | 541,625 |  |  | $ | 413,122 |  |  | $ | 7,155 |

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
8

Table of Contents

BBCN BANCORP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
| Three Months Ended March 31,
| 2016 |  | 2015
| (In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES |  |  |
Net income | $ | 23,623 |  |  | $ | 21,358 |
Adjustments to reconcile net income to net cash from operating activities: |  |  |  |
Depreciation, amortization, net of discount accretion | (798 | ) |  | (715 | )
Stock-based compensation expense | 22 |  |  | 235 |
Provision for loan losses | 500 |  |  | 1,500 |
Valuation adjustment of OREO | 695 |  |  | 378 |
Change in deferred income taxes, net | 6,794 |  |  | 5,290 |
Proceeds from sales of loans held for sale | 25,900 |  |  | 36,066 |
Originations of loans held for sale | (29,593 | ) |  | (31,837 | )
Net gains on sales of SBA and other loans | (1,825 | ) |  | (3,226 | )
Additions in servicing assets | (777 | ) |  | (1,045 | )
Net change in BOLI | (274 | ) |  | (269 | )
Loss on disposal of equipment | — |  |  | 7 |
Net gains on sales of securities available for sale | — |  |  | (424 | )
Net gains on sales of OREO | (132 | ) |  | (110 | )
Change in accrued interest receivable | (465 | ) |  | (270 | )
Change in investments in affordable housing partnership | 405 |  |  | (599 | )
Change in other assets | (18,978 | ) |  | (12,428 | )
Change in accrued interest payable | 739 |  |  | 622 |
Change in other liabilities | (981 | ) |  | 1,715 |
Net cash provided by operating activities | 4,855 |  |  | 16,248 |
CASH FLOWS FROM INVESTING ACTIVITIES |  |  |
Net change in loans receivable | (120,570 | ) |  | (141,318 | )
Proceeds from sales of securities available for sale | — |  |  | 22,510 |
Proceeds from sales of OREO | 2,617 |  |  | 2,400 |
Proceeds from sales of other loans held for sale | — |  |  | 1,326 |
Proceeds from sales and disposals of equipment | — |  |  | 6 |
Purchase of premises and equipment | (2,303 | ) |  | (1,101 | )
Purchase of securities available for sale | (99,566 | ) |  | (65,632 | )
Purchases of other investments | (1,470 | ) |  | — |
Redemption of FHLB stock | — |  |  | 35 |
Proceeds from matured or paid-down securities available for sale | 36,435 |  |  | 31,461 |
Net cash used in investing activities | (184,857 | ) |  | (150,313 | )
CASH FLOWS FROM FINANCING ACTIVITIES |  |  |
Net change in deposits | 126,459 |  |  | 109,727 |
Cash dividends paid on Common Stock | (8,752 | ) |  | (7,951 | )
Proceeds from FHLB advances | 150,000 |  |  | — |
Repayment of FHLB advances | (150,000 | ) |  | — |
Issuance of additional stock pursuant to various stock plans | 7 |  |  | — |
Net cash provided by financing activities | 117,714 |  |  | 101,776 |
NET CHANGE IN CASH AND CASH EQUIVALENTS | (62,288 | ) |  | (32,289 | )
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 298,389 |  |  | 462,160 |
CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 236,101 |  |  | $ | 429,871 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION |  |  |
Interest paid | $ | 11,115 |  |  | $ | 8,809 |
Income taxes paid | $ | 20,862 |  |  | $ | 15,852 |
SUPPLEMENTAL DISCLOSURES OF NON-CASH ACTIVITIES |  |  |
Transfer from loans receivable to OREO | $ | 1,895 |  |  | $ | 412 |
Transfer from loans receivable to other loans held for sale | $ | 52 |  |  | $ | 450 |

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
9

Table of Contents
BBCN BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1. | BBCN Bancorp, Inc.

BBCN Bancorp, Inc. (“BBCN Bancorp” on a parent-only basis and the “Company” on a consolidated basis), headquartered in Los Angeles, California, is the holding company for BBCN Bank (“BBCN Bank” or the “Bank”). The Bank has branches in California, New Jersey, and the New York City, Chicago, Seattle and Washington, D.C. metropolitan areas, as well as loan production offices in Atlanta, Annandale, Dallas, Denver, Portland, Seattle, and Northern California. The Company is a corporation organized under the laws of the state of Delaware and a bank holding company registered under the Bank Holding Company Act of 1956, as amended.
On December 7, 2015 the Company announced the signing of a definitive agreement and plan of merger (the “Merger Agreement”) with Wilshire Bancorp, Inc. (“Wilshire”) pursuant to which Wilshire will merge (the “merger”) with and into BBCN Bancorp with BBCN Bancorp as the surviving corporation. As part of the merger, Wilshire Bank, a wholly-owned subsidiary of Wilshire, will merge with and into the Bank. Under the terms of the Merger Agreement, Wilshire shareholders will receive a fixed exchange ratio of 0.7034 of a share of the Company’s common stock in exchange for each share of Wilshire common stock they own in a 100% stock-for-stock transaction.
The Merger Agreement contains customary representations and warranties, and each party has agreed to customary covenants, including, among others, covenants relating to the conduct of its business during the interim period between execution of the Merger Agreement and the closing time. In addition, the consummation of the Merger Agreement is subject to customary conditions and the receipt of requisite regulatory approvals. We currently expect to close the merger in mid-2016 subject to satisfaction of the conditions set forth in the Merger Agreement.

2. | Basis of Presentation

The condensed consolidated financial statements included herein have been prepared without an audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”), except for the Condensed Consolidated Statement of Financial Condition as of December 31, 2015 which was derived from audited financial statements included in the Company’s 2015 Annual Report on Form 10-K. Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such SEC rules and regulations.
The condensed consolidated financial statements include the accounts of BBCN Bancorp and its wholly owned subsidiaries, principally BBCN Bank. All intercompany transactions and balances have been eliminated in consolidation. The Company has made all adjustments, consisting solely of normal accruals, that in the opinion of management, are necessary to fairly present the Company’s financial position at March 31, 2016 and the results of operations for the three months then ended. Certain reclassifications have been made to prior period amounts to conform to the current year presentation. The results of operations for the interim periods are not necessarily indicative of results to be anticipated for the full year.
The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are susceptible to change in the near term relate to the determination of the allowance and provision for loan losses, the evaluation of other than temporary impairment of investment securities, accounting for derivatives and hedging activities, the determination of the carrying value for cash surrender value of life insurance, the determination of the carrying value of goodwill and other intangible assets, accounting for deferred tax assets and related valuation allowances, the determination of the fair values of investment securities and other financial instruments, accounting for lease arrangements, accounting for incentive compensation, profit sharing and bonus payments, and the valuation of servicing assets.
These unaudited condensed consolidated financial statements should be read along with the audited consolidated financial statements and accompanying notes included in the Company’s 2015 Annual Report on Form 10-K.
10

Table of Contents
Recent Accounting Pronouncements:
FASB ASU No. 2015-05, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting or Fees Paid in a Cloud Computing Arrangement. The amendments in ASU 2015-05 provide guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The amendments do not change the accounting for a customer’s accounting for service contracts. As a result of the amendments, all software licenses within the scope of Subtopic 350-40 will be accounted for consistently with other licenses of intangible assets. The amendments became effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. The adoption of ASU 2015-05 did not have a material effect on the Company’s financial statements.
FASB ASU No. 2015-10, Technical Corrections and Improvements. The amendments in ASU 2015-10 represent changes to clarify the Codification, correct unintended application of guidance, or make minor improvements to the Codification that are not expected to have significant effect on current accounting practice or create a significant administrative cost to most entities. The amendments that require transition guidance became effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2015. The adoption of ASU 2015-10 did not have a significant impact on the Company’s financial statements.
FASB ASU No. 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments. The FASB issued guidance that requires an acquirer in a business combination to recognize adjustments to estimated amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The amendments also require that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the estimated amounts, calculated as if the accounting had been completed at the acquisition date. The amendments became effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2015. The adoption of ASU 2015-16 did not have a significant impact on the Company’s financial statements.
FASB ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. The amendments eliminate the current requirement for organizations to present deferred tax liabilities and assets as current and noncurrent in a classified balance sheet. Instead, organizations will be required to classify all deferred tax assets and liabilities as noncurrent. The amendments become effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2016. The adoption of ASU 2015-17 is not expected to have a significant impact on the Company’s consolidated financial statements.
FASB ASU No. 2016-01, Financial Instruments─Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The amendments require equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. The amendments become effective for fiscal years beginning after December 15, 2017. The adoption of ASU 2016-01 is not expected to have a significant impact on the Company’s consolidated financial statements.
FASB ASU No. 2016-02, Leases (Topic 842). The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is evaluating the impact of the pending adoption of the new standard on its consolidated financial statements.
FASB ASU No. 2016-07, Investments - Equity Method and Joint Ventures (Topic 323): Simplifying the Transition to the Equity Method of Accounting. The amendments eliminate the requirement that when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, an investor must adjust the investment, results of operations, and retained earnings retroactively on a step-by-step basis as if the equity method had been in effect during all previous periods that the investment had been held. The amendments require that the equity method investor add the cost of acquiring the additional interest in the investee to the current basis of the investor’s previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting. Therefore, upon qualifying for the equity method of accounting, no retroactive adjustment of the investment is required. The amendments become effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years and early adoption is permitted. The Company is currently in the process of evaluating the impact of the pending adoption of the new standard on its consolidated financial statements.
11

Table of Contents
FASB ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net). The amendments are intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations by amending certain existing illustrative examples and adding additional illustrative examples to assist in the application of the guidance. The amendments become effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2017. The Company is currently in the process of evaluating the impact of the pending adoption of the new standard on its consolidated financial statements.
FASB ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The amendments require recognition of all excess tax benefits and tax deficiencies through income tax expense or benefit in the income statement. Other amendments in ASU 2016-09 include guidance on the classification of share based payment transactions in the statement of cash flows and an option to account for forfeitures of share-based awards as they occur rather than estimating the compensation cost based on the number of awards that are expected to vest. The amendments become effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company is currently in the process of evaluating the impact of the pending adoption of the new standard on its consolidated financial statements.
12

Table of Contents

3. | Stock-Based Compensation

The Company has a stock-based incentive plan, the 2007 BBCN Bancorp Equity Incentive Plan (the “2007 Plan”). The 2007 Plan, approved by the Company’s stockholders on May 31, 2007, was amended and restated on July 25, 2007 and again on December 1, 2011. The 2007 Plan provides for grants of stock options, stock appreciation rights (“SARs”), restricted stock, performance shares and performance units (sometimes referred to individually or collectively as “awards”) to non-employee directors, officers, employees and consultants of the Company. Stock options may be either incentive stock options (“ISOs”), as defined in Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), or nonqualified stock options (“NQSOs”).
The 2007 Plan gives the Company flexibility to (i) attract and retain qualified non-employee directors, executives and other key employees and consultants with appropriate equity-based awards; (ii) motivate high levels of performance; (iii) recognize employee contributions to the Company’s success; and (iv) align the interests of the 2007 Plan participants with those of the Company’s stockholders. The exercise price for shares under an ISO may not be less than 100% of fair market value on the date the award is granted under Code Section 422. Similarly, under the terms of the 2007 Plan the exercise price for SARs and NQSOs may not be less than 100% of fair market value on the date of grant. Performance units are awarded to a participant at the market price of the Company’s common stock on the date of award (after the lapse of the restriction period and the attainment of the performance criteria). No minimum exercise price is prescribed for performance shares and restricted stock awarded under the 2007 Plan.
ISOs, SARs and NQSOs have vesting periods of three to five years and have 10-year contractual terms. Restricted stock, performance shares, and performance units will be granted with a restriction period of not less than one year from the grant date for performance-based awards and not more than three years from the grant date for time-based vesting of grants. Compensation expense for awards is recognized over the vesting period.
The Company has another stock-based incentive plan, the 2006 Stock Incentive Plan, adopted April 12, 2006, as amended and restated June 13, 2007 (the “2006 Plan”). The 2006 Plan provides for the granting of incentive stock options to officers and employees and non-qualified stock options and restricted stock awards to employees (including officers) and non-employee directors. The option prices of all options granted under the 2006 Plan may not be less than 100% of the fair market value at the date of grant. All options granted generally vest at the rate of 20% per year except that the options granted to the non-employee directors vest at the rate of 33% per year. All options not exercised generally expire ten years after the date of grant.
Under the 2007 Plan and 2006 Plan, 2,589,428 shares were available for future grants as of March 31, 2016.
The total shares reserved for issuance will serve as the underlying value for all equity awards under the 2007 Plan and 2006 Plan. With the exception of the shares underlying stock options and restricted stock awards, the board of directors may choose to settle the awards by paying the equivalent cash value or by delivering the appropriate number of shares.
13

Table of Contents
The following is a summary of stock option activity under the 2007 Plan and 2006 Plan for the three months ended March 31, 2016:

| Number of Shares |  | Weighted- Average Exercise Price Per Share |  | Weighted- Average Remaining Contractual Life (Years) |  | Aggregate Intrinsic Value
Outstanding - January 1, 2016 | 457,851 |  |  | $ | 19.29 |  |  |  |  |
Granted | — |  |  | — |  |  |  |  |
Exercised | — |  |  | — |  |  |  |  |
Expired | (23,415 | ) |  | 18.99 |  |  |  |  |
Forfeited | — |  |  | — |  |  |  |  |
Outstanding - March 31, 2016 | 434,436 |  |  | $ | 19.30 |  |  | 2.19 |  | $ | 480 |
Options exercisable - March 31, 2016 | 296,436 |  |  | $ | 20.92 |  |  | 2.19 |  | $ | 480 |

The following is a summary of restricted stock and performance unit activity under the 2007 Plan and 2006 Plan for the three months ended March 31, 2016:

| Number of Shares |  | Weighted- Average Grant Date Fair Value
Outstanding - January 1, 2016 | 107,049 |  |  | $ | 13.72 |
Granted | — |  |  | — |
Vested | (34,086 | ) |  | 11.12 |
Forfeited | (2,163 | ) |  | 10.42 |
Outstanding - March 31, 2016 | 70,800 |  |  | $ | 15.07 |

The total fair value of restricted performance units vested for the three months ended March 31, 2016 and 2015 was $492 thousand and $575 thousand, respectively.
The amount charged against income related to stock-based payment arrangements was $22 thousand and $235 thousand for the three months ended March 31, 2016 and 2015, respectively.
The income tax benefit recognized was $9 thousand and $83 thousand for the three months ended March 31, 2016 and 2015, respectively.
At March 31, 2016, the unrecognized compensation expense related to non-vested stock option grants was $309 thousand which is expected to be recognized over a weighted average vesting period of 3.06 years. At March 31, 2016, the unrecognized compensation expense related to non-vested restricted units and performance units was $855 thousand which is expected to be recognized over a weighted average vesting period of 3.07 years.
14

Table of Contents

4. | Earnings Per Share (“EPS”)

Basic EPS does not reflect the possibility of dilution that could result from the issuance of additional shares of common stock upon exercise or conversion of outstanding securities, and is computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if stock options or other contracts to issue common stock were exercised or converted to common stock that would then share in our earnings. For the three months ended March 31, 2016, stock options and restricted shares awards for 443,956 shares of common stock were excluded in computing diluted earnings per common share because they were antidilutive. Additionally, warrants issued pursuant to the Company’s participation in the U.S. Treasury’s TARP Capital Purchase Plan, to purchase 19,420 shares and 18,882 shares of common stock were antidilutive and excluded for the three months ended March 31, 2016 and 2015, respectively.
The following tables show the computation of basic and diluted EPS for the three months ended March 31, 2016 and 2015.

| Three Months Ended March 31,
| 2016 |  | 2015
| Net Income (Numerator) |  | Weighted-Average Shares (Denominator) |  | Per Share (Amount) |  | Net Income (Numerator) |  | Weighted-Average Shares (Denominator) |  | Per Share (Amount)
| (In thousands, except share and per share data)
Basic EPS - common stock | $ | 23,623 |  |  | 79,583,188 |  |  | $ | 0.30 |  |  | $ | 21,358 |  |  | 79,526,218 |  |  | $ | 0.27 |
Effect of dilutive securities: |  |  |  |  |  |  |  |  |  |  |
Stock options and restricted stock |  |  | 30,057 |  |  |  |  |  |  | 27,359 |  |  |
Common stock warrants |  |  | — |  |  |  |  |  |  | 48,545 |  |  |
Diluted EPS - common stock | $ | 23,623 |  |  | 79,613,245 |  |  | $ | 0.30 |  |  | $ | 21,358 |  |  | 79,602,122 |  |  | $ | 0.27 |

15

Table of Contents
5. Securities Available for Sale
The following is a summary of securities available for sale as of the dates indicated:

| At March 31, 2016
| Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Estimated Fair Value
| (In thousands)
Debt securities: |  |  |  |  |  |  |
U.S. Government agency and U.S. Government sponsored enterprises |  |  |  |  |  |  |
Collateralized mortgage obligations | $ | 493,539 |  |  | $ | 5,189 |  |  | $ | (702 | ) |  | $ | 498,026 |
Mortgage-backed securities | 520,254 |  |  | 7,245 |  |  | (589 | ) |  | 526,910 |
Trust preferred securities | 4,549 |  |  | — |  |  | (1,155 | ) |  | 3,394 |
Municipal bonds | 44,000 |  |  | 2,120 |  |  | (7 | ) |  | 46,113 |
Total debt securities | 1,062,342 |  |  | 14,554 |  |  | (2,453 | ) |  | 1,074,443 |
Mutual funds | 13,425 |  |  | 29 |  |  | — |  |  | 13,454 |
| $ | 1,075,767 |  |  | $ | 14,583 |  |  | $ | (2,453 | ) |  | $ | 1,087,897 |
| At December 31, 2015
| Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Estimated Fair Value
| (In thousands)
Debt securities: |  |  |  |  |  |  |
U.S. Government agency and U.S. Government sponsored enterprises |  |  |  |  |  |  |
Collateralized mortgage obligations | $ | 454,096 |  |  | $ | 839 |  |  | $ | (4,955 | ) |  | $ | 449,980 |
Mortgage-backed securities | 497,889 |  |  | 3,003 |  |  | (2,845 | ) |  | 498,047 |
Trust preferred securities | 4,545 |  |  | — |  |  | (796 | ) |  | 3,749 |
Municipal bonds | 44,105 |  |  | 1,406 |  |  | — |  |  | 45,511 |
Total debt securities | 1,000,635 |  |  | 5,248 |  |  | (8,596 | ) |  | 997,287 |
Mutual funds | 13,425 |  |  | — |  |  | (156 | ) |  | 13,269 |
| $ | 1,014,060 |  |  | $ | 5,248 |  |  | $ | (8,752 | ) |  | $ | 1,010,556 |

As of March 31, 2016 and December 31, 2015, there were no holdings of securities of any one issuer, other than the U.S. Government and its agencies, in an amount greater than 10% of stockholders’ equity.
For the three months ended March 31, 2016 and 2015, $15.6 million and $5.3 million of unrealized gains, respectively, were included in accumulated other comprehensive income. A total of $0 and $424 thousand of net gains on sales of securities were reclassified out of accumulated other comprehensive income into earnings for the three months ended March 31, 2016 and 2015, respectively.
The proceeds from sales of securities and the associated gross gains and losses recorded in earnings are listed below:

| Three Months Ended March 31,
| 2016 |  | 2015
| (In thousands)
Proceeds | $ | — |  |  | $ | 22,510 |
Gross gains | — |  |  | 437 |
Gross losses | — |  |  | (13 | )

16

Table of Contents
The amortized cost and estimated fair value of investment securities at March 31, 2016, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately.

| Amortized Cost |  | Estimated Fair Value
| (In thousands)
Available for sale: |  |  |
Due within one year | $ | — |  |  | $ | — |
Due after one year through five years | 2,171 |  |  | 2,338 |
Due after five years through ten years | 28,847 |  |  | 30,177 |
Due after ten years | 17,531 |  |  | 16,992 |
U.S. Government agency and U.S. Government sponsored enterprises |  |  |
Collateralized mortgage obligations | 493,539 |  |  | 498,026 |
Mortgage-backed securities | 520,254 |  |  | 526,910 |
Mutual funds | 13,425 |  |  | 13,454 |
| $ | 1,075,767 |  |  | $ | 1,087,897 |

Securities with carrying values of approximately $350.4 million and $359.6 million at March 31, 2016 and December 31, 2015, respectively, were pledged to secure public deposits, various borrowings and for other purposes as required or permitted by law.
The following tables show our investments’ gross unrealized losses and estimated fair value, aggregated by investment category and the length of time that the individual securities have been in a continuous unrealized loss position as of the dates indicated.

| As of March 31, 2016
| Less than 12 months |  | 12 months or longer |  | Total
Description of Securities | Number of Securities |  | Fair Value |  | Gross Unrealized Losses |  | Number of Securities |  | Fair Value |  | Gross Unrealized Losses |  | Number of Securities |  | Fair Value |  | Gross Unrealized Losses
| (In thousands)
Collateralized mortgage obligations* | 1 |  |  | $ | 7,098 |  |  | $ | (26 | ) |  | 9 |  |  | $ | 78,032 |  |  | $ | (676 | ) |  | 10 |  |  | $ | 85,130 |  |  | $ | (702 | )
Mortgage-backed securities* | 7 |  |  | 13,612 |  |  | (42 | ) |  | 4 |  |  | 30,527 |  |  | (547 | ) |  | 11 |  |  | 44,139 |  |  | (589 | )
Trust preferred securities | — |  |  | — |  |  | — |  |  | 1 |  |  | 3,394 |  |  | (1,155 | ) |  | 1 |  |  | 3,394 |  |  | (1,155 | )
Municipal bonds | 2 |  |  | 1,076 |  |  | (7 | ) |  | — |  |  | — |  |  | — |  |  | 2 |  |  | 1,076 |  |  | (7 | )
Mutual funds | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
| 10 |  |  | $ | 21,786 |  |  | $ | (75 | ) |  | 14 |  |  | $ | 111,953 |  |  | $ | (2,378 | ) |  | 24 |  |  | $ | 133,739 |  |  | $ | (2,453 | )

* Investments in U.S. Government agency and U.S. Government sponsored enterprises
17

Table of Contents

| As of December 31, 2015
| Less than 12 months |  | 12 months or longer |  | Total
Description of Securities | Number of Securities |  | Fair Value |  | Gross Unrealized Losses |  | Number of Securities |  | Fair Value |  | Gross Unrealized Losses |  | Number of Securities |  | Fair Value |  | Gross Unrealized Losses
| (In thousands)
Collateralized mortgage obligations* | 31 |  |  | $ | 300,202 |  |  | $ | (2,611 | ) |  | 8 |  |  | $ | 70,857 |  |  | $ | (2,344 | ) |  | 39 |  |  | $ | 371,059 |  |  | $ | (4,955 | )
Mortgage-backed securities* | 28 |  |  | 247,160 |  |  | (1,487 | ) |  | 3 |  |  | 27,947 |  |  | (1,358 | ) |  | 31 |  |  | 275,107 |  |  | (2,845 | )
Trust Preferred securities | — |  |  | — |  |  | — |  |  | 1 |  |  | 3,750 |  |  | (796 | ) |  | 1 |  |  | 3,750 |  |  | (796 | )
Municipal bonds | 1 |  |  | 127 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 1 |  |  | 127 |  |  | — |
Mutual funds | 1 |  |  | 13,269 |  |  | (156 | ) |  | — |  |  | — |  |  | — |  |  | 1 |  |  | 13,269 |  |  | (156 | )
| 61 |  |  | $ | 560,758 |  |  | $ | (4,254 | ) |  | 12 |  |  | $ | 102,554 |  |  | $ | (4,498 | ) |  | 73 |  |  | $ | 663,312 |  |  | $ | (8,752 | )

* Investments in U.S. Government agency and U.S. Government sponsored enterprises
The Company evaluates securities for other-than-temporary-impairment (“OTTI”) on at least a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to the financial condition and near-term prospects of the issuer, the length of time and the extent to which the fair values of the securities have been less than the cost of the securities, and management’s intention to sell, or whether it is more likely than not that management will be required to sell a security in an unrealized loss position before recovery of its amortized cost basis. In analyzing an issuer’s financial condition, the Company considers, among other considerations, whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, and the results of reviews of the issuer’s financial condition.
The Company has certain collateralized mortgage obligations, mortgage-backed securities and trust preferred securities that were in a continuous unrealized loss position for twelve months or longer as of March 31, 2016. The trust preferred securities at March 31, 2016 had an amortized cost of $4.5 million and an unrealized loss of $1.2 million at March 31, 2016. The trust preferred securities are scheduled to mature in May 2047. These securities were rated investment grade and there were no credit quality concerns with the obligor. The collateralized mortgage obligations and mortgage-backed securities in a continuous loss position for twelve months or longer had an unrealized loss of $676 thousand and $547 thousand, respectively at March 31, 2016. These securities were issued by U.S. Government agency and U.S. Government sponsored enterprises and have high credit ratings of “AA” grade or better. Interest on the trust preferred securities and the U.S. Government agency and U.S. Government sponsored enterprise investments have been paid as agreed, and management believes this will continue in the future and that the securities will be repaid in full as scheduled. The market value declines for these securities were primarily due to movements in interest rates and are not reflective of management’s expectations of the Company’s ability to fully recover these investments, which may be at maturity. For these reasons, no OTTI was recognized on the trust preferred securities and the U.S. Government agency and U.S. Government sponsored collateralized mortgage obligations and mortgage-backed securities that are in an unrealized loss position at March 31, 2016.
The Company considers the losses on the investments in unrealized loss positions at March 31, 2016 to be temporary based on: 1) the likelihood of recovery; 2) the information relative to the extent and duration of the decline in market value; and 3) the Company’s intention not to sell, and management’s determination that it is more likely than not that the Company will not be required to sell a security in an unrealized loss position before recovery of its amortized cost basis.
18

Table of Contents

6. | Loans Receivable and Allowance for Loan Losses

The following is a summary of loans receivable by major category:

| March 31, 2016 |  | December 31, 2015
| (In thousands)
Loan portfolio composition |  |  |
Real estate loans: |  |  |
Residential | $ | 32,390 |  |  | $ | 33,797 |
Commercial & industrial | 4,957,751 |  |  | 4,912,655 |
Construction | 142,376 |  |  | 123,030 |
Total real estate loans | 5,132,517 |  |  | 5,069,482 |
Commercial business | 1,032,078 |  |  | 980,153 |
Trade finance | 86,342 |  |  | 99,163 |
Consumer and other | 124,064 |  |  | 102,573 |
Total loans outstanding | 6,375,001 |  |  | 6,251,371 |
Less: deferred loan fees | (3,066 | ) |  | (3,030 | )
Loans receivable | 6,371,935 |  |  | 6,248,341 |
Less: allowance for loan losses | (76,856 | ) |  | (76,408 | )
Loans receivable, net of allowance for loan losses | $ | 6,295,079 |  |  | $ | 6,171,933 |

The loan portfolio is made up of four segments: real estate loans, commercial business, trade finance and consumer and other. These segments are further segregated between loans accounted for under the amortized cost method (“Legacy Loans”) and acquired loans that were originally recorded at fair value with no carryover of the related pre-acquisition allowance for loan losses (“Acquired Loans”). Acquired Loans are further segregated between Acquired Credit Impaired Loans (loans with credit deterioration on the acquisition date and accounted for under ASC 310-30, or “ACILs”) and Acquired Performing Loans (loans that were pass graded on the acquisition date and the fair value adjustment is amortized over the contractual life under ASC 310-20, or “APLs”).
The following table presents changes in the accretable discount on the ACILs for the three months ended March 31, 2016 and 2015:

| Three Months Ended March 31,
| 2016 |  | 2015
| (In thousands)
Balance at beginning of period | $ | 23,777 |  |  | $ | 24,051 |
Accretion | (3,029 | ) |  | (1,555 | )
Changes in expected cash flows | 1,349 |  |  | 149 |
Balance at end of period | $ | 22,097 |  |  | $ | 22,645 |

On the acquisition date, the amount by which the undiscounted expected cash flows exceed the estimated fair value of the ACILs is the “accretable yield.” The accretable yield is then measured at each financial reporting date and represents the difference between the remaining undiscounted expected cash flows and the current carrying value of the loans. The accretable yield will change from period to period due to the following: 1) estimates of the remaining life of acquired loans will affect the amount of future interest income; 2) indices for variable rates of interest on ACILs may change; and 3) estimates of the amount of the contractual principal and interest that will not be collected (nonaccretable difference) may change.
19

Table of Contents
The following tables detail the activity in the allowance for loan losses by portfolio segment for the three months ended March 31, 2016 and 2015:

| Legacy |  | Acquired |  | Total
| Real Estate |  | Commercial Business |  | Trade Finance |  | Consumer and Other |  | Real Estate |  | Commercial Business |  | Trade Finance |  | Consumer and Other |
| (In thousands)
Three Months Ended March 31, 2016 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance, beginning of period | $ | 42,829 |  |  | $ | 16,332 |  |  | $ | 3,592 |  |  | $ | 556 |  |  | $ | 12,823 |  |  | $ | 214 |  |  | $ | — |  |  | $ | 62 |  |  | $ | 76,408 |
Provision (credit) for loan losses | (1,218 | ) |  | 3,147 |  |  | (1,507 | ) |  | 276 |  |  | (82 | ) |  | (112 | ) |  | — |  |  | (4 | ) |  | 500 |
Loans charged off | (19 | ) |  | (621 | ) |  | — |  |  | (65 | ) |  | (116 | ) |  | — |  |  | — |  |  | — |  |  | (821 | )
Recoveries of charge offs | 523 |  |  | 190 |  |  | — |  |  | 1 |  |  | 1 |  |  | 52 |  |  | — |  |  | 2 |  |  | 769 |
Balance, end of period | $ | 42,115 |  |  | $ | 19,048 |  |  | $ | 2,085 |  |  | $ | 768 |  |  | $ | 12,626 |  |  | $ | 154 |  |  | $ | — |  |  | $ | 60 |  |  | $ | 76,856 |

| Legacy |  | Acquired |  | Total
| Real Estate |  | Commercial Business |  | Trade Finance |  | Consumer and Other |  | Real Estate |  | Commercial Business |  | Trade Finance |  | Consumer and Other |
| (In thousands)
Three Months Ended March 31, 2015 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance, beginning of period | $ | 38,775 |  |  | $ | 15,986 |  |  | $ | 3,456 |  |  | $ | 427 |  |  | $ | 8,573 |  |  | $ | 485 |  |  | $ | — |  |  | $ | 56 |  |  | $ | 67,758 |
Provision (credit) for loan losses | (3,621 | ) |  | (22 | ) |  | (186 | ) |  | (1 | ) |  | 5,310 |  |  | 23 |  |  | — |  |  | (3 | ) |  | 1,500 |
Loans charged off | (182 | ) |  | (451 | ) |  | (229 | ) |  | (13 | ) |  | (159 | ) |  | (87 | ) |  | — |  |  | (4 | ) |  | (1,125 | )
Recoveries of charge offs | 800 |  |  | 655 |  |  | — |  |  | 3 |  |  | — |  |  | 1 |  |  | — |  |  | 2 |  |  | 1,461 |
Balance, end of period | $ | 35,772 |  |  | $ | 16,168 |  |  | $ | 3,041 |  |  | $ | 416 |  |  | $ | 13,724 |  |  | $ | 422 |  |  | $ | — |  |  | $ | 51 |  |  | $ | 69,594 |

20

Table of Contents
The following tables disaggregate the allowance for loan losses and the loans outstanding by impairment methodology at March 31, 2016 and December 31, 2015:

| March 31, 2016
| Legacy |  | Acquired |  | Total
| Real Estate |  | Commercial Business |  | Trade Finance |  | Consumer and Other |  | Real Estate |  | Commercial Business |  | Trade Finance |  | Consumer and Other |
| (In thousands)
Allowance for loan losses:
Individually evaluated for impairment | $ | 1,760 |  |  | $ | 6,513 |  |  | $ | 1,307 |  |  | $ | — |  |  | $ | 208 |  |  | $ | 96 |  |  | $ | — |  |  | $ | — |  |  | $ | 9,884 |
Collectively evaluated for impairment | 40,355 |  |  | 12,535 |  |  | 778 |  |  | 768 |  |  | 541 |  |  | 58 |  |  | — |  |  | 60 |  |  | 55,095 |
ACILs | — |  |  | — |  |  | — |  |  | — |  |  | 11,877 |  |  | — |  |  | — |  |  | — |  |  | 11,877 |
Total | $ | 42,115 |  |  | $ | 19,048 |  |  | $ | 2,085 |  |  | $ | 768 |  |  | $ | 12,626 |  |  | $ | 154 |  |  | $ | — |  |  | $ | 60 |  |  | $ | 76,856 |
Loans outstanding: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment | $ | 65,354 |  |  | $ | 46,534 |  |  | $ | 8,081 |  |  | $ | 786 |  |  | $ | 17,952 |  |  | $ | 1,262 |  |  | $ | — |  |  | $ | 455 |  |  | $ | 140,424 |
Collectively evaluated for impairment | 4,815,539 |  |  | 949,346 |  |  | 78,261 |  |  | 84,441 |  |  | 166,190 |  |  | 16,328 |  |  | — |  |  | 19,813 |  |  | 6,129,918 |
ACILs | — |  |  | — |  |  | — |  |  | — |  |  | 67,482 |  |  | 18,608 |  |  | — |  |  | 18,569 |  |  | 104,659 |
Total | $ | 4,880,893 |  |  | $ | 995,880 |  |  | $ | 86,342 |  |  | $ | 85,227 |  |  | $ | 251,624 |  |  | $ | 36,198 |  |  | $ | — |  |  | $ | 38,837 |  |  | $ | 6,375,001 |

| December 31, 2015
| Legacy |  | Acquired |  | Total
| Real Estate |  | Commercial Business |  | Trade Finance |  | Consumer and Other |  | Real Estate |  | Commercial Business |  | Trade Finance |  | Consumer and Other |
| (In thousands)
Allowance for loan losses:
Individually evaluated for impairment | $ | 1,663 |  |  | $ | 4,188 |  |  | $ | 2,603 |  |  | $ | — |  |  | $ | 225 |  |  | $ | 128 |  |  | $ | — |  |  | $ | — |  |  | $ | 8,807 |
Collectively evaluated for impairment | 41,166 |  |  | 12,144 |  |  | 989 |  |  | 556 |  |  | 616 |  |  | 86 |  |  | — |  |  | 62 |  |  | 55,619 |
ACILs | — |  |  | — |  |  | — |  |  | — |  |  | 11,982 |  |  | — |  |  | — |  |  | — |  |  | 11,982 |
Total | $ | 42,829 |  |  | $ | 16,332 |  |  | $ | 3,592 |  |  | $ | 556 |  |  | $ | 12,823 |  |  | $ | 214 |  |  | $ | — |  |  | $ | 62 |  |  | $ | 76,408 |
Loans outstanding: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment | $ | 63,376 |  |  | $ | 40,352 |  |  | $ | 12,548 |  |  | $ | 812 |  |  | $ | 19,109 |  |  | $ | 1,235 |  |  | $ | — |  |  | $ | 658 |  |  | $ | 138,090 |
Collectively evaluated for impairment | 4,717,300 |  |  | 896,041 |  |  | 86,615 |  |  | 60,570 |  |  | 200,753 |  |  | 22,660 |  |  | — |  |  | 20,533 |  |  | 6,004,472 |
ACILs | — |  |  | — |  |  | — |  |  | — |  |  | 68,944 |  |  | 19,865 |  |  | — |  |  | 20,000 |  |  | 108,809 |
Total | $ | 4,780,676 |  |  | $ | 936,393 |  |  | $ | 99,163 |  |  | $ | 61,382 |  |  | $ | 288,806 |  |  | $ | 43,760 |  |  | $ | — |  |  | $ | 41,191 |  |  | $ | 6,251,371 |

As of March 31, 2016 and December 31, 2015, the liability for unfunded commitments was $1.4 million and $2.0 million, respectively. For the three months ended March 31, 2016 and 2015, the recognized credit for losses related to unfunded commitments was $570 thousand and $240 thousand, respectively.
21

Table of Contents
The recorded investment in individually impaired loans was as follows:

| March 31, 2016 |  | December 31, 2015
| (In thousands)
With allocated allowance |  |  |
Without charge off | $ | 79,747 |  |  | $ | 77,922 |
With charge off | 458 |  |  | 155 |
With no allocated allowance |  |  |
Without charge off | 57,138 |  |  | 57,585 |
With charge off | 3,081 |  |  | 2,428 |
Allowance on impaired loans | (9,884 | ) |  | (8,807 | )
Impaired loans, net of allowance | $ | 130,540 |  |  | $ | 129,283 |

22

Table of Contents
The following tables detail impaired loans (Legacy and APLs that became impaired subsequent to being acquired) as of March 31, 2016 and December 31, 2015 and for the three months ended March 31, 2016 and 2015 and for the year ended December 31, 2015. Loans with no related allowance for loan losses are believed by management to have adequate collateral securing their carrying value.

|  | As of March 31, 2016 |  | For the Three Months Ended March 31, 2016
Total Impaired Loans |  | Recorded Investment* |  | Unpaid Contractual Principal Balance |  | Related Allowance |  | Average Recorded Investment* |  | Interest Income Recognized during Impairment
|  | (In thousands)
With related allowance: |  |  |  |  |  |  |  |  |  |
Real estate—residential |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Real estate—commercial |  |  |  |  |  |  |  |  |  |
Retail |  | 1,553 |  |  | 1,686 |  |  | 195 |  |  | 1,712 |  |  | — |
Hotel & motel |  | 4,526 |  |  | 4,526 |  |  | 258 |  |  | 4,611 |  |  | 57 |
Gas station & car wash |  | 530 |  |  | 562 |  |  | 26 |  |  | 1,050 |  |  | — |
Mixed use |  | 562 |  |  | 1,085 |  |  | 8 |  |  | 563 |  |  | 2 |
Industrial & warehouse |  | 556 |  |  | 556 |  |  | — |  |  | 560 |  |  | 6 |
Other |  | 24,321 |  |  | 24,562 |  |  | 1,481 |  |  | 24,462 |  |  | 275 |
Real estate—construction |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Commercial business |  | 39,956 |  |  | 40,326 |  |  | 6,609 |  |  | 35,742 |  |  | 265 |
Trade finance |  | 8,081 |  |  | 8,083 |  |  | 1,307 |  |  | 10,314 |  |  | 94 |
Consumer and other |  | 120 |  |  | 120 |  |  | — |  |  | 128 |  |  | 1 |
|  | $ | 80,205 |  |  | $ | 81,506 |  |  | $ | 9,884 |  |  | $ | 79,142 |  |  | $ | 700 |
With no related allowance: |  |  |  |  |  |  |  |  |  |
Real estate—residential |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Real estate—commercial |  |  |  |  |  |  |  |  |  |
Retail |  | 10,906 |  |  | 11,795 |  |  | — |  |  | 11,105 |  |  | 100 |
Hotel & motel |  | 8,107 |  |  | 12,173 |  |  | — |  |  | 7,849 |  |  | 22 |
Gas station & car wash |  | 5,576 |  |  | 8,423 |  |  | — |  |  | 4,665 |  |  | 34 |
Mixed use |  | 2,346 |  |  | 2,589 |  |  | — |  |  | 2,364 |  |  | 12 |
Industrial & warehouse |  | 10,808 |  |  | 12,222 |  |  | — |  |  | 9,888 |  |  | 85 |
Other |  | 12,173 |  |  | 13,473 |  |  | — |  |  | 12,712 |  |  | 90 |
Real estate—construction |  | 1,342 |  |  | 1,465 |  |  | — |  |  | 1,355 |  |  | — |
Commercial business |  | 7,840 |  |  | 9,770 |  |  | — |  |  | 8,950 |  |  | 41 |
Trade finance |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Consumer and other |  | 1,121 |  |  | 1,176 |  |  | — |  |  | 1,228 |  |  | 7 |
|  | $ | 60,219 |  |  | $ | 73,086 |  |  | $ | — |  |  | $ | 60,116 |  |  | $ | 391 |
Total |  | $ | 140,424 |  |  | $ | 154,592 |  |  | $ | 9,884 |  |  | $ | 139,258 |  |  | $ | 1,091 |

* | Unpaid contractual principal balance less charge offs, interest applied to principal and purchase discounts.

23

Table of Contents

|  | For the Three Months Ended March 31, 2015
Total Impaired Loans |  | Average Recorded Investment* |  | Interest Income Recognized during Impairment
|  | (In thousands)
With related allowance: |  |  |  |
Real estate—residential |  | $ | — |  |  | $ | — |
Real estate—commercial |  |  |  |
Retail |  | 4,406 |  |  | 44 |
Hotel & motel |  | 12,493 |  |  | 129 |
Gas station & car wash |  | 1,359 |  |  | — |
Mixed use |  | 481 |  |  | — |
Industrial & warehouse |  | 4,516 |  |  | 76 |
Other |  | 8,845 |  |  | 88 |
Real estate—construction |  | — |  |  | — |
Commercial business |  | 33,856 |  |  | 287 |
Trade finance |  | 4,509 |  |  | 35 |
Consumer and other |  | 7 |  |  | — |
|  | $ | 70,472 |  |  | $ | 659 |
With no related allowance: |  |  |  |
Real estate—residential |  | $ | — |  |  | $ | — |
Real estate—commercial |  |  |  |
Retail |  | 10,792 |  |  | 87 |
Hotel & motel |  | 5,922 |  |  | — |
Gas station & car wash |  | 3,245 |  |  | 25 |
Mixed use |  | 1,793 |  |  | 9 |
Industrial & warehouse |  | 11,917 |  |  | 77 |
Other |  | 8,620 |  |  | 38 |
Real estate—construction |  | 1,500 |  |  | — |
Commercial business |  | 7,958 |  |  | 79 |
Trade finance |  | 1,638 |  |  | — |
Consumer and other |  | 1,084 |  |  | 7 |
|  | $ | 54,469 |  |  | $ | 322 |
Total |  | $ | 124,941 |  |  | $ | 981 |

* | Unpaid contractual principal balance less charge offs, interest applied to principal and purchase discounts.

24

Table of Contents

|  | As of March 31, 2016 |  | For the Three Months Ended March 31, 2016
Impaired APLs |  | Recorded Investment* |  | Unpaid Contractual Principal Balance |  | Related Allowance |  | Average Recorded Investment* |  | Interest Income Recognized during Impairment
|  | (In thousands)
With related allowance: |  |  |  |  |  |  |  |  |  |
Real estate—residential |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Real estate—commercial |  |  |  |  |  |  |  |  |  |
Retail |  | 1,168 |  |  | 1,263 |  |  | 184 |  |  | 1,169 |  |  | — |
Hotel & motel |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Gas station & car wash |  | — |  |  | — |  |  | — |  |  | 509 |  |  | — |
Mixed use |  | 493 |  |  | 489 |  |  | 8 |  |  | 493 |  |  | 2 |
Industrial & warehouse |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Other |  | 303 |  |  | 303 |  |  | 16 |  |  | 305 |  |  | 4 |
Real estate—construction |  | — |  |  | — |  |  | — |  |  | — |  |  |  |
Commercial business |  | 586 |  |  | 653 |  |  | 96 |  |  | 576 |  |  | 3 |
Trade finance |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Consumer and other |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
|  | $ | 2,550 |  |  | $ | 2,708 |  |  | $ | 304 |  |  | $ | 3,052 |  |  | $ | 9 |
With no related allowance: |  |  |  |  |  |  |  |  |  |
Real estate—residential |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Real estate—commercial |  |  |  |  |  |  |  |  |  |
Retail |  | 2,500 |  |  | 2,652 |  |  | — |  |  | 2,571 |  |  | 26 |
Hotel & motel |  | 6,751 |  |  | 9,058 |  |  | — |  |  | 6,882 |  |  | 17 |
Gas station & car wash |  | 1,595 |  |  | 1,846 |  |  | — |  |  | 1,392 |  |  | 25 |
Mixed use |  | 272 |  |  | 282 |  |  | — |  |  | 273 |  |  | 3 |
Industrial & warehouse |  | 1,095 |  |  | 1,281 |  |  | — |  |  | 1,111 |  |  | 2 |
Other |  | 3,775 |  |  | 4,784 |  |  | — |  |  | 3,826 |  |  | 14 |
Real estate—construction |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Commercial business |  | 676 |  |  | 1,036 |  |  | — |  |  | 672 |  |  | 8 |
Trade finance |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Consumer and other |  | 455 |  |  | 501 |  |  | — |  |  | 557 |  |  | 2 |
|  | $ | 17,119 |  |  | $ | 21,440 |  |  | $ | — |  |  | $ | 17,284 |  |  | $ | 97 |
Total |  | $ | 19,669 |  |  | $ | 24,148 |  |  | $ | 304 |  |  | $ | 20,336 |  |  | $ | 106 |

* | Unpaid contractual principal balance less charge offs, interest applied to principal and purchase discounts.

25

Table of Contents

|  | For the Three Months Ended March 31, 2015
Impaired APLs |  | Average Recorded Investment* |  | Interest Income Recognized during Impairment
|  | (In thousands)
With related allowance: |  |  |  |
Real estate—residential |  | $ | — |  |  | $ | — |
Real estate—commercial |  |  |  |
Retail |  | 2,128 |  |  | 37 |
Hotel & motel |  | — |  |  | — |
Gas station & car wash |  | 1,237 |  |  | — |
Mixed use |  | 352 |  |  | — |
Industrial & warehouse |  | 180 |  |  | 5 |
Other |  | 1,040 |  |  | 4 |
Real estate—construction |  | — |  |  | — |
Commercial business |  | 713 |  |  | 1 |
Trade finance |  | — |  |  | — |
Consumer and other |  | 1 |  |  | — |
|  | $ | 5,651 |  |  | $ | 47 |
With no related allowance: |  |  |  |
Real estate—residential |  | $ | — |  |  | $ | — |
Real estate—commercial |  |  |  |
Retail |  | 2,370 |  |  | 6 |
Hotel & motel |  | 5,555 |  |  | — |
Gas station & car wash |  | 521 |  |  | 15 |
Mixed use |  | 111 |  |  | — |
Industrial & warehouse |  | 1,481 |  |  | 1 |
Other |  | 4,490 |  |  | 10 |
Real estate—construction |  | — |  |  | — |
Commercial business |  | 1,021 |  |  | 3 |
Trade finance |  | — |  |  | — |
Consumer and other |  | 622 |  |  | 2 |
|  | $ | 16,171 |  |  | $ | 37 |
Total |  | $ | 21,822 |  |  | $ | 84 |

* | Unpaid contractual principal balance less charge offs, interest applied to principal and purchase discounts.

26

Table of Contents

|  | As of December 31, 2015 |  | For the Year Ended December 31, 2015
Total Impaired Loans |  | Recorded Investment* |  | Unpaid Contractual Principal Balance |  | Related Allowance |  | Average Recorded Investment* |  | Interest Income Recognized during Impairment
|  | (In thousands)
With related allowance: |  |  |  |  |  |  |  |  |  |
Real estate—residential |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Real estate—commercial |  |  |  |  |  |  |  |  |  |
Retail |  | 1,871 |  |  | 1,984 |  |  | 230 |  |  | 3,388 |  |  | — |
Hotel & motel |  | 4,697 |  |  | 4,707 |  |  | 158 |  |  | 10,512 |  |  | 230 |
Gas station & car wash |  | 1,569 |  |  | 1,625 |  |  | 47 |  |  | 1,542 |  |  | 59 |
Mixed use |  | 564 |  |  | 1,087 |  |  | 13 |  |  | 498 |  |  | 9 |
Industrial & warehouse |  | 563 |  |  | 563 |  |  | — |  |  | 3,686 |  |  | 25 |
Other |  | 24,603 |  |  | 24,851 |  |  | 1,440 |  |  | 12,585 |  |  | 1,110 |
Real estate—construction |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Commercial business |  | 31,527 |  |  | 31,832 |  |  | 4,316 |  |  | 31,790 |  |  | 998 |
Trade finance |  | 12,548 |  |  | 12,548 |  |  | 2,603 |  |  | 6,209 |  |  | 527 |
Consumer and other |  | 135 |  |  | 135 |  |  | — |  |  | 153 |  |  | 7 |
|  | $ | 78,077 |  |  | $ | 79,332 |  |  | $ | 8,807 |  |  | $ | 70,363 |  |  | $ | 2,965 |
With no related allowance: |  |  |  |  |  |  |  |  |  |
Real estate—residential |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Real estate—commercial |  |  |  |  |  |  |  |  |  |
Retail |  | 11,305 |  |  | 12,051 |  |  | — |  |  | 10,779 |  |  | 464 |
Hotel & motel |  | 7,592 |  |  | 10,180 |  |  | — |  |  | 6,455 |  |  | 93 |
Gas station & car wash |  | 3,754 |  |  | 6,435 |  |  | — |  |  | 3,685 |  |  | 107 |
Mixed use |  | 2,382 |  |  | 2,604 |  |  | — |  |  | 2,375 |  |  | 51 |
Industrial & warehouse |  | 8,967 |  |  | 10,608 |  |  | — |  |  | 10,186 |  |  | 254 |
Other |  | 13,250 |  |  | 14,234 |  |  | — |  |  | 9,355 |  |  | 362 |
Real estate—construction |  | 1,369 |  |  | 1,470 |  |  | — |  |  | 1,153 |  |  | — |
Commercial business |  | 10,059 |  |  | 12,063 |  |  | — |  |  | 8,722 |  |  | 345 |
Trade finance |  | — |  |  | — |  |  | — |  |  | 986 |  |  | — |
Consumer and other |  | 1,335 |  |  | 1,431 |  |  | — |  |  | 1,177 |  |  | 26 |
|  | $ | 60,013 |  |  | $ | 71,076 |  |  | $ | — |  |  | $ | 54,873 |  |  | $ | 1,702 |
Total |  | $ | 138,090 |  |  | $ | 150,408 |  |  | $ | 8,807 |  |  | $ | 125,236 |  |  | $ | 4,667 |

* | Unpaid contractual principal balance less charge offs, interest applied to principal and purchase discounts.

27

Table of Contents

|  | As of December 31, 2015 |  | For the Year Ended December 31, 2015
Impaired APLs |  | Recorded Investment* |  | Unpaid Contractual Principal Balance |  | Related Allowance |  | Average Recorded Investment* |  | Interest Income Recognized during Impairment
|  | (In thousands)
With related allowance: |  |  |  |  |  |  |  |  |  |
Real estate—residential |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Real estate—commercial |  |  |  |  |  |  |  |  |  |
Retail |  | 1,171 |  |  | 1,173 |  |  | 197 |  |  | 1,835 |  |  | — |
Hotel & motel |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Gas station & car wash |  | 1,017 |  |  | 1,062 |  |  | 6 |  |  | 1,246 |  |  | 59 |
Mixed use |  | 494 |  |  | 491 |  |  | 5 |  |  | 380 |  |  | 9 |
Industrial & warehouse |  | — |  |  | — |  |  | — |  |  | 72 |  |  | — |
Other |  | 306 |  |  | 306 |  |  | 17 |  |  | 797 |  |  | 16 |
Real estate—construction |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Commercial business |  | 566 |  |  | 645 |  |  | 128 |  |  | 671 |  |  | 15 |
Trade finance |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Consumer and other |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
|  | $ | 3,554 |  |  | $ | 3,677 |  |  | $ | 353 |  |  | $ | 5,001 |  |  | $ | 99 |
With no related allowance: |  |  |  |  |  |  |  |  |  |
Real estate—residential |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Real estate—commercial |  |  |  |  |  |  |  |  |  |
Retail |  | 2,642 |  |  | 2,756 |  |  | — |  |  | 2,301 |  |  | 105 |
Hotel & motel |  | 7,014 |  |  | 9,303 |  |  | — |  |  | 5,889 |  |  | 73 |
Gas station & car wash |  | 1,188 |  |  | 1,299 |  |  | — |  |  | 651 |  |  | 64 |
Mixed use |  | 273 |  |  | 282 |  |  | — |  |  | 210 |  |  | 13 |
Industrial & warehouse |  | 1,127 |  |  | 1,298 |  |  | — |  |  | 1,275 |  |  | 9 |
Other |  | 3,876 |  |  | 4,615 |  |  | — |  |  | 4,162 |  |  | 53 |
Real estate—construction |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Commercial business |  | 668 |  |  | 1,039 |  |  | — |  |  | 892 |  |  | 55 |
Trade finance |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Consumer and other |  | 658 |  |  | 748 |  |  | — |  |  | 629 |  |  | 7 |
|  | $ | 17,446 |  |  | $ | 21,340 |  |  | $ | — |  |  | $ | 16,009 |  |  | $ | 379 |
Total |  | $ | 21,000 |  |  | $ | 25,017 |  |  | $ | 353 |  |  | $ | 21,010 |  |  | $ | 478 |

* | Unpaid contractual principal balance less charge offs, interest applied to principal and purchase discounts.

Generally, loans are placed on nonaccrual status if principal or interest payments become 90 days past due and/or management deems the collectibility of the principal and/or interest to be in question, as well as when required by regulatory requirements. Loans to a customer whose financial condition has deteriorated are considered for nonaccrual status whether or not the loan is 90 days or more past due. Generally, payments received on nonaccrual loans are recorded as principal reductions. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.
28

Table of Contents
The following tables present the aging of past due loans as of March 31, 2016 and December 31, 2015 by class of loans:

| As of March 31, 2016
| Past Due and Accruing |  |  |  |
| 30-59 Days Past Due |  | 60-89 Days Past Due |  | 90 or More Days Past Due |  | Total |  | Nonaccrual Loans (2) |  | Total Delinquent Loans
| (In thousands)
Legacy Loans: |
Real estate—residential | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Real estate—commercial |  |  |  |  |  |  |  |  |  |  |
Retail | 69 |  |  | 427 |  |  | — |  |  | 496 |  |  | 2,816 |  |  | 3,312 |
Hotel & motel | 175 |  |  | — |  |  | — |  |  | 175 |  |  | 953 |  |  | 1,128 |
Gas station & car wash | — |  |  | — |  |  | — |  |  | — |  |  | 3,672 |  |  | 3,672 |
Mixed use | — |  |  | — |  |  | — |  |  | — |  |  | 1,377 |  |  | 1,377 |
Industrial & warehouse | 109 |  |  | — |  |  | — |  |  | 109 |  |  | 2,215 |  |  | 2,324 |
Other | — |  |  | 844 |  |  | — |  |  | 844 |  |  | 2,866 |  |  | 3,710 |
Real estate—construction | — |  |  | — |  |  | — |  |  | — |  |  | 1,342 |  |  | 1,342 |
Commercial business | 1,340 |  |  | 101 |  |  | — |  |  | 1,441 |  |  | 14,371 |  |  | 15,812 |
Trade finance | — |  |  | — |  |  | — |  |  | — |  |  | 1,937 |  |  | 1,937 |
Consumer and other | 2,795 |  |  | 138 |  |  | 45 |  |  | 2,978 |  |  | 233 |  |  | 3,211 |
Subtotal | $ | 4,488 |  |  | $ | 1,510 |  |  | $ | 45 |  |  | $ | 6,043 |  |  | $ | 31,782 |  |  | $ | 37,825 |
Acquired Loans: (1) |  |  |  |  |  |  |  |  |  |  |
Real estate—residential | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Real estate—commercial |  |  |  |  |  |  |  |  |  |  |
Retail | 1,189 |  |  | — |  |  | — |  |  | 1,189 |  |  | 1,983 |  |  | 3,172 |
Hotel & motel | — |  |  | — |  |  | — |  |  | — |  |  | 4,930 |  |  | 4,930 |
Gas station & car wash | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Mixed use | — |  |  | — |  |  | — |  |  | — |  |  | 414 |  |  | 414 |
Industrial & warehouse | — |  |  | — |  |  | — |  |  | — |  |  | 959 |  |  | 959 |
Other | — |  |  | — |  |  | — |  |  | — |  |  | 2,596 |  |  | 2,596 |
Real estate—construction | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Commercial business | 267 |  |  | 47 |  |  | — |  |  | 314 |  |  | 534 |  |  | 848 |
Trade finance | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Consumer and other | — |  |  | — |  |  | — |  |  | — |  |  | 350 |  |  | 350 |
Subtotal | $ | 1,456 |  |  | $ | 47 |  |  | $ | — |  |  | $ | 1,503 |  |  | $ | 11,766 |  |  | $ | 13,269 |
TOTAL | $ | 5,944 |  |  | $ | 1,557 |  |  | $ | 45 |  |  | $ | 7,546 |  |  | $ | 43,548 |  |  | $ | 51,094 |

(1) | The Acquired Loans exclude ACILs.

(2) | Nonaccrual loans exclude the guaranteed portion of delinquent SBA loans that are in liquidation totaling $15.4 million.

29

Table of Contents

| As of December 31, 2015
| Past Due and Accruing |  |  |  |
| 30-59 Days Past Due |  | 60-89 Days Past Due |  | 90 or More Days Past Due |  | Total |  | Nonaccrual Loans (2) |  | Total Delinquent Loans
| (In Thousands)
Legacy Loans: |
Real estate—residential | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Real estate—commercial |  |  |  |  |  |  |  |  |  |  |
Retail | 574 |  |  | — |  |  | — |  |  | 574 |  |  | 2,383 |  |  | 2,957 |
Hotel & motel | 854 |  |  | — |  |  | — |  |  | 854 |  |  | 318 |  |  | 1,172 |
Gas station & car wash | — |  |  | 640 |  |  | 330 |  |  | 970 |  |  | 2,418 |  |  | 3,388 |
Mixed use | — |  |  | — |  |  | — |  |  | — |  |  | 1,407 |  |  | 1,407 |
Industrial & warehouse | — |  |  | 110 |  |  | — |  |  | 110 |  |  | 2,275 |  |  | 2,385 |
Other | — |  |  | — |  |  | — |  |  | — |  |  | 2,930 |  |  | 2,930 |
Real estate—construction | — |  |  | — |  |  | — |  |  | — |  |  | 1,369 |  |  | 1,369 |
Commercial business | 905 |  |  | 770 |  |  | — |  |  | 1,675 |  |  | 13,393 |  |  | 15,068 |
Trade finance | — |  |  | — |  |  | — |  |  | — |  |  | 1,731 |  |  | 1,731 |
Consumer and other | 770 |  |  | 158 |  |  | 45 |  |  | 973 |  |  | 245 |  |  | 1,218 |
Subtotal | $ | 3,103 |  |  | $ | 1,678 |  |  | $ | 375 |  |  | $ | 5,156 |  |  | $ | 28,469 |  |  | $ | 33,625 |
Acquired Loans: (1) |  |  |  |  |  |  |  |  |  |  |
Real estate—residential | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Real estate—commercial |  |  |  |  |  |  |  |  |  |  |
Retail | 2,572 |  |  | — |  |  | — |  |  | 2,572 |  |  | 2,113 |  |  | 4,685 |
Hotel & motel | — |  |  | — |  |  | — |  |  | — |  |  | 5,072 |  |  | 5,072 |
Gas station & car wash | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Mixed use | — |  |  | — |  |  | — |  |  | — |  |  | 415 |  |  | 415 |
Industrial & warehouse | — |  |  | — |  |  | — |  |  | — |  |  | 990 |  |  | 990 |
Other | — |  |  | — |  |  | — |  |  | — |  |  | 2,684 |  |  | 2,684 |
Real estate—construction | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Commercial business | 310 |  |  | 39 |  |  | — |  |  | 349 |  |  | 476 |  |  | 825 |
Trade finance | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Consumer and other | 287 |  |  | — |  |  | — |  |  | 287 |  |  | 582 |  |  | 869 |
Subtotal | $ | 3,169 |  |  | $ | 39 |  |  | $ | — |  |  | $ | 3,208 |  |  | $ | 12,332 |  |  | $ | 15,540 |
TOTAL | $ | 6,272 |  |  | $ | 1,717 |  |  | $ | 375 |  |  | $ | 8,364 |  |  | $ | 40,801 |  |  | $ | 49,165 |

(1) | The Acquired Loans exclude ACILs.

(2) | Nonaccrual loans exclude guaranteed portion of delinquent SBA loans that are in liquidation totaling $18.7 million.

Loans accounted for under ASC 310-30 are generally considered accruing and performing loans and the accretable discount is accreted to interest income over the estimated life of the loan when cash flows are reasonably estimable. Accordingly, ACILs that are contractually past due are still considered to be accruing and performing loans. The loans may be classified as nonaccrual if the timing and amount of future cash flows is not reasonably estimable.
The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, including, but not limited to, current financial information, historical payment experience, credit documentation, public information, and current economic trends. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis includes all non-homogeneous loans. This analysis is performed at least on a quarterly basis. The definitions for risk ratings are as follows:

• | Pass: Loans that meet a preponderance or more of the Company’s underwriting criteria and evidence an acceptable level of risk.

• | Special Mention: Loans that have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

30

Table of Contents

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

• | Doubtful/Loss: Loans that have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or repayment in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

The following tables present the risk rating for Legacy Loans and Acquired Loans as of March 31, 2016 and December 31, 2015 by class of loans:

| As of March 31, 2016
| Pass |  | Special Mention |  | Substandard |  | Doubtful/Loss |  | Total
| (In thousands)
Legacy Loans: |  |  |
Real estate—residential | $ | 31,147 |  |  | $ | 462 |  |  | $ | — |  |  | $ | — |  |  | $ | 31,609 |
Real estate—commercial |  |  |  |  |  |  |  |  |
Retail | 1,198,910 |  |  | 26,784 |  |  | 14,550 |  |  | — |  |  | 1,240,244 |
Hotel & motel | 1,036,478 |  |  | 2,877 |  |  | 6,469 |  |  | — |  |  | 1,045,824 |
Gas station & car wash | 629,787 |  |  | 6,154 |  |  | 3,997 |  |  | — |  |  | 639,938 |
Mixed use | 337,416 |  |  | 1,182 |  |  | 2,562 |  |  | — |  |  | 341,160 |
Industrial & warehouse | 460,309 |  |  | 10,020 |  |  | 13,830 |  |  | — |  |  | 484,159 |
Other | 906,232 |  |  | 16,073 |  |  | 33,277 |  |  | — |  |  | 955,582 |
Real estate—construction | 141,035 |  |  | — |  |  | 1,342 |  |  | — |  |  | 142,377 |
Commercial business | 931,827 |  |  | 19,500 |  |  | 44,420 |  |  | 133 |  |  | 995,880 |
Trade finance | 74,291 |  |  | 3,970 |  |  | 8,081 |  |  | — |  |  | 86,342 |
Consumer and other | 84,438 |  |  | 3 |  |  | 786 |  |  | — |  |  | 85,227 |
Subtotal | $ | 5,831,870 |  |  | $ | 87,025 |  |  | $ | 129,314 |  |  | $ | 133 |  |  | $ | 6,048,342 |
Acquired Loans: |  |  |  |  |  |  |  |  |
Real estate—residential | $ | 503 |  |  | $ | 278 |  |  | $ | — |  |  | $ | — |  |  | $ | 781 |
Real estate—commercial |  |  |  |  |  |  |  |  |
Retail | 73,951 |  |  | 2,019 |  |  | 13,507 |  |  | — |  |  | 89,477 |
Hotel & motel | 12,780 |  |  | 4,339 |  |  | 13,581 |  |  | — |  |  | 30,700 |
Gas station & car wash | 21,828 |  |  | 352 |  |  | 6,016 |  |  | — |  |  | 28,196 |
Mixed use | 13,703 |  |  | 6,337 |  |  | 3,929 |  |  | 8 |  |  | 23,977 |
Industrial & warehouse | 30,427 |  |  | 1,337 |  |  | 4,662 |  |  | 354 |  |  | 36,780 |
Other | 31,802 |  |  | 362 |  |  | 9,549 |  |  | — |  |  | 41,713 |
Real estate—construction | — |  |  | — |  |  | — |  |  | — |  |  | — |
Commercial business | 21,370 |  |  | 897 |  |  | 13,813 |  |  | 118 |  |  | 36,198 |
Trade finance | — |  |  | — |  |  | — |  |  | — |  |  | — |
Consumer and other | 29,327 |  |  | 1,096 |  |  | 6,897 |  |  | 1,517 |  |  | 38,837 |
Subtotal | $ | 235,691 |  |  | $ | 17,017 |  |  | $ | 71,954 |  |  | $ | 1,997 |  |  | $ | 326,659 |
Total | $ | 6,067,561 |  |  | $ | 104,042 |  |  | $ | 201,268 |  |  | $ | 2,130 |  |  | $ | 6,375,001 |

31

Table of Contents

| As of December 31, 2015
| Pass |  | Special Mention |  | Substandard |  | Doubtful/Loss |  | Total
| (In thousands)
Legacy Loans: |  |  |
Real estate—residential | $ | 32,543 |  |  | $ | 465 |  |  | $ | — |  |  | $ | — |  |  | $ | 33,008 |
Real estate—commercial |  |  |  |  |  |  |  |  |
Retail | 1,168,844 |  |  | 25,686 |  |  | 14,838 |  |  | — |  |  | 1,209,368 |
Hotel & motel | 1,009,493 |  |  | 789 |  |  | 5,937 |  |  | — |  |  | 1,016,219 |
Gas station & car wash | 610,749 |  |  | 6,192 |  |  | 3,758 |  |  | — |  |  | 620,699 |
Mixed use | 326,902 |  |  | 1,191 |  |  | 2,610 |  |  | — |  |  | 330,703 |
Industrial & warehouse | 461,938 |  |  | 10,099 |  |  | 11,966 |  |  | — |  |  | 484,003 |
Other | 913,304 |  |  | 15,805 |  |  | 34,537 |  |  | — |  |  | 963,646 |
Real estate—construction | 121,661 |  |  | — |  |  | 1,369 |  |  | — |  |  | 123,030 |
Commercial business | 875,989 |  |  | 21,886 |  |  | 38,505 |  |  | 13 |  |  | 936,393 |
Trade finance | 82,797 |  |  | 3,818 |  |  | 12,548 |  |  | — |  |  | 99,163 |
Consumer and other | 60,549 |  |  | 14 |  |  | 812 |  |  | 7 |  |  | 61,382 |
Subtotal | $ | 5,664,769 |  |  | $ | 85,945 |  |  | $ | 126,880 |  |  | $ | 20 |  |  | $ | 5,877,614 |
Acquired Loans: |  |  |
Real estate—residential | $ | 508 |  |  | $ | 281 |  |  | $ | — |  |  | $ | — |  |  | $ | 789 |
Real estate—commercial |  |  |  |  |  |  |  |  |
Retail | 91,076 |  |  | 2,364 |  |  | 14,926 |  |  | — |  |  | 108,366 |
Hotel & motel | 21,306 |  |  | 4,339 |  |  | 13,835 |  |  | — |  |  | 39,480 |
Gas station & car wash | 22,231 |  |  | 356 |  |  | 6,548 |  |  | — |  |  | 29,135 |
Mixed use | 14,195 |  |  | 6,382 |  |  | 3,762 |  |  | — |  |  | 24,339 |
Industrial & warehouse | 31,606 |  |  | 1,361 |  |  | 4,708 |  |  | 378 |  |  | 38,053 |
Other | 38,311 |  |  | 366 |  |  | 9,967 |  |  | — |  |  | 48,644 |
Real estate—construction | — |  |  | — |  |  | — |  |  | — |  |  | — |
Commercial business | 27,413 |  |  | 1,149 |  |  | 14,835 |  |  | 363 |  |  | 43,760 |
Trade finance | — |  |  | — |  |  | — |  |  | — |  |  | — |
Consumer and other | 32,194 |  |  | 1,643 |  |  | 5,901 |  |  | 1,453 |  |  | 41,191 |
Subtotal | $ | 278,840 |  |  | $ | 18,241 |  |  | $ | 74,482 |  |  | $ | 2,194 |  |  | $ | 373,757 |
Total | $ | 5,943,609 |  |  | $ | 104,186 |  |  | $ | 201,362 |  |  | $ | 2,214 |  |  | $ | 6,251,371 |

| Three Months Ended March 31,
| 2016 |  | 2015
Reclassification to held for sale | (In thousands)
Real estate - Commercial | $ | — |  |  | $ | 384 |
Real estate - Construction | — |  |  | — |
Commercial Business | — |  |  | 66 |
Consumer | 400 |  |  | — |
Total | $ | 400 |  |  | $ | 450 |

The adequacy of the allowance for loan losses is determined by management based upon an evaluation and review of the credit quality of the loan portfolio, consideration of historical loan loss experience, relevant internal and external factors that affect the collection of a loan, and other pertinent factors.
Migration analysis is a formula methodology derived from the Bank’s actual historical net charge off experience for each loan class (type) pool and risk grade. The migration analysis (“Migration Analysis”) is centered on the Bank’s internal credit risk rating system. Management’s internal loan review and external contracted credit review examinations are used to determine and validate loan risk grades. This credit review system takes into consideration factors such as: borrower’s background and experience; historical and current financial condition; credit history and payment performance; economic
32

Table of Contents
conditions and their impact on various industries; type, fair value and volatility of the fair value of collateral; lien position; and the financial strength of any guarantors.
A general loan loss allowance is provided on loans not specifically identified as impaired (“non-impaired loans”). The Bank’s general loan loss allowance has two components: quantitative and qualitative risk factors. The quantitative risk factors are based on a migration analysis methodology described above. The loans are classified by class and risk grade and the historical loss migration is tracked for the various classes. Loss experience is quantified for a specified period and then weighted to place more significance on the most recent loss history. That loss experience is then applied to the stratified portfolio at each quarter end. For ACILs, a general loan loss allowance is provided to the extent that there has been credit deterioration since the date of acquisition.
Additionally, in order to systematically quantify the credit risk impact of other trends and changes within the loan portfolio, the Bank utilizes qualitative adjustments to the Migration Analysis within established parameters. The parameters for making adjustments are established under a Credit Risk Matrix that provides seven possible scenarios for each of the factors below. The matrix allows for up to three positive (Major, Moderate, and Minor), three negative (Major, Moderate, and Minor), and one neutral credit risk scenarios within each factor for each loan type pool. However, if information exists to warrant adjustment to the Migration Analysis, changes are made in accordance with the established parameters supported by narrative and/or statistical analysis. The Credit Risk Matrix and the nine possible scenarios enable the Bank to qualitatively adjust the Loss Migration Ratio by as much as 50 basis points in either direction (positive or negative) for each loan type pool. This matrix considers the following nine factors, which are patterned after the guidelines provided under the FFIEC Interagency Policy Statement on the Allowance for Loan and Lease Losses:

• | Changes in lending policies and procedures, including underwriting standards and collection, charge off, and recovery practices;

• | Changes in national and local economic and business conditions and developments, including the condition of various market segments;

• | Changes in the nature and volume of the loan portfolio;

• | Changes in the experience, ability and depth of lending management and staff;

• | Changes in the trends of the volume and severity of past due loans, Classified Loans, nonaccrual loans, troubled debt restructurings and other loan modifications;

• | Changes in the quality of our loan review system and the degree of oversight by the Directors;

• | Changes in the value of underlying collateral for collateral-dependent loans;

• | The existence and effect of any concentrations of credit and changes in the level of such concentrations; and

• | The effect of external factors, such as competition and legal and regulatory requirements, on the level of estimated losses in our loan portfolio.

The Company also establishes specific loss allowances for loans that have identified potential credit risk conditions or circumstances related to a specific individual credit. The specific allowance amounts are determined by a method prescribed by FASB ASC 310-10-35-22, Measurement of Impairment. The loans identified as impaired will be accounted for in accordance with one of the three acceptable valuation methods: 1) the present value of future cash flows discounted at the loan’s effective interest rate; 2) the loan’s observable market price; or 3) the fair value of the collateral, if the loan is collateral dependent. For the collateral dependent impaired loans, management obtains a new appraisal to determine the amount of impairment as of the date that the loan became impaired. The appraisals are based on an “as is” valuation. To ensure that appraised values remain current, management either obtains updated appraisals every twelve months from a qualified independent appraiser or an internal evaluation of the collateral is performed by qualified personnel. If the third party market data indicates that the value of the collateral property has declined since the most recent valuation date, management adjusts the value of the property downward to reflect current market conditions. If the fair value of the collateral is less than the recorded amount of the loan, management recognizes impairment by creating or adjusting an existing valuation allowance with a corresponding charge to the provision for loan losses. If an impaired loan is expected to be collected through liquidation of the underlying collateral, the loan is deemed to be collateral dependent and the amount of impairment is charged off against the allowance for loan losses.
The Company considers a loan to be impaired when it is probable that not all amounts due (principal and interest) will be collectible in accordance with the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. The significance of payment delays and payment shortfalls is determined on a case-by-case basis by taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed.
33

Table of Contents
For commercial business loans, real estate loans and certain consumer loans, management bases the measurement of loan impairment on the present value of the expected future cash flows, discounted at the loan’s effective interest rate or on the fair value of the loan’s collateral if the loan is collateral dependent. Management evaluates most consumer loans for impairment on a collective basis because these loans generally have smaller balances and are homogeneous in the underwriting of terms and conditions and in the type of collateral.
For ACILs, the allowance for loan losses is based upon expected cash flows for these loans. To the extent that a deterioration in borrower credit quality results in a decrease in expected cash flows subsequent to the acquisition of the loans, an allowance for loan losses would be established based on an estimate of future credit losses over the remaining life of the loans.
The following table presents loans by portfolio segment and impairment method at March 31, 2016 and December 31, 2015:

| As of March 31, 2016
| Real Estate— Residential |  | Real Estate— Commercial |  | Real Estate— Construction |  | Commercial Business |  | Trade Finance |  | Consumer and Other |  | Total
| (In thousands)
Impaired loans (gross carrying value) | $ | — |  |  | $ | 81,964 |  |  | $ | 1,342 |  |  | $ | 47,796 |  |  | $ | 8,081 |  |  | $ | 1,241 |  |  | $ | 140,424 |
Specific allowance | $ | — |  |  | $ | 1,968 |  |  | $ | — |  |  | $ | 6,609 |  |  | $ | 1,307 |  |  | $ | — |  |  | $ | 9,884 |
Loss coverage ratio | N/A |  |  | 2.4 | % |  | 0.0 | % |  | 13.8 | % |  | 16.2 | % |  | 0.0 | % |  | 7.0 | %
Non-impaired loans | $ | 32,390 |  |  | $ | 4,875,787 |  |  | $ | 141,034 |  |  | $ | 984,282 |  |  | $ | 78,261 |  |  | $ | 122,823 |  |  | $ | 6,234,577 |
General allowance | $ | 221 |  |  | $ | 51,498 |  |  | $ | 1,054 |  |  | $ | 12,593 |  |  | $ | 778 |  |  | $ | 828 |  |  | $ | 66,972 |
Loss coverage ratio | 0.7 | % |  | 1.1 | % |  | 0.7 | % |  | 1.3 | % |  | 1.0 | % |  | 0.7 | % |  | 1.1 | %
Total loans | $ | 32,390 |  |  | $ | 4,957,751 |  |  | $ | 142,376 |  |  | $ | 1,032,078 |  |  | $ | 86,342 |  |  | $ | 124,064 |  |  | $ | 6,375,001 |
Total allowance for loan losses | $ | 221 |  |  | $ | 53,466 |  |  | $ | 1,054 |  |  | $ | 19,202 |  |  | $ | 2,085 |  |  | $ | 828 |  |  | $ | 76,856 |
Loss coverage ratio | 0.7 | % |  | 1.1 | % |  | 0.7 | % |  | 1.9 | % |  | 2.4 | % |  | 0.7 | % |  | 1.2 | %

| As of December 31, 2015
| Real Estate— Residential |  | Real Estate— Commercial |  | Real Estate— Construction |  | Commercial Business |  | Trade Finance |  | Consumer and Other |  | Total
| (In thousands)
Impaired loans (gross carrying value) | $ | — |  |  | $ | 81,117 |  |  | $ | 1,369 |  |  | $ | 41,586 |  |  | $ | 12,548 |  |  | $ | 1,470 |  |  | $ | 138,090 |
Specific allowance | $ | — |  |  | $ | 1,888 |  |  | $ | — |  |  | $ | 4,316 |  |  | $ | 2,603 |  |  | $ | — |  |  | $ | 8,807 |
Loss coverage ratio | N/A |  |  | 2.3 | % |  | 0.0 | % |  | 10.4 | % |  | 20.7 | % |  | 0.0 | % |  | 6.4 | %
Non-impaired loans | $ | 33,797 |  |  | $ | 4,831,538 |  |  | $ | 121,661 |  |  | $ | 938,567 |  |  | $ | 86,615 |  |  | $ | 101,103 |  |  | $ | 6,113,281 |
General allowance | $ | 230 |  |  | $ | 52,617 |  |  | $ | 917 |  |  | $ | 12,231 |  |  | $ | 989 |  |  | $ | 617 |  |  | $ | 67,601 |
Loss coverage ratio | 0.7 | % |  | 1.1 | % |  | 0.8 | % |  | 1.3 | % |  | 1.1 | % |  | 0.6 | % |  | 1.1 | %
Total loans | $ | 33,797 |  |  | $ | 4,912,655 |  |  | $ | 123,030 |  |  | $ | 980,153 |  |  | $ | 99,163 |  |  | $ | 102,573 |  |  | $ | 6,251,371 |
Total allowance for loan losses | $ | 230 |  |  | $ | 54,505 |  |  | $ | 917 |  |  | $ | 16,547 |  |  | $ | 3,592 |  |  | $ | 617 |  |  | $ | 76,408 |
Loss coverage ratio | 0.7 | % |  | 1.1 | % |  | 0.7 | % |  | 1.7 | % |  | 3.6 | % |  | 0.6 | % |  | 1.2 | %

34

Table of Contents
Under certain circumstances, the Company provides borrowers relief through loan modifications. These modifications are either temporary in nature (“temporary modifications”) or are more substantive. At March 31, 2016, total modified loans were $77.8 million, compared to $72.2 million at December 31, 2015. The temporary modifications generally consist of interest only payments for a three to six month period, whereby principal payments are deferred. At the end of the modification period, the remaining principal balance is re-amortized based on the original maturity date. Loans subject to temporary modifications are generally downgraded to Special Mention or Substandard. At the end of the modification period, the loan either 1) returns to the original contractual terms; 2) is further modified and accounted for as a troubled debt restructuring in accordance with ASC 310-10-35; or 3) is disposed of through foreclosure or liquidation.
Troubled Debt Restructurings (“TDRs”) of loans are defined by ASC 310-40, “Troubled Debt Restructurings by Creditors” and ASC 470-60, “Troubled Debt Restructurings by Debtors” and evaluated for impairment in accordance with ASC 310-10-35. The concessions may be granted in various forms, including reduction in the stated interest rate, reduction in the amount of principal amortization, forgiveness of a portion of a loan balance or accrued interest, or extension of the maturity date. In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed on the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the Bank’s internal underwriting policy.
A summary of TDRs on accrual and nonaccrual status by type of concession as of March 31, 2016 and December 31, 2015 is presented below:

| As of March 31, 2016
| TDRs on Accrual |  | TDRs on Nonaccrual |  | Total
| Real Estate— Commercial |  | Commercial Business |  | Other |  | Total |  | Real Estate— Commercial |  | Commercial Business |  | Other |  | Total |
| (In thousands)
Payment concession | $ | 11,515 |  |  | $ | 355 |  |  | $ | — |  |  | $ | 11,870 |  |  | $ | 3,773 |  |  | $ | 2,607 |  |  | $ | — |  |  | $ | 6,380 |  |  | $ | 18,250 |
Maturity / amortization concession | 3,500 |  |  | 23,529 |  |  | 6,766 |  |  | 33,795 |  |  | 2,018 |  |  | 7,501 |  |  | 2,272 |  |  | 11,791 |  |  | 45,586 |
Rate concession | 6,694 |  |  | 401 |  |  | — |  |  | 7,095 |  |  | 6,250 |  |  | 453 |  |  | 163 |  |  | 6,866 |  |  | 13,961 |
Principal forgiveness | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
| $ | 21,709 |  |  | $ | 24,285 |  |  | $ | 6,766 |  |  | $ | 52,760 |  |  | $ | 12,041 |  |  | $ | 10,561 |  |  | $ | 2,435 |  |  | $ | 25,037 |  |  | $ | 77,797 |

| As of December 31, 2015
| TDRs on Accrual |  | TDRs on Nonaccrual |  | Total
| Real Estate— Commercial |  | Commercial Business |  | Other |  | Total |  | Real Estate— Commercial |  | Commercial Business |  | Other |  | Total |
| (In thousands)
Payment concession | $ | 11,604 |  |  | $ | 375 |  |  | $ | — |  |  | $ | 11,979 |  |  | $ | 3,891 |  |  | $ | 2,410 |  |  | $ | — |  |  | $ | 6,301 |  |  | $ | 18,280 |
Maturity / amortization concession | 4,009 |  |  | 18,192 |  |  | 5,311 |  |  | 27,512 |  |  | 1,583 |  |  | 6,818 |  |  | 2,297 |  |  | 10,698 |  |  | 38,210 |
Rate concession | 7,215 |  |  | 1,278 |  |  | — |  |  | 8,493 |  |  | 6,445 |  |  | 641 |  |  | 166 |  |  | 7,252 |  |  | 15,745 |
Principal forgiveness | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
| $ | 22,828 |  |  | $ | 19,845 |  |  | $ | 5,311 |  |  | $ | 47,984 |  |  | $ | 11,919 |  |  | $ | 9,869 |  |  | $ | 2,463 |  |  | $ | 24,251 |  |  | $ | 72,235 |

TDRs on accrual status are comprised of loans that were accruing at the time of restructuring and for which the Bank anticipates full repayment of both principal and interest under the restructured terms. TDRs that are on nonaccrual status can be returned to accrual status after a period of sustained performance, generally determined to be six months of timely payments as modified. Sustained performance includes the periods prior to the modification if the prior performance met or exceeded the modified terms. TDRs on accrual status at March 31, 2016 were comprised of 22 commercial real estate loans totaling $21.7 million, 26 commercial business loans totaling $24.3 million, and 6 other loans totaling $6.8 million. TDRs on accrual status at December 31, 2015 were comprised of 24 commercial real estate loans totaling $22.8 million, 28 commercial business loans totaling $19.8 million and 4 consumer and other loans totaling $5.3 million. The Company expects that the TDRs on accrual status as of March 31, 2016, which were all performing in accordance with their restructured terms, to continue to comply with the restructured terms because of the reduced principal or interest payments on these loans. TDRs that were restructured at market interest rates and had sustained performance as agreed under the modified loan terms may be reclassified as non-TDRs after each year end but are reserved for under ASC 310-10.
35

Table of Contents
The Company has allocated $7.9 million and $5.7 million of specific reserves to TDRs as of March 31, 2016 and December 31, 2015, respectively.
The following table presents loans by class modified as TDRs that occurred during the three months ended March 31, 2016:

| Three Months Ended March 31, 2016
| Number of Loans |  | Pre- Modification |  | Post- Modification
| (Dollars in thousands)
Legacy Loans: |  |  |  |  |
Real estate—commercial |  |  |  |  |  |  |
Retail | — |  |  | $ | — |  |  | $ | — |
Hotel & motel | — |  |  | — |  |  | — |
Gas station & car wash | — |  |  | — |  |  | — |
Mixed use | — |  |  | — |  |  | — |
Industrial & warehouse | — |  |  | — |  |  | — |
Other | — |  |  | — |  |  | — |
Real estate - construction | — |  |  | — |  |  | — |
Commercial business | 6 |  |  | 11,088 |  |  | 7,039 |
Trade finance | 1 |  |  | 2,199 |  |  | 1,586 |
Consumer and other | — |  |  | — |  |  | — |
Subtotal | 7 |  |  | $ | 13,287 |  |  | $ | 8,625 |
Acquired Loans: |  |  |  |  |
Real estate—commercial |  |  |  |  |  |  |
Retail | — |  |  | $ | — |  |  | $ | — |
Hotel & motel | — |  |  | — |  |  | — |
Gas station & car wash | — |  |  | — |  |  | — |
Mixed use | — |  |  | — |  |  | — |
Industrial & warehouse | — |  |  | — |  |  | — |
Other | — |  |  | — |  |  | — |
Real estate—construction | — |  |  | — |  |  | — |
Commercial business | — |  |  | — |  |  | — |
Trade finance | — |  |  | — |  |  | — |
Consumer and other | 1 |  |  | 30 |  |  | 29 |
Subtotal | 1 |  |  | $ | 30 |  |  | $ | 29 |
Total | 8 |  |  | $ | 13,317 |  |  | $ | 8,654 |

The specific reserves for the TDRs that occurred during the three months ended March 31, 2016 totaled $2.1 million and there were $0 in charge offs for the three months ended March 31, 2016, respectively.
36

Table of Contents
The following table presents loans by class for TDRs that have been modified within the previous twelve months and have subsequently had a payment default during the three months ended March 31, 2016:

| Three Months Ended March 31, 2016
| Number of Loans |  | Balance
| (Dollars In thousands)
Legacy Loans: |  |  |
Real estate—commercial |  |  |
Retail | — |  |  | $ | — |
Gas station & car wash | 2 |  |  | 729 |
Industrial & warehouse | — |  |  | — |
Other | — |  |  | — |
Commercial business | 6 |  |  | 2,272 |
Subtotal | 8 |  |  | $ | 3,001 |
Acquired Loans: |  |  |
Real estate—commercial |  |  |  |  |
Retail | — |  |  | $ | — |
Gas station & car wash | — |  |  | — |
Hotel & motel | — |  |  | — |
Mixed Use | 1 |  |  | 62 |
Industrial & warehouse | — |  |  | — |
Other | — |  |  | — |
Commercial business | — |  |  | — |
Subtotal | 1 |  |  | $ | 62 |
| 9 |  |  | $ | 3,063 |

A loan is considered to be in payment default once it is 30 days contractually past due under the modified terms. As of March 31, 2016, the specific reserves totaled $144 thousand for the TDRs that had payment defaults during the three months ended March 31, 2016. The total charge offs for the TDRs that had payment defaults during the three months ended March 31, 2016 were $30 thousand.
There were eight Legacy Loans that subsequently defaulted during the three months ended March 31, 2016 that were modified as follows: four Commercial Business loans totaling $2.0 million were modified through payment concessions, two Commercial Business loans totaling $249 thousand were modified through maturity concessions, and two Real Estate Commercial loans totaling $729 thousand were modified through maturity concessions.
There was one Acquired Loan totaling $62 thousand that defaulted during the three months ended March 31, 2016 that was modified through payment concession.
37

Table of Contents
Covered Assets
On April 16, 2010, the Department of Financial Institutions closed Innovative Bank, California, and appointed the FDIC as its receiver. On the same date, the Bank assumed the banking operations of Innovative Bank from the FDIC under a purchase and assumption agreement and two related loss sharing agreements with the FDIC. These agreements provide for the sharing of losses and recoveries on the covered assets. The loss sharing provisions of the agreements expired on June 30, 2015, however, the Company will continue to reimburse the FDIC for recoveries on its covered assets until June 30, 2018.
Covered nonperforming assets totaled $2.0 million and $1.3 million at March 31, 2016 and December 31, 2015, respectively. These covered nonperforming assets are subject to the loss sharing agreements with the FDIC. The covered nonperforming assets at March 31, 2016 and December 31, 2015 were as follows:

| March 31, 2016 |  | December 31, 2015
| (In thousands)
Covered loans on nonaccrual status | $ | 1,102 |  |  | $ | 1,118 |
Covered OREO | 915 |  |  | 220 |
Total covered nonperforming assets | $ | 2,017 |  |  | $ | 1,338 |
Acquired covered loans | $ | 21,769 |  |  | $ | 22,989 |

Related Party Loans
In the ordinary course of business, the Company enters into loan transactions with certain of its directors or associates of such directors (“Related Parties”). The loans to Related Parties are on substantially the same terms and conditions, including interest rates and collateral, as those prevailing at the same time for comparable transactions with unrelated parties. In management’s opinion, these transactions did not involve more than normal credit risk or present other unfavorable features. All loans to Related Parties were current as of March 31, 2016 and December 31, 2015, and the outstanding principal balance as of March 31, 2016 and December 31, 2015 was $2.9 million and $3.8 million, respectively.
38

Table of Contents

7. | Borrowings

The Company maintains a secured credit facility with the FHLB against which the Bank may take advances. The borrowing capacity is limited to the lower of 25% of the Bank’s total assets or the Bank’s collateral capacity, which was $2.39 billion at March 31, 2016 and $2.36 billion at December 31, 2015. The terms of this credit facility require the Company to pledge eligible collateral with the FHLB equal to at least 100% of outstanding advances.
At March 31, 2016 and December 31, 2015, real estate secured loans with a carrying amount of approximately $3.17 billion and $3.13 billion, respectively, were pledged as collateral for borrowings from the FHLB. At March 31, 2016 and December 31, 2015, other than FHLB stock, no securities are pledged as collateral for borrowings from the FHLB.
At March 31, 2016 and December 31, 2015, FHLB advances were $530.5 million and $530.6 million, respectively, had a weighted average interest rate of 1.15% and 1.15%, respectively, and had various maturities through June 2020. At March 31, 2016 and December 31, 2015, $20.5 million and $20.6 million, respectively, of the advances were putable advances with various putable dates and strike prices. The stated rate of FHLB advances as of March 31, 2016 ranged between 0.44% and 2.02%. At March 31, 2016, the Company had a remaining borrowing capacity of $1.86 billion.
At March 31, 2016, the contractual maturities for FHLB advances were as follows:

| Contractual Maturities |  | Maturity/ Put Date
| (In thousands)
Due within one year | $ | 175,000 |  |  | $ | 195,495 |
Due after one year through five years | 355,495 |  |  | 335,000 |
| $ | 530,495 |  |  | $ | 530,495 |

In addition, as a member of the FRB system, the Bank may also borrow from the FRB of San Francisco. The maximum amount that the Bank may borrow from the FRB’s discount window is up to 95% of the outstanding principal balance of the qualifying loans and the fair value of the securities that are pledged. At March 31, 2016, the outstanding principal balance of the qualifying loans was $742.9 million, and the collateral value of investment securities was $984 thousand. There were no borrowings outstanding against this line as of March 31, 2016 and December 31, 2015.

8. | Subordinated Debentures

At March 31, 2016, the Company had five wholly owned subsidiary grantor trusts that had issued $46 million of pooled trust preferred securities. Trust preferred securities accrue and pay distributions periodically at specified annual rates as provided in the indentures. The trusts used the net proceeds from the offering to purchase a like amount of subordinated debentures (the “Debentures”) of BBCN Bancorp. The Debentures are the sole assets of the trusts. The Company’s obligations under the subordinated debentures and related documents, taken together, constitute a full and unconditional guarantee by the Company of the obligations of the trusts. The trust preferred securities are mandatorily redeemable upon the maturity of the Debentures, or upon earlier redemption as provided in the indentures. The Company has the right to redeem the Debentures in whole (but not in part) on or after specific dates, at a redemption price specified in the indentures plus any accrued but unpaid interest to the redemption date. The Company also has a right to defer consecutive payments of interest on the debentures for up to five years.
The following table is a summary of trust preferred securities and Debentures at March 31, 2016:

Issuance Trust |  | Issuance Date |  | Trust Preferred Security Amount |  | Carrying Value of Subordinated Debentures |  | Rate Type |  | Current Rate |  | Maturity Date
|  |  |  | (Dollars in thousands) |  |  |  |  |  |
Nara Capital Trust III |  | 6/5/2003 |  | $ | 5,000 |  |  | $ | 5,155 |  |  | Variable |  | 3.78 | % |  | 6/15/2033
Nara Statutory Trust IV |  | 12/22/2003 |  | 5,000 |  |  | 5,155 |  |  | Variable |  | 3.47 | % |  | 1/7/2034
Nara Statutory Trust V |  | 12/17/2003 |  | 10,000 |  |  | 10,310 |  |  | Variable |  | 3.59 | % |  | 12/17/2033
Nara Statutory Trust VI |  | 3/22/2007 |  | 8,000 |  |  | 8,248 |  |  | Variable |  | 2.28 | % |  | 6/15/2037
Center Capital Trust I |  | 12/30/2003 |  | 18,000 |  |  | 13,503 |  |  | Variable |  | 3.47 | % |  | 1/7/2034
TOTAL ISSUANCE |  |  |  | $ | 46,000 |  |  | $ | 42,371 |  |  |  |  |  |  |

39

Table of Contents
The Company’s investment in the common trust securities of the issuer trusts of $1.5 million and $1.5 million at March 31, 2016 and December 31, 2015, respectively, is included in other assets. Although the subordinated debt issued by the trusts are not included as a component of stockholders’ equity in the consolidated balance sheets, the debt is treated as capital for regulatory purposes. The trust preferred security debt issuances are includable in Tier I capital up to a maximum of 25% of capital on an aggregate basis. Any amount that exceeds 25% qualifies as Tier 2 capital.
9. Derivative Financial Instruments
The Company offers a loan hedging program to certain loan customers. Through this program, the Company originates a variable rate loan with the customer. The Company and the customer will then enter into a fixed interest rate swap. Lastly, an identical offsetting swap is entered into by the Company with a correspondent bank. These “back-to-back” swap arrangements are intended to offset each other and allow the Company to book a variable rate loan, while providing the customer with a contract for fixed interest payments. In these arrangements, the Company’s net cash flow is equal to the interest income received from the variable rate loan originated with the customer. These customer swaps are not designated as hedging instruments and are recorded at fair value in other assets and other liabilities. The changes in fair value are recognized in the income statement in other income and fees.
At March 31, 2016, the following interest rate swaps related to our loan hedging program were outstanding:

|  | As of March 31, 2016
Interest rate swaps on loans with loan customers |  |
Notional amount (in thousands) |  | $ | 120,583 |
Weighted average remaining term |  | 7.5 years |
Received fixed rate (weighted average) |  | 4.45 | %
Pay variable rate (weighted average) |  | 2.81 | %
Estimated fair value (in thousands) |  | $ | 6,260 |
Back to back interest rate swaps with correspondent banks |  |
Notional amount (in thousands) |  | $ | 120,583 |
Weighted average remaining term |  | 7.5 years |
Received variable rate (weighted average) |  | 2.81 | %
Pay fixed rate (weighted average) |  | 4.45 | %
Estimated fair value (in thousands) |  | $ | (6,260 | )

40

Table of Contents

10. | Intangible Assets

The carrying amount of the Company’s goodwill as of March 31, 2016 and December 31, 2015 was $105.4 million. There was no impairment of goodwill during the three months ended March 31, 2016 and 2015.
Core deposit intangible assets are amortized over their estimated lives, which range from seven to ten years. Amortization expense related to core deposit intangible assets totaled $212 thousand and $267 thousand for the three months ended March 31, 2016 and 2015, respectively. The following table provides information regarding the core deposit intangibles at March 31, 2016:

|  |  | As of March 31, 2016
| Amortization period |  | Gross Carrying Amount |  | Accumulated Amortization
|  |  | (In thousands)
Core deposit—Center Financial Corporation acquisition | 7 years |  | $ | 4,100 |  |  | $ | (3,365 | )
Core deposit—PIB acquisition | 7 years |  | 603 |  |  | (401 | )
Core deposit—Foster acquisition | 10 years |  | 2,763 |  |  | (1,093 | )
Total |  |  | $ | 7,466 |  |  | $ | (4,859 | )

Servicing assets are recognized when SBA loans are sold with servicing retained with the income statement effect recorded in net gains on sales of SBA loans. Servicing assets are initially recorded at fair value based on the present value of the contractually specified servicing fee, net of servicing costs, over the estimated life of the loan, using a discount rate based on the related note rate. The Company’s servicing costs approximates the industry average servicing costs of 40 basis points. All classes of servicing assets are subsequently measured using the amortization method which requires servicing rights to be amortized into noninterest income in proportion to, and over the period of, the estimated future net servicing income of the underlying loans.
Management periodically evaluates servicing assets for impairment based upon the fair value of the rights as compared to the carrying amount. Impairment is determined by stratifying rights into groupings based on loan type. Impairment is recognized through a valuation allowance for an individual grouping, to the extent that fair value is less than the carrying amount.
The changes in servicing assets for the three months ended March 31, 2016 were as follows:

|  | Three Months Ended March 31,
|  | 2016 |  | 2015
|  | (In thousands)
Balance at beginning of period |  | $ | 12,000 |  |  | $ | 10,341 |
Additions through originations of servicing assets |  | 777 |  |  | 1,045 |
Amortization |  | (921 | ) |  | (857 | )
Balance at end of period |  | $ | 11,856 |  |  | $ | 10,529 |

The Company utilizes the discounted cash flow method to calculate the initial excess servicing assets. The inputs used in determining the fair value of the servicing assets at March 31, 2016 and December 31, 2015 are presented below.

|  | March 31, 2016 |  | December 31, 2015
|  | Range |  | Range
Weighted-average discount rate |  | 5.57% ~ 6.12% |  | 5.59% ~ 6.01%
Constant prepayment rate |  | 7.20% ~ 11.90% |  | 7.30% ~11.90%

41

Table of Contents

11. | Income Taxes

The Company and its subsidiaries are subject to U.S. federal income tax, as well as state income taxes. The Company had total unrecognized tax benefits of $1.8 million and $1.8 million at March 31, 2016 and December 31, 2015, respectively, that relate primarily to uncertainties in California enterprise zone loan interest deductions.
Management believes it is reasonably possible that the unrecognized tax benefits may decrease by approximately $329 thousand in the next twelve months.
The statute of limitations for the assessment of income taxes related to the consolidated Federal income tax returns is closed for all tax years up to and including 2011. The expiration of the statute of limitations for the assessment of income and franchise taxes related to the various state income and franchise tax returns varies by state. The Company is currently under examination by the California Franchise Tax Board (FTB) for the 2009, 2010, 2012, and 2013 tax years. While the outcome of the examinations is unknown, the Company expects no material adjustments. The Company recognizes interest and penalties related to income tax matters in income tax expense. The Company recorded approximately $169 thousand and $154 thousand for accrued interest and penalties at March 31, 2016 and December 31, 2015, respectively.
Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all, of the deferred tax asset will not be realized. In assessing the realization of deferred tax assets, management evaluates both positive and negative evidence, including the existence of any cumulative losses in the current year and the prior two years, the amount of taxes paid in available carry-back years, the forecasts of future income, applicable tax planning strategies, and assessments of current and future economic and business conditions. This analysis is updated quarterly and adjusted as necessary. Based on the analysis, the Company has determined that a valuation allowance for deferred tax assets was not required as of March 31, 2016.
42

Table of Contents

12. | Fair Value Measurements

Accounting guidance establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

Level 1: | Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: | Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: | Significant unobservable inputs that reflect estimates of assumptions that market participants would use in pricing the asset or liability.

Securities Available for Sale
The fair values of securities available for sale are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs) or matrix pricing, which is a technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs).
The fair values of the Company’s Level 3 securities available for sale were measured using an income approach valuation technique. The primary inputs and assumptions used in the fair value measurement were derived from the securities’ underlying collateral, which included discount rates, prepayment speeds, payment delays, and an assessment of the risk of default of the underlying collateral, among other factors. Significant increases or decreases in any of the inputs or assumptions would result in a significant increase or decrease in the fair value measurement.
Impaired Loans
The fair values of impaired loans are generally measured for impairment using the practical expedients permitted by FASB ASC 310-10-35 including impaired loans measured at an observable market price (if available), or at the fair value of the loan’s collateral (if the loan is collateral dependent). Fair value of the loan’s collateral, when the loan is dependent on collateral, is determined by appraisals or independent valuation, less costs to sell of 8.5%. For commercial and industrial and asset backed loans, independent valuations may be comprised of a 20-60% discount for accounts receivable and a 50-70% discount for inventory. These result in a Level 3 classification.
OREO
OREO is fair valued at the time the loan is foreclosed upon and the asset is transferred to OREO. The value is based primarily on third party appraisals, less costs to sell of 8.5% and result in a Level 3 classification of the inputs for determining fair value. OREO is reviewed and evaluated on at least an annual basis for additional impairment and adjusted to lower of cost or market accordingly, based on the same factors identified above.
Loans held for sale
Loans held for sale are carried at the lower of cost or fair value, as determined by outstanding commitments from investors, or based on recent comparable sales (Level 2 inputs), if available, and if not available, are based on discounted cash flows using current market rates applied to the estimated life and credit risk (Level 3 inputs) or may be assessed based upon the fair value of the collateral, which is obtained from recent real estate appraisals (Level 3 inputs). These appraisals may utilize a single valuation approach or a combination of approaches including the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are typically significant and result in Level 3 classification of the inputs for determining fair value.
43

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

|  |  | Fair Value Measurements at the End of the Reporting Period Using
| March 31, 2016 |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
| (In thousands)
Assets: |  |  |  |  |  |  |
Securities available for sale: |  |  |  |  |  |  |
GSE collateralized mortgage obligations | $ | 498,026 |  |  | $ | — |  |  | $ | 498,026 |  |  | $ | — |
GSE mortgage-backed securities | 526,910 |  |  | — |  |  | 526,910 |  |  | — |
Trust preferred securities | 3,394 |  |  | — |  |  | 3,394 |  |  | — |
Municipal bonds | 46,113 |  |  | — |  |  | 44,904 |  |  | 1,209 |
Mutual funds | 13,454 |  |  | 13,454 |  |  | — |  |  | — |
Interest rate swaps | 6,260 |  |  | — |  |  | 6,260 |  |  | — |
Liabilities: |  |  |  |  |  |  |
Interest rate swaps | 6,260 |  |  | — |  |  | 6,260 |  |  | — |

|  |  | Fair Value Measurements at the End of the Reporting Period Using
| December 31, 2015 |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
| (In thousands)
Assets: |  |  |  |  |  |  |
Securities available for sale: |  |  |  |  |  |  |
GSE collateralized mortgage obligations | $ | 449,980 |  |  | $ | — |  |  | $ | 449,980 |  |  | $ | — |
GSE mortgage-backed securities | 498,047 |  |  | — |  |  | 498,047 |  |  | — |
Trust preferred securities | 3,749 |  |  | — |  |  | 3,749 |  |  | — |
Municipal bonds | 45,511 |  |  | — |  |  | 44,345 |  |  | 1,166 |
Mutual funds | 13,269 |  |  | 13,269 |  |  | — |  |  | — |
Interest rate swaps | 2,680 |  |  | — |  |  | 2,680 |  |  | — |
Liabilities: |  |  |  |  |  |  |
Interest rate swaps | 2,680 |  |  | — |  |  | 2,680 |  |  | — |

There were no transfers between Level 1, 2 and 3 during the three months ended March 31, 2016 and 2015. There were no gains or losses recognized in earnings during the three months ended March 31, 2016 and 2015.
The table below presents a reconciliation and income statement classification of gains and losses for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months ended March 31, 2016:
44

Table of Contents

|  | Three Months Ended March 31,
|  | 2016 |  | 2015
|  | (In thousands)
Beginning Balance, January 1 |  | $ | 1,166 |  |  | $ | 1,178 |
Purchases, issuances and settlements |  | — |  |  | — |
Amortization |  | — |  |  | — |
Total gains included in other comprehensive income |  | 43 |  |  | 17 |
Ending Balance, March 31 |  | $ | 1,209 |  |  | $ | 1,195 |

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

|  |  | Fair Value Measurements at the End of the Reporting Period Using
| March 31, 2016 |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
| (In thousands)
Assets: |  |  |  |  |  |  |
Impaired loans at fair value: |  |  |  |  |  |  |
Real estate loans | $ | 44,616 |  |  | $ | — |  |  | $ | — |  |  | $ | 44,616 |
Commercial business | 6,026 |  |  | — |  |  | — |  |  | 6,026 |
Trade finance | — |  |  | — |  |  | — |  |  | — |
Consumer | 264 |  |  | — |  |  | — |  |  | 264 |
Loans held for sale, net | 400 |  |  | — |  |  | 400 |  |  | — |
OREO | 5,514 |  |  | — |  |  | — |  |  | 5,514 |

|  |  | Fair Value Measurements at the End of the Reporting Period Using
| December 31, 2015 |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
| (In thousands)
Assets: |  |  |  |  |  |  |
Impaired loans at fair value: |  |  |  |  |  |  |
Real estate loans | $ | 18,251 |  |  | $ | — |  |  | $ | — |  |  | $ | 18,251 |
Commercial business | 9,366 |  |  | — |  |  | — |  |  | 9,366 |
Trade Finance | 15,540 |  |  | — |  |  | — |  |  | 15,540 |
Consumer | 391 |  |  | — |  |  | — |  |  | 391 |
Loans held for sale, net | 348 |  |  | — |  |  | 348 |  |  | — |
OREO | 18,308 |  |  | — |  |  | — |  |  | 18,308 |

For assets measured at fair value on a non-recurring basis, the total net gains (losses), which include charge offs, recoveries, specific reserves, and gains and losses on sales recognized are summarized below:
45

Table of Contents

| For the Three Months Ended March 31,
| 2016 |  | 2015
| (In thousands)
Assets: |  |  |
Impaired loans at fair value: |  |  |
Real estate loans | $ | 309 |  |  | $ | 534 |
Commercial business | (2,672 | ) |  | 1,274 |
Trade Finance | 1,296 |  |  | (310 | )
Consumer | (62 | ) |  | (12 | )
Loans held for sale, net | 15 |  |  | 182 |
OREO | (577 | ) |  | (425 | )

46

Table of Contents
Fair Value of Financial Instruments
Carrying amounts and estimated fair values of financial instruments, not previously presented, at March 31, 2016 and December 31, 2015 were as follows:

| March 31, 2016
| Carrying Amount |  | Estimated Fair Value |  | Fair Value Measurement Using
| (In thousands)
Financial Assets: |  |  |  |  |
Cash and cash equivalents | $ | 236,101 |  |  | $ | 236,101 |  |  | Level 1
Other investments | 49,365 |  |  | 49,461 |  |  | Level 3
Loans held for sale | 13,843 |  |  | 14,535 |  |  | Level 2
Loans receivable—net | 6,295,079 |  |  | 6,713,741 |  |  | Level 3
Customers’ liabilities on acceptances | 2,769 |  |  | 2,769 |  |  | Level 2
Financial Liabilities: |  |  |  |  |
Noninterest bearing deposits | $ | 1,695,040 |  |  | $ | 1,695,040 |  |  | Level 2
Saving and other interest bearing demand deposits | 2,133,340 |  |  | 2,133,340 |  |  | Level 2
Time deposits | 2,639,031 |  |  | 2,643,155 |  |  | Level 2
FHLB advances | 530,495 |  |  | 535,782 |  |  | Level 2
Subordinated debentures | 42,371 |  |  | 44,138 |  |  | Level 2
Bank’s liabilities on acceptances outstanding | 2,769 |  |  | 2,769 |  |  | Level 2
| December 31, 2015
| Carrying Amount |  | Estimated Fair Value |  | Fair Value Measurement Using
| (In thousands)
Financial Assets: |  |  |  |  |
Cash and cash equivalents | $ | 298,389 |  |  | $ | 298,389 |  |  | Level 1
Other investments | 47,895 |  |  | 47,919 |  |  | Level 3
Loans held for sale | 8,273 |  |  | 8,669 |  |  | Level 2
Loans receivable—net | 6,171,933 |  |  | 6,559,838 |  |  | Level 3
Customers’ liabilities on acceptances | 1,463 |  |  | 1,463 |  |  | Level 2
Financial Liabilities: |  |  |  |  |
Noninterest bearing deposits | $ | 1,694,427 |  |  | $ | 1,694,427 |  |  | Level 2
Saving and other interest bearing demand deposits | 2,170,748 |  |  | 2,170,748 |  |  | Level 2
Time deposits | 2,475,801 |  |  | 2,478,858 |  |  | Level 2
FHLB advances | 530,591 |  |  | 532,137 |  |  | Level 2
Subordinated debentures | 42,327 |  |  | 44,084 |  |  | Level 2
Bank’s liabilities on acceptances outstanding | 1,463 |  |  | 1,463 |  |  | Level 2

The methods and assumptions used to estimate fair value are described as follows:
The carrying amount is the estimated fair value for cash and cash equivalents, savings and other interest bearing demand deposits, customer’s and Bank’s liabilities on acceptances, noninterest bearing deposits, short-term debt, secured borrowings and variable rate loans or deposits that reprice frequently and fully. For fixed rate loans or deposits and for variable rate loans or deposits with infrequent repricing or repricing limits, fair value is based on discounted cash flows using current market rates applied to the estimated life and credit risk. The allowance for loan losses is considered to be a reasonable estimate of discount for credit quality concerns. Fair value of SBA loans held for sale is based on market quotes. For fair value of non-SBA loans held for sale, see the measurement method discussed previously. Fair value of time deposits and debt is based on current rates for similar financing. It was not practicable to determine the fair value of FRB stock or FHLB stock due to restrictions placed on their transferability. The fair value of commitments to fund loans represents fees currently charged to enter into similar
47

Table of Contents
agreements with similar remaining maturities and is not presented herein. The fair value of these financial instruments is not material to the consolidated financial statements.

13. | Stockholders’ Equity

In June 2012, the Company redeemed all of the Fixed Rate Cumulative Perpetual Preferred Stock issued under the U.S. Treasury Department’s TARP Capital Purchase Program.
The Company assumed certain warrants (related to the TARP Capital Purchase Plan) to purchase shares of the Company’s common stock. On May 20, 2015, the U.S. Treasury Department completed an auction to sell certain of its warrant positions, and the Company submitted the winning bid to repurchase an outstanding warrant to purchase 350,767 shares of the Company’s common stock. The Company repurchased this warrant for $1.2 million. As of March 31, 2016, the U.S. Treasury Department held one remaining warrant for the purchase of 19,420 shares of the Company’s common stock.
The Company’s Board of Directors declared quarterly dividends of $0.11 per common share for the first quarter of 2016 and $0.10 per common share for the first quarter of 2015.
The following table presents the changes to accumulated other comprehensive income at March 31, 2016 and March 31, 2015:

| March 31, 2016 |  | March 31, 2015
| (In thousands)
Balance at beginning of period | (1,832 | ) |  | 1,705 |
Unrealized gains on securities available for sale and interest only strips | 15,592 |  |  | 5,255 |
Reclassification adjustments for gains realized in income | — |  |  | (424 | )
Tax expense | 6,605 |  |  | 2,048 |
Total other comprehensive income | 8,987 |  |  | 2,783 |
Balance at end of period | 7,155 |  |  | 4,488 |

48

Table of Contents

14. | Regulatory Matters

The Company and the Bank are subject to various regulatory capital requirements administered by the federal and state banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material and adverse effect on the Company’s and the Bank’s financial statements, such as restrictions on growth or the payment of dividends or other capital distributions or management fees. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Prompt corrective action provisions are not applicable to bank holding companies.
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 Basel III international agreements reached by the Basel Committee. The final rules began for the Company and the Bank on January 1, 2015 and are subject to a phase-in period through January 1, 2019. The final rules that had an impact on the Company and the Bank include:

• | 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 “common equity Tier 1” as a subset of Tier 1 capital limited to common equity;

• | A minimum non-risk-based leverage ratio is set at 4.00%, eliminating a 3.00% exception for higher rated banks;

• | Changes in the permitted composition of Tier 1 capital to exclude trust preferred securities, 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; and

• | A new additional capital conservation buffer of 2.5% of risk weighted assets over each of the required capital ratios will be phased in from 2016 to 2019 and must be met to avoid limitations on the ability of the B ank to pay dividends, repurchase shares or pay discretionary bonuses.

Management believes that the capital ratios for the Company and the Bank under Basel III will continue to exceed the well capitalized minimum capital requirements. As of March 31, 2016, the ratios for the Company and the Bank are sufficient to meet the fully phased-in conservation buffer.
As of March 31, 2016 and December 31, 2015, the most recent regulatory notification categorized the Bank as “well-capitalized” under the regulatory framework for prompt corrective action. To be categorized as “well-capitalized”, the Bank must maintain minimum total risk-based, Tier I risk-based and Tier I leverage ratios as set forth in the table below. There are no conditions or events since the notification that management believes have changed the Bank’s category.
49

Table of Contents
The Company’s and the Bank’s actual capital amounts and ratios are presented in the table below:

| Actual |  | Required For Capital Adequacy Purposes |  | Minimum Capital Adequacy With Capital Buffer |  | Required To Be Well Capitalized Under Prompt Corrective Action Provisions
| Amount |  | Ratio |  | Amount |  | Ratio |  | Amount |  | Ratio |  | Amount |  | Ratio
| (Dollars in thousands)
As of March 31, 2016 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Common equity tier 1 capital (to risk weighted assets): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Company | $ | 848,429 |  |  | 11.96 | % |  | $ | 319,220 |  |  | 4.50 | % |  | $ | 363,556 |  |  | 5.125 | % |  | N/A |  |  | N/A |
Bank | $ | 882,569 |  |  | 12.45 | % |  | $ | 319,097 |  |  | 4.50 | % |  | $ | 363,416 |  |  | 5.125 | % |  | $ | 460,918 |  |  | 6.50 | %
Total capital (to risk-weighted assets): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Company | $ | 967,615 |  |  | 13.64 | % |  | $ | 567,502 |  |  | 8.00 | % |  | $ | 611,838 |  |  | 8.625 | % |  | N/A |  |  | N/A |
Bank | $ | 960,808 |  |  | 13.55 | % |  | $ | 567,284 |  |  | 8.00 | % |  | $ | 611,603 |  |  | 8.625 | % |  | $ | 709,105 |  |  | 10.00 | %
Tier I capital (to risk-weighted assets): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Company | $ | 889,375 |  |  | 12.54 | % |  | $ | 425,627 |  |  | 6.00 | % |  | $ | 469,963 |  |  | 6.625 | % |  | N/A |  |  | N/A |
Bank | $ | 882,569 |  |  | 12.45 | % |  | $ | 425,463 |  |  | 6.00 | % |  | $ | 469,782 |  |  | 6.625 | % |  | $ | 567,284 |  |  | 8.00 | %
Tier I capital (to average assets): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Company | $ | 889,375 |  |  | 11.44 | % |  | $ | 310,909 |  |  | 4.00 | % |  | N/A |  |  | N/A |  |  | N/A |  |  | N/A |
Bank | $ | 882,569 |  |  | 11.36 | % |  | $ | 310,874 |  |  | 4.00 | % |  | N/A |  |  | N/A |  |  | $ | 388,593 |  |  | 5.00 | %

| Actual |  | Required For Capital Adequacy Purposes |  | Required To Be Well Capitalized Under Prompt Corrective Action Provisions
| Amount |  | Ratio |  | Amount |  | Ratio |  | Amount |  | Ratio
| (Dollars in thousands)
As of December 31, 2015 |  |  |  |  |  |  |  |  |  |  |
Common equity tier 1 capital (to risk weighted assets): |  |  |  |  |  |  |  |  |  |  |
Company | $ | 833,868 |  |  | 12.08 | % |  | $ | 310,732 |  |  | 4.5 | % |  | N/A |  |  | N/A |
Bank | $ | 866,652 |  |  | 12.56 | % |  | $ | 310,627 |  |  | 4.5 | % |  | $ | 448,684 |  |  | 6.5 | %
Total capital (to risk-weighted assets): |  |  |  |  |  |  |  |  |  |  |
Company | $ | 953,132 |  |  | 13.80 | % |  | $ | 552,412 |  |  | 8.00 | % |  | N/A |  |  | N/A |
Bank | $ | 945,013 |  |  | 13.69 | % |  | $ | 552,226 |  |  | 8.00 | % |  | $ | 690,283 |  |  | 10.00 | %
Tier I capital (to risk-weighted assets): |  |  |  |  |  |  |  |  |  |  |
Company | $ | 874,771 |  |  | 12.67 | % |  | $ | 414,309 |  |  | 6.00 | % |  | N/A |  |  | N/A |
Bank | $ | 866,652 |  |  | 12.56 | % |  | $ | 414,170 |  |  | 6.00 | % |  | $ | 552,226 |  |  | 8.00 | %
Tier I capital (to average assets): |  |  |  |  |  |  |  |  |  |  |
Company | $ | 874,771 |  |  | 11.53 | % |  | $ | 303,528 |  |  | 4.00 | % |  | N/A |  |  | N/A |
Bank | $ | 866,652 |  |  | 11.43 | % |  | $ | 303,410 |  |  | 4.00 | % |  | $ | 379,262 |  |  | 5.00 | %

50

Table of Contents

Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A)

The following discussion and analysis should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2015 and the unaudited consolidated financial statements and notes set forth elsewhere in this report.
GENERAL
Selected Financial Data
The following tables set forth a performance overview concerning the periods indicated and should be read in conjunction with the unaudited consolidated financial statements and notes set forth elsewhere in this report and the following Results of Operations and Financial Condition sections in the MD&A.

| At or for the Three Months Ended March 31,
| 2016 |  | 2015
| (Dollars in thousands, except share and per share data)
Income Statement Data: |  |  |
Interest income | $ | 83,461 |  |  | $ | 74,554 |
Interest expense | 11,854 |  |  | 9,431 |
Net interest income | 71,607 |  |  | 65,123 |
Provision for loan losses | 500 |  |  | 1,500 |
Net interest income after provision for loan losses | 71,107 |  |  | 63,623 |
Noninterest income | 8,775 |  |  | 11,048 |
Noninterest expense | 40,049 |  |  | 39,077 |
Income before income tax provision | 39,833 |  |  | 35,594 |
Income tax provision | 16,210 |  |  | 14,236 |
Net income | $ | 23,623 |  |  | $ | 21,358 |
Per Share Data: |  |  |
Earnings per common share - basic | $ | 0.30 |  |  | $ | 0.27 |
Earnings per common share - diluted | $ | 0.30 |  |  | $ | 0.27 |
Book value per common share (period end, excluding warrants) (8) | $ | 12.09 |  |  | $ | 11.30 |
Cash dividends declared per common share | $ | 0.11 |  |  | $ | 0.10 |
Tangible book value per common share (period end, excluding warrants) (8) (10) | $ | 10.73 |  |  | $ | 9.93 |
Number of common shares outstanding (period end) | 79,597,106 |  |  | 79,542,321 |
Weighted average shares - basic | 79,583,188 |  |  | 79,526,218 |
Weighted average shares - diluted | 79,613,245 |  |  | 79,602,122 |
Tangible common equity to tangible assets (8) | 10.73 | % |  | 11.03 | %
Statement of Financial Condition Data - at Period End: |  |  |
Assets | $ | 8,063,752 |  |  | $ | 7,267,905 |
Securities available for sale | 1,087,897 |  |  | 808,372 |
Loans receivable | 6,371,935 |  |  | 5,710,639 |
Deposits | 6,467,411 |  |  | 5,803,254 |
FHLB advances | 530,495 |  |  | 480,881 |
Subordinated debentures | 42,371 |  |  | 42,199 |
Stockholders’ equity | 961,982 |  |  | 899,198 |

51

Table of Contents

| At or for the Three Months Ended March 31,
| 2016 |  | 2015
| (Dollars in thousands)
Average Balance Sheet Data: |  |  |
Assets | $ | 7,875,940 |  |  | $ | 7,161,811 |
Securities available for sale | 1,016,865 |  |  | 778,305 |
Loans receivable and loans held for sale | 6,269,428 |  |  | 5,617,929 |
Deposits | 6,290,704 |  |  | 5,703,376 |
Stockholders’ equity | 945,634 |  |  | 890,206 |
Selected Performance Ratios: |  |  |
Return on average assets (1) | 1.20 | % |  | 1.19 | %
Return on average stockholders’ equity (1) | 9.99 | % |  | 9.60 | %
Average stockholders’ equity to average assets | 12.01 | % |  | 12.43 | %
Return on average tangible equity (1) (9) | 11.28 | % |  | 10.94 | %
Dividend payout ratio (dividends per share / earnings per share) | 36.67 | % |  | 37.04 | %
Efficiency ratio (2) | 49.82 | % |  | 51.30 | %
Net interest spread | 3.56 | % |  | 3.62 | %
Net interest margin (3) | 3.84 | % |  | 3.87 | %
Regulatory Capital Ratios (4) |  |  |
Leverage capital ratio (5) | 11.44 | % |  | 11.76 | %
Tier 1 risk-based capital ratio | 12.54 | % |  | 13.39 | %
Total risk-based capital ratio | 13.64 | % |  | 14.53 | %
Common equity tier 1 capital ratio (11) | 11.96 | % |  | 12.73 | %
Asset Quality Ratios: |  |  |
Allowance for loan losses to loans receivable | 1.21 | % |  | 1.22 | %
Allowance for loan losses to nonaccrual loans | 176.49 | % |  | 179.57 | %
Allowance for loan losses to nonperforming loans(6) | 79.77 | % |  | 72.00 | %
Allowance for loan losses to nonperforming assets(7) | 66.17 | % |  | 59.86 | %
Nonaccrual loans to loans receivable | 0.68 | % |  | 0.68 | %
Nonperforming loans to loans receivable (6) | 1.51 | % |  | 1.69 | %
Nonperforming assets to loans receivable and OREO (7) | 1.82 | % |  | 2.03 | %
Nonperforming assets to total assets (7) | 1.44 | % |  | 1.60 | %
Legacy Portfolio: |  |  |
Nonaccrual loans to loans receivable | 0.53 | % |  | 0.45 | %
Nonperforming loans to loans receivable | 1.36 | % |  | 1.53 | %
Allowance for loan losses to loans receivable | 1.06 | % |  | 1.08 | %
Allowance for loan losses to nonaccrual loans | 201.42 | % |  | 238.66 | %
Allowance for loan losses to nonperforming loans | 78.07 | % |  | 70.64 | %

52

Table of Contents

| At or for the Three Months Ended March 31,
| 2016 |  | 2,015
| (Dollars in thousands)
Asset Quality Ratios (continued): |  |  |
Acquired Portfolio: |  |  |
Nonaccrual loans to loans receivable | 3.60 | % |  | 2.65 | %
Nonperforming loans to loans receivable | 4.39 | % |  | 3.11 | %
Allowance for loan losses to loans receivable | 3.93 | % |  | 2.42 | %
Allowance for loan losses to nonaccrual loans | 109.13 | % |  | 91.34 | %
Allowance for loan losses to nonperforming loans | 89.45 | % |  | 77.85 | %

(1) | Annualized.

(2) | Efficiency ratio is defined as noninterest expense divided by the sum of net interest income before provision for loan losses and noninterest income.

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

(4) | The ratios generally required to meet the definition of a “well-capitalized” institution under certain banking regulations are 5% leverage capital, 8% tier I risk-based capital, 10% total risk-based capital, and 6.5% common equity tier 1 capital.

(5) | Calculations are based on average quarterly asset balances.

(6) | Nonperforming loans include nonaccrual loans, Legacy Loans and APLs past due 90 days or more and still accruing interest, and accruing restructured loans.

(7) | Nonperforming assets consist of nonperforming loans and OREO.

(8) | Excludes TARP preferred stock related stock warrants of $0 and $378 thousand at March 31, 2016 and 2015, respectively.

(9) | Average tangible equity is calculated by subtracting average goodwill and average core deposit intangibles assets from average stockholders’ equity. This is a non-GAAP measure that we believe provides investors with information that is useful in understanding our financial performance and position.

|  | Three Months Ended March 31,
|  | 2016 |  | 2015
|  | (Dollars in thousands)
Net income |  | $ | 23,623 |  |  | $ | 21,358 |
Average stockholders’ equity |  | $ | 945,634 |  |  | $ | 890,206 |
Less: Average goodwill and core deposit intangible assets, net |  | (108,120 | ) |  | (109,173 | )
Average tangible equity |  | $ | 837,514 |  |  | $ | 781,033 |
Net income (annualized) to average tangible equity |  | 11.28 | % |  | 10.94 | %

(10) | Tangible book value per common share is calculated by subtracting goodwill and core deposit intangible assets from total stockholders’ equity and dividing the difference by the number of shares of common stock outstanding. This is a non-GAAP measure that we believe provides investors with information that is useful in understanding our financial performance and position.

|  | March 31, 2016 |  | March 31, 2015
|  | (In thousands, except per share data)
Total stockholders’ equity |  | $ | 961,982 |  |  | $ | 899,198 |
Less: Common stock warrant |  | — |  |  | (378 | )
Goodwill and core deposit intangible assets, net |  | (108,008 | ) |  | (109,021 | )
Tangible common equity |  | $ | 853,974 |  |  | $ | 789,799 |
Common shares outstanding |  | 79,597,106 |  |  | 79,542,321 |
Tangible book value per common share |  | $ | 10.73 |  |  | $ | 9.93 |

53

Table of Contents

(11) | The Common equity tier 1 capital ratio is calculated by dividing Tier 1 capital less non-common elements, including perpetual preferred stock and related surplus, minority interest in subsidiaries, trust preferred securities and mandatory convertible preferred securities by total risk-weighted assets less the disallowed allowance for loan losses.

|  | March 31, 2016 |  | March 31, 2015
|  | (Dollars in thousands)
Tier 1 capital |  | $ | 889,375 |  |  | $ | 829,375 |
Less: Trust preferred securities less unamortized acquisition discount |  | (40,946 | ) |  | (40,774 | )
Common equity tier 1 capital |  | $ | 848,429 |  |  | $ | 788,601 |
Total risk weighted assets less disallowed allowance for loan losses |  | $ | 7,093,779 |  |  | $ | 6,194,595 |
Common equity tier 1 capital ratio |  | 11.96 | % |  | 12.73 | %

54

Table of Contents
Results of Operations
Overview
Total assets increased $151.1 million from $7.91 billion at December 31, 2015 to $8.06 billion at March 31, 2016. The increase in total assets was primarily due to a $123.1 million increase in loans receivable, net of allowance for loan losses, from $6.17 billion at December 31, 2015 to $6.30 billion at March 31, 2016. The increase in total assets was also related to increases in securities available for sale of $77.3 million from $1.01 billion at December 31, 2015 to $1.09 billion at March 31, 2016. The increase in assets was primarily offset by a $62.3 million decrease in cash and cash equivalents from $298.4 million at December 31, 2015 to $236.1 million at March 31, 2016. The increase in total assets was primarily funded by a $126.4 million increase in total deposits to $6.47 billion at March 31, 2016 and net income of $23.6 million for the three months ended March 31, 2016.
Net income for the first quarter of 2016 was $23.6 million, or $0.30 per diluted common share, compared to $21.4 million, or $0.27 per diluted common share, for the same period of 2015, which was an increase of $2.2 million, or 10.6%. The increase in net income was primarily due to an increase in interest income of $8.9 million and a decrease in the provision for loan losses of $1.0 million. The increase was primarily offset by a decrease in noninterest income of $2.3 million, an increase in noninterest expense of $972 thousand, and an increase in income tax provision of $2.0 million.
The following table summarizes the accretion and amortization adjustments that are included in net income for the three months ended March 31, 2016 and 2015:

|  | Three Months Ended March 31,
|  | 2016 |  | 2015
|  | (Dollars in thousands)
Accretion of discounts on acquired performing loans |  | $ | 1,966 |  |  | $ | 2,183 |
Accretion of discounts on acquired credit impaired loans |  | 1,965 |  |  | 1,555 |
Amortization of premiums on assumed FHLB advances |  | 97 |  |  | 94 |
Accretion of discounts on assumed subordinated debt |  | (44 | ) |  | (41 | )
Amortization of premiums on assumed time deposits |  | 24 |  |  | 75 |
Amortization of core deposit intangible assets |  | (212 | ) |  | (267 | )
Total |  | $ | 3,796 |  |  | $ | 3,599 |

The annualized return on average assets was 1.20% for the first quarter of 2016, compared to 1.19% for the same period of 2015. The annualized return on average stockholders’ equity was 9.99% for the first quarter of 2016, compared to 9.60% for the same period of 2015. The efficiency ratio was 49.82% for the first quarter of 2016, compared to 51.30% for the same period of 2015.
Net Interest Income and Net Interest Margin
Net Interest Income
A principal component of our earnings is net interest income, which is the difference between the interest and fees earned on loans and investments and the interest paid on deposits and borrowed funds. Net interest income expressed as a percentage of average interest earning assets is referred to as the net interest margin. The net interest spread is the yield on average interest earning assets less the cost of average interest bearing liabilities. Net interest income is affected by changes in the balances of interest earning assets and interest bearing liabilities and changes in the yields earned on interest earning assets and the rates paid on interest bearing liabilities.
Comparison of Three Months Ended March 31, 2016 with the Same Period of 2015
Net interest income before provision for loan losses was $71.6 million for the first quarter of 2016, compared to $65.1 million for the same period of 2015, an increase of $6.5 million, or 10.0%.
Interest income for the first quarter of 2016 was $83.5 million, an increase of $8.9 million, or 11.9%, compared to $74.6 million for the same period of 2015. An increase of $9.5 million was primarily attributed to the increase in the balance of
55

Table of Contents
interest earning loans and securities available for sale during the quarter. The increase in interest income was partially offset by a $1.2 million decrease attributable to lower yields on loans during the quarter.
Interest expense for the first quarter of 2016 was $11.9 million, an increase of $2.4 million or 25.7% compared to $9.4 million for the same period of 2015. A $1.1 million increase in interest expense was attributable to increases in average balances during the quarter, primarily in interest bearing demand accounts and time deposits. Also, a $603 thousand increase and a $619 thousand increase was attributable to the increase in rates on time deposits and interest bearing demand accounts, respectively.
Net Interest Margin
Our reported net interest margin is impacted by the weighted average rates we earn on interest earning assets and pay on interest bearing liabilities and the effect of acquisition accounting adjustments. The net interest margin for the first quarter of 2016 was 3.84%, a decrease of 3 basis points from 3.87% for the same period of 2015.
The change in our reported net interest margin for the three and nine months ended March 31, 2016 and 2015 is summarized in the table below.

|  | Three Months Ended March 31,
|  | 2016 |  | 2015
Net interest margin, excluding the effect of acquisition accounting adjustments |  | 3.60 | % |  | 3.61 | %
Acquisition accounting adjustments(1) |  | 0.24 |  |  | 0.26 |
Reported net interest margin |  | 3.84 | % |  | 3.87 | %
(1) Acquisition accounting adjustments are calculated by subtracting net interest margin, excluding the effect of acquisition accounting adjustments, from reported net interest margin.

As noted in the table above, excluding the effect of the acquisition accounting adjustments, the net interest margin for the first quarter of 2016 decreased 1 basis point to 3.60% from 3.61% for the same period of 2015.
The decrease in the net interest margin was due to a decline in the effect of acquisition accounting adjustments and a decline in the weighted average yield on the loan portfolio. The decrease in net interest margin was also caused by an increase in the cost of deposits.
The acquisition related adjustments that impact the net interest margin increased by $0.1 million, totaling $4.0 million during the first quarter of 2016, compared to $3.9 million for the same period of 2015.
The weighted average yield on loans decreased to 4.95% for the first quarter of 2016 from 5.03% for the first quarter of 2015. The change in the yield was due to continued pricing pressure on loan interest rates as well a decline of 3 basis points in the effects of acquisition accounting adjustments for the three months ended March 31, 2016 as summarized in the following table.

|  | Three Months Ended March 31,
|  | 2016 |  | 2015
The weighted average yield on loans, excluding the effect of acquisition accounting adjustments |  | 4.66 | % |  | 4.71 | %
Acquisition accounting adjustments(1) |  | 0.29 |  |  | 0.32 |
Reported weighted average yield on loans |  | 4.95 | % |  | 5.03 | %
(1) Acquisition accounting adjustments are calculated by subtracting the weighted average yield on loans, excluding the effect of acquisition accounting adjustments, from the reported weighted average yield on loans.

56

Table of Contents
Excluding the effect of acquisition accounting adjustments, the weighted average yield on loans for the first quarter of 2016 decreased 5 basis points to 4.66% from 4.71% for the same period of 2015. In addition to the continued pricing pressures, the declining loan yields were caused by a higher mix of lower yielding fixed rate loans. At March 31, 2016, fixed rate loans accounted for 53% of the loan portfolio, compared to 52% at March 31, 2015. The weighted average yield on the variable rate and fixed rate loan portfolios (excluding loan discount accretion) at March 31, 2016 was 4.14% and 4.63%, respectively, compared with 4.14% and 4.72% at March 31, 2015.
The weighted average yield on securities available for sale for the first quarter of 2016 was 2.23%, compared to 2.16% for the same period of 2015. The increase was primarily attributable to an increase in treasury yields resulting in higher interest earned for the newly purchased collateralized mortgage obligations and mortgage-backed securities, compared to the same period in 2015.
The weighted average cost of deposits for the first quarter of 2016 was 0.63%, an increase of 8 basis points from 0.55% for the same period of 2015.

|  | Three Months Ended March 31,
|  | 2016 |  | 2015
The weighted average cost of deposits, excluding the effect of acquisition accounting adjustments |  | 0.63 | % |  | 0.56 | %
Acquisition accounting adjustments(1) |  | 0.00 |  |  | (0.01 | )
Reported weighted average cost of deposits |  | 0.63 | % |  | 0.55 | %

Excluding the amortization of premiums on time deposits assumed in acquisitions, the weighted average cost of deposits was 0.63% for the first quarter of 2016, compared to 0.56% for the same period of 2015. The increase was due to an increase in retail deposits, primarily money market and time deposits, due to our deposit campaigns and promotions. The average cost of the retail deposits was 0.92% at March 31, 2016, compared to 0.84% at March 31, 2015.
The weighted average cost of FHLB advances for the first quarter of 2016 was 1.15%, an increase of 7 basis points from 1.08% for the same period of 2015.

|  | Three Months Ended March 31,
|  | 2016 |  | 2015
The weighted average cost of FHLB advances, excluding the effect of acquisition accounting adjustments |  | 1.22 | % |  | 1.17 | %
Acquisition accounting adjustments(1) |  | (0.07 | ) |  | (0.09 | )
Reported weighted average cost of FHLB advances |  | 1.15 | % |  | 1.08 | %
(1) Acquisition accounting adjustments are calculated by subtracting the weighted average cost on FHLB advances, excluding the effect of acquisition accounting adjustments, from reported weighted average cost on FHLB advances.

Excluding amortization of premiums on FHLB advances assumed in acquisitions, the weighted average cost of FHLB advances increased to 1.22% for the first quarter of 2016 from 1.17% for the same period of 2015. The average cost increased due to the maturity of eight advances totaling $450.0 million that had effective rates ranging from 0.21% to 0.60%, while the effective rates for FHLB advances obtained during the most recent twelve months ranged from 0.22 to 1.88%.
57

Table of Contents
The following table presents our condensed consolidated average balance sheet information, together with interest rates earned and paid on the various sources and uses of funds for the periods indicated:

| Three Months Ended March 31, 2016 |  | Three Months Ended March 31, 2015
| Average Balance |  | Interest Income/ Expense |  | Average Yield/ Rate * |  | Average Balance |  | Interest Income/ Expense |  | Average Yield/ Rate *
| (Dollars in thousands)
INTEREST EARNINGS ASSETS: |  |  |  |  |  |  |  |  |  |  |
Loans(1) (2) | $ | 6,269,428 |  |  | $ | 77,118 |  |  | 4.95 | % |  | $ | 5,617,929 |  |  | $ | 69,639 |  |  | 5.03 | %
Securities available for sale(3) | 1,016,865 |  |  | 5,677 |  |  | 2.23 | % |  | 778,305 |  |  | 4,207 |  |  | 2.16 | %
FRB and FHLB stock and other investments | 217,048 |  |  | 666 |  |  | 1.21 | % |  | 414,973 |  |  | 708 |  |  | 0.68 | %
Total interest earning assets | $ | 7,503,341 |  |  | $ | 83,461 |  |  | 4.47 | % |  | $ | 6,811,207 |  |  | $ | 74,554 |  |  | 4.44 | %
INTEREST BEARING LIABILITIES: |  |  |  |  |  |  |  |  |  |  |
Deposits: |  |  |  |  |  |  |  |  |  |  |
Demand, interest bearing | $ | 1,968,637 |  |  | $ | 4,004 |  |  | 0.82 | % |  | $ | 1,625,641 |  |  | $ | 2,765 |  |  | 0.68 | %
Savings | 186,462 |  |  | 366 |  |  | 0.79 | % |  | 195,063 |  |  | 425 |  |  | 0.88 | %
Time deposits: |  |  |  |  |  |  |  |  |  |  |
$100,000 or more | 1,806,609 |  |  | 4,057 |  |  | 0.90 | % |  | 1,713,331 |  |  | 3,377 |  |  | 0.80 | %
Other | 699,431 |  |  | 1,480 |  |  | 0.85 | % |  | 626,197 |  |  | 1,187 |  |  | 0.77 | %
Total time deposits | 2,506,040 |  |  | 5,537 |  |  | 0.89 | % |  | 2,339,528 |  |  | 4,564 |  |  | 0.79 | %
Total interest bearing deposits | 4,661,139 |  |  | 9,907 |  |  | 0.85 | % |  | 4,160,232 |  |  | 7,754 |  |  | 0.76 | %
FHLB advances | 532,206 |  |  | 1,523 |  |  | 1.15 | % |  | 480,942 |  |  | 1,297 |  |  | 1.09 | %
Other borrowings | 40,813 |  |  | 424 |  |  | 4.11 | % |  | 40,624 |  |  | 380 |  |  | 3.74 | %
Total interest bearing liabilities | 5,234,158 |  |  | $ | 11,854 |  |  | 0.91 | % |  | 4,681,798 |  |  | $ | 9,431 |  |  | 0.82 | %
Noninterest bearing demand deposits | 1,629,565 |  |  |  |  |  |  | 1,543,144 |  |  |  |  |
Total funding liabilities/cost of funds | $ | 6,863,723 |  |  |  |  | 0.69 | % |  | $ | 6,224,942 |  |  |  |  | 0.61 | %
Net interest income/net interest spread |  |  | $ | 71,607 |  |  | 3.56 | % |  |  |  | $ | 65,123 |  |  | 3.62 | %
Net interest margin |  |  |  |  | 3.84 | % |  |  |  |  |  | 3.87 | %
Net interest margin, excluding the effect of nonaccrual loan income (expense)(4) |  |  |  |  | 3.84 | % |  |  |  |  |  | 3.88 | %
Net interest margin, excluding the effect of nonaccrual loan income (expense) and prepayment fee income(4) (5) |  |  |  |  | 3.81 | % |  |  |  |  |  | 3.85 | %
Cost of deposits: |  |  |  |  |  |  |  |  |  |  |
Noninterest bearing demand deposits | $ | 1,629,565 |  |  | $ | — |  |  |  |  | $ | 1,543,144 |  |  | — |  |  |
Interest bearing deposits | 4,661,139 |  |  | 9,907 |  |  | 0.85 | % |  | 4,160,232 |  |  | 7,754 |  |  | 0.76 | %
Total deposits | $ | 6,290,704 |  |  | $ | 9,907 |  |  | 0.63 | % |  | $ | 5,703,376 |  |  | $ | 7,754 |  |  | 0.55 | %

* | Annualized

(1) | Interest income on loans includes loan fees.

(2) | Average balances of loans consist of loans receivable and loans held for sale.

(3) | Interest income and yields are not presented on a tax-equivalent basis.

(4) | Nonaccrual interest income reversed was $123 and $24 thousand for the three months ended March 31, 2016 and 2015, respectively.

(5) | Loan prepayment fee income excluded was $631 thousand and $510 thousand for the three months ended March 31, 2016 and 2015, respectively.

58

Table of Contents
Changes in net interest income are a function of changes in interest rates and volumes of interest earning assets and interest bearing liabilities. The following table sets forth information regarding the changes in interest income and interest expense for the periods indicated. The total change for each category of interest earning assets and interest bearing liabilities is segmented into the change attributable to variations in volume (changes in volume multiplied by the old rate) and the change attributable to variations in interest rates (changes in rates multiplied by the old volume). Nonaccrual loans are included in average loans used to compute this table.

| Three Months Ended March 31, 2016 over March 31, 2015
| Net Increase (Decrease) |  |  |  |
| Change due to
| Rate |  | Volume
| (In thousands)
INTEREST INCOME: |  |  |  |  |
Interest and fees on loans | $ | 7,479 |  |  | $ | (1,178 | ) |  | $ | 8,657 |
Interest on securities | 1,470 |  |  | 147 |  |  | 1,323 |
Interest on FRB and FHLB stock and other investments | (42 | ) |  | 390 |  |  | (432 | )
Total interest income | $ | 8,907 |  |  | $ | (641 | ) |  | $ | 9,548 |
INTEREST EXPENSE: |  |  |  |  |
Interest on demand, interest bearing | $ | 1,239 |  |  | $ | 619 |  |  | $ | 620 |
Interest on savings | (58 | ) |  | (43 | ) |  | (15 | )
Interest on time deposits | 972 |  |  | 603 |  |  | 369 |
Interest on FHLB advances | 226 |  |  | 76 |  |  | 150 |
Interest on other borrowings | 44 |  |  | 38 |  |  | 6 |
Total interest expense | $ | 2,423 |  |  | $ | 1,293 |  |  | $ | 1,130 |
NET INTEREST INCOME | $ | 6,484 |  |  | $ | (1,934 | ) |  | $ | 8,418 |

59

Table of Contents
Provision for Loan Losses
The provision for loan losses reflects our judgment of the current period cost associated with credit risk inherent in our loan portfolio. The loan loss provision for each period is dependent upon many factors, including loan growth, net charge offs, changes in the composition of the loan portfolio, delinquencies, assessments by management, third parties’ and regulators’ examination of the loan portfolio, the value of the underlying collateral for problem loans and the general economic conditions in our market areas. Specifically, the provision for loan losses represents the amount charged against current period earnings to achieve an allowance for loan losses that, in our judgment, is adequate to absorb probable incurred losses inherent in our loan portfolio. Periodic fluctuations in the provision for loan losses result from management’s assessment of the adequacy of the allowance for loan losses; however, actual loan losses may vary in material respects from current estimates. If the allowance for loan losses is inadequate, it may have a material adverse effect on our financial condition.
The provision for loan losses for the first quarter of 2016 was $500 thousand, a decrease of $1.0 million, or 66.7%, from $1.5 million for the same period last year. The decrease in the provision primarily reflects a decrease in quantitative reserves due to declining historical loss rates.
See Financial Condition section of this MD&A for additional information and further discussion.
Noninterest Income
Noninterest income is primarily comprised of service fees on deposit accounts, fees received on trade finance letters of credit, net gains on sales of loans, and other income.
Noninterest income for the first quarter of 2016 was $8.8 million, compared to $11.0 million for the same quarter of 2015, a decrease of $2.3 million, or 20.6%. The decrease was primarily due to a decrease of $1.2 million, or 40.0%, in net gains on sales of SBA loans and a decrease of $379 thousand, or 12.4%, in service fees on deposit accounts.
Noninterest income by category is summarized below:

| Three Months Ended March 31, |  | Increase (Decrease)
| 2016 |  | 2015 |  | Amount |  | Percent (%)
| (Dollars in thousands)
Service fees on deposit accounts | $ | 2,683 |  |  | $ | 3,062 |  |  | $ | (379 | ) |  | (12.4 | )%
International service fees | 776 |  |  | 814 |  |  | (38 | ) |  | (4.7 | )%
Loan servicing fees, net | 690 |  |  | 720 |  |  | (30 | ) |  | (4.2 | )%
Wire transfer fees | 914 |  |  | 763 |  |  | 151 |  |  | 19.8 | %
Other income and fees | 1,887 |  |  | 2,039 |  |  | (152 | ) |  | (7.5 | )%
Net gains on sales of SBA loans | 1,825 |  |  | 3,044 |  |  | (1,219 | ) |  | (40.0 | )%
Net gains on sales of other loans | — |  |  | 182 |  |  | (182 | ) |  | N/A |
Net gains on sales of securities available for sale | — |  |  | 424 |  |  | (424 | ) |  | N/A |
Total noninterest income | $ | 8,775 |  |  | $ | 11,048 |  |  | $ | (2,273 | ) |  | (20.6 | )%

Noninterest Expense
Noninterest expense for the first quarter of 2016 was $40.0 million, an increase of $972 thousand, or 2.5%, from $39.1 million for the same period of 2015. Merger and integration expenses increased $1.2 million primarily consisting of fees for legal counsel and financial advisors which were associated with the plan of merger agreement with Wilshire Bancorp, Inc. on December 7, 2015. Salaries and employee benefits expense increased $388 thousand due to an increase in the number of full-time equivalent employees, which increased to 945 at March 31, 2016 from 933 at March 31, 2015. The increases in noninterest expenses were offset by a decrease of $434 thousand in credit related expenses, $255 thousand in advertising and marketing expenses, and $341 thousand in professional fees.
60

Table of Contents
The breakdown of changes in noninterest expense by category is shown in the following table:

| Three Months Ended March 31, |  | Increase (Decrease)
| 2016 |  | 2015 |  | Amount |  | Percent (%)
| (Dollars in thousands)
Salaries and employee benefits | $ | 21,569 |  |  | $ | 21,181 |  |  | $ | 388 |  |  | 1.8 | %
Occupancy | 4,817 |  |  | 4,692 |  |  | 125 |  |  | 2.7 | %
Furniture and equipment | 2,287 |  |  | 2,263 |  |  | 24 |  |  | 1.1 | %
Advertising and marketing | 1,136 |  |  | 1,391 |  |  | (255 | ) |  | (18.3 | )%
Data processing and communications | 2,171 |  |  | 2,349 |  |  | (178 | ) |  | (7.6 | )%
Professional fees | 1,083 |  |  | 1,424 |  |  | (341 | ) |  | (23.9 | )%
FDIC assessment | 1,038 |  |  | 1,112 |  |  | (74 | ) |  | (6.7 | )%
Credit related expenses | 421 |  |  | 855 |  |  | (434 | ) |  | (50.8 | )%
OREO expense | 1,428 |  |  | 1,177 |  |  | 251 |  |  | 21.3 | %
Merger and integration expenses | 1,207 |  |  | 52 |  |  | 1,155 |  |  | NA |
Other | 2,892 |  |  | 2,581 |  |  | 311 |  |  | 12.0 | %
Total noninterest expense | $ | 40,049 |  |  | $ | 39,077 |  |  | $ | 972 |  |  | 2.5 | %

Provision for Income Taxes
Income tax expense was $16.2 million and $14.2 million for the quarters ended March 31, 2016 and 2015, respectively. The effective income tax rates were 40.7% and 40.0% for the quarters ended March 31, 2016 and 2015, respectively.
61

Table of Contents
Financial Condition
At March 31, 2016, our total assets were $8.06 billion, an increase of $151.1 million from $7.91 billion at December 31, 2015. The increase was principally due to a $123.1 million increase in loans receivable, net of allowance for loan losses, a $77.3 million increase in securities available for sale, and a $1.5 million increase in other investments. The increase was offset by a decrease in cash and cash equivalents totaling $62.3 million. The increase in total assets was funded primarily by a $126.4 million increase in deposits and net income of $23.6 million.
Investment Securities Portfolio
As of March 31, 2016, we had $1.09 billion in available for sale securities, compared to $1.01 billion at December 31, 2015. The net unrealized gain on the available for sale securities at March 31, 2016 was $12.1 million, compared to a net unrealized loss on such securities of $3.5 million at December 31, 2015. During the three months ended March 31, 2016, $99.6 million in securities were purchased and $36.4 million in mortgage related securities were paid down. During the same period last year, $65.6 million in securities were purchased, $31.5 in mortgage related securities were paid down and $22.1 million in securities were sold. The weighted average life of the available for sale securities was 4.52 years and 5.09 years at March 31, 2016 and December 31, 2015, respectively.
Loan Portfolio
As of March 31, 2016, loans outstanding totaled $6.38 billion, an increase of $123.6 million from $6.25 billion at December 31, 2015. Total loan originations during the three months ended March 31, 2016 were $333.5 million, including SBA loan originations of $54.3 million, of which $37.6 million was included as additions to loans held for sale during the period.
The following table summarizes our loan portfolio by amount and percentage of total loans outstanding in each major loan category at the dates indicated:

| March 31, 2016 |  | December 31, 2015
| Amount |  | Percent (%) |  | Amount |  | Percent (%)
|  |  | (Dollars in thousands) |  |
Loan portfolio composition |  |  |  |  |  |  |
Real estate loans: |  |  |  |  |  |  |
Residential | $ | 32,390 |  |  | 1 | % |  | $ | 33,797 |  |  | 0 | %
Commercial & industrial | 4,957,751 |  |  | 78 | % |  | 4,912,655 |  |  | 78 | %
Construction | 142,376 |  |  | 2 | % |  | 123,030 |  |  | 2 | %
Total real estate loans | 5,132,517 |  |  | 81 | % |  | 5,069,482 |  |  | 80 | %
Commercial business | 1,032,078 |  |  | 16 | % |  | 980,153 |  |  | 16 | %
Trade finance | 86,342 |  |  | 1 | % |  | 99,163 |  |  | 2 | %
Consumer and other | 124,064 |  |  | 2 | % |  | 102,573 |  |  | 2 | %
Total loans outstanding | 6,375,001 |  |  | 100 | % |  | 6,251,371 |  |  | 100 | %
Less: deferred loan fees | (3,066 | ) |  |  |  | (3,030 | ) |  |
Loans receivable | 6,371,935 |  |  |  |  | 6,248,341 |  |  |
Less: allowance for loan losses | (76,856 | ) |  |  |  | (76,408 | ) |  |
Loans receivable, net of allowance for loan losses | $ | 6,295,079 |  |  |  |  | $ | 6,171,933 |  |  |

SBA loans are included in commercial business loans and commercial and industrial real estate loans. SBA loans included in commercial business loans were $44.2 million at March 31, 2016 and $46.2 million at December 31, 2015. SBA loans included in commercial and industrial real estate loans were $186.6 million at March 31, 2016 and $187.9 million at December 31, 2015.
We normally do not extend lines of credit or make loan commitments to business customers for periods in excess of one year. We use the same credit policies in making commitments and conditional obligations as we do for providing loan facilities to our customers. We perform annual reviews of such commitments prior to renewal.
62

Table of Contents
The following table shows our loan commitments and letters of credit outstanding at the dates indicated:

| March 31, 2016 |  | December 31, 2015
| (In thousands)
Loan commitments | $ | 851,744 |  |  | $ | 802,251 |
Standby letters of credit | 36,590 |  |  | 45,083 |
Other commercial letters of credit | 45,406 |  |  | 36,256 |
| $ | 933,740 |  |  | $ | 883,590 |

Nonperforming Assets
Nonperforming assets, which consist of nonaccrual loans, loans 90 days or more past due and on accrual status, accruing restructured loans and OREO, were $116.1 million at March 31, 2016, compared to $110.2 million at December 31, 2015. The ratio of nonperforming assets to loans receivable and OREO was 1.82% and 1.76% at March 31, 2016 and December 31, 2015, respectively.
The following table summarizes the composition of our nonperforming assets as of the dates indicated.

| March 31, 2016 |  | December 31, 2015
| (Dollars in thousands)
Nonaccrual loans (1) | $ | 43,548 |  |  | $ | 40,801 |
Loans 90 days or more days past due, still accruing | 45 |  |  | 375 |
Accruing restructured loans | 52,760 |  |  | 47,984 |
Total nonperforming loans | 96,353 |  |  | 89,160 |
OREO | 19,794 |  |  | 21,035 |
Total nonperforming assets | $ | 116,147 |  |  | $ | 110,195 |
Nonaccrual loans: |  |  |
Legacy Portfolio | $ | 31,782 |  |  | $ | 23,212 |
Acquired Portfolio | 11,766 |  |  | 15,543 |
Total nonaccrual loans | $ | 43,548 |  |  | $ | 38,755 |
Nonperforming loans: |  |  |
Legacy Portfolio | $ | 81,998 |  |  | $ | 78,424 |
Acquired Portfolio | 14,355 |  |  | 18,236 |
Total nonperforming loans | $ | 96,353 |  |  | $ | 96,660 |

(1) | Nonaccrual loans exclude the guaranteed portion of delinquent SBA loans that are in liquidation totaling $15.4 million and $18.7 million as of March 31, 2016 and December 31, 2015, respectively.

Allowance for Loan Losses
The allowance for loan losses was $76.9 million at March 31, 2016, compared to $76.4 million at December 31, 2015. The allowance for loan losses was 1.21% of loans receivable at March 31, 2016 and 1.22% of loans receivable at December 31, 2015. The increase in the allowance for loan losses was driven by an increase in the amount of qualitative reserves. The qualitative reserves increased due to an increase in the volume of loans compared to December 31, 2015. The increase in qualitative reserves were offset by decreases in the quantitative reserves which was caused by decreasing historical losses. In addition, the reserve on our impaired loans increased to $9.9 million at March 31, 2016 from $8.8 million at December 31, 2015.
63

Table of Contents
The following table reflects our allocation of the allowance for loan and lease losses (“ALLL”) by loan type and the ratio of each loan category to total loans as of the dates indicated:

| Allocation of Allowance for Loan Losses
| March 31, 2016 |  | December 31, 2015
| Amount of Allowance for Loan Losses |  | Percent of ALLL to Total ALLL |  | Amount of Allowance for Loan Losses |  | Percent of ALLL to Total ALLL
| (Dollars in thousands)
Loan Type |  |  |  |  |  |  |
Real estate - residential | $ | 221 |  |  | 0.29 | % |  | $ | 230 |  |  | 0.30 | %
Real estate - commercial | 53,466 |  |  | 69.57 | % |  | 54,505 |  |  | 71.33 | %
Real estate - construction | 1,054 |  |  | 1.37 | % |  | 917 |  |  | 1.20 | %
Commercial business | 19,202 |  |  | 24.98 | % |  | 16,547 |  |  | 21.66 | %
Trade finance | 2,085 |  |  | 2.71 | % |  | 3,592 |  |  | 4.70 | %
Consumer and other | 828 |  |  | 1.08 | % |  | 617 |  |  | 0.81 | %
Total | $ | 76,856 |  |  | 100 | % |  | $ | 76,408 |  |  | 100 | %

For a better understanding of the changes in the ALLL, the loan portfolio has been segmented for disclosures purposes between loans which are accounted for under the amortized cost method (Legacy Loans) and loans acquired from acquisitions (Acquired Loans). Acquired Loans have been further segregated between Acquired Credit Impaired Loans (loans with credit deterioration at the time they were acquired and accounted for under ASC 310-30, or “ACILs”) and performing loans (loans that were pass graded at the time they were acquired, or “APLs”). The activity in the ALLL for the three months ended March 31, 2016 is as follows:

|  |  |  | Acquired Loans(2) |  |
Three Months Ended March 31, 2016 |  | Legacy Loans(1) |  | ACILs |  | APLs |  | Total
|  | (Dollars in thousands)
Balance, beginning of period |  | $ | 63,309 |  |  | $ | 11,982 |  |  | $ | 1,117 |  |  | $ | 76,408 |
Provision for loan losses |  | 698 |  |  | (105 | ) |  | (93 | ) |  | 500 |
Loans charged off |  | (705 | ) |  | — |  |  | (116 | ) |  | (821 | )
Recoveries of loan charge offs |  | 714 |  |  | — |  |  | 55 |  |  | 769 |
Balance, end of period |  | $ | 64,016 |  |  | $ | 11,877 |  |  | $ | 963 |  |  | $ | 76,856 |
Total loans outstanding |  | $ | 6,048,342 |  |  | $ | 104,659 |  |  | $ | 222,000 |  |  | $ | 6,375,001 |
Loss coverage ratio |  | 1.06 | % |  | 11.35 | % |  | 0.43 | % |  | 1.21 | %
Net loan charge offs to beginning allowance |  | (0.01 | )% |  | 0.00 | % |  | 5.46 | % |  | 0.07 | %
Net loan charge offs to provision for loan losses |  | 1.29 | % |  | 0.00 | % |  | 65.59 | % |  | 10.40 | %
(1) Legacy Loans includes Acquired Loans that have been renewed or refinanced subsequent to the acquisition date.
(2) Acquired Loans were marked to fair value at the acquisition date and provisions for loan losses reflect credit deterioration subsequent to the acquisition date.

64

Table of Contents
The following table shows the provisions made for loan losses, the amount of loans charged off and the recoveries on loans previously charged off, together with the balance in the ALLL at the beginning and end of each period, the amount of average and loans receivable outstanding, and certain other ratios as of the dates and for the periods indicated:

| At or for the Three Months Ended March 31,
| 2016 |  | 2015
| (Dollars in thousands)
LOANS: |  |  |
Average loans receivable, including loans held for sale | $ | 6,269,428 |  |  | $ | 5,617,929 |
Loans receivable | $ | 6,371,935 |  |  | $ | 5,710,639 |
ALLOWANCE: |  |  |
Balance, beginning of period | $ | 76,408 |  |  | $ | 67,758 |
Less loan charge offs: |  |  |
Commercial & industrial real estate | (135 | ) |  | (341 | )
Commercial business loans | (621 | ) |  | (538 | )
Trade finance | — |  |  | (229 | )
Consumer and other loans | (65 | ) |  | (17 | )
Total loan charge offs | (821 | ) |  | (1,125 | )
Plus loan recoveries: |  |  |
Commercial & industrial real estate | 524 |  |  | 800 |
Commercial business loans | 242 |  |  | 656 |
Trade Finance | — |  |  | — |
Consumer and other loans | 3 |  |  | 5 |
Total loans recoveries | 769 |  |  | 1,461 |
Net loan charge offs | (52 | ) |  | 336 |
Provision for loan losses | 500 |  |  | 1,500 |
Balance, end of period | $ | 76,856 |  |  | $ | 69,594 |
Net loan (recoveries) charge offs to average loans receivable, including loans held for sale* | 0.00 | % |  | (0.02 | )%
Allowance for loan losses to loans receivable at end of period | 1.21 | % |  | 1.22 | %
Net loan (recoveries) charge offs to beginning allowance * | 0.27 | % |  | (1.98 | )%
Net loan (recoveries) charge offs to provision for loan losses | 10.40 | % |  | (22.40 | )%
* Annualized |  |  |

We believe the allowance for loan losses as of March 31, 2016 is adequate to absorb probable incurred losses in the loan portfolio. However, no assurance can be given that actual losses will not exceed the estimated amounts.
Deposits and Other Borrowings
Deposits. Deposits are our primary source of funds used in our lending and investment activities. At March 31, 2016, deposits increased $126.4 million, or 2.0%, to $6.47 billion from $6.34 billion at December 31, 2015. The net increase in deposits primarily reflects increases in retail deposits due to the impact of recent deposit campaigns and promotions. In addition, wholesale deposits were increased to help fund loan growth. Interest bearing demand deposits, including money market and Super Now accounts and time deposits, totaled $4.77 billion at March 31, 2016 and $4.65 billion at December 31, 2015.
At March 31, 2016, 26% of total deposits were noninterest bearing demand deposits, 41% were time deposits and 33% were interest bearing demand and savings deposits. At December 31, 2015, 27% of total deposits were noninterest bearing demand deposits, 39% were time deposits, and 34% were interest bearing demand and savings deposits.
At March 31, 2016, we had $510.0 million in brokered deposits and $300.0 million in California State Treasurer deposits, compared to $374.6 million and $300.0 million of such deposits at December 31, 2015, respectively. The California State Treasurer deposits had three-month maturities with a weighted average interest rate of 0.29% at March 31, 2016 and were collateralized with securities with a carrying value of $349.4 million.
65

Table of Contents
The following is a schedule of certificates of deposit maturities as of March 31, 2016:

| Balance |  | Percent (%)
| (Dollars in thousands)
Three months or less | $ | 871,856 |  |  | 33.04 | %
Over three months through six months | 643,378 |  |  | 24.38 | %
Over six months through nine months | 474,243 |  |  | 17.97 | %
Over nine months through twelve months | 485,071 |  |  | 18.38 | %
Over twelve months | 164,483 |  |  | 6.23 | %
Total time deposits | $ | 2,639,031 |  |  | 100.00 | %

Other Borrowings. Advances may be obtained from the FHLB as an alternative source of funds. FHLB advances are typically secured by a pledge of commercial real estate loans and/or securities with a market value at least equal to the outstanding advances plus our investment in FHLB stock.
At March 31, 2016, we had $530.5 million of FHLB advances with average remaining maturities of 1.7 years, compared to $530.6 million with average remaining maturities of 1.9 years at December 31, 2015. The weighted average rate was 1.15% and 1.15% at March 31, 2016 and December 31, 2015, respectively.
Subordinated debentures totaled $42.4 million at March 31, 2016 and $42.3 million at December 31, 2015. The Trust Preferred Securities accrue and pay distributions periodically at specified annual rates as provided in the related indentures for the securities. The trusts used the net proceeds from their respective offerings to purchase a like amount of subordinated debentures (the “Debentures”) issued by us. The Debentures are the sole assets of the trusts. Our obligations under the Debentures and related documents, taken together, constitute a full and unconditional guarantee by us of the obligations of the trusts. The Trust Preferred Securities are mandatorily redeemable upon the maturity of the Debentures, or upon earlier redemption as provided in the indentures. We have the right to redeem the Debentures in whole (but not in part) on or after specific dates, at a redemption price specified in the indentures plus any accrued but unpaid interest to the redemption date.
Off-Balance-Sheet Activities and Contractual Obligations
We routinely engage in activities that involve, to varying degrees, elements of risk that are not reflected, in whole or in part, in the consolidated financial statements. These activities are part of our normal course of business and include traditional off-balance-sheet credit-related financial instruments, interest rate swap contracts, operating leases and long-term debt.
Traditional off-balance-sheet credit-related financial instruments are primarily commitments to extend credit and standby letters of credit. These activities could require us to make cash payments to third parties if certain specified future events occur. The contractual amounts represent the extent of our exposure in these off-balance-sheet activities. However, since certain off-balance-sheet commitments, particularly standby letters of credit, are expected to expire or be only partially used, the total amount of commitments does not necessarily represent future cash requirements. These activities are necessary to meet the financing needs of our customers.
We enter into interest rate swap contracts under which we are required to either receive cash from or pay cash to counterparties depending on changes in interest rates. We also purchase interest rate caps to protect against increases in market interest rates. We utilize interest rate swap contracts and interest rate caps to help manage the risk of changing interest rates.
We sell interest rate swaps to certain adjustable rate commercial loan customers to fix the interest rate on their floating rate loan. When the fixed rate swap is originated with the customer, an identical offsetting swap is also entered into by us with a correspondent bank.
Our leased banking facilities and equipment are leased under non-cancelable operating leases under which we must make monthly payments over periods up to 15 years.
We do not anticipate that our current off-balance-sheet activities will have a material impact on our future results of operations or our financial condition. Further information regarding our financial instruments with off-balance-sheet risk can be found in Item 3 “Quantitative and Qualitative Disclosures about Market Risk.”
66

Table of Contents
Stockholders’ Equity and Regulatory Capital
Historically, our primary source of capital has been the retention of earnings, net of dividend payments to shareholders. We seek to maintain capital at a level sufficient to assure our stockholders, our customers and our regulators that our Company and our bank subsidiary are financially sound. For this purpose, we perform ongoing assessments of our components of capital, as well as projected sources and uses of capital in conjunction with projected increases in assets and levels of risks.
Total stockholders’ equity was $962.0 million at March 31, 2016, compared to $938.1 million at December 31, 2015.
The federal banking agencies require a minimum ratio of qualifying total capital to risk-weighted assets of 8% and a minimum ratio of Tier I capital to risk-weighted assets of 6% to generally be considered “adequately capitalized” under the Prompt Corrective Action regulations. In addition to the risk-based guidelines, federal banking agencies require banking organizations to maintain a minimum amount of Tier I capital to average total assets, referred to as the leverage ratio, of 4% to generally be considered “adequately capitalized” under the Prompt Corrective Action regulations. Beginning January 1, 2015, federal banking agencies required a minimum Common Equity Tier 1 capital to risk weighted assets ratio of 4.5% to generally be considered “adequately capitalized” under the Prompt Corrective Action regulations. Beginning January 1, 2016, federal banking agencies required a capital conservation buffer of 0.625% in addition to the ratios required to generally be considered “adequately capitalized” under the Prompt Corrective Action regulations. Failure to maintain this capital conservation buffer results in limits or prohibitions on capital distributions and discretionary compensation payments. Capital requirements apply to the Company and the Bank separately. In addition to these uniform risk-based capital guidelines and leverage ratios that apply across the industry, the regulators have the discretion to set individual minimum capital requirements for specific institutions at rates significantly above the minimum guidelines and ratios.
At March 31, 2016, our Common Equity Tier 1 capital was $848.4 million compared to $833.9 million at December 31, 2015. Our Tier I capital, defined as stockholders’ equity less intangible assets, was $889.4 million, compared to $874.8 million at December 31, 2015, representing an increase of $14.6 million, or 1.7%. The increase was primarily due to an increase of $23.6 million in retained earnings from net income during the three months ended March 31, 2016, which was partially offset by $8.8 million of cash dividends. At March 31, 2016, the Common Equity Tier 1 capital ratio was 11.96%. The total capital to risk-weighted assets ratio was 13.64% and the Tier I capital to risk-weighted assets ratio was 12.54%. The Tier I leverage capital ratio was 11.44%.
As of March 31, 2016 and December 31, 2015, the most recent regulatory notification categorized the Bank as “well capitalized” under the regulatory framework for prompt corrective action. To be generally categorized as “well-capitalized”, the Bank must maintain minimum Common Equity Tier 1 capital, total risk-based, Tier I risk-based and Tier I leverage capital ratios as set forth in the table below.
67

Table of Contents

| As of March 31, 2016 (Dollars in thousands)
| Actual |  | To Be Well-Capitalized |  | Excess
| Amount |  | Ratio |  | Amount |  | Ratio |  | Amount |  | Ratio
BBCN Bancorp, Inc |  |  |  |  |  |  |  |  |  |  |
Common Equity Tier 1 capital ratio | $ | 848,429 |  |  | 11.96 | % |  | N/A |  |  | N/A |  |  |  |  |
Total risk-based capital ratio | $ | 967,615 |  |  | 13.64 | % |  | N/A |  |  | N/A |  |  |  |  |
Tier 1 risk-based capital ratio | $ | 889,375 |  |  | 12.54 | % |  | N/A |  |  | N/A |  |  |  |  |
Tier 1 capital to total assets | $ | 889,375 |  |  | 11.44 | % |  | N/A |  |  | N/A |  |  |  |  |  |  |
BBCN Bank |  |  |  |  |  |  |  |  |  |  |
Common Equity Tier 1 capital ratio | $ | 882,569 |  |  | 12.45 | % |  | $ | 460,918 |  |  | 6.50 | % |  | $ | 421,651 |  |  | 5.95 | %
Total risk-based capital ratio | $ | 960,808 |  |  | 13.55 | % |  | $ | 709,105 |  |  | 10.00 | % |  | $ | 251,703 |  |  | 3.55 | %
Tier 1 risk-based capital ratio | $ | 882,569 |  |  | 12.45 | % |  | $ | 567,284 |  |  | 8.00 | % |  | $ | 315,285 |  |  | 4.45 | %
Tier I capital to total assets | $ | 882,569 |  |  | 11.36 | % |  | $ | 388,593 |  |  | 5.00 | % |  | $ | 493,976 |  |  | 6.36 | %
| As of December 31, 2015 (Dollars in thousands)
| Actual |  | To Be Well-Capitalized |  | Excess
| Amount |  | Ratio |  | Amount |  | Ratio |  | Amount |  | Ratio
BBCN Bancorp, Inc |  |  |  |  |  |  |  |  |  |  |
Common Equity Tier 1 capital ratio | $ | 833,868 |  |  | 12.08 | % |  | N/A |  |  | N/A |  |  |  |  |
Total risk-based capital ratio | $ | 953,132 |  |  | 13.80 | % |  | N/A |  |  | N/A |  |  |  |  |
Tier 1 risk-based capital ratio | $ | 874,771 |  |  | 12.67 | % |  | N/A |  |  | N/A |  |  |  |  |
Tier 1 capital to total assets | $ | 874,771 |  |  | 11.53 | % |  | N/A |  |  | N/A |  |  |  |  |  |  |
BBCN Bank |  |  |  |  |  |  |  |  |  |  |
Common Equity Tier 1 capital ratio | $ | 866,652 |  |  | 12.56 | % |  | $ | 448,684 |  |  | 6.50 | % |  | $ | 417,968 |  |  | 6.06 | %
Total risk-based capital ratio | $ | 945,013 |  |  | 13.69 | % |  | $ | 690,283 |  |  | 10.00 | % |  | $ | 254,730 |  |  | 3.69 | %
Tier 1 risk-based capital ratio | $ | 866,652 |  |  | 12.56 | % |  | $ | 552,226 |  |  | 6.00 | % |  | $ | 314,426 |  |  | 6.56 | %
Tier I capital to total assets | $ | 866,652 |  |  | 11.43 | % |  | $ | 379,262 |  |  | 5.00 | % |  | $ | 487,390 |  |  | 6.43 | %

68

Table of Contents
Liquidity Management
Liquidity risk is the risk of reduction in our earnings or capital that would result if we were not able to meet our obligations when they come due without incurring unacceptable losses. Liquidity risk includes the risk of unplanned decreases or changes in funding sources and changes in market conditions that affect our ability to liquidate assets quickly and with minimum loss of value. Factors considered in liquidity risk management are the stability of the deposit base; the marketability, maturity, and pledging of our investments; the availability of alternative sources of funds; and our demand for credit. The objective of our liquidity management is to have funds available to meet cash flow requirements arising from fluctuations in deposit levels and the demands of daily operations, which include funding of securities purchases, providing for customers’ credit needs, and ongoing repayment of borrowings.
Our primary sources of liquidity are derived from financing activities, which include customer and broker deposits, federal funds facilities, and borrowings from the FHLB and the FRB Discount Window. These funding sources are augmented by payments of principal and interest on loans and securities, proceeds from sale of loans and the liquidation or sale of securities from our available for sale portfolio. Primary uses of funds include withdrawal of and interest payments on deposits, originations of loans, purchases of investment securities, and payment of operating expenses.
At March 31, 2016, our total borrowing capacity from the FHLB was $2.39 billion, of which $1.86 billion was unused and available to borrow. At March 31, 2016, our total borrowing capacity from the FRB was $549.0 million, which was unused and available to borrow. In addition to these lines, our liquid assets, consisting of cash and cash equivalents, interest bearing cash deposits and time deposits with other banks, overnight federal funds sold to other banks, liquid investment securities available for sale, and loan repayments within 30 days, were $1.03 billion at March 31, 2016, compared to $1.0 billion at December 31, 2015. Cash and cash equivalents, including federal funds sold, were $236.1 million at March 31, 2016, compared to $298.4 million at December 31, 2015. We believe our liquidity sources are sufficient to meet all reasonably foreseeable short-term and intermediate-term needs.
69

Table of Contents

Item 3. | Quantitative and Qualitative Disclosures About Market Risk

The objective of our asset and liability management activities is to maximize our earnings while maintaining adequate liquidity and an exposure to interest rate risk deemed by management to be acceptable by adjusting the type and mix of assets and liabilities to seek to effectively address changing conditions and risks. Through overall management of our balance sheet and by seeking to control various risks, we seek to optimize our financial returns within safe and sound parameters. Our operating strategies for attaining this objective include managing net interest margin through appropriate risk/return pricing of assets and liabilities and emphasizing growth in retail deposits, as a percentage of interest bearing liabilities, to reduce our cost of funds. We also seek to improve earnings by controlling noninterest expense, and enhancing noninterest income. We also use risk management instruments to modify interest rate characteristics of certain assets and liabilities to hedge against our exposure to interest rate fluctuations with the objective of reducing the effects fluctuations might have on associated cash flows or values. Finally, we perform internal analysis to measure, evaluate and monitor risk.
Interest Rate Risk
Interest rate risk is the most significant market risk impacting us. Interest rate risk occurs when interest rate sensitive assets and liabilities do not reprice simultaneously and in equal volume. A key objective of asset and liability management is to manage interest rate risk associated with changing asset and liability cash flows and values of our assets and liabilities and market interest rate movements. The management of interest rate risk is governed by policies reviewed and approved annually by the Board of Directors. Our Board delegates responsibility for interest rate risk management to the Asset and Liability Committee of the Board (“ALCO”) and to the Asset and Liability Management Committee (“ALM”), which is composed of the Bank’s senior executives and other designated officers.
Market risk is the risk of adverse impacts on our future earnings, the fair values of our assets and liabilities, or our future cash flows that may result from changes in the price of a financial instrument. The fundamental objective of our ALM is to manage our exposure to interest rate fluctuations while maintaining adequate levels of liquidity and capital. Our ALM meets regularly to monitor interest rate risk, the sensitivity of our assets and liabilities to interest rate changes, the book and market values of our assets and liabilities, and our investment activities. It also directs changes in the composition of our assets and liabilities. Our strategy has been to reduce the sensitivity of our earnings to interest rate fluctuations by more closely matching the effective maturities or repricing characteristics of our assets and liabilities. Certain assets and liabilities, however, may react in different degrees to changes in market interest rates. Furthermore, interest rates on certain types of assets and liabilities may fluctuate prior to changes in market interest rates, while interest rates on other types may lag behind changes in market interest rates. We consider the anticipated effects of these factors when implementing our interest rate risk management objectives.
Interest Rate Sensitivity
We monitor interest rate risk through the use of a simulation model that provides us with the ability to simulate our net interest income. In order to measure, at March 31, 2016, the sensitivity of our forecasted net interest income to changing interest rates, both rising and falling interest rate scenarios were projected and compared to base market interest rate forecasts. One application of our simulation model measures the impact of market interest rate changes on the net present value of estimated cash flows from our assets and liabilities, defined as our market value of equity. This analysis assesses the changes in market values of interest rate sensitive financial instruments that would occur in response to immediate and parallel changes in market interest rates.
The impacts on our net interest income and market value of equity exposed to immediate and parallel hypothetical changes in market interest rates as projected by the model we use for this purpose are illustrated in the following table.

| March 31, 2016 |  | December 31, 2015
Simulated | Estimated Net Interest Income Sensitivity |  | Market Value Of Equity Volatility |  | Estimated Net Interest Income Sensitivity |  | Market Value Of Equity Volatility
Rate Changes |  |  |
+ 200 basis points | 2.21 | % |  | (6.25 | )% |  | 3.38 | % |  | (5.57 | )%
+ 100 basis points | 1.07 | % |  | (2.61 | )% |  | 1.49 | % |  | (2.47 | )%
- 100 basis points | 0.58 | % |  | 0.89 | % |  | 0.37 | % |  | 1.33 | %
- 200 basis points | (0.33 | )% |  | 0.20 | % |  | (0.71 | )% |  | 0.41 | %

70

Table of Contents

Item 4. | Controls and Procedures

Evaluation of Disclosure Controls and Procedures
The Company maintains disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the U.S. Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to management, including the Principal Executive Officer and the Principal Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.
The Company’s management, with the participation of our Principal Executive Officer and Principal Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that, as of the end of such period, our disclosure controls and procedures are effective in ensuring that information required to be disclosed by the Company in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the U.S. Securities and Exchange Commission’s rules and forms, and is accumulated and communicated to management, including the Principal Executive Officer and the Principal Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting during the quarter ended March 31, 2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
71

Table of Contents
PART II
OTHER INFORMATION

Item 1. | Legal Proceedings

We are involved in routine litigation incidental to our business, none of which is expected to have a material adverse effect on us.

Item 1A. | Risk Factors

Management is not aware of any material changes to the risk factors discussed in Part 1, Item 1A of the Annual Report on Form 10-K for the year ended December 31, 2015. In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the risk factors discussed in Part I, Item 1A of the Annual Report on Form 10-K for the year ended December 31, 2015, which could materially and adversely affect the Company’s business, financial condition and results of operations. The risks described in the Annual Report on Form 10-K are not the only risks facing the Company. Additional risks and uncertainties not presently known to management or that management presently believes not to be material
may also result in material and adverse effects on our business, financial condition and results of operations.

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

None.

Item 3. | Defaults Upon Senior Securities

None.

Item 4. | Mine Safety Disclosures

None.

Item 5. | Other Information

(a) Additional Disclosures. None.
(b) Stockholder Nominations. There have been no material changes in the procedures by which shareholders may recommend nominees to the Board of Directors during the three months ended March 31, 2016. Please see the discussion of these procedures in the most recent proxy statement forming part of the Registration Statement on Form S-4/A recently filed with the U.S. Securities and Exchange Commission.

Item 6. | Exhibits

See “Index to Exhibits.”
72

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

|  | BBCN BANCORP, INC. |
Date: | May 10, 2016 | /s/ Kevin S. Kim |
|  | Kevin S. Kim |
|  | Chairman, President and Chief Executive Officer |
Date: | May 10, 2016 | /s/ Douglas J. Goddard |
|  | Douglas J. Goddard |
|  | Executive Vice President and Chief Financial Officer |

73

Table of Contents
INDEX TO EXHIBITS

Exhibit Number |  | Description
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 pursuant to Section 906 of the Public Company Accounting Reform and Investor Protection Act of 2002**
32.2 |  | Certification of Chief Financial Officer pursuant to section 906 of the Public Company Accounting Reform and Investor Protection Act of 2002**
101.INS |  | XBRL Instance Document**
101.SCH |  | XBRL Taxonomy Extension Schema Document**
101.CAL |  | XBRL Taxonomy Extension Calculation Linkbase Document**
101.DEF |  | XBRL Taxonomy Extension Definition Linkbase Document**
101.LAB |  | XBRL Taxonomy Extension Label Linkbase Document**
101.PRE |  | XBRL Taxonomy Extension Presentation Linkbase Document**

__________________________________

* | Filed herewith

** | Furnished herewith

74