UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

______________________________________________

FORM 10-Q

______________________________________________

(Mark One)



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

For the quarterly period ended ~~June~~September 30, 2013



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



Large accelerated filer	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 ~~August 2,~~November 1, 2013, there were ~~79,197,982~~79,267,580 outstanding shares of the issuer’s Common Stock, $0.001 par value.

Table of Contents



		Page
PART I FINANCIAL INFORMATION

	Forward-Looking Information	4

Item 1.	FINANCIAL STATEMENTS

	Condensed Consolidated Statements of Financial Condition - ~~June~~September 30, 2013 (Unaudited) and December 31, 2012	5

	Condensed Consolidated Statements of Income - Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2013 and 2012 (Unaudited)	7

	Condensed Consolidated Statements of Comprehensive Income - Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2013 and 2012 (Unaudited)	8

	Condensed Consolidated Statements of Changes in Stockholders’ Equity - ~~Six~~Nine Months Ended ~~June~~September 30, 2013 and 2012 (Unaudited)	9

	Condensed Consolidated Statements of Cash Flows - ~~Six~~Nine Months Ended ~~June~~September 30, 2013 and 2012 (Unaudited)	10

	Notes to Condensed Consolidated Financial Statements (Unaudited)	12

Item 2	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	5152

Item 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	7173

Item 4.	CONTROLS AND PROCEDURES	7274

PART II OTHER INFORMATION

Item 1.	Legal Proceedings	7375

Item 1A.	Risk Factors	7375

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	7375

Item 3.	Defaults Upon Senior Securities	7375

Item 4.	Mine Safety Disclosures	7375

Item 5.	Other Information	7375

Item 6.	Exhibits	7375

	Signatures	7476

	Index to Exhibits	7577

	Certifications

Table of Contents

Forward-Looking Information

Certain matters discussed in this report may constitute forward-looking statements under Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. There can be no assurance that the results described or implied in such forward-looking statements will, in fact, be achieved and actual results, performance, and achievements could differ materially because our business involves inherent risks and uncertainties. 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; 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, 2012.

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PART I

FINANCIAL INFORMATION


Item 1.	Financial Statements

BBCN BANCORP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION	BBCN BANCORP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION				BBCN BANCORP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

	(Unaudited)				(Unaudited)
	6/30/2013		December 31, 2012		September 30, 2013		December 31, 2012
ASSETS	(In thousands, except share data)				(In thousands, except share data)
Cash and cash equivalents:
Cash and due from banks	$	81,003	$	88,506	$	172,483	$	88,506
Interest-earning deposit at the Federal Reserve Bank (the "FRB")	215,327		224,410
Interest earning deposit at the Federal Reserve Bank (the "FRB")					172,869		224,410
Total cash and cash equivalents	296,330		312,916		345,352		312,916
Securities available for sale, at fair value	725,239		704,403		708,566		704,403
Loans held for sale, at the lower of cost or fair value	43,111		51,635		49,480		51,635
Loans receivable, net of allowance for loan losses (June 30, 2013 - $71,675; December 31, 2012 - $66,941)	4,446,447		4,229,311
Loans receivable, net of allowance for loan losses (September 30, 2013 - $65,715; December 31, 2012 - $66,941)					4,833,224		4,229,311
Other real estate owned ("OREO"), net	9,596		2,698		27,582		2,698
Federal Home Loan Bank ("FHLB") stock, at cost	26,261		22,495		27,958		22,495
Premises and equipment, net of accumulated depreciation and amortization (June 30, 2013 - $24,089; December 31, 2012 - $22,201)	23,226		22,609
Premises and equipment, net of accumulated depreciation and amortization (September 30, 2013 - $24,925; December 31, 2012 - $22,201)					29,747		22,609
Accrued interest receivable	13,054		12,117		13,108		12,117
Deferred tax assets, net	73,899		60,240		80,768		60,240
Customers’ liabilities on acceptances	9,533		10,493		6,126		10,493
Bank owned life insurance	44,400		43,767		44,593		43,767
Investments in affordable housing partnerships	12,487		13,164		11,983		13,164
Goodwill	92,288		89,878		119,881		89,878
Other intangible assets, net	3,125		3,033		5,563		3,033
Prepaid FDIC insurance	—		7,574		—		7,574
FDIC loss share receivable	3,455		5,797		2,430		5,797
Other assets	40,563		48,531		34,626		48,531
Total assets	$	5,863,014	$	5,640,661	$	6,340,987	$	5,640,661

(Continued)	(Continued)				(Continued)

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BBCN BANCORP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION	BBCN BANCORP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION					BBCN BANCORP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

	(Unaudited)					(Unaudited)
	6/30/2013			December 31, 2012		September 30, 2013			December 31, 2012
LIABILITIES AND STOCKHOLDERS’ EQUITY	(In thousands, except share data)					(In thousands, except share data)
LIABILITIES:
Deposits:
Non-interest bearing	$	1,210,563		$	1,184,285
Noninterest bearing						$	1,362,675		$	1,184,285
Interest bearing:
Money market and NOW accounts	1,261,905			1,248,304		1,267,113			1,248,304
Savings deposits	181,672			180,686		228,073			180,686
Time deposits of $100,000 or more	1,276,147			1,088,611		1,475,321			1,088,611
Other time deposits	646,512			682,149		687,920			682,149
Total deposits	4,576,799			4,384,035		5,021,102			4,384,035
FHLB advances	421,539			420,722		421,446			420,722
Subordinated debentures	41,920			41,846		57,303			41,846
Accrued interest payable	4,499			4,355		4,827			4,355
Acceptances outstanding	9,533			10,493		6,126			10,493
Other liabilities	27,699			28,106		28,953			28,106
Total liabilities	5,081,989			4,889,557		5,539,757			4,889,557
STOCKHOLDERS’ EQUITY:
Common stock, $0.001 par value; authorized 150,000,000 shares at June 30, 2013 and December 31, 2012; issued and outstanding, 79,205,840 and 78,041,511 shares at June 30, 2013 and December 31, 2012, respectively	79			78
Common stock, $0.001 par value; authorized 150,000,000 shares at September 30, 2013 and December 31, 2012; issued and outstanding, 79,247,719 and 78,041,511 shares at September 30, 2013 and December 31, 2012, respectively						79			78
Additional paid-in capital	537,085			525,354		538,062			525,354
Retained earnings	248,866			216,590		266,478			216,590
Accumulated other comprehensive income, net	(5,005		)	9,082		(3,389		)	9,082
Total stockholders’ equity	781,025			751,104		801,230			751,104
Total liabilities and stockholders’ equity	$	5,863,014		$	5,640,661	$	6,340,987		$	5,640,661

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

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BBCN BANCORP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)	BBCN BANCORP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)												BBCN BANCORP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012			2013			2012			2013			2012
	(In thousands, except share data)												(In thousands, except share data)
INTEREST INCOME:
Interest and fees on loans	$	65,473		$	62,504		$	128,502		$	125,923		$	67,747		$	61,553		$	196,249		$	187,476
Interest on securities	3,526			4,249			6,953			9,158			3,802			3,782			10,755			12,940
Interest on federal funds sold and other investments	380			190			667			417			486			120			1,153			537
Total interest income	69,379			66,943			136,122			135,498			72,035			65,455			208,157			200,953
INTEREST EXPENSE:
Interest on deposits	5,647			5,245			11,055			10,648			5,959			5,214			17,014			15,862
Interest on FHLB advances	1,218			1,603			2,442			3,229			1,251			1,603			3,693			4,832
Interest on other borrowings	411			593			806			1,260			465			407			1,271			1,667
Total interest expense	7,276			7,441			14,303			15,137			7,675			7,224			21,978			22,361
NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES	62,103			59,502			121,819			120,361			64,360			58,231			186,179			178,592
PROVISION FOR LOAN LOSSES	800			7,182			8,306			9,782			744			6,900			9,050			16,682
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	61,303			52,320			113,513			110,579			63,616			51,331			177,129			161,910
NON-INTEREST INCOME:
NONINTEREST INCOME:
Service fees on deposit accounts	2,922			3,269			5,797			6,429			3,321			3,121			9,118			9,550
International service fees	1,266			1,403			2,504			2,627			1,196			1,183			3,700			3,810
Loan servicing fees, net	1,036			810			2,005			2,147			1,004			1,031			3,009			3,178
Wire transfer fees	887			775			1,703			1,516			916			833			2,619			2,349
Other income and fees	1,204			1,354			2,453			2,694			1,583			1,364			4,036			4,058
Net gains on sales of SBA loans	3,295			2,463			5,989			5,426			2,827			—			8,816			5,426
Net gains on sales of other loans	19			146			62			146			—			—			62			146
Net gains on sales of securities available for sale	—			—			54			816			—			133			54			949
Net valuation gains on interest rate swaps and caps	—			10			—			13			—			11			—			24
Net (loss) gain on sales of OREO	(11		)	(8		)	(9		)	53
Total non-interest income	10,618			10,222			20,558			21,867
NON-INTEREST EXPENSE:
Net (losses) gains on sales of OREO													(48		)	(12		)	(57		)	41
Total noninterest income													10,799			7,664			31,357			29,531
NONINTEREST EXPENSE:
Salaries and employee benefits	16,219			14,658			32,551			28,737			16,535			13,611			49,086			42,348
Occupancy	4,835			4,232			8,846			7,878			4,360			3,910			13,206			11,788
Furniture and equipment	1,613			1,468			3,186			2,686			1,728			1,495			4,914			4,181
Advertising and marketing	1,190			1,525			2,463			2,983			1,393			1,159			3,856			4,142
Data processing and communications	1,861			1,573			3,505			3,184			1,983			1,659			5,488			4,843
Professional fees	1,443			1,069			2,744			1,682			1,440			876			4,184			2,558
FDIC assessments	858			51			1,552			1,088			818			644			2,370			1,732
Credit related expenses	2,203			2,290			3,918			4,470			2,646			2,613			6,564			6,967
Merger and integration expense	385			1,348			1,690			3,121			931			183			2,621			3,304
Other	3,822			2,863			7,249			5,683			3,912			2,620			11,161			8,419
Total non-interest expense	34,429			31,077			67,704			61,512
Total noninterest expense													35,746			28,770			103,450			90,282
INCOME BEFORE INCOME TAX PROVISION	37,492			31,465			66,367			70,934			38,669			30,225			105,036			101,159
INCOME TAX PROVISION	14,821			12,101			26,235			27,636			15,117			11,827			41,352			39,463
NET INCOME	$	22,671		$	19,364		40,132			$	43,298		$	23,552		$	18,398		63,684			$	61,696
DIVIDENDS AND DISCOUNT ACCRETION ON PREFERRED STOCK	$	—		$	(3,771	)	$	0		$	(5,640	)	$	—		$	—		$	—		$	(5,640	)
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	22,671		$	15,593		$	40,132		$	37,658		$	23,552		$	18,398		$	63,684		$	56,056
EARNINGS PER COMMON SHARE
Basic	$	0.29		$	0.20		$	0.51		$	0.48		$	0.30		$	0.24		$	0.81		$	0.72
Diluted	$	0.29		$	0.20		$	0.51		$	0.48		$	0.30		$	0.24		$	0.80		$	0.72

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

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BBCN BANCORP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)	BBCN BANCORP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)												BBCN BANCORP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended September 30,					Nine Months Ended September 30,
	2013			2012			2013			2012			2013		2012			2013			2012
	(In thousands)												(In thousands)
Net income	$	22,671		$	19,364		$	40,132		$	43,298		$	23,552	$	18,398		$	63,684		$	61,696
Other comprehensive income (loss):
Unrealized (loss) gain on securities available for sale and interest only strips	(19,699		)	809			(23,353		)	493
Unrealized gains (losses) on securities available for sale and interest only strips													2,021		3,374			(21,389		)	3,867
Reclassification adjustments for gains realized in income ⁽¹⁾	—			—			(54		)	(816		)	—		(133		)	(54		)	(949		)
Tax expense (benefit)	(7,738		)	269			(9,320		)	(209		)	405		1,261			(8,972		)	1,051
Change in unrealized gain on securities available for sale and interest only strips	(11,961		)	540			(14,087		)	(114		)
Change in unrealized gains (losses) on securities available for sale and interest only strips													1,616		1,980			(12,471		)	1,867

Reclassification adjustment for the deferred gain on early settlement of interest-rate caps⁽²⁾	—			(11		)	—			(22		)	—		(11		)	—			(33		)
Tax benefit	—			(5		)	—			(9		)	—		(5		)	—			(13		)
Change in unrealized gain on interest-rate caps, net of tax ⁽³⁾	—			(6		)	—			(13		)	—		(6		)	—			(20		)

Total other comprehensive income (loss)	(11,961		)	534			(14,087		)	(127		)	1,616		1,974			(12,471		)	1,847
Total comprehensive income	$	10,710		$	19,898		$	26,045		$	43,171		$	25,168	$	20,372		$	51,213		$	63,543


⁽¹⁾	Reclassification adjustments were recognized in net gains on sales of securities available for sale in the consolidated statements of income.


⁽²⁾	Reclassification adjustments were recognized in accumulated other comprehensive income in the consolidated statements of financial position.


⁽³⁾	Reclassification adjustments were recognized in other income in the consolidated statements of income.

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

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BBCN BANCORP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited)	BBCN BANCORP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited)														BBCN BANCORP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited)

				Common stock														Common stock
	Preferred stock			Shares	Amount		Additional paid-in capital		Retained earnings			Accumulated other comprehensive income (loss), net			Preferred stock			Shares	Amount		Additional paid-in capital			Retained earnings			Accumulated other comprehensive income (loss), net
	(In thousands, except share data)														(In thousands, except share data)

BALANCE, JANUARY 1, 2012	$	119,350		77,984,252	$	78	$	524,644	$	142,909		$	8,958		$	119,350		77,984,252	$	78	$	524,644		$	142,909		$	8,958
Redemption of 122,000 shares of TARP preferred stock	(122,000		)												(122,000		)
Issuance of additional shares pursuant to various stock plans				29,855			200											32,008			200
Tax effect of stock plans																					(6		)
Stock-based compensation							1,141														1,959
Redemption of common stock warrant																					(2,189		)
Preferred stock cash dividends accrued (5%)									(2,990		)													(2,991		)
Accretion of preferred stock discount	2,650								(2,650		)				2,650									(2,650		)
Comprehensive income:
Net income									43,298															61,696
Other comprehensive loss												(127		)													1,847
BALANCE, JUNE 30, 2012	$	—		78,014,107	$	78	$	525,985	$	180,567		$	8,831
BALANCE, SEPTEMBER 30, 2012															$	—		78,016,260	$	78	$	524,608		$	198,964		$	10,805

BALANCE, JANUARY 1, 2013	$	—		78,041,511	$	78	$	525,354	$	216,590		$	9,082		$	—		78,041,511	$	78	$	525,354		$	216,590		$	9,082
Acquisition of Pacific International Bank				632,050	1		8,640
Acquisition of Pacific International Bancorp, Inc.																		632,050	1		8,640
Acquisition of Foster Bankshares, Inc.																		49,496			778
Issuance of additional shares pursuant to various stock plans				532,279			1,849											524,662			1,954
Tax effect of stock plans							234														208
Stock-based compensation							1,008														1,128
Cash dividends declared on common stock									(7,856		)													(13,796		)
Comprehensive income:
Net income									40,132															63,684
Other comprehensive loss												(14,087		)													(12,471		)
BALANCE, JUNE 30, 2013	$	—		79,205,840	$	79	$	537,085	$	248,866		$	(5,005	)
BALANCE, SEPTEMBER 30, 2013															$	—		79,247,719	$	79	$	538,062		$	266,478		$	(3,389	)

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

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BBCN BANCORP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)	BBCN BANCORP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)						BBCN BANCORP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

	Six Months Ended June 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
	(In thousands)						(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	40,132		$	43,298		$	63,684		$	61,696
Adjustments to reconcile net income to net cash from operating activities:
Depreciation, amortization, net of discount accretion	(7,328		)	(14,353		)	(13,402		)	(18,518		)
Stock-based compensation expense	1,008			1,141			1,128			1,959
Provision for loan losses	8,306			9,782			9,050			16,682
Valuation adjustment of loans held for sale	—			668			53			703
Valuation adjustment of OREO	762			1,067			1,229			2,659
Proceeds from sales of loans	67,732			88,822
Proceeds from sales of loans held for sale							107,712			90,022
Originations of loans held for sale	(53,176		)	(73,003		)	(89,832		)	(97,968		)
Net gains on sales of SBA and other loans	(6,051		)	(6,014		)	(8,878		)	(6,014		)
Net change in bank owned life insurance	(633		)	(605		)	(826		)	(902		)
Net gains on sales of securities available for sale	(54		)	(816		)	(54		)	(949		)
Net gains on sales of OREO	9			(53		)	57			(41		)
Net valuation gains on interest rate swaps and caps	—			(13		)	—			(24		)
Change in accrued interest receivable	(513		)	1,377			539			558
Change in deferred income taxes	2,976			7,604			9,487			7,625
Change in prepaid FDIC insurance	7,771			938			7,771			1,508
Change in investments in affordable housing partnership	677			1,206			1,181			1,591
Change in FDIC loss share receivable	2,342			1,781			3,367			3,743
Change in other assets	8,376			(10,384		)	17,517			(9,532		)
Change in accrued interest payable	70			(595		)	472			(1,068		)
Change in other liabilities	(4,832		)	6,421			(9,486		)	11,754
Net cash provided by operating activities	67,574			58,269			100,769			65,484
CASH FLOWS FROM INVESTING ACTIVITIES
Net change in loans receivable	(84,982		)	(128,519		)	(228,758		)	(326,194		)
Proceeds from sales of securities available for sale	6,636			1,883			6,636			28,446
Proceeds from sales of OREO	1,425			3,160			1,708			4,341
Proceeds from matured term federal funds	—			100,000			—			100,000
Proceeds from sales of equipment	—			3			—			3
Purchase of premises and equipment	(3,348		)	(3,494		)	(6,524		)	(5,572		)
Purchase of securities available for sale	(147,995		)	(15,457		)	(167,850		)	(111,696		)
Purchase of FHLB stock	(1,969		)	—			(1,969		)	—
Redemption of FHLB stock	32			2,595			49			3,873
Purchase of term federal funds	—			(60,000		)	—			(60,000		)
Proceeds from matured or paid-down securities available for sale	101,604			84,735			143,627			135,686
Net cash received from acquisition	25,968			—
Net cash received from acquisition - Pacific International Bancorp, Inc.							25,967			—
Net cash received from acquisition - Foster Bankshares, Inc.							41,167			—
Redemption of preferred stock upon the acquisition	(7,475		)	—			(7,475		)	—
Net cash used in investing activities	(110,104		)	(15,094		)	(193,422		)	(231,113		)
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in deposits	49,537			(56,693		)	172,800			114,344
Redemption of preferred stock	—			(122,000		)	—			(122,000		)
Cash dividends paid on Preferred Stock	—			(3,647		)	—			(3,648		)
Redemption of subordinated debentures	(4,124		)	(10,400		)	(4,124		)	(10,400		)
Proceeds from FHLB advances	140,000			125,000			155,000			625,000
Repayment of FHLB advances	(153,697		)	(96,124		)	(186,745		)	(506,145		)
Redemption of common stock warrant							—			(2,189		)
Cash dividends paid on Common Stock	(7,855		)	—			(13,796		)	—
Issuance of additional stock pursuant to various stock plans	2,083			200			1,954			200
Net cash used in financing activities	25,944			(163,664		)
Net cash provided by financing activities							125,089			95,162
NET CHANGE IN CASH AND CASH EQUIVALENTS	(16,586		)	(120,489		)	32,436			(70,467		)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	312,916			300,110			312,916			300,110
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	296,330		$	179,621		$	345,352		$	229,643
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid	$	14,159		$	15,732		$	21,506		$	23,429
Income taxes paid	$	19,516		$	19,022		$	23,650		$	26,663
SUPPLEMENTAL DISCLOSURES OF NON-CASH ACTIVITIES
Transfer from loans receivable to OREO	$	4,396		$	3,262		$	7,557		$	3,470
Non-cash goodwill adjustment, net	$	(1,116	)	$	591
Pacific International Bank Acquisition:

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BBCN BANCORP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)	BBCN BANCORP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)					BBCN BANCORP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

Transfer from loans receivable to loans held for sale						$	6,900		$	2,820
Pacific International Bancorp, Inc. Acquisition:
Assets acquired	$	181,048		$	—	$	183,120		$	—
Liabilities assumed	$	(167,028	)	$	—	$	167,545		$	—
Foster Bankshares, Inc. Acquisition:
Assets acquired						$	333,243		$	—
Liabilities assumed						$	(358,274	)	$	—

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

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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 York, New Jersey, Washington, Illinois and ~~Illinois,~~Virginia, as well as loan production offices in the Atlanta, Dallas, Denver, Northern California, Seattle and metropolitan Washington, D.C. markets. The Company is a corporation organized under the laws of Delaware and a financial holding company and bank holding company registered under the Bank Holding Company Act of 1956, as amended.


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, 2012 which was derived from audited financial statements included in the Company's 2012 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 recurring accruals, that in the opinion of management, are necessary to fairly present the Company's financial position at ~~June~~September 30, 2013 and the results of operations for the three and ~~six~~nine months then ended. 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, the valuation of servicing assets, and the determination of the fair values of acquired assets and liabilities including the fair value of loans acquired with credit deterioration.

These unaudited condensed consolidated financial statements should be read along with the audited consolidated financial statements and accompanying notes included in the Company's 2012 Annual Report on Form 10-K.

Recent Accounting Pronouncements:

FASB ~~has issued~~ ASU No. ~~2013-07, Presentation~~2013-11, "Presentation of ~~Financial Statements (Topic 205): Liquidation Basis~~an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists." The provisions of Accounting. The amendments in this ASU clarify when an entity should apply the liquidation basis of accounting. In addition, the guidance provides principles for the recognition and measurement of assets and liabilities and requirements for financial statements prepared using the liquidation basis of accounting. Liquidation is the process by which a company converts its assets to cash or other assets and settles its obligations with creditors in anticipation of ceasing all of its activities. An organization in liquidation must prepare its financial statements using a basis of accounting that communicates information to users of those financial statements to enable those users to develop expectations about how much the organization will have available for distribution to investors after disposing of its assets and settling its obligations.

~~FASB~~ ASU No. ~~2013-02, “Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income” - ASU 2013-02 requires~~2013-11 require an entity to ~~provide information about the amounts reclassified out of accumulated other comprehensive income by component and to~~ present ~~either on the face of~~an unrecognized tax benefit, or portion thereof, in the statement ~~where~~of financial position as a reduction to a deferred tax asset for a net ~~income~~operating loss carryforward or a tax credit carryforward, with certain exceptions related to availability. ASU No. 2013-11 is ~~presented, or in the notes, significant amounts reclassified out~~effective for interim and annual reporting periods beginning after December 15, 2013. The adoption of ~~accumulated other comprehensive income by the respective line items of net income, but only if the amount reclassified~~ASU No. 2013-11 is ~~required~~not expected to ~~be reclassified to net income in its entirety in the same reporting period. The Company adopted ASU 2013-02 for the reporting period ending March 31, 2013, and its adoption did not~~ have a material ~~effect~~impact on the Company's consolidated financial statements.

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3.	Business Combinations

The Company applies the acquisition method of accounting for business combinations under ASC 805 - Business Combinations. Under the acquisition method, the acquiring entity in a business combination recognizes 100 percent of the assets acquired and liabilities assumed at their acquisition date fair values. Management utilizes valuation techniques appropriate for the asset or liability being measured in determining these fair values. Any excess of the purchase price over amounts allocated to assets acquired, including identifiable intangible assets, and liabilities assumed is recorded as goodwill. Where amounts allocated to assets acquired and liabilities assumed is greater than the purchase price, a bargain purchase gain is recognized. Acquisition-related costs are expensed as incurred as merger and integration ~~expenses.~~

expense.

Acquisition of Foster Bankshares, Inc.

On August 13, 2013, the Company completed the acquisition of Foster Bankshares, Inc.

~~On April 15, 2013,~~("Foster"), the ~~Company entered into an Agreement and Plan of Merger with Foster Bankshares, Inc., a Delaware corporation and a Chicago-based~~holding company ~~("Foster") dated April 15, 2013. At June 30, 2013, Foster had total assets of approximately~~ ~~$381.0 million, including~~ ~~$302.1 million~~ ~~of gross loans and~~ ~~$333.2 million~~ ~~in deposits.~~

~~The transaction is valued at approximately~~ ~~$4.6 million, valuing each outstanding share~~ of Foster ~~common stock at~~ ~~$34.67~~.Bank. The Company acquired Foster in order to expand its market in Illinois and into Virginia. Foster's primary subsidiary, Foster Bank, operated eight branches in Illinois and one branch in Virginia.

Under the terms of the acquisition agreement, Foster shareholders ~~will have a choice between electing~~can elect to receive ~~the~~a cash ~~value~~price of $34.6703 per share or, for shareholders who ~~qualify~~qualified as accredited investors, 2.62771 shares of ~~BBCN~~Company common stock for each share of Foster common stock. As of September 30, 2013, the Company issued 54,620 shares of Company common stock ~~or a combination thereof, with no limitations~~in exchange for 20,790 shares of Foster common stock, paid $1.7 million for 49,496 shares of Foster common stock and there were 61,714 shares of Foster common stock that had not been redeemed. At September 30, 2013, the accrued liability for the unredeemed Foster common shares was $2.1 million, which was based on the ~~consideration mix.~~ cash conversion price.

The consideration ~~for~~paid, the ~~transaction is subject to reduction in certain events. Foster has no outstanding options or warrants. The transaction is expected to be completed~~assets acquired, and the liabilities assumed are summarized in the ~~third quarter~~following table:



		(In thousands)
Consideration paid:
	BBCN common stock issued in exchange for Foster common stock	$	778
	Cash paid for the redemption of Foster common stock	1,716
	Liability for unredeemed Foster common stock	2,140
	Total consideration paid	$	4,634

Assets Acquired:
	Cash and cash equivalents	$	42,883
	Investment securities available for sale	4,844
	Loans, net	245,558
	FRB and FHLB stock	1,714
	OREO	16,630
	Premises and equipment	4,733
	Core deposit intangibles	2,763
	Deferred tax assets, net	11,655
	Other assets	2,463
Liabilities Assumed:
	Deposits	(321,596		)
	Borrowings	(18,045		)
	Subordinated debentures	(15,309		)
	Other liabilities	(3,324		)
Total identifiable net assets		$	(25,031	)
Excess of consideration paid over fair value of net assets acquired (goodwill)		$	29,665

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The assets and liabilities of Foster were recorded on the consolidated balance sheet at estimated fair value on the acquisition date. The purchase price may change as additional information becomes available and when unredeemed Foster shares are redeemed. The fair values of the net deferred tax assets, loans, and OREO acquired and certain liabilities assumed from Foster were provisional and adjustments to the provisional amounts may occur during the measurement period as the Company obtains additional information about the facts and circumstances that existed as of the acquisition date.

Acquisition of Pacific International Bancorp, Inc.

On February 15, 2013, the Company completed the acquisition of Pacific International Bancorp, Inc. ("PIB"), a Seattle based company, pursuant to an Agreement and Plan of Merger, dated October 22, 2012. The Company acquired PIB in order to increase the Company's presence in terms of branch offices and deposit market share in the Seattle market. PIB's primary subsidiary, Pacific International Bank, a Washington state-chartered bank, operated four bank branches in the Seattle metropolitan area.

In connection with the acquisition, the consideration paid, the assets acquired, and the liabilities assumed are summarized in the following table:

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		(In thousands)				(In thousands)
Consideration paid:	Consideration paid:				Consideration paid:
	BBCN common stock issued	$	8,437		BBCN common stock issued	$	8,437
	Cash in lieu of fractional shares paid to PIB stockholders	1			Cash in lieu of fractional shares paid to PIB stockholders	1
	Redemption of Preferred Stock	7,475			Redemption of Preferred Stock	7,475
	Total consideration paid	$	15,913		Total consideration paid	$	15,913

Assets Acquired:	Assets Acquired:				Assets Acquired:
	Cash and cash equivalents	$	25,968		Cash and cash equivalents	$	25,968
	Investment securities available for sale	7,810			Investment securities available for sale	7,810
	Loans, net	131,589			Loans, net	131,589
	FRB and FHLB stock	1,829			FRB and FHLB stock	1,829
	OREO	3,418			OREO	3,418
	Deferred tax assets, net	7,316			Deferred tax assets, net	9,388
	Other assets	3,118			Other assets	3,118
Liabilities Assumed:	Liabilities Assumed:				Liabilities Assumed:
	Deposits	(143,665		)	Deposits	(143,665		)
	Borrowings	(14,698		)	Borrowings	(14,698		)
	Subordinated debentures	(4,108		)	Subordinated debentures	(4,108		)
	Other liabilities	(5,074		)	Other liabilities	(5,074		)
Total identifiable net assets	Total identifiable net assets	$	13,503		Total identifiable net assets	$	15,575
Excess of consideration paid over fair value of net assets acquired (goodwill)	Excess of consideration paid over fair value of net assets acquired (goodwill)	$	2,410		Excess of consideration paid over fair value of net assets acquired (goodwill)	$	338

The $29.7 million and $338 thousand of goodwill recognized in the Foster and PIB acquisitions, respectively, represent the future economic benefit arising from the acquisitions including the creation of a platform that can support future operations and strengthening the Company's existing presence in the Chicago metropolitan and Pacific Northwest markets and expansion into the Virginia market. Goodwill is not amortized for book purposes and is not deductible for tax purposes.

Acquired Loans

The Company estimated the fair value for most loans acquired ~~from PIB~~ by utilizing a methodology wherein loans with comparable characteristics were aggregated by type of collateral, remaining maturity and repricing terms. Cash flows for each pool were

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determined by estimating future credit losses and ~~the rate of prepayments.~~prepayment rates. Projected monthly cash flows were then discounted ~~to present value~~ using a risk-adjusted market rate for similar ~~loans.~~loans to determine the fair value of each pool. To estimate the fair value of the remaining loans, management analyzed the value of the underlying collateral of the loans, assuming the fair values of the loans were derived from the eventual sale of the collateral. The value of the collateral was based on recently completed appraisals adjusted to the valuation date based on recognized industry indices. WeThe Company discounted those values using market derived rates of return, with consideration given to the period of time and costs associated with the foreclosure and disposition of the collateral. There was no carryover of ~~PIB’s~~the allowance for loan losses associated with the loans wethe Company acquired as the loans were initially recorded at fair value. The following table presents loans acquired with deteriorated credit quality ~~from~~as of the date of acquisition:



	Foster		PIB
	(In thousands)
Contractually required principal and interest at acquisition	$	150,430	$	54,462
Contractual cash flows not expected to be collected (nonaccretable discount)	37,447		9,687
Expected cash flows at acquisition	112,983		44,775
Interest component of expected cash flows (accretable discount)	14,928		4,945
Fair value of acquired impaired loans	$	98,055	$	39,830

The outstanding principal balances and the related carrying amounts of the acquired loans included in the statement of financial condition are $296.1 million and $239.0 million, respectively for Foster and $117.8 million and $112.6 million, respectively for PIB, as of ~~February 15, 2013 were as follows:~~

(In thousands)
Contractually required principal and interest at acquisition $ 54,462
Contractual cash flows not expected to be collected (nonaccretable discount) 9,687
Expected cash flows at acquisition 44,775
Interest component of expected cash flows (accretable discount) 4.945
Fair value of acquired loans $ 39,830

The fair value of savings and transactional deposit accounts acquired from PIB was assumed to approximate the carrying value as these accounts have no stated maturity and are payable on demand. Certificates of deposit were valued by comparing the contractual cost of the the portfolio to an identical portfolio bearing current market rates. The projected cash flows from maturing certificates were calculated based on contractual rates. The fair value of the certificates of deposit was calculated by discounting their contractual cash flows at a market rate for a certificate of deposit with a corresponding maturity

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~~The fair value of borrowings assumed was determined by estimating projected future cash outflows and discounting them at a market rate of interest.~~

The fair value of the net deferred tax assets acquired from PIB was provisional and adjustments to the provisional amount may occur during the measurement period as the Company obtains additional information about the facts and circumstances that existed as of the acquisition date.

~~The~~ ~~$2.4 million~~ of goodwill recognized in the PIB acquisition represents the future economic benefit arising from the acquisition including: the creation of a platform that can support future operations and strengthening the Company's existing presence in the Pacific Northwest market. Goodwill is not amortized for book purposes and is not deductible for tax purposes.

~~The goodwill arising from the PIB acquisition was reduced by a net $1.1 million down to~~ ~~$92.3 million~~ due to adjustments to the deferred tax asset, which was provisional as of March 31, 2013, and other adjustments of certain acquisition date fair value asset and liability estimates during the second quarter ofSeptember 30, 2013.

For the three months ended June 30, 2013
(In thousands)
Balance, beginning of period $ 93,404
Acquired goodwill —
Adjustment (1,116 )
Impairment —
Balance, end of period $ 92,288

Pro Forma Information

The operating results of Foster and PIB from the ~~date~~dates of ~~acquisition~~acquisitions through ~~June~~September 30, 2013 are included in the Condensed Consolidated Statement of Income for 2013 and are not material to the total consolidated operating results for the three and ~~six~~nine month ~~period~~periods ended ~~June~~September 30, 2013 ~~and, consequently, no~~.

The following unaudited combined pro forma information ~~is presented. Direct costs~~presents the operating results for the three and nine months ended September 30, 2013 and 2012, as if the Foster and PIB acquisitions had occurred on January 1, 2012:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
	(In thousands, except share data)
Net Interest income	$	67,498	$	64,769	$	198,315	$	199,562
Net income	$	25,277	$	15,475	$	64,211	$	55,754

Pro forma earnings per share:
Basic	$	0.32	$	0.20	$	0.81	$	0.64
Diluted	0.32		0.20		0.81		0.64

The above pro forma results are presented for illustrative purposes and are not intended to represent or be indicative of the actual results of operations of the merged companies that would have been achieved had the acquisition occurred at January 1, 2012, nor are they intended to represent or be indicative of future results of operations. The pro forma results do not include expected operating cost savings as a result of the acquisitions. These pro forma results require significant estimates and judgments particularly as it relates to valuation and accretion of income associated with acquired loans.

Acquisition-Related Expenses

The Company incurred acquisition-related expenses associated with the Foster and PIB acquisitions which were reflected on the Company's income statement. During the three and nine months ended September 30, 2013, the Company incurred $1.2 million and $1.5 million, respectively, in expenses related to the ~~acquisition were expensed as incurred as merger related expenses. The~~Foster acquisition. During the three and nine months ended

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September 30, 2013, the Company incurred $8129 thousand and $~~1.3~~1.1 million, respectively, in expenses related to the PIB ~~acquisition related expenses during three months and six months ended June 30, 2013, respectively.~~acquisition. These expenses ~~were~~are comprised primarily of salaries and benefits, occupancy expenses, professional services, and other ~~non-interest~~noninterest expense.


4.	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 our 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,~~awards; (ii) motivate high levels of ~~performance,~~performance; (iii) recognize employee contributions to the Company’s ~~success,~~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%~~1% of fair market value ~~(“FMV”)~~ 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%~~1% of ~~FMV~~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.

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The Company has another stock-based incentive plan, the Center Financial Corporation 2006 Stock Incentive Plan, adopted April 12, 2006, as amended and restated June 13, 2007 (the "2006 Plan"), which was assumed by the Company during the merger with Center Bank.

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 must be not less than ~~100%~~1% of the fair market value at the date of grant. All options granted generally vest at the rate of ~~20%~~0.2% per year except that the options granted to the non-employee directors vest at the rate of ~~33%~~0% per year. All options not exercised generally expire ten years after the date of grant.

Under the 2007 and 2006 Plans, ~~2,659,119~~2,739,703 shares were available for future grants as of ~~June~~September 30, 2013.

The total shares reserved for issuance will serve as the underlying value for all equity awards under the 2007 and 2006 Plans. 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.

The following is a summary of stock option activity under the 2007 and 2006 Plans for the ~~six~~nine months ended ~~June~~September 30, 2013:

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	Number of Shares		Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value		Number of Shares		Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
Outstanding - January 1, 2013	797,805		$	16.70				797,805		$	—
Granted	—		—					—		—
Exercised	(214,100	)	8.64					(226,242	)	8.64
Expired								(29,267	)	15.90
Forfeited	(43,844	)	26.99					(51,702	)	24.20
Outstanding - June 30, 2013	539,861		$	19.06	3.14	$	120,000
Vested or expected to be vested - June 30, 2013	539,861		$	19.06	3.14	$	120,000
Options exercisable - June 30, 2013	531,861		$	19.22	3.10	$	75,000
Outstanding - September 30, 2013								490,594		$	19.67	3.14	$	—
Options exercisable - September 30, 2013								490,594		$	19.67	3.10	$	—

The following is a summary of restricted and performance unit activity under the 2007 and 2006 Plans for the ~~six~~nine months ended ~~June~~September 30, 2013:


	Number of Shares		Weighted- Average Grant Date Fair Value		Number of Shares		Weighted- Average Grant Date Fair Value
Outstanding - January 1, 2013	512,183		$	9.78	512,183		$	9.78
Granted	48,000		12.83		58,000		12.86
Vested	(306,140	)	10.16		(306,541	)	10.17
Forfeited	(29,550	)	10.42		(83,009	)	10.79
Outstanding - June 30, 2013	224,493		$	10.75
Outstanding - September 30, 2013					180,633		$	10.79

The total fair value of performance units vested for the ~~six~~nine months ended ~~June~~September 30, 2013 and 2012 was $3.9 million and $22100 thousand, respectively.

The amount charged against income related to stock-based payment arrangements was $~~299~~119 thousand and $~~743~~818 thousand for the three months ended ~~June~~September 30, 2013 and 2012, respectively. For the ~~six~~nine months ended ~~June~~September 30, 2013 and 2012, $~~1.0~~1.1 million and $~~1.1~~2.0 million, respectively, was charged against income related to stock-based payment arrangements.

The income tax benefit recognized was $~~1.3 million~~50 thousand and $~~308~~328 thousand, for the three months ended ~~June~~September 30, 2013 and 2012, respectively, and ~~the amount recognized was~~ $~~1.2 million~~474 thousand and $~~477~~805 thousand for the ~~six~~nine months ended ~~June~~September 30, 2013 and 2012, respectively.

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At ~~June~~September 30, 2013, total unrecognized compensation expense related to non-vested stock option grants and restricted and performance units aggregated $~~2.0~~1.5 million, and is expected to be recognized over a weighted average vesting period of ~~2.84~~2.55 years.

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5.	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 available to common stockholders 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 ~~June~~September 30, 2013 and 2012, stock options and restricted shares awards for approximately ~~192,000~~126 thousand shares and ~~564,000~~565 thousand shares of common stock, respectively, were excluded in computing diluted earnings per common share because they were antidilutive. For the ~~six~~nine months ended ~~June~~September 30, 2013 and 2012, stock options and restricted shares awards for approximately ~~199,000~~172 thousand shares and ~~564,000~~564 thousand shares of common stock, respectively, were excluded in computing diluted earnings per common share because they were antidilutive. Additionally, warrants to purchase ~~19,000~~51 thousand shares and ~~15,000~~28 thousand shares of common stock (related to the TARP Capital Purchase Plan) were antidilutive and excluded for the three and ~~six~~nine months ended ~~June~~September 30, 2013, respectively. Warrants to purchase ~~337,000~~337 thousand shares common stock (related to the TARP Capital Purchase Plan) were antidilutive and excluded for the three and ~~six~~nine months ended ~~June~~September 30, 2012.

The following table shows the computation of basic and diluted EPS for the three months ended ~~June~~September 30, 2013 and 2012.


	For the three months ended June 30,											Three Months Ended September 30,
	2013					2012						2013					2012
	Net income available to common stockholders (Numerator)		Shares (Denominator)	Per Share (Amount)		Net income available to common stockholders (Numerator)			Shares (Denominator)	Per Share (Amount)		Net income available to common stockholders (Numerator)		Shares (Denominator)	Per Share (Amount)		Net income available to common stockholders (Numerator)		Shares (Denominator)	Per Share (Amount)
	(In thousands, except share and per share data)											(In thousands, except share and per share data)
Net income as reported	$	22,671				$	19,364					$	23,552				$	18,398
Less: preferred stock dividends and accretion of preferred stock discount	—					(3,771		)				—					—
Basic EPS - common stock	$	22,671	79,062,233	$	0.29	$	15,593		78,007,270	$	0.20	$	23,552	79,223,636	$	0.30	$	18,398	78,015,960	$	0.24
Effect of Dilutive Securities:
Stock Options and Performance Units			155,890						79,063					60,188					87,835
Common stock warrants			18,609						55,194					51,041					—
Diluted EPS - common stock	$	22,671	79,236,732	$	0.29	$	15,593		78,141,527	$	0.20	$	23,552	79,334,865	$	0.30	$	18,398	78,103,795	$	0.24


	For the six months ended June 30,											Nine Months Ended September 30,
	2013					2012						2013					2012
	Net income available to common stockholders (Numerator)		Shares (Denominator)	Per Share (Amount)		Net income available to common stockholders (Numerator)			Shares (Denominator)	Per Share (Amount)		Net income available to common stockholders (Numerator)		Shares (Denominator)	Per Share (Amount)		Net income available to common stockholders (Numerator)			Shares (Denominator)	Per Share (Amount)
	(In thousands, except share and per share data)											(In thousands, except share and per share data)
Net income as reported	$	40,132				$	43,298					$	63,684				$	61,696
Less: preferred stock dividends and accretion of preferred stock discount	—					(5,640		)				—					(5,640		)
Basic EPS - common stock	$	40,132	78,746,444	$	0.51	$	37,658		77,997,305	$	0.48	$	63,684	78,914,360	$	0.81	$	56,056		78,004,458	$	0.72
Effect of Dilutive Securities:
Stock Options and Performance Units			238,957						75,621					179,206						77,601
Common stock warrants			15,410						48,333					28,494						—
Diluted EPS - common stock	$	40,132	79,000,811	$	0.51	$	37,658		78,121,259	$	0.48	$	63,684	79,122,060	$	0.80	$	56,056		78,082,059	$	0.72

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6. Securities Available for Sale

The following is a summary of securities available for sale as of the dates indicated:


	At June 30, 2013									At September 30, 2013
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(In thousands)									(In thousands)
Debt securities:
U.S. Government agency and U.S. Government sponsored enterprises
Collateralized mortgage obligations	$	307,186	$	2,154	$	(7,598	)	$	301,742	$	290,061	$	2,001	$	(7,171	)	$	284,891
Mortgage-backed securities	401,159		3,901		(5,953		)	399,107		396,877		4,947		(5,090		)	396,734
Trust preferred securities	4,509		—		(738		)	3,771		4,513		—		(807		)	3,706
Municipal bonds	5,698		394		(36		)	6,056		5,692		368		(44		)	6,016
Total debt securities	718,552		6,449		(14,325		)	710,676		697,143		7,316		(13,112		)	691,347
Mutual funds	14,710		—		(147		)	14,563		17,425		—		(206		)	17,219
	$	733,262	$	6,449	$	(14,472	)	$	725,239	$	714,568	$	7,316	$	(13,318	)	$	708,566

	At December 31, 2012									At December 31, 2012
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(In thousands)									(In thousands)
Debt securities:
U.S. Government agency and U.S. Government sponsored enterprises
Collateralized mortgage obligations	$	249,373	$	5,649	$	(110	)	$	254,912	$	249,373	$	5,649	$	(110	)	$	254,912
Mortgage-backed securities	415,925		10,277		(662		)	425,540		415,925		10,277		(662		)	425,540
Trust preferred securities	4,502		—		(665		)	3,837		4,502		—		(665		)	3,837
Municipal bonds	4,506		612		—			5,118		4,506		612		—			5,118
Total debt securities	674,306		16,538		(1,437		)	689,407		674,306		16,538		(1,437		)	689,407
Mutual funds	14,710		286		—			14,996		14,710		286		—			14,996
	$	689,016	$	16,824	$	(1,437	)	$	704,403	$	689,016	$	16,824	$	(1,437	)	$	704,403

As of ~~June~~September 30, 2013 and December 31, 2012, 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 ~~June~~September 30,2013 and 2012, $~~19.7~~2.0 million ~~of gross unrealized losses~~ and $~~809 thousand~~3.4 million of gross unrealized gains, respectively, were included in accumulated other comprehensive income during the ~~period.~~periods. For the ~~six~~nine months ended ~~June~~September 30,2013 and 2012, $~~23.4~~21.4 million of gross unrealized losses and $~~493 thousand~~3.9 million of gross unrealized gains, respectively, were included in accumulated other comprehensive income during the ~~period.~~periods. A total of ~~$54~~$0 and $133 thousand ~~and~~ ~~$816 thousand~~ of net gains on sales of securities were reclassified out of accumulated other comprehensive income into earnings for the ~~six~~three months ended ~~June~~September 30, 2013 and 2012, respectively. A total of $54 thousand and $949 thousand of net gains on sales of securities were reclassified out of accumulated other comprehensive income into earnings for the nine months ended September 30,2013 and 2012, respectively, as a result of securities being sold. ~~There were no securities sold during the three month period ended June 30, 2013 and 2012.~~

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The proceeds from sales of securities and the associated gross gains and losses recorded in earnings are listed below:


	For the three months ended June 30,				For the six months ended June 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012		2013		2012		2013		2012
	(In thousands)								(In thousands)
Proceeds	$	—	$	—	$	6,636	$	1,883	$	—	$	26,563	$	6,636	$	28,446
Gross gains	—		—		54		816		—		132		54		948
Gross losses	—		—		—		—		—		—		—		—

The amortized cost and estimated fair value of debt securities at ~~June~~September 30, 2013, 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		Amortized Cost		Estimated Fair Value
	(In thousands)				(In thousands)
Available for sale:
Due within one year	$	—	$	—	$	—	$	—
Due after one year through five years	340		354		340		351
Due after five years through ten years	3,883		4,235		3,883		4,213
Due after ten years	5,984		5,238		5,982		5,158
U.S. Government agency and U.S. Government sponsored enterprises
Collateralized mortgage obligations	307,186		301,742		290,061		284,891
Mortgage-backed securities	401,159		399,107		396,877		396,734
Mutual funds	14,710		14,563		17,425		17,219
	$	733,262	$	725,239	$	714,568	$	708,566

Securities with carrying values of approximately $~~366.6~~362.3 million and $338.6 million at ~~June~~September 30, 2013 and December 31, 2012, respectively, were pledged to secure public deposits, various borrowings and for other purposes as required or permitted by law.

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The following table shows 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.


	At June 30, 2013																		At September 30, 2013
	Less than 12 months						12 months or longer						Total						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			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)																		(In thousands)
Collateralized mortgage obligations*	18	$	175,605	$	(7,597	)	—	$	—	$	—		18	$	175,605	$	(7,597	)	17	$	180,322	$	(7,170	)	—	$	—	$	—		17	$	180,322	$	(7,170	)
Mortgage-backed securities*	32	197,082		(5,839		)	4	8,305		(114		)	36	205,387		(5,953		)	22	117,369		(4,683		)	7	14,647		(407		)	29	132,016		(5,090		)
Trust preferred securities	—	—		—			1	3,771		(738		)	1	3,771		(738		)	—	—		—			1	3,706		(807		)	1	3,706		(807		)
Municipal bonds	1	1,156		(37		)	—	—		—			1	1,156		(37		)	1	1,143		(44		)	—	—		—			1	1,143		(44		)
Mutual funds	1	10,563		(147		)	—	—		—			1	10,563		(147		)	1	13,219		(207		)	—	—		—			1	13,219		(207		)
	52	$	384,406	$	(13,620	)	5	$	12,076	$	(852	)	57	$	396,482	$	(14,472	)	41	$	312,053	$	(12,104	)	8	$	18,353	$	(1,214	)	49	$	330,406	$	(13,318	)

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



	At December 31, 2012
	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*	3	$	18,009	$	(110	)	—	$	—	$	—		3	$	18,009	$	(110	)
Mortgage-backed securities*	7	32,406		(597		)	3	8,251		(65		)	10	40,657		(662		)
Trust Preferred securities	—	—		—			1	3,837		(665		)	1	3,837		(665		)
	10	$	50,415	$	(707	)	4	$	12,088	$	(730	)	14	$	62,503	$	(1,437	)

* 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 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 trust preferred securities and U.S. Government agency and U.S. Government sponsored enterprise collateralized mortgage obligations that were in a continuous unrealized loss position for twelve months or longer as of September 30, 2013. The trust preferred securities at ~~June~~September 30, 2013 had an amortized cost of $4.5 million and an unrealized loss of $~~738~~807 thousand at ~~June~~September 30, 2013. The trust preferred securities are scheduled to mature in May 2047. These securities are rated investment grade and there are no credit quality concerns with the obligor. Certain of the Company's U.S. Government agency and U.S. Government sponsored enterprise investments were in an unrealized loss position at ~~June~~September 30, 2013. All of the Company's U.S. Government agency and U.S. Government sponsored enterprise investments have high credit ratings ("AA" ~~grade)~~grade or better). Interest on the trust preferred securities and the U.S. Government agency and

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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 are deemed to be due to the current market volatility

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and are not reflective of management’s expectations of its 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 ~~June~~September 30, 2013.

The Company considers the losses on the investments in unrealized loss positions at ~~June~~September 30, 2013 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 management will not be required to sell a security in an unrealized loss position before recovery of its amortized cost basis.

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7.	Loans Receivable and Allowance for Loan Losses

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


	June 30, 2013			December 31, 2012			September 30, 2013			December 31, 2012
	(In thousands)						(In thousands)
Loan portfolio composition
Real estate loans:
Residential	$	9,849		$	9,247		$	10,294		$	9,247
Commercial & industrial	3,328,606			3,100,466			3,652,815			3,100,466
Construction	74,165			65,045			73,116			65,045
Total real estate loans	3,412,620			3,174,758			3,736,225			3,174,758
Commercial business	942,369			921,556			932,955			921,556
Trade finance	117,827			152,070			135,889			152,070
Consumer and other	47,088			49,954			95,693			49,954
Total loans outstanding	4,519,904			4,298,338			4,900,762			4,298,338
Less: deferred loan fees	(1,782		)	(2,086		)	(1,823		)	(2,086		)
Gross loans receivable	4,518,122			4,296,252			4,898,939			4,296,252
Less: allowance for loan losses	(71,675		)	(66,941		)	(65,715		)	(66,941		)
Loans receivable, net	$	4,446,447		$	4,229,311		$	4,833,224		$	4,229,311

Our 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"). The 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)~~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)~~310-20, or "APLs"). ~~The outstanding principal balance and the related carrying amount of the acquired PIB loans included in the statement of financial condition as of June 30, 2013 was~~ ~~$143.0 million~~ ~~and~~ ~~$121.6 million, respectively.~~

The following table presents changes in the accretable discount on the ~~Acquired Credit Impaired Loans~~ACILs for the three and ~~six~~nine months ended ~~June~~September 30, 2013 and 2012:


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012			2013			2012			2013			2012
	(In thousands)												(In thousands)
Balance at beginning of period	$	23,410		$	29,788		$	18,651		$	31,999		$	37,090		$	22,966		$	18,651		$	31,999
Additions due to acquisitions during the period	—			—			4,945			—			14,928			—			19,873			—
Accretion	(3,586		)	(3,890		)	(7,032		)	(7,451		)	(4,250		)	(3,415		)	(11,281		)	(10,866		)
Changes in expected cash flows	17,266			(2,932		)	20,526			(1,582		)	5,689			516			26,214			(1,066		)
Balance at end of period	$	37,090		$	22,966		$	37,090		$	22,966		$	53,457		$	20,067		$	53,457		$	20,067

On the acquisition date, the amount by which the undiscounted expected cash flows exceed the estimated fair value of the ~~Acquired Credit Impaired Loans~~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,~~income; 2) indices for variable rates of interest on ~~Acquired Credit Impaired Loans~~ACILs may change; and 3) estimates of the amount of the contractual principal and interest that will not be collected (nonaccretable difference) may change.

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The following tables detail the activity in the allowance for loan losses by portfolio segment for the three and ~~six~~nine months ended ~~June~~September 30, 2013 and 2012:



	Legacy												Acquired												Total			Legacy												Acquired												Total
	Real Estate			Commercial Business			Trade Finance			Consumer and Other			Real Estate			Commercial Business			Trade Finance			Consumer and Other			Total			Real Estate			Commercial Business			Trade Finance			Consumer and Other			Real Estate			Commercial Business			Trade Finance			Consumer and Other			Total
	(In thousands)																											(In thousands)
Three Months Ended June 30, 2013
Three Months Ended September 30, 2013																												Three Months Ended September 30, 2013
Balance, beginning of period	$	43,709		$	16,522		$	1,698		$	538		$	9,889		$	809		$	—		$	103		$	73,268		$	41,932		$	16,520		$	2,335		$	528		$	9,632		$	654		$	—		$	74		$	71,675
Provision (credit) for loan losses	(1,057		)	1,043			637			(20		)	(233		)	484			—			(54		)	800			545			(2,085		)	178			52			1,221			830			—			3			744
Loans charged off	(777		)	(1,413		)	—			(2		)	(24		)	(684		)	—			—			(2,900		)	(528		)	(774		)	—			—			(5,668		)	(813		)	—			(7		)	(7,790		)
Recoveries of charged offs	57			368			—			12			—			45			—			25			507
Recoveries of charge offs																												62			958			—			50			5			10			—			1			1,086
Balance, end of period	$	41,932		$	16,520		$	2,335		$	528		$	9,632		$	654		$	—		$	74		$	71,675		$	42,011		$	14,619		$	2,513		$	630		$	5,190		$	681		$	—		$	71		$	65,715
Six Months Ended June 30, 2013
Nine Months Ended September 30, 2013																												Nine Months Ended September 30, 2013
Balance, beginning of period	$	41,505		$	16,490		$	2,349		$	658		$	4,718		$	1,115		$	3		$	103		$	66,941		$	41,505		$	16,490		$	2,349		$	658		$	4,718		$	1,115		$	3		$	103		$	66,941
Provision (credit) for loan losses	2,012			1,082			12			(149		)	5,087			295			(3		)	(30		)	8,306			2,557			(1,004		)	190			(96		)	6,308			1,126			(3		)	(28		)	9,050
Loans charged off	(1,682		)	(1,596		)	(26		)	(9		)	(175		)	(808		)	—			(33		)	(4,329		)	(2,209		)	(2,370		)	(26		)	(9		)	(5,843		)	(1,621		)	—			(41		)	(12,119		)
Recoveries of charged offs	97			544			0			28			2			52			—			34			757
Recoveries of charge offs																												158			1,503			0			77			7			61			—			37			1,843
Balance, end of period	$	41,932		$	16,520		$	2,335		$	528		$	9,632		$	654		$	—		$	74		$	71,675		$	42,011		$	14,619		$	2,513		$	630		$	5,190		$	681		$	—		$	71		$	65,715



	Legacy											Acquired												Total			Legacy												Acquired												Total
	Real Estate			Commercial Business			Trade Finance		Consumer and Other			Real Estate			Commercial Business			Trade Finance			Consumer and Other			Total			Real Estate			Commercial Business			Trade Finance			Consumer and Other			Real Estate			Commercial Business			Trade Finance			Consumer and Other			Total
	(In thousands)																										(In thousands)
Three Months Ended June 30, 2012
Three Months Ended September 30, 2012																											Three Months Ended September 30, 2012
Balance, beginning of period	$	35,809		$	21,591		$	1,823	$	1,010		$	1,543		$	517		$	16		$	—		$	62,309		$	37,237		$	20,880		$	3,164		$	1,115		$	2,283		$	397		$	340		$	89		$	65,505
Provision (credit) for loan losses	2,650			588			1,341		569			895			440			624			75			7,182			5,499			988			(495		)	(418		)	750			784			(157		)	(51		)	6,900
Loans charged off	(2,330		)	(1,534		)	—		(482		)	(155		)	(590		)	(300		)	(218		)	(5,609		)	(1,832		)	(5,574		)	—			(2		)	(242		)	(118		)	—			(1		)	(7,769		)
Recoveries of charged offs	1,108			235			—		18			—			30			—			232			1,623
Recoveries of charge offs																											973			275			—			24			—			15			—			29			1,316
Balance, end of period	$	37,237		$	20,880		$	3,164	$	1,115		$	2,283		$	397		$	340		$	89		$	65,505		$	41,877		$	16,569		$	2,669		$	719		$	2,791		$	1,078		$	183		$	66		$	65,952
Six Months Ended June 30, 2012
Nine Months Ended September 30, 2012																											Nine Months Ended September 30, 2012
Balance, beginning of period	$	39,040		$	20,681		$	1,786	$	445		$	—		$	—		$	—		$	—		$	61,952		$	39,040		$	20,681		$	1,786		$	445		$	—		$	—		$	—		$	—		$	61,952
Provision (credit) for loan losses	1,333			2,215			1,318		1,118			2,149			917			640			92			9,782			6,831			3,203			823			700			2,899			1,701			483			42			16,682
Loans charged off	(4,264		)	(2,896		)	—		(483		)	(169		)	(637		)	(300		)	(243		)	(8,992		)	(6,095		)	(8,470		)	—			(485		)	(411		)	(755		)	(300		)	(244		)	(16,760		)
Recoveries of charged offs	1,128			880			60		35			303			117			—			240			2,763
Recoveries of charge offs																											2,101			1,155			60			59			303			132			—			268			4,078
Balance, end of period	$	37,237		$	20,880		$	3,164	$	1,115		$	2,283		$	397		$	340		$	89		$	65,505		$	41,877		$	16,569		$	2,669		$	719		$	2,791		$	1,078		$	183		$	66		$	65,952

Table of Contents

The following tables disaggregate the allowance for loan losses and the loans receivables by impairment methodology at ~~June~~September 30, 2013 and December 31, 2012:


	June 30, 2013																		September 30, 2013
	Legacy								Acquired								Total		Legacy								Acquired								Total
	Real Estate		Commercial Business		Trade Finance		Consumer and Other		Real Estate		Commercial Business		Trade Finance		Consumer and Other		Total		Real Estate		Commercial Business		Trade Finance		Consumer and Other		Real Estate		Commercial Business		Trade Finance		Consumer and Other		Total
	(In thousands)																		(In thousands)
Allowance for loan losses:
Individually evaluated for impairment	$	5,993	$	2,890	$	481	$	7	$	5,096	$	654	$	—	$	—	$	15,121	$	5,516	$	2,753	$	794	$	90	$	1,202	$	680	$	—	$	—	$	11,035
Collectively evaluated for impairment	35,939		13,630		1,854		521		1		—		—		74		52,019		36,495		11,866		1,719		540		10		1		—		71		50,702
Acquired Credit Impaired Loans	—		—		—		—		4,535		—		—		—		4,535		—		—		—		—		3,978		—		—		—		3,978
Total	$	41,932	$	16,520	$	2,335	$	528	$	9,632	$	654	$	—	$	74	$	71,675	$	42,011	$	14,619	$	2,513	$	630	$	5,190	$	681	$	—	$	71	$	65,715

Loans outstanding:
Individually evaluated for impairment	$	42,796	$	24,455	$	940	$	1,032	$	24,948	$	3,228	$	—	$	773	$	98,172	$	41,343	$	26,683	$	6,938	$	544	$	20,023	$	2,892	$	—	$	770	$	99,193
Collectively evaluated for impairment	2,637,818		768,830		116,887		29,298		599,246		103,599		—		10,994		4,266,672		2,873,167		749,597		128,951		30,246		651,528		103,674		—		36,994		4,574,157
Acquired Credit Impaired Loans	—		—		—		—		107,812		42,257		—		4,991		155,060		—		—		—		—		150,164		50,109		—		27,139		227,412
Total	$	2,680,614	$	793,285	$	117,827	$	30,330	$	732,006	$	149,084	$	—	$	16,758	$	4,519,904	$	2,914,510	$	776,280	$	135,889	$	30,790	$	821,715	$	156,675	$	—	$	64,903	$	4,900,762



	December 31, 2012
	Legacy								Acquired								Total
	Real Estate		Commercial Business		Trade Finance		Consumer and Other		Real Estate		Commercial Business		Trade Finance		Consumer and Other		Total
	(In thousands)
Allowance for loan losses:
Individually evaluated for impairment	$	4,723	$	3,084	$	96	$	—	$	183	$	1,074	$	—	$	—	$	9,160
Collectively evaluated for impairment	36,782		13,406		2,253		658		—		41		3		103		53,246
Acquired Credit Impaired Loans	—		—		—		—		4,535		—		—		—		4,535
Total	$	41,505	$	16,490	$	2,349	$	658	$	4,718	$	1,115	$	3	$	103	$	66,941

Loans outstanding:
Individually evaluated for impairment	$	37,394	$	23,951	$	6,199	$	536	$	17,951	$	3,323	$	—	$	802	$	90,156
Collectively evaluated for impairment	2,387,080		729,904		144,173		27,284		628,449		114,621		242		18,257		4,050,010
Acquired Credit Impaired Loans	—		—		—		—		103,884		49,757		1,456		3,075		158,172
Total	$	2,424,474	$	753,855	$	150,372	$	27,820	$	750,284	$	167,701	$	1,698	$	22,134	$	4,298,338

As of ~~June~~September 30, 2013 and December 31, 2012, the liability for unfunded commitments was $802 thousand ~~for~~at both ~~periods.~~dates. ~~For the three months ended June~~Three Months Ended September 30, 2013 and 2012, the recognized provision for credit losses related to unfunded commitments was $0 thousand and $~~116~~0 thousand, respectively. For the ~~six~~nine months ended ~~June~~September 30, 2013 and 2012, the recognized provision for credit losses related to unfunded commitments was $0 and $116 thousand, ~~respectively~~respectively.

Table of Contents

The recorded investment in individually impaired loans was as follows:


	June 30, 2013			December 31, 2012			September 30, 2013			December 31, 2012
	(In thousands)						(In thousands)
With Allocated Allowance
Without charge-off	$	69,993		$	65,526
With charge-off	894			2,599
Without charge off							$	71,634		$	65,526
With charge off							966			2,599
With No Allocated Allowance
Without charge-off	21,906			17,536
With charge-off	5,379			4,495
Without charge off							20,451			17,536
With charge off							6,142			4,495
Allowance on Impaired Loans	(15,121		)	(9,160		)	(11,035		)	(9,160		)
Impaired Loans, net of allowance	$	83,051		$	80,996		$	88,158		$	80,996

Table of Contents

The following tables detail impaired loans (Legacy and Acquired) as of ~~June~~September 30, 2013 and December 31, 2012 and for the three and ~~six~~nine months ended ~~June~~September 30, 2013 and September 30, 2012 and for the year ended December 31, 2012. Loans with no related allowance for loan losses are believed by management to have adequate collateral securing their carrying value.


	As of June 30, 2013						For the six months ended June 30, 2013				For the three months ended June 30, 2013				As of September 30, 2013						For the Nine Months Ended September 30, 2013				For the Three Months Ended September 30, 2013
Total Impaired Loans	Recorded Investment*		Unpaid Contractual Principal Balance		Related Allowance		Average Recorded Investment*		Interest Income Recognized during Impairment		Average Recorded Investment*		Interest Income Recognized during Impairment		Recorded Investment*		Unpaid Contractual Principal Balance		Related Allowance		Average Recorded Investment*		Interest Income Recognized during Impairment		Average Recorded Investment*		Interest Income Recognized during Impairment
	(In thousands)														(In thousands)
With Related Allowance:
Real Estate—Residential	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Real Estate—Commercial
Retail	9,431		9,590		1,394		7,529		116		8,556		73		9,011		9,552		1,298		7,900		172		9,221		76
Hotel & Motel	12,102		12,926		2,930		11,077		275		12,120		138		12,009		12,833		2,884		11,310		413		12,056		138
Gas Station & Car Wash	1,862		1,937		107		1,711		53		1,621		27		2,171		2,236		415		1,826		46		2,017		15
Mixed Use	1,818		1,880		276		1,223		23		1,385		10		938		959		224		1,152		33		1,378		10
Industrial & Warehouse	13,438		14,128		5,082		8,880		127		12,283		62		8,442		8,442		883		8,770		171		10,940		44
Other	5,780		6,798		1,300		11,041		110		8,469		55		5,749		6,511		1,014		9,717		165		5,765		55
Real Estate—Construction	—		—		—		—		—		—		—		—		—		—		—		—		—		—
Commercial Business	24,964		26,582		3,544		24,529		550		23,617		270		26,798		29,083		3,433		25,096		947		25,881		306
Trade Finance	940		967		481		4,675		—		3,913		—		6,938		6,966		794		5,241		228		3,939		80
Consumer and Other	552		552		7		221		11		303		6		544		544		90		302		17		548		6
	$	70,887	$	75,360	$	15,121	$	70,886	$	1,265	$	72,267	$	641	$	72,600	$	77,126	$	11,035	$	71,314	$	2,192	$	71,745	$	730
With No Related Allowance:
Real Estate—Residential	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Real Estate—Commercial
Retail	5,362		7,692		—		3,063		—		3,336		—		3,927		6,557		—		3,279		30		4,645		10
Hotel & Motel	6,004		9,196		—		6,114		—		6,065		—		6,676		10,416		—		6,254				6,340
Gas Station & Car Wash	3,291		6,864		—		3,085		—		3,762		—		4,918		7,890		—		3,543		104		4,105		35
Mixed Use	—		—		—		593		—		441		—		859		915		—		660				430
Industrial & Warehouse	4,815		7,795		—		4,684		5		4,830		3		1,932		3,976		—		3,996		8		3,374		3
Other	2,165		4,597		—		3,531		16		4,111		8		3,076		5,265		—		3,417		32		2,621		11
Real Estate—Construction	1,676		1,676		—		1,690		45		1,680		22		1,658		1,658		—		1,682		67		1,667		22
Commercial Business	2,719		4,505		—		1,877		—		2,356		—		2,777		3,850		—		2,102		20		2,748		4
Trade Finance	—		—		—		—		—		—		—		—		—		—		—				—
Consumer and Other	1,253		1,311		—		1,266		10		1,259		5		770		831		—		1,142				1,012
	$	27,285	$	43,636	$	—	$	25,903	$	76	$	27,840	$	38	$	26,593	$	41,358	$	—	$	26,075	$	261	$	26,942	$	85
Total	$	98,172	$	118,996	$	15,121	$	96,789	$	1,341	$	100,107	$	679	$	99,193	$	118,484	$	11,035	$	97,389	$	2,453	$	98,687	$	815


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

Table of Contents


	For the six months ended June 30, 2012				For the three months ended June 30, 2012				For the Nine Months Ended September 30, 2012				For the Three Months Ended September 30, 2012
Total Impaired Loans	Average Recorded Investment*		Interest Income Recognized during Impairment		Average Recorded Investment*		Interest Income Recognized during Impairment		Average Recorded Investment*		Interest Income Recognized during Impairment		Average Recorded Investment*		Interest Income Recognized during Impairment

With Related Allowance:
Real Estate—Residential	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Real Estate—Commercial
Retail	2,543		53		2,910		21		3,021		124		3,872		39
Hotel & Motel	21,037		433		22,835		211		19,673		327		19,349		106
Gas Station & Car Wash	3,653		46		4,346		23		3,162		69		2,496		23
Mixed Use	4,391		103		5,175		46		3,752				3,539
Industrial & Warehouse	3,646		27		3,348		13		3,297		67		1,845		22
Other	13,150		179		12,235		87		13,857		483		13,960		160
Real Estate—Construction	43		—		—		—		32		—		—		—
Commercial Business	23,874		426		25,975		209		24,946		1,048		26,858		341
Trade Finance	1,646		14		220		7		2,838		108		3,208		63
Consumer and Other	160		—		240		—		135		3		30		2
	$	74,143	$	1,281	$	77,284	$	617	$	74,713	$	2,229	$	75,157	$	756
With No Related Allowance:
Real Estate—Residential	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Real Estate—Commercial
Retail	1,530		—		1,261		—		1,374				919
Hotel & Motel	94		—		141		—		154				307
Gas Station & Car Wash	1,323		—		1,841		—		1,786				2,689
Mixed Use	—		—		—		—		—				—
Industrial & Warehouse	5,526		18		6,547		9		4,412				3,840
Other	3,016		17		3,221		8		2,654				2,133
Real Estate—Construction	1,710		56		1,710		28		1,710		85		1,710		28
Commercial Business	12,597		10		11,057		5		9,805		15		5,928		5
Trade Finance	1,576		57		2,131		42		1,182				—
Consumer and Other	144		—		141		—		126				105
	$	27,516	$	158	$	28,050	$	92	$	23,203	$	100	$	17,631	$	33
Total	$	101,659	$	1,439	$	105,334	$	709	$	97,916	$	2,329	$	92,788	$	789


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

Table of Contents


	As of June 30, 2013						For the six months ended June 30, 2013				For the three months ended June 30, 2013				As of September 30, 2013						For the Nine Months Ended September 30, 2013				For the Three Months Ended September 30, 2013
Impaired Acquired Loans	Recorded Investment*		Unpaid Contractual Principal Balance		Related Allowance		Average Recorded Investment*		Interest Income Recognized during Impairment		Average Recorded Investment*		Interest Income Recognized during Impairment
Impaired APLs⁽¹⁾															Recorded Investment*		Unpaid Contractual Principal Balance		Related Allowance		Average Recorded Investment*		Interest Income Recognized during Impairment		Average Recorded Investment*		Interest Income Recognized during Impairment
	(In thousands)														(In thousands)
With Related Allowance:
Real Estate—Residential	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Real Estate—Commercial
Retail	1,271		1,271		18		1,546		27		1,676		13		390		834		53		1,247		10		831		4
Hotel & Motel	—		—		—		—		—		—		—		—		—		—		—				—
Gas Station & Car Wash	810		885		95		270		30		405		16		821		885		362		544				816
Mixed Use	—		—		—		—		—		—		—		—		—		—		—				—
Industrial & Warehouse	10,180		10,870		4,964		7,095		—		10,227		—		5,200		5,200		772		8,551				7,690
Other	159		166		19		2,525		5		1,652		2		159		165		16		1,154		8		158		2
Real Estate—Construction	—		—		—		—		—		—		—		—		—		—		—				—
Commercial Business	3,208		3,423		654		3,112		3		3,181		2		2,813		3,141		680		3,058		5		3,011		2
Trade Finance	—		—		—		—		—		—		—		—		—		—		—				—
Consumer and Other	—		—		—		—		—		—		—		—		—		—		—				—
	$	15,628	$	16,615	$	5,750	$	14,548	$	65	$	17,141	$	33	$	9,383	$	10,225	$	1,883	$	14,554	$	23	$	12,506	$	8
With No Related Allowance:
Real Estate—Residential	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Real Estate—Commercial
Retail	872		957		—		577		—		466		—		1,788		2,124		—		907		30		1,330		10
Hotel & Motel	5,869		7,375		—		5,929		—		5,899		—		6,616		8,595		—		6,138				6,243
Gas Station & Car Wash	765		2,136		—		1,132		—		1,311		—		1,821		3,251		—		1,481		46		1,293		16
Mixed Use	—		—		—		—		—		—		—		—		—		—		—				—
Industrial & Warehouse	3,383		3,658		—		3,324		5		3,391		3		553		790		—		2,445		8		1,968		3
Other	1,639		2,339		—		1,397		16		1,692		8		2,675		3,120		—		2,020		32		2,157		11
Real Estate—Construction	—		—		—		—		—		—		—		—		—		—		—				—
Commercial Business	20		20		—		189		—		109		—		79		79		—		99				50
Trade Finance	—		—		—		—		—		—		—		—		—		—		—				—
Consumer and Other	773		831		—		786		—		779		—		770		831		—		776				772
	$	13,321	$	17,316	$	—	$	13,334	$	21	$	13,647	$	11	$	14,302	$	18,790	$	—	$	13,866	$	116	$	13,813	$	40
Total	$	28,949	$	33,931	$	5,750	$	27,882	$	86	$	30,788	$	44	$	23,685	$	29,015	$	1,883	$	28,420	$	139	$	26,319	$	48


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


⁽¹⁾	APLs that became impaired subsequent to being acquired.

Table of Contents


	For the six months ended June 30, 2012					For the three months ended June 30, 2012					For the Nine Months Ended September 30, 2012				For the Three Months Ended September 30, 2012
Impaired Acquired Loans	Average Recorded Investment*		Interest Income Recognized during Impairment			Average Recorded Investment*		Interest Income Recognized during Impairment
Impaired APLs⁽¹⁾											Average Recorded Investment*		Interest Income Recognized during Impairment		Average Recorded Investment*		Interest Income Recognized during Impairment

With Related Allowance:
Real Estate—Residential	$	—	$	—		$	—	$	—		$	—	$	—	$	—	$	—
Real Estate—Commercial
Retail	390		27			585		8			828		86		1,546		26
Hotel & Motel	4,109		120			6,163		(12		)	4,594				6,081
Gas Station & Car Wash	95		—			142		—			71				—
Mixed Use	—		—			—		—			—				—
Industrial & Warehouse	—		—			—		—			206		27		411		9
Other	12		—			17		—			1,071		216		2,124		72
Real Estate—Construction	—		—			—					—				—
Commercial Business	681		39			1,021		16			1,287		69		2,276		21
Trade Finance	—		—			—		—			—				—
Consumer and Other	—		—			—		—			—				—
	$	5,287	$	186		$	7,928	$	12		$	8,057	$	398	$	12,438	$	128
With No Related Allowance:
Real Estate—Residential	$	—	$	—		$	—	$	—		$	—	$	—	$	—	$	—
Real Estate—Commercial
Retail	—		—			—		—			1		—		2		—
Hotel & Motel	—		—			—		—			—		—		—		—
Gas Station & Car Wash	489		11			734		1			566		—		805		—
Mixed Use	—		—			—		—			—		—		—		—
Industrial & Warehouse	2,278		(1		)	3,417		9			1,709		—		1,903		—
Other	1,108		26			1,662		12			1,040		—		1,249		—
Real Estate—Construction	—		—			—		—			—		—		—		—
Commercial Business	875		21			1,313		13			763		15		927		5
Trade Finance	—		—			—		—			—		—		—		—
Consumer and Other	—		—			—		—			—		—		—		—
	$	4,750	$	57		$	7,126	$	35		$	4,079	$	15	$	4,886	$	5
Total	$	10,037	$	243		$	15,054	$	47		$	12,136	$	413	$	17,324	$	133


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


⁽¹⁾	APLs that became impaired subsequent to being acquired.

~~The table above includes only Acquired Loans that became impaired.~~

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	As of December 31, 2012						For the year ended December 31, 2012				As of December 31, 2012						For the Year Ended December 31, 2012
Total Impaired Loans	Recorded Investment*		Unpaid Contractual Principal Balance		Related Allowance		Average Recorded Investment*		Interest Income Recognized during Impairment		Recorded Investment*		Unpaid Contractual Principal Balance		Related Allowance		Average Recorded Investment*		Interest Income Recognized during Impairment
	(In thousands)										(In thousands)
With Related Allowance:
Real Estate—Residential	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Real Estate—Commercial
Retail	5,477		5,610		1,167		3,512		255		5,477		5,610		1,167		3,512		255
Hotel & Motel	8,990		8,995		1,860		17,536		426		8,990		8,995		1,860		17,536		426
Gas Station & Car Wash	1,892		2,440		73		2,908		—		1,892		2,440		73		2,908		—
Mixed Use	900		976		250		3,182		—		900		976		250		3,182		—
Industrial & Warehouse	2,074		2,153		567		3,052		66		2,074		2,153		567		3,052		66
Other	16,184		16,389		989		14,322		805		16,184		16,389		989		14,322		805
Real Estate—Construction	—		—		—		26		—		—		—		—		26		—
Commercial Business	26,354		29,073		4,158		25,227		1,252		26,354		29,073		4,158		25,227		1,252
Trade Finance	6,199		7,173		96		3,510		248		6,199		7,173		96		3,510		248
Consumer and Other	55		56		—		119		4		55		56		—		119		4
	$	68,125	$	72,865	$	9,160	$	73,394	$	3,056	$	68,125	$	72,865	$	9,160	$	73,394	$	3,056
With No Related Allowance:
Real Estate—Residential	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Real Estate—Commercial
Retail	2,516		5,404		—		1,602		48		2,516		5,404		—		1,602		48
Hotel & Motel	6,212		8,202		—		1,365		—		6,212		8,202		—		1,365		—
Gas Station & Car Wash	1,731		4,359		—		1,775		—		1,731		4,359		—		1,775		—
Mixed Use	899		923		—		180		—		899		923		—		180		—
Industrial & Warehouse	4,392		6,450		—		4,408		160		4,392		6,450		—		4,408		160
Other	2,371		6,283		—		2,598		—		2,371		6,283		—		2,598		—
Real Estate—Construction	1,710		1,710		—		1,710		111		1,710		1,710		—		1,710		111
Commercial Business	920		1,368		—		8,028		18		920		1,368		—		8,028		18
Trade Finance	—		—		—		946		—		—		—		—		946		—
Consumer and Other	1,280		1,316		—		357		20		1,280		1,316		—		357		20
	$	22,031	$	36,015	$	—	$	22,969	$	357	$	22,031	$	36,015	$	—	$	22,969	$	357
Total	$	90,156	$	108,880	$	9,160	$	96,363	$	3,413	$	90,156	$	108,880	$	9,160	$	96,363	$	3,413


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

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	As of December 31, 2012						For the year ended December 31, 2012				As of December 31, 2012						For the Year Ended December 31, 2012
Impaired Acquired Loans	Recorded Investment*		Unpaid Contractual Principal Balance		Related Allowance		Average Recorded Investment*		Interest Income Recognized during Impairment
Impaired APLs⁽¹⁾											Recorded Investment*		Unpaid Contractual Principal Balance		Related Allowance		Average Recorded Investment*		Interest Income Recognized during Impairment
	(In thousands)										(In thousands)
With Related Allowance:
Real Estate—Residential	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Real Estate—Commercial
Retail	1,286		1,286		9		920		64		1,286		1,286		9		920		64
Hotel & Motel	—		—		—		3,676		—		—		—		—		3,676		—
Gas Station & Car Wash	—		—		—		57		—		—		—		—		57		—
Mixed Use	—		—		—		—		—		—		—		—		—		—
Industrial & Warehouse	832		887		2		331		36		832		887		2		331		36
Other	4,272		4,461		172		1,711		288		4,272		4,461		172		1,711		288
Real Estate—Construction	—		—		—		—		—		—		—		—		—		—
Commercial Business	2,974		3,072		1,074		1,625		26		2,974		3,072		1,074		1,625		26
Trade Finance	—		—		—		—		—		—		—		—		—		—
Consumer and Other	—		—		—		—		—		—		—		—		—		—
	$	9,364	$	9,706	$	1,257	$	8,320	$	414	$	9,364	$	9,706	$	1,257	$	8,320	$	414
With No Related Allowance:
Real Estate—Residential	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Real Estate—Commercial
Retail	800		840		—		161		48		800		840		—		161		48
Hotel & Motel	5,990		7,375		—		1,198		—		5,990		7,375		—		1,198		—
Gas Station & Car Wash	774		1,865		—		608		—		774		1,865		—		608		—
Mixed Use	—		—		—		—		—		—		—		—		—		—
Industrial & Warehouse	3,190		3,302		—		2,005		160		3,190		3,302		—		2,005		160
Other	807		3,156		—		993		—		807		3,156		—		993		—
Real Estate—Construction	—		—		—		—		—		—		—		—		—		—
Commercial Business	349		681		—		680		15		349		681		—		680		15
Trade Finance	—		—		—		—		—		—		—		—		—		—
Consumer and Other	802		836		—		160		—		802		836		—		160		—
	$	12,712	$	18,055	$	—	$	5,805	$	223	$	12,712	$	18,055	$	—	$	5,805	$	223
Total	$	22,076	$	27,761	$	1,257	$	14,125	$	637	$	22,076	$	27,761	$	1,257	$	14,125	$	637


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


⁽¹⁾	APLs that became impaired subsequent to being acquired.

Generally, loans are placed on nonaccrual status if principal or interest payments become 90 days past due and/or management deems the collectability 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.

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The following tables present the aging of past due loans as of ~~June~~September 30, 2013 and December 31, 2012 by class of loans:


	As of June 30, 2013												As of September 30, 2013
	Past Due and Accruing												Past Due and Accruing
	30-59 Days Past Due		60-89 Days Past Due		90 or More Days Past Due		Total		Nonaccrual Loans ⁽³⁾		Total Delinquent Loans		30-59 Days Past Due		60-89 Days Past Due		90 or More Days Past Due		Total		Nonaccrual Loans ⁽³⁾		Total Delinquent Loans
	(In thousands)												(In thousands)
Legacy Loans:
Real estate—Residential	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Real estate—Commercial
Retail	56		—		—		56		6,539		6,595		133		—		—		133		4,683		4,816
Hotel & Motel	311		—		—		311		196		507		—		—		—		—		121		121
Gas Station & Car Wash	—		—		—		—		2,525		2,525		737		—		—		737		2,091		2,828
Mixed Use	—		—		—		—		1,007		1,007		—		—		—		—		990		990
Industrial & Warehouse	122		—		—		122		1,432		1,554		217		577		—		794		1,379		2,173
Other	364		—		—		364		1,284		1,648		—		—		—		—		1,162		1,162
Real estate—Construction	—		—		—		—		—		—		—		—		—		—		—		—
Commercial business	1,182		85		—		1,267		5,578		6,845		590		154		—		744		4,990		5,734
Trade finance	—		—		—		—		940		940		—		—		—		—		938		938
Consumer and other	21		—		—		21		—		21		28		1		—		29		—		29
Subtotal	$	2,056	$	85	$	—	$	2,141	$	19,501	$	21,642	$	1,705	$	732	$	—	$	2,437	$	16,354	$	18,791
Acquired Loans: ⁽¹⁾
Real estate—Residential	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	377	$	377	$	—	$	377
Real estate—Commercial
Retail	1,361		773		1,843		3,977		860		4,837		6,776		1,667		11,802		20,245		913		21,158
Hotel & Motel	3,200		—		5,064		8,264		5,869		14,133		79		—		4,840		4,919		6,616		11,535
Gas Station & Car Wash	637		2,043		5,992		8,672		765		9,437		955		2,835		4,240		8,030		1,571		9,601
Mixed Use	56		—		239		295		—		295		292		—		236		528		—		528
Industrial & Warehouse	458		121		265		844		13,441		14,285		1,023		1,045		4,084		6,152		5,633		11,785
Other	2,262		522		969		3,753		659		4,412		2,836		772		5,856		9,464		1,458		10,922
Real estate—Construction	—		—		—		—		—		—		—		—		—		—		—		—
Commercial business	359		2,102		3,887		6,348		3,111		9,459		9,907		772		4,043		14,722		2,814		17,536
Trade finance	—		—		—		—		—		—		—		—		—		—		—		—
Consumer and other	257		13		528		798		781		1,579		436		275		4,082		4,793		770		5,563
Subtotal⁽²⁾	$	8,590	$	5,574	$	18,787	$	32,951	$	25,486	$	58,437	$	22,304	$	7,366	$	39,560	$	69,230	$	19,775	$	89,005
TOTAL	$	10,646	$	5,659	$	18,787	$	35,092	$	44,987	$	80,079	$	24,009	$	8,098	$	39,560	$	71,667	$	36,129	$	107,796


⁽¹⁾	The Acquired Loans include ~~Acquired Credit Impaired Loans (ASC 310-30 loans)~~ACILs and ~~Acquired Performing Loans (loans that were pass graded at the time of acquisition).~~APLs.


⁽²⁾	The past due and accruing Acquired Loans include ~~Acquired Credit Impaired Loans accounted for under ASC 310-30~~ACILs of $~~6.8~~18.3 million, $~~3.5~~5.7 million and $~~18.8~~38.6 million that were 30-59 days, 60-89 days and 90 or more days past due, respectively.


⁽³⁾	Nonaccrual loans exclude the guaranteed portion of delinquent SBA loans that are in liquidation totaling $~~21.0~~25.2 million.

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	As of December 31, 2012
	Past Due and Accruing
	30-59 Days Past Due		60-89 Days Past Due		90 or More Days Past Due		Total		Nonaccrual Loans ⁽³⁾		Total Delinquent Loans
	(In Thousands)
Legacy Loans:
Real estate—Residential	$	—	$	—	$	—	$	—	$	—	$	—
Real estate—Commercial
Retail	87		—		—		87		3,316		3,403
Hotel & Motel	—		—		—		—		437		437
Gas Station & Car Wash	359		—		—		359		2,848		3,207
Mixed Use	34		—		—		34		1,799		1,833
Industrial & Warehouse	—		—		—		—		1,950		1,950
Other	—		115		—		115		2,379		2,494
Real estate—Construction	—		—		—		—		—		—
Commercial business	298		234		—		532		4,942		5,474
Trade finance	—		—		—		—		869		869
Consumer and other	190		—		—		190		—		190
Subtotal	$	968	$	349	$	—	$	1,317	$	18,540	$	19,857
Acquired Loans: ⁽¹⁾
Real estate—Residential	$	—	$	—	$	—	$	—	$	—	$	—
Real estate—Commercial
Retail	1,126		6,604		1,190		8,920		—		8,920
Hotel & Motel	1,522		2,668		944		5,134		5,990		11,124
Gas Station & Car Wash	2,218		1,109		875		4,202		774		4,976
Mixed Use	985		1,918		1,507		4,410		—		4,410
Industrial & Warehouse	53		3,320		61		3,434		—		3,434
Other	50		25		5,542		5,617		937		6,554
Real estate—Construction	—		—		5,972		5,972		—		5,972
Commercial business	1,359		1,174		1,236		3,769		2,442		6,211
Trade finance	—		—		—		—		—		—
Consumer and other	98		17		415		530		970		1,500
Subtotal⁽²⁾	$	7,411	$	16,835	$	17,742	$	41,988	$	11,113	$	53,101
TOTAL	$	8,379	$	17,184	$	17,742	$	43,305	$	29,653	$	72,958


⁽¹⁾	The Acquired Loans include ~~Acquired Credit Impaired Loans (ASC 310-30 loans)~~ACILs and ~~Acquired Performing Loans (loans that were pass graded at the time of the acquisition).~~APLs.


⁽²⁾	The past due and accruing Acquired Loans include ~~Acquired Credit Impaired Loans accounted for under ASC 310-30~~ACILs of $7.0 million, $12.1 million and $17.7 million that were 30-59 days, 60-89 days and 90 or more days past due, respectively.

⁽³⁾Nonaccrual loans exclude guaranteed portion of delinquent SBA loans that are in liquidation totaling $17.6 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, ~~Acquired Credit Impaired Loans~~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.

We categorize 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. We analyze 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. We use the following definitions for risk ratings:

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

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

Substandard: Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the 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 classified as doubtful 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 ~~June~~September 30, 2013 and December 31, 2012 by class of loans:


	As of June 30, 2013										As of September 30, 2013
	Pass		Special Mention		Substandard		Doubtful/Loss		Total		Pass		Special Mention		Substandard		Doubtful/Loss		Total
	(In thousands)										(In thousands)
Legacy Loans:
Real estate—Residential	$	9,058	$	—	$	19	$	—	$	9,077	$	8,125	$	—	$	17	$	—	$	8,142
Real estate—Commercial
Retail	672,250		953		16,945		—		690,148		765,450		455		15,038		—		780,943
Hotel & Motel	490,162		1,869		13,790		—		505,821		508,721		1,854		13,770		—		524,345
Gas Station & Car Wash	415,386		1,010		9,233		—		425,629		452,808		—		9,759		—		462,567
Mixed Use	235,803		2,104		3,411		—		241,318		242,725		2,090		3,361		—		248,176
Industrial & Warehouse	212,188		14,296		7,357		—		233,841		222,185		8,794		6,835		—		237,814
Other	489,457		2,195		10,137		—		501,789		566,252		5,773		8,261		—		580,286
Real estate—Construction	71,315		—		1,676		—		72,991		70,579		—		1,658		—		72,237
Commercial business	737,365		30,328		25,440		152		793,285		718,178		25,601		32,493		8		776,280
Trade finance	95,637		14,008		8,182		—		117,827		110,348		17,226		8,315		—		135,889
Consumer and other	28,817		11		1,502		—		30,330		29,735		11		1,044		—		30,790
Subtotal	$	3,457,438	$	66,774	$	97,692	$	152	$	3,622,056	$	3,695,106	$	61,804	$	100,551	$	8	$	3,857,469
Acquired Loans:
Real estate—Residential	$	232	$	292	$	247	$	—	$	771	$	1,211	$	300	$	641	$	—	$	2,152
Real estate—Commercial
Retail	210,311		4,894		13,265		113		228,583		246,793		9,970		29,015		—		285,778
Hotel & Motel	126,010		8,851		18,063		—		152,924		115,022		8,122		15,560		—		138,704
Gas Station & Car Wash	37,965		5,562		13,227		—		56,754		36,011		5,174		14,910		253		56,348
Mixed Use	29,641		2,413		4,600		—		36,654		33,078		2,036		5,864		—		40,978
Industrial & Warehouse	92,193		3,618		19,216		—		115,027		102,187		4,357		18,342		—		124,886
Other	117,130		5,407		17,582		—		140,119		142,221		6,265		22,865		638		171,989
Real estate—Construction	1,174		—		—		—		1,174		880		—		—		—		880
Commercial business	105,850		10,577		31,788		869		149,084		116,800		11,514		26,434		1,927		156,675
Trade finance	—		—		—		—		—		—		—		—		—		—
Consumer and other	12,495		400		3,770		93		16,758		53,079		2,089		9,518		217		64,903
Subtotal	$	733,001	$	42,014	$	121,758	$	1,075	$	897,848	$	847,282	$	49,827	$	143,149	$	3,035	$	1,043,293
Total	$	4,190,439	$	108,788	$	219,450	$	1,227	$	4,519,904	$	4,542,388	$	111,631	$	243,700	$	3,043	$	4,900,762

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	As of December 31, 2012
	Pass		Special Mention		Substandard		Doubtful/Loss		Total
	(In thousands)
Legacy Loans:
Real estate—Residential	$	9,223	$	—	$	24	$	—	$	9,247
Real estate—Commercial
Retail	589,720		3,584		12,303		—		605,607
Hotel & Motel	453,908		1,894		16,795		—		472,597
Gas Station & Car Wash	370,803		1,288		9,982		—		382,073
Mixed Use	233,687		2,131		3,423		—		239,241
Industrial & Warehouse	202,066		1,010		4,295		370		207,741
Other	431,685		1,219		17,084		—		449,988
Real estate—Construction	56,270		—		1,710		—		57,980
Commercial business	726,073		6,164		21,514		104		753,855
Trade finance	136,197		7,976		6,199		—		150,372
Consumer and other	26,801		13		1,006		—		27,820
Subtotal	$	3,236,433	$	25,279	$	94,335	$	474	$	3,356,521
Acquired Loans:
Real estate—Residential	$	—	$	—	$	—	$	—	$	—
Real estate—Commercial
Retail	225,982		6,469		17,331		—		249,782
Hotel & Motel	105,032		16,150		13,215		—		134,397
Gas Station & Car Wash	33,360		7,192		4,119		—		44,671
Mixed Use	34,927		3,826		6,526		—		45,279
Industrial & Warehouse	114,616		1,385		9,470		—		125,471
Other	121,667		4,473		17,479		—		143,619
Real estate—Construction	1,093		—		5,972		—		7,065
Commercial business	119,026		14,057		34,047		571		167,701
Trade finance	242		334		1,122		—		1,698
Consumer and other	17,292		424		4,329		89		22,134
Subtotal	$	773,237	$	54,310	$	113,610	$	660	$	941,817
Total	$	4,009,670	$	79,589	$	207,945	$	1,134	$	4,298,338

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.

The Migration Analysis is a formula methodology based on the Bank's actual historical net ~~charge-off~~charge off experience for each loan class (type) pool, and risk grade. The migration analysis is centered on the Bank's internal credit risk rating system. Our 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 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 historical loss migration methodology. 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 to the most recent loss history. That loss experience is then applied to the stratified portfolio at each quarter end. For the ~~Acquired Performing Loans,~~ACILs, a general loan loss allowance is provided to the extent that there has been credit deterioration since the date of acquisition.

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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. Generally, the factors are considered to have no significant impact (neutral) to our historical migration ratios. 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,~~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.

We also establish specific loss allowances for loans where we 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, we obtain 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, we either obtain 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 our collateral property has declined since the most recent valuation date, we adjust the value of the property downward to reflect current market conditions. If the fair value of the collateral, less cost to sell, is less than the recorded amount of the loan, we then recognize 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 Bank 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.

For commercial business loans, real estate loans and certain consumer loans, we base 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, less estimated costs to sell, if the loan is collateral dependent. We evaluate 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 our ~~Acquired Credit Impaired Loans,~~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,

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~~acquisition of the loans,~~ an allowance for loan losses would be established based on our estimate of future credit losses over the remaining life of the loans.

The following table presents loans by portfolio segment and impairment method at ~~June~~September 30, 2013 and December 31, 2012:


	As of June 30, 2013																					As of September 30, 2013
	Real estate - Residential			Real estate - Commercial			Real estate - Construction			Commercial business			Trade finance			Consumer and other			Total			Real estate - Residential			Real estate - Commercial			Real estate - Construction			Commercial business			Trade finance			Consumer and other			Total
	(In thousands)																					(In thousands)
Impaired loans (Gross carrying value)	$	—		$	66,068		$	1,676		$	27,683		$	940		$	1,805		$	98,172		$	—		$	59,708		$	1,658		$	29,575		$	6,938		$	1,314		$	99,193
Specific allowance	$	—		$	11,089		$	—		$	3,544		$	481		$	7		$	15,121		$	—		$	6,718		$	—		$	3,433		$	794		$	90		$	11,035
Loss coverage ratio	0.0		%	16.8		%	0.0		%	12.8		%	51.2		%	0.4		%	15.4		%	0.0		%	11.3		%	0.0		%	11.6		%	11.4		%	6.8		%	11.1		%
Non-impaired loans	$	9,849		$	3,262,538		$	72,489		$	914,686		$	116,887		$	45,283		$	4,421,732		$	10,294		$	3,593,107		$	71,458		$	903,380		$	128,951		$	94,379		$	4,801,569
General allowance	$	71		$	39,463		$	941		$	13,630		$	1,854		$	595		$	56,554		$	68		$	39,575		$	840		$	11,867		$	1,719		$	611		$	54,680
Loss coverage ratio	0.7		%	1.2		%	1.3		%	1.5		%	1.6		%	1.3		%	1.3		%	0.7		%	1.1		%	1.2		%	1.3		%	1.3		%	0.6		%	1.1		%
Total loans	$	9,849		$	3,328,606		$	74,165		$	942,369		$	117,827		$	47,088		$	4,519,904		$	10,294		$	3,652,815		$	73,116		$	932,955		$	135,889		$	95,693		$	4,900,762
Total allowance for loan losses	$	71		$	50,552		$	941		$	17,174		$	2,335		$	602		$	71,675		$	68		$	46,293		$	840		$	15,300		$	2,513		$	701		$	65,715
Loss coverage ratio	0.7		%	1.5		%	1.3		%	1.8		%	2.0		%	1.3		%	1.6		%	0.7		%	1.3		%	1.1		%	1.6		%	1.8		%	0.7		%	1.3		%



	As of December 31, 2012
	Real estate - Residential			Real estate - Commercial			Real estate - Construction			Commercial business			Trade finance			Consumer and other			Total
	(In thousands)
Impaired loans (Gross carrying value)	$	—		$	53,634		$	1,710		$	27,274		$	6,199		$	1,338		$	90,155
Specific allowance	$	—		$	4,906		$	—		$	4,158		$	96		$	—		$	9,160
Loss coverage ratio	0.0		%	9.1		%	0.0		%	15.2		%	1.5		%	0.0		%	10.2		%
Non-impaired loans	$	9,247		$	3,046,832		$	63,335		$	894,282		$	145,871		$	48,616		$	4,208,183
General allowance	$	74		$	40,256		$	986		$	13,448		$	2,256		$	761		$	57,781
Loss coverage ratio	0.8		%	1.3		%	1.6		%	1.5		%	1.5		%	1.6		%	1.4		%
Total loans	$	9,247		$	3,100,466		$	65,045		$	921,556		$	152,070		$	49,954		$	4,298,338
Total allowance for loan losses	$	74		$	45,162		$	986		$	17,606		$	2,352		$	761		$	66,941
Loss coverage ratio	0.8		%	1.5		%	1.5		%	1.9		%	1.5		%	1.5		%	1.6		%

Under certain circumstances, we provide borrowers relief through loan modifications. These modifications are either temporary in nature (“temporary modifications”) or are more substantive. At ~~June~~September 30, 2013, total modified loans were $~~67.2~~60.7 million, compared to $51.5 million at December 31, 2012. 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

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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.

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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 our internal underwriting policy.

A summary of TDRs on accrual and nonaccrual by type of concession as of ~~June~~September 30, 2013 and December 31, 2012 is presented below:


	As of June 30, 2013																		As of September 30, 2013
	TDRs on Accrual								TDRs on Nonaccrual								Total		TDRs on Accrual								TDRs on Nonaccrual								Total
	Real estate - Commercial		Commercial Business		Other		Total		Real estate - Commercial		Commercial Business		Other		Total		Total		Real estate - Commercial		Commercial Business		Other		Total		Real estate - Commercial		Commercial Business		Other		Total		Total
	(In thousands)																		(In thousands)
Payment concession	$	7,273	$	5,400	$	—	$	12,673	$	14,760	$	2,779	$	773	$	18,312	$	30,985	$	7,218	$	1,758	$	—	$	8,976	$	9,918	$	1,279	$	770	$	11,967	$	20,943
Maturity / Amortization concession	777		6,564		532		7,873		1,482		2,328		940		4,750		12,623		771		6,434		544		7,749		1,701		3,239		—		4,940		12,689
Rate concession	14,689		990		—		15,679		7,822		—		—		7,822		23,501		14,591		4,703		—		19,294		7,687		—		—		7,687		26,981
Principal forgiveness	—		—		—		—		—		56		—		56		56		—		—		—		—		—		52		—		52		52
	$	22,739	$	12,954	$	532	$	36,225	$	24,064	$	5,163	$	1,713	$	30,940	$	67,165	$	22,580	$	12,895	$	544	$	36,019	$	19,306	$	4,570	$	770	$	24,646	$	60,665



	As of December 31, 2012
	TDRs on Accrual								TDRs on Nonaccrual								Total
	Real estate - Commercial		Commercial Business		Other		Total		Real estate - Commercial		Commercial Business		Other		Total		Total
	(In thousands)
Payment concession	$	9,608	$	687	$	—	$	10,295	$	4,735	$	4,618	$	802	$	10,155	$	20,450
Maturity / Amortization concession	348		3,847		536		4,731		652		1,941		869		3,462		8,193
Rate concession	13,594		1,229		—		14,823		7,923		—		—		7,923		22,746
Principal forgiveness	—		—		—		—		—		62		—		62		62
	$	23,550	$	5,763	$	536	$	29,849	$	13,310	$	6,621	$	1,671	$	21,602	$	51,451

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 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 ~~June~~September 30, 2013 were comprised of 15 commercial real estate loans totaling $~~22.7~~22.6 million ~~and~~, 2730 commercial business loans totaling $~~13.0~~12.9 million, and 2 consumer loans totaling $~~532~~544 thousand. TDRs on accrual status at December 31, 2012 were comprised of 12 commercial real estate loans totaling $23.6 million ~~and~~, 20 commercial business loans totaling $5.8 million, and 2 consumer loans totaling $536 thousand. The Company expects that the TDRs on accrual status as of ~~June~~September 30, 2013, 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 still monitored for potential impairment.

We have allocated $~~12.6~~7.7 million and $6.3 million of specific reserves to TDRs as of ~~June~~September 30, 2013 and December 31, 2012, respectively. As of ~~June~~September 30, 2013 and December 31, 2012, we did not have any outstanding commitments to extend additional funds to these borrowers.

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The following table presents loans by class modified as TDRs that occurred during the three and ~~six~~nine months ended ~~June~~September 30, 2013:

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	Three Months Ended June 30, 2013					Six Months Ended June 30, 2013					Three Months Ended September 30, 2013					Nine Months Ended September 30, 2013
	Number of Loans	Pre- Modification		Post- Modification		Number of Loans	Pre- Modification		Post- Modification		Number of Loans	Pre- Modification		Post- Modification		Number of Loans	Pre- Modification		Post- Modification
	(Dollars in thousand)										(Dollars in thousand)
Legacy Loans:
Real estate - Commercial
Retail	2	$	4,132	$	4,272	4	$	4,871	$	4,979	1	$	568	$	568	5	$	5,443	$	5,521
Hotel & Motel	—	—		—		—	—		—		—	—		—		—	—		—
Gas Station & Car Wash	—	—		—		1	1,371		938		—	—		—		1	1,371		909
Mixed Use	—	—		—		—	—		—		—	—		—		—	—		—
Industrial & Warehouse	—	—		—		1	370		354		—	—		—		1	370		346
Other	—	—		—		—	—		—		—	—		—		—	—		—
Real estate - Construction	—	—		—		—	—		—		—	—		—		—	—		—
Commercial business	7	6,256		6,242		9	7,270		7,247		3	569		258		12	7,550		7,473
Trade Finance	—	—		—		—	—		—		—	—		—		—	—		—
Consumer and other											1	500		496		1	500		496
Subtotal	9	$	10,388	$	10,514	15	$	13,882	$	13,518	5	$	1,637	$	1,322	20	$	15,234	$	14,745
Acquired Loans:
Real estate - Commercial
Retail	—	$	—	$	—	—	$	—	$	—	1	$	58	$	57	1	$	59	$	57
Hotel & Motel	—	—		—		—	—		—		—	—		—		—	—		—
Gas Station & Car Wash	—	—		—		1	165		170		—	—		—		1	165		170
Mixed Use	—	—		—		—	—		—		—	—		—		—	—		—
Industrial & Warehouse	1	87		84		2	10,336		10,264		—	—		—		2	10,336		5,282
Other	1	158		158		2	1,137		1,138		—	—		—		2	1,137		1,132
Real estate - Construction	—	—		—		—	—		—		—	—		—		—	—		—
Commercial business	3	203		198		5	1,055		380		1	31		31		6	1,089		390
Trade Finance	—	—		—		—	—		—		—	—		—		—	��		—
Subtotal	5	$	448	$	440	10	$	12,693	$	11,952	2	$	89	$	88	12	$	12,786	$	7,031
Total	14	$	10,836	$	10,954	25	$	26,575	$	25,470	7	$	1,726	$	1,410	32	$	28,020	$	21,776

The specific reserves for the TDRs that occurred during the three months and ~~six~~nine months period ended ~~June~~September 30, 2013 totaled $~~1.0 million~~316 thousand and ~~$6.2~~$2.4 million, respectively, and there were $~~0.0 million~~$0 and $150 thousand in charge offs for the three months and ~~six~~nine months ended ~~June~~September 30, ~~2013.~~2013, respectively.

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 and ~~six~~nine months ended ~~June~~September 30, 2013:

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	Three Months Ended June 30, 2013			Six Months Ended June 30, 2013			Three Months Ended September 30, 2013			Nine Months Ended September 30, 2013
	Number of Loans	Balance		Number of Loans	Balance		Number of Loans	Balance		Number of Loans	Balance
	(Dollars In thousands)						(Dollars In thousands)
Legacy Loans:
Real estate - Commercial
Retail	1	$	748	1	$	748	1	$	709	2	$	1,220
Gas Station & Car Wash	—	—		—	—		—	—		—	—
Industrial & Warehouse	—	—		—	—		—	—		—	—
Other	—	—		—	—		—	—		—	—
Commercial Business	4	88		4	88		2	1,822		4	1,852
Subtotal	5	$	836	5	$	836	3	$	2,531	6	$	3,072
Acquired Loans:
Real estate - Commercial
Retail	—	$	—	—	$	—	1	$	57	1	$	57
Gas Station & Car Wash	1	170		1	170		1	170		1	170
Hotel & Motel	—	—		—	—		—	—		—	—
Industrial & Warehouse	—	—		1	10,180		1	5,200		1	5,200
Other	—	—		—	—		—	—		—	—
Commercial Business	3	1,083		3	1,083		3	33		4	182
Subtotal	4	$	1,253	5	$	11,433	6	$	5,460	7	$	5,609
	9	$	2,089	10	$	12,269	9	$	7,991	13	$	8,681

A loan is considered to be in payment default once it is 30 days contractually past due under the modified terms. As of ~~June~~September 30, 2013, the specific reserves totaled $~~238~~$856 thousand and $~~5.2~~1.0 million for the TDRs that had payment defaults during the three months and ~~six~~nine months ended ~~June~~September 30, 2013, respectively. The total charge offs for the TDRs that had payment defaults during the three and ~~six~~nine months ended ~~June~~September 30, 2013 were ~~$387~~$304 thousand. and $1.1 million, respectively.

There were ~~five~~three Legacy Loans that subsequently defaulted during the three months ~~and six months~~ ended ~~June~~September 30, 2013 that were modified as follows: two Commercial Business loans totaling $~~50 thousand~~1.8 million were modified through maturity/amortization concessions ~~one~~ ~~Commercial Business loan totaling~~ ~~$38 thousand~~ ~~was modified through a payment concession,~~ and ~~two~~one Real Estate Commercial - Retail loan totaling $~~748~~709 thousand was modified through a rate concession.

The six Legacy Loans that subsequently defaulted during the nine months ended September 30, 2013 were modified as follows: four Commercial Business loans totaling $1.9 million were modified through maturity/amortization concessions and two Real Estate Commercial - Retail loans totaling $1.2 million were modified through rate concessions.

There were ~~four~~six Acquired Loans that subsequently defaulted during the three months ended ~~June~~September 30, 2013 which were modified as follows: three Commercial Business loans totaling $~~1.1 million~~33 thousand were modified through payment concessions and ~~one~~three Real Estate Commercial ~~- Gas Station & Car Wash loan~~loans totaling $~~170 thousand~~5.4 million ~~was~~were modified through payment ~~concession.~~concessions

The ~~five~~seven Acquired Loans that subsequently defaulted during the ~~six~~nine months ended ~~June~~September 30, 2013 were modified as follows: three Commercial Business loans totaling $~~1.1 million~~33 thousand were modified through payment concessions, one ~~Real Estate~~ Commercial ~~- Gas Station & Car Wash~~Business loan totaling $~~170~~149 thousand was modified through ~~payment~~a maturity/amortization concession and ~~one~~three Real Estate Commercial ~~- Industrial & Warehouse loan~~loans totaling $~~10.2~~5.4 million ~~was~~were modified through payment ~~concession.~~concessions.

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.

Covered nonperforming assets totaled $~~2.9~~2.4 million and $882 thousand at ~~June~~September 30, 2013 and December 31, 2012, respectively. These covered nonperforming assets are subject to the loss sharing agreements with the FDIC. The covered nonperforming assets at ~~June~~September 30, 2013 and December 31, 2012 were as follows:

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	June 30, 2013		December 31, 2012		September 30, 2013		December 31, 2012
	(In thousands)				(In thousands)
Covered loans on nonaccrual status	$	434	$	489	$	427	$	489
Covered OREO	2,417		393		1,963		393
Total covered nonperforming assets	$	2,851	$	882	$	2,390	$	882

Acquired covered loans	$	65,653	$	72,528	$	58,637	$	72,528

Related Party Loans

In the ordinary course of business, the Company entered 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 ~~June~~September 30, 2013 and December 31, 2012, and the outstanding principal balance as of ~~June~~September 30, 2013 and December 31, 2012 was $~~8.2~~7.7 million and $11.1 million, respectively.


8.	Borrowings

We maintain a secured credit facility with the FHLB against which the Bank may take advances. The borrowing capacity is limited to the lower of 30% of the Bank’s total assets or the Bank’s collateral capacity, which was $~~1.59~~1.58 billion at ~~June~~September 30, 2013 and $1.35 billion at December 31, 2012. 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 ~~June~~September 30, 2013 and December 31, 2012, real estate secured loans with a carrying amount of approximately $2.08 billion and $2.04 billion, respectively, were pledged as collateral for borrowings from the FHLB. At ~~June~~September 30, 2013 other than FHLB stock, securities with a carrying value of $13.9 million were pledged as collateral for borrowings from the FHLB, and at December 31, 2012, ~~other than FHLB stock,~~ no securities were pledged as collateral for borrowings from the FHLB.

At ~~June~~September 30, 2013 and December 31, 2012, FHLB advances were $~~421.5~~421.4 million and $420.7 million, had a weighted average interest rate of ~~1.17%~~1.10% and 1.24%, respectively, and had various maturities through ~~May~~October 2018. At ~~June~~September 30, 2013 and December 31, 2012, $~~66.5~~51.4 million and $66.7 million, respectively, of the advances were putable advances with various putable dates and strike prices. The cost of FHLB advances as of ~~June~~September 30, 2013 ranged between 0.47% and ~~3.89%~~3.81%. At ~~June~~September 30, 2013, the Company had a remaining borrowing capacity of $~~1.17~~1.18 billion.

At ~~June~~September 30, 2013, the contractual maturities for FHLB advances were as follows:


	Contractual Maturities		Maturity/ Put Date		Contractual Maturities		Maturity/ Put Date
	(In thousands)				(In thousands)
Due within one year	$	40,000	$	91,540	$	39,000	$	76,446
Due after one year through five years	381,539		329,999		382,446		345,000
	$	421,539	$	421,539	$	421,446	$	421,446

In addition, as a member of the FRB system, we may also borrow from the FRB of San Francisco. The maximum amount that we 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 we pledge. At ~~June~~September 30, 2013, the outstanding principal balance of the qualifying loans was $~~470.2~~465.9 million, and no borrowings were outstanding against this line.


9.	Subordinated Debentures

At ~~June~~September 30, 2013, four wholly-owned subsidiary grantor trusts established by former Nara Bancorp had issued $28 million of pooled Trust Preferred Securities (“trust preferred securities”) and one wholly-owned subsidiary grantor trust established by former Center Financial Corporation had issued $18 million of trust preferred securities. Upon the acquisition of PIB, the Company assumed one grantor trust established by former PIB which issued $~~4.0~~15.0 million of trust preferred securities, which the Company redeemed on June 17, 2013. Upon the acquisition of Foster Bankshares, the Company assumed one grantor trust established by former Foster Bank which issued $15 million of 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. BBCN Bancorp’s obligations under the subordinated debentures and related

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documents, taken together, constitute a full and unconditional guarantee by BBCN Bancorp 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. BBCN Bancorp has

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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. BBCN Bancorp 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 ~~June~~September 30, 2013:


Issuance Trust	Issuance Date	Trust Preferred Security Amount		Subordinated Debentures Amount		Rate Type	Initial Rate		Coupon Rate at June 30, 2013			Maturity Date	Issuance Date	Trust Preferred Security Amount		Subordinated Debentures Amount		Rate Type	Initial Rate		Coupon Rate at September 30, 2013			Maturity Date
		(Dollars in thousands)												(Dollars in thousands)
Nara Capital Trust III	6/5/2003	$	5,000	$	5,155	Variable	4.44	%	3.43	%		6/15/2033	6/5/2003	$	5,000	$	5,155	Variable	4.44	%	3.40	%		6/15/2033
Nara Statutory Trust IV	12/22/2003	5,000		5,155		Variable	4.02	%	3.15	%		1/7/2034	12/22/2003	5,000		5,155		Variable	4.02	%	3.12	%		1/7/2034
Nara Statutory Trust V	12/17/2003	10,000		10,310		Variable	4.12	%	3.23	%		12/17/2033	12/17/2003	10,000		10,310		Variable	4.12	%	3.20	%		12/17/2033
Nara Statutory Trust VI	3/22/2007	8,000		8,248		Variable	7.00	%	1.93	%		6/15/2037	3/22/2007	8,000		8,248		Variable	7.00	%	1.90	%		6/15/2037
Center Capital Trust I	12/30/2003	18,000		13,052		Variable	4.01	%	3.15	%	⁽¹⁾	1/7/2034	12/30/2003	18,000		13,091		Variable	4.01	%	3.12	%	⁽¹⁾	1/7/2034
Foster Capital Trust I													7/8/2005	15,000		15,344		Variable	1.70	%	1.95	%	⁽²⁾	7/8/2035
TOTAL ISSUANCE		$	46,000	$	41,920									$	61,000	$	57,303


⁽¹⁾	The Center Capital Trust I trust preferred security was assumed in the merger with Center Financial Corporation. The remaining discount was $5.5 million at ~~June~~September 30, 2013 and the effective rate of the security, including the effect of the discount accretion, was 6.03% at ~~June~~September 30, 2013.


⁽²⁾	The Foster Capital Trust I trust preferred security was assumed in the merger with Foster Bankshares. The remaining discount was $119 thousand at September 30, 2013 and the effective rate of the security, including the effect of the discount accretion, was 3.75% at September 30, 2013.

The Company’s investment in the common trust securities of the issuer trusts of $~~1.6~~1.9 million and $1.6 million at ~~June~~September 30, 2013 and December 31, 2012, 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. At ~~June~~September 30, 2013, $~~40.5~~55.4 million of the trusts’ securities qualified as Tier 1 capital. In July 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) was signed into law which, among other things, limits the ability of bank holding companies with total assets of more than $15 billion to treat trust preferred security debt issuances as Tier 1 capital. Since the Company had less than $15 billion in assets at ~~June~~September 30, 2013, we will be able to continue to include its existing trust preferred securities in Tier 1 capital under the Dodd-Frank Act.

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10.	~~Derivative Financial Instruments~~Goodwill and ~~Hedging Activities~~Other Intangible Assets

~~During~~Changes in the ~~first quarter of 2010, the Company entered into a three-year interest rate cap agreement with an aggregate notional~~carrying amount of ~~$50.0 million~~, which expired in February 2013. Under this cap agreement, the Company received quarterly payments from the counterparty when the quarterly resetting 3 Month London-Interbank Offered Rate exceeded the strike level of ~~2.00%. The upfront fee paid to the counterparty in entering into this interest rate cap agreement was $890 thousand~~.

~~The interest rate cap agreement was considered “free-standing” due to the non-designation of a hedge relationship to any~~ of the Company's ~~financial assets or liabilities. Under FASB ASC 815, valuation gains or losses on interest rate caps not designated~~goodwill for the nine months ended September 30, 2013 are as ~~hedging instruments are recognized in earnings.~~follows:



	For the Nine Months Ended September 30, 2013
	(In thousands)
Balance, beginning of period	$	89,878
Acquired goodwill - PIB	3,526
Acquired goodwill - Foster	29,665
Measurement period adjustment - PIB	(3,188		)
Impairment	—
Balance, end of period	$	119,881

The goodwill arising from the PIB acquisition was reduced by a net $3.2 million to $338 thousand due to adjustments to the deferred tax asset, which was provisional as of March 31, 2013, and other adjustments of certain acquisition date fair value asset and liability estimates during the nine months ended September 30, 2013.

Core deposit intangibles assets are amortized over their estimated lives, which range from seven to ten years. The Company acquired, through the acquisitions of PIB and Foster during the second and third quarters of 2013, respectively, core deposit intangibles which totaled $603 thousand and $2.8 million, respectively. Amortization expense related to core deposit intangible assets totaled $325 thousand and $302 thousand for the three months ended September 30, 2013 and 2012, respectively, and $837 thousand and $942 thousand for the nine months ended September 30, 2013 and 2012, respectively. The following table provides information regarding the core deposit intangibles at September 30, 2013:



		As of September 30, 2013
		Gross Carrying Amount		Accumulated Amortization
Intangible assets:	Amortization period
Core deposit—IBKNY acquisition	10 years	$	1,187	$	(1,187	)
Core deposit—Asiana Bank acquistion	10 years	1,018		(1,017		)
Core deposit—KEB, Broadway acquisition	10 years	2,726		(2,720		)
Core deposit—Center Financial Corporation acquisition	7 years	4,100		(1,748		)
Core deposit—PIB acquisition	7 years	$	603	$	(101	)
Core deposit—Foster acquisition	10 years	$	2,763	$	(63	)
Total		$	12,397	$	(6,836	)

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~~The effect of derivative instruments on the Consolidated Statement of Income~~ ~~for the three months endedJune 30, 2013~~ ~~and~~ ~~2012~~ ~~are as follows:~~

Three Months Ended June 30,
Six Months Ended June 30,

2013
2012
2013
2012

Location of Gain or (Loss) Recognized in Income on Derivatives Amount of Gain or (Loss) Recognized in Income on Derivatives
Amount of Gain or (Loss)
Recognized in Income on
Derivatives
(In thousands)
Derivatives not designated as hedging instruments under FASB ASC 815:

Interest rate contracts ⁽¹⁾
Other income $ —

$ (1 )
$ —

$ (9 )


⁽¹⁾	~~Includes amounts representing the net interest payments as stated in the contractual agreements and the valuation gains or (losses) on interest rate contracts not designated as hedging instruments.~~


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 $~~1.74~~0.97 million and $748 thousand at ~~June~~September 30, 2013 and December 31, 2012, respectively, that relate primarily to uncertainties related to California enterprise zone loan interest ~~deductions and anticipated adjustments from the 2010 Internal Revenue Service (IRS) examination.~~deductions.

We anticipate an increase of approximately $~~220~~416 thousand in the unrecognized tax benefit related to the California enterprise zone loan interest ~~deduction~~deduction. ~~and a decrease of approximately~~ ~~$971 thousand~~ ~~in the unrecognized tax benefit related to an expected settlement with the IRS for the 2010 tax year within the next twelve months.~~

The statute of limitations related to the consolidated Federal income tax return is closed for all tax years up to and including 2008. The expiration of the statute of limitations related to the various state income and franchise tax returns varies by state. The Company is currently under examination by IRS for the 2010 and 2011 tax years and by the California Franchise Tax Board (FTB) for the 2009 and 2010 tax years. While the outcome of the examinations is unknown, the Company expects no material adjustments. Within the last twelve months, examinations by the City of New York for tax years 2007, 2008, and 2009, and the FTB for tax years 2007 and 2008, were concluded with no material adjustments.

We recognize interest and penalties related to income tax matters in income tax expense. We had approximately $8544 thousand and $52 thousand for accrued interest and penalties at ~~June~~September 30, 2013 and December 31, 2012, 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 ~~June~~September 30, 2013.

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12.	Fair Value Measurements

FASB ASC 820, Fair Value Measurements and Disclosures, 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 and result in a Level 2.

Derivatives

The fair value of our derivative financial instruments, including interest rate swaps and caps, is based on derivative valuation models using market data inputs as of the valuation date that can generally be verified and do not typically involve significant management judgments (Level 2 inputs).

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 and result in a Level 2 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.

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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								Fair Value Measurements at the End of the Reporting Period Using
	June 30, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		September 30, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)								(In thousands)
Assets:
Securities available for sale:
GSE collateralized mortgage obligations	$	301,742	$	—	$	301,742	$	—	$	284,891	$	—	$	284,891	$	—
GSE mortgage-backed securities	399,107		—		399,107		—		396,734		—		396,734		—
Trust preferred securities	3,771		—		3,771		—		3,706		—		3,706		—
Municipal bonds	6,056		—		4,900		1,156		6,016		—		4,874		1,142
Mutual funds	14,563		14,563		—		—		17,219		17,219		—		—



			Fair Value Measurements at the End of the Reporting Period Using
	December 31, 2012		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	$	254,912	$	—	$	254,912	$	—
GSE mortgage-backed securities	425,540		—		425,540		—
Trust preferred securities	3,837		—		3,837		—
Municipal bonds	5,118		—		5,118		—
Mutual funds	14,996		14,996		—		—

There were no transfers between Level 1, 2 and 3 during the period ended ~~June~~September 30, 2013 and 2012. There were no gains or losses recognized in earnings

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 ~~six~~nine months ended ~~June~~September 30, 2013:


	Securities Available for Sale Municipal Bonds			Nine Months Ended September 30,
	(in thousands)			2013			2012
Beginning Balance, January 1, 2013	$	—
Purchases, issuances, and settlements	1,202
				(In thousands)
Beginning Balance, January 1				$	—		$	—
Purchases, issuances and settlements				1,202			—
Amortization	(9		)	(15		)	—
Total gains or (losses) included in earnings	—			—			—
Total gains or (losses) included in other comprehensive income	(37		)	(45		)	—
Ending Balance, June 30, 2013	$	1,156
Ending Balance, September 30				$	1,142		$	—

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


			Fair Value Measurements at the End of the Reporting Period Using								Fair Value Measurements at the End of the Reporting Period Using
	June 30, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		September 30, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)								(In thousands)
Assets:
Impaired loans at fair value:
Real estate loans	$	7,381	$	—	$	7,381	$	—	$	16,822	$	—	$	16,822	$	—
Commercial business	890		—		890		—		2,818		—		2,818		—
Loans held for sale, net									6,900		—		6,900		—
OREO	2,717		—		2,717		—		4,003		—		4,003		—



			Fair Value Measurements at the End of the Reporting Period Using
	December 31, 2012		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	$	4,443	$	—	$	4,443	$	—
Commercial business	1,164		—		1,164		—
Loans held for sale, net	803		—		803		—
OREO	2,636		—		2,636		—

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


	For the three months ended June 30,						For the six months ended June 30,						For the three months ended September 30,						For the nine months ended September 30,
	2013			2012			2013			2012			2013			2012			2013			2012
	(In thousands)												(In thousands)
Assets:
Impaired loans at fair value:
Real estate loans	$	(357	)	$	(183	)	$	(7,941	)	$	1,420		$	(1,759	)	$	(186	)	$	(9,700	)	$	1,234
Commercial business	(1,729		)	(224		)	(1,194		)	(2,408		)	(509		)	(1,064		)	(1,703		)	(3,472		)
Loans held for sale, net	—			(156		)	—			(156		)	(530		)	(380		)	(530		)	(536		)
OREO	(657		)	(560		)	(771		)	(1,014		)	(570		)	(1,611		)	(956		)	(2,433		)

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Fair Value of Financial Instruments

Carrying amounts and estimated fair values of financial instruments, not previously presented, at ~~June~~September 30, 2013 and December 31, 2012 were as follows:


	June 30, 2013					September 30, 2013
	Carrying Amount		Estimated Fair Value		Fair Value Measurement Using	Carrying Amount		Estimated Fair Value		Fair Value Measurement Using
	(In thousands)					(In thousands)
Financial Assets:
Cash and cash equivalents	$	296,330	$	296,330	Level 1	$	345,352	$	345,352	Level 1
Loans held for sale	43,111		49,157		Level 2	49,480		54,476		Level 2
Loans receivable—net	4,446,447		4,867,329		Level 3	4,833,224		5,266,747		Level 3
FHLB stock	26,261		N/A		N/A	27,958		N/A		N/A
FDIC loss share receivable	3,455		3,455		Level 3	2,430		2,430		Level 3
Customers’ liabilities on acceptances	9,533		9,533		Level 2	6,126		6,126		Level 2
Financial Liabilities:
Noninterest-bearing deposits	$	1,210,563	$	1,210,563	Level 2
Noninterest bearing deposits						$	1,362,675	$	1,362,675	Level 2
Saving and other interest bearing demand deposits	1,443,577		1,443,577		Level 2	1,495,186		1,495,186		Level 2
Time deposits	1,922,659		1,925,764		Level 2	2,163,241		2,167,307		Level 2
FHLB advances	421,539		421,232		Level 2	421,446		422,108		Level 2
Subordinated debentures	41,920		43,965		Level 2	57,303		56,434		Level 2
Bank’s liabilities on acceptances outstanding	9,533		9,533		Level 2	6,126		6,126		Level 2
	December 31, 2012					December 31, 2012
	Carrying Amount		Estimated Fair Value		Fair Value Measurement Using	Carrying Amount		Estimated Fair Value		Fair Value Measurement Using
	(In thousands)					(In thousands)
Financial Assets:
Cash and cash equivalents	$	312,916	$	312,916	Level 1	$	312,916	$	312,916	Level 1
Loans held for sale	51,635		57,856		Level 2	51,635		57,856		Level 2
Loans receivable—net	4,229,311		4,591,685		Level 3	4,229,311		4,591,685		Level 3
FHLB stock	22,495		N/A		N/A	22,495		N/A		N/A
FDIC loss share receivable	5,797		5,797		Level 3	5,797		5,797		Level 3
Customers’ liabilities on acceptances	10,493		10,493		Level 2	10,493		10,493		Level 2
Financial Liabilities:
Noninterest-bearing deposits	$	1,184,285	$	1,184,285	Level 2
Noninterest bearing deposits						$	1,184,285	$	1,184,285	Level 2
Saving and other interest bearing demand deposits	1,428,990		1,428,990		Level 2	1,428,990		1,428,990		Level 2
Time deposits	1,770,760		1,772,778		Level 2	1,770,760		1,772,778		Level 2
FHLB advances	420,722		425,107		Level 2	420,722		425,107		Level 2
Subordinated debentures	41,846		32,218		Level 2	41,846		32,218		Level 2
Bank’s liabilities on acceptances outstanding	10,493		10,493		Level 2	10,493		10,493		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, accrued interest receivable and payable, customer’s and Bank’s liabilities on acceptances, ~~non-interest-bearing~~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

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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 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 and 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 effect on the Company’s and the Bank’s financial statements, such as restrictions on the growth, expansion 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.

Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum ratios (set forth in the table below) of total and Tier I capital (as defined in the regulations) to risk-weighted assets (as defined) and of Tier I capital (as defined) to average assets (as defined). Management believes that, as of ~~June~~September 30, 2013 and December 31, 2012, the Company and the Bank met all capital adequacy requirements to which they are subject.

As of ~~June~~September 30, 2013 and December 31, 2012, 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.

In June 2012, the Company redeemed $55 million of our Fixed Rate Cumulative Perpetual Preferred Stock, Series B, issued by Center Financial under the Treasury Department's TARP Capital Purchase Program. A ten-year warrant to purchase Center Financial common stock issued in connection with Center Financial's sale of preferred stock to the Treasury Department was converted into a warrant to purchase BBCN Bancorp common stock upon our merger with Center. Reflecting the merger exchange ratio of 0.7805, the warrant now entitles the holder of the warrant to purchase, in one or more exercises of the warrant, up to 337,480 shares of BBCN Bancorp common stock at a price of $12.22 per share. The Company has not reached an agreement with the Treasury Department regarding repurchase of this warrant.

In December 2008, PIB granted a ten-year warrant to purchase up to 127,785 shares of its common stock (in relation to the TARP Capital Purchase Plan) which were assumed by the Company upon the acquisition of PIB. On the acquisition date of February 15, 2013, these warrants were canceled and converted into a warrant to purchase BBCN Bancorp common stock. The warrant entitles the holder to purchase, on one or more exercises of the warrant, up to 18,045 shares of BBCN Bancorp common stock at a price of $54.03 per share. The warrant expires on ~~the~~ December 12, 2018. The Company has not reached an agreement with the Treasury Department regarding repurchase of this warrant.

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


	Actual				Required For Capital Adequacy Purposes				Required To Be Well Capitalized under Prompt Corrective Action Provisions				Actual				Required For Capital Adequacy Purposes				Required To Be Well Capitalized under Prompt Corrective Action Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
	(Dollars in thousands)												(Dollars in thousands)
As of June 30, 2013
As of September 30, 2013
Total capital (to risk-weighted assets):
Company	$	790,164	16.12	%	$	392,021	8.00	%	N/A		N/A		$	793,569	14.89	%	$	426,401	8.00	%	N/A		N/A
Bank	$	780,843	15.95	%	$	391,740	8.00	%	$	489,676	10.00	%	$	784,601	14.73	%	$	426,149	8.00	%	$	532,686	10.00	%
Tier I capital (to risk-weighted assets):
Company	$	728,773	14.87	%	$	196,010	4.00	%	N/A		N/A		$	727,053	13.64	%	$	213,200	4.00	%	N/A		N/A
Bank	$	719,494	14.69	%	$	195,870	4.00	%	$	293,805	6.00	%	$	718,084	13.48	%	$	213,074	4.00	%	$	319,612	6.00	%
Tier I capital (to average assets):
Company	$	728,773	12.60	%	$	231,325	4.00	%	N/A		N/A		$	727,053	12.06	%	$	241,094	4.00	%	N/A		N/A
Bank	$	719,494	12.42	%	$	231,286	4.00	%	$	289,108	5.00	%	$	718,084	11.90	%	$	241,392	4.00	%	$	301,740	5.00	%
	Actual				Required For Capital Adequacy Purposes				Required To Be Well Capitalized under Prompt Corrective Action Provisions				Actual				Required For Capital Adequacy Purposes				Required To Be Well Capitalized under Prompt Corrective Action Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
	(Dollars in thousands)												(Dollars in thousands)
As of December 31, 2012
Total capital (to risk-weighted assets):
Company	$	746,396	16.16	%	$	369,417	8.00	%	N/A		N/A		$	746,396	16.16	%	$	369,417	8.00	%	N/A		N/A
Bank	$	725,655	15.73	%	$	369,134	8.00	%	$	461,417	10.00	%	$	725,655	15.73	%	$	369,134	8.00	%	$	461,417	10.00	%
Tier I capital (to risk-weighted assets):
Company	$	688,422	14.91	%	$	184,708	4.00	%	N/A		N/A		$	688,422	14.91	%	$	184,708	4.00	%	N/A		N/A
Bank	$	667,725	14.47	%	$	184,567	4.00	%	$	276,850	6.00	%	$	667,725	14.47	%	$	184,567	4.00	%	$	276,850	6.00	%
Tier I capital (to average assets):
Company	$	688,422	12.76	%	$	215,861	4.00	%	N/A		N/A		$	688,422	12.76	%	$	215,861	4.00	%	N/A		N/A
Bank	$	667,725	12.38	%	$	215,813	4.00	%	$	269,767	5.00	%	$	667,725	12.38	%	$	215,813	4.00	%	$	269,767	5.00	%

The following table presents the components of accumulated other comprehensive (loss) income at ~~June~~September 30, 2013 and December 31, 2012:


	June 30, 2013			December 31, 2012		September 30, 2013			December 31, 2012
	(In thousands)					(In thousands)
Net unrealized (loss) gain on securities available for sale	$	(5,085	)	$	9,004	$	(3,472	)	$	9,004
Net unrealized gain on interest-only strips	80			78		83			78
Total accumulated other comprehensive (loss) income	$	(5,005	)	$	9,082	$	(3,389	)	$	9,082

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

The following discussion and analysis should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2012 and the unaudited consolidated financial statements and notes set forth elsewhere in this report.

GENERAL

Selected Financial Data

The following table sets forth certain selected financial data concerning the periods indicated:


	At or for the Three Months Ended June 30,						At or for the Six Months Ended June 30,						At or for the Three Months Ended September 30,						At or for the Nine Months Ended September 30,
	2013			2012			2013			2012			2013			2012			2013			2012
	(Dollars in thousands, except share and per share data)												(Dollars in thousands, except share and per share data)
Income Statement Data:
Interest income	$	69,379		$	66,943		$	136,122		$	135,498		$	72,035		$	65,455		$	208,157		$	200,953
Interest expense	7,276			7,441			14,303			15,137			7,675			7,224			21,978			22,361
Net interest income	62,103			59,502			121,819			120,361			64,360			58,231			186,179			178,592
Provision for loan losses	800			7,182			8,306			9,782			744			6,900			9,050			16,682
Net interest income after provision for loan losses	61,303			52,320			113,513			110,579			63,616			51,331			177,129			161,910
Non-interest income	10,618			10,222			20,558			21,867
Non-interest expense	34,429			31,077			67,704			61,512
Noninterest income													10,799			7,664			31,357			29,531
Noninterest expense													35,746			28,770			103,450			90,282
Income before income tax provision	37,492			31,465			66,367			70,934			38,669			30,225			105,036			101,159
Income tax provision	14,821			12,101			26,235			27,636			15,117			11,827			41,352			39,463
Net income	$	22,671		$	19,364		$	40,132		$	43,298		$	23,552		$	18,398		$	63,684		$	61,696
Dividends and discount accretion on preferred stock	—			(3,771		)	—			(5,640		)	—			—			—			(5,640		)
Net income available to common stockholders	$	22,671		$	15,593		$	40,132		$	37,658		$	23,552		$	18,398		$	63,684		$	56,056
Per Share Data:
Earnings per common share - basic	$	0.29		$	0.20		$	0.51		$	0.48		$	0.30		$	0.24		$	0.81		$	0.72
Earnings per common share - diluted	$	0.29		$	0.20		$	0.51		$	0.48		$	0.30		$	0.24		$	0.80		$	0.72
Book value per common share (period end, excluding preferred stock and warrants)	$	9.86		$	9.14		$	9.86		$	9.14		$	10.11		$	9.41		$	10.11		$	9.41
Cash dividends declared per common share	$	.05		$	—		$	.10		$	—		$	.05		$	—		$	.175		$	—
Tangible book value per common share (period end, excluding preferred stock and warrants)⁽¹¹⁾	$	8.65		$	7.94		$	8.65		$	7.94		$	8.52		$	8.21		$	8.52		$	8.21
Number of common shares outstanding (period end)	79,205,840			78,014,107			79,205,840			78,014,107			79,247,719			78,016,260			79,247,719			78,016,260
Weighted average shares - basic	79,062,233			78,007,270			78,746,444			77,997,305			79,223,636			78,015,960			78,914,360			78,004,458
Weighted average shares - diluted	79,236,732			78,141,527			79,000,811			78,121,259			79,334,865			78,103,795			79,122,060			78,082,059
Tangible common equity ratio ⁽⁹⁾	11.88		%	12.49		%	11.88		%	12.49		%	10.87		%	12.23		%	10.87		%	12.23		%
Statement of Financial Condition Data - at Period End:
Assets	$	5,863,014		$	5,049,405		$	5,863,014		$	5,049,405		$	6,340,987		$	5,331,979		$	6,340,987		$	5,331,979
Securities available for sale	725,239			666,852			725,239			666,852			708,566			687,059			708,566			687,059
Gross loans, net of deferred loan fees and costs (excludes loans held for sale)	4,518,122			3,874,538			4,518,122			3,874,538			4,898,939			4,069,494			4,898,939			4,069,494
Deposits	4,576,799			3,882,680			4,576,799			3,882,680			5,021,102			4,052,524			5,021,102			4,052,524
FHLB advances	421,539			371,143			421,539			371,143			421,446			460,815			421,446			460,815
Subordinated debentures	41,920			41,772			41,920			41,772			57,303			41,809			57,303			41,809
Stockholders’ equity	781,025			715,461			781,025			715,461			801,230			734,455			801,230			734,455

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	At or for the Three Months Ended June 30,						At or for the Six Months Ended June 30,						At or for the Three Months Ended September 30,						At or for the Nine Months Ended September 30,
	2013			2012			2013			2012			2013			2012			2013			2012
	(Dollars in thousands)												(Dollars in thousands)
Average Balance Sheet Data:
Assets	$	5,878,377		$	5,102,769		$	5,802,413		$	5,121,082		$	6,160,132		$	5,179,186		$	5,924,397		$	5,140,591
Securities available for sale	705,479			692,399			698,769			709,063			714,660			679,764			704,124			699,225
Gross loans, including loans held for sale	4,546,461			3,847,921			4,495,673			3,812,708			4,771,022			4,007,402			4,588,464			3,878,080
Deposits	4,592,036			3,854,756			4,520,401			3,879,207			4,845,402			3,961,484			4,629,925			3,906,834
Stockholders’ equity	783,181			823,839			774,257			815,111			794,737			728,038			781,159			785,875
Selected Performance Ratios:
Return on average assets ^{(1) (8)}	1.54		%	1.52		%	1.38		%	1.69		%	1.53		%	1.42		%	1.43		%	1.60		%
Return on average stockholders’ equity^{(1) (8)}	11.58		%	9.40		%	10.37		%	10.62		%	11.85		%	10.11		%	10.87		%	10.47		%
Average stockholders' equity to average assets	13.32		%	16.14		%	13.34		%	15.92		%	12.90		%	14.06		%	13.19		%	15.29		%
Return on average tangible equity ⁽¹⁾ ^{(8) (10)}	13.21		%	10.61		%	11.83		%	12.01		%	13.90		%	11.60		%	12.52		%	11.89		%
Dividend payout ratio (dividends per share / earnings per share)	17.24		%	0.0		%	19.61		%	0.0		%	25.00		%	0.0		%	21.60		%	0.0		%
Pre-Tax Pre-Provision income to average assets⁽¹⁾	2.60		%	3.03		%	2.57		%	3.15		%	2.56		%	2.87		%	2.57		%	3.06		%
Efficiency ratio⁽²⁾	47.34		%	44.57		%	47.55		%	47.69		%	47.56		%	43.66		%	47.56		%	43.38		%
Net interest spread	4.25		%	4.72		%	4.25		%	4.77		%	4.19		%	4.51		%	4.23		%	4.68		%
Net interest margin ⁽³⁾	4.49		%	5.02		%	4.49		%	5.07		%	4.42		%	4.79		%	4.46		%	4.97		%
Regulatory Capital Ratios ⁽⁴⁾
Leverage capital ratio⁽⁵⁾	12.61		%	12.97		%	12.61		%	12.97		%	12.06		%	13.15		%	12.06		%	13.15		%
Tier 1 risk-based capital ratio	14.89		%	15.54		%	14.89		%	15.54		%	13.64		%	15.22		%	13.64		%	15.22		%
Total risk-based capital ratio	16.14		%	16.80		%	16.14		%	16.80		%	14.89		%	16.48		%	14.89		%	16.48		%
Tier 1 common risk-based capital ratio ⁽¹²⁾	14.05		%	14.58		%	14.05		%	14.58		%	12.60		%	14.30		%	12.60		%	14.30		%
Asset Quality Ratios:
Allowance for loan losses to gross loans, excluding loans held for sale	1.59		%	1.69		%	1.59		%	1.69		%	1.34		%	1.62		%	1.34		%	1.62		%
Allowance for loan losses to nonaccrual loans	159.32		%	164.88		%	159.32		%	164.88		%	181.89		%	212.06		%	181.89		%	212.06		%
Allowance for loan losses to nonperforming loans ⁽⁶⁾	71.67		%	78.44		%	71.67		%	78.44		%	91.08		%	123.70		%	91.08		%	123.70		%
Allowance for loan losses to nonperforming assets ⁽⁷⁾	65.40		%	72.60		%	65.40		%	72.60		%	47.18		%	80.86		%	47.18		%	80.86		%
Nonaccrual loans to gross loans, excluding loans held for sale	1.00		%	1.03		%	1.00		%	1.03		%	0.74		%	0.76		%	0.74		%	0.76		%
Nonperforming loans to gross loans, excluding loans held for sale ⁽⁶⁾	2.21		%	2.16		%	2.21		%	2.16		%	2.28		%	1.90		%	2.28		%	1.90		%
Nonperforming assets to gross loans and OREO ⁽⁷⁾	2.42		%	2.32		%	2.42		%	2.32		%	2.83		%	2.00		%	2.83		%	2.00		%
Nonperforming assets to total assets⁽⁷⁾	1.87		%	1.70		%	1.87		%	1.70		%	2.20		%	1.53		%	2.20		%	1.53		%


⁽¹⁾	Annualized.


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


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


⁽⁴⁾	The ratios required to meet the definition of a “well-capitalized” institution under certain banking regulations are 5% leverage capital, 6% tier I risk-based capital and 10% total risk-based capital.


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

⁽⁶⁾

Nonperforming loans include nonaccrual loans, loans past due 90 days or more and still accruing interest, and accruing restructured loans. Loans 90 days or more past due and still accruing consist of acquired loans that were originally recorded at fair value upon acquisitions. These loans are considered to be accruing as we can reasonably estimate future cash flows on acquired loans and we expect to fully collect the carrying value of these loans.


⁽⁷⁾	Nonperforming assets include nonaccrual loans, loans past due 90 days or more and still accruing interest, OREO, and accruing restructured loans.


⁽⁸⁾	Based on net income before effect of dividends and discount accretion on preferred stock.

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⁽⁹⁾	Excludes TARP preferred stock, net of discount, of $0 and ~~$119.7~~$0 million and stock warrants of $378 thousand and ~~$2.8 million~~$378 thousand at ~~June~~September 30, 2013 and 2012, respectively.


⁽¹⁰⁾	Average tangible equity is calculated by subtracting average goodwill and average other intangibles 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 June 30,						Six Months Ended June 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012			2013			2012			2013			2012
	(Dollars in thousands)												(Dollars in thousands)
Net income	$	22,671		$	19,364		$	40,132		$	43,298		$	23,552		$	18,398		$	63,684		$	61,696

Average stockholders' equity	$	783,181		$	823,839		$	774,257		$	815,111		$	794,737		$	728,038		$	781,159		$	785,875
Less: Average goodwill and other intangible assets, net	(96,660		)	(93,713		)	(95,824		)	(93,955		)	(116,885		)	(93,407		)	(102,935		)	(93,771		)
Average tangible equity	$	686,521		$	730,126		$	678,433		$	721,156		$	677,852		$	634,631		$	678,224		$	692,104

Net income (annualized) to average tangible equity	13.21		%	10.61		%	11.83		%	12.01		%	13.90		%	11.60		%	12.52		%	11.89		%


⁽¹¹⁾	Tangible book value per common share is calculated by subtracting goodwill and other 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.


	June 30, 2013			June 30, 2012			September 30, 2013			September 30, 2012
	(In thousands)						(In thousands)
Total stockholders' equity	$	781,025		$	715,461		$	801,230		$	734,455
Less: Preferred stock, net of discount	—			—			—			—
Common stock warrant	(378		)	(2,760		)	(378		)	(378		)
Goodwill and other intangible assets, net	(95,413		)	(93,518		)	(125,444		)	(93,217		)
Tangible common equity	$	685,234		$	619,183		$	675,408		$	640,860

Common shares outstanding	79,205,840			78,014,107			79,247,719			78,016,260

Tangible common equity per share	$	8.65		$	7.94
Tangible book value per common share							$	8.52		$	8.21


⁽¹²⁾	The Tier 1 common risk-based capital ratio is calculated asby 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.~~securities by total risk-weighted assets less the disallowed allowance for loan losses.


	June 30, 2013			June 30, 2012			September 30, 2013			September 30, 2012
	(In thousands)						(In thousands)
Tier 1 capital	$	728,773		$	649,293		$	727,053		$	668,710
Less: Preferred stock, net of discount	—			—			—			—
Trust preferred securities less unamortized acquisition discount	(40,495		)	(40,347		)	(55,414		)	(40,384		)
Tier 1 common risk-based capital	$	688,278		$	608,946		$	671,639		$	628,326

Total risk weighted assets less disallowed allowance for loan losses	4,900,260			4,177,728			5,330,009			4,392,505

Tier 1 common risk-based capital ratio	14.05		%	14.58		%	12.60		%	14.30		%

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Results of Operations

Overview

Total assets increased ~~$222.4~~$700.3 million from $5.64 billion at December 31, 2012 to $~~5.86~~6.34 billion at ~~June~~September 30, 2013. The increase in total assets was primarily due to a ~~$217.1~~$603.9 million increase in loans receivable, net of allowance for loan losses, from $4.23 billion at December 31, 2012 to $~~4.45~~4.83 billion at ~~June~~September 30, 2013 and a ~~$20.8~~$32.4 million increase in ~~securities available for sale~~cash and due from ~~$704.4~~banks, from $312.9 million at December 31, 2012 to ~~$725.2~~$345.4 million at ~~June~~September 30, ~~2013~~ ~~These increases were partially offset by a $16.6 million decrease in cash and cash equivalents from~~ ~~$312.9 million~~ at ~~December 31, 2012~~ to ~~$296.3 million~~ at ~~June 30, 2013~~.2013. The increase in total assets was funded by a ~~$192.8~~$637.1 million increase in deposits from $4.38 billion at December 31, 2012 to $~~4.58~~5.02 billion at ~~June~~September 30, 2013, a ~~$817~~$724 thousand increase in FHLB advances from $420.7 million at December 31, 2012 to $~~421.5~~421.4 million at ~~June~~September 30, 2013, a $15.5 million increase in subordinated debentures from $41.8 million at December 31, 2012 to $57.3 at September 30, 2013 and net income available to common stockholders of $~~40.1~~63.7 million.

The net income available to common stockholders for the ~~second~~third quarter of 2013 was ~~$22.7~~$23.6 million, or ~~$0.29~~$0.30 per diluted common share, compared to ~~the net income available to common stockholders of $15.6~~$18.4 million, or ~~$0.20~~$0.24 per diluted common share, for the same period of 2012, an increase of ~~$7.1~~$5.2 million, or ~~45.4%~~28.0%. The net income available to common stockholders for the ~~six~~nine months ended ~~June~~September 30, 2012 was ~~$40.1~~$63.7 million, or ~~$0.51~~$0.80 per diluted common share, compared to ~~the net income available to common stockholders of $37.7~~$56.1 million, or ~~$0.48~~$0.72 per diluted common share, for the same period of 2012, an increase of ~~$2.5~~$7.6 million, or ~~6.6%~~13.6%. ~~The acquisitions~~Acquisitions impact the comparability of the operating results for the ~~second~~third quarter and the ~~six~~nine months ~~period ending June~~ended September 30 of 2013 and 2012, because ~~the acquisitions resulted in increases in interest earning assets, interest bearing liabilities, employees and branch locations. In addition,~~ the acquired assets and liabilities were recorded at fair value and certain acquisition premiums and discounts are being amortized or accreted into income or expense as adjustments to the yield/cost of the related asset or liability. In addition, the PIB and Foster acquisitions resulted in increases in interest earning assets, interest bearing liabilities, employees and branch locations in 2013. The operating results for the three months ended ~~June~~September 30, 2013 and 2012 and the ~~six~~nine months ended ~~June~~September 30, 2013 and 2012 include the following major pre-tax acquisition accounting adjustments and expenses related to acquisitions.


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012			2013			2012			2013			2012
	(Dollars in thousands)												(Dollars in thousands)
Accretion of discounts on acquired performing loans	$	6,637		$	6,010		$	10,713		$	12,093		$	4,074		$	4,890		$	14,787		$	16,983
Accretion of discounts on acquired credit impaired loans	1,032			1,686			2,554			5,247			2,806			1,215			5,360			6,462
Amortization of premiums on assumed FHLB advances	92			904			183			2,135			94			307			277			2,442
Accretion of discounts on assumed subordinated debt	(48		)	(36		)	(91		)	(71		)	(81		)	(37		)	(172		)	(108		)
Amortization of premiums on assumed time deposits	247			787			685			2,062			308			650			993			2,712
Increase to pre-tax income	$	7,960		$	9,351		$	14,044		$	21,466		$	7,201		$	7,025		$	21,245		$	28,491

The annualized return on average assets, before the effect of dividends and discount accretion on preferred stock on average assets, was ~~1.54%~~1.53% for the ~~second~~third quarter of 2013, compared to ~~1.52%~~1.42% for the same period of 2012. The annualized return on average stockholders' equity, before the effect of dividends and discount accretion on preferred stock, was ~~11.58%~~11.85% for the ~~second~~third quarter of 2013, compared to ~~9.40%~~10.11% for the same period of 2012. The efficiency ratio was ~~47.34%~~47.56% for the ~~second~~third quarter of 2013, compared to ~~44.57%~~43.66% for the same period of 2012.

The annualized return on average assets, before the effect of dividends and discount accretion on preferred stock on average assets, was ~~1.38%~~1.43% for the ~~for the six~~nine months ended ~~June~~September 30, 2013, compared to ~~1.69%~~1.60% for the same period of 2012. The annualized return on average stockholders' equity, before the effect of dividends and discount accretion on preferred stock, was ~~10.37%~~10.87% for the ~~six~~nine months ended ~~June~~September 30, 2013, compared to ~~10.62%~~10.47% for the same period of 2012. The efficiency ratio was ~~47.55%~~47.56% for the ~~six~~nine months ended September 30, 2013, compared to ~~47.69%~~43.38% for the same period of 2012.

Net Interest Income and Net Interest Margin

Net Interest Income

A principal component of the Company's 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~~interest earning assets is referred to as the net interest margin. The net interest spread is the yield on average ~~interest-earning~~interest earning assets less the cost of average ~~interest-bearing~~interest bearing liabilities. Net interest income is affected by changes in

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the balances of ~~interest-earning~~interest earning assets and ~~interest-bearing~~interest bearing liabilities and changes in the yields earned on ~~interest-earning~~interest earning assets and the rates paid on ~~interest-bearing~~interest bearing liabilities.

Comparison of Three Months Ended ~~June~~September 30, 2013 with the Same Period of 2012

Net interest income before provision for loan losses was $~~62.1~~64.4 million for the ~~second~~third quarter of 2013, an increase of ~~$2.6~~$6.1 million, or ~~4.37%~~10.5%, compared to $~~59.5~~58.2 million for the same period of 2012. The increase was principally attributable to the increase in interest earnings assets, which was partially offset by the decline in the net interest margin.

Interest income for the ~~second~~third quarter of 2013 was $~~69.4~~72.0 million, aan increase of ~~$2.4~~$6.6 million, or ~~3.64%~~10.1%, compared to $~~66.9~~65.5 million for the same period of 2012. The increase resulted from ~~a a~~an $~~10.8~~11.6 million increase in interest income due to an increase in average ~~interest-earning~~interest earning assets and partially offset by a $~~8.4~~5.0 million decrease in interest income due to a decrease in the yield on average ~~interest-earnings~~interest earnings assets.

Comparison of ~~Six~~Nine Months Ended ~~June~~September 30, 2013 with the Same Period of 2012

Net interest income before provision for loan losses was ~~$121.8~~$186.2 million for the ~~six~~nine months ended ~~June~~September 30, 2013, an increase of ~~$1.4~~$7.6 million, or ~~1.21%~~4.2%, compared to ~~$120.4~~$178.6 million for the same period of 2012. The increase was principally attributable to the increase in average interest earning assets, which was partially offset by the decline in the net interest margin.

Interest income for the ~~six~~nine months ended ~~June~~September 30, 2013 was ~~$136.1~~$208.2 million, an increase of ~~$0.6~~$7.2 million, or ~~0.05%~~3.6%, compared to ~~$135.5 million~~$201.0million for the same period of 2012. The increase resulted from a ~~$20.4~~$32.0 million increase in interest income due to an increase in average ~~interest-earning~~interest earning assets and partially offset by a ~~$19.7~~$24.8 million decrease in interest income due to a decrease in the yield on average ~~interest-earnings~~interest earnings assets.

Net Interest Margin

The Company's reported net interest margin is impacted by the weighted average rates it earns on interest earning assets and pays on interest earning liabilities and the effect of acquisition accounting adjustments. The net interest margin for the ~~second~~third quarter of 2013 was ~~4.49%~~4.42%, a decrease of 5337 basis points from ~~5.02%~~4.79% for the same period of 2012. The decrease in the net interest margin was due to a decline in the weighted average yield on the Company's loan portfolio and a decline in the effect of acquisition accounting adjustments. The net interest margin for the first nine months of 2013 was 4.46%, a decrease of 51 basis points from 4.97% for the same period of 2012. The decrease in the net interest margin was principally due to a decline in the weighted average yield on the Company's loan portfolio and a decline in the effect of acquisition accounting ~~adjustments, as~~adjustments. The change in the Company's reported net interest margin for the three and nine months ended September 30, 2013 and 2012 is summarized in the ~~following table.~~table below.


	Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012			2013		2012		2013		2012
Net interest margin, excluding the effect of acquisition accounting adjustments	3.86	%	4.15	%	3.91	%	4.10	%		3.86	%	4.14	%	3.90	%	4.29	%
Acquisition accounting adjustments⁽¹⁾	0.63		0.87		0.58		0.97			0.56		0.65		0.56		0.68
Reported net interest margin	4.49	%	5.02	%	4.49	%	5.07	%		4.42	%	4.79	%	4.46	%	4.97	%
⁽¹⁾Acquisition accounting adjustments is calculated by subtracting net interest margin, excluding effect of acquisition accounting adjustments, from reported net interest margin.
⁽¹⁾Acquisition accounting adjustments are calculated by subtracting net interest margin, excluding effect of acquisition accounting adjustments, from reported net interest margin.									⁽¹⁾Acquisition accounting adjustments are calculated by subtracting net interest margin, excluding effect of acquisition accounting adjustments, from reported net interest margin.

Excluding the effect of acquisition accounting adjustments, the net interest margin for the ~~second~~third quarter of 2013 decreased 2928 basis points to 3.86% ~~compared to~~from ~~4.15%~~4.14% for the same period of 2012. ~~The net interest margin excluding~~Excluding the effect of acquisition accounting adjustments, ~~for the six months ended June 30, 2013, decreased 19 basis points to 3.91%, compared with~~ the net interest margin for the nine months ended September 30, 2013 decreased 39 basis points to 3.90%, from 4.29% for the same period of 2012. ~~The decrease was largely attributable to the decrease in the weighted average yield on loans.~~

The weighted average yield on loans decreased to ~~5.78%~~5.63% for the ~~second~~third quarter of 2013 from ~~6.53%~~6.11% for the ~~second~~third quarter of 2012 and decreased to ~~5.76%~~5.72% for the ~~six~~nine months ~~period~~ ended ~~June~~September 30, 2013 from ~~6.64%~~6.46% for the same period in 2012. The change in the yield was due to continued pricing pressure on loan interest rates and ~~the decline~~5 basis point and 25 basis point declines in the effects of acquisition accounting adjustments for the respective periods, as summarized in the following table.

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	Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012			2013		2012		2013		2012
The weighted average yield on loans, excluding the effect of acquisition accounting adjustments	5.02	%	5.59	%	5.08	%	5.60	%		4.96	%	5.39	%	5.04	%	5.53	%
Acquisition accounting adjustments⁽¹⁾	0.76		0.94		0.68		1.04			0.67		0.72		0.68		0.93
Reported weighted average yield on loans	5.78	%	6.53	%	5.76	%	6.64	%		5.63	%	6.11	%	5.72	%	6.46	%
⁽¹⁾ Acquisition accounting adjustments is calculated by subtracting the weighted average yield on loans, excluding the effect of acquisition accounting adjustments, from the reported weighted average yield on loans.
⁽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.									⁽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.

Excluding the effects of acquisition accounting adjustments, the weighted average yield on loans for the ~~second~~third quarter of 2013 decreased 5743 basis points to ~~5.02%~~4.96% ~~compared to 5.59%~~from 5.39% for the same period of 2012. This decrease was primarily due to the lower yields on acquired loan portfolios and the reduction in market rates compared to a year ago due to continued pricing pressures. At ~~June~~September 30, 2013, fixed rate loans accounted for ~~40%~~45% of the loan portfolio, compared to 38% at ~~June~~September 30, 2012, reflecting a higher mix of fixed rate loans in the ~~Company's focus on variable~~acquired loan portfolios and the high demand for fixed rate ~~business loans.~~loans in the current market. The weighted average yield on the variable rate and fixed rate loan portfolios (excluding loan discount accretion) at ~~June~~September 30, 2013 was ~~4.50%~~5.16% and ~~5.31%~~4.43%, respectively, compared with ~~4.60%~~5.97% and ~~6.25%~~4.57% at ~~June~~September 30, 2012.

The weighted average yield on securities available for sale for the ~~second~~third quarter of 2013 was ~~2.0%~~2.13%, compared to ~~2.45%~~2.23% for the same period of 2012. The weighted average yield on securities available for sale for the ~~six~~nine months ended ~~June~~September 30, 2013 was ~~1.99%~~2.04%, compared to ~~2.58%~~2.47% for the same period of 2012. The decrease was primarily attributable to the replacement of maturing securities with lower yielding investments as market interest rates declined.

The weighted average cost of deposits for the ~~second~~third quarter of 2013 was 0.49%, a decrease of 63 basis points from ~~0.55%~~0.52% for the same period of 2012. The amortization of the premium on time deposits assumed in the acquisition positively affected the weighted average cost of deposits, as summarized in the following table.


	Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012			2013		2012		2013		2012
The weighted average cost of deposits, excluding effect of acquisition accounting adjustments	0.51	%	0.63	%	0.52	%	0.66	%		0.51	%	0.59	%	0.52	%	0.64	%
Acquisition accounting adjustments⁽¹⁾	(0.02	)	(0.08	)	(0.03	)	(0.11	)		(0.02	)	(0.07	)	(0.03	)	(0.09	)
Reported weighted average cost of deposits	0.49	%	0.55	%	0.49	%	0.55	%		0.49	%	0.52	%	0.49	%	0.55	%
⁽¹⁾ Acquisition accounting adjustments is calculated by subtracting the weighted average cost of deposits, excluding the effect of acquisition accounting adjustments, from the reported weighted average cost of deposits.
⁽¹⁾ Acquisition accounting adjustments are calculated by subtracting the weighted average cost of deposits, excluding the effect of acquisition accounting adjustments, from the reported weighted average cost of deposits.									⁽¹⁾ Acquisition accounting adjustments are calculated by subtracting the weighted average cost of deposits, excluding the effect of acquisition accounting adjustments, from the reported weighted average cost of deposits.

Excluding the amortization of premiums on time deposits assumed in acquisitions, the weighted average cost of deposits was 0.51% for the ~~second~~third quarter of 2013, compared to ~~0.63%~~0.59% for the same period of 2012 and 0.52% for the ~~six~~nine months ended ~~June~~September 30, 2013, compared to ~~0.66~~0.64% for the same period of 2012. The decrease was due to reductions in the cost of ~~interest-bearing~~interest bearing demand deposits ~~and an increase~~with no significant changes in the proportion of ~~non-interest~~noninterest bearing demand deposits to total deposits. ~~Non-interest~~Noninterest bearing demand deposits accounted for ~~26.0%~~27.1% of total deposits at ~~June~~September 30, 2013, compared with ~~25.8%~~27.3% at ~~June~~September 30, 2012.

The weighted average cost of FHLB advances for the ~~second~~third quarter of 2013 was ~~1.16%~~1.18%, a decrease of 7938 basis points from ~~1.95%~~1.56% for the same period of 2012. The decrease was attributable to decreases in FHLB advance rates, which was partially offset by the decline in the amortization of premiums on FHLB advances assumed in acquisitions, as summarized in the following table.

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	Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012			2013		2012		2013		2012
The weighted average cost on FHLB advances, excluding effect of acquisition accounting adjustments	1.25	%	3.08	%	1.26	%	3.25	%		1.27	%	1.87	%	1.23	%	2.72	%
Acquisition accounting adjustments	(0.09	)	(1.13	)	(0.09	)	(1.31	)		(0.09	)	(0.31	)	(0.06	)	(0.93	)
Reported weighted average cost on FHLB advances	1.16	%	1.95	%	1.17	%	1.94	%		1.18	%	1.56	%	1.17	%	1.79	%
⁽¹⁾ Acquisition accounting adjustments is 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.
⁽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.									⁽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 decreased to ~~1.25%~~1.27% for the ~~second~~third quarter of 2013 from ~~3.08%~~1.87% for the same period of 2012, reflecting the addition of ~~$415.0~~$255.0 million in new borrowings and FHLB advances assumed from acquisitions at an average rate of ~~0.59%~~0.70%, which was ~~substantially~~ lower than the weighted average rate paid on matured borrowings. The weighted average original maturity of the new borrowings was ~~2.10~~2.27 years. In addition, a total of ~~$364.1~~$294.0 million of FHLB advances, with weighted average rates of ~~1.13%~~1.12%, matured over the past twelve months.

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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 June 30, 2013						Three Months Ended June 30, 2012						Three Months Ended September 30, 2013						Three Months Ended September 30, 2012
	Average Balance		Interest Income/ Expense		Average Yield/ Rate *		Average Balance		Interest Income/ Expense		Average Yield/ Rate *		Average Balance		Interest Income/ Expense		Average Yield/ Rate *		Average Balance		Interest Income/ Expense		Average Yield/ Rate *
	(Dollars in thousands)												(Dollars in thousands)
INTEREST EARNINGS ASSETS:
Loans^{(1) (2)}	$	4,546,461	$	65,473	5.78	%	$	3,847,921	$	62,504	6.53	%	$	4,771,022	$	67,747	5.63	%	$	4,007,402	$	61,553	6.11	%
Securities available for sale⁽³⁾	705,479		3,526		2.00	%	692,399		4,249		2.45	%	714,660		3,802		2.13	%	679,764		3,782		2.23	%
FRB and FHLB stock and other investments	296,788		380		0.51	%	203,935		160		0.31	%	291,672		486		0.65	%	155,590		120		0.30	%
Federal funds sold	—		—		N/A		19,794		30		0.59	%	—		—		N/A		—		—		N/A
Total interest earning assets	$	5,548,728	$	69,379	5.01	%	$	4,764,049	$	66,943	5.65	%	$	5,777,354	$	72,035	4.95	%	$	4,842,756	$	65,455	5.38	%
INTEREST BEARING LIABILITIES:
Deposits:
Demand, interest-bearing	$	1,285,768	$	1,937	0.60	%	$	1,184,339	$	1,849	0.63	%
Demand, interest bearing													$	1,276,732	$	1,927	0.60	%	$	1,156,915	$	1,775	0.61	%
Savings	185,584		721		1.56	%	187,872		830		1.78	%	204,049		668		1.30	%	184,219		820		1.77	%
Time deposits:
$100,000 or more	1,252,934		1,975		0.63	%	807,803		1,498		0.75	%	1,380,962		2,361		0.68	%	843,388		1,533		0.72	%
Other	652,766		1,013		0.62	%	652,937		1,068		0.66	%	677,352		1,003		0.59	%	672,861		1,086		0.64	%
Total time deposits	1,905,700		2,988		0.63	%	1,460,740		2,566		0.71	%	2,058,314		3,364		0.65	%	1,516,249		2,619		0.69	%
Total interest bearing deposits	3,377,052		5,646		0.67	%	2,832,951		5,245		0.74	%	3,539,095		5,959		0.67	%	2,857,383		5,214		0.73	%
FHLB advances	421,595		1,218		1.16	%	329,066		1,603		1.95	%	422,084		1,251		1.18	%	407,325		1,603		1.56	%
Other borrowings	43,559		411		3.73	%	47,488		593		4.95	%	48,273		465		3.77	%	40,407		407		3.95	%
Total interest bearing liabilities	3,842,206		$	7,275	0.75	%	3,209,505		$	7,441	0.93	%	4,009,452		$	7,675	0.76	%	3,305,115		$	7,224	0.87	%
Non-interest bearing demand deposits	1,214,984						1,021,805
Total funding liabilities / cost of funds	$	5,057,190			0.58	%	$	4,231,310			0.71	%
Noninterest bearing demand deposits													1,306,308						1,104,996
Total funding liabilities/cost of funds													$	5,315,760			0.57	%	$	4,410,111			0.65	%
Net interest income/net interest spread			$	62,104	4.25	%			$	59,502	4.72	%			$	64,360	4.19	%			$	58,231	4.51	%
Net interest margin					4.49	%					5.02	%					4.42	%					4.79	%
Net interest margin, excluding the effect of nonaccrual loan income (expense)⁽⁴⁾					4.47	%					5.06	%					4.42	%					4.79	%
Net interest margin, excluding the effect of nonaccrual loan income (expense) and prepayment fee income^{(4) (5)}					4.46	%					5.04	%					4.37	%					4.78	%
Cost of deposits:
Non-interest bearing demand deposits	$	1,214,984	$	—			$	1,021,805	$	—
Noninterest bearing demand deposits													$	1,306,308	$	—			$	1,104,996	$	—
Interest bearing deposits	3,377,052		5,646		0.67	%	2,832,951		5,245		0.74	%	3,539,095		5,959		0.67	%	2,857,383		5,214		0.73	%
Total deposits	$	4,592,036	$	5,646	0.49	%	$	3,854,756	$	5,245	0.55	%	$	4,845,403	$	5,959	0.49	%	$	3,962,379	$	5,214	0.52	%


*	Annualized


⁽¹⁾	Interest income on loans includes loan fees.


⁽²⁾	Average balances of loans are net of deferred loan fees and costs and include nonaccrual loans and loans held for sale.


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


⁽⁴⁾	Nonaccrual interest income reversed was ~~$77~~$153 thousand and ~~$400~~$44 thousand for the three months ended ~~June~~September 30, 2013 and 2012, respectively.


⁽⁵⁾	Loan prepayment fee income excluded was ~~$306~~$580 thousand and ~~$198~~$119 thousand for the three months ended ~~June~~September 30, 2013 and 2012, respectively.

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	Six Months Ended June 30, 2013						Six Months Ended June 30, 2012						Nine Months Ended September 30, 2013						Nine Months Ended September 30, 2012
	Average Balance		Interest Income/ Expense		Average Yield/ Rate *		Average Balance		Interest Income/ Expense		Average Yield/ Rate *		Average Balance		Interest Income/ Expense		Average Yield/ Rate *		Average Balance		Interest Income/ Expense		Average Yield/ Rate *
	(Dollars in thousands)												(Dollars in thousands)
INTEREST EARNINGS ASSETS:
Loans^{(1) (2)}	$	4,495,673	$	128,502	5.76	%	$	3,812,708	$	125,923	6.64	%	$	4,588,464	$	196,249	5.72	%	$	3,878,080	$	187,476	6.46	%
Securities available for sale⁽³⁾	698,769		6,953		1.99	%	709,063		9,158		2.58	%	704,124		10,755		2.04	%	699,225		12,940		2.47	%
FRB and FHLB stock and other investments	277,266		667		0.48	%	230,789		339		0.29	%	282,120		1,153		0.54	%	205,540		459		0.29	%
Federal funds sold	—		—		N/A		22,787		78		0.68	%	—		—		N/A		15,136		78		0.68	%
Total interest earning assets	$	5,471,708	$	136,122	5.01	%	$	4,775,347	$	135,498	5.70	%	$	5,574,708	$	208,157	4.99	%	$	4,797,981	$	200,953	5.59	%
INTEREST BEARING LIABILITIES:
Deposits:
Demand, interest-bearing	$	1,275,922	$	3,809	0.60	%	$	1,208,551	$	3,973	0.66	%
Demand, interest bearing													$	1,276,195	$	5,736	0.60	%	$	1,191,213	$	5,748	0.64	%
Savings	185,885		1,475		1.60	%	191,902		1,752		1.84	%	192,006		2,144		1.49	%	189,322		2,571		1.81	%
Time deposits:
$100,000 or more	1,207,381		3,705		0.62	%	787,468		2,895		0.74	%	1,265,877		6,066		0.64	%	806,244		4,428		0.73	%
Other	674,165		2,065		0.62	%	687,979		2,029		0.59	%	675,239		3,068		0.61	%	682,903		3,115		0.61	%
Total time deposits	1,881,546		5,770		0.62	%	1,475,447		4,924		0.67	%	1,941,116		9,134		0.63	%	1,489,147		7,543		0.68	%
Total interest bearing deposits	3,343,353		11,054		0.67	%	2,875,900		10,649		0.74	%	3,409,317		17,014		0.67	%	2,869,682		15,862		0.74	%
FHLB advances	422,266		2,442		1.17	%	334,515		3,229		1.94	%	422,205		3,693		1.17	%	358,962		4,832		1.79	%
Other borrowings	42,915		806		3.74	%	48,798		1,260		5.11	%	44,721		1,271		3.75	%	45,981		1,667		4.77	%
Total interest bearing liabilities	3,808,534		$	14,302	0.76	%	3,259,213		$	15,138	0.93	%	3,876,243		$	21,978	0.76	%	3,274,625		$	22,361	0.91	%
Non-interest bearing demand deposits	1,177,048						1,003,307
Total funding liabilities / cost of funds	$	4,985,582			0.58	%	$	4,262,520			0.71	%
Noninterest bearing demand deposits													1,220,608						1,037,152
Total funding liabilities/cost of funds													$	5,096,851			0.58	%	$	4,311,777			0.69	%
Net interest income/net interest spread			$	121,820	4.25	%			$	120,360	4.77	%			$	186,179	4.23	%			$	178,592	4.68	%
Net interest margin					4.49	%					5.07	%					4.46	%					4.97	%
Net interest margin, excluding the effect of nonaccrual loan income (expense)⁽⁴⁾					4.48	%					5.10	%					4.46	%					4.99	%
Net interest margin, excluding the effect of nonaccrual loan income (expense) and prepayment fee income^{(4) (5)}					4.47	%					5.09	%					4.44	%					4.98	%
Cost of deposits:
Non-interest bearing demand deposits	$	1,177,048	$	—			$	1,003,307	$	—
Noninterest bearing demand deposits													$	1,220,608	$	—			$	1,037,152	$	—
Interest bearing deposits	3,343,353		11,054		0.67	%	2,875,900		10,649		0.74	%	3,409,317		17,014		0.67	%	2,869,682		15,862		0.74	%
Total deposits	$	4,520,401	$	11,054	0.49	%	$	3,879,207	$	10,649	0.55	%	$	4,629,925	$	17,014	0.49	%	$	3,906,834	$	15,862	0.55	%


*	Annualized


⁽¹⁾	Interest income on loans includes loan fees.


⁽²⁾	Average balances of loans are net of deferred loan fees and costs and include nonaccrual loans and loans held for sale.


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


⁽⁴⁾	Nonaccrual interest income recognized (reversed) was ~~$160~~$6 thousand and ($~~749)~~793) thousand for the ~~six~~nine months ended ~~June~~September 30, 2013 and 2012, respectively.


⁽⁵⁾	Loan prepayment fee income excluded was ~~$369~~$948 thousand and ~~$314~~$433 thousand for the ~~six~~nine months ended ~~June~~September 30, 2013 and 2012, respectively.

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Changes in net interest income are a function of changes in interest rates and volumes of ~~interest-earning~~interest earning assets and ~~interest-bearing~~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~~interest earning assets and ~~interest-bearing~~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 June 30, 2013 over June 30, 2012									Three Months Ended September 30, 2013 over September 30, 2012
	Net Increase (Decrease)									Net Increase (Decrease)
				Change due to									Change due to
				Rate			Volume						Rate			Volume
	(Dollars in thousands)									(Dollars in thousands)
INTEREST INCOME:
Interest and fees on loans	$	2,969		$	(7,701	)	$	10,670		$	6,194		$	(5,013	)	$	11,207
Interest on securities	(723		)	(792		)	69			20			(168		)	188
Interest on FRB and FHLB stock and other investments	220			127			93			366			207			159
Interest on federal funds sold	(30		)	(15		)	(15		)	—			—			—
Total interest income	$	2,436		$	(8,381	)	$	10,817		$	6,580		$	(4,974	)	$	11,554
INTEREST EXPENSE:
Interest on demand, interest bearing	$	88		$	(80	)	$	168		$	152		$	(28	)	$	180
Interest on savings	(109		)	(97		)	(12		)	(152		)	(233		)	81
Interest on time deposits	423			(308		)	731			745			(155		)	900
Interest on FHLB advances	(385		)	(765		)	380			(352		)	(409		)	57
Interest on other borrowings	(182		)	(135		)	(47		)	58			(18		)	76
Total interest expense	$	(165	)	$	(1,385	)	$	1,220		$	451		$	(843	)	$	1,294
Net Interest Income	$	2,601		$	(6,996	)	$	9,597
NET INTEREST INCOME										$	6,129		$	(4,131	)	$	10,260



	Six months ended June 30, 2013 over June 30, 2012									Nine Months Ended September 30, 2013 over September 30, 2012
	Net Increase (Decrease)									Net Increase (Decrease)
				Change due to									Change due to
				Rate			Volume						Rate			Volume
	(Dollars in thousands)									(Dollars in thousands)
INTEREST INCOME:
Interest and fees on loans	$	2,579		$	(17,941	)	$	20,520		$	8,773		$	(23,054	)	$	31,827
Interest on securities	328			245			83			694			479			215
Interest on FRB and FHLB stock and other investments	(2,205		)	(2,050		)	(155		)	(2,185		)	(2,251		)	66
Interest on federal funds sold	(78		)	—			(78		)	(78		)	—			(78		)
Total interest income	$	624		$	(19,746	)	$	20,370		$	7,204		$	(24,826	)	$	32,030
INTEREST EXPENSE:
Interest on demand, interest bearing	$	(164	)	$	(392	)	$	228		$	(12	)	$	(400	)	$	388
Interest on savings	(277		)	(229		)	(48		)	(427		)	(469		)	42
Interest on time deposits	848			(392		)	1,240			1,591			(589		)	2,180
Interest on FHLB advances	(787		)	(1,511		)	724			(1,139		)	(1,904		)	765
Interest on other borrowings	(454		)	(317		)	(137		)	(396		)	(356		)	(40		)
Total interest expense	$	(834	)	$	(2,841	)	$	2,007		$	(383	)	$	(3,718	)	$	3,335
Net Interest Income	$	1,458		$	(16,905	)	$	18,363
NET INTEREST INCOME										$	7,587		$	(21,108	)	$	28,695

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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,~~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 ~~second~~third quarter of 2013 was ~~$800~~$744 thousand, a decrease of ~~$6.4~~$6.2 million, or ~~89.86%~~89.2%, from $~~7.2~~6.9 million for the same period last year. The decrease was primarily due to decreased historical loss rates compared to the third quarter of 2012, which was partially offset by loan growth.

The provision for loan losses for the nine months ended September 30, 2013 was $9.1 million, a decrease of $7.6 million, or 45.75%, from $16.7 million for the same period last year. The decrease is primarily due an overall reduction in quantitative reserves as a result of decreasing historical loss rates. Net ~~charge-offs~~charge offs also decreased to ~~$2.4~~$10.3 million for the ~~three~~nine months ended ~~June~~September 30, 2013~~, compared to $4.0 million for the same period last year.~~

~~The provision for loan losses for the six months period ended June 30, 2013 was $8.3 million, a decrease of $1.5 million, or 15.09%,~~ from $9.8 million for the same period last year. The decrease is primarily due an overall reduction in quantitative reserves as a result of decreasing historical loss rates. This overall decrease was offset by the addition of a new specific reserve of $5.1 million related to a TDR of an industrial warehouse loan in the six months period ended June 30, 2013. Net charge-offs decreased to $3.6 million for the six months ended ~~June 30, 2013, compared to $6.2~~$12.7 million for the same period last year.

See Note 7 of the Notes to Condensed Consolidated Financial Statements (Unaudited) and Financial ~~Condition-Loans~~Condition - Loans Receivable and Allowance for Loan Losses for further discussion.

~~Non-interest~~Noninterest Income

~~Non-interest~~Noninterest income is primarily comprised of service fees on deposit accounts, fees received on trade finance letters of credit and net gains on sales of loans.

~~Non-interest~~Noninterest income for the ~~second~~third quarter of 2013 was $~~10.6~~10.8 million, compared to $~~10.2~~7.7 million for the same quarter of 2012, an increase of $~~0.4~~3.1 million, or ~~3.9%~~40.9%. The increase was principally due to ~~increases in loan servicing fees, net and~~ net gains onof $2.8 million recorded from the sales of $36.8 million of SBA ~~loans. These increases~~loans to the secondary market during the third quarter of 2013. No SBA loans were ~~caused~~sold to the secondary market during the third quarter of 2012. Noninterest income also increased due to a $200 thousand increase in service fees on deposit accounts and a $219 thousand increase from other income and fees.

Noninterest income for the nine months ended 2013 was $31.4 million, compared to $29.5 million for the same period of 2012, an increase of $1.8 million, or 6.2 %. The increase was primarily bydue to an increase in the volume of SBA loans sold, resulting in net gains on sales ~~to $33.8 million during three months ended June 30, 2013 from $27.0~~of SBA loans of $8.8 million during the ~~same~~ period, ~~last year.~~compared to $5.4 million in the previous period. The ~~increases~~increase in ~~non-interest~~noninterest income ~~were partially~~was offset by decreases ~~in service fees on deposit accounts and a decrease in international service fees.~~

~~Non-interest income for the six months ended 2013 was~~ ~~$20.6 million, compared to~~ ~~$21.9 million~~ ~~for the same period of 2012, a decrease of~~ ~~$1.3 million, or~~ ~~6.0 %. The decrease was principally due to a decrease~~ in net gains on sales of securities available for sale and a decrease in service fees on deposit accounts. ~~The Company posted~~We recorded $54 thousand of net gains on sales of securities available for sale during the first nine months of 2013. During the same period in 2012, we recoded a net gain of $816 thousand from the sale of a Trust Preferred security, which had been marked to market in a prior ~~period, during the six months ended June 30, 2012. This compares with none in the same reporting period of 2013.~~period. Service fees on deposit accounts decreased primarily due to a decrease in non-sufficient funds charges of ~~$590~~$497 thousand.

~~Non-interest~~Noninterest income by category is summarized below:

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	Three Months Ended June 30,						Increase (Decrease)					Three Months Ended September 30,						Increase (Decrease)
	2013			2012			Amount			%		2013			2012			Amount			%
	(Dollars in thousands)											(Dollars in thousands)
Service fees on deposit accounts	$	2,922		$	3,269		$	(347	)	(10.6	)%	$	3,321		$	3,121		$	200		6.4	%
International service fees	1,266			1,403			(137		)	(9.8	)%	1,196			1,183			13			1.1	%
Loan servicing fees, net	1,036			810			226			27.9	%	1,004			1,031			(27		)	(2.6	)%
Wire transfer fees	887			775			112			14.5	%	916			833			83			10.0	%
Other income and fees	1,204			1,354			(150		)	(11.1	)%	1,583			1,364			219			16.1	%
Net gains on sales of SBA loans	3,295			2,463			832			33.8	%	2,827			—			2,827			100.0	%
Net losses on sales of other loans	19			146			(127		)	—	%	—			—			—			—	%
Net valuation gains (losses) on interest rate contracts	—			10			(10		)	100.0	%
Net gains on sales of OREO	(11		)	(8		)	(3		)	37.5	%
Total non-interest income	$	10,618		$	10,222		$	396		3.9	%
Net gains on sales of securities available for sale												—			133			(133		)	(100.0	)%
Net valuation gains on interest rate contracts												—			11			(11		)	(100.0	)%
Net losses on sales of OREO												(48		)	(12		)	(36		)	300.0	%
Total noninterest income												$	10,799		$	7,664		$	3,135		40.9	%



	Six months ended June 30,						Increase (Decrease)					Nine Months Ended September 30,						Increase (Decrease)
	2013			2012			Amount			Percent (%)		2013			2012			Amount			Percent (%)
	(Dollars in thousands)											(Dollars in thousands)
Service fees on deposit accounts	$	5,797		$	6,429		$	(632	)	(9.8	%)	$	9,118		$	9,550		$	(432	)	(4.5	%)
International service fees	2,504			2,627			(123		)	(4.7	%)	3,700			3,810			(110		)	(2.9	%)
Loan servicing fees, net	2,005			2,147			(142		)	(6.6	%)	3,009			3,178			(169		)	(5.3	%)
Wire transfer fees	1,703			1,516			187			12.3	%	2,619			2,349			270			11.5	%
Other income and fees	2,453			2,694			(241		)	(8.9	%)	4,036			4,058			(22		)	(0.5	%)
Net gains on sales of SBA loans	5,989			5,426			563			10.4	%	8,816			5,426			3,390			62.5	%
Net gains (losses) on sales of other loans	62			146			(84		)	57.5	%
Net gains on sales and calls of securities available for sale	54			816			(762		)	(93.4	%)
Net valuation gains (losses) on interest rate contracts	—			13			(13		)	100.0	%
Net gains on sales of OREO	(9		)	53			(62		)	(117.0	%)
Total non-interest income	$	20,558		$	21,867		$	(1,309	)	(6.0	%)
Net gains on sales of other loans												62			146			(84		)	57.5	%
Net gains on sales of securities available for sale												54			949			(895		)	(94.3	%)
Net valuation gains on interest rate contracts												—			24			(24		)	100.0	%
Net (losses) gains on sales of OREO												(57		)	41			(98		)	(239.0	%)
Total noninterest income												$	31,357		$	29,531		$	1,826		6.2	%

~~Non-interest~~Noninterest Expense

~~Non-interest~~Noninterest expense for the ~~second~~third quarter of 2013 was $~~34.4~~35.7 million, an increase of $~~3.4~~7.0 million, or ~~10.8%~~24.2%, from $~~31.1~~28.8 million for the same period of 2012. Salaries and employee benefits expense increased $~~1.6~~2.9 million due to an increase in the number of full-time equivalent employees, which increased to ~~742~~831 at ~~June~~September 30, 2013 from ~~653~~684 at ~~June~~September 30, 2012, which was partially ~~as a result of~~due to the ~~PIB acquisition~~PI and Foster acquisitions that were completed in ~~the first quarter of~~ 2013. Occupancy expense ~~and furniture and equipment~~ increased by a total of ~~$603~~$450 thousand principally due to increased rental commitments ~~during~~of $342 thousand from an increased number of leases and reflects minimal increases in property taxes and utilities related to the period and due to increased depreciation expense for software and hardware resulting from recent equipment upgrades and purchases. The FDIC assessment for the second quarter of 2013 increased by $807 thousand.leased properties. Professional fees increased by ~~$374~~$564 thousand due to additional legal services and consulting fees for our information systems during the quarter. Merger and integration expenses ~~decreased~~increased by ~~$963~~$748 thousand, as we incurred the ~~Company incurred greater~~majority of the expenses from the Foster acquisition, including salaries and benefits expenses and professional service fees, during the quarter. The majority of expenses related to the ~~merger with~~ Center Financial ~~compared to~~Merger were incurred in the ~~acquisition~~first and second quarters of ~~PIB.~~2012, while only $183 thousand was incurred in the third quarter of 2012. Other noninterest expense, which is comprised of directors fees, amortization on intangibles and other miscellaneous expenses, increased by $1.3 million during the quarter.

~~Non-interest~~Noninterest expense for the ~~six~~nine months ended of 2013 was $~~67.7~~103.5 million, an increase of $~~6.2~~13.2 million, or ~~10.1%~~14.6%, ~~from~~compared to $~~61.5~~90.3 million for the same period of 2012. Salaries and employee benefits expense increased $~~3.8~~6.7 million due to one-time costs incurrred as part of a management transition and an increase in the number of full-time equivalent employees. Occupancy expense ~~and furniture and equipment~~ increased by a total of ~~$968 thousand~~$1.4 million principally due to increased rental commitments during the period causing an increase in lease expense of $1.2 million and ~~due to increased depreciation expense~~increases in property taxes and utilities for software and hard resulting recent equipment upgrades and purchases. Credit related expenses decreased by $552 thousand primarily due to a decrease of $614 thousand in valuation expenses for loans held for sale.the leased properties. Professional fees increased by ~~$1.1~~$1.6 million due to ~~additional~~increased legal fees, fees for accounting services and consulting services for ~~the Company's~~our information systems. Merger and integration expenses decreased by ~~$1.4 million,~~$683 thousand, as the Company incurred greater

Table of Contents

salaries and benefits expenses and professional service fees related to the merger with Center Financial ~~compared to~~in 2012 than were incurred on the ~~acquisition of PIB.~~PIB and Foster acquisitions in 2013. Other noninterest expense increased by $2.7 million during the period.

~~Table of Contents~~

The breakdown of changes in ~~non-interest~~noninterest expense by category is shown below:


	Three Months Ended June 30,				Increase (Decrease)					Three Months Ended September 30,				Increase (Decrease)
	2013		2012		Amount			%		2013		2012		Amount			%
	(Dollars in thousands)									(Dollars in thousands)
Salaries and employee benefits	$	16,219	$	14,658	$	1,561		10.6	%	$	16,535	$	13,611	$	2,924		21.5	%
Occupancy	4,835		4,232		603			14.2	%	4,360		3,910		450			11.5	%
Furniture and equipment	1,613		1,468		145			9.9	%	1,728		1,495		233			15.6	%
Advertising and marketing	1,190		1,525		(335		)	(22.0	)%	1,393		1,159		234			20.2	%
Data processing and communications	1,861		1,573		288			18.3	%	1,983		1,659		324			19.5	%
Professional fees	1,443		1,069		374			35.0	%	1,440		876		564			64.4	%
FDIC assessment	858		51		807			1,582.4	%	818		644		174			27.0	%
Credit related expenses	2,203		2,290		(87		)	(3.8	)%	2,646		2,613		33			1.3	%
Merger and integration expenses	385		1,348		(963		)	(71.4	)%	931		183		748			408.7	%
Other	3,822		2,863		959			33.5	%	3,912		2,620		1,292			49.3	%
Total non-interest expense	$	34,429	$	31,077	$	3,352		10.8	%
Total noninterest expense										$	35,746	$	28,770	$	6,976		24.2	%


	Six Months Ended June 30,				Increase (Decrease)					Nine Months Ended September 30,				Increase (Decrease)
	2013		2012		Amount			Percent (%)		2013		2012		Amount			Percent (%)
	(Dollars in thousands)									(Dollars in thousands)
Salaries and employee benefits	$	32,551	$	28,737	$	3,814		13.3	%	$	49,086	$	42,348	$	6,738		15.9	%
Occupancy	8,846		7,878		968			12.3	%	13,206		11,788		1,418			12.0	%
Furniture and equipment	3,186		2,686		500			18.6	%	4,914		4,181		733			17.5	%
Advertising and marketing	2,463		2,983		(520		)	-17.4	%	3,856		4,142		(286		)	(6.9	)%
Data processing and communications	3,505		3,184		321			10.1	%	5,488		4,843		645			13.3	%
Professional fees	2,744		1,682		1,062			63.1	%	4,184		2,558		1,626			63.6	%
FDIC assessment	1,552		1,088		464			42.6	%	2,370		1,732		638			36.8	%
Credit related expenses	3,918		4,470		(552		)	-12.3	%	6,564		6,967		(403		)	(5.8	)%
Merge and integration expenses	1,690		3,121		(1,431		)	(45.9	)%
Merger and integration expenses										2,621		3,304		(683		)	(20.7	)%
Other	7,249		5,683		1,566			27.6	%	11,161		8,419		2,742			32.6	%
Total non-interest expense	$	67,704	$	61,512	$	6,192		10.1	%
Total noninterest expense										$	103,450	$	90,282	$	13,168		14.6	%

Provision for Income Taxes

Income tax expense was $~~14.8~~15.1 million and $~~12.1~~11.8 million for the quarters ended ~~June~~September 30, 2013 and 2012, respectively. The effective income tax ~~rate~~rates were 39.1% for the quarters ended ~~June~~September 30, 2013 and ~~2012 was 39.5% and 38.5%, respectively.~~2012. Income tax expense was $~~26.2~~41.4 million and $~~27.6~~39.5 million for the ~~six~~nine months ended ~~June~~September 30, 2013 and 2012, respectively. The effective income tax ~~rate~~rates for the ~~six~~nine months ended ~~June~~September 30, 2013 and 2012 ~~was 39.5%~~were 39.4% and 39.0%, respectively.

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Financial Condition

At ~~June~~September 30, 2013, our total assets were $~~5.86~~6.34 billion, an increase of ~~$222.4~~$700.3 million from $5.64 billion at December 31, 2012. ~~As previously discussed, the~~The increase was principally due to a ~~$221.9~~$603.9 million increase in loans receivable, net of allowance for loan losses, ~~and~~ a ~~$20.8~~$32.4 million increase in ~~securities available for sale. The increases were partially offset by a decrease in~~ cash and ~~cash equivalents of $16.6 million.~~due from banks and a $30 million increase in goodwill. The increase in total assets was funded by a ~~$192.8~~$637.1 million increase in deposits, a ~~$817~~$724 thousand increase in FHLB advances, a $15.5 million increase in subordinated debentures and net income of ~~$40.1~~$63.7 million. As previously discussed, the increases in assets and liabilities were principally due to the PIB and Foster acquisitions.

Investment Securities Portfolio

As of ~~June~~September 30, 2013, we had $~~725.2~~708.6 million in available for sale securities, compared to $704.4 million at December 31, 2012. The net unrealized loss on the available for sale securities at ~~June~~September 30, 2013 was ~~$8.0~~$6.0 million, compared to a net unrealized gain on such securities of $15.4 million at December 31, 2012. During the ~~six~~nine months ended ~~June~~September 30, 2013, ~~$148.0~~$169.9 million in securities were purchased, ~~$101.6~~$143.6 million in mortgage related securities were paid down, and $6.6 million in securities were sold. We recognized net gains of $54 thousand on the securities that were sold. WeDuring the same period last year, we sold a ~~$1.0 million~~ corporate trust preferred security and other debt securities and recognized a gain of ~~$816 thousand during the same period of last year.~~$949 thousand. The weighted average duration (the weighted average of the times of the present values of all the cash flows) of the available for sale securities was ~~4.54~~4.81 years and 3.26 years at ~~June~~September 30, 2013 and December 31, 2012, respectively. The weighted average life (the weighted average of the times of the principal repayments) of the available for sale securities was ~~5.11~~5.50 years and 3.5 years at ~~June~~September 30, 2013 and December 31, 2012, respectively.

Loan Portfolio

As of ~~June~~September 30, 2013, gross loans outstanding, net of deferred loan fees and costs and excluding loans held for sale, was $~~4.52~~4.90 billion, an increase of ~~$217.1~~$602.7 million from $4.30 billion at December 31, 2012. Total loan originations during the three months ended ~~June~~September 30, 2013 were ~~$208.0~~$387.6 million, including SBA loan originations of ~~$42.7~~$72.7 million. Of the ~~$42.7~~$72.7 million in SBA loan originations, $38.9 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 gross loans in each major loan category at the dates indicated:


	June 30, 2013					December 31, 2012					September 30, 2013					December 31, 2012
	Amount			%		Amount			%		Amount			%		Amount			%
				(Dollars in thousands)										(Dollars in thousands)
Loan portfolio composition
Real estate loans:
Residential	$	9,849		0	%	$	9,247		0	%	$	10,294		0	%	$	9,247		0	%
Commercial & industrial	3,328,606			74	%	3,100,466			72	%	3,652,815			75	%	3,100,466			72	%
Construction	74,165			2	%	65,045			2	%	73,116			1	%	65,045			2	%
Total real estate loans	3,412,620			76	%	3,174,758			73	%	3,736,225			76	%	3,174,758			73	%
Commercial business	942,369			21	%	921,556			21	%	932,955			19	%	921,556			21	%
Trade finance	117,827			3	%	152,070			4	%	135,889			3	%	152,070			4	%
Consumer and other	47,088			1	%	49,954			1	%	95,693			2	%	49,954			1	%
Total loans outstanding	4,519,904			100	%	4,298,338			100	%	4,900,762			100	%	4,298,338			100	%
Less: deferred loan fees	(1,782		)			(2,086		)			(1,823		)			(2,086		)
Gross loans receivable	4,518,122					4,296,252					4,898,939					4,296,252
Less: allowance for loan losses	(71,675		)			(66,941		)			(65,715		)			(66,941		)
Loans receivable, net	$	4,446,447				$	4,229,311				$	4,833,224				$	4,229,311

SBA loans are included in commercial business loans and commercial and industrial real estate loans. SBA loans included in commercial business loans were ~~$52.7~~$61.2 million at ~~June~~September 30, 2013 and $69.8 million at December 31, 2012. SBA loans included in commercial and industrial real estate loans were ~~$179.71million~~$199.5 million at ~~June~~September 30, 2013 and $148.0 million at December 31, 2012.

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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.

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


	June 30, 2013		December 31, 2012		September 30, 2013		December 31, 2012
	(Dollars in thousands)				(Dollars in thousands)
Loan commitments	$	669,764	$	690,917	$	669,248	$	690,917
Standby letters of credit	30,272		39,176		36,744		39,176
Other commercial letters of credit	71,031		51,257		55,055		51,257
	$	771,067	$	781,350	$	761,047	$	781,350

Nonperforming Assets

Nonperforming assets, which include nonaccrual loans, loans 90 days or more past due and on accrual status, restructured loans, and OREO, were ~~$104.6~~$139.3 million at ~~June~~September 30, 2013, compared to $79.9 million at December 31, 2012. The ratio of nonperforming assets to gross loans plus OREO was ~~2.21%~~2.83% and 1.86% at ~~June~~September 30, 2013 and December 31, 2012, respectively.

The following table summarizes the composition of our nonperforming assets as of the dates indicated.


	June 30, 2013			December 31, 2012			September 30, 2013			December 31, 2012
	(Dollars in thousands)						(Dollars in thousands)
Nonaccrual loans ⁽¹⁾	$	44,987		$	29,653		$	36,129		$	29,653
Loans 90 days or more days past due on accrual status ⁽²⁾	18,786			17,742			39,560			17,742
Accruing restructured loans	36,225			29,849			36,018			29,849
Total Nonperforming Loans	99,998			77,244			111,707			77,244
OREO	9,596			2,698			27,582			2,698
Total Nonperforming Assets	$	109,594		$	79,942		$	139,289		$	79,942
Nonperforming loans to total gross loans, excluding loans held for sale	2.21		%	1.80		%	2.28		%	1.80		%
Nonperforming assets to gross loans plus OREO	2.21		%	1.86		%	2.83		%	1.86		%
Nonperforming assets to total assets	1.87		%	1.42		%	2.20		%	1.42		%
Allowance for loan losses to nonperforming loans (excludes delinquent loans 90 days or more on accrual status)	88.26		%	112.50		%	91.08		%	112.50		%
Allowance for loan losses to nonperforming assets	65.40		%	83.74		%	47.18		%	83.74		%


⁽¹⁾	Nonaccrual loans exclude the guaranteed portion of delinquent SBA loans that are in liquidation totaling ~~$21.0~~$25.2 million and $17.6 million as of ~~June~~September 30, 2013 and December 31, 2012, respectively.


⁽²⁾	Loans 90 days or more past due on accrual status are acquired loans accounted for under ASC 310-30.

Allowance for Loan Losses

The allowance for loan losses was $~~71.7~~65.7 million at ~~June~~September 30, 2013, compared to $66.9 million at December 31, 2012. We recorded a provision for loan losses of ~~$8.3~~$9.1 million during the ~~six~~nine months ended ~~June~~September 30, 2013, compared to ~~$9.8~~$16.7 million for the same period of 2012. The allowance for loan losses was ~~1.59%~~1.34% of gross loans at ~~June~~September 30, 2013 and 1.56% of gross loans at December 31, 2012. Impaired loans as defined by FASB ASC 310-10-35, “Accounting by Creditors for Impairment of a Loan,” totaled $~~98.2~~99.2 million and $90.2 million as of ~~June~~September 30, 2013 and December 31, 2012, respectively, with specific allowances of $~~15.1~~11.0 million and $9.2 million, respectively.

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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								Allocation of Allowance for Loan Losses
	June 30, 2013				December 31, 2012				September 30, 2013				December 31, 2012
	Amount of Allowance for Loan Losses		Percent of ALLL to Total ALLL		Amount of Allowance for Loan Losses		Percent of ALLL to Total ALLL		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)								(Dollars in thousands)
Loan Type
Real estate - Residential	$	71	0	%	$	74	0	%	$	68	0.10	%	$	74	0.11	%
Real estate - Commercial	50,552		71	%	45,162		67	%	46,293		70.45	%	45,162		67.47	%
Real estate - Construction	941		1	%	986		1	%	840		1.28	%	986		1.47	%
Commercial business	17,174		24	%	17,606		26	%	15,300		23.28	%	17,606		26.30	%
Trade finance	2,335		3	%	2,352		4	%	2,513		3.82	%	2,352		3.51	%
Consumer and other	602		1	%	761		1	%	701		1.07	%	761		1.14	%
Total	$	71,675	100	%	$	66,941	100	%	$	65,715	100	%	$	66,941	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). The Acquired Loans were further segregated between Acquired Credit Impaired Loans (loans with credit deterioration at the time they were acquired and accounted for under ASC ~~310-30)~~310-30, or "ACILs") and performing loans (loans that were pass graded at the time they were ~~acquired)~~acquired, or "APLs"). The activity in the ALLL for the three and ~~six~~nine months ended ~~June~~September 30, 2013 is as follows:

Acquired Loans⁽²⁾

Three Months Ended June 30, 2013
Legacy Loans⁽¹⁾
Credit Impaired Loans Performing Loans Total
(Dollars in thousands)
Balance, beginning of period $ 62,467
$ 4,535
$ 6,266
$ 73,268
Provision for loan losses 603
—
197
800
Loans charged off (2,192 ) —
(708 ) (2,900 )
Recoveries of charged offs 437
—
70
507
Balance, end of period $ 61,315
$ 4,535
$ 5,825
$ 71,675

Gross loans, net of deferred loan fees and costs $ 3,622,056
155,060
742,792
$ 4,519,908
Loss coverage ratio 1.69 % 2.92 % 0.78 % 1.59 %

Six Months Ended June 30, 2013
Legacy Loans ⁽¹⁾
Credit Impaired Loans Performing Loans Total
(Dollars in thousands)
Balance, beginning of period $ 61,952
$ 0
$ 0
$ 61,952
Provision for loan losses 11,558
2,112
3,012
16,682
Loans charged off (15,051 ) 0
(1,710 ) (16,761 )
Recoveries of charged offs 3,375
0
704
4,079
Balance, end of period $ 61,834
$ 2,112
$ 2,006
$ 65,952
⁽¹⁾ Legacy Loans includes acquired loans that have been renewed or refinanced after the merger.
⁽²⁾ Acquired loans were marked to fair value at the acquisition date and provisions for loan losses reflect credit deterioration since the acquisition date.

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				Acquired Loans⁽²⁾
Three Months Ended September, 2013	Legacy Loans⁽¹⁾			ACILs			APLs			Total
	(Dollars in thousands)
Balance, beginning of period	$	61,315		$	4,535		$	5,825		$	71,675
Provision for loan losses	(1,310		)	—			2,054			744
Loan charge offs	(1,302		)	(557		)	(5,931		)	(7,790		)
Recoveries of loan charge offs	1,070			—			16			1,086
Balance, end of period	$	59,773		$	3,978		$	1,964		$	65,715

Gross loans, net of deferred loan fees and costs	$	3,857,469		227,412			815,881			$	4,900,762
Loss coverage ratio	1.55		%	1.75		%	0.24		%	1.34		%


				Acquired Loans ⁽²⁾
Nine Months Ended September 30, 2013	Legacy Loans ⁽¹⁾			ACILs			APLs			Total
	(Dollars in thousands)
Balance, beginning of period	$	61,002		$	4,535		$	1,404		$	66,941
Provision for loan losses	1,647			—			7,403			9,050
Loans charged off	(4,614		)	(557		)	(6,948		)	(12,119		)
Recoveries of charged offs	1,738			—			105			1,843
Balance, end of period	$	59,773		$	3,978		$	1,964		$	65,715

⁽¹⁾ Legacy Loans includes acquired loans that have been renewed or refinanced after the merger.
⁽²⁾ Acquired loans were marked to fair value at the acquisition date and provisions for loan losses reflect credit deterioration since the acquisition date.

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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 allowance for loan losses at the beginning and end of each period, the amount of average and gross loans outstanding, and certain other ratios as of the dates and for the periods indicated:


	At or for the Three Months Ended June 30,						At or for the Nine Months Ended September 30,
	2013			2012			2013			2012
	(Dollars in thousands)						(Dollars in thousands)
LOANS
Average gross loans receivable, including loans held for sale (net of deferred fees)	$	4,546,461		$	3,847,921		$	4,588,464		$	3,878,080
Total gross loans receivables, excluding loans held for sale (net of deferred fees)	$	4,518,122		$	3,874,538		$	4,898,939		$	4,069,494
ALLOWANCE:
Balance-beginning of period	$	73,268		$	62,309
Less: Loan charge-offs:
Balance, beginning of period							$	66,941		$	65,505
Less: Loan charge offs:
Commercial & industrial real estate	(801		)	(2,485		)	(8,052		)	(2,074		)
Commercial business loans	(2,097		)	(2,124		)	(3,991		)	(5,692		)
Trade finance	—			(300		)	(26		)	—
Consumer and other loans	(2		)	(700		)	(50		)	(3		)
Total loans charged off	(2,900		)	(5,609		)
Total loan charge offs							(12,119		)	(7,769		)
Plus: Loan recoveries
Commercial & industrial real estate	57			1,108			165			973
Commercial business loans	413			265			1,564			290
Trade Finance							—			—
Consumer and other loans	37			250			114			53
Total loans recoveries	507			1,623			1,843			1,316
Net loan charge-offs	(2,393		)	(3,986		)
Net loan charge offs							(10,276		)	(6,453		)
Provision for loan losses	800			2,600			9,050			6,900
Balance-end of period	$	71,675		$	60,923
Net loan charge-offs to average gross loans, including loans held for sale (net of deferred fees) *	0.21		%	0.41		%
Balance, end of period							$	65,715		$	65,952
Net loan charge offs to average gross loans, including loans held for sale (net of deferred fees) *							0.30		%	0.22		%
Allowance for loan losses to gross loans at end of period	1.59		%	1.57		%	1.34		%	1.62		%
Net loan charge-offs to beginning allowance *	13.06		%	25.59		%
Net loan charge-offs to provision for loan losses	299.13		%	153.31		%
Net loan charge offs to beginning allowance *							20.47		%	13.13		%
Net loan charge offs to provision for loan losses							113.55		%	93.52		%
* Annualized

We believe the allowance for loan losses as of ~~June~~September 30, 2013 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 ~~June~~September 30, 2013, deposits increased ~~$192.8~~$637.1 million, or ~~4.40%~~14.5%, to ~~$4.58~~$5.02 billion from $4.38 billion at December 31, 2012. The net increase in deposits is primarily due to the PIB ~~acquisition during the first quarter of 2013~~and Foster acquisitions in which we assumed $143.7 million and $321.6 million in ~~deposits. Interest-bearing~~deposits, respectively. Interest bearing demand deposits, including money market and Super Now accounts, totaled ~~$1.44~~$1.50 billion at ~~June~~September 30, 2013, an increase of ~~$14.6~~$66.2 million from $1.43 billion at December 31, 2012.

At ~~June~~September 30, 2013, ~~26%~~27% of total deposits were ~~non-interest~~noninterest bearing demand deposits, ~~42%~~43% were time deposits and ~~32%~~30% were interest bearing demand and savings deposits. By comparison, at December 31, 2012, 27% of total deposits were ~~non-interest~~noninterest bearing demand deposits, 40% were time deposits, and 33% were interest bearing demand and savings deposits.

At ~~June~~September 30, 2013, we had ~~$301.7~~$290.1 million in brokered deposits and $300.0 million in California State Treasurer deposits, compared to $307.2 million and $300.0 million of such deposits at December 31, 2012, respectively. The California State Treasurer deposits had three-month maturities with a weighted average interest rate of 0.09% at ~~June~~September 30, 2013 and were

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collateralized with securities with a carrying value of ~~$366.6 million~~.$345.7 million. The weighted average interest rate for wholesale deposits was 0.33% at ~~June~~September 30, 2013.

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The following is a schedule of certificates of deposit maturities as of ~~June~~September 30, 2013: which do not include the certificates of deposits totaling $141,093 as of September 30, 2013 from the acquisition of Foster:



	Balance		%		Balance	%
	(Dollars in thousands)				(Dollars in thousands)
Three months or less	$	597,509	31	%	722,960	35.75	%
Over three months through six months	512,953		27	%	368,962	18.25	%
Over six months through nine months	246,624		13	%	314,340	15.54	%
Over nine months through twelve months	324,920		17	%	335,169	16.57	%
Over twelve months	240,653		13	%	280,717	13.88	%
Total time deposits	$	1,922,659	100	%	2,022,148	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 ~~June~~September 30, 2013, we had $~~421.5~~421.4 million of FHLB advances with average remaining maturities of ~~2.9~~3.0 years, compared to $420.7 million with average remaining maturities of 2.6 years at December 31, 2012. The weighted average rate, including acquisition accounting adjustments, was ~~1.16%~~1.18% and 1.31% at ~~June~~September 30, 2013 and at December 31, 2012, respectively.

At ~~June~~September 30, 2013, five wholly-owned subsidiary grantor trusts ("Trusts") established by us had issued $46 million of pooled trust preferred securities (“Trust Preferred Securities”). Upon the acquisition of Foster Bankshares, we assumed one grantor trust established by former Foster Bank, which issued $15.0 million of trust preferred securities, which we plan to redeem by the first quarter of 2014. 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 redemption prices 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~~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 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”.

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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.

Stockholders’ Equity and Regulatory Capital

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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~~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 $~~781.0~~801.2 million at ~~June~~September 30, 2013 compared to $751.1 million at December 31, 2012.

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 4%. In addition to the risk-based guidelines, federal banking regulators require banking organizations to maintain a minimum amount of Tier I capital to average total assets, referred to as the leverage ratio. 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 ~~June~~September 30, 2013, our Tier I capital, defined as stockholders’ equity less intangible assets, plus proceeds from the trust preferred securities (subject to limitations), was $~~728.8~~727.1 million, compared to $688.4 million at December 31, 2012, representing an increase of ~~$40.4~~$38.6 million, or ~~5.54%~~5.6%. The increase was primarily due to the increase in additional paid-in capital from the net income during the ~~six~~nine months ~~period~~ended September 30, 2013 of $~~40.1~~63.7 million. At ~~June~~September 30, 2013, the total capital to risk-weighted assets ratio was ~~16.14%~~14.89% and the Tier I capital to risk-weighted assets ratio was ~~14.89%~~13.64%. The Tier I leverage capital ratio was ~~12.61%~~12.06%.


	As of June 30, 2013 (Dollars in thousands)												As of September 30, 2013 (Dollars in thousands)
	Actual				To Be Well-Capitalized				Excess				Actual				To Be Well-Capitalized				Excess
	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
BBCN Bancorp, Inc
Total risk-based capital ratio	$	790,164	16.12	%	N/A		N/A						$	793,569	14.89	%	N/A		N/A
Tier 1 risk-based capital ratio	$	728,773	14.87	%	N/A		N/A						$	727,053	13.64	%	N/A		N/A
Tier 1 capital to total assets	$	728,773	12.60	%	N/A		N/A						$	727,053	12.06	%	N/A		N/A
BBCN Bank
Total risk-based capital ratio	$	780,843	15.95	%	$	489,676	10.00	%	$	291,167	5.95	%	$	784,601	14.73	%	$	532,686	10.00	%	$	251,915	4.73	%
Tier 1 risk-based capital ratio	$	719,494	14.69	%	$	293,805	6.00	%	$	425,689	8.69	%	$	718,084	13.48	%	$	319,612	6.00	%	$	398,472	7.48	%
Tier I capital to total assets	$	719,494	12.42	%	$	289,108	5.00	%	$	430,386	7.42	%	$	718,084	11.90	%	$	301,740	5.00	%	$	416,344	6.90	%
	As of December 31, 2012 (Dollars in thousands)												As of December 31, 2012 (Dollars in thousands)
	Actual				To Be Well-Capitalized				Excess				Actual				To Be Well-Capitalized				Excess
	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
BBCN Bancorp, Inc
Total risk-based capital ratio	$	746,396	16.16	%	N/A		N/A						$	746,396	16.16	%	N/A		N/A
Tier 1 risk-based capital ratio	$	688,422	14.91	%	N/A		N/A						$	688,422	14.91	%	N/A		N/A
Tier 1 capital to total assets	$	688,422	12.76	%	N/A		N/A						$	688,422	12.76	%	N/A		N/A
BBCN Bank
Total risk-based capital ratio	$	725,655	15.73	%	$	461,417	10.00	%	$	264,238	5.73	%	$	725,655	15.73	%	$	461,417	10.00	%	$	264,238	5.73	%
Tier 1 risk-based capital ratio	$	667,725	14.47	%	$	276,850	6.00	%	$	390,875	8.47	%	$	667,725	14.47	%	$	276,850	6.00	%	$	390,875	8.47	%
Tier I capital to total assets	$	667,725	12.38	%	$	269,767	5.00	%	$	397,958	7.38	%	$	667,725	12.38	%	$	269,767	5.00	%	$	397,958	7.38	%

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

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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.

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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.

~~A t~~At ~~June~~September 30, 2013, our total borrowing capacity from the FHLB was $~~1.59~~1.58 billion, of which $~~1.17~~1.18 billion was unused and available to borrow. At ~~June~~September 30, 2013, our total borrowing capacity from the FRB was ~~$370.6~~$465.9 million, of which ~~$370.6~~$465.9 million was unused and available to borrow. In addition to these lines, our liquid assets, consisting of cash and cash equivalent, ~~interest-bearing~~interest bearing cash deposits with other banks, overnight federal funds sold to other banks, liquid investment securities available for sale, and loan repayments within 30 days, were ~~$683.2~~$653.8 million at ~~June~~September 30, 2013, compared to $661.3 million at December 31, 2012. Cash and cash equivalents, including federal funds sold, were $~~296.3~~345.4 million at ~~June~~September 30, 2013, compared to $312.9 million at December 31, 2012. We believe our liquidity sources to be stable and adequate to meet our day-to-day cash flow requirements.

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Item 3.	Quantitative and Qualitative Disclosures About Market Risk

The objective of our asset and liability management activities is to improve our earnings by adjusting the type and mix of assets and liabilities to effectively address changing conditions and risks. Through overall management of our balance sheet and by controlling 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~~interest bearing liabilities, to reduce our cost of funds. We also seek to improve earnings by controlling ~~non-interest~~noninterest expense, and enhancing ~~non-interest~~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 these 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 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. 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 ~~June~~September 30, 2013, 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.


	June 30, 2013					December 31, 2012					September 30, 2013						December 31, 2012
Simulated	Estimated Net Interest Income Sensitivity		Market Value Of Equity Volatility			Estimated Net Interest Income Sensitivity			Market Value Of Equity Volatility		Estimated Net Interest Income Sensitivity			Market Value Of Equity Volatility			Estimated Net Interest Income Sensitivity			Market Value Of Equity Volatility
Rate Changes	Estimated Net Interest Income Sensitivity								Market Value Of Equity Volatility		Estimated Net Interest Income Sensitivity			Market Value Of Equity Volatility			Estimated Net Interest Income Sensitivity			Market Value Of Equity Volatility
+ 200 basis points	6.53	%	Market Value Of Equity Volatility		(3.77	Estimated Net Interest Income Sensitivity		)%		5.31	%		(2.24	)%	7.13	%		(2.90	)%		5.31	%	(2.24	)%
+ 100 basis points	2.77	%	(1.47	)%		2.51	%		1.01	%	3.17	%		(1.05	)%		2.51	%		1.01	%
- 100 basis points	(0.58	)%	1.06	%		(3.78	)%		3.06	%	(1.28	)%		0.63	%		(3.78	)%		3.06	%
- 200 basis points	(1.20	)%	0.84	%		(4.52	)%		4.68	%	(1.87	)%		0.50	%		(4.52	)%		4.68	%

The results obtained from using the simulation model are somewhat uncertain as the model does not take into account other impacts or changes and the effect they could have on Company’s business or changes in business strategy the Company might make in reaction to changes in the interest rate environment.

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Item 4.	Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We conducted an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) for the period ended ~~June~~September 30, 2013. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer determined that our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting during the quarter ended ~~June~~September 30, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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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. There were no material developments in legal proceedings which were previously disclosed in our 2012 Annual Report on Form 10-K.


Item 1A.	Risk Factors

There were no material changes from risk factors previously disclosed in our 2012 Annual Report on Form 10-K.


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

None


Item 3.	Defaults Upon Senior Securities

None


Item 4.	Mine Safety Disclosures

None


Item 5.	Other Information

None


Item 6.	Exhibits

See “Index to Exhibits”.

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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:	~~August 9,~~November 8, 2013	/s/ Kevin S. Kim
		Kevin S. Kim
		Chairman, President and Chief Executive Officer

Date:	~~August 9,~~November 8, 2013

		/s/ Douglas J. Goddard
		Douglas J. Goddard
		Executive Vice President and Chief Financial Officer

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INDEX TO EXHIBITS



Exhibit Number		Description

3.1		Certificate of Incorporation of the Company, filed with the Delaware Secretary of State on June 5, 2000 (incorporated herein by reference to the Registration Statement on Form S-4 filed with the Securities and Exchange Commission (“SEC”) on November 16, 2000)

3.2		Certificate of Amendment of Certificate of Incorporation of the Company, filed with the Delaware Secretary of State on May 31, 2002 (incorporated herein by reference to Exhibit 3.3 of the Registration Statement on Form S-8 filed with the SEC on February 5, 2003)

3.3		Certificate of Amendment of Certificate of Incorporation of the Company, filed with the Delaware Secretary of State on June 1, 2004 (incorporated herein by reference to Exhibit 3.1.1 of the Quarterly Report on Form 10-Q filed with the SEC on November 8, 2004)

3.4		Certificate of Amendment of Certificate of Incorporation of the Company, filed with the Delaware Secretary of State on November 2, 2005 (incorporated herein by reference to Appendix B of the Proxy Statement on DEF14 A, filed with the SEC on September 6, 2005)

3.5		Certificate of Amendment of Certificate of Incorporation of the Company, filed with the Delaware Secretary of State on July 20, 2007 (incorporated herein by reference to Appendix C of the Proxy Statement on DEF14 A, Appendix C filed with the SEC on April 19, 2007)

3.6		Certificate of Merger, filed with the Delaware Secretary of State on November 30, 2011 (incorporated herein by reference to Exhibit 3.6 of the Quarterly Report on Form 10-Q filed with SEC on May 10, 2012)

3.7		Amended and Restated Bylaws of BBCN Bancorp, Inc. ~~((incorporated~~(incorporated herein by reference to Exhibit 3.7 of the Quarterly Report on Form 10-Q filed with the SEC on May 8, 2013)

~~10.1~~4.1		~~Agreement~~Amended and ~~Plan~~Restated Declaration of ~~Merger,~~Trust, Foster Capital Trust I, dated as of ~~April 15, 2013,~~July 8, 2005, by and among ~~BBCN Bancorp, Inc., Won Merger Sub Corp.~~Christiana Bank and Trust as Delaware Trustee, LaSalle Bank National Association as Institutional Trustee, Foster Bankshares, Inc.* as Sponsor and the Administrators named therein*

~~10.2~~4.2		~~CEO~~Indenture, Junior Subordinated Debt Securities, dated as of July 8, 2005, between Foster Bankshares, Inc. as Issuer and LaSalle Bank National Association as Trustee*

4.3		Guarantee Agreement, dated as of July 8, 2005, by and between Foster Bankshares, Inc. and LaSalle Bank National Association as Trustee*

10.1		CCO Employment Agreement between BBCN Bank and ~~Kevin S. Kim,~~Mark Lee, dated ~~May 31,~~August 20, 2013*

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

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