UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

______________________________________________

FORM 10-Q

______________________________________________

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

For the quarterly period ended ~~September 30, 2017~~March 31, 2018

Commission File Number: 000-50245

______________________________________________

HOPE BANCORP, INC.

(Exact name of registrant as specified in its charter)

______________________________________________



Delaware		95-4849715
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

3200 Wilshire Boulevard, Suite 1400, Los Angeles, California		90010
(Address of principal executive offices)		(Zip Code)

(213) ~~387-3200~~639-1700

(Registrant’s telephone number, including area code)

N/A

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

______________________________________________

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

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



Large accelerated filer	x		Accelerated filer	o

Non-accelerated filer	o	(Do not check if a smaller reporting company)	Smaller reporting company	o

			Emerging growth company	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(d) of the Exchange Act. 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 ~~November~~May 2, ~~2017,~~2018, there were ~~135,498,278~~135,517,002 outstanding shares of Hope Bancorp, Inc. common stock, $0.001 par value.

Table of Contents




		Page
PART I - FINANCIAL INFORMATION

Item 1.	FINANCIAL STATEMENTS

	Consolidated Statements of Financial Condition - ~~September 30, 2017~~March 31, 2018 (Unaudited) and December 31, ~~2016~~2017	4

	Consolidated Statements of Income (Unaudited) - Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~	6

	Consolidated Statements of Comprehensive Income (Unaudited) - Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~	7

	Consolidated Statements of Changes in Stockholders’ Equity (Unaudited) - ~~Nine~~Three Months Ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~	8

	Consolidated Statements of Cash Flows (Unaudited) - ~~Nine~~Three Months Ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~	9

	Notes to Consolidated Financial Statements (Unaudited)	10

Item 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	5556

Item 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	7775

Item 4.	CONTROLS AND PROCEDURES	7876


PART II - OTHER INFORMATION

Item 1.	LEGAL PROCEEDINGS	7977

Item 1A.	RISK FACTORS	7977

Item 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	7977

Item 3.	DEFAULTS UPON SENIOR SECURITIES	7977

Item 4.	MINE SAFETY DISCLOSURES	7977

Item 5.	OTHER INFORMATION	7977

Item 6.	EXHIBITS	7977


INDEX TO EXHIBITS		8078

SIGNATURES		8179

Forward-Looking Statements

Certain statements in this Quarterly Report on Form 10-Q may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements relate to, among other things, expectations regarding the business environment in which we operate, projections of future performance, perceived opportunities in the market, and statements regarding our business strategies, objectives and vision. Forward-looking statements include, but are not limited to, statements preceded by, followed by or that include the words “will,” “believes,” “expects,” “anticipates,” “intends,” “plans,” “estimates” or similar expressions. With respect to any such forward-looking statements, the Company claims the protection provided for in the Private Securities Litigation Reform Act of 1995. These statements involve known and unknown risks, trends, uncertainties, and ~~uncertainties.~~factors that are beyond the Company’s control or ability to predict. Our actual results, performance or achievements may differ significantly from the results, performance or achievements expressed or implied in any forward-looking statements. The risks and uncertainties include: the Company’s inability to remediate its presently identified material weaknesses or to do so in a timely manner, the possibility that additional material weaknesses may arise in the future, and that a material weakness may have an impact on our reported financial results; 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 I, Item 1A. Risk Factors contained in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2017.

The Company does not undertake, and specifically disclaims any obligation, to update any forward looking statements to reflect the occurrence of events or circumstances after the date of such statements except as required by law.

PART I

FINANCIAL INFORMATION


Item 1.	Financial Statements

HOPE BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION	HOPE BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION				HOPE BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION


	(Unaudited)				(Unaudited)
	September 30, 2017		December 31, 2016		March 31, 2018		December 31, 2017
ASSETS	(Dollars in thousands, except share data)				(Dollars in thousands, except share data)
Cash and cash equivalents:
Cash and due from banks	$	159,609	$	168,827	$	160,372	$	185,527
Interest bearing cash in other banks	245,687		268,507		451,981		306,473
Total cash and cash equivalents	405,296		437,334		612,353		492,000
Interest bearing deposits in other financial institutions and other investments	53,715		44,202		78,940		53,366
Securities available for sale, at fair value	1,868,309		1,556,740		1,699,315		1,720,257
Loans held for sale, at the lower of cost or fair value	11,425		22,785		33,689		29,661
Loans receivable (net of allowance for loan losses of $83,633 and $79,343 at September 30, 2017 and December 31, 2016, respectively)	10,879,341		10,463,989
Loans receivable (net of allowance for loan losses of $86,461 and $84,541 at March 31, 2018 and December 31, 2017, respectively)					11,206,022		11,018,034
Other real estate owned (“OREO”), net	17,208		21,990		8,261		10,787
Federal Home Loan Bank (“FHLB”) stock, at cost	28,426		21,964		28,966		29,776
Premises and equipment, net	55,838		55,316		56,564		56,714
Accrued interest receivable	29,145		26,880		29,154		29,979
Deferred tax assets, net	83,230		88,110		58,082		55,203
Customers’ liabilities on acceptances	1,433		2,899		1,220		1,691
Bank owned life insurance (“BOLI”)	74,514		73,696		75,302		74,915
Investments in affordable housing partnerships	88,540		70,059		78,379		81,009
Goodwill	464,450		462,997		464,450		464,450
Core deposit intangible assets, net	17,198		19,226		15,907		16,523
Servicing assets	25,079		26,457		24,866		24,710
Other assets	46,874		46,778		35,656		47,642
Total assets	$	14,150,021	$	13,441,422	$	14,507,126	$	14,206,717

(Continued)	(Continued)				(Continued)

HOPE BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION	HOPE BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION						HOPE BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION


	(Unaudited)						(Unaudited)
	September 30, 2017			December 31, 2016			March 31, 2018			December 31, 2017
LIABILITIES AND STOCKHOLDERS’ EQUITY	(Dollars in thousands, except share data)						(Dollars in thousands, except share data)
LIABILITIES:
Deposits:
Noninterest bearing	$	3,049,998		$	2,900,241		$	3,048,181		$	2,998,734
Interest bearing:
Money market and NOW accounts	3,685,973			3,401,446			3,454,660			3,332,703
Savings deposits	243,042			301,906			233,014			240,509
Time deposits	4,014,307			4,038,442			4,774,714			4,274,663
Total deposits	10,993,320			10,642,035			11,510,569			10,846,609
FHLB advances	1,018,046			754,290			862,346			1,157,693
Federal funds purchased							—			69,900
Subordinated debentures	100,590			99,808			101,117			100,853
Accrued interest payable	13,740			10,863			19,614			15,961
Acceptances outstanding	1,433			2,899			1,220			1,691
Commitments to fund investments in affordable housing partnerships	42,433			24,409			35,495			38,467
Other liabilities	46,028			51,645			31,432			47,288
Total liabilities	12,215,590			11,585,949			12,561,793			12,278,462
STOCKHOLDERS’ EQUITY:
Common stock, $0.001 par value; authorized 150,000,000 shares at September 30, 2017 and December 31, 2016: issued and outstanding, 135,467,176 and 135,240,079 shares at September 30, 2017 and December 31, 2016, respectively	135			135
Common stock, $0.001 par value; authorized 150,000,000 shares at March 31, 2018 and December 31, 2017: issued and outstanding, 135,516,119 and 135,511,891 shares at March 31, 2018 and December 31, 2017, respectively							136			136
Additional paid-in capital	1,403,586			1,400,490			1,405,806			1,405,014
Retained earnings	540,921			469,505			578,031			544,886
Accumulated other comprehensive loss, net	(10,211		)	(14,657		)	(38,640		)	(21,781		)
Total stockholders’ equity	1,934,431			1,855,473			1,945,333			1,928,255
Total liabilities and stockholders’ equity	$	14,150,021		$	13,441,422		$	14,507,126		$	14,206,717

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

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

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(Dollars in thousands, except per share data)
INTEREST INCOME:
Loans, including fees $ 136,822
$ 112,132
$ 388,631
$ 266,336
Securities 9,540
6,645
26,394
18,051
Interest bearing deposits in other banks and other investments 1,281
775
3,894
2,160
Total interest income 147,643
119,552
418,919
286,547
INTEREST EXPENSE:
Deposits 20,376
13,017
53,001
33,276
FHLB advances 2,698
2,161
7,176
5,370
Other borrowings 1,306
900
3,754
1,755
Total interest expense 24,380
16,078
63,931
40,401
NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES 123,263
103,474
354,988
246,146
PROVISION FOR LOAN LOSSES 5,400
6,500
13,760
8,200
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 117,863
96,974
341,228
237,946
NONINTEREST INCOME:
Service fees on deposit accounts 5,151
4,778
15,668
10,363
International service fees 1,107
1,010
3,334
2,601
Loan servicing fees, net 1,373
955
4,102
2,234
Wire transfer fees 1,287
1,158
3,816
2,966
Net gains on sales of SBA loans 3,631
230
10,148
5,090
Net gains on sales of other loans 847
1,476
1,619
1,519
Net gains on sales of securities available for sale —
948
—
948
Other income and fees 2,850
3,591
11,277
7,906
Total noninterest income 16,246
14,146
49,964
33,627
NONINTEREST EXPENSE:
Salaries and employee benefits 35,987
30,456
105,099
73,782
Occupancy 7,131
6,889
21,479
16,626
Furniture and equipment 3,642
3,297
10,611
7,921
Advertising and marketing 2,217
2,306
8,035
4,845
Data processing and communications 3,221
3,199
9,503
7,499
Professional fees 3,239
1,898
10,401
4,255
Investments in affordable housing partnership expenses 2,803
1,457
8,019
2,133
FDIC assessments 1,262
1,564
3,276
3,697
Credit related expenses (2,487 ) 810
(491 )
2,142
OREO expense, net 678
(423 ) 2,863
1,138
Merger and integration expenses 260
11,222
1,769
13,962
Other 3,884
5,171
13,009
10,244
Total noninterest expense 61,837
67,846
193,573
148,244
INCOME BEFORE INCOME TAXES 72,272
43,274
197,619
123,329
INCOME TAX PROVISION 27,708
17,169
76,158
50,212
NET INCOME $ 44,564
$ 26,105
$ 121,461
$ 73,117
EARNINGS PER COMMON SHARE
Basic $ 0.33
$ 0.22
$ 0.90
$ 0.80
Diluted $ 0.33
$ 0.22
$ 0.90
$ 0.79

See accompanying Notes to Consolidated Financial Statements (Unaudited)

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

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(Dollars in thousands)
Net income $ 44,564
$ 26,105
$ 121,461
$ 73,117
Other comprehensive (loss) income:
Change in unrealized net holding (losses) gains on securities available for sale (208 ) (3,383 ) 7,741
18,857
Change in unrealized net holding (losses) gains on interest only strips (3 ) 535
(44 ) 490
Reclassification adjustment for gains realized in income —
(948 ) —
(948 )
Less tax effect (89 ) (1,239 ) 3,251
8,150
Other comprehensive (loss) income, net of tax (122 ) (2,557 ) 4,446
10,249
Total comprehensive income $ 44,442
$ 23,548
$ 125,907
$ 83,366

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


	Three Months Ended March 31,
	2018			2017
	(Dollars in thousands, except per share data)
INTEREST INCOME:
Interest and fees on loans	$	137,943		$	123,294
Interest on securities	10,101			8,113
Interest on federal funds sold and other investments	2,366			1,336
Total interest income	150,410			132,743
INTEREST EXPENSE:
Interest on deposits	24,849			14,511
Interest on FHLB advances	4,069			2,139
Interest on other borrowings	1,424			1,188
Total interest expense	30,342			17,838
NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES	120,068			114,905
PROVISION FOR LOAN LOSSES	2,500			5,600
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	117,568			109,305
NONINTEREST INCOME:
Service fees on deposit accounts	4,801			5,338
International service fees	1,020			1,108
Loan servicing fees, net	1,579			1,438
Wire transfer fees	1,207			1,186
Net gains on sales of SBA loans	3,450			3,250
Net gains on sales of other loans	1,196			420
Other income and fees	6,597			4,863
Total noninterest income	19,850			17,603
NONINTEREST EXPENSE:
Salaries and employee benefits	39,385			34,166
Occupancy	7,239			7,194
Furniture and equipment	3,721			3,413
Advertising and marketing	2,299			3,424
Data processing and communications	3,495			3,606
Professional fees	3,106			3,902
Loss on investments in affordable housing partnerships	2,630			2,160
FDIC assessments	1,767			1,010
Credit related expenses	772			1,883
OREO expense, net	(104		)	997
Merger-related expenses	(7		)	947
Other	4,150			4,997
Total noninterest expense	68,453			67,699
INCOME BEFORE INCOME TAXES	68,965			59,209
INCOME TAX PROVISION	17,733			22,999
NET INCOME	$	51,232		$	36,210
EARNINGS PER COMMON SHARE
Basic	$	0.38		$	0.27
Diluted	$	0.38		$	0.27

See accompanying Notes to Consolidated Financial Statements (Unaudited)

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


	Three Months Ended March 31,
	2018			2017
	(Dollars in thousands)
Net income	$	51,232		$	36,210
Other comprehensive (loss) income:
Change in unrealized net holding (losses) gains on securities available for sale	(24,645		)	3,181
Change in unrealized net holding losses on interest only strips	(4		)	(49		)
Tax effect	7,509			(1,324		)
Other comprehensive (loss) income, net of tax	(17,140		)	1,808
Total comprehensive income	$	34,092		$	38,018

See accompanying Notes to Consolidated Financial Statements (Unaudited)

HOPE BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Unaudited)	HOPE BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Unaudited)															HOPE BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Unaudited)



		Common stock			Additional paid-in capital		Retained earnings			Accumulated other comprehensive (loss) income, net			Total stockholders’ equity				Common stock			Additional paid-in capital		Retained earnings			Accumulated other comprehensive loss, net			Total stockholders’ equity
		Shares	Amount														Shares	Amount
	(Dollars in thousands, except share data)
BALANCE, JANUARY 1, 2016		79,566,356	$	80	$	541,596	$	398,251		$	(1,832	)	$	938,095
Issuance of shares pursuant to various stock plans		49,559			1,098								1,098
Stock-based compensation					1,967								1,967
Issuance of Hope stock options in exchange for Wilshire stock options					3,370								3,370
Issuance of shares in exchange for Wilshire common stock		55,493,726	55		852,884								852,939
Cash dividends declared on common stock							(26,264		)				(26,264		)
Comprehensive income:
Net income							73,117						73,117
Other comprehensive income										10,249			10,249
BALANCE, SEPTEMBER 30, 2016		135,109,641	$	135	$	1,400,915	$	445,104		$	8,417		$	1,854,571
																(Dollars in thousands, except share data)
BALANCE, JANUARY 1, 2017		135,240,079	$	135	$	1,400,490	$	469,505		$	(14,657	)	$	1,855,473			135,240,079	$	135	$	1,400,490	$	469,505		$	(14,657	)	$	1,855,473
Issuance of shares pursuant to various stock plans		227,097			1,278								1,278				8,106			252								252
Stock-based compensation					1,818								1,818							533								533
Cash dividends declared on common stock							(50,045		)				(50,045		)							(16,229		)				(16,229		)
Comprehensive income:
Net income							121,461						121,461									36,210						36,210
Other comprehensive income										4,446			4,446												1,808			1,808
BALANCE, SEPTEMBER 30, 2017		135,467,176	$	135	$	1,403,586	$	540,921		$	(10,211	)	$	1,934,431
BALANCE, MARCH 31, 2017																	135,248,185	$	135	$	1,401,275	$	489,486		$	(12,849	)	$	1,878,047

BALANCE, JANUARY 1, 2018																	135,511,891	$	136	$	1,405,014	$	544,886		$	(21,781	)	$	1,928,255
Reclassification of unrealized losses on equity investments to retained earnings - ASU 2016-01																						(469		)	281			(188		)
Issuance of shares pursuant to various stock plans																	4,228			112								112
Stock-based compensation																				680								680
Cash dividends declared on common stock																						(17,618		)				(17,618		)
Comprehensive income:
Net income																						51,232						51,232
Other comprehensive loss																									(17,140		)	(17,140		)
BALANCE, MARCH 31, 2018																	135,516,119	$	136	$	1,405,806	$	578,031		$	(38,640	)	$	1,945,333

See accompanying Notes to Consolidated Financial Statements (Unaudited)

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


	Nine Months Ended September 30,						Three Months Ended March 31,
	2017			2016			2018			2017
	(Dollars in thousands)						(Dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	121,461		$	73,117		$	51,232		$	36,210
Adjustments to reconcile net income to net cash from operating activities:
Depreciation, amortization, net of discount accretion	(9,270		)	(1,574		)
Discount accretion, net of depreciation and amortization							(2,077		)	(504		)
Stock-based compensation expense	2,298			1,967			953			746
Provision for loan losses	13,760			8,200			2,500			5,600
Credit for unfunded loan commitments	(2,358		)	(191		)	(200		)	241
Valuation adjustment of premises held for sale	1,084			—			—			1,084
Valuation adjustment of OREO	2,001			1,025			—			592
Net gains on sales of SBA and other loans	(11,767		)	(6,609		)	(4,646		)	(3,670		)
Earnings on BOLI	(818		)	(1,032		)	(387		)	(394		)
Net change in fair value of derivatives	46			285			(19		)	33
Net (gains) losses on sale and disposal of premises and equipment	(277		)	2,449
Net losses on sale and disposal of premises and equipment							33			147
Net (gains) losses on sales of OREO	(34		)	97			(72		)	3
Net gains on sales of securities available for sale	—			(948		)
Net change in fair value of equity investments							(3,519		)	—
Losses on investments in affordable housing partnership	7,766			3,057			2,546			2,077
Net change in deferred income taxes	891			5,183			4,442			7,182
Proceeds from sales of loans held for sale	221,821			127,467			92,850			70,254
Originations of loans held for sale	(200,951		)	(156,908		)	(90,004		)	(53,903		)
Originations of servicing assets	(4,096		)	(2,472		)	(1,716		)	(1,296		)
Net change in accrued interest receivable	(2,265		)	256			825			1,197
Net change in other assets	(592		)	(3,654		)	11,515			6,981
Net change in accrued interest payable	2,877			1,092			3,653			(271		)
Net change in other liabilities	(3,259		)	(18,276		)	(15,656		)	(878		)
Net cash provided by operating activities	138,318			32,531			52,253			71,431
CASH FLOWS FROM INVESTING ACTIVITIES
Net cash received from acquisition - Wilshire Bancorp, Inc.	—			100,124
Purchases of interest bearing deposits in other financial institutions and other investments	(28,615		)	(1,960		)	(1,323		)	—
Redemption of interest bearing deposits in other financial institutions and other investments	19,102			—			1,225			244
Purchase of securities available for sale	(504,831		)	(428,867		)	(77,531		)	(94,890		)
Proceeds from matured or paid-down securities available for sale	193,320			167,101			49,850			68,124
Proceeds from sale of securities available for sale	—			217,077
Proceeds from sales of other loans held for sale	417			—			6,296			—
Net change in loans receivable	(407,767		)	(500,329		)	(188,437		)	(17,288		)
Proceeds from sales of OREO	7,542			12,196			1,202			194
Purchase of FHLB stock	(7,223		)	(30		)
Redemption of FHLB stock	761			12,084			810			761
Purchase of premises and equipment	(10,271		)	(10,788		)	(2,302		)	(2,491		)
Proceeds from sales and disposals of premises and equipment held for sale	3,267			—
Investments in affordable housing partnerships	(8,476		)	—			(2,972		)	(1,379		)
Net cash used in investing activities	(742,774		)	(433,392		)	(213,182		)	(46,725		)
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in deposits	356,185			551,541			663,961			65,218
Proceeds from FHLB advances	815,000			725,000			—			50,000
Repayment of FHLB advances	(550,000		)	(705,000		)	(295,000		)	(100,000		)
Net change in federal funds sold							(69,900		)	—
Cash dividends paid on common stock	(50,045		)	(26,264		)	(17,618		)	(16,229		)
Taxes paid in net settlement of restricted stock							(273		)	(213		)
Issuance of additional stock pursuant to various stock plans	1,278			1,098			112			252
Net cash provided by financing activities	572,418			546,375
Net cash provided by (used in) financing activities							281,282			(972		)
NET CHANGE IN CASH AND CASH EQUIVALENTS	(32,038		)	145,514			120,353			23,734
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	437,334			298,389			492,000			437,334
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	405,296		$	443,903		$	612,353		$	461,068

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid	$	66,416		$	36,700		$	26,773		$	21,767
Income taxes paid	$	85,384		$	48,378		$	1,249		$	1,161
SUPPLEMENTAL DISCLOSURES OF NON-CASH ACTIVITIES
Transfer from loans receivable to OREO	$	7,173		$	4,823		$	806		$	137
Transfer from loans receivable to loans held for sale	$	429		$	1,392		$	6,155		$	9,451
Transfer from loans held for sale to loans receivable	$	1,829		$	—		$	43		$	159
Transfer from premises and equipment to premises held for sale	$	3,300		$	—		$	—		$	3,300
New commitments to fund affordable housing partnership investments	$	26,500		$	—		$	—		$	8,500
Assets acquired from Wilshire	$	—		$	4,627,636
Liabilities assumed from Wilshire	$	—		$	4,130,342
Equity issued in consideration for Wilshire	$	—		$	856,309

See accompanying Notes to Consolidated Financial Statements (Unaudited)

Table of Contents

HOPE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


1.	Hope Bancorp, Inc.

Hope Bancorp, Inc. (“Hope Bancorp” on a parent-only basis and the “Company” on a consolidated basis), headquartered in Los Angeles, California, is the holding company for Bank of Hope (the “Bank”). As of ~~September 30, 2017,~~March 31, 2018, the Bank operated branches in California, Washington, Texas, Illinois, Alabama, Georgia, Virginia, New Jersey, and New York, ~~as well as~~ loan production offices in ~~Virginia,~~Colorado, Texas, Oregon, Washington, Georgia, Southern California, and Northern ~~California.~~California, and a representative office in Seoul, Korea. The Company is a corporation organized under the laws of the state of Delaware and a bank holding company registered under the Bank Holding Company Act of 1956, as amended.

Effective at the close of business on July 29, 2016, the Company (previously known as BBCN Bancorp, Inc.) completed its merger with Wilshire Bancorp, Inc. (“Wilshire”) pursuant to the Agreement and Plan of Merger, dated as of December 7, 2015, by and between the Company and Wilshire (the “Merger Agreement”). On the date of the acquisition, Wilshire merged with and into the Company, with the Company being the surviving corporation. On the date of the merger with Wilshire, the Company changed its name to “Hope Bancorp, Inc.” and changed its ticker symbol to “HOPE”.


2.	Basis of Presentation

The 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 Consolidated Statement of Financial Condition as of December 31, ~~2016~~2017 which was from the audited financial statements included in the Company’s ~~2016~~2017 Annual Report on Form 10-K. Certain information and footnote disclosures normally included in ~~consolidated~~annual 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 consolidated financial statements include the accounts of Hope Bancorp and its wholly owned subsidiaries, principally Bank of Hope. All intercompany transactions and balances have been eliminated in consolidation. The Company has made all adjustments, that in the opinion of management, are necessary to fairly present the Company’s financial position at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017 and the results of operations for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2018 and ~~2016.~~2017. Certain reclassifications have been made to prior period amounts to conform to the current year presentation. The results of operations for the interim periods are not necessarily indicative of results to be anticipated for the full year.

The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) 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 significantly from those estimates.

These unaudited consolidated financial statements should be read along with the audited consolidated financial statements and accompanying notes included in the Company’s ~~2016~~2017 Annual Report on Form 10-K.

Accounting Pronouncements Adopted

On May 28, 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-09, Revenue from Contracts with Customers (ASC Topic 606), with several subsequent updates. This series of comprehensive guidance has replaced all existing revenue recognition guidance and is effective for annual reporting periods beginning after December 15, 2017, and interim periods therein. Under the new guidance, there is a five-step model to apply to revenue recognition. The five-steps consist of: (1) determination of whether a contract, an agreement between two or more parties that creates legally enforceable rights and obligations, exists; (2) identification of the performance obligations in the contract; (3) determination of the transaction price; (4) allocation of the transaction price to the performance obligations in the contract; and (5) recognition of revenue when (or as) the performance obligation is satisfied. The Company adopted this standard as of January 1, 2018, and applied the modified retrospective approach to reflect the aggregate effect of all modifications of those contracts that were not completed as of that date. There was no material impact on the consolidated financial statements or on how the Company recognizes revenue upon adoption. As such, prior period amounts were not adjusted and the prior period amounts continue to be reported in accordance with previous accounting guidance. See Note 18, “Revenue Recognition” for further details.

In January 2016, the FASB issued ASU No. 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities.” This ASU addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments by making targeted improvements to GAAP as follows: (1) require equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. However, an entity may choose to measure equity investments that do not have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer; (2) simplify the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment. When a qualitative assessment indicates that impairment exists, an entity is required to measure the investment at fair value; (3) eliminate the requirement to disclose the fair value of financial instruments measured at amortized cost for entities that are not public business entities; (4) eliminate the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; (5) require public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; (6) require an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments; (7) require separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements; and (8) clarify that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. The adoption of ASU No. 2016-01 on January 1, 2018 did not have a material impact on the Company’s consolidated financial statements. In accordance with (1) above, the Company measured equity investments at fair value and recognized changes in fair value in net income as of March 31, 2018 (see Note 5 Equity Investment Securities). In accordance with (5) above, the Company measured the fair value of its loan portfolio as of March 31, 2018 using an exit price notion (see Note 15 Fair Value Measurements).

Recent Accounting Pronouncements

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers” which supersedes the revenue recognition requirements in Topic 605, Revenue Recognition. ASU 2014-09 is based on the principle that revenue is recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts. ASU 2014-09 as amended by ASU 2015-14, ASU 2016-08, ASU 2016-10, ASU 2016-12 and ASU 2016-20, is effective for interim and annual periods beginning after December 15, 2017 and is applied on either a modified retrospective or full retrospective basis. Early adoption is permitted for interim and annual periods beginning after December 15, 2016. The Company’s revenue primarily consists of net interest income and noninterest income. The scope of the guidance explicitly excludes net interest income, as well as other revenues from financial instruments such as loans, leases, securities and derivatives. Certain noninterest income revenue items such as service charges on deposits accounts, gain/loss on other real estate owned sales, and other income items may be in the scope of ASU 2014-09 and how these revenue streams are recognized may change. The Company is currently in the process of evaluating the impact of ASU 2014-09 on its consolidated financial statements, but does not expect the adoption of ASU 2014-09 to have a material impact on its consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)”. The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is currently in the process of evaluating the impact of the pending adoption of the new standard on its consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. ASU 2016-13 becomes effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2019. The Company is currently in the process of evaluating the impact of the pending adoption of the new standard on its consolidated financial statements and is collaborating with a third party advisory team to develop and execute upon the Company’s implementation plan and methodology in order for the Company to be compliant with ASU 2016-13 by the effective date. The Company has established a CECL committee to oversee the development and implementation of ASU 2016-13. Based on the Company’s initial assessment of the ASU 2016-13, the Company expects the new guidance will result in additional required provision and allowance for loan losses which could have a material impact on its consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, “Intangibles: Goodwill and Other: Simplifying the Test for Goodwill Impairment.” ASU 2017-04 will amend and simplify current goodwill impairment testing to eliminate Step 2 from the current provisions. Under the new guidance, an entity should perform the goodwill impairment test by comparing the fair value of a reporting unit with its carrying value and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. An entity still has the option to perform the quantitative assessment for a reporting unit to determine if a quantitative impairment test is necessary. ASU 2017-04 should be adopted for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. The adoption of ASU 2017-04 is not expected to have a material impact on the Company’s consolidated financial statements.

In March 2017, the FASB issued ASU 2017-08, “Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities”. ASU 2017-08 was issued to amend the amortization period for certain callable debt securities held at a premium. ASU 2017-08 shortens the amortization period of premiums on certain purchased callable debt securities to the earliest call date. ASU 2017-08 affect all entities that hold investments in callable debt securities that have an amortized cost basis in excess of the amount that is repayable by the issuer at the earliest call date (that is, at a premium). ASU 2017-08 does not impact securities purchased at a discount, which continue to be amortized to maturity. ASU 2017-08 is effective for annual period beginning after December 15, 2018, including interim periods within those annual periods. Early adoption is permitted in an interim period. If an entity chooses to adopt early, any adjustments should be reflected as of the beginning of the fiscal year that includes the interim period. The adoption of ASU 2017-08 is not expected to have a material impact on the Company’s consolidated financial statements.

In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718), “Scope of Modification”. ASU 2017-09 was issued to provide clarity and reduce both 1) diversity in practice and 2) cost and complexity when applying the guidance in Topic 718, Compensation - Stock Compensation, to a change to the terms or conditions of a share-based payment award. Diversity in practice has arisen in part because some entities apply modification accounting under Topic 718 for modifications to terms and conditions that they consider substantive, but do not when they conclude that particular modifications are not substantive. Others apply modification accounting for any change to an award, except for changes that they consider purely administrative in nature. Still others apply modification accounting when a change to an award changes the fair value, the vesting, or the classification of the award. In practice, it appears that the evaluation of a change in fair value, vesting, or classification may be used to evaluate whether a change is substantive. ASU 2017-09 include guidance on determining which changes to the terms and conditions of share-based payment awards require an entity to apply modification accounting under Topic 718. ASU 2017-09 is effective for the annual period, and interim periods within the annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period for: (a) public business entities for reporting periods for which financial statements have not yet been issued, and (b) all other entities for reporting periods for which financial statements have not yet been made available for issuance. ASU 2017-09 should be applied prospectively to an award modified on or after the adoption date. The Company is currently in the process of evaluating the impact of ASU 2017-09 on its consolidated financial statements, but does not expect the adoption of ASU 2017-09 to have material impact on its consolidated financial statements.

~~In September 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815), “~~Targeted Improvements to Accounting for Hedging Activities”. ASU 2017-12 refines and expands hedge accounting for both financial (e.g., interest rate) and commodity risks. Its provisions create more transparency around how economic results are presented, both on the face of the financial statements and in the footnotes, for investors and analysts. The amendments also simplify the application of hedge accounting in certain situations. The new guidance eliminates the requirement to separately measure and report hedge ineffectiveness and generally requires the entire change in the fair value of a hedging instrument to be presented in the same income statement line as the hedged item. In addition, the guidance also eases certain documentation and assessment requirements and modifies the accounting for components excluded from the assessment of hedge effectiveness. ASU 2017-12 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. The Company is currently in the process of evaluating the impact of ASU 2017-12 on its consolidated financial statements, but does not expect the adoption of ASU 2017-12 to have material impact on its consolidated financial statements.


3.	~~Mergers and Acquisitions~~

The Company applies the acquisition method of accounting for business combinations, including the merger with Wilshire under ASC 805 “Business Combinations”. Under the acquisition method of accounting, 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 expense.

~~Termination of Acquisition of U & I Financial Corp~~

On January 23, 2017, the Company announced the signing of a definitive agreement and plan of merger (the “U & I Merger Agreement”) with U & I Financial Corporation (“U & I”) pursuant to which U & I would have merged with and into Hope Bancorp with Hope Bancorp as the surviving corporation. As part of the merger, UniBank, a wholly-owned subsidiary of U & I, would have merged with and into the Bank.

Subsequently on September 15, 2017, the Company announced the mutual termination of the proposed merger with U & I as the Company was unable to obtain the required regulatory approval prior to the transaction termination deadline of September 23, 2017. The Mutual Termination Agreement provides, among other things, that each party will bear its own costs and expenses in connection with the terminated transaction, without penalties or termination fees. In connection with the termination, the parties have provided mutual releases from any claims of liability to one another relating to the merger transaction.

~~Merger with Wilshire Bancorp, Inc.~~

On July 29, 2016, the Company completed the merger with Wilshire Bancorp, Inc. (“Wilshire”), the holding company of Wilshire Bank. Wilshire’s primary subsidiary, Wilshire Bank, previously operated thirty-five branches located in California, New York, New Jersey, Texas, Georgia, and Alabama. Approximately $4.63 billion in assets were acquired through the transaction including $3.80 billion in loans receivable and $3.81 billion in deposits. Subsequent to the merger, the Bank now operates 64 branches in nine different states throughout the United States, has loan production offices throughout the country, and a representative office in Seoul, Korea.

Under the terms of the Merger Agreement, Wilshire shareholders received 0.7034 shares of Hope Bancorp common stock for each share of Wilshire common stock owned. As a result, 55.5 million shares of Hope Bancorp common stock were issued to Wilshire shareholders in addition to $3 thousand that was paid for fractional shares. In addition, the Company issued Hope stock options and restricted stock in exchange for Wilshire stock options and restricted stock outstanding at July 29, 2016 under substantially the same terms that were applicable immediately prior to the merger, subject to adjustment for the exchange ratio. Total consideration for the merger was $856.3 million.

~~The consideration paid, the assets acquired, and the liabilities assumed are summarized in the following table:~~

(Dollars in thousands)
Consideration Paid:
Hope common stock issued in exchange for Wilshire common stock $ 852,939
Cash paid for fractional shares 3
Hope stock options issued in exchange Wilshire stock options 3,370
Total consideration paid $ 856,312

Assets Acquired:
Cash and cash equivalents $ 100,127
Investment securities available for sale 478,938
Loans receivable 3,800,807
FRB and FHLB stock 16,539
OREO 13,173
Premises and equipment 16,812
Bank owned life insurance 25,240
Servicing assets 16,203
Low income housing tax credit investments 47,111
Core deposit intangibles 18,138
Deferred tax assets, net 17,698
Other assets 76,818
Liabilities Assumed:
Deposits (3,812,367 )
Borrowings (206,282 )
Subordinated debentures (56,942 )
Other liabilities (54,751 )
Total identifiable net assets $ 497,262
Excess of consideration paid over fair value of net assets acquired (goodwill) $ 359,050

Fair values are primarily determined through the use of inputs that are not observable from market-based information. Under ASC 805-10-25-13, management may adjust the fair values of acquired assets or assumed liabilities for a period of up to one year from the date of the acquisition to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have an effect on the measurement of the amounts recognized as of that date. During the fourth quarter of 2016, the Company made a net adjustment of $1.4 million to deferred tax assets and taxes receivable acquired from Wilshire which reduced the previous goodwill recorded from the transaction by $1.4 million. Subsequently in the first quarter of 2017, the Company made an adjustment which increased goodwill by $978 thousand consisting of a $1.7 million adjustment to OREO partially offset by a $716 thousand adjustment to deferred tax assets. During the second quarter of 2017, the Company made an adjustment of $475 thousand to deferred tax assets which increased goodwill by the same amount.

~~Acquired Loans~~

The fair value of loans were estimated on an individual basis based on the characteristics for each loan. A discounted cash flow analysis was used to project cash flows for each loan using assumptions for rate, remaining maturity, prepayment speeds, projected default probabilities, loss given defaults, and estimates of prevailing discount rates. At the time of the merger with Wilshire on July 29, 2016, the fair value of loans acquired from Wilshire with deteriorated credit quality totaled $243.1 million. The carrying balance of the acquired loans included in the Statement of Financial Condition at September 30, 2017 and was $3.10 billion for loans acquired from Wilshire compared to $3.59 billion at December 31, 2016.

~~Merger-Related Expenses~~

The following table presents merger-related expenses associated with the merger with Wilshire, the terminated merger with U & I, and other previous transactions which were reflected in the Consolidated Statements of Income in merger and integration expenses. These expenses are comprised primarily of salaries and employee benefits, professional fees, and other noninterest expenses related to mergers.

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(Dollars in thousands)
Wilshire $ 288
$ 11,198
$ 1,226
$ 13,890
U & I (52 ) —
471
—
Other 24
24
72
72
Total merger and integration expenses $ 260
$ 11,222
$ 1,769
$ 13,962

4. Stock-Based Compensation

The Company has a stock-based incentive plan (the “2016 Plan”) to award equity as a form of compensation. The 2016 Plan, was approved by the Company’s stockholders on September 1, 2016. The 2016 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, 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 2016 Plan gives the Company flexibility to (i) attract and retain qualified non-employee directors, executives, other key employees, and consultants with appropriate equity-based awards to; (ii) motivate high levels of performance; (iii) recognize employee contributions to the Company’s success; and (iv) align the interests of the 2016 Plan participants with those of the Company’s stockholders. The plan initially had 2,400,000 shares available for grant to participants. The exercise price for shares under an ISO may not be less than 100% of fair market value on the date the award is granted under Code Section 422. Similarly, under the terms of the 2016 Plan, the exercise price for SARs and NQSOs may not be less than 100% of fair market value on the date of grant. Performance units are awarded to a participant at the market price of the Company’s common stock on the date of award (after the lapse of the restriction period and the attainment of the performance criteria). No minimum exercise price is prescribed for performance shares and restricted stock awarded under the 2016 Plan. All options not exercised generally expire 10 years after the date of grant.

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 are granted with a restriction period of not less than one year from the grant date for performance-based awards and not more than three years from the grant date for time-based vesting of grants. Compensation expense for awards is recognized over the vesting period.

The Company had another stock-based incentive plan, the 2007 Equity Incentive Plan (“2007 Plan”), which was approved by stockholders in May 2007. Under the terms of this plan, awards cannot be granted under the plan more than ten years after the plan adoption date. Therefore, subsequent to May 2017, equity awards ~~can no longer be~~were not issued from this plan.

Under the 2016 Plan, ~~1,331,888~~1,330,621 shares were available for future grants as of ~~September 30, 2017.~~March 31, 2018.

The total shares reserved for issuance will serve as the underlying value for all equity awards under the 2016 Plan. With the exception of the shares underlying stock options and restricted stock awards, the board of directors may choose to settle the awards by paying the equivalent cash value or by delivering the appropriate number of shares.

The following is a summary of stock option activity under the ~~2007 Plan and~~ 2016 Plan for the ~~nine~~three months ended ~~September 30,~~March 31, ~~2017~~2018:


	Number of Shares		Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value (Dollars in thousands)		Number of Shares		Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value (Dollars in thousands)
Outstanding - January 1, 2017	1,603,876		$	15.28
Outstanding - January 1, 2018								1,075,423		$	15.06
Granted	—		—					—		—
Exercised	(172,959	)	7.19					(11,000	)	9.35
Expired	(268,070	)	21.35					(3,195	)	16.66
Forfeited	(38,421	)	17.17					—		—
Outstanding - September 30, 2017	1,124,426		$	15.01	7.43	$	3,035
Options exercisable - September 30, 2017	669,089		$	13.71	6.62	$	2,679
Outstanding - March 31, 2018								1,061,228		$	15.11		7.11	$	3,267
Options exercisable - March 31, 2018								630,770		$	13.88		6.43	$	2,721

The following is a summary of restricted stock and performance unit activity under the ~~2007 Plan and~~ 2016 Plan for the ~~nine~~three months ended ~~September 30,~~March 31, ~~2017~~2018:


	Number of Shares		Weighted- Average Grant Date Fair Value		Number of Shares		Weighted- Average Grant Date Fair Value
Outstanding - January 1, 2017	398,658		$	16.16
Outstanding - January 1, 2018					379,419		$	16.42
Granted	165,612		16.77		13,000		18.91
Vested	(145,392	)	16.16		(24,763	)	15.11
Forfeited	(21,332	)	16.13		(2,801	)	14.84
Outstanding - September 30, 2017	397,546		$	16.41
Outstanding - March 31, 2018					364,855		$	16.61

The total fair value of restricted stock and performance units vested for the ~~nine~~three months ended ~~September 30,~~March 31, 2018 and 2017 was $476 thousand and ~~2016 was $2.6 million and $1.7 million,~~$735 thousand, respectively.

On August, 21, 2017 the Company adopted the Hope Employee Stock Purchase Plan (“ESPP”). The ESPP allows eligible employees to purchase the Company’s common shares through payroll deductions which build up between the offering date and the purchase date. At the purchase date, the Company uses the accumulated funds to purchase shares in the Company on behalf of the participating employees at 10% discount of the closing price of the Company’s common shares. The closing price is the lower of either the closing price on the first day of the offering period or on the closing price on the purchase date. The dollar amount of common shares purchased under the ESPP must not exceed 20% of the participating employee’s base salary, subject to a cap of $25 thousand in stock value based on the grant date. The ESPP is considered compensatory under GAAP and compensation expense for the ESPP is recognized as part of the Company’s stock based compensation expenses. The compensation expense for ESPP during the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2018 was ~~$18~~$148 thousand. The Company did not have any compensation expenses for the ESPP during the three ~~or nine~~ months ended ~~September 30, 2016.~~March 31, 2017.

The amount charged against income related to stock-based payment arrangements, ~~and the~~including ESPP, was ~~$792~~$953 thousand and ~~$1.9 million~~$746 thousand for the three months ended ~~September 30,~~March 31, 2018 and 2017, ~~and 2016,~~ respectively. ~~For the nine months ended September 30, 2017 and 2016, $2.3 million and $2.0 million, respectively, of stock-based payment arrangements were charged against income.~~

The income tax benefit recognized was approximately ~~$304~~$245 thousand and ~~$761~~$290 thousand for the three months ended ~~September 30,~~March 31, 2018 and 2017, ~~and 2016, respectively. The income tax benefit recognized for the nine months ended September 30, 2017 and 2016, was approximately $886 thousand and $821 thousand,~~ respectively.

At ~~September 30, 2017,~~March 31, 2018, the unrecognized compensation expense related to non-vested stock option grants was ~~$1.3~~$880 thousand which is expected to be recognized over a weighted average vesting period of 2.75 years. Unrecognized compensation expense related to non-vested restricted stock and performance units was $3.9 million which is expected to be recognized over a weighted average vesting period of ~~2.94~~2.46 years. ~~Unrecognized compensation expense related to non-vested restricted stock and performance units was $5.2 million which is expected to be recognized over a weighted average vesting period of 2.61 years.~~

During the first quarter of 2017 the Company adopted ASU 2016-09, “Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting”. With the adoption of ASU 2016-09 all of the Company’s excess tax benefits on share-based payment awards were recorded in income tax provision on the Consolidated Statements of Income for the three and nine months ended September 30, 2017.

5.4. Earnings Per Share (“EPS”)

Basic EPS does not reflect the possibility of dilution that could result from the issuance of additional shares of common stock upon exercise or conversion of outstanding equity awards, and is computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if stock options or other contracts to issue common stock were exercised or converted to common stock that would then share in earnings. For the three months ended ~~September 30,~~March 31, 2018 and 2017, stock options and restricted shares awards for ~~762,833~~308,258 and 236,878 shares of common stock, respectively, were excluded in computing diluted earnings per common share because they were anti-dilutive. For the nine months ended September 30, 2017, stock options and restricted shares awards for 484,426 shares of common stock were excluded in computing diluted earnings per common share because they were anti-dilutive. Stock options and restricted shares awards for 609,186 shares of common stock were excluded in computing diluted earnings per common share because they were anti-dilutive for the three months ended September 30, 2016. Stock options and restricted shares awards for 559,790 shares of common stock were excluded in computing diluted earnings per common share because they were anti-dilutive for the nine months ended September 30, 2016. Additionally, warrants issued pursuant to the Company’s participation in the U.S. Treasury’s TARP Capital Purchase Plan, to purchase ~~20,238~~20,520 shares and ~~19,703~~19,963 shares of common stock were anti-dilutive and excluded for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 and 2017, ~~and 2016,~~ respectively.

The following tables show the computation of basic and diluted EPS for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2018 and ~~2016~~2017.


	Three Months Ended September 30,										Three Months Ended March 31,
	2017					2016					2018					2017
	Net Income (Numerator)		Weighted-Average Shares (Denominator)	Per Share (Amount)		Net Income (Numerator)		Weighted-Average Shares (Denominator)	Per Share (Amount)		Net Income (Numerator)		Weighted-Average Shares (Denominator)	Per Share (Amount)		Net Income (Numerator)		Weighted-Average Shares (Denominator)	Per Share (Amount)
	(Dollars in thousands, except share and per share data)										(Dollars in thousands, except share and per share data)
Basic EPS - common stock	$	44,564	135,382,457	$	0.33	$	26,105	116,622,920	$	0.22	$	51,232	135,518,705	$	0.38	$	36,210	135,248,018	$	0.27
Effect of dilutive securities:
Stock options, restricted stock, and ESPP shares			248,455					328,154					296,557					520,627
Diluted EPS - common stock	$	44,564	135,630,912	$	0.33	$	26,105	116,951,074	$	0.22	$	51,232	135,815,262	$	0.38	$	36,210	135,768,645	$	0.27

Nine Months Ended September 30,
2017 2016

Net Income
(Numerator)
Weighted-Average Shares
(Denominator)
Per
Share
(Amount)

Net Income
(Numerator)
Weighted-Average Shares
(Denominator)
Per
Share
(Amount)
(In thousands, except share and per share data)
Basic EPS - common stock $ 121,461
135,296,332
$ 0.90
$ 73,117
91,940,070
$ 0.80
Effect of dilutive securities:
Stock options, restricted stock,
and ESPP shares
365,633
326,175

Diluted EPS - common stock $ 121,461
135,661,965
$ 0.90
$ 73,117
92,266,245
$ 0.79

5. Equity Investment Securities

On January 1, 2018, the Company adopted ASU 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities”. As a result of the adoption, the Company reclassified $469 thousand in net unrealized losses included in other comprehensive income and deferred tax assets as of December 31, 2017 to retained earnings on January 1, 2018. Equity investment securities measured at fair value at March 31, 2018, consisted of mutual funds and equity stock in other institutions in the amount of $21.6 million and $3.9 million, respectively.

In accordance with ASU 2016-01, the change in fair value for equity investment securities for the three months ended March 31, 2018 were recorded as noninterest income for the three months ended March 31, 2018, summarized in the table below:



	Three Months Ended March 31,
	2018
	(Dollars in thousands)
Net unrealized gains recorded during the period on equity investment securities	$	3,519
Net gains (losses) recorded on equity investment securities sold during the period	—
Net unrealized gains on equity investment securities at end of period	$	3,519

6. Securities Available for Sale

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


	At September 30, 2017									At March 31, 2018
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(Dollars in thousands)									(Dollars in thousands)
Debt securities:
U.S. Government agency and U.S. Government sponsored enterprises:
Debt securities	$	5,000	$	—	$	(1	)	$	4,999
Collateralized mortgage obligations:
Collateralized mortgage obligations										$	839,229	$	39	$	(27,258	)	$	812,010
Mortgage-backed securities:
Residential	911,229		332		(9,679		)	901,882		453,107		122		(14,559		)	438,670
Commercial										375,880		147		(12,246		)	363,781
Corporate securities										5,000		—		(561		)	4,439
Municipal securities										81,897		311		(1,793		)	80,415
Total investment securities available for sale										$	1,755,113	$	619	$	(56,417	)	$	1,699,315

										At December 31, 2017
										Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
										(Dollars in thousands)
Debt securities:
U.S. Government agency and U.S. Government sponsored enterprises:
Collateralized mortgage obligations										$	856,193	$	58	$	(17,542	)	$	838,709
Mortgage-backed securities:
Residential	600,155		1,566		(5,451		)	596,270		477,676		521		(6,983		)	471,214
Commercial	245,972		128		(4,672		)	241,428		308,046		—		(6,681		)	301,365
Corporate securities	4,571		4		—			4,575		4,997		—		(522		)	4,475
Municipal securities	96,785		1,063		(796		)	97,052		82,542		870		(875		)	82,537
Total debt securities	1,863,712		3,093		(20,599		)	1,846,206		1,729,454		1,449		(32,603		)	1,698,300
Mutual funds	22,425		27		(349		)	22,103		22,425		17		(485		)	21,957
Total investment securities available for sale	$	1,886,137	$	3,120	$	(20,948	)	$	1,868,309	$	1,751,879	$	1,466	$	(33,088	)	$	1,720,257

	At December 31, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(Dollars in thousands)
Debt securities:
U.S. Government agency and U.S. Government sponsored enterprises:
Debt securities	$	12,005	$	3	$	—		$	12,008
Collateralized mortgage obligations:
Residential	715,981		349		(10,663		)	705,667
Mortgage-backed securities:
Residential	599,755		1,132		(9,311		)	591,576
Commercial	141,549		—		(5,084		)	136,465
Corporate securities	11,576		—		(449		)	11,127
Municipal securities	88,018		358		(1,537		)	86,839
Total debt securities	1,568,884		1,842		(27,044		)	1,543,682
Mutual funds	13,425		—		(367		)	13,058
Total investment securities available for sale	$	1,582,309	$	1,842	$	(27,411	)	$	1,556,740

As of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, 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.

At ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016, $10.2~~2017, $39.6 million and ~~$14.6~~$19.0 million, respectively, in unrealized losses on securities net of taxes were included in accumulated other comprehensive loss. Also included in accumulated other comprehensive loss at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, were unrealized losses on interest only strip net of taxes of ~~$40~~$51 thousand and ~~$14~~$41 thousand, respectively. There were no reclassifications out of accumulated other comprehensive income into earnings for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 or 2017. ~~A total~~

During the first quarter of ~~$948~~2018, the Company adopted ASU 2016-01 “Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities”. As a result of the adoption of ASU 2016-01, the Company no longer accounts for mutual funds as available-for-sale securities and accounts for these investments as equity investments with changes in fair value recorded through earnings. In accordance with ASU 2016-01, the Company reclassified $469 thousand ~~($572 thousand~~in net ~~of taxes) of net gains on sales of securities were reclassified out of accumulated~~unrealized losses included in other comprehensive income ~~(loss) into~~and deferred tax assets as of December 31, 2017 to retained earnings on January 1, 2018. The subsequent change to fair value for mutual funds were recorded as noninterest income for the three ~~and nine~~ months ended ~~September 30, 2016.~~March 31, 2018.

The amortized cost and estimated fair value of investment securities at ~~September 30, 2017~~March 31, 2018, 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
	(Dollars in thousands)				(Dollars in thousands)
Available for sale:
Due within one year	$	5,724	$	5,726	$	—	$	—
Due after one year through five years	11,567		11,875		12,035		12,143
Due after five years through ten years	39,563		40,060		33,567		33,450
Due after ten years	49,502		48,965		41,295		39,261
U.S. Government agency and U.S. Government sponsored enterprises
Collateralized mortgage obligations:
Residential	911,229		901,882
U.S. Government agency and U.S. Government sponsored enterprises:
Collateralized mortgage obligations					839,229		812,010
Mortgage-backed securities:
Residential	600,155		596,270		453,107		438,670
Commercial	245,972		241,428		375,880		363,781
Mutual funds	22,425		22,103
Total	$	1,886,137	$	1,868,309	$	1,755,113	$	1,699,315

Securities with carrying values of approximately $~~349.2~~357.9 million and ~~$382.1~~$359.2 million at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, respectively, were pledged to secure public deposits, various borrowings and for other purposes as required or permitted by law.

The following tables show the Company’s investments’ gross unrealized losses and estimated fair value, aggregated by investment category and the length of time that the individual securities have been in a continuous unrealized loss position as of the dates indicated.


	As of September 30, 2017																		As of March 31, 2018
	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
	(Dollars in thousands)																		(Dollars in thousands)
Debt securities*	1	$	4,999	$	(1	)	—	$	—	$	—		1	$	4,999	$	(1	)
Collateralized mortgage obligations:
Residential*	56	566,997		(4,406		)	26	228,250		(5,273		)	82	795,247		(9,679		)
Collateralized mortgage obligations*																			40	$	400,036	$	(10,841	)	53	$	386,009	$	(16,417	)	93	$	786,045	$	(27,258	)
Mortgage-backed securities:
Residential*	27	291,483		(1,922		)	13	116,490		(3,529		)	40	407,973		(5,451		)	23	201,859		(5,252		)	22	207,694		(9,307		)	45	409,553		(14,559		)
Commercial*	8	86,608		(804		)	6	106,790		(3,868		)	14	193,398		(4,672		)	18	201,894		(4,659		)	9	122,332		(7,587		)	27	324,226		(12,246		)
Corporate securities																			1	4,439		(561		)	—	—		—			1	4,439		(561		)
Municipal securities	14	13,521		(221		)	6	17,735		(575		)	20	31,256		(796		)	58	36,166		(419		)	3	21,029		(1,374		)	61	57,195		(1,793		)
Mutual funds	3	15,607		(108		)	1	5,007		(241		)	4	20,614		(349		)
Total	109	$	979,215	$	(7,462	)	52	$	474,272	$	(13,486	)	161	$	1,453,487	$	(20,948	)	140	$	844,394	$	(21,732	)	87	$	737,064	$	(34,685	)	227	$	1,581,458	$	(56,417	)

__________________________________

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


	As of December 31, 2016																		As of December 31, 2017
	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
	(Dollars in thousands)																		(Dollars in thousands)
Collateralized mortgage obligations:
Residential*	66	$	615,803	$	(9,459	)	4	$	36,333	$	(1,204	)	70	$	652,136	$	(10,663	)
Collateralized mortgage obligations																			38	$	425,198	$	(5,954	)	53	$	408,526	$	(11,588	)	91	$	833,724	$	(17,542	)
Mortgage-backed securities:
Residential*	48	486,332		(9,311		)	—	—		—			48	486,332		(9,311		)	20	195,086		(1,282		)	23	230,616		(5,701		)	43	425,702		(6,983		)
Commercial*	9	136,465		(5,084		)	—	—		—			9	136,465		(5,084		)	16	186,357		(1,614		)	8	115,008		(5,067		)	24	301,365		(6,681		)
Corporate securities	1	7,014		(2		)	1	4,113		(447		)	2	11,127		(449		)	1	4,475		(522		)	—	—		—			1	4,475		(522		)
Municipal securities	95	69,331		(1,537		)	—	—		—			95	69,331		(1,537		)	18	9,295		(69		)	3	22,144		(806		)	21	31,439		(875		)
Mutual funds	3	13,058		(367		)	—	—		—			3	13,058		(367		)	1	8,899		(101		)	3	11,579		(384		)	4	20,478		(485		)
Total	222	$	1,328,003	$	(25,760	)	5	$	40,446	$	(1,651	)	227	$	1,368,449	$	(27,411	)	94	$	829,310	$	(9,542	)	90	$	787,873	$	(23,546	)	184	$	1,617,183	$	(33,088	)

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

The Company evaluates securities for other-than-temporary-impairment (“OTTI”) on at least a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to the financial condition and near-term prospects of the issuer, the length of time and the extent to which the fair values of the securities have been less than the cost of the securities, and management’s intention to sell, or whether it is more likely than not that management will be required to sell a security in an unrealized loss position before recovery of its amortized cost basis. In analyzing an issuer’s financial condition, the Company considers, among other considerations, whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, and the results of reviews of the issuer’s financial condition.

The Company has certain collateralized mortgage obligations, mortgage backed securities, and municipal securities ~~and mutual funds~~ that were in a continuous unrealized loss position for twelve months or longer as of ~~September 30, 2017.~~March 31, 2018. The collateralized mortgage obligations in a continuous loss position for twelve months or longer had an unrealized loss of ~~$5.3~~$16.4 million at ~~September 30, 2017~~March 31, 2018 and total mortgage backed securities in a continuous loss position for twelve months or longer had a total unrealized loss of ~~$7.4~~$16.9 million. These securities were issued by U.S. Government agency and U.S. Government sponsored enterprises and have high credit ratings of “AA” grade or better. Interest on U.S. Government agency and U.S. Government sponsored enterprise investments have been paid as agreed, and management believes this will continue in the future and that the securities will be repaid in full as scheduled. Municipal securities that were in a continuous loss position for twelve months or longer had an unrealized loss of ~~$575 thousand~~$1.4 million at ~~September 30, 2017. Mutual funds that were in a continuous loss position for twelve months or longer had an unrealized loss of $241 thousand at September 30, 2017.~~March 31, 2018. The market value declines for these securities were primarily due to movements in interest rates and are not reflective of management’s expectations of the Company’s ability to fully recover these investments, which may be at maturity. For these reasons, no OTTI was recognized on U.S. Government sponsored collateralized mortgage obligations and mortgage backed securities, and municipal securities ~~and mutual funds~~ that were in an unrealized loss position at ~~September 30, 2017.~~March 31, 2018.

The Company considers the losses on the investments in unrealized loss positions at ~~September 30, 2017~~March 31, 2018 to be temporary based on: 1) the likelihood of recovery; 2) the information relative to the extent and duration of the decline in market value; and 3) the Company’s intention not to sell, and management’s determination that it is more likely than not that the Company will not be required to sell a security in an unrealized loss position before recovery of its amortized cost basis.

7. Loans Receivable and Allowance for Loan Losses

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


	September 30, 2017			December 31, 2016			March 31, 2018			December 31, 2017
	(Dollars in thousands)						(Dollars in thousands)
Loan portfolio composition
Real estate loans:
Residential	$	55,072		$	57,884		$	47,662		$	49,774
Commercial	8,085,307			7,842,573			8,180,537			8,142,036
Construction	297,686			254,113			300,954			316,412
Total real estate loans	8,438,065			8,154,570			8,529,153			8,508,222
Commercial business	1,824,442			1,832,021			1,818,291			1,780,869
Trade finance	180,847			154,928			189,395			166,664
Consumer and other	521,459			403,470			755,621			647,102
Total loans outstanding	10,964,813			10,544,989			11,292,460			11,102,857
Deferred loan fees, net	(1,839		)	(1,657		)
Deferred loan costs (fees), net							23			(282		)
Loans receivable	10,962,974			10,543,332			11,292,483			11,102,575
Allowance for loan losses	(83,633		)	(79,343		)	(86,461		)	(84,541		)
Loans receivable, net of allowance for loan losses	$	10,879,341		$	10,463,989		$	11,206,022		$	11,018,034

The loan portfolio is made up of four segments: real estate loans, commercial business, trade finance, and consumer and other. These segments are further segregated between loans accounted for under the amortized cost method (“Legacy Loans”) and previously acquired loans that were originally recorded at fair value with no carryover of the related pre-acquisition allowance for loan losses (“Acquired Loans”). Acquired Loans are further segregated between purchased credit impaired loans (loans with credit deterioration on the acquisition date and accounted for under ASC 310-30, or “PCIs”) and Acquired Performing Loans (loans that were pass graded on the acquisition date and the fair value adjustment is amortized over the contractual life under ASC 310-20, or “non-PCI loans”).

The following table presents changes in the accretable discount on the PCI loans for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2018 and ~~2016:~~2017:


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2017			2016			2017			2016			2018			2017
	(Dollars in thousands)												(Dollars in thousands)
Balance at beginning of period	$	53,657		$	20,150		$	43,611		$	23,777		$	55,002		$	43,611
Additions due to acquisitions during the period	—			41,271			—			41,271
Accretion	(5,815		)	(4,723		)	(16,375		)	(10,226		)	(5,772		)	(5,348		)
Reclassification from nonaccretable difference	6,696			40			27,302			1,916			5,616			13,388
Balance at end of period	$	54,538		$	56,738		$	54,538		$	56,738		$	54,846		$	51,651

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

The following tables detail the activity in the allowance for loan losses by portfolio segment for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2018 and ~~2016:~~2017:


	Legacy Loans												Acquired Loans											Total			Legacy Loans											Acquired Loans												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
	(Dollars in thousands)																										(Dollars in thousands)
Three Months Ended September 30, 2017
Three Months Ended March 31, 2018																											Three Months Ended March 31, 2018
Balance, beginning of period	$	40,478		$	21,495		$	1,000		$	2,282		$	13,411		$	1,291		$	106	$	11		$	80,074		$	45,360		$	17,228		$	1,674	$	3,385		$	13,322		$	3,527		$	42		$	3		$	84,541
Provision (credit) for loan losses	3,664			1,499			418			664			(1,312		)	395			56		16			5,400			479			3,289			81		877			(173		)	(2,046		)	(4		)	(3		)	2,500
Loans charged off	(175		)	(3,870		)	—			(218		)	(162		)	(471		)	—		(17		)	(4,913		)	(63		)	(342		)	—		(347		)	(102		)	(214		)	—			—			(1,068		)
Recoveries of charge offs	23			3,020			2			—			—			25			—		2			3,072			201			212			12		19			1			41			—			2			488
Balance, end of period	$	43,990		$	22,144		$	1,420		$	2,728		$	11,937		$	1,240		$	162	$	12		$	83,633		$	45,977		$	20,387		$	1,767	$	3,934		$	13,048		$	1,308		$	38		$	2		$	86,461
Nine Months Ended September 30, 2017
Balance, beginning of period	$	38,956		$	23,430		$	1,897		$	2,116		$	12,791		$	117		$	—	$	36		$	79,343
Provision (credit) for loan losses	7,174			2,356			1,621			1,348			(406		)	1,517			162		(12		)	13,760
Loans charged off	(2,221		)	(7,485		)	(2,104		)	(738		)	(479		)	(596		)	—		(17		)	(13,640		)
Recoveries of charge offs	81			3,843			6			2			31			202			—		5			4,170
Balance, end of period	$	43,990		$	22,144		$	1,420		$	2,728		$	11,937		$	1,240		$	162	$	12		$	83,633


	Legacy Loans												Acquired Loans											Total			Legacy Loans												Acquired Loans											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
	(Dollars in thousands)																										(Dollars in thousands)
Three Months Ended September 30, 2016
Three Months Ended March 31, 2017																											Three Months Ended March 31, 2017
Balance, beginning of period	$	43,666		$	16,576		$	2,449		$	926		$	12,607		$	148		$	—	$	53		$	76,425		$	38,956		$	23,430		$	1,897		$	2,116		$	12,791		$	117		$	—	$	36		$	79,343
Provision (credit) for loan losses	(2,474		)	7,444			(32		)	970			527			72			—		(7		)	6,500			6,106			(2,884		)	303			184			975			748			187		(19		)	5,600
Loans charged off	(132		)	(3,219		)	—			(162		)	(435		)	(10		)	—		—			(3,958		)	(1,154		)	(3,190		)	(1,576		)	(279		)	(336		)	(70		)	—		—			(6,605		)
Recoveries of charge offs	432			539			—			2			8			27			—		1			1,009			21			123			—			1			25			149			—		2			321
Balance, end of period	$	41,492		$	21,340		$	2,417		$	1,736		$	12,707		$	237		$	—	$	47		$	79,976		$	43,929		$	17,479		$	624		$	2,022		$	13,455		$	944		$	187	$	19		$	78,659
Nine Months Ended September 30, 2016
Balance, beginning of period	$	42,829		$	16,332		$	3,592		$	556		$	12,823		$	214		$	—	$	62		$	76,408
Provision (credit) for loan losses	(2,318		)	9,792			(1,175		)	1,370			633			(82		)	—		(20		)	8,200
Loans charged off	(151		)	(5,845		)	—			(278		)	(758		)	(43		)	—		—			(7,075		)
Recoveries of charge offs	1,132			1,061			—			88			9			148			—		5			2,443
Balance, end of period	$	41,492		$	21,340		$	2,417		$	1,736		$	12,707		$	237		$	—	$	47		$	79,976

The following tables break out the allowance for loan losses and the recorded investment of loans outstanding (not including accrued interest ~~receivables~~receivable and net deferred loan ~~fees)~~costs or fees by individually impaired, general valuation, and PCI impairment, by portfolio segment, at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017:


	September 30, 2017																		March 31, 2018
	Legacy Loans								Acquired Loans								Total		Legacy Loans								Acquired Loans								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
	(Dollars in thousands)																		(Dollars in thousands)
Allowance for loan losses:
Individually evaluated for impairment	$	1,462	$	4,679	$	2	$	4	$	245	$	415	$	—	$	—	$	6,807	$	6,966	$	3,662	$	—	$	24	$	267	$	595	$	—	$	—	$	11,514
Collectively evaluated for impairment	42,528		17,465		1,418		2,724		1,081		825		162		12		66,215		39,011		16,725		1,767		3,910		966		713		38		2		63,132
PCI loans	—		—		—		—		10,611		—		—		—		10,611		—		—		—		—		11,815		—		—		—		11,815
Total	$	43,990	$	22,144	$	1,420	$	2,728	$	11,937	$	1,240	$	162	$	12	$	83,633	$	45,977	$	20,387	$	1,767	$	3,934	$	13,048	$	1,308	$	38	$	2	$	86,461

Loans outstanding:
Individually evaluated for impairment	$	48,535	$	35,494	$	4,201	$	1,048	$	10,155	$	4,885	$	3,384	$	758	$	108,460	$	52,454	$	32,639	$	2,597	$	870	$	18,414	$	16,448	$	3,368	$	1,278	$	128,068
Collectively evaluated for impairment	5,996,526		1,437,398		133,599		339,980		2,213,662		317,150		39,663		168,844		10,646,822		6,300,435		1,598,739		176,856		593,727		2,005,172		142,774		6,574		149,677		10,973,954
PCI loans	—		—		—		—		169,187		29,515		—		10,829		209,531		—		—		—		—		152,678		27,691		—		10,069		190,438
Total	$	6,045,061	$	1,472,892	$	137,800	$	341,028	$	2,393,004	$	351,550	$	43,047	$	180,431	$	10,964,813	$	6,352,889	$	1,631,378	$	179,453	$	594,597	$	2,176,264	$	186,913	$	9,942	$	161,024	$	11,292,460


	December 31, 2016																		December 31, 2017
	Legacy Loans								Acquired Loans								Total		Legacy Loans									Acquired Loans								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
	(Dollars in thousands)																		(Dollars in thousands)
Allowance for loan losses:
Individually evaluated for impairment	$	1,889	$	4,420	$	864	$	50	$	113	$	73	$	—	$	—	$	7,409	$	1,378		$	2,807	$	3	$	35	$	246	$	854	$	—	$	—	$	5,323
Collectively evaluated for impairment	37,067		19,010		1,033		2,066		548		44		—		36		59,804		43,982			14,421		1,671		3,350		1,036		2,673		42		3		67,178
PCI loans	—		—		—		—		12,130		—		—		—		12,130		—			—		—		—		12,040		—		—		—		12,040
Total	$	38,956	$	23,430	$	1,897	$	2,116	$	12,791	$	117	$	—	$	36	$	79,343	$	45,360		$	17,228	$	1,674	$	3,385	$	13,322	$	3,527	$	42	$	3	$	84,541
																					��
Loans outstanding:
Individually evaluated for impairment	$	74,085	$	34,783	$	6,029	$	733	$	23,865	$	435	$	—	$	431	$	140,361	$	41,041		$	31,322	$	3,951	$	908	$	14,239	$	18,733	$	2,984	$	1,171	$	114,349
Collectively evaluated for impairment	5,271,262		1,079,348		75,365		179,961		2,597,200		650,710		70,535		206,802		10,131,183		6,172,448			1,459,273		152,204		477,375		2,120,001		244,980		7,525		157,794		10,791,600
PCI loans	—		—		—		—		188,158		66,745		2,999		15,543		273,445		—			—		—		—		160,493		26,561		—		9,854		196,908
Total	$	5,345,347	$	1,114,131	$	81,394	$	180,694	$	2,809,223	$	717,890	$	73,534	$	222,776	$	10,544,989	$	6,213,489		$	1,490,595	$	156,155	$	478,283	$	2,294,733	$	290,274	$	10,509	$	168,819	$	11,102,857

As of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, the reserve for unfunded loan commitments recorded in other liabilities was ~~$836~~$636 thousand and ~~$3.2 million,~~$836 thousand, respectively. For the three months ended ~~September 30,~~March 31, 2018 and 2017, ~~and 2016,~~ the recognized (credit) provision for unfunded commitments recorded in credit related expense was ~~$(2.8) million~~$(200) thousand and ~~$270~~$241 thousand, respectively. For the nine months ended September 30, 2017 and 2016, the recognized credit for unfunded commitments was $(2.4) million and $(191) thousand, respectively. The credit for unfunded commitments recorded in the third quarter of 2017 was a result of updated information related to credit card commitments that was used in the calculation of allowance for off balance sheet unfunded commitments.

The recorded investment of individually impaired loans and the total impaired loans net of specific allowance is presented in the following table:


	September 30, 2017			December 31, 2016			March 31, 2018			December 31, 2017
	(Dollars in thousands)						(Dollars in thousands)
With allocated specific allowance
Without charge off	$	40,218		$	59,638		$	56,548		$	28,614
With charge off	879			1,120			1,355			3,044
With no allocated specific allowance
Without charge off	60,129			76,775			63,194			77,533
With charge off	7,234			2,828			6,971			5,158
Specific allowance on impaired loans	(6,807		)	(7,409		)	(11,514		)	(5,323		)
Impaired loans, net of specific allowance	$	101,653		$	132,952		$	116,554		$	109,026

The following tables detail the recorded investment of impaired loans (Legacy Loans and Acquired Loans that became impaired subsequent to being originated and acquired, respectfully) as of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, and the average recorded investment and interest income recognized for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2018 and ~~2016. Loans~~2017. Impaired loans with no related allowance are believed by management to be adequately collateralized.


	As of September 30, 2017						As of December 31, 2016						As of March 31, 2018						As of December 31, 2017
Total Impaired Loans	Recorded Investment*		Unpaid Contractual Principal Balance		Related Allowance		Recorded Investment*		Unpaid Contractual Principal Balance		Related Allowance		Recorded Investment*		Unpaid Contractual Principal Balance		Related Allowance		Recorded Investment*		Unpaid Contractual Principal Balance		Related Allowance
	(Dollars in thousands)												(Dollars in thousands)
With related allowance:
Real estate—residential	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Real estate—commercial
Retail	931		936		132		2,095		2,384		90		6,384		6,384		5,740		532		531		131
Hotel & motel	2,696		3,667		263		6,387		6,387		337		2,826		4,982		232		2,931		5,090		284
Gas station & car wash	—		—		—		215		228		41		—		—		—		—		—		—
Mixed use	169		727		7		206		732		27		2,959		4,819		5		312		958		4
Industrial & warehouse	988		1,670		135		530		530		—		2,378		2,380		103		772		1,482		96
Other	4,389		4,389		1,170		22,580		22,825		1,507		9,391		9,397		1,153		4,397		4,401		1,109
Real estate—construction	—		—		—		—		—		—		—		—		—		—		—		—
Commercial business	27,292		28,713		5,094		26,543		27,161		4,493		30,876		32,791		4,257		18,330		22,757		3,661
Trade finance	4,201		4,201		2		2,111		2,156		864		2,597		2,597		—		3,861		3,861		3
Consumer and other	431		431		4		91		91		50		492		492		24		523		524		35
Subtotal	$	41,097	$	44,734	$	6,807	$	60,758	$	62,494	$	7,409	$	57,903	$	63,842	$	11,514	$	31,658	$	39,604	$	5,323
With no related allowance:
Real estate—residential	$	498	$	1,488	$	—	$	3,562	$	3,562	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Real estate—commercial
Retail	10,467		12,210		—		12,753		13,290		—		13,968		16,973		—		11,792		13,923		—
Hotel & motel	8,172		12,262		—		6,122		11,735		—		3,038		5,767		—		2,841		5,288		—
Gas station & car wash	2,939		6,646		—		5,043		7,449		—		749		1,944		—		591		1,764		—
Mixed use	1,319		3,732		—		7,303		7,822		—		1,102		1,477		—		1,101		3,490		—
Industrial & warehouse	8,054		8,140		—		9,673		9,748		—		12,606		13,531		—		8,429		8,525		—
Other	16,768		18,278		—		20,181		21,492		—		14,167		18,064		—		20,282		24,412		—
Real estate—construction	1,300		1,441		—		1,300		1,441		—		1,300		1,441		—		1,300		1,441		—
Commercial business	13,087		17,917		—		8,675		9,472		—		18,211		22,961		—		31,725		33,207		—
Trade finance	3,384		5,067		—		3,918		3,918		—		3,368		3,368		—		3,074		3,091		—
Consumer and other	1,375		1,453		—		1,073		1,136		—		1,656		1,808		—		1,556		1,676		—
Subtotal	$	67,363	$	88,634	$	—	$	79,603	$	91,065	$	—	$	70,165	$	87,334	$	—	$	82,691	$	96,817	$	—
Total	$	108,460	$	133,368	$	6,807	$	140,361	$	153,559	$	7,409	$	128,068	$	151,176	$	11,514	$	114,349	$	136,421	$	5,323


*	Unpaid contractual principal balance less charge offs, interest collected applied to principal if on nonaccrual and purchase discounts.


	For the Three Months Ended September 30,								For the Nine Months Ended September 30,								For the Three Months Ended March 31,
	2017				2016				2017				2016				2018				2017
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		Average Recorded Investment*		Interest Income Recognized during Impairment		Average Recorded Investment*		Interest Income Recognized during Impairment
	(Dollars in thousands)																(Dollars in thousands)
With related allowance:
Real estate—residential	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Real estate—commercial
Retail	1,197		4		1,711		—		1,268		11		1,711		—		3,458		—		1,338		4
Hotel & motel	2,269		17		1,320		16		4,330		49		2,965		48		2,878		18		6,391		43
Gas station & car wash	—		—		1,052		9		54		—		1,051		28		—		—		108		—
Mixed use	228		2		208		2		228		5		386		5		1,635		36		228		2
Industrial & warehouse	746		—		542		6		1,226		—		551		18		1,575		23		1,706		32
Other	4,572		60		23,474		259		13,534		175		23,968		776		6,894		68		22,496		253
Real estate—construction	—		—		—		—		—		—		—		—		—		—		—		—
Commercial business	27,031		261		32,553		296		25,036		749		34,147		821		24,603		149		23,041		195
Trade finance	4,118		58		6,465		70		2,587		215		8,390		237		3,229		58		1,055		—
Consumer and other	251		1		548		1		169		3		338		2		508		—		87		1
Subtotal	$	40,412	$	403	$	67,873	$	659	$	48,432	$	1,207	$	73,507	$	1,935	$	44,780	$	352	$	56,450	$	530
With no related allowance:
Real estate—residential	$	249	$	20	$	—	$	—	$	1,381	$	57	$	—	$	—	$	—	$	—	$	2,513	$	28
Real estate—commercial
Retail	10,071		91		9,381		95		12,412		263		10,243		296		12,880		110		14,752		159
Hotel & motel	10,494		59		9,776		54		8,346		175		8,813		163		2,940		—		6,198		7
Gas station & car wash	3,022		114		4,855		25		3,812		317		4,760		75		670		—		4,602		10
Mixed use	1,274		109		2,195		9		4,095		324		2,279		28		1,101		—		6,916		63
Industrial & warehouse	8,390		68		10,905		89		8,738		191		10,396		268		10,518		64		9,086		75
Other	14,733		6		9,912		59		16,324		19		11,312		177		17,225		125		17,915		130
Real estate—construction	1,300		—		1,300		—		1,689		—		1,328		—		1,300		—		2,078		20
Commercial business	11,544		—		13,111		26		10,417		—		11,030		79		18,204		94		9,289		30
Trade finance	1,765		—		2,225		—		2,975		—		1,113		—		3,221		44		4,184		51
Consumer and other	1,305		—		800		7		1,147		—		1,014		23		1,597		6		989		7
Subtotal	$	64,147	$	467	$	64,460	$	364	$	71,336	$	1,346	$	62,288	$	1,109	$	69,656	$	443	$	78,522	$	580
Total	$	104,559	$	870	$	132,333	$	1,023	$	119,768	$	2,553	$	135,795	$	3,044	$	114,436	$	795	$	134,972	$	1,110


*	Unpaid contractual principal balance less charge offs, interest collected applied to principal if on nonaccrual and purchase discounts.


	As of September 30, 2017						As of December 31, 2016						As of March 31, 2018						As of December 31, 2017
Impaired Acquired Loans	Recorded Investment*		Unpaid Contractual Principal Balance		Related Allowance		Recorded Investment*		Unpaid Contractual Principal Balance		Related Allowance		Recorded Investment*		Unpaid Contractual Principal Balance		Related Allowance		Recorded Investment*		Unpaid Contractual Principal Balance		Related Allowance
	(Dollars in thousands)												(Dollars in thousands)
With related allowance:
Real estate—residential	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Real estate—commercial
Retail	661		666		127		1,826		2,114		85		507		506		128		262		261		126
Hotel & motel	87		87		2		—		—		—		85		86		10		85		86		2
Gas station & car wash	—		—		—		—		—		—		—		—		—		—		—		—
Mixed use	131		131		6		136		136		2		2,959		4,819		5		129		129		1
Industrial & warehouse	402		1,084		100		—		—		—		264		266		102		221		896		96
Other	279		279		10		337		341		26		5,315		5,321		22		319		323		21
Real estate—construction	—		—		—		—		—		—		—		—		—		—		—		—
Commercial business	1,787		2,919		415		294		339		73		11,834		13,178		595		1,987		2,903		854
Trade finance	—		—		—		—		—		—		—		—		—		—		—		—
Consumer and other	—		—		—		—		—		—		—		—		—		—		—		—
Subtotal	$	3,347	$	5,166	$	660	$	2,593	$	2,930	$	186	$	20,964	$	24,176	$	862	$	3,003	$	4,598	$	1,100
With no related allowance:
Real estate—residential	$	498	$	1,488	$	—	$	679	$	679	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Real estate—commercial
Retail	1,962		2,279		—		3,148		3,214		—		3,298		3,988		—		3,412		4,099		—
Hotel & motel	536		2,388		—		4,767		7,171		—		485		2,183		—		482		1,887		—
Gas station & car wash	448		2,146		—		1,568		1,815		—		199		236		—		1		28		—
Mixed use	162		2,240		—		5,315		5,551		—		—		—		—		152		2,240		—
Industrial & warehouse	55		55		—		66		66		—		863		1,635		—		45		45		—
Other	4,934		5,800		—		6,023		6,752		—		4,439		5,019		—		9,131		9,951		—
Real estate—construction	—		—		—		—		—		—		—		—		—		—		—		—
Commercial business	3,098		3,453		—		141		386		—		4,614		4,877		—		16,746		16,926		—
Trade finance	3,384		5,067		—		—		—		—		3,368		3,368		—		2,984		3,001		—
Consumer and other	758		826		—		431		484		—		1,278		1,430		—		1,171		1,291		—
Subtotal	$	15,835	$	25,742	$	—	$	22,138	$	26,118	$	—	$	18,544	$	22,736	$	—	$	34,124	$	39,468	$	—
Total	$	19,182	$	30,908	$	660	$	24,731	$	29,048	$	186	$	39,508	$	46,912	$	862	$	37,127	$	44,066	$	1,100


*	Unpaid contractual principal balance less charge offs, interest collected applied to principal if on nonaccrual and purchase discounts.


	For the Three Months Ended September 30,								For the Nine Months Ended September 30,								For the Three Months Ended March 31,
	2017				2016				2017				2016				2018				2017
Impaired Acquired 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		Average Recorded Investment*		Interest Income Recognized during Impairment		Average Recorded Investment*		Interest Income Recognized during Impairment
	(Dollars in thousands)																(Dollars in thousands)
With related allowance:
Real estate—residential	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Real estate—commercial
Retail	927		4		1,386		—		998		11		1,277		—		384		—		1,068		4
Hotel & motel	174		—		—		—		110		—		—		—		85		—		46		—
Gas station & car wash	—		—		—		—		—		—		254		—		—		—		—		—
Mixed use	190		2		139		2		191		5		316		5		1,544		36		193		2
Industrial & warehouse	452		—		—		—		226		—		—		—		243		—		—		—
Other	303		4		344		4		319		11		324		13		2,817		68		335		4
Real estate—construction	—		—		—		—		—		—		—		—		—		—		—		—
Commercial business	1,250		9		396		—		892		24		486		—		6,911		30		534		5
Trade finance	—		—		—		—		—		—		—		—		—		—		—		—
Consumer and other	—		—		80		—		—		—		40		—		—		—		—		—
Subtotal	$	3,296	$	19	$	2,345	$	6	$	2,736	$	51	$	2,697	$	18	$	11,984	$	134	$	2,176	$	15
With no related allowance:
Real estate—residential	$	249	$	20	$	—	$	—	$	294	$	57	$	—	$	—	$	—	$	—	$	339	$	—
Real estate—commercial
Retail	1,709		15		2,095		21		2,729		45		2,333		72		3,355		34		3,750		31
Hotel & motel	2,671		—		4,983		3		3,737		—		5,933		10		483		—		4,803		4
Gas station & car wash	454		—		1,589		25		774		—		1,490		75		100		—		1,093		10
Mixed use	104		—		166		—		2,701		—		219		—		76		—		5,299		63
Industrial & warehouse	60		1		1,038		2		63		2		1,075		7		454		—		66		1
Other	3,806		46		3,215		13		4,205		116		3,520		39		6,785		57		4,603		13
Real estate—construction	—		—		—		—		—		—		—		—		—		—		—		—
Commercial business	1,835		47		707		4		1,014		142		690		13		3,916		13		193		1
Trade finance	1,692		68		—		—		846		191		—		—		3,176		44		—		—
Consumer and other	684		2		361		2		518		6		459		7		1,216		2		351		2
Subtotal	$	13,264	$	199	$	14,154	$	70	$	16,881	$	559	$	15,719	$	223	$	19,561	$	150	$	20,497	$	125
Total	$	16,560	$	218	$	16,499	$	76	$	19,617	$	610	$	18,416	$	241	$	31,545	$	284	$	22,673	$	140


*	Unpaid contractual principal balance less charge offs, interest collected applied to principal if on nonaccrual and purchase discounts.

Generally, loans are placed on nonaccrual status if the principal and/or interest payments become 90 days or more 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 customers 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 only when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. The Company did not recognize any cash basis interest income for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2018 or ~~2016.~~2017.

The following table represent the recorded investment in nonaccrual and loans past due over 90 days or more and still on accrual status by class of loans as of March 31, 2018 and December 31, 2017.



	Nonaccrual Loans⁽¹⁾				Accruing Loans Past Due 90 or More Days
	March 31, 2018		December 31, 2017		March 31, 2018		December 31, 2017
	(Dollars in thousands)
Legacy Loans:
Real estate—residential	$	—	$	—	$	—	$	—
Real estate—commercial
Retail	11,118		3,179		—		—
Hotel & motel	4,029		3,931		—		—
Gas station & car wash	550		590		1,609		—
Mixed use	1,102		1,132		—		—
Industrial & warehouse	6,279		3,403		—		—
Other	9,214		5,689		—		—
Real estate—construction	1,300		1,300		—		—
Commercial business	16,209		8,540		—		—
Trade finance	—		—		—		—
Consumer and other	492		471		285		407
Subtotal	$	50,293	$	28,235	$	1,894	$	407
Acquired Loans: ⁽²⁾
Real estate—residential	$	—	$	—	$	—	$	—
Real estate—commercial
Retail	880		638		—		—
Hotel & motel	570		568		—		—
Gas station & car wash	199		1		—		—
Mixed use	107		152		—		—
Industrial & warehouse	1,090		221		—		—
Other	655		1,389		—		—
Real estate—construction	—		—		—		—
Commercial business	13,237		14,560		—		—
Trade finance	—		—		—		—
Consumer and other	1,121		1,011		—		—
Subtotal	$	17,859	$	18,540	$	—	$	—
Total	$	68,152	$	46,775	$	1,894	$	407


⁽¹⁾	Total nonaccrual loans exclude guaranteed portion of delinquent SBA loans that are in liquidation totaling $21.9 million and 22.1 million, at March 31, 2018 and December 31, 2017, respectively.


⁽²⁾	Acquired Loans exclude PCI loans.

The following tables present the recorded investment in past due loans, including nonaccrual loans, by the number of days past due as of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017 by class of loans:


	As of September 30, 2017
									Nonaccrual Loans ⁽²⁾				Total Delinquent and Nonaccrual Loans
	Past Due and Accruing											As of March 31, 2018										As of December 31, 2017
	30-59 Days		60-89 Days		90 or More Days		Total					30-59 Past Days				60-89 Past Days			90 or More Past Days		Total Past Due		30-59 Past Days		60-89 Past Days		90 or More Past Days		Total Past Due
	(Dollars in thousands)														(Dollars in thousands)
Legacy Loans:
Real estate—residential	$	—	$	—	$	—	$	—		$	—					$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Real estate—commercial
Retail	1,168		—		—		1,168		3,259				4,427		2,086			—		2,695		4,781		3,239		—		285		3,524
Hotel & motel	329		1,895		—		2,224		8,966				11,190		4,746			—		2,891		7,637		1,884		1,172		2,635		5,691
Gas station & car wash	1,755		—		—		1,755		2,490				4,245		—			—		2,029		2,029		956		—		435		1,391
Mixed use	161		—		—		161		1,196				1,357		—			—		926		926		129		—		952		1,081
Industrial & warehouse	1,123		—		—		1,123		3,456				4,579		3,899			—		2,473		6,372		1,121		99		2,473		3,693
Other	1,418		—		—		1,418		6,332				7,750		149			1,628		4,150		5,927		1,409		—		5,425		6,834
Real estate—construction	—		—		—		—		1,300				1,300		—			—		1,300		1,300		—		—		1,300		1,300
Commercial business	2,660		960		150		3,770		9,485				13,255		1,470			725		3,828		6,023		698		516		2,508		3,722
Trade finance	—		—		—		—		—				—		128			—		—		128		—		—		—		—
Consumer and other	243		717		257		1,217		594				1,811		9,906			175		358		10,439		7,512		97		494		8,103
Subtotal	$	8,857	$	3,572	$	407	$	12,836	$	37,078			$	49,914	$	22,384		$	2,528	$	20,650	$	45,562	$	16,948	$	1,884	$	16,507	$	35,339
Acquired Loans: ⁽¹⁾
Real estate—residential	$	—	$	—	$	—	$	—	$	—			$	—	$	—		$	—	$	—	$	—	$	—	$	—	$	—	$	—
Real estate—commercial
Retail	128		—		—		128		1,005				1,133		36			245		386		667		81		216		386		683
Hotel & motel	—		1,521		—		1,521		621				2,142		185			—		88		273		—		1,219		—		1,219
Gas station & car wash	—		—		—		—		448				448		29			—		170		199		1,161		41		1		1,203
Mixed use	—		—		—		—		161				161		—			—		106		106		151		—		152		303
Industrial & warehouse	338		—		—		338		402				740		1,031			—		1,090		2,121		804		264		221		1,289
Other	336		—		—		336		1,818				2,154		5,781			802		—		6,583		275		—		—		275
Real estate—construction	—		—		—		—		—				—		—			—		—		—		—		—		—		—
Commercial business	627		166		—		793		1,196				1,989		1,894			555		959		3,408		1,088		256		885		2,229
Trade finance	—		—		—		—		—				—		200			—		—		200		—		—		—		—
Consumer and other	—		—		—		—		594				594		487			268		164		919		957		270		181		1,408
Subtotal	$	1,429	$	1,687	$	—	$	3,116	$	6,245			$	9,361	$	9,643		$	1,870	$	2,963	$	14,476	$	4,517	$	2,266	$	1,826	$	8,609
TOTAL	$	10,286	$	5,259	$	407	$	15,952	$	43,323			$	59,275
Total Past Due															$	32,027		$	4,398	$	23,613	$	60,038	$	21,465	$	4,150	$	18,333	$	43,948


⁽¹⁾	Acquired Loans exclude PCI loans.


⁽²⁾	~~Nonaccrual loans exclude guaranteed portion of delinquent SBA loans that are in liquidation totaling $21.5 million. Includes nonaccrual loans less than 30 days past due totaling $9.1 million.~~

As of December 31, 2016

Nonaccrual Loans ⁽²⁾
Total Delinquent and Nonaccrual Loans
Past Due and Accruing

30-59
Days

60-89
Days
90 or More Days Total
(Dollars in thousands)
Legacy Loans:
Real estate—residential $ —
$ —
$ —
$ —
$ —
$ —
Real estate—commercial
Retail 480
—
—
480
3,672
4,152
Hotel & motel 1,836
3,137
—
4,973
1,392
6,365
Gas station & car wash 362
—
—
362
3,690
4,052
Mixed use —
—
—
—
1,305
1,305
Industrial & warehouse —
697
—
697
1,922
2,619
Other 2,871
—
—
2,871
4,007
6,878
Real estate—construction —
1,513
—
1,513
1,300
2,813
Commercial business 558
815
—
1,373
9,371
10,744
Trade finance —
500
—
500
2,056
2,556
Consumer and other 146
58
305
509
229
738
Subtotal $ 6,253
$ 6,720
$ 305
$ 13,278
$ 28,944
$ 42,222
Acquired Loans: ⁽¹⁾

Real estate—residential $ —
$ —
$ —
$ —
$ 679
$ 679
Real estate—commercial
Retail 1,611
—
—
1,611
1,871
3,482
Hotel & motel 95
—
—
95
4,501
4,596
Gas station & car wash 68
340
—
408
993
1,401
Mixed use —
—
—
—
48
48
Industrial & warehouse 257
—
—
257
—
257
Other 350
—
—
350
2,144
2,494
Real estate—construction —
—
—
—
—
—
Commercial business 1,303
684
—
1,987
345
2,332
Trade finance —
—
—
—
—
—
Consumer and other 331
25
—
356
549
905
Subtotal $ 4,015
$ 1,049
$ —
$ 5,064
$ 11,130
$ 16,194
TOTAL $ 10,268
$ 7,769
$ 305
$ 18,342
$ 40,074
$ 58,416


⁽¹⁾	~~Acquired Loans exclude PCI loans.~~


⁽²⁾	~~Nonaccrual loans exclude guaranteed portion of delinquent SBA loans that are in liquidation totaling $15.9 million. Includes nonaccrual loans less than 30 days past due totaling $18.3 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, PCI loans that are contractually past due are still considered to be accruing and performing loans. The loans may be classified as nonaccrual if the timing and amount of future cash flows is not reasonably estimable.

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, including, but not limited to, current financial information, historical payment experience, credit documentation, public information, and current economic trends. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis includes all non-homogeneous loans. Homogeneous loans are not risk rated and credit risk is analyzed largely by the number of days past due. This analysis is performed at least on a quarterly basis. The definitions for risk ratings are as follows:

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

Special Mention: Loans that have potential weaknesses that ~~deserves~~deserve 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 that are inadequately protected by the current net worth and paying capacity of the borrower or by the collateral pledged, if any. Loans in this classification 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: Loans that have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or repayment in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

The following tables present the recorded investment of risk ratings for Legacy and Acquired Loans as of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017 by class of loans:


	As of September 30, 2017										As of March 31, 2018
	Pass/ Not Rated		Special Mention		Substandard		Doubtful		Total		Pass/ Not Rated		Special Mention		Substandard		Doubtful		Total
	(Dollars in thousands)										(Dollars in thousands)
Legacy Loans:
Real estate—residential	$	36,488	$	1,035	$	1,447	$	—	$	38,970	$	33,999	$	1,140	$	6	$	—	$	35,145
Real estate—commercial
Retail	1,569,248		23,225		19,348		—		1,611,821		1,650,936		27,294		30,007		—		1,708,237
Hotel & motel	1,194,329		10,042		13,128		—		1,217,499		1,249,515		13,233		10,044		—		1,272,792
Gas station & car wash	729,531		12,382		4,246		—		746,159		761,321		6,578		3,221		—		771,120
Mixed use	400,074		4,612		1,544		—		406,230		448,290		5,118		2,445		—		455,853
Industrial & warehouse	568,172		15,999		22,032		—		606,203		609,308		17,893		25,367		—		652,568
Other	1,125,919		29,111		50,047		—		1,205,077		1,176,578		35,413		33,955		—		1,245,946
Real estate—construction	210,134		—		2,968		—		213,102		202,484		5,692		3,052		—		211,228
Commercial business	1,358,444		33,068		81,164		216		1,472,892		1,535,242		25,726		70,302		108		1,631,378
Trade finance	134,262		2,311		1,227		—		137,800		175,591		2,500		1,362		—		179,453
Consumer and other	340,187		—		841		—		341,028		593,726		1		870		—		594,597
Subtotal	$	7,666,788	$	131,785	$	197,992	$	216	$	7,996,781	$	8,436,990	$	140,588	$	180,631	$	108	$	8,758,317
Acquired Loans:
Real estate—residential	$	15,837	$	265	$	—	$	—	$	16,102	$	12,257	$	260	$	—	$	—	$	12,517
Real estate—commercial
Retail	649,572		8,974		21,643		—		680,189		582,824		4,823		20,012		—		607,659
Hotel & motel	285,539		9,289		20,423		2		315,253		261,779		4,532		23,188		2		289,501
Gas station & car wash	198,481		8,973		8,828		—		216,282		187,283		1,929		9,047		—		198,259
Mixed use	99,250		5,648		14,317		8		119,223		95,621		3,099		10,516		—		109,236
Industrial & warehouse	266,876		15,185		15,908		270		298,239		235,875		15,081		16,539		255		267,750
Other	600,411		36,607		26,114		—		663,132		555,411		16,547		29,658		—		601,616
Real estate—construction	84,584		—		—		—		84,584		89,726		—		—		—		89,726
Commercial business	310,220		7,782		33,528		20		351,550		133,265		8,954		44,687		7		186,913
Trade finance	39,663		—		3,384		—		43,047		6,348		226		3,368		—		9,942
Consumer and other	174,254		720		4,470		987		180,431		154,352		43		6,414		215		161,024
Subtotal	$	2,724,687	$	93,443	$	148,615	$	1,287	$	2,968,032	$	2,314,741	$	55,494	$	163,429	$	479	$	2,534,143
Total	$	10,391,475	$	225,228	$	346,607	$	1,503	$	10,964,813	$	10,751,731	$	196,082	$	344,060	$	587	$	11,292,460


	As of December 31, 2016										As of December 31, 2017
	Pass/ Not Rated		Special Mention		Substandard		Doubtful		Total		Pass/ Not Rated		Special Mention		Substandard		Doubtful		Total
	(Dollars in thousands)										(Dollars in thousands)
Legacy Loans:
Real estate—residential	$	34,283	$	223	$	2,883	$	—	$	37,389	$	33,557	$	1,147	$	1,439	$	—	$	36,143
Real estate—commercial
Retail	1,303,452		18,929		15,430		—		1,337,811		1,640,809		32,723		17,856		—		1,691,388
Hotel & motel	1,187,709		12,763		9,026		—		1,209,498		1,224,597		19,358		8,877		—		1,252,832
Gas station & car wash	643,282		7,259		3,690		—		654,231		737,485		9,013		590		—		747,088
Mixed use	375,312		—		1,467		—		376,779		421,755		4,581		1,477		—		427,813
Industrial & warehouse	478,528		29,830		13,745		—		522,103		577,344		16,716		24,317		—		618,377
Other	969,024		22,220		41,017		—		1,032,261		1,133,188		30,030		53,995		—		1,217,213
Real estate—construction	159,230		14,745		1,300		—		175,275		219,583		—		3,052		—		222,635
Commercial business	1,032,232		15,919		65,885		95		1,114,131		1,389,043		35,640		65,912		—		1,490,595
Trade finance	68,051		5,673		7,670		—		81,394		152,583		2,200		1,372		—		156,155
Consumer and other	179,864		1		829		—		180,694		477,370		5		908		—		478,283
Subtotal	$	6,430,967	$	127,562	$	162,942	$	95	$	6,721,566	$	8,007,314	$	151,413	$	179,795	$	—	$	8,338,522
Acquired Loans:
Real estate—residential	$	18,007	$	1,809	$	679	$	—	$	20,495	$	13,369	$	262	$	—	$	—	$	13,631
Real estate—commercial
Retail	772,465		9,860		21,110		—		803,435		630,555		6,921		20,797		—		658,273
Hotel & motel	328,396		5,419		18,233		—		352,048		275,191		4,247		24,987		—		304,425
Gas station & car wash	249,379		8,437		11,338		—		269,154		194,063		2,872		8,992		—		205,927
Mixed use	118,643		3,105		12,505		8		134,261		94,864		5,725		14,738		—		115,327
Industrial & warehouse	321,040		31,819		9,048		315		362,222		250,049		14,973		16,358		265		281,645
Other	736,385		23,286		29,099		—		788,770		568,545		19,848		33,335		—		621,728
Real estate—construction	78,838		—		—		—		78,838		93,777		—		—		—		93,777
Commercial business	649,186		31,340		37,265		99		717,890		236,705		8,593		44,964		12		290,274
Trade finance	70,535		61		2,938		—		73,534		7,455		—		3,054		—		10,509
Consumer and other	214,437		958		5,949		1,432		222,776		162,495		37		6,202		85		168,819
Subtotal	$	3,557,311	$	116,094	$	148,164	$	1,854	$	3,823,423	$	2,527,068	$	63,478	$	173,427	$	362	$	2,764,335
Total	$	9,988,278	$	243,656	$	311,106	$	1,949	$	10,544,989	$	10,534,382	$	214,891	$	353,222	$	362	$	11,102,857

The Company ~~reclassifies~~may reclassify loans held for investment to loans held for sale in the event that the Company plans to sell loans that were originated with the intent to hold to maturity. Loans transferred from held to investment to held for sale are carried at the lower of cost or fair value. The breakdown of loans by type that were reclassified from held to investment to held for sale for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~ is presented in the following table:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2017		2016		2017		2016		2018		2017
Transfer of loans receivable to held for sale	(Dollars in thousands)								(Dollars in thousands)
Real estate - commercial	$	—	$	992	$	429	$	992	$	—	$	8,699
Commercial business									—		752
Consumer	—		—		—		400		6,155		—
Total	$	—	$	992	$	429	$	1,392	$	6,155	$	9,451

The adequacy of the allowance for loan losses is determined by management based upon an evaluation and review of the credit quality of the loan portfolio, consideration of historical loan loss experience, relevant internal and external factors that affect the collection of a loan, and other pertinent factors.

Migration analysis is a formula methodology derived from the Bank’s actual historical net charge off experience for each loan class (type) or pool and risk grade. The migration analysis is centered on the Bank’s internal credit risk rating system. Management’s internal loan review and external contracted credit review examinations are used to determine and validate loan risk grades. This credit review system takes into consideration factors such as: borrower’s background and experience; historical and current financial condition; credit history and payment performance; economic 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 the migration analysis methodology described above. The loans are classified by class and risk grade, and the historical loss migration is tracked for the various classes. Loss experience is quantified for a specified period and then weighted to place more significance on the most recent losses. That loss experience is then applied to the stratified portfolio at the end of each quarter. ~~For PCI loans, a general~~The Company utilizes nineteen non-homogeneous loan pools in the quantitative analysis process. The non-impaired commercial real estate loan portfolio is stratified into fourteen different loan pools based on property types and the non-impaired commercial and industrial loan portfolio is stratified into five different loan pools based on loan type in order to allocate historic loss ~~allowance is provided~~experience to ~~the extent that there has been credit deterioration since the date of acquisition.~~ more granular loan pools.

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 or pool. However, if information exists to warrant adjustment to the migration analysis, changes are made in accordance with the established parameters supported by narrative and/or statistical analysis. The Credit Risk Matrix and the nine possible scenarios enable the Bank to qualitatively adjust the Loss Migration Ratio by as much as 50 basis points in either direction (positive or negative) for each loan type pool. This matrix considers the following nine factors, which are patterned after the guidelines provided under the FFIEC Interagency Policy Statement on the Allowance for Loan and Lease Losses:

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

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

Changes in the nature and volume of the loan portfolio;

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

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

Changes in the quality of the 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 the loan portfolio.

The Company also establishes specific loss allowances for loans that have identified potential credit risk conditions or circumstances related to a specific individual credit. The specific allowance amounts are determined in accordance with ASC 310-10-35-22, “Measurement of Impairment.” The loans identified as impaired will be accounted for in accordance with one of the three acceptable valuation methods: 1) the present value of future cash flows discounted at the loan’s effective interest rate; 2) the loan’s observable market price; or 3) the fair value of the collateral, if the loan is collateral dependent. For the collateral dependent impaired loans, management obtains a new appraisal to determine the amount of impairment as of the date that the loan became impaired. The appraisals are based on an “as is” valuation. To ensure that appraised values remain current, management either obtains updated appraisals every twelve months from a qualified independent appraiser or an internal evaluation of the collateral is performed by qualified personnel. If the third party market data indicates that the value of the collateral property has declined since the most recent valuation date, management adjusts the value of the property downward to reflect current market conditions. If the fair value of the collateral is less than the recorded amount of the loan, management recognizes impairment by creating or adjusting an existing valuation allowance with a corresponding charge to the provision for loan losses. If an impaired loan is expected to be collected through liquidation or operation of the underlying collateral, the loan is deemed to be collateral dependent and the amount of impairment is charged off against the allowance for loan losses.

The Company considers a loan to be impaired when it is probable that not all amounts due (principal and interest) will be collectible in accordance with the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. The significance of payment delays and payment shortfalls is determined on a case-by-case basis by taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.

For commercial business loans, real estate loans, and certain consumer loans, management bases the measurement of loan impairment on the present value of the expected future cash flows, discounted at the loan’s effective interest rate, or on the fair value of the loan’s collateral if the loan is collateral dependent. Management evaluates most consumer loans for impairment on a collective basis because these loans generally have smaller balances and are homogeneous in the underwriting of terms and conditions and in the types of collateral.

If a loan is deemed to be impaired, the amount of the impairment is supported by a specific allowance amount which is included in the allowance for loan losses through a charge to the provision for loan losses.

For PCI loans, the allowance for loan losses is based upon expected cash flows for these loans. To the extent that a deterioration in borrower’s credit quality results in a decrease in expected cash flows subsequent to the acquisition of the loans, an allowance for loan losses would be established based on an estimate of future credit losses over the remaining life of the loans. Credit for loan losses on acquired loans for the three months ended ~~September 30, 2017~~March 31, 2018 was ~~$845 thousand~~$2.2 million of which included ~~$610~~$225 thousand in provision for loan losses related to PCI loans. Provision for loan losses on acquired loans for the ~~nine~~three months ended ~~September 30,~~March 31, 2017 was ~~$1.3~~$1.9 million of which included ~~$1.5 million~~$734 thousand in credit for loan losses related to PCI loans.

The following table presents breakdown of loans by impairment method at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017:


	As of September 30, 2017																					As of March 31, 2018
	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
	(Dollars in thousands)																					(Dollars in thousands)
Impaired loans (gross carrying value)	$	498		$	56,892		$	1,300		$	40,379		$	7,585		$	1,806		$	108,460
Impaired loans (recorded investment)																						$	—		$	69,568		$	1,300		$	49,087		$	5,965		$	2,148		$	128,068
Specific allowance	$	—		$	1,707		$	—		$	5,094		$	2		$	4		$	6,807		$	—		$	7,233		$	—		$	4,257		$	—		$	24		$	11,514
Specific allowance to impaired loans	N/A			3.00		%	N/A			12.62		%	0.03		%	0.22		%	6.28		%	N/A			10.40		%	—		%	8.67		%	—		%	1.12		%	8.99		%
Other loans	$	54,574		$	8,028,415		$	296,386		$	1,784,063		$	173,262		$	519,653		$	10,856,353		$	47,662		$	8,110,969		$	299,654		$	1,769,204		$	183,430		$	753,473		$	11,164,392
General allowance	$	161		$	52,573		$	1,486		$	18,290		$	1,580		$	2,736		$	76,826		$	49		$	51,405		$	338		$	17,438		$	1,805		$	3,912		$	74,947
General allowance to other loans	0.30		%	0.65		%	0.50		%	1.03		%	0.91		%	0.53		%	0.71		%	0.10		%	0.63		%	0.11		%	0.99		%	0.98		%	0.52		%	0.67		%
Total loans	$	55,072		$	8,085,307		$	297,686		$	1,824,442		$	180,847		$	521,459		$	10,964,813		$	47,662		$	8,180,537		$	300,954		$	1,818,291		$	189,395		$	755,621		$	11,292,460
Total allowance for loan losses	$	161		$	54,280		$	1,486		$	23,384		$	1,582		$	2,740		$	83,633		$	49		$	58,638		$	338		$	21,695		$	1,805		$	3,936		$	86,461
Total allowance to total loans	0.29		%	0.67		%	0.50		%	1.28		%	0.87		%	0.53		%	0.76		%	0.10		%	0.72		%	0.11		%	1.19		%	0.95		%	0.52		%	0.77		%


	As of December 31, 2016																					As of December 31, 2017
	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
	(Dollars in thousands)																					(Dollars in thousands)
Impaired loans (gross carrying value)	$	3,562		$	93,088		$	1,300		$	35,218		$	6,029		$	1,164		$	140,361
Impaired loans (recorded investment)																						$	—		$	53,980		$	1,300		$	50,055		$	6,935		$	2,079		$	114,349
Specific allowance	$	—		$	2,002		$	—		$	4,493		$	864		$	50		$	7,409		$	—		$	1,624		$	—		$	3,661		$	3		$	35		$	5,323
Specific allowance to impaired loans	N/A			2.15		%	N/A			12.76		%	14.33		%	4.30		%	5.28		%	N/A			3.01		%	N/A			7.31		%	0.04		%	1.68		%	4.66		%
Other loans	$	54,322		$	7,749,485		$	252,813		$	1,796,803		$	148,899		$	402,306		$	10,404,628		$	49,774		$	8,088,056		$	315,112		$	1,730,814		$	159,729		$	645,023		$	10,988,508
General allowance	$	209		$	47,915		$	1,621		$	19,054		$	1,033		$	2,102		$	71,934		$	88		$	56,040		$	930		$	17,094		$	1,713		$	3,353		$	79,218
General allowance to other loans	0.38		%	0.62		%	0.64		%	1.06		%	0.69		%	0.52		%	0.69		%	0.18		%	0.69		%	0.30		%	0.99		%	1.07		%	0.52		%	0.72		%
Total loans	$	57,884		$	7,842,573		$	254,113		$	1,832,021		$	154,928		$	403,470		$	10,544,989		$	49,774		$	8,142,036		$	316,412		$	1,780,869		$	166,664		$	647,102		$	11,102,857
Total allowance for loan losses	$	209		$	49,917		$	1,621		$	23,547		$	1,897		$	2,152		$	79,343		$	88		$	57,664		$	930		$	20,755		$	1,716		$	3,388		$	84,541
Total allowance to total loans	0.36		%	0.64		%	0.64		%	1.29		%	1.22		%	0.53		%	0.75		%	0.18		%	0.71		%	0.29		%	1.17		%	1.03		%	0.52		%	0.76		%

Under certain circumstances, the Company provides borrowers relief through loan modifications. These modifications are either temporary in nature (“temporary modifications”) or are more substantive. The temporary modifications generally consist of interest only payments for a three to six month period, whereby principal payments are deferred. At the end of the modification period, the remaining principal balance is re-amortized based on the original maturity date. Loans subject to temporary modifications are generally downgraded to Special Mention or Substandard. At the end of the modification period, the loan either 1) returns to the original contractual terms; 2) is further modified and accounted for as a troubled debt restructuring in accordance with ASC 310-10-35; or 3) is disposed of through foreclosure or liquidation.

Troubled Debt Restructurings (“TDRs”) of loans are defined by ASC 310-40, “Troubled Debt Restructurings by Creditors” and evaluated for impairment in accordance with ASC 310-10-35. The concessions may be granted in various forms, including

reduction in the stated interest rate, reduction in the amount of principal amortization, forgiveness of a portion of a loan balance or accrued interest, or extension of the maturity date. In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed on the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the Bank’s internal underwriting policy. At ~~September 30, 2017~~March 31, 2018, total TDR loans were ~~$75.7~~$80.1 million, compared to ~~$70.9~~$78.5 million at December 31, ~~2016.~~2017.

A summary of the recorded investment of TDRs on accrual and nonaccrual status by type of concession as of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017 is presented below:


	As of September 30, 2017																		As of March 31, 2018
	TDRs on Accrual Status								TDRs on Nonaccrual Status								Total		TDRs on Accrual Status								TDRs on Nonaccrual Status								Total
	Real Estate		Commercial Business		Other		Total		Real Estate		Commercial Business		Other		Total		Total		Real Estate		Commercial Business		Other		Total		Real Estate		Commercial Business		Other		Total		Total
	(Dollars in thousands)																		(Dollars in thousands)
Payment concession	$	18,014	$	434	$	—	$	18,448	$	1,817	$	150	$	—	$	1,967	$	20,415	$	16,280	$	219	$	—	$	16,499	$	7,105	$	286	$	—	$	7,391	$	23,890
Maturity / amortization concession	3,397		25,187		8,203		36,787		2,084		5,394		323		7,801		44,588		11,778		18,506		6,400		36,684		689		11,173		139		12,001		48,685
Rate concession	5,497		4,075		—		9,572		1,109		20		—		1,129		10,701		5,396		916		101		6,413		1,050		18		—		1,068		7,481
Total	$	26,908	$	29,696	$	8,203	$	64,807	$	5,010	$	5,564	$	323	$	10,897	$	75,704	$	33,454	$	19,641	$	6,501	$	59,596	$	8,844	$	11,477	$	139	$	20,460	$	80,056


	As of December 31, 2016																		As of December 31, 2017
	TDRs on Accrual Status								TDRs on Nonaccrual Status								Total		TDRs on Accrual Status								TDRs on Nonaccrual Status								Total
	Real Estate		Commercial Business		Other		Total		Real Estate		Commercial Business		Other		Total		Total		Real Estate		Commercial Business		Other		Total		Real Estate		Commercial Business		Other		Total		Total
	(Dollars in thousands)																		(Dollars in thousands)
Payment concession	$	16,358	$	29	$	—	$	16,387	$	4,417	$	1,717	$	—	$	6,134	$	22,521	$	22,550	$	376	$	—	$	22,926	$	3,071	$	170	$	—	$	3,241	$	26,167
Maturity / amortization concession	1,840		17,471		4,600		23,911		1,313		6,130		2,287		9,730		33,641		4,768		25,584		7,442		37,794		1,536		5,264		98		6,898		44,692
Rate concession	6,856		1,665		55		8,576		5,590		387		155		6,132		14,708		5,444		996		90		6,530		1,083		18		—		1,101		7,631
Total	$	25,054	$	19,165	$	4,655	$	48,874	$	11,320	$	8,234	$	2,442	$	21,996	$	70,870	$	32,762	$	26,956	$	7,532	$	67,250	$	5,690	$	5,452	$	98	$	11,240	$	78,490

TDRs on accrual status are comprised of loans that were accruing at the time of restructuring and for which the Bank anticipates full repayment of both principal and interest under the restructured terms. TDRs that are on nonaccrual status can be returned to accrual status after a period of sustained performance, generally determined to be six months of timely payments as modified. Sustained performance includes the periods prior to the modification if the prior performance met or exceeded the modified terms. TDRs on accrual status at ~~September 30, 2017~~March 31, 2018 were comprised of 2226 commercial real estate loans totaling ~~$26.9~~$33.5 million, 2631 commercial business loans totaling ~~$29.7~~$19.6 million, and 647 other loans totaling ~~$8.2~~$6.5 million. TDRs on accrual status at December 31, ~~2016~~2017 were comprised of 2024 commercial real estate loans totaling ~~$25.1~~$32.8 million, 2327 commercial business loans totaling ~~$19.2~~$27.0 million and 1956 other loans totaling ~~$4.7~~$7.5 million. The Company expects that TDRs on accrual status as of ~~September 30, 2017,~~March 31, 2018, which were all performing in accordance with their restructured terms, to continue to comply with the restructured terms because of the reduced principal or interest payments on these loans. TDRs that were restructured at market interest rates and had sustained performance as agreed under the modified loan terms may be reclassified as non-TDRs after each year end but are reserved for under ASC 310-10.

The Company has allocated ~~$4.1~~$5.3 million and ~~$5.3~~$4.8 million of specific reserves to TDRs as of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, respectively.

The following table presents the recorded investment of loans classified as ~~TDR~~TDRs within the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 and 2017 ~~and September 30, 2016~~ by class of loans:


	Three Months Ended September 30, 2017					Three Months Ended September 30, 2016					Three Months Ended March 31, 2018					Three Months Ended March 31, 2017
	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 thousands)										(Dollars in thousands)
Legacy Loans:
Real estate—residential	—	$	—	$	—	—	$	—	$	—	—	$	—	$	—	—	$	—	$	—
Real estate—commercial
Retail	1	464		452		—	—		—		1	15		15		—	—		—
Hotel & motel	—	—		—		—	—		—		—	—		—		—	—		—
Gas station & car wash	—	—		—		—	—		—		—	—		—		—	—		—
Mixed use	—	—		—		—	—		—		—	—		—		—	—		—
Industrial & warehouse	—	—		—		—	—		—		1	2,113		2,113		—	—		—
Other	—	—		—		1	845		836		1	1,240		1,240		1	482		482
Real estate - construction	—	—		—		—	—		—
Real estate—construction											—	—		—		—	—		—
Commercial business	7	5,409		4,753		4	265		314		3	3,659		3,659		2	1,681		1,218
Trade finance	—	—		—		—	—		—		—	—		—		—	—		—
Consumer and other	—	—		—		—	—		—		—	—		—		—	—		—
Subtotal	8	$	5,873	$	5,205	5	$	1,110	$	1,150	6	$	7,027	$	7,027	3	$	2,163	$	1,700
Acquired Loans:
Real estate—residential	1	$	614	$	498	—	$	—	$	—	—	$	—	$	—	—	$	—	$	—
Real estate—commercial
Retail	—	—		—		1	1,377		1,344		1	213		213		—	—		—
Hotel & motel	—	—		—		—	—		—		—	—		—		—	—		—
Gas station & car wash	—	—		—		—	—		—		—	—		—		—	—		—
Mixed use	—	—		—		—	—		—		1	2,725		2,725		—	—		—
Industrial & warehouse	—	—		—		—	—		—		—	—		—		—	—		—
Other	1	851		2,265		1	81		79		1	1,055		1,055		1	93		97
Real estate—construction	—	—		—		—	—		—		—	—		—		—	—		—
Commercial business	5	4,478		3,535		2	31		27		2	133		133		2	649		561
Trade finance	1	2,938		3,384		—	—		—		—	—		—		—	—		—
Consumer and other	—	—		—		—	—		—		—	—		—		—	—		—
Subtotal	8	$	8,881	$	9,682	4	$	1,489	$	1,450	5	$	4,126	$	4,126	3	$	742	$	658
Total	16	$	14,754	$	14,887	9	$	2,599	$	2,600	11	$	11,153	$	11,153	6	$	2,905	$	2,358

Nine Months Ended September 30, 2017 Nine Months Ended September 30, 2016
Number of
Loans Pre-
Modification Post-
Modification
Number of
Loans

Pre-
Modification

Post-
Modification
(Dollars in thousands)
Legacy Loans:
Real estate—residential —
$ —
$ —
—
$ —
$ —
Real estate—commercial

Retail 2
1,123
1,091
—
—
—
Hotel & motel —
—
—
—
—
—
Gas station & car wash —
—
—
—
—
—
Mixed use —
—
—
—
—
—
Industrial & warehouse —
—
—
—
—
—
Other —
—
—
1
845
836
Real estate - construction —
—
—
—
—
—
Commercial business 12
12,282
11,027
12
11,465
8,178
Trade finance —
—
—
1
2,199
1,439
Consumer and other —
—
—
1
—
101
Subtotal 14
$ 13,405
$ 12,118
15
$ 14,509
$ 10,554
Acquired Loans:
Real estate—residential 1
$ 614
$ 498
—
$ —
$ —
Real estate—commercial

Retail 2
221
218
1
1,377
1,344
Hotel & motel —
—
—
—
—
—
Gas station & car wash —
—
—
—
—
—
Mixed use —
—
—
—
—
—
Industrial & warehouse —
—
—
—
—
—
Other 1
851
2,265
1
81
79
Real estate—construction —
—
—
—
—
—
Commercial business 6
4,678
3,688
2
31
27
Trade finance 1
2,938
3,384
—
—
—
Consumer and other —
—
—
1
30
26
Subtotal 11
$ 9,302
$ 10,053
5
$ 1,519
$ 1,476
Total 25
$ 22,707
$ 22,171
20
$ 16,028
$ 12,030

For TDRs modified during the three months ended ~~September 30, 2017,~~March 31, 2018, the Company recorded ~~totaled $376~~$78 thousand in specific reserves. There were no charge offs of TDR loans modified during the three ~~and nine~~ months ended ~~September 30, 2017. TDRs modified during the nine months ended September 30, 2017 had $1.3 million in specific reserves.~~

March 31, 2018. For TDR loans modified during the three ~~and nine~~ months ended ~~September 30, 2016,~~March 31, 2017, the Company recorded ~~totaled $183~~$2 thousand ~~and $2.9 million, respectively~~ in specific reserves. ~~There were no~~Total charge offs of TDR loans modified during the three ~~and nine~~ months ended ~~September 30, 2016.~~March 31, 2017 totaled $131 thousand.

The following table presents loans modified as TDRs within the previous twelve months ended ~~September 30,~~March 31, 2018 and March 31, 2017 ~~and September 30, 2016~~ that subsequently had payment defaults during the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2018 and ~~September 30, 2016:~~March 31, 2017:


	Three Months Ended September 30, 2017			Three Months Ended September 30, 2016			Three Months Ended March 31, 2018			Three Months Ended March 31, 2017
	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	$	625	—	$	—
Hotel & motel	—	—		—	—		—	—		—	—
Gas station & car wash	—	—		—	—		—	—		—	—
Mixed Use	—	—		—	—		—	—		—	—
Industrial & warehouse	—	—		—	—		—	—		—	—
Other	—	—		—	—		—	—		—	—
Real estate—construction	—	—		—	—		—	—		—	—
Commercial business	2	827		6	4,296		—	—		1	102
Trade finance	—	—		—	—		—	—		—	—
Consumer and other	—	—		—	—		—	—		—	—
Subtotal	2	$	827	6	$	4,296	1	$	625	1	$	102
Acquired Loans:
Real estate—commercial
Retail	—	$	—	—	$	—	—	$	—	—	$	—
Hotel & motel	—	—		—	—		—	—		—	—
Gas station & car wash	—	—		—	—		—	—		—	—
Mixed Use	—	—		—	—		—	—		—	—
Industrial & warehouse	—	—		—	—		—	—		—	—
Other	—	—		—	—		1	3,042		—	—
Real estate—construction	—	—		—	—		—	—		—	—
Commercial business	—	—		—	—		—	—		1	11
Trade finance	—	—		—	—		—	—		—	—
Consumer and other	—	—		1	26		—	—		—	—
Subtotal	—	$	—	1	$	26	1	$	3,042	1	$	11
Total	2	$	827	7	$	4,322	2	$	3,667	2	$	113

Nine Months Ended September 30, 2017 Nine Months Ended September 30, 2016
Number of Loans Balance Number of Loans Balance
(Dollars in thousands)
Legacy Loans:
Real estate—commercial
Retail —
$ —
—
$ —
Hotel & motel —
—
—
—
Gas station & car wash —
—
—
—
Mixed Use —
—
—
—
Industrial & warehouse —
—
—
—
—
Other —
—
—
—
Real estate—construction —
—
—
—
Commercial business 2
827
8
4,496
Trade finance —
—
1
3,178
Consumer and other —
—
—
—
Subtotal 2
$ 827
9
$ 7,674
Acquired Loans:
Real estate—commercial

Retail —
$ —
—
$ —
Hotel & motel —
—
—
—
Gas station & car wash —
—
—
—
Mixed Use —
—
—
—
Industrial & warehouse —
—
—
—
Other —
—
—
—
Real estate—construction —
—
—
—
Commercial business —
—
—
—
Trade finance —
—
—
—
Consumer and other —
—
1
26
Subtotal —
$ —
1
$ 26
Total 2
$ 827
10
$ 7,700

A loan is considered to be in payment default once it is 30 days contractually past due under the modified terms. As of ~~September 30, 2017,~~March 31, 2018, there were no specific reserves for the TDRs that had payment defaults during the three ~~and nine~~ months ended ~~September 30, 2017. The total~~March 31, 2018. There were no charge offs for TDR loans that had payment defaults during the three months ended March 31, 2018.

There was one Real Estate Commercial Legacy Loan totaling $625 thousand that subsequently defaulted during the three months ended March 31, 2018 that was modified through a maturity concession. There was one Real Estate Commercial Acquired Loan totaling $3.0 million that subsequently defaulted during the three months ended March 31, 2018 that was modified through a payment concession.

As of March 31, 2017, the specific reserves totaled $10 thousand for the TDRs that had payment defaults during the three ~~and nine~~ months ended ~~September 30, 2017 totaled $203 thousand.~~

March 31, 2017. There were ~~two Legacy Loans that subsequently defaulted during the three and nine months ended September 30, 2017 that were modified as follows: two commercial business~~no charge offs for TDR loans ~~totaling $827 thousand were modified through maturity concessions.~~

~~As of September 30, 2016, the specific reserves totaled $1.0 million and $2.4 million for the TDRs~~ that had payment defaults during the three ~~and nine~~ months ended ~~September 30, 2016. The total charge offs for the TDRs that had payment defaults during the three and nine months ended September 30, 2016 were $85 thousand and $115 thousand respectively.~~March 31, 2017.

There ~~were six~~was one commercial business Legacy ~~Loans~~Loan totaling $102 thousand that subsequently defaulted during the three months ended ~~September 30, 2016~~March 31, 2017 that ~~were modified as follows: three Commercial Business loans totaling $401 thousand were~~was modified through payment ~~concessions, and three Commercial Business loans totaling $4.1 million were modified through maturity concessions.~~concession. There was one ~~Consumer and other~~commercial business Acquired Loan totaling ~~$26~~$11 thousand that subsequently defaulted during the three months ended ~~September 30, 2016~~March 31, 2017 that was modified through ~~maturity concession.~~

There were nine Legacy Loans that subsequently defaulted during the nine months ended September 30, 2016 that were modified as follows: four Commercial Business loans totaling $401 thousand were modified through payment concessions, four Commercial Business loans totaling $4.1 million were modified through maturity concessions, and one Trade Finance loan totaling $3.2 million was modified through maturity concession. There was one Consumer and other Acquired Loan totaling $26 thousand that defaulted during the nine months ended September 30, 2016 that was modified through maturity concession.

8. Deposits

The aggregate amount of time deposits in denominations of more than $250 thousand ~~or more~~ at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, was ~~$1.62~~$1.38 billion and ~~$1.55~~$1.28 billion, respectively. Included in time deposits of more than $250 thousand ~~or more~~ were $300.0 million in California State Treasurer’s deposits at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016.~~2017. The California State Treasurer’s deposits are subject to withdrawal based on the State’s periodic evaluations. The Company is required to pledge eligible collateral of at least 110% of outstanding deposits. At ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, securities with carrying values of approximately ~~$330.3~~$337.5 million and ~~$371.6~~$337.7 million, respectively, were pledged as collateral for the California State Treasurer’s deposit.

The Company also utilizes brokered deposits as a secondary source of funds. Total brokered deposits at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, totaled ~~$808.4 million~~$1.11 billion and ~~$724.7~~$797.0 million, respectively. Brokered deposits at ~~September 30, 2017~~March 31, 2018 consisted of ~~$289.4~~$289.3 million in money market and NOW accounts and ~~$519.0~~$816.0 million in time deposits accounts. Brokered deposits at December 31, ~~2016~~2017 consisted of ~~$303.7~~$258.5 million in money market and NOW accounts and ~~$421.0~~$538.5 million in time ~~deposits~~deposit accounts.

9. Borrowings

The Company maintains a line of credit with the FHLB of San Francisco for use as a secondary source of funds. The borrowing capacity with the FHLB is limited to the lower of 25% of the Bank’s total assets or the Bank’s collateral capacity, which was ~~$3.34~~$3.55 billion at ~~September 30, 2017,~~March 31, 2018, and ~~$3.38~~$3.54 billion at December 31, ~~2016.~~2017. 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 ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, real estate secured loans with a carrying amount of approximately ~~$4.85~~$5.68 billion and ~~$5.53~~$4.91 billion, respectively, were pledged at the FHLB. At ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, other than FHLB stock, no securities were pledged as collateral at FHLB. The purchase of FHLB stock is a prerequisite to become a member of the FHLB system, and the Company is required to own a certain amount of stock based on outstanding borrowings.

At ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, FHLB advances ~~totaled $1.02~~totaling $862.3 million and $1.16 billion, ~~and $754.3 million,~~ respectively had weighted average effective interest rates of ~~1.31%~~1.73% and ~~1.22%~~1.63%, respectively, and had various maturities through ~~August~~December 2022. ~~The Company had a putable advance at December 31, 2016 totaling $20.2 million with a quarterly put date which matured in September 2017.~~ The effective interest rate of FHLB advances as of ~~September 30, 2017~~March 31, 2018 ranged between ~~0.88%~~0.94% and ~~2.02%~~2.39%. At ~~September 30, 2017,~~March 31, 2018, the Company’s remaining borrowing capacity with the FHLB was ~~$2.32~~$2.67 billion.

At ~~September 30,~~December 31, 2017, the Company also had $69.9 million in overnight federal funds purchased from lines at other banks. There were no federal funds purchased from other banks at March 31, 2018.

At March 31, 2018, the contractual maturities for FHLB advances were as follows:

Contractual
Maturities
Maturity/
Put Date
(Dollars in thousands)
Due within one year $ 480,000
$ 480,000
Due after one year through five years 538,046
538,046
Total $ 1,018,046
$ 1,018,046



	March 31, 2018
Scheduled maturities in:	(Dollars in thousands)
2018	$	65,000
2019	322,346
2020	185,000
2021	145,000
2022 and thereafter	145,000
Total	$	862,346

As a member of the FRB system, the Bank may also borrow from the FRB of San Francisco. The maximum amount that the Bank may borrow from the FRB’s discount window is up to 95% of the outstanding principal balance of the qualifying loans and the fair value of the securities that are pledged. At ~~September 30, 2017,~~March 31, 2018, the outstanding principal balance of the qualifying loans was ~~$549.3~~$606.9 million, and ~~the fair value of~~no investment securities ~~was $5.7 million.~~were pledged. There were no borrowings outstanding at the FRB discount window as of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016.~~2017.

10. Subordinated Debentures

At ~~September 30, 2017~~March 31, 2018, the Company had nine wholly owned subsidiary grantor trusts that had issued $126.0 million of pooled trust preferred securities. Trust preferred securities accrue and pay distributions periodically at specified annual rates as provided in the indentures. The trusts used the net proceeds from the offering to purchase a like amount of subordinated debentures (the “Debentures”). The Debentures are the sole assets of the trusts. The Company’s obligations under the subordinated debentures and related documents, taken together, constitute a full and unconditional guarantee by the Company of the obligations of the trusts. The trust preferred securities are mandatorily redeemable upon the maturity of the Debentures, or upon earlier redemption as provided in the indentures. The Company now has the right to redeem the Debentures in whole (but not in part) on a quarterly basis at a redemption price specified in the indentures plus any accrued but unpaid interest to the redemption date. The Company also has a right to defer consecutive payments of interest on the debentures for up to five years.

The following table is a summary of trust preferred securities and Debentures at ~~September 30, 2017~~March 31, 2018:


Issuance Trust	Issuance Date	Trust Preferred Security Amount		Carrying Value of Debentures		Rate Type	Current Rate	Maturity Date	Issuance Date	Trust Preferred Security Amount		Carrying Value of Debentures		Rate Type	Current Rate	Maturity Date
		(Dollars in thousands)								(Dollars in thousands)
Nara Capital Trust III	06/05/2003	$	5,000	$	5,155	Variable	4.47%	06/15/2033	06/05/2003	$	5,000	$	5,155	Variable	5.27%	06/15/2033
Nara Statutory Trust IV	12/22/2003	5,000		5,155		Variable	4.15%	01/07/2034	12/22/2003	5,000		5,155		Variable	4.57%	01/07/2034
Nara Statutory Trust V	12/17/2003	10,000		10,310		Variable	4.27%	12/17/2033	12/17/2003	10,000		10,310		Variable	5.13%	12/17/2033
Nara Statutory Trust VI	03/22/2007	8,000		8,248		Variable	2.97%	06/15/2037	03/22/2007	8,000		8,248		Variable	3.77%	06/15/2037
Center Capital Trust I	12/30/2003	18,000		13,778		Variable	4.15%	01/07/2034	12/30/2003	18,000		13,875		Variable	4.57%	01/07/2034
Wilshire Statutory Trust II	03/17/2005	20,000		15,262		Variable	3.11%	03/17/2035	03/17/2005	20,000		15,366		Variable	3.97%	03/17/2035
Wilshire Statutory Trust III	09/15/2005	15,000		10,723		Variable	2.72%	09/15/2035	09/15/2005	15,000		10,812		Variable	3.52%	09/15/2035
Wilshire Statutory Trust IV	07/10/2007	25,000		17,411		Variable	2.70%	09/15/2037	07/10/2007	25,000		17,548		Variable	3.50%	09/15/2037
Saehan Capital Trust I	03/30/2007	20,000		14,548		Variable	2.96%	06/30/2037	03/30/2007	20,000		14,648		Variable	3.93%	06/30/2037
Total		$	126,000	$	100,590					$	126,000	$	101,117

The Company’s investment in the common trust securities of the issuer trusts was $3.9 million at ~~September 30, 2017~~March 31, 2018 and is included in other assets. Although the subordinated debt issued by the trusts ~~are~~is 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.

Under the “Merger and Acquisition Transition Provisions” in BASEL III, if a depository institution holding company of $15 billion or more acquires a depository institution holding company with total consolidated assets of less than $15 billion as of December 31, 2009, the non-qualifying capital instruments of the resulting organization will be subject to a phase-out schedule. The phase-out schedule ended in 2016 and therefore in accordance with BASEL III, the Company’s subordinated debenture will no longer qualify for Tier 1 treatment once the Company exceeds total consolidated assets of $15 billion or more since the Company had acquisitions subsequent to December 31, 2009. The subordinated debentures will be still be eligible for Tier 2 inclusion once the Company exceeds $15 billion or more in total consolidated assets.

11. Derivative Financial Instruments

The Company offers a loan hedging program to certain loan customers. Through this program, the Company originates a variable rate loan with the customer. The Company and the customer will then enter into a fixed interest rate swap. Lastly, an identical offsetting swap is entered into by the Company with a correspondent bank. These “back-to-back” swap arrangements are intended to offset each other and allow the Company to book a variable rate loan, while providing the customer with a contract for fixed interest payments. In these arrangements, the Company’s net cash flow is equal to the interest income received from the variable rate loan originated with the customer. These customer swaps are not designated as hedging instruments and are recorded at fair value in other assets and other liabilities. The changes in fair value are recognized in the income statement in other income and fees.

At ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, the following interest rate swaps related to the Company’s loan hedging program were outstanding:


	As of September 30, 2017			As of December 31, 2016			As of March 31, 2018			As of December 31, 2017
	(Dollars in thousands)						(Dollars in thousands)
Interest rate swaps on loans with loan customers:
Notional amount	$	279,786		$	223,098		$	299,894		$	274,156
Weighted average remaining term	7.5 years			7.4 years			7.0 years			7.3 years
Received fixed rate (weighted average)	4.35		%	4.29		%	4.41		%	4.34		%
Pay variable rate (weighted average)	3.59		%	3.06		%	4.03		%	3.74		%
Estimated fair value	$	(175	)	$	(1,565	)	$	(8,112	)	$	(2,838	)
Back to back interest rate swaps with correspondent banks:
Notional amount	$	279,786		$	223,098		$	299,894		$	274,156
Weighted average remaining term	7.5 years			7.4 years			7.0 years			7.3 years
Received variable rate (weighted average)	3.59		%	3.06		%	4.03		%	3.74		%
Pay fixed rate (weighted average)	4.35		%	4.29		%	4.41		%	4.34		%
Estimated fair value	$	175		$	1,565		$	8,112		$	2,838

~~Subsequent to the acquisition of Wilshire, the~~The Company ~~began to enter~~enters into various stand-alone mortgage-banking derivatives in order to hedge the risk associated with the fluctuation of interest rates. Changes in fair value are recorded as mortgage banking revenue. Residential mortgage loans funded with interest rate lock commitments and forward commitments for the future delivery of mortgage loans to third party investors are considered derivatives. At ~~September 30, 2017,~~March 31, 2018, the Company had approximately ~~$83.7~~$8.0 million in interest rate lock commitments and ~~$11.5 million in~~ total forward sales commitments for the future delivery of residential mortgage loans. At December 31, ~~2016,~~2017, the Company had approximately ~~$23.7~~$4.8 million in interest rate lock commitments and ~~$13.0 million in~~ total forward sales commitments for the future delivery of residential mortgage loans.

The following table reflects the notional amount and fair value of mortgage banking derivatives for the dates indicated:


	As of September 30, 2017				As of December 31, 2016				As of March 31, 2018				As of December 31, 2017
	Notional Amount		Fair Value		Notional Amount		Fair Value		Notional Amount		Fair Value		Notional Amount		Fair Value
	(Dollars in thousands)								(Dollars in thousands)
Assets:
Interest rate lock commitments	$	10,734	$	60	$	11,168	$	130	$	6,989	$	47	$	4,795	$	25
Forward sale contracts related to mortgage banking	$	6,966	$	24	$	3,223	$	17	$	2,215	$	14	$	2,452	$	8

Liabilities:
Interest rate lock commitments	$	777	$	2	$	1,810	$	3	$	980	$	3	$	—	$	—
Forward sale contracts related to mortgage banking	$	4,545	$	23	$	9,755	$	38	$	5,754	$	11	$	2,343	$	5

12. Commitments and Contingencies

In the normal course of business, the Company is a party to financial instruments with off-balance sheet risk that are used to meet the financing needs of customers. These financial instruments include commitments to extend credit, standby letters of credit, commercial letters of credit, commitments to fund investments in affordable housing partnerships, mortgage derivatives, and operating lease commitments. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated statements of financial condition. The Company’s exposure to credit loss in the event of nonperformance on commitments to extend credit and standby letters of credit is represented by the contractual notional amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as the Company does for extending loan facilities to customers. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary upon extension of credit, is based on the Company’s credit evaluation of the counterparty. The types of collateral that the Company may hold can vary and may include accounts receivable, inventory, property, plant and equipment, and income-producing properties.

Commitments at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017 are summarized as follows:


	September 30, 2017		December 31, 2016		March 31, 2018		December 31, 2017
	(Dollars in thousands)				(Dollars in thousands)
Commitments to extend credit	$	1,571,460	$	1,592,221	$	1,877,130	$	1,526,981
Standby letters of credit	68,358		63,753		73,069		74,748
Other letters of credit	60,036		52,125		67,695		74,147
Commitments to fund investments in affordable housing partnerships	42,433		24,409		35,495		38,467
Interest rate lock	83,705		23,749		7,969		4,795
Forward sale commitments	11,511		12,978		7,969		4,795
Operating lease commitments	53,042		51,059		63,466		66,698

In the normal course of business, the Company is involved in various legal claims. The Company has reviewed all legal claims against us with counsel and have taken into consideration the views of such counsel as to the potential outcome of the claims. Loss contingencies for all legal claims totaled ~~$428~~$420 thousand at ~~September 30, 2017~~March 31, 2018 and ~~$557~~$414 thousand at December 31, ~~2016.~~2017. It is reasonably possible the Company may incur losses in addition to the amounts currently accrued. However, at this time, the Company is unable to estimate the range of additional losses that are reasonably possible because of a number of factors, including the fact that certain of these litigation matters are still in their early stages and involve claims that the Company believes have little to no merit. Management has considered these and other possible loss contingencies and does not expect the amounts to be material to ~~any of~~ the consolidated financial statements.

13. Goodwill, Intangible Assets, and Servicing Assets

Goodwill represents the excess of the purchase price over the sum of the estimated fair values of the tangible and identifiable intangible assets acquired less the estimated fair value of the liabilities assumed. Goodwill has an indefinite useful life and is evaluated for impairment annually or more frequently if events and circumstances indicate that the asset might be impaired. An impairment loss is recognized to the extent that the carrying amount exceeds the asset’s fair value. At December 31, ~~2016,~~2017, management assessed the qualitative factors related to intangible assets and goodwill and for the year to determine whether it was more-likely-than-not that the fair value was less than its carrying amount. Based on the analysis of these factors, management determined that it was more-likely-than-not that intangible assets were not impaired and that the fair value of goodwill exceeded the carrying value and that the two-step goodwill impairment test was not needed. Goodwill is not amortized for book purposes and is not tax deductible.

The carrying amount of the Company’s goodwill as of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017 was $464.5 ~~million and $463.0 million, respectively.~~million. There was no impairment of goodwill during the three ~~and nine~~ months ended September 30, 2017. Goodwill recorded in the third quarter of 2016 from the acquisition of Wilshire totaled $359.0 million. During the fourth quarter of 2016, the Company made a net adjustment of $1.4 million to the deferred tax assets and taxes receivable acquired from Wilshire which reduced the previous goodwill recorded from the transaction by $1.4 million. Subsequently in the first quarter of 2017, the Company made a net adjustment of $978 thousand to OREO and deferred tax assets acquired from Wilshire which increased goodwill recorded from the Wilshire transaction by this amount. During the second quarter of 2017, the Company made a final adjustment of $475 thousand to deferred tax assets which increased goodwill by the same amount. These adjustments were made to reflect new information obtained about facts and circumstances that existed as of the acquisition date in accordance with ASC 805-10-25-13. At September 30, 2017, goodwill related to the acquisition of Wilshire totaled $359.0 million.March 31, 2018.

Core deposit intangible assets are amortized over their estimated lives, which range from seven to ten years. Amortization expense related to core deposit intangible assets totaled ~~$676~~$615 thousand and ~~$565~~$676 thousand for the three months ended ~~September 30,~~March 31, 2018 and 2017, ~~and 2016, respectively. The amortization expense related to core deposit intangible assets totaled $2.0 million and $990 thousand for the nine months ended September 30, 2017 and 2016,~~ respectively. The following table provides information regarding the core deposit intangibles at ~~September 30, 2017:~~March 31, 2018:


		As of September 30, 2017						As of March 31, 2018
Core Deposit Intangibles Related To:	Amortization Period	Gross Carrying Amount		Accumulated Amortization			Amortization Period	Gross Carrying Amount		Accumulated Amortization
		(Dollars in thousands)						(Dollars in thousands)
Center Financial acquisition	7 years	$	4,100	$	(3,896	)	7 years	$	4,100	$	(3,999	)
PIB acquisition	7 years	603		(517		)	7 years	604		(546		)
Foster acquisition	10 years	2,763		(1,563		)	10 years	2,763		(1,700		)
Wilshire acquisition	10 years	18,138		(2,430		)	10 years	18,138		(3,453		)
Total		$	25,604	$	(8,406	)		$	25,605	$	(9,698	)

Servicing assets are recognized when SBA orand residential mortgage loans are sold with servicing retained with the income statement effect recorded in ~~net~~ gains on sales of ~~SBA and other~~ loans. Servicing assets are initially recorded at fair value based on the present value of the contractually specified servicing fee, net of servicing costs, over the estimated life of the loan, using a discount ~~rate based on market conditions and implicit discount rates used by market participants in evaluating servicing transactions~~, ~~which in turn reflect the yields expected to be earned on those transactions.~~rate. The Company’s servicing costs approximates the industry average servicing ~~costs.~~costs of 40 basis points. All classes of servicing assets are subsequently measured using the amortization method which requires servicing rights to be amortized into noninterest income in proportion to, and over the period of, the estimated future net servicing income of the underlying loans.

Management periodically evaluates servicing assets for impairment based upon the fair value of the rights as compared to the carrying amount. Impairment is determined by stratifying rights into groupings based on loan type. Impairment is recognized through a valuation allowance for an individual grouping, to the extent that fair value is less than the carrying amount. As of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, the Company did not have a valuation allowance for servicing assets.

The changes in servicing assets for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2018 and 2017 ~~and 2016~~ were as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2017			2016			2017			2016			2018			2017
	(Dollars in thousands)												(Dollars in thousands)
Balance at beginning of period	$	25,338		$	12,193		$	26,457		$	12,000		$	24,710		$	26,457
Additions through originations of servicing assets	1,484			385			4,096			2,472			1,716			1,296
Additions through acquisition of Wilshire	—			16,203			—			16,203
Amortization	(1,743		)	(2,252		)	(5,474		)	(4,146		)	(1,560		)	(1,812		)
Balance at end of period	$	25,079		$	26,529		$	25,079		$	26,529		$	24,866		$	25,941

Loans serviced for others are not reported as assets. The principal balances of loans serviced for other institutions were ~~$1.48~~$1.54 billion as of ~~September 30, 2017~~March 31, 2018 and ~~$1.55~~$1.51 billion as of December 31, ~~2016.~~2017.

The Company utilizes the discounted cash flow method to calculate the initial excess servicing assets. The inputs used in determining the impairment of the servicing assets at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017 are presented below.


	September 30, 2017	December 31, 2016	March 31, 2018	December 31, 2017
SBA Servicing Assets:
Weighted-average discount rate	10.35%	9.85%	11.52%	11.13%
Constant prepayment rate	8.19%	8.05%	9.51%	8.38%
Mortgage Servicing Assets:
Weighted-average discount rate	9.50%	7.25%	10.13%	9.63%
Constant prepayment rate	9.12%	13.77%	7.69%	9.05%

14. Income Taxes

For the ~~third quarter of 2017,~~three months ended March 31, 2018, the Company had an income tax provision totaling ~~$27.7~~$17.7 million on pretax income of ~~$72.3~~$69.0 million, representing an effective tax rate of ~~38.34%~~25.71%, compared with an income tax provision of ~~$17.2~~$23.0 million on pretax income of ~~$43.3~~$59.2 million, representing an effective tax rate of ~~39.68%~~38.84% for the ~~third quarter of 2016. For the nine~~three months ended September 30, 2017, the Company had an income tax provision totaling $76.2 million on pretax income of $197.6 million, representing an effective tax rate of 38.54%, compared with an income tax provision of $50.2 million on pretax income of $123.3 million, representing an effective tax rate of 40.71% for the nine months ended September 30, 2016.

March 31, 2017. The reduction in effective tax rate for ~~periods in 2017~~2018 compared to ~~periods in 2016~~2017 was primarily due to the reduction of federal income tax rate from 35% to 21% under comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (“Tax Act”) effective as of December 22, 2017 and the increase in affordable housing partnership investment tax credits for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2018 compared to the same periods in ~~2016.~~2017.

~~A reconciliation~~As of March 31, 2018, the Company believes it has reasonably estimated the effects of the ~~difference between the federal statutory~~Tax Act by recording a provisional income tax ~~rate~~expense of $25.4 million for the year ended December 31, 2017 in accordance with SEC Staff Accounting Bulletin No. 118 (“SAB 118”). As required by SAB 118, the Company will continue to evaluate and re-measure the ~~effective~~impact of the Tax Act on deferred tax ~~rate is shown~~amounts that existed at December 31, 2017 and record appropriate income tax provision amounts in 2018. As a result of this process through the first quarter of 2018, the Company recorded an additional provisional income tax provision expense of $16 thousand in the ~~following table~~income tax provision for the ~~three and nine months~~quarter ended ~~September 30, 2017 and 2016:~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Statutory tax rate 35.00 % 35.00 % 35.00 % 35.00 %
State taxes-net of federal tax effect 7.14 % 7.33 % 7.14 % 7.33 %
Affordable housing partnership investment tax credit (3.15 )% (2.40 )% (3.15 )% (2.40 )%
Bank owned life insurance (0.16 )% (0.22 )% (0.16 )% (0.22 )%
Municipal securities (0.24 )% (0.21 )% (0.24 )% (0.21 )%
Nondeductible transaction costs (0.02 )% 0.86 % (0.02 )% 0.86 %
Other (0.23 )% (0.68 )% (0.03 )% 0.35 %
Effective income tax rate 38.34 % 39.68 % 38.54 % 40.71 %
March 31, 2018.

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 $2.1 million at ~~September 30, 2017~~March 31, 2018 and ~~$2.2~~$2.1 million at December 31, ~~2016,~~2017 that relate to uncertainties associated with federal and state income tax matters. ~~Other than the accrued interest of $67 thousand related to uncertain tax positions from an acquired entity, the~~The Company recognizes interest and penalties on income tax matters in income tax expense. The Company recorded approximately ~~$344~~$372 thousand and ~~$306~~$348 thousand, for accrued interest ~~and penalties~~ (no portion was related to penalties) at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, respectively.

Management believes it is reasonably possible that the unrecognized tax benefits may decrease by ~~approximately $1.0~~$2.1 million in the next twelve ~~months.~~months due to a settlement with the state tax authorities.

The statute of limitations for the assessment of income taxes related to the consolidated ~~Federal~~federal income tax returns is closed for all tax years up to and including 2013. The expiration of the statute of limitations for the assessment of income and franchise taxes related to the various state income and franchise tax returns varies by state. The Company is currently under examination by the California Franchise Tax Board (FTB) for the 2011, 2012 and 2013 tax years and by the New York State Department of Taxation and Finance for the 2013, 2014, and 2015 tax years. Wilshire Bancorp, Inc., an acquired entity, is currently under examination by the ~~California Franchise Tax Board~~FTB for the 2011, 2012, and 2013 tax years. While the outcome of the examinations is unknown, the Company expects no material adjustments.

Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and ~~liabilities.~~liabilities (without regard to certain changes to deferred taxes). 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 ~~September 30, 2017.~~March 31, 2018.

15. Fair Value Measurements

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair value. The fair value inputs of the instruments are classified and disclosed in one of the following categories pursuant to ASC 820:

Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. The quoted price shall not be adjusted for any blockage factor (i.e., size of the position relative to trading volume).

Level 2 - Pricing inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Fair value is determined through the use of models or other valuation methodologies, including the use of pricing matrices. If the asset or liability has a specified (contractual) term, a Level 2 input must be observable for substantially the full term of the asset or liability.

Level 3 - Pricing inputs are unobservable for the asset or liability. Unobservable inputs are used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date. The inputs into the determination of fair value require significant management judgment or estimation.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an asset’s or liability’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

The Company uses the following methods and assumptions in estimating fair value disclosures for financial instruments. Financial assets and liabilities recorded at fair value on a recurring and non-recurring basis are listed as follows:

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.

Equity Investments

The fair value of our equity investments which is comprised of mutual funds and equity stock is obtained from unadjusted quoted prices in active markets on the date of measurement and is therefore classified as Level 1.

Interest Rate Swaps

The Company offers interest rate swaps to certain loan customers to allow them to hedge the risk of rising interest rates on their variable rate loans. The Company originates a variable rate loan and enters into a variable-to-fixed interest rate swap with the customer. The Company also enters into an offsetting swap with a correspondent bank. These back-to-back agreements are intended to offset each other and allow the Company to originate a variable rate loan, while providing a contract for fixed interest payments for the customer. The net cash flow for the Company is equal to the interest income received from a variable rate loan originated with the customer. The fair value of these derivatives is based on a discounted cash flow approach. Due to the observable nature of the inputs used in deriving the fair value of these derivative contracts, the valuation of interest rate swaps is classified as Level 2.

Impaired Loans

The fair values of impaired loans are generally measured for impairment using the practical expedients permitted by FASB ASC 310-10-35 including impaired loans measured at an observable market price (if available), or at the fair value of the loan’s collateral (if the loan is collateral dependent). Fair value of the loan’s collateral, when the loan is dependent on collateral, is determined by appraisals or independent valuation, less costs to sell of 8.5%. For commercial and industrial and asset backed loans, independent valuations may be comprised of a 20-60% discount for eligible accounts receivable and a 50-70% discount for inventory. These result in a Level 3 classification.

Derivatives

The fair value of our derivative financial instruments 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 of 8.5% and result in a Level 3 classification of the inputs for determining fair value. OREO is reviewed and evaluated on at least a quarterly 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.

Mortgage banking derivatives

Mortgage banking derivative instruments consist of interest rate lock commitments and forward sale contracts that trade in liquid markets. The fair value is based on the prices available from third party investors. Due to the observable nature of the inputs used in deriving the fair value, the valuation of mortgage banking derivatives are classified as Level 2.

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
	September 30, 2017			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)		March 31, 2018			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
	(Dollars in thousands)										(Dollars in thousands)
Assets:
Securities available for sale:
U.S. Government agency and U.S. Government sponsored enterprises:
Debt securities	$	4,999		$	—	$	4,999		$	—
Collateralized mortgage obligations:											$	812,010		$	—	$	812,010		$	—
Residential	901,882			—		901,882			—
Mortgage-backed securities:														—					—
Residential	596,270			—		596,270			—		438,670			—		438,670			—
Commercial	241,428			—		241,428			—		363,781			—		363,781			—
Corporate securities	4,575			—		4,575			—		4,439			—		4,439			—
Municipal securities	97,052			—		95,932			1,120		80,415			—		79,336			1,079
Mutual funds	22,103			22,103		—			—
Equity investments											25,476			25,476		—			—
Interest rate swaps	(175		)	—		(175		)	—		(8,112		)	—		(8,112		)	—
Mortgage banking derivatives	84			—		84			—		61			—		61			—

Liabilities:
Interest rate swaps	(175		)	—		(175		)	—		(8,112		)	—		(8,112		)	—
Mortgage banking derivatives	25			—		25			—		14			—		14			—


				Fair Value Measurements at the End of the Reporting Period Using										Fair Value Measurements at the End of the Reporting Period Using
	December 31, 2016			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)		December 31, 2017			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
	(Dollars in thousands)										(Dollars in thousands)
Assets:
Securities available for sale:
U.S. Government agency and U.S. Government sponsored enterprises:
Debt securities	$	12,008		$	—	$	12,008		$	—
Collateralized mortgage obligations:
Residential	705,667			—		705,667			—
Collateralized mortgage obligations											$	838,709		$	—	$	838,709		$	—
Mortgage-backed securities:
Residential	591,576			—		591,576			—		471,214			—		471,214			—
Commercial	136,465			—		136,465			—		301,365			—		301,365			—
Corporate securities	11,127			—		11,127			—		4,475			—		4,475			—
Municipal securities	86,839			—		85,700			1,139		82,537			—		81,429			1,108
Mutual funds	13,058			13,058		—			—		21,603			21,603		—			—
Interest rate swaps	(1,565		)	—		(1,565		)	—		(2,838		)	—		(2,838		)	—
Mortgage banking derivatives	147			—		147			—		33			—		33			—

Liabilities:
Interest rate swaps	(1,565		)	—		(1,565		)	—		(2,838		)	—		(2,838		)	—
Mortgage banking derivatives	41			—		41			—		5			—		5			—

There were no transfers between Level 1, 2, and 3 during the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2018 and ~~2016.~~2017.

The table below presents a reconciliation and income statement classification of gains and losses for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2018 and ~~2016:~~2017:


	Three Months Ended September 30,						Nine Months Ended September 30,					Three Months Ended March 31,
	2017			2016			2017			2016		2018			2017
	(Dollars in thousands)											(Dollars in thousands)
Beginning Balance	$	1,127		$	1,234		$	1,139		$	1,166	$	1,108		$	1,139
Total (losses) gains included in other comprehensive income	(7		)	(5		)	(19		)	63		(29		)	(11		)
Ending Balance	$	1,120		$	1,229		$	1,120		$	1,229	$	1,079		$	1,128

The Company measures certain assets at fair value on a non-recurring basis including impaired loans (excluding PCI loans), loans held for sale, and OREO. These fair value adjustments result from impairments recognized during the period, application of the lower of cost or fair value on loans held for sale, and the application of fair value less cost to sell on OREO.

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
	September 30, 2017		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		March 31, 2018		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in thousands)								(Dollars in thousands)
Assets:
Impaired loans at fair value:
Real estate loans	$	5,447	$	—	$	—	$	5,447	$	12,410	$	—	$	—	$	12,410
Commercial business	9,865		—		—		9,865		17,191		—		—		17,191
Consumer									66		—		—		66
OREO	10,077		—		—		10,077		5,450		—		—		5,450


			Fair Value Measurements at the End of the Reporting Period Using								Fair Value Measurements at the End of the Reporting Period Using
	December 31, 2016		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		December 31, 2017		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in thousands)								(Dollars in thousands)
Assets:
Impaired loans at fair value:
Real estate loans	$	58,882	$	—	$	—	$	58,882	$	6,086	$	—	$	—	$	6,086
Commercial business	6,563		—		—		6,563		3,320		—		—		3,320
Consumer	253		—		—		253		84		—		—		84
Loans held for sale, net	3,788		—		3,788		—
OREO	21,990		—		—		21,990		5,615		—		—		5,615

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


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,						For the Three Months Ended March 31,
	2017			2016			2017			2016			2018			2017
	(Dollars in thousands)												(Dollars in thousands)
Assets:
Impaired loans at fair value:
Real estate loans	$	142		$	(154	)	$	(2,293	)	$	97		$	(5,572	)	$	(2,002	)
Commercial business	364			(3,108		)	(4,637		)	(5,956		)	(899		)	(974		)
Trade Finance	3			109			(1,236		)	1,190			15			(712		)
Consumer	(206		)	(151		)	(701		)	(245		)	(315		)	(266		)
Loans held for sale, net	847			1,476			1,619			1,519			—			420
OREO	(640		)	(162		)	(1,967		)	(1,408		)	72			(595		)

Fair Value of Financial Instruments

Carrying amounts and estimated fair values of financial instruments, not previously presented, at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016~~2017 were as follows:


	September 30, 2017					March 31, 2018
	Carrying Amount		Estimated Fair Value		Fair Value Measurement Using	Carrying Amount		Estimated Fair Value		Fair Value Measurement Using
	(Dollars in thousands)					(Dollars in thousands)
Financial Assets:
Cash and cash equivalents	$	405,296	$	405,296	Level 1	$	612,353	$	612,353	Level 1
Interest bearing deposits in other financial institutions and other investments	53,715		53,615		Level 2/3	78,940		78,859		Level 2/3
Loans held for sale	11,425		11,964		Level 2	33,689		36,298		Level 2
Loans receivable—net	10,879,341		10,985,397		Level 3	11,206,022		11,193,282		Level 3
FHLB stock	28,426		N/A		N/A	28,966		N/A		N/A
Accrued interest receivable	29,145		29,145		Level 2/3	29,154		29,154		Level 2/3
Servicing assets	25,079		28,152		Level 3	24,866		27,511		Level 3
Customers’ liabilities on acceptances	1,433		1,433		Level 2	1,220		1,220		Level 2
Financial Liabilities:
Noninterest bearing deposits	$	3,049,998	$	3,049,998	Level 2	$	3,048,181	$	3,048,181	Level 2
Saving and other interest bearing demand deposits	3,929,015		3,929,015		Level 2	3,687,674		3,687,674		Level 2
Time deposits	4,014,307		4,008,879		Level 2	4,774,714		4,783,506		Level 2
FHLB advances	1,018,046		1,013,404		Level 2	862,346		860,365		Level 2
Subordinated debentures	100,590		100,590		Level 2	101,117		117,240		Level 2
Accrued interest payable	13,740		13,740		Level 2	19,614		19,614		Level 2
Acceptances outstanding	1,433		1,433		Level 2	1,220		1,220		Level 2

	December 31, 2016					December 31, 2017
	Carrying Amount		Estimated Fair Value		Fair Value Measurement Using	Carrying Amount		Estimated Fair Value		Fair Value Measurement Using
	(Dollars in thousands)					(Dollars in thousands)
Financial Assets:
Cash and cash equivalents	$	437,334	$	437,334	Level 1	$	492,000	$	492,000	Level 1
Interest bearing deposits in other financial institutions and other investments	44,202		43,773		Level 2/3	53,366		52,960		Level 2/3
Loans held for sale	22,785		24,492		Level 2	29,661		32,048		Level 2
Loans receivable—net	10,463,989		10,666,642		Level 3	11,018,034		11,112,179		Level 3
FHLB stock	21,964		N/A		N/A	29,776		N/A		N/A
Accrued interest receivable	26,880		26,880		Level 2/3	29,979		29,979		Level 2/3
Servicing assets	26,457		26,457		Level 3	24,710		27,511		Level 3
Customers’ liabilities on acceptances	2,899		2,899		Level 2	1,691		1,691		Level 2
Financial Liabilities:
Noninterest bearing deposits	$	2,900,241	$	2,900,241	Level 2	$	2,998,734	$	2,998,734	Level 2
Saving and other interest bearing demand deposits	3,703,352		3,703,352		Level 2	3,573,212		3,573,212		Level 2
Time deposits	4,038,442		4,036,664		Level 2	4,274,663		4,263,585		Level 2
FHLB advances	754,290		749,486		Level 2	1,157,693		1,220,529		Level 2
Federal funds purchased						69,900		69,900		Level 2
Subordinated debentures	99,808		99,808		Level 2	100,853		100,853		Level 2
Accrued interest payable	10,863		10,863		Level 2	15,961		15,961		Level 2
Acceptances outstanding	2,899		2,899		Level 2	1,691		1,691		Level 2

During the first quarter of 2018, the Company adopted ASU 2016-01, “Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities.” Among other things, the guidance requires the Company to base their fair value disclosures for financial instruments that are not measured at fair value in the financial statements on the exit price notion as opposed to an entry pricing notion. As of December 31, 2017, the Company used the entry prices to measure the fair value of certain assets and liabilities including loans, deposits, and subordinated debentures as permitted by ASC 820-10. However, upon adoption of ASU 2016-01, the Company now measures these assets and liabilities based on the exit price notion. Although the exit price notion represents the value that would be received to sell an asset or paid to transfer a liability, the actual price received for a sale of assets or paid to transfer liabilities could be different from exit price disclosed.

The methods and assumptions used to estimate fair value are described as follows:

The carrying amount is the estimated fair value for cash and cash equivalents, savings and other interest bearing demand deposits, customer’s and Bank’s liabilities on acceptances, noninterest bearing deposits, short-term debt, secured borrowings and variable rate loans or deposits that reprice frequently and fully. For ~~fixed rate~~ loans ~~or deposits and for variable rate loans or deposits with infrequent repricing or repricing limits,~~the 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. The fair value for servicing assets is determined through a discounted cash flow analysis which incorporates probability of default and ~~utilizes~~loss given default rates on an individual loan basis. The discount ~~rates,~~rate is based on the LIBOR Swap Rate for fixed rate loans, while variable loans start with the corresponding index rate and an adjustment was made on certain loans which considered factors such as servicing costs, capital charges, duration, asset type incremental costs, and use of projected cash flows. Residential real estate loans fair values included Fannie Mae and Freddie Mac prepayment ~~speeds, and delinquency rate~~speed assumptions ~~as inputs.~~or a third party index based on historical prepayment speeds. Fair value of time deposits is based discounted cash flow analysis using recent issuance rates over the prior three months and a market rate analysis of recent offering rates for retail products. Wholesale time deposits fair values incorporated brokered time deposit offering rates. The fair value of our 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.

16. Stockholders’ Equity

On July 29, 2016 the Company acquired Wilshire in an all-stock transaction. Pursuant to the merger agreement, Wilshire shareholders received 0.7034 shares of the Company’s common stock for each share of Wilshire stock owned. Based on this exchange ratio, 55.5 million shares of the Company’s common stock were issued to Wilshire shareholders at $15.37 per share, the closing price of the Company’s stock on July 29, 2016. As a result, $852.9 million in common stock was issued as consideration in the transaction and $3.4 million in additional paid-in capital was recorded to account for the fair value of stock options assumed. Total stockholders’ equity at ~~September 30, 2017~~March 31, 2018 was ~~$1.93~~$1.95 billion, compared to ~~$1.86~~$1.93 billion at December 31, ~~2016.~~2017.

The Company assumed certain warrants (related to the TARP Capital Purchase Plan) to purchase shares of the Company’s common stock. On May 20, 2015, the U.S. Treasury Department completed an auction to sell certain warrant positions, and the Company submitted the winning bid to repurchase an outstanding warrant to purchase 350,767 shares of the Company’s common stock. The Company repurchased this warrant for $1.2 million. As of ~~September 30, 2017,~~March 31, 2018, the U.S. Treasury Department held one remaining warrant for the purchase of ~~20,238~~20,520 shares of the Company’s common stock.

The Company paid a quarterly dividend of $0.13 per common share for the ~~third~~first quarter of ~~2017~~2018 compared to ~~$0.11~~$0.12 per common share for the ~~third~~first quarter of ~~2016. For the nine months ended September 30, 2017 and 2016, the Company paid total dividends of $0.37 and $0.33, respectively.~~2017.

The following table presents the quarterly changes to accumulated other comprehensive (loss) income for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2018 and ~~September 30, 2016:~~March 31, 2017:


	Three Months Ended,						Three Months Ended,
	September 30, 2017			September 30, 2016			March 31, 2018			March 31, 2017
	(Dollars in thousands)						(Dollars in thousands)
Balance at beginning of period	$	(10,089	)	$	10,974		$	(21,781	)	$	(14,657	)
Unrealized loss on securities available for sale and interest only strips	(211		)	(2,848		)	(24,649		)	3,132
Reclassification adjustments for gains realized in income	—			(948		)
Less tax effect	(89		)	(1,239		)
Total other comprehensive loss	(122		)	(2,557		)
Tax effect							7,509			(1,324		)
Total other comprehensive (loss) income							$	(17,140	)	$	1,808
Reclassification to retained earnings per ASU 2016-01							281			—
Balance at end of period	$	(10,211	)	$	8,417		$	(38,640	)	$	(12,849	)

Nine Months Ended,
September 30, 2017 September 30, 2016
(Dollars in thousands)
Balance at beginning of period $ (14,657 ) $ (1,832 )
Unrealized gains on securities available for sale and interest only strips 7,697
19,347
Reclassification adjustments for gains realized in income —
(948 )
Less tax effect 3,251
8,150
Total other comprehensive income 4,446
10,249
Balance at end of period $ (10,211 ) $ 8,417

During the first quarter of 2018, the Company adopted ASU 2016-01 “Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities.” As a result of the adoption of ASU 2016-01, the Company no longer accounts for mutual funds as available-for-sale securities and accounts for these investments as equity investments with changes to fair value recorded through earnings. In accordance with ASU 2016-01, the Company reclassified $281 thousand in net unrealized losses included in other comprehensive income, net of taxes, as of December 31, 2017 to retained earnings on January 1, 2018. For the three ~~and nine~~ months ended ~~September 30,~~and March 31, 2017, there were no reclassifications out of accumulated other comprehensive ~~loss~~(loss) income. For the three and nine months ended September 30, 2016, reclassifications out of accumulated other comprehensive income (loss) totaled $948 thousand, consisting of net gains on the sales and calls of securities available for sale.

17. 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 material and adverse effect on the Company’s and the Bank’s business, financial condition and results of operation, such as restrictions on growth or the payment of dividends or other capital distributions or management fees. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

In July, 2013, the federal bank regulatory agencies adopted final regulations, which revised their risk-based and leverage capital requirements for banking organizations to meet requirements of Dodd-Frank and to implement Basel III international agreements reached by the Basel Committee. The final rules began for the Company and the Bank on January 1, 2015 and are subject to a phase-in period through January 1, 2019. The final rules that had an impact on the Company and the Bank include:

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

A new category and a required 4.50% of risk-weighted assets ratio is established for “Common Equity Tier 1” as a subset of Tier 1 capital limited to common equity;

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

Changes in the permitted composition of Tier 1 capital to exclude trust preferred securities, mortgage servicing rights and certain deferred tax assets and include unrealized gains and losses on available for sale debt and equity securities;

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

A new additional capital conservation buffer of 2.5% of risk weighted assets over each of the required capital ratios is being phased in from 2016 to 2019 and must be met to avoid limitations on the ability of the Bank to pay dividends, repurchase shares, or pay discretionary bonuses. The capital conservation buffer for the Company was initially 0.625% in 2016, and increases 0.625% annually until 2019. As of ~~September 30, 2017,~~March 31, 2018, the capital conservation buffer for the Company stood at ~~1.25%~~1.875%.

As of ~~September 30, 2017,~~March 31, 2018, the ratios for the Company and the Bank are sufficient to meet the fully phased-in conservation buffer.

As of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, the most recent regulatory notification categorized the Bank as “well-capitalized” under the regulatory framework for prompt corrective action. To generally be categorized as “well-capitalized”, the Bank must maintain minimum total risk-based, Tier I risk-based, common equity Tier 1, and Tier I leverage ratios as set forth in the following table. There are no conditions or events since the most recent notification from regulators that management believes has changed the institution’s category. As of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, the Company and the Bank met the capital adequacy requirements to which they are subject.

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


	Actual				Required For Capital Adequacy Purposes				Minimum Capital Adequacy With Capital Conservation Buffer				Required To Be Well Capitalized Under Prompt Corrective Action Provisions				Actual				Required For Capital Adequacy Purposes				Minimum Capital Adequacy With Capital Conservation Buffer				Required To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
	(Dollars in thousands)																(Dollars in thousands)
As of September 30, 2017
As of March 31, 2018
Common equity Tier 1 capital (to risk weighted assets):	Common equity Tier 1 capital (to risk weighted assets):																Common equity Tier 1 capital (to risk weighted assets):
Company	$	1,467,385	12.29	%	$	537,100	4.50	%	$	686,295	5.75	%	N/A		N/A		$	1,502,969	12.35	%	$	547,772	4.50	%	$	776,010	6.375	%	N/A		N/A
Bank	$	1,543,700	12.94	%	$	536,883	4.50	%	$	685,953	5.75	%	$	775,425	6.50	%	$	1,580,728	12.99	%	$	547,470	4.50	%	$	775,582	6.375	%	$	790,790	6.50	%
Total capital (to risk-weighted assets):	Total capital (to risk-weighted assets):																Total capital (to risk-weighted assets):
Company	$	1,648,543	13.81	%	$	954,845	8.00	%	$	1,104,039	9.25	%	N/A		N/A		$	1,687,281	13.86	%	$	973,817	8.00	%	$	1,202,055	9.875	%	N/A		N/A
Bank	$	1,628,169	13.65	%	$	954,369	8.00	%	$	1,103,489	9.25	%	$	1,192,961	10.00	%	$	1,667,824	13.71	%	$	973,280	8.00	%	$	1,201,392	9.875	%	$	1,216,600	10.00	%
Tier I capital (to risk-weighted assets):	Tier I capital (to risk-weighted assets):																Tier I capital (to risk-weighted assets):
Company	$	1,564,074	13.10	%	$	716,134	6.00	%	$	865,328	7.25	%	N/A		N/A		$	1,600,185	13.15	%	$	730,362	6.00	%	$	658,601	7.875	%	N/A		N/A
Bank	$	1,543,700	12.94	%	$	715,777	6.00	%	$	685,953	7.25	%	$	954,369	8.00	%	$	1,580,728	12.99	%	$	729,960	6.00	%	$	775,582	7.875	%	$	973,280	8.00	%
Tier I capital (to average assets):	Tier I capital (to average assets):																Tier I capital (to average assets):
Company	$	1,564,074	11.78	%	$	530,885	4.00	%	N/A		N/A		N/A		N/A		$	1,600,185	11.61	%	$	551,302	4.00	%	N/A		N/A		N/A		N/A
Bank	$	1,543,700	11.63	%	$	530,807	4.00	%	N/A		N/A		$	663,508	5.00	%	$	1,580,728	11.47	%	$	551,186	4.00	%	N/A		N/A		$	688,983	5.00	%


	Actual				Required For Capital Adequacy Purposes				Minimum Capital Adequacy With Capital Buffer				Required To Be Well Capitalized Under Prompt Corrective Action Provisions				Actual				Required For Capital Adequacy Purposes				Minimum Capital Adequacy With Capital Conservation Buffer				Required To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
	(Dollars in thousands)																(Dollars in thousands)
As of December 31, 2016
As of December 31, 2017
Common equity Tier 1 capital (to risk weighted assets):	Common equity Tier 1 capital (to risk weighted assets):																Common equity Tier 1 capital (to risk weighted assets):
Company	$	1,400,246	12.10	%	$	520,917	4.50	%	$	593,267	5.125	%	N/A		N/A		$	1,471,193	12.30	%	$	538,435	4.50	%	$	688,000	5.75	%	N/A		N/A
Bank	$	1,475,228	12.75	%	$	520,631	4.50	%	$	592,941	5.125	%	$	752,022	6.50	%	$	1,548,401	12.95	%	$	538,178	4.50	%	$	687,672	5.75	%	$	777,368	6.50	%
Total capital (to risk-weighted assets):	Total capital (to risk-weighted assets):																Total capital (to risk-weighted assets):
Company	$	1,578,690	13.64	%	$	926,076	8.00	%	$	998,425	8.625	%	N/A		N/A		$	1,653,521	13.82	%	$	957,217	8.00	%	$	1,106,782	9.25	%	N/A		N/A
Bank	$	1,557,765	13.46	%	$	925,566	8.00	%	$	997,876	8.625	%	$	1,156,957	10.00	%	$	1,633,778	13.66	%	$	956,761	8.00	%	$	1,106,255	9.25	%	$	1,195,951	10.00	%
Tier I capital (to risk-weighted assets):	Tier I capital (to risk-weighted assets):																Tier I capital (to risk-weighted assets):
Company	$	1,496,153	12.92	%	$	694,557	6.00	%	$	766,906	6.625	%	N/A		N/A		$	1,568,144	13.11	%	$	717,913	6.00	%	$	867,478	7.25	%	N/A		N/A
Bank	$	1,475,228	12.75	%	$	694,174	6.00	%	$	766,484	6.625	%	$	925,566	8.00	%	$	1,548,401	12.95	%	$	717,571	6.00	%	$	687,672	7.25	%	$	956,761	8.00	%
Tier I capital (to average assets):	Tier I capital (to average assets):																Tier I capital (to average assets):
Company	$	1,496,153	11.49	%	$	520,947	4.00	%	N/A		N/A		N/A		N/A		$	1,568,144	11.54	%	$	543,528	4.00	%	N/A		N/A		N/A		N/A
Bank	$	1,475,228	11.33	%	$	520,903	4.00	%	N/A		N/A		$	651,129	5.00	%	$	1,548,401	11.40	%	$	543,441	4.00	%	N/A		N/A		$	679,301	5.00	%

18. Revenue Recognition

On January 1, 2018, the Company adopted ASU No. 2014-09 “Revenue from Contracts with Customers” (Topic 606) and all subsequent issued ASUs that are related to Topic 606. As stated in Note 2, Basis of Presentation, the implementation of the new standard did not have a material impact on the measurement or recognition of revenue; as such, a cumulative effect adjustment to opening retained earnings was not deemed necessary. Results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period results were not adjusted and continue to be reported in accordance with previous accounting guidance under Topic 605.

Topic 606 does not apply to revenue associated with financial instruments, including revenue from loans and securities. In addition, certain noninterest income streams such as fees associated with mortgage servicing rights, financial guarantees, derivatives, and certain credit card fees are also out of scope of the new guidance. Topic 606 is applicable to noninterest revenue streams such as deposit related fees, and OREO related expenses. However, the recognition of these revenue streams did not change significantly upon adoption of Topic 606. Noninterest revenue streams in-scope of Topic 606 are discussed below.

Service Charges on Deposit Accounts

Service charges on noninterest and interest bearing deposit accounts consist of monthly service charges, customer analysis charges, non-sufficient funds (“NSF”) charges, other deposit account related charges, and wire transfer fees. The Company’s performance obligation for account analysis charges and monthly service charges is generally satisfied, and the related revenue recognized, over the period in which the service is provided. NSF charges and other deposit account related charges are largely transactional based, and therefore, the Company’s performance obligation is satisfied, and related revenue recognized, at a point in time. Payment for service charges on deposit accounts is primarily received immediately or in the following month through a direct charge to customers’ accounts.

Service charges on deposit accounts and wire transfers are summarized below:



	Three Months Ended,
	March 31, 2018		March 31, 2017
	(Dollars in thousands)
Noninterest bearing deposit account income:
Monthly service charges	$	439	$	464
Customer analysis charges	2,024		2,179
NSF charges	2,091		2,414
Other service charges	233		264
Total noninterest bearing deposit account income	4,787		5,321

Interest bearing deposit account income:
Monthly service charges	14		17

Total service fees on deposit accounts	$	4,801	$	5,338

Wire transfer fees income:
Wire transfer fees	$	1,080	$	1,101
Foreign exchange fees	127		85
Total wire transfer fees	$	1,207	$	1,186

OREO Expense (Income)

OREO is often sold in a transaction that, under ASU 2014-09, may not be considered a contract with a customer because the sale of the asset may not be an output of the Company’s ordinary activities. However, sales of nonfinancial assets, including in-substance nonfinancial assets, should be accounted for using new guidance in ASC Subtopic 610-20, “Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets”, which requires the Company to apply certain measurement and recognition concepts of ASC 606. Accordingly, the Company recognizes the sale of a real estate property, along with any associated gain or loss, when control of the property transfers to the buyer. For sales of existing real estate properties, this generally will occur at a point in time. When the Company finances the sale of OREO to the buyer, the Company assesses whether the buyer is committed to perform their obligations under the contract and whether collectability of the transaction price is probable. Once these criteria are met, the OREO asset is derecognized and the gain or loss on sale is recorded upon the transfer of control of the property to the buyer. Application of the new revenue recognition standard does not materially change the amount and the timing of the gain/loss on sale of OREO and other nonfinancial assets. Further, there were no open OREO/nonfinancial assets sale contracts at the adoption date that would require an evaluation under the new standard. The Company recognized a gain on sale of OREO of $72 thousand and a loss of $3 thousand during the three months ended March 31, 2018 and 2017, respectively.


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

The following discussion and analysis should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2017 and the unaudited consolidated financial statements and notes set forth elsewhere in this Quarterly Report on Form 10-Q.

GENERAL

Selected Financial Data

The following tables set forth a performance overview concerning the periods indicated and should be read in conjunction with the unaudited consolidated financial statements and notes set forth elsewhere in this Quarterly Report on Form 10-Q and the following Results of Operations and Financial Condition sections in the MD&A.


	At or for the Three Months Ended September 30,						At or for the Nine Months Ended September 30,						At or for the Three Months Ended March 31,
	2017			2016			2017			2016			2018			2017
	(Dollars in thousands, except share and per share data)												(Dollars in thousands, except share and per share data)
Income Statement Data:
Interest income	$	147,643		$	119,552		$	418,919		$	286,547		$	150,410		$	132,743
Interest expense	24,380			16,078			63,931			40,401			30,342			17,838
Net interest income	123,263			103,474			354,988			246,146			120,068			114,905
Provision for loan losses	5,400			6,500			13,760			8,200			2,500			5,600
Net interest income after provision for loan losses	117,863			96,974			341,228			237,946			117,568			109,305
Noninterest income	16,246			14,146			49,964			33,627			19,850			17,603
Noninterest expense	61,837			67,846			193,573			148,244			68,453			67,699
Income before income tax provision	72,272			43,274			197,619			123,329			68,965			59,209
Income tax provision	27,708			17,169			76,158			50,212			17,733			22,999
Net income	$	44,564		$	26,105		$	121,461		$	73,117		$	51,232		$	36,210
Per Share Data:
Earnings per common share - basic	$	0.33		$	0.22		$	0.90		$	0.80		$	0.38		$	0.27
Earnings per common share - diluted	$	0.33		$	0.22		$	0.90		$	0.79		$	0.38		$	0.27
Book value per common share (period end)	$	14.28		$	13.73		$	14.28		$	13.73		$	14.35		$	13.89
Cash dividends declared per common share	$	0.13		$	—		$	0.37		$	0.33		$	0.13		$	0.12
Tangible book value per common share (period end)⁽⁹⁾	$	10.72		$	10.14		$	10.72		$	10.14		$	10.81		$	10.32
Number of common shares outstanding (period end)	135,467,176			135,109,641			135,467,176			135,109,641			135,516,119			135,248,185
Weighted average shares - basic	135,382,457			116,622,920			135,296,332			91,940,070			135,518,705			135,248,018
Weighted average shares - diluted	135,630,912			116,951,074			135,661,965			92,266,245			135,815,262			135,768,645
Tangible common equity to tangible assets	10.63		%	10.52		%	10.63		%	10.52		%	10.44		%	10.74		%

Average Balance Sheet Data:
Assets	$	13,737,532		$	11,777,564		$	13,516,139		$	9,279,438		$	14,214,250		$	13,335,727
Securities available for sale	1,743,610			1,406,919			1,640,784			1,171,816			1,673,122			1,567,497
Loans receivable and loans held for sale	10,712,856			9,292,814			10,544,898			7,347,740			11,095,864			10,381,771
Deposits	10,832,247			9,328,179			10,707,638			7,385,796			11,106,366			10,608,111
Stockholders’ equity	1,924,444			1,585,100			1,895,393			1,167,747			1,931,290			1,868,998


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,				For the Three Months Ended March 31,
	2017			2016			2017		2016		2018			2017
Selected Performance Ratios:
Return on average assets ⁽¹⁾	1.30		%	0.89		%	1.20	%	1.05	%	1.44		%	1.09		%
Return on average stockholders’ equity⁽¹⁾	9.26		%	6.59		%	8.54	%	8.35	%	10.61		%	7.75		%
Return on average tangible equity ^{(1) (8)}	12.36		%	8.59		%	11.46	%	10.03	%	14.13		%	10.44		%
Dividend payout ratio (dividends per share / earnings per share)	39.39		%	50.00		%	41.11	%	41.25	%	34.21		%	44.91		%
Efficiency ratio⁽²⁾	44.32		%	57.68		%	47.80	%	52.99	%	48.92		%	51.09		%
Net interest spread	3.48		%	3.51		%	3.46	%	3.49	%	3.26		%	3.50		%
Net interest margin ⁽³⁾	3.83		%	3.77		%	3.78	%	3.76	%	3.66		%	3.77		%

	At September 30,										At March 31,
	2017			2016							2018			2017
	(Dollars in thousands)										(Dollars in thousands)
Statement of Financial Condition Data - at Period End:	Statement of Financial Condition Data - at Period End:										Statement of Financial Condition Data - at Period End:
Assets	$	14,150,021		$	13,510,629						$	14,507,126		$	13,481,429
Securities available for sale	1,868,309			1,558,719							1,699,315			1,583,946
Loans receivable	10,962,974			10,561,197							11,292,483			10,549,667
Deposits	10,993,320			10,702,505							11,510,569			10,703,777
FHLB advances	1,018,046			754,739							862,346			703,850
Subordinated debentures	100,590			99,548							101,117			100,067
Stockholders’ equity	1,934,431			1,854,571							1,945,333			1,878,047

Regulatory Capital Ratios ⁽⁴⁾
Leverage capital ratio⁽⁵⁾	11.78		%	13.02		%					11.61		%	11.72		%
Common equity Tier 1 capital ratio⁽¹⁰⁾											12.35		%	12.22		%
Tier 1 risk-based capital ratio	13.10		%	12.79		%					13.15		%	13.05		%
Total risk-based capital ratio	13.81		%	13.51		%					13.86		%	13.76		%
Common equity tier 1 capital ratio ⁽¹⁰⁾	12.29		%	11.96		%

Asset Quality Ratios:
Allowance for loan losses to loans receivable	0.76		%	0.76		%					0.77		%	0.75		%
Allowance for loan losses to nonaccrual loans	193.05		%	196.98		%					126.86		%	212.54		%
Allowance for loan losses to nonperforming loans⁽⁶⁾	77.05		%	89.36		%					66.69		%	91.18		%
Allowance for loan losses to nonperforming assets ⁽⁷⁾	66.51		%	68.38		%					62.70		%	74.65		%
Nonaccrual loans to loans receivable	0.40		%	0.38		%					0.60		%	0.35		%
Nonperforming loans to loans receivable ⁽⁶⁾	0.99		%	0.85		%					1.15		%	0.82		%
Nonperforming assets to loans receivable and OREO⁽⁷⁾	1.15		%	1.10		%					1.22		%	1.00		%
Nonperforming assets to total assets ⁽⁷⁾	0.89		%	0.87		%					0.95		%	0.78		%


⁽¹⁾	Annualized.


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


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


⁽⁴⁾	The ratios generally required to meet the definition of a “well-capitalized” financial institution under certain banking regulations are 5.0% leverage capital, 6.5% common equity tier 1 capital, 8.0% tier I risk-based capital, and 10.0% total risk-based ~~capital, and 6.5% common equity tier 1~~ capital.


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


⁽⁶⁾	Nonperforming loans include nonaccrual loans, loans past due 90 days or more and still accruing interest, and accruing restructured loans (excluding PCI loans).


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


⁽⁸⁾	Average tangible equity is calculated by subtracting average goodwill and average core deposit intangibles assets from average stockholders’ equity. This is a non-GAAP measure that we believe provides investors with information that is useful in understanding our financial performance and position.


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2017			2016			2017			2016			2018			2017
	(Dollars in thousands)												(Dollars in thousands)
Net income	$	44,564		$	26,105		$	121,461		$	73,117		$	51,232		$	36,210

Average stockholders’ equity	$	1,924,444		$	1,585,100		$	1,895,393		$	1,167,747		$	1,931,290		$	1,868,998
Less: Average goodwill and core deposit intangible assets, net	(482,069		)	(370,003		)	(482,108		)	(195,984		)	(480,742		)	(481,983		)
Average tangible equity	$	1,442,375		$	1,215,097		$	1,413,285		$	971,763		$	1,450,548		$	1,387,015

Net income (annualized) to average tangible equity	12.36		%	8.59		%	11.46		%	10.03		%	14.13		%	10.44		%


	At September 30,						At March 31,
	2017			2016			2018			2017
	(Dollars in thousands, except share data)						(Dollars in thousands, except share data)
Total stockholders’ equity	$	1,934,431		$	1,854,571		$	1,945,333		$	1,878,047
Less: Goodwill and core deposit intangible assets, net	(481,648		)	(484,387		)	(480,357		)	(482,525		)
Tangible common equity	$	1,452,783		$	1,370,184		$	1,464,976		$	1,395,522

Common shares outstanding	135,467,176			135,109,641			135,516,119			135,248,185

Tangible book value per common share⁽⁹⁾	$	10.72		$	10.14		$	10.81		$	10.32

⁽⁹⁾Tangible book value per common share is calculated by subtracting goodwill and core deposit intangible assets from total stockholders’ equity and dividing the difference by the number of shares of common stock outstanding. This is a non-GAAP measure that we believe provides investors with information that is useful in understanding our financial performance and position.


	At September 30,						At March 31,
	2017			2016			2018			2017
	(Dollars in thousands)						(Dollars in thousands)
Tier 1 capital	$	1,564,074		$	1,469,699		$	1,600,185		$	1,509,758
Less: Trust preferred securities less unamortized acquisition discount	(96,689		)	(95,644		)	(97,216		)	(96,166		)
Common equity tier 1 capital	$	1,467,385		$	1,374,055		$	1,502,969		$	1,413,592

Total risk weighted assets less disallowed allowance for loan losses	$	11,935,561		$	11,491,204		$	12,172,708		$	11,571,354

Common equity tier 1 capital ratio⁽¹⁰⁾	12.29		%	11.96		%	12.35		%	12.22		%

⁽¹⁰⁾The Common equity tier 1 capital ratio is calculated by dividing Tier 1 capital less non-common elements, including perpetual preferred stock and related surplus, minority interest in subsidiaries, trust preferred securities and mandatory convertible preferred securities by total risk-weighted assets less the disallowed allowance for loan losses.

Results of Operations

The mergers of Wilshire Bancorp, Inc. (“Wilshire”) with and into BBCN Bancorp, Inc. (“BBCN”) and Wilshire Bank with and into BBCN Bank were completed on July 29, 2016, and the combined companies began operations under the new banners of Hope Bancorp, Inc. and Bank of Hope effective July 30, 2016. The third quarter 2017 financial results reflect three full months of combined operations. The third quarter 2016 financial results reflects one month of stand-alone operations of the former BBCN and two months of combined operations. As a result, our third quarter 2017 financial results are not comparable to the financial results for the third quarter of 2016.

Overview

Total assets increased ~~$708.6~~$300.4 million from ~~$13.44~~$14.21 billion at December 31, ~~2016~~2017 to ~~$14.15~~$14.51 billion at ~~September 30, 2017.~~March 31, 2018. The increase in total assets was primarily due to an increase in net loans receivable of ~~$415.4~~$188.0 million and an increase in ~~securities available for sale~~cash and cash equivalents of ~~$311.6~~$120.4 million during the ~~nine~~three months ended ~~September 30, 2017.~~March 31, 2018.

Net income for the ~~third~~first quarter of ~~2017~~2018 was ~~$44.6~~$51.2 million, or ~~$0.33~~$0.38 per diluted common share, compared to ~~$26.1~~$36.2 million, or ~~$0.22~~$0.27 per diluted common share, for the same period of ~~2016,~~2017, which was an increase of ~~$18.5~~$15.0 million, or ~~70.7%~~41.5%. The increase in net income was ~~largely~~mostly due to the ~~addition of income from assets acquired in the merger with Wilshire during the third quarter of 2016 and an~~ increase in interest income from the increase in the volume and rate on loans ~~receivable.~~receivable for the first quarter of 2018 compared to the first quarter of 2017 partially offset by an increase in interest expense due to the increase in volume and rates on deposits for the same period. In addition, net income increased for the first quarter of 2018 compared to the first quarter of 2017 due to the Tax Act which lowered the corporate tax rate from 35% to 21% starting January 1, 2018. Net interest income before provision for loan losses increased ~~$19.8~~$5.2 million ~~for~~in the ~~third~~first quarter of ~~2017~~2018 to ~~$123.3~~$120.1 million compared to ~~$103.5~~$114.9 million ~~for~~in the ~~third~~first quarter of ~~2016.~~

Net income for the nine months ended September 30, 2017 was $121.5 million, or $0.90 per diluted common share, compared to $73.1 million, or $0.79 per diluted common share, for the same period of 2016, which represents an increase of $48.4 million, or 66.1%. The increase in net income was largely due to the addition of income from the interest earning assets acquired in the merger with Wilshire.2017.

The following table summarizes the accretion and amortization adjustments resulting from prior acquisitions that are included in net income for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2018 and ~~2016:~~2017:


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2017			2016			2017			2016			2018			2017
	(Dollars in thousands)												(Dollars in thousands)
Accretion of discounts on acquired performing loans	$	4,566		$	3,111		$	10,743		$	5,975		$	3,197		$	2,676
Accretion of discounts on purchased credit impaired loans	5,815			4,723			16,375			10,266			5,772			5,348
Amortization/accretion of premiums or discounts on low income housing tax credit investments	(84		)	(54		)	(253		)	(54		)
Amortization of premiums on investments in affordable housing partnerships													(84		)	(84		)
Amortization of premiums on assumed FHLB advances	357			1,940			1,244			2,134			347			441
Accretion of discounts on assumed subordinated debt	(262		)	(190		)	(782		)	(278		)	(264		)	(259		)
Amortization of premiums on assumed time deposits and savings	206			2,336			4,900			2,379			1			3,476
Amortization of core deposit intangibles	(676		)	(565		)	(2,028		)	(990		)	(616		)	(676		)
Total	$	9,922		$	11,301		$	30,199		$	19,432		$	8,353		$	10,922

The annualized return on average assets was ~~1.30%~~1.44% for the ~~third~~first quarter of ~~2017~~2018 compared to ~~0.89%~~1.09% for the same period of ~~2016.~~2017. The annualized return on average stockholders’ equity was ~~9.26%~~10.61% for the ~~third~~first quarter of ~~2017~~2018 compared to ~~6.59%~~7.75% for the same period of ~~2016.~~2017. The efficiency ratio was ~~44.32%~~48.92% for the ~~third~~first quarter of ~~2017~~2018 compared to ~~57.68%~~51.09% for the same period of ~~2016.~~

The annualized return on average assets was 1.20% for the nine months ended September 30, 2017 compared to 1.05% for the same period of 2016. The annualized return on average stockholders' equity was 8.54% for the nine months ended September 30, 2017 compared to 8.35% for the same period of 2016. The efficiency ratio was 47.80% for the nine months ended September 30, 2017 compared to 52.99% for the same period of 2016.2017.

Net Interest Income and Net Interest Margin

Net Interest Income

A principal component of our earnings is net interest income, which is the difference between the interest and fees earned on loans and investments and the interest paid on deposits and borrowed funds. Net interest income expressed as a percentage of average interest earning assets is referred to as the net interest margin. The net interest spread is the yield on average interest earning assets less the cost of average interest bearing liabilities. Net interest income is affected by changes in the balances of interest earning assets and interest bearing liabilities and changes in the yields earned on interest earning assets and the rates paid on interest bearing liabilities.

Comparison of Three Months Ended ~~September 30, 2017~~March 31, 2018 with the Three Months Ended ~~September 30, 2016~~March 31, 2017

Net interest income before provision for loan losses was ~~$123.3~~$120.1 million for the ~~third~~first quarter of ~~2017~~2018 compared to ~~$103.5~~$114.9 million for the same period of ~~2016,~~2017, an increase of ~~$19.8~~$5.2 million, or ~~19.1%~~4.5%. The increase in net interest income was due largely to the increase in volume of loans offset by an increase in ~~interest earning assets that were acquired from Wilshire in~~deposits for the ~~merger, which occurred during the third~~first quarter of ~~2016, in addition~~2018 compared to ~~an increase in interest income from~~ the ~~growth in loans receivable and securities available for sale.~~first quarter of 2017. The increase in interest rates in 2017 and 2018 also contributed to the increase in net interest ~~income.~~income as a result of the increase in loan yields partially offset by an increase in deposit costs.

Interest income for the ~~third~~first quarter of ~~2017~~2018 was ~~$147.6~~$150.4 million, an increase of ~~$28.1~~$17.7 million, or ~~23.5%~~13.3%, compared to ~~$119.6~~$132.7 million for the same period of ~~2016.~~2017. The increase in interest income was primarily attributable to the increase in loans ~~and investments resulting from the merger with Wilshire and to a lesser extent the growth in loans receivable and securities available for sale. The~~as result of higher originations as well as an increase in ~~interest rates in 2017 also contributed to the increase in interest income.~~loan rates.

Interest expense for the ~~third~~first quarter of ~~2017~~2018 was ~~$24.4~~$30.3 million, an increase of ~~$8.3~~$12.5 million, or ~~51.6%~~70.1% compared to ~~$16.1~~$17.8 million for the same period of ~~2016.~~2017. The increase in interest expense was primarily due to the ~~acquisition of~~increase in overall deposits and ~~borrowings from the merger with Wilshire and to a lesser extent due to~~ the rise in interest rates in ~~2017.~~

~~Comparison of Nine Months Ended September 30,~~ 2017 ~~with the Nine Months Ended September 30, 2016~~

Net interest income before provision for loan losses was $355.0 million for the nine months ended September 30, 2017, compared to $246.1 million for the same period of 2016, an increase of $108.9 million, or 44.2%. The increase in net interest income was due largely to an increase in interest earning assets that were acquired from Wilshire in the merger which occurred during the third quarter of 2016, in addition to an increase in interest income from the growth in loans receivable and ~~securities available for sale.The increase in interest rates in 2017 also contributed to the increase in net interest income.~~2018.

Interest income for the nine months ended September 30, 2017 was $418.9 million, an increase of $132.4 million, or 46.2%, compared to $286.5 million for the same period of 2016. The increase in interest income was primarily attributable to the increase in loans and investments resulting from the merger with Wilshire and to a lesser extent the growth in loan receivable and securities available for sale.The increase in interest rates in 2017 also contributed to the increase in interest income.

Interest expense for the nine months ended September 30, 2017 was $63.9 million, an increase of $23.5 million, or 58.2% compared to $40.4 million for the same period of 2016. The increase in interest expense was primarily due to the acquisition of deposits and borrowings from the merger with Wilshire and to a lesser extent due to the rise in interest rates in 2017.

Net Interest Margin

Our net interest margin is impacted by the weighted average rates we earn on interest earning assets and pay on interest bearing liabilities and the effect of acquisition accounting adjustments. The net interest margin for the ~~third~~first quarter of ~~2017~~2018 was ~~3.83%~~3.66%, ~~an increase~~a decrease of 611 basis points from 3.77% for the same period of ~~2016. Net interest margin for the nine months ended September 30, 2017 was 3.78%, an increase of 2 basis point from 3.76% for the same period of 2016.~~2017.

The weighted average yield on loans increased to ~~5.07%~~5.04% for the ~~third~~first quarter of ~~2017~~2018 from ~~4.80%~~4.82% for the ~~third~~first quarter of ~~2016.~~2017. The ~~weighted average yield on loans was 4.93% for the nine months ended September 30, 2017 compared to 4.84% for the nine months ended September 30, 2016. The change~~increase in loan yields for ~~periods~~the first quarter of 2018 compared to the first quarter of 2017 was mostly due to the increase in overall interest rates experienced in 2017 ~~compared to periods~~and 2018. The Federal Open Market Committee raised interest rates three times in ~~2016 was due to a combination~~2017 and again at the end of ~~the impact of acquired loan discount accretion in connection with the merger with Wilshire and, the rise~~March 2018. The increase in interest rates ~~in 2017, and~~led to an increase in ~~large loan payoffs during the third quarter of 2017. The loan payoffs during the third quarter of 2017 included the payoff of a large non-accrual loan~~rates on our variable rate loans, and new loans were originated at higher rates which resulted in an increase in ~~interest~~loan yields. Discount accretion income ~~previously not accrued and payoffs~~on acquired loans also increased from $8.0 million for the three months ended March 31, 2017 to $9.0 million of ~~loans acquired from Wilshire which resulted in an increase in discount accretion income.~~

the three months ended March 31, 2018.

The weighted average yield on securities available for sale for the ~~third~~first quarter of ~~2017~~2018 was ~~2.17%~~2.45% compared to ~~1.89%~~2.10% for the same period of ~~2016. The weighted average yield on securities available for sale for the nine months ended September 30, 2017 was 2.15% compared to 2.06% for the nine months ended September 30, 2016.~~2017. The increase in weighted average yield on securities available for sale for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2018 compared to the same ~~periods~~period of ~~2016~~2017 was due to the purchase of ~~$504.8 million in~~ investment securities with higher yields during the ~~nine~~twelve months ended September 30, 2017. The investment securities purchased in 2017 had slightly longer durations then the existing portfolio and were purchased after the interest rates increases which resulted in higher yields compared to the portfolio at September 30, 2016.March 31, 2018.

The weighted average cost of deposits for the ~~third~~first quarter of ~~2017~~2018 was ~~0.75%~~0.91%, an increase of 1936 basis points from ~~0.56%~~0.55% for the same period of ~~2016. The weighted average cost of deposits for the nine months ended September 30, 2017 was 0.66% compared to 0.60% for the nine months ended September 30, 2016.~~2017. The premiums recorded for time and savings deposits acquired from Wilshire were fully amortized at the end of April 2017. The reduction in Wilshire premium amortizations in addition to the increase in interest rates in 2017 and 2018, resulted in an increase in the weighted average cost of deposits for the ~~third~~first quarter of ~~2017~~2018 compared to the same period of 2016. The reduction in premium amortizations did not have as great an impact on the weighted average cost of deposits for the nine months ended September 30, 2017, which experienced an increase of only 6 basis points compared to the weighted average cost of deposits for the nine months ended September 30, 2016.2017.

The weighted average cost of FHLB advances for the ~~third~~first quarter of ~~2017~~2018 was ~~1.40%~~1.69%, an increase of 1738 basis points from ~~1.23%~~1.31% for the same period of ~~2016. The weighted average cost of FHLB advances for the nine months ended September 30, 2017 was 1.34%, an increase of 14 basis points from 1.20% for the nine months ended September 30, 2016.~~2017. The increase in weighted average cost of FHLB advances was due to the increase in ~~FHLB advance rates stemming from the increase in overall~~ interest rates, as ~~a portion~~well as the overall longer average weighted maturity of ~~our~~ advances ~~with the FHLB are overnight borrowings with rates that reset on a daily basis.~~at March 31, 2018 compared to March 31, 2017.

The following table presents our 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 September 30, 2017						Three Months Ended September 30, 2016						Three Months Ended March 31, 2018						Three Months Ended March 31, 2017
	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)}	$	10,712,856	$	136,822	5.07	%	$	9,292,814	$	112,132	4.80	%	$	11,095,864	$	137,943	5.04	%	$	10,381,771	$	123,294	4.82	%
Securities available for sale⁽³⁾	1,743,610		9,540		2.17	%	1,406,919		6,645		1.89	%	1,673,122		10,101		2.45	%	1,567,497		8,113		2.10	%
FRB and FHLB stock and other investments	299,305		1,281		1.70	%	237,981		775		1.30	%	517,572		2,366		1.85	%	423,955		1,336		1.28	%
Total interest earning assets	12,755,771		147,643		4.59	%	10,937,714		119,552		4.35	%	13,286,558		150,410		4.59	%	12,373,223		132,743		4.35	%
Total noninterest earning assets	981,761						839,850						927,692						962,504
Total assets	$	13,737,532					$	11,777,564					$	14,214,250					$	13,335,727

INTEREST BEARING LIABILITIES:
Deposits:
Demand, interest bearing	$	3,526,846	$	8,127	0.91	%	$	2,924,340	$	5,932	0.81	%	$	3,402,760	$	8,864	1.06	%	$	3,436,984	$	7,191	0.85	%
Savings	258,383		348		0.53	%	268,424		311		0.46	%	236,216		424		0.73	%	293,609		287		0.40	%
Time deposits	4,053,577		11,901		1.16	%	3,600,400		6,774		0.75	%	4,525,813		15,561		1.39	%	4,009,179		7,033		0.71	%
Total interest bearing deposits	7,838,806		20,376		1.03	%	6,793,164		13,017		0.76	%	8,164,789		24,849		1.23	%	7,739,772		14,511		0.76	%
FHLB advances	764,691		2,698		1.40	%	698,081		2,161		1.23	%	974,071		4,069		1.69	%	662,472		2,139		1.31	%
Other borrowings	96,524		1,306		5.29	%	78,828		900		4.47	%	97,049		1,424		5.87	%	95,911		1,188		4.95	%
Total interest bearing liabilities	8,700,021		24,380		1.11	%	7,570,073		16,078		0.84	%	9,235,909		30,342		1.33	%	8,498,155		17,838		0.85	%
Noninterest bearing liabilities and equity:
Noninterest bearing demand deposits	2,993,441						2,535,015						2,941,577						2,868,339
Other liabilities	119,626						87,376						105,474						100,235
Stockholders’ equity	1,924,444						1,585,100						1,931,290						1,868,998
Total liabilities and stockholders’ equity	$	13,737,532					$	11,777,564					$	14,214,250					$	13,335,727

Net interest income/net interest spread			$	123,263	3.48	%			$	103,474	3.51	%			$	120,068	3.26	%			$	114,905	3.50	%
Net interest margin					3.83	%					3.77	%					3.66	%					3.77	%
Cost of deposits					0.75	%					0.56	%					0.91	%					0.55	%


*	Annualized


⁽¹⁾	Interest income on loans includes loan fees.


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


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

Nine Months Ended September 30, 2017 Nine Months Ended September 30, 2016

Average
Balance

Interest
Income/
Expense

Average
Yield/
Rate *

Average
Balance

Interest
Income/
Expense

Average
Yield/
Rate *
(Dollars in thousands)
INTEREST EARNINGS ASSETS:
Loans^(1) (2)
$ 10,544,898
$ 388,631
4.93 % $ 7,347,740
$ 266,336
4.84 %
Securities available for sale⁽³⁾
1,640,784
26,394
2.15 % 1,171,816
18,051
2.06 %
FRB and FHLB stock and other investments 362,265
3,894
1.44 % 230,993
2,160
1.25 %
Total interest earning assets 12,547,947
418,919
4.46 % 8,750,549
286,547
4.37 %
Total noninterest earning assets 968,192
528,889

Total assets $ 13,516,139
$ 9,279,438

INTEREST BEARING LIABILITIES:
Deposits:
Demand, interest bearing $ 3,474,077
$ 23,291
0.90 % $ 2,310,000
$ 14,083
0.81 %
Savings 277,264
914
0.44 % 211,255
962
0.61 %
Time deposits 4,025,360
28,796
0.96 % 2,916,868
18,231
0.83 %
Total interest bearing deposits 7,776,701
53,001
0.91 % 5,438,123
33,276
0.82 %
FHLB advances 714,048
7,176
1.34 % 598,672
5,370
1.20 %
Other borrowings 96,220
3,754
5.14 % 53,593
1,755
4.30 %
Total interest bearing liabilities 8,586,969
63,931
1.00 % 6,090,388
40,401
0.89 %
Noninterest bearing liabilities and equity:
Noninterest bearing demand deposits 2,930,937
1,947,673

Other liabilities 102,840
73,630

Stockholders’ equity 1,895,393
1,167,747

Total liabilities and stockholders’ equity $ 13,516,139
$ 9,279,438

Net interest income/net interest spread $ 354,988
3.46 % $ 246,146
3.49 %
Net interest margin 3.78 % 3.76 %
Cost of deposits 0.66 % 0.60 %


*	~~Annualized~~


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


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


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

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

Three Months Ended September 30, 2017 over September 30, 2016

Net
Increase

Change due to
Rate Volume
(Dollars in thousands)
INTEREST INCOME:
Loans, including fees $ 24,690
$ 6,583
$ 18,107
Securities available for sale 2,895
1,112
1,783
FRB and FHLB stock and other investments 506
277
229
Total interest income $ 28,091
$ 7,972
$ 20,119
INTEREST EXPENSE:
Demand, interest bearing $ 2,195
$ 861
$ 1,334
Savings 37
49
(12 )
Time deposits 5,127
4,181
946
FHLB advances 537
316
221
Other borrowings 406
183
223
Total interest expense $ 8,302
$ 5,590
$ 2,712
NET INTEREST INCOME $ 19,789
$ 2,382
$ 17,407


	Nine Months Ended September 30, 2017 over September 30, 2016								Three Months Ended March 31, 2018 over March 31, 2017
	Net Increase (Decrease)								Net Increase
				Change due to							Change due to
				Rate			Volume				Rate			Volume
	(Dollars in thousands)								(Dollars in thousands)
INTEREST INCOME:
Loans, including fees	$	122,295		$	4,780		$	117,515	$	14,649	$	5,932		$	8,717
Securities available for sale	8,343			847			7,496		1,988		1,415			573
FRB and FHLB stock and other investments	1,734			363			1,371		1,030		691			339
Total interest income	$	132,372		$	5,990		$	126,382	$	17,667	$	8,038		$	9,629
INTEREST EXPENSE:
Demand, interest bearing	$	9,208		$	1,533		$	7,675	$	1,673	$	1,745		$	(72	)
Savings	(48		)	(304		)	256		137		202			(65		)
Time deposits	10,565			2,927			7,638		8,528		7,519			1,009
FHLB advances	1,806			698			1,108		1,930		742			1,188
Other borrowings	1,999			395			1,604		236		222			14
Total interest expense	$	23,530		$	5,249		$	18,281	$	12,504	$	10,430		$	2,074
NET INTEREST INCOME	$	108,842		$	741		$	108,101	$	5,163	$	(2,392	)	$	7,555

Provision for Loan Losses

The provision for loan losses reflects ~~management’s~~our judgment of the current period cost associated with credit risk inherent in our loan portfolio. The loan loss provision for each period is dependent upon many factors, including loan growth, net charge offs, changes in the composition of the loan portfolio, delinquencies, assessments by management, ~~and~~ third ~~parties,~~parties’ and regulators’ examination of the loan portfolio, the value of the underlying collateral ~~for~~on 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 ~~management’s~~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 ~~and adverse~~ respects from current estimates. If the allowance for loan losses is inadequate, itwe may be required to record additional loan loss provision, which may have a material adverse effect on our business, financial condition, and results of ~~operations.~~operations.

The provision for loan losses for the ~~third~~first quarter of ~~2017~~2018 was ~~$5.4~~$2.5 million, ana decrease of ~~$1.1~~$3.1 million from ~~$6.5~~$5.6 million for the same period last year. ~~The provision for loan losses for the nine months ended September 30, 2017 was $13.8 million, an increase of $5.6 million from $8.2 million for the nine months ended September 30, 2016.~~ The decrease in provision for loan losses for the ~~third~~first quarter of ~~2017~~2018 compared to the same period in ~~2016~~2017 was due to a decline in net charge offs and a reduction in specific reserves on impaired loans while the increase in provision for loan losses for the nine months ended September 30, 2017 compared to the same period in 2016 was due to an increase in net charge offs and an increase in qualitative factors in the allowance for loan losses.general valuation reserves. The ~~increase~~decrease in net charge offs for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2018 compared to the ~~nine~~three months ended ~~September 30, 2016,~~March 31, 2017 was due primarily to one large customer relationship that had loans that were charged off during the first quarter of 2017.

See Financial Condition section of this MD&A for additional information and further discussion.

Noninterest Income

Noninterest income is primarily comprised of service fees on deposit accounts, fees received on trade finance letters of credit, loan servicing fees, wire transfer fees, net gains on sales of loans, net gains on sales or calls of securities and other ~~income.~~income which includes changes in the fair value of our equity investments. Noninterest income for the ~~third~~first quarter of ~~2017~~2018 was ~~$16.2~~$19.9 million compared to ~~$14.1~~$17.6 million for the same quarter of ~~2016,~~2017, an increase of ~~$2.1~~$2.3 million, or ~~14.8%. Noninterest income for the nine months ended September 30, 2017 was $50.0 million compared to $33.6 million for the nine months ended September 30, 2016, an increase of $16.3 million, or 48.6%~~12.8%.

Noninterest income by category is summarized in the table below:



	Three Months Ended September 30,				Increase (Decrease)					Three Months Ended March 31,				Increase (Decrease)
	2017		2016		Amount			Percent (%)		2018		2017		Amount			Percent (%)
	(Dollars in thousands)									(Dollars in thousands)
Service fees on deposit accounts	$	5,151	$	4,778	$	373		7.8	%	$	4,801	$	5,338	$	(537	)	(10.1	)%
International service fees	1,107		1,010		97			9.6	%	1,020		1,108		(88		)	(7.9	)%
Loan servicing fees, net	1,373		955		418			43.8	%	1,579		1,438		141			9.8	%
Wire transfer fees	1,287		1,158		129			11.1	%	1,207		1,186		21			1.8	%
Net gains on sales of SBA loans	3,631		230		3,401			1,478.7	%	3,450		3,250		200			6.2	%
Net gains on sales of other loans	847		1,476		(629		)	(42.6	)%	1,196		420		776			184.8	%
Net gains on sales of securities available for sale	—		948		(948		)	(100.0	)%
Other income and fees	2,850		3,591		(741		)	(20.6	)%	6,597		4,863		1,734			35.7	%
Total noninterest income	$	16,246	$	14,146	$	2,100		14.8	%	$	19,850	$	17,603	$	2,247		12.8	%

	Nine Months Ended September 30,				Increase (Decrease)
	2017		2016		Amount			Percent (%)
	(Dollars in thousands)
Service fees on deposit accounts	$	15,668	$	10,363	$	5,305		51.2	%
International service fees	3,334		2,601		733			28.2	%
Loan servicing fees, net	4,102		2,234		1,868			83.6	%
Wire transfer fees	3,816		2,966		850			28.7	%
Net gains on sales of SBA loans	10,148		5,090		5,058			99.4	%
Net gains on sales of other loans	1,619		1,519		100			6.6	%
Net gains on sales of securities available for sale	—		948		(948		)	(100.0	)%
Other income and fees	11,277		7,906		3,371			42.6	%
Total noninterest income	$	49,964	$	33,627	$	16,337		48.6	%

The increase in noninterest income for the ~~third~~first quarter of ~~2017~~2018 compared to the ~~third~~first quarter of ~~2016~~2017 was largely due to an increase in net gains on sale of SBA loans, ~~offset by a decrease in~~ net gains on sale of other loans, and ~~net gains~~an increase in other income and fees partially offset by a decline in service fees on sales of securities available for sale. Subsequent to the merger with Wilshire in July 2016, we chose not to sell a significant portion of SBA loans held for sale during the third quarter of 2016 and instead chose to focus on integration efforts. We did not sell any investment securities during the third quarter of 2017, which resulted in a reduction in net gains on sales of securities compared to the third quarter of 2016.deposit accounts.

The ~~increase in noninterest income for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 was largely due to an increase~~decrease in service fees on deposit accounts ~~an increase in loan servicing fees, an increase in net gains on sale~~for the three months ended March 31, 2018 compared the same period of ~~SBA loans, and an increase in other income and fees. The increase in service fees on deposit accounts and the increase in loan servicing fees~~2017 was ~~primarily~~ due to a decline in non-sufficient fee charges which declined $325 thousand from $2.4 million for the ~~increase in deposits accounts and~~three months ended March 31, 2017 to $2.1 million for the ~~increase in loans previously sold with servicing, respectively, that were acquired from the merger with Wilshire.~~ three months ended March 31, 2018.

Gain on sale of SBA and other loans increased due to an increase in total SBA and residential loans sold in during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2018 compared to the ~~nine~~three months ended ~~September 30, 2016.~~March 31, 2017. During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2018, we sold ~~$140.9~~$48.6 million in SBA loans compared to ~~$65.7~~$44.9 million sold during the ~~nine~~three months ended ~~September 30, 2016. The increase~~March 31, 2017. Residential mortgage loans sold during the three months ended March 31, 2018 totaled $45.9 million compared to $21.7 million during the three month ended March 31, 2017.

During the first quarter of 2018, the Company adopted ASU 2016-01 which requires changes in the fair value of certain equity investments to be recorded in earnings. As a result of the adoption of ASU 2016-01, the Company recorded $3.5 million in other income and fees ~~was largely due~~ to ~~recoveries recorded on previously charged off loans that were acquired from Wilshire~~account for the change in fair value of our mutual funds and ~~other previous transactions.~~equity stock owned.

Noninterest Expense

Noninterest expense for the ~~third~~first quarter of ~~2017~~2018 was ~~$61.8~~$68.5 million, ~~a decrease~~an increase of ~~$6.0 million,~~$754 thousand, or ~~8.9%~~1.1%, from ~~$67.8~~$67.7 million for the same period of ~~2016. Noninterest expense for the nine months ended September 30, 2017 was $193.6 million, an increase of $45.4 million, or 30.6%, from $148.2 million for the nine months ended September 30, 2016.~~

2017. The breakdown of changes in noninterest expense by category is shown in the following table:


	Three Months Ended September 30,						Increase (Decrease)					Three Months Ended March 31,					Increase (Decrease)
	2017			2016			Amount			Percent (%)		2018			2017		Amount			Percent (%)
	(Dollars in thousands)											(Dollars in thousands)
Salaries and employee benefits	$	35,987		$	30,456		$	5,531		18.2	%	$	39,385		$	34,166	$	5,219		15.3	%
Occupancy	7,131			6,889			242			3.5	%	7,239			7,194		45			0.6	%
Furniture and equipment	3,642			3,297			345			10.5	%	3,721			3,413		308			9.0	%
Advertising and marketing	2,217			2,306			(89		)	(3.9	)%	2,299			3,424		(1,125		)	(32.9	)%
Data processing and communications	3,221			3,199			22			0.7	%	3,495			3,606		(111		)	(3.1	)%
Professional fees	3,239			1,898			1,341			70.7	%	3,106			3,902		(796		)	(20.4	)%
Investments in affordable housing partnership expenses	2,803			1,457			1,346			92.4	%	2,630			2,160		470			21.8	%
FDIC assessments	1,262			1,564			(302		)	(19.3	)%	1,767			1,010		757			75.0	%
Credit related expenses	(2,487		)	810			(3,297		)	N/A		772			1,883		(1,111		)	(59.0	)%
OREO expense, net	678			(423		)	1,101			N/A		(104		)	997		(1,101		)	N/A
Merger and integration expenses	260			11,222			(10,962		)	(97.7	)%	(7		)	947		(954		)	N/A
Other	3,884			5,171			(1,287		)	(24.9	)%	4,150			4,997		(847		)	(17.0	)%
Total noninterest expense	$	61,837		$	67,846		$	(6,009	)	(8.9	)%	$	68,453		$	67,699	$	754		1.1	%

	Nine Months Ended September 30,						Increase (Decrease)
	2017			2016			Amount			Percent (%)
	(Dollars in thousands)
Salaries and employee benefits	$	105,099		$	73,782		$	31,317		42.4	%
Occupancy	21,479			16,626			4,853			29.2	%
Furniture and equipment	10,611			7,921			2,690			34.0	%
Advertising and marketing	8,035			4,845			3,190			65.8	%
Data processing and communications	9,503			7,499			2,004			26.7	%
Professional fees	10,401			4,255			6,146			144.4	%
Investments in affordable housing partnership expenses	8,019			2,133			5,886			275.9	%
FDIC assessments	3,276			3,697			(421		)	(11.4	)%
Credit related expenses	(491		)	2,142			(2,633		)	N/A
OREO expense, net	2,863			1,138			1,725			151.6	%
Merger and integration expenses	1,769			13,962			(12,193		)	(87.3	)%
Other	13,009			10,244			2,765			27.0	%
Total noninterest expense	$	193,573		$	148,244		$	45,329		30.6	%

The ~~decrease~~increase in noninterest expense for the three months ended ~~September 30, 2017~~March 31, 2018 compared to the three months ended ~~September 30, 2016~~March 31, 2017 was mostly due to ~~a decline in merger and integration expenses, credit related expenses, and other noninterest expense items offset by~~ an increase in salaries and employee benefits ~~professional fees, investment~~partially offset by a decline in ~~affordable housing partnership expenses, and OREO expenses, net. The increase in noninterest~~other expense for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 was due to an increase in all expenses categories apart from FDIC assessments, credit related expenses, and merger and integration expenses. The increase in noninterest expenses for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 was due to the merger with Wilshire, which resulted in additional expenditures in most expense categories aside from credit related expenses and FDIC assessment. Most of the merger and integration expense associated with the merger with Wilshire were recorded in 2016.line items.

Salaries and employee benefits expense increased ~~$5.5~~$5.2 million for the ~~third~~first quarter of ~~2017~~2018 compared to the same period in ~~2016, and increased $31.3 million for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016.~~2017. The increase in salaries and employee benefits expense for three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2018 compared to the three ~~and nine~~ months ended ~~September 30, 2016~~March 31, 2017 was due to an increase in the number of full-time equivalent employees ~~primarily as a result of the merger with Wilshire, but also due to additional staff~~ hired during the ~~third quarter of 2017.~~twelve months ended March 31, 2018. The number of full-time equivalent employees increased from ~~1,400~~1,352 at ~~September 30, 2016~~March 31, 2017 to ~~1,463~~1,502 at ~~September 30, 2017. Salaries~~March 31, 2018. In 2017 and ~~employee benefits for former Wilshire employees were recorded for only two months for the three~~2018, we made significant investments in our risk, compliance, SOX, and ~~nine months ended September 30, 2016 as the merger closed on July 29, 2016.~~

~~The increase in occupancy expense and furniture and equipment expense for the three and nine months ended September 30, 2017 compared~~accounting departments due to the ~~three~~increase compliance requirements of a larger institution. We also hired additional staff in our commercial and ~~nine months ended September 30, 2016 was due~~residential lending departments as we continue to ~~additional branches acquired in the merger with Wilshire. During the nine months ended September 30, 2017, we consolidated nine branches as part~~expand these lines of its second phase consolidation plan. Occupancy expenses for the three and nine months ended September 30, 2017 included a portion of the savings from the branch consolidations. At September 30, 2017, total future lease commitments totaled $53.0 million with the last of the commitments ending in 2030.businesses.

Advertising and marketing expense experienced a ~~small~~ decrease of $1.1 million for the ~~third~~first quarter of ~~2017~~2018 compared to the ~~third~~first quarter of ~~2016~~2017 due to a decline in advertising expenditures in ~~2017.~~2018. We increased advertising and marketing to promote our name change and new brand subsequent to the merger ~~with~~of BBCN and Wilshire. With the brand now ~~somewhat~~ established, we reduced ~~its~~ overall advertising expense during the ~~third~~first quarter of 2017. The increase in advertising and marketing expense for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016, was due to additional expenses that resulted from the merger with Wilshire.2018. Advertising and marketing expense for the ~~nine~~three months ended ~~September 30,~~March 31, 2017 included $1.5 million in sponsorship fees paid to sponsor the Ladies Professional Golf Association (“LPGA”) Bank of Hope Founders Cup event in March ~~2017.~~2017 for the first time.

The ~~increase~~decrease in professional fees for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2018 compared to the three ~~and nine~~ months ended ~~September 30, 2016~~March 31, 2017, was due to ~~an increase in~~higher external auditor fees and legal fees as well as additional consulting costs associated with ~~our~~ new compliance requirements as a result of exceeding $10 billion in total ~~assets.~~assets for the first quarter of 2017. Although we still incur costs associated with these compliance requirements, the overall expenditures have declined in 2018. The ~~increase~~decrease in legal fees ~~for periods~~ in ~~2017~~the first quarter of 2018 compared ~~to periods in 2016~~the first quarter of 2017 was due mostly to legal fees recorded in 2017 related to the merger with U & I Financial Corp. which was terminated in September 2017.

Investments in affordable housing partnership expenses are recorded based on the financial statements of the investment projects. We make investments in affordable housing partnerships and ~~receives~~receive Community Reinvestment Act ~~credit~~credits and receive tax credits which ~~reduces~~reduce our overall tax provision rate. Investments in affordable housing partnership expenses are based on the performance of the underlying investment. We receive updated financial information for our investments in affordable housing partnerships ~~investments~~ and ~~records~~record losses based on the performance of ~~the investment.~~our investments. These ~~losses will eventually be~~expenditures are offset by tax credits which reduce our tax provision expense. Investments in affordable housing partnerships increased from ~~$69.0~~$76.4 million at ~~September 30, 2016,~~March 31, 2017 to ~~$88.5~~$78.4 million at ~~September 30, 2017, due to additional investments funded in 2017.~~March 31, 2018.

Credit related expenses declined for ~~periods in 2017~~the first quarter of 2018 compared to ~~periods in 2016~~the first quarter of 2017 largely due to a ~~$2.8 million credit~~decline in provision for off balance sheet unfunded ~~commitments recorded during~~commitments. During the ~~third~~first quarter of ~~2017. Updated information related to off balance sheet unfunded commitments and utilization rates used in the calculation~~2018 we recorded a credit of ~~the allowance for unfunded commitments resulted in a $2.8 million reduction in the required allowance for the third quarter of 2017. Credit~~$200 thousand for off balance sheet unfunded commitments compared to a provision of $241 thousand for the ~~nine months ended September 30, 2017 totaled $2.4 million.~~

~~OREO expenses, net experienced increases~~first quarter of 2017. Loan collection fees also declined $356 thousand for ~~periods in 2017~~the first quarter of 2018 compared to ~~periods~~the first quarter of 2017.

At March 31, 2018 we had $8.3 million in ~~2016 mostly due~~recorded OREO compared to ~~additional~~$19.1 million at March 31, 2017. The decline in OREO resulted in a reduction in OREO related expenditures as we experienced a reduction in OREO valuation expenses and ~~valuations on OREO acquired from Wilshire in~~expenses related to the ~~merger.~~maintenance and sale of OREO.

Merger and integration expenses for the ~~third~~first quarter of ~~2017~~2018 consisted of ~~$288~~a reversal of $7 thousand in expenses related to the merger with ~~Wilshire, a reversal~~Wilshire. Merger and integration expenses for the first quarter of ~~$52~~2017 consisted of $401 thousand in expenses related to the ~~now terminated U & I transaction, and $24 thousand in expenses related to other former acquisitions. Merger and integration expenses for the nine months ended September 30, 2017 consisted~~acquisition of ~~$1.2 million in expenses related to the merger with~~ Wilshire, ~~$471~~$522 thousand in expenses related to the terminated acquisition of U & I, ~~transaction,~~ and ~~$72~~$24 thousand in expenses related to other former acquisitions.

Other noninterest expense ~~saw~~experienced a decline for the ~~third~~first quarter of ~~2017~~2018 compared to the ~~third~~first quarter of ~~2016~~2017 due mostly to a decrease in ~~our directors stock compensation~~valuation expenses ~~and~~for premises held for sale. During the first quarter of 2017, we recorded a ~~decrease in operating losses. Other noninterest~~$1.1 million valuation expense on premises held for sale. We had no such recorded expenses for the ~~nine months ended September 30, 2017 experienced an increase compared to the nine months ended September 30, 2016 due to additional expenses from the merger with Wilshire.~~first quarter of 2018.

Provision for Income Taxes

Income tax provision expense was ~~$27.7~~$17.7 million and ~~$17.2~~$23.0 million for the quarters ended ~~September 30,~~March 31, 2018 and 2017, ~~and 2016,~~ respectively. The effective income tax rates were ~~38.34%~~25.71% and ~~39.68%~~38.84% for the quarters ended ~~September 30,~~March 31, 2018 and 2017, respectively. On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and ~~2016, respectively. Income~~Jobs Act (“Tax Act”). Among other changes, the Tax Act reduced the U.S. federal corporate tax ~~provision expense was $76.2 million and $50.2 million for the nine months ended September 30, 2017 and 2016, respectively.~~rate from 35% to 21% as of January 1, 2018. The ~~effective income~~reduction in tax rates for the nine months ended September 30, 2017 and 2016 were 38.54% and 40.71%, respectively. The decrease in tax rate was due to the increase in affordable housing partnership tax credits for the three and nine months ended September 30, 2017first quarter of 2018 compared to the ~~same periods~~first quarter of 2017 reflects the reduced corporate tax rate as a result of the ~~prior year.~~Tax Act.

Financial Condition

At ~~September 30, 2017,~~March 31, 2018, our total assets were ~~$14.15~~$14.51 billion, an increase of ~~$708.6~~$300.4 million, or ~~5.3%~~2.1%, from ~~$13.44~~$14.21 billion at December 31, ~~2016.~~2017. The increase in assets was due to an increase in loans receivable and ~~investment securities available for sale.~~cash and cash equivalents.

Investment Securities Portfolio

As of ~~September 30, 2017~~March 31, 2018 we had ~~$1.87~~$1.70 billion in available for sale securities compared to ~~$1.56~~$1.72 billion at December 31, ~~2016.~~2017. The net unrealized loss on the available for sale securities at ~~September 30, 2017~~March 31, 2018 was ~~$17.8~~$55.8 million compared to a net unrealized loss on securities of ~~$25.6~~$31.6 million at December 31, ~~2016.~~2017.

During the ~~nine~~three months ended ~~September 30, 2017, $504.8~~March 31, 2018, $77.5 million in securities were purchased, ~~$179.3~~$49.9 million in ~~collateralized~~ mortgage ~~obligations or mortgage-backed~~related securities were paid down, and there were ~~$14.0 million in maturities.~~no maturities or called securities. During the same period last year, ~~$478.9~~$94.9 million in investment securities were ~~acquired in the merger with Wilshire, $428.9~~purchased, $59.1 million in ~~securities were purchased, $108.3 million in collateralized~~ mortgage ~~obligations or mortgage-backed~~related securities were paid down, and ~~$22.5~~we had $9.0 million in maturities. At December 31, 2017, we had $22.0 million in mutual funds that were categorized as available-for-sale. Upon the adoption of ASU 2016-01 on January 1, 2018, these investments were no longer categorized as available-for-sale securities and were ~~sold.~~reclassified as equity investments in accordance with the adopted guidance, and changes to fair value were be recorded as unrealized gains or losses in earnings.

Investments in Affordable Housing Partnerships

At ~~September 30, 2017,~~March 31, 2018, we had ~~$88.5~~$78.4 million in investments in affordable housing partnerships compared to ~~$70.1~~$81.0 million at December 31, ~~2016.~~2017. The ~~increase~~decrease in investments in affordable housing partnerships was due to ~~additional commitments entered into during the nine months ended September 30, 2017 totaling $26.5 million less~~ losses on investments in affordable housing partnerships and premium accretion ~~recorded.~~recorded totaling $2.6 million for the three months ended March 31, 2018. Commitments to fund investments in affordable housing partnerships totaled ~~$42.4~~$35.5 million at ~~September 30, 2017~~March 31, 2018 compared to ~~$24.4~~$38.5 million at December 31, ~~2016.~~2017.

Loan Portfolio

As of ~~September 30, 2017,~~March 31, 2018, loans outstanding totaled ~~$10.96~~$11.29 billion, an increase of ~~$419.8~~$189.6 million from ~~$10.54~~$11.10 billion at December 31, ~~2016.~~2017. The following table summarizes our loan portfolio by amount and percentage of total loans outstanding in each major loan category at the dates indicated:


	September 30, 2017					December 31, 2016					March 31, 2018					December 31, 2017
	Amount			Percent (%)		Amount			Percent (%)		Amount			Percent (%)		Amount			Percent (%)
Loan portfolio composition				(Dollars in thousands)										(Dollars in thousands)
Real estate loans:
Residential	$	55,072		0	%	$	57,884		1	%	$	47,662		—	%	$	49,774		—	%
Commercial	8,085,307			74	%	7,842,573			75	%	8,180,537			72	%	8,142,036			73	%
Construction	297,686			3	%	254,113			2	%	300,954			3	%	316,412			3	%
Total real estate loans	8,438,065			77	%	8,154,570			78	%	8,529,153			75	%	8,508,222			76	%
Commercial business	1,824,442			17	%	1,832,021			17	%	1,818,291			16	%	1,780,869			16	%
Trade finance	180,847			1	%	154,928			1	%	189,395			2	%	166,664			2	%
Consumer and other	521,459			5	%	403,470			4	%	755,621			7	%	647,102			6	%
Total loans outstanding	10,964,813			100	%	10,544,989			100	%	11,292,460			100	%	11,102,857			100	%
Deferred loan fees, net	(1,839		)			(1,657		)			23					(282		)
Loans receivable	10,962,974					10,543,332					11,292,483					11,102,575
Allowance for loan losses	(83,633		)			(79,343		)			(86,461		)			(84,541		)
Loans receivable, net of allowance for loan losses	$	10,879,341				$	10,463,989				$	11,206,022				$	11,018,034

All of our loan types experienced an increase from December 31, ~~2016~~2017 to ~~September 30, 2017~~March 31, 2018 due to increased loan originations during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2018 aside from residential real estate and ~~commercial business~~construction loans which experienced ~~only small~~ declines.

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.

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


	September 30, 2017		December 31, 2016		March 31, 2018		December 31, 2017
	(Dollars in thousands)				(Dollars in thousands)
Commitments to extend credit	$	1,571,460	$	1,592,221	$	1,877,130	$	1,526,981
Standby letters of credit	68,358		63,753		73,069		74,748
Other commercial letters of credit	60,036		52,125		67,695		74,147
	$	1,699,854	$	1,708,099	$	2,017,894	$	1,675,876

Nonperforming Assets

Nonperforming assets, which consist of nonaccrual loans, loans 90 days or more past due and on accrual status, accruing restructured loans, and OREO totaled ~~$125.7~~$137.9 million at ~~September 30, 2017~~March 31, 2018 compared to ~~$111.2~~$125.2 million at December 31, ~~2016.~~2017. The ratio of nonperforming assets to loans receivable and OREO was ~~1.15%~~1.22% and ~~1.05%~~1.13% at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, respectively.

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


	September 30, 2017			December 31, 2016			March 31, 2018			December 31, 2017
	(Dollars in thousands)						(Dollars in thousands)
Nonaccrual loans ⁽¹⁾	$	43,323		$	40,074		$	68,152		$	46,775
Loans 90 days or more days past due, still accruing	407			305			1,894			407
Accruing restructured loans	64,807			48,874			59,596			67,250
Total nonperforming loans	108,537			89,253			129,642			114,432
OREO	17,208			21,990			8,261			10,787
Total nonperforming assets	$	125,745		$	111,243		$	137,903		$	125,219

Nonaccrual loans:
Legacy Portfolio	$	37,078		$	28,944		$	50,293		$	28,235
Acquired Portfolio	6,245			11,130			17,859			18,540
Total nonaccrual loans	$	43,323		$	40,074		$	68,152		$	46,775

Nonperforming loans:
Legacy Portfolio	$	89,358		$	74,890		$	90,134		$	77,305
Acquired Portfolio	19,179			14,363			39,508			37,127
Total nonperforming loans	$	108,537		$	89,253		$	129,642		$	114,432

Nonperforming loans to loans receivable	0.99		%	0.85		%	1.15		%	1.03		%
Nonperforming assets to loans receivable and OREO	1.15		%	1.05		%	1.22		%	1.13		%
Nonperforming assets to total assets	0.89		%	0.83		%	0.95		%	0.88		%
Allowance for loan losses to nonperforming loans	77.05		%	88.90		%	66.69		%	73.88		%
Allowance for loan losses to nonperforming assets	66.51		%	71.32		%	62.70		%	67.51		%


⁽¹⁾	Nonaccrual loans exclude the guaranteed portion of delinquent SBA loans that are in liquidation totaling $~~21.5~~21.9 million and ~~$15.9~~$22.1 million as of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, respectively.

Allowance for Loan Losses

The allowance for loan and lease losses (“ALLL”) was ~~$83.6~~$86.5 million at ~~September 30, 2017~~March 31, 2018 compared to ~~$79.3~~$84.5 million at December 31, ~~2016.~~2017. The ALLL was ~~0.76%~~0.77% of loans receivable at ~~September 30, 2017,~~March 31, 2018 and ~~0.75%~~0.76% at December 31, ~~2016.~~2017. Total ALLL to loans receivable ratio does not include discount on acquired loans. ~~The ALLL impaired~~Impaired loan reserves ~~decreased~~increased to ~~$6.8~~$11.5 million at ~~September 30, 2017~~March 31, 2018 from ~~$7.4~~$5.3 million at December 31, ~~2016.~~2017.

The following table reflects our allocation of the ALLL by loan type and the ratio of each loan segment to total loans as of the dates indicated:


	Allocation of Allowance for Loan Losses												Allocation of Allowance for Loan Losses
	September 30, 2017						December 31, 2016						March 31, 2018						December 31, 2017
	Allowance for Loan Losses		Loans Receivable*		Percent of Allowance to Loans Receivable		Allowance for Loan Losses		Loans Receivable*		Percent of Allowance to Loans Receivable		Allowance for Loan Losses		Loans Receivable*		Percent of Allowance to Loans Receivable		Allowance for Loan Losses		Loans Receivable*		Percent of Allowance to Loans Receivable
	(Dollars in thousands)												(Dollars in thousands)
Loan Type
Real estate - residential	$	161	$	55,072	0.29	%	$	209	$	57,884	0.36	%	$	49	$	47,662	0.10	%	$	88	$	49,774	0.18	%
Real estate - commercial	54,280		8,085,307		0.67	%	49,917		7,842,573		0.64	%	58,638		8,180,537		0.72	%	57,664		8,142,036		0.71	%
Real estate - construction	1,486		297,686		0.50	%	1,621		254,113		0.64	%	338		300,954		0.11	%	930		316,412		0.29	%
Commercial business	23,384		1,824,442		1.28	%	23,547		1,832,021		1.29	%	21,695		1,818,291		1.19	%	20,755		1,780,869		1.17	%
Trade finance	1,582		180,847		0.87	%	1,897		154,928		1.22	%	1,805		189,395		0.95	%	1,716		166,664		1.03	%
Consumer and other	2,740		521,459		0.53	%	2,152		403,470		0.53	%	3,936		755,621		0.52	%	3,388		647,102		0.52	%
Total	$	83,633	$	10,964,813	0.76	%	$	79,343	$	10,544,989	0.75	%	$	86,461	$	11,292,460	0.77	%	$	84,541	$	11,102,857	0.76	%


^*	Held-for-sale loans of ~~$11.4~~$33.7 million and ~~$22.8~~$29.7 million at ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, respectively, were excluded.

For a better understanding of the changes in the ALLL, the loan portfolio has been segmented for disclosure purposes between loans which are accounted for under the amortized cost method (Legacy Loans) and loans acquired from acquisitions (Acquired Loans). Acquired Loans have been further segregated between Purchase Credit Impaired Loans (loans with credit deterioration at the time they were acquired and accounted for under ASC 310-30, or “PCI loans”) and performing loans (loans that were pass graded at the time they were acquired, or “non-PCI loans”).

The activity in the ALLL for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2018 is as follows:


				Acquired Loans⁽²⁾												Acquired Loans⁽²⁾
Three Months Ended September 30, 2017	Legacy Loans ⁽¹⁾			PCI Loans			Non-PCI Loans			Total
Three Months Ended March 31, 2018													Legacy Loans ⁽¹⁾			PCI Loans			Non-PCI Loans			Total
	(Dollars in thousands)												(Dollars in thousands)
Balance, beginning of period	$	65,255		$	12,066		$	2,753		$	80,074		$	67,647		$	12,040		$	4,854		$	84,541
Provision (credit) for loan losses	6,245			(1,455		)	610			5,400			4,726			(188		)	(2,038		)	2,500
Loans charged off	(4,263		)	—			(650		)	(4,913		)	(752		)	(37		)	(279		)	(1,068		)
Recoveries of loan charge offs	3,045			—			27			3,072			444			—			44			488
Balance, end of period	$	70,282		$	10,611		$	2,740		$	83,633		$	72,065		$	11,815		$	2,581		$	86,461

Total loans outstanding	$	7,996,781		$	209,531		$	2,758,501		$	10,964,813		$	8,758,317		$	190,438		$	2,343,705		$	11,292,460
Allowance to total loans receivable ratio	0.88		%	5.06		%	0.10		%	0.76		%	0.82		%	6.20		%	0.11		%	0.77		%
Net loan charge offs to beginning allowance	1.87		%	—		%	22.63		%	2.30		%	0.46		%	(0.31		)%	4.84		%	0.69		%
Net loan charge offs to provision for loan losses	19.50		%	—		%	102.13		%	34.09		%	6.52		%	19.68		%	(11.53		)%	23.20		%


				Acquired Loans ⁽²⁾												Acquired Loans ⁽²⁾
Nine Months Ended September 30, 2017	Legacy Loans ⁽¹⁾			PCI Loans			Non-PCI Loans			Total
Three Months Ended March 31, 2017													Legacy Loans ⁽¹⁾			PCI Loans			Non-PCI Loans			Total
	(Dollars in thousands)												(Dollars in thousands)
Balance, beginning of period	$	66,399		$	12,130		$	814		$	79,343		$	66,399		$	12,130		$	814		$	79,343
Provision (credit) for loan losses	12,499			(1,519		)	2,780			13,760
Provision for loan losses													3,709			6			1,885			5,600
Loans charged off	(12,548		)	—			(1,092		)	(13,640		)	(6,199		)	—			(406		)	(6,605		)
Recoveries of loan charge offs	3,932			—			238			4,170			145			—			176			321
Balance, end of period	$	70,282		$	10,611		$	2,740		$	83,633		$	64,054		$	12,136		$	2,469		$	78,659

Total loans outstanding	$	7,996,781		$	209,531		$	2,758,501		$	10,964,813		$	6,915,682		$	260,265		$	3,375,603		$	10,551,550
Allowance to total loans receivable ratio	0.88		%	5.06		%	0.10		%	0.76		%	0.93		%	4.66		%	0.07		%	0.75		%
Net loan charge offs to beginning allowance	12.98		%	—		%	104.91		%	11.94		%	9.12		%	—		%	28.26		%	7.92		%
Net loan charge offs to provision for loan losses	68.93		%	—		%	30.72		%	68.82		%	163.22		%	—		%	12.20		%	112.21		%


⁽¹⁾	Legacy Loans includes Acquired Loans that have been renewed or refinanced subsequent to the acquisition date.


⁽²⁾	Acquired loans were marked to fair value at the acquisition date and provisions for loan losses reflect credit deterioration subsequent to the acquisition date.

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 of the ALLL at the beginning and end of each period, the amount of average and loans receivable outstanding, and certain other ratios as of the dates and for the periods indicated:


	At or for the Three Months Ended September 30,						At or for the Nine Months Ended September 30,						At or for the Three Months Ended March 31,
	2017			2016			2017			2016			2018			2017
	(Dollars in thousands)												(Dollars in thousands)
LOANS:
Average loans, including loans held for sale	$	10,712,856		$	9,292,814		$	10,544,898		$	7,347,740		$	11,095,864		$	10,381,771
Loans receivable	$	10,962,974		$	10,561,197		$	10,962,974		$	10,561,197		$	11,292,483		$	10,549,667

ALLOWANCE:
Balance, beginning of period	$	80,074		$	76,425		$	79,343		$	76,408		$	84,541		$	79,343
Less loan charge offs:
Real estate - commercial	(337		)	(567		)	(2,700		)	(909		)	(165		)	(1,490		)
Commercial business	(4,341		)	(3,229		)	(8,081		)	(5,888		)	(556		)	(3,260		)
Trade finance	—			—			(2,104		)	—			—			(1,576		)
Consumer and other	(235		)	(162		)	(755		)	(278		)	(347		)	(279		)
Total loan charge offs	(4,913		)	(3,958		)	(13,640		)	(7,075		)	(1,068		)	(6,605		)
Plus loan recoveries:
Real estate - commercial	23			440			112			1,141			202			46
Commercial business	3,045			566			4,045			1,209			253			272
Trade Finance	2			—			6			—			12			—
Consumer and other	2			3			7			93			21			3
Total loans recoveries	3,072			1,009			4,170			2,443			488			321
Net loan charge offs	(1,841		)	(2,949		)	(9,470		)	(4,632		)	(580		)	(6,284		)
Provision for loan losses	5,400			6,500			13,760			8,200			2,500			5,600
Balance, end of period	$	83,633		$	79,976		$	83,633		$	79,976		$	86,461		$	78,659

Net loan charge offs to average loans, including loans held for sale*	0.07		%	0.13		%	0.12		%	0.08		%	0.02		%	0.24		%
Allowance for loan losses to loans receivable at end of period	0.76		%	0.76		%	0.76		%	0.76		%	0.77		%	0.75		%
Net loan charge offs to allowance*	8.81		%	14.75		%	15.10		%	7.72		%	2.68		%	31.96		%
Net loan charge offs to provision for loan losses	34.09		%	45.37		%	68.82		%	56.49		%	23.20		%	112.21		%


*	Annualized

We believe the ALLL as of ~~September 30, 2017~~March 31, 2018 was 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, and if actual losses exceed the estimated amounts it could have a material and adverse effect on our financial condition and results of operations.

At ~~September 30, 2017,~~March 31, 2018, we had ~~$95.1~~$80.0 million in remaining discount on loans acquired from previous transactions compared to ~~$110.8~~$85.8 million at December 31, ~~2016.~~2017.

Deposits and Other Borrowings

Deposits

Deposits are our primary source of funds used in our lending and investment activities. At ~~September 30, 2017,~~March 31, 2018, deposits increased ~~$351.3~~$664.0 million, or ~~3.3%~~6.1%, to ~~$10.99~~$11.51 billion from ~~$10.64~~$10.85 billion at December 31, ~~2016.~~2017. The increase in deposits was primarily due to an increase in demand deposits, ~~and~~ money market ~~accounts.~~

and NOW accounts, and time deposits.

At ~~September 30,~~March 31, 2018, 26.5% of total deposits were noninterest bearing demand deposits, 41.5% were time deposits, and 32.0% were interest bearing demand and savings deposits. At December 31, 2017, 27.7% of total deposits were noninterest bearing demand deposits, ~~36.5%~~39.4% were time deposits, and ~~35.8% were interest bearing demand and savings deposits. At December 31, 2016, 27.3% of total deposits were noninterest bearing demand deposits, 37.9% were time deposits, and 34.8%~~32.9% were interest bearing demand and savings deposits.

At ~~September 30, 2017,~~March 31, 2018, we had ~~$808.4 million~~$1.11 billion in brokered deposits and $300.0 million in California State Treasurer deposits compared to ~~$724.7~~$797.0 million in brokered deposits and $300.0 million in California State Treasurer deposits at December 31, ~~2016.~~2017. The California State Treasurer deposits had three-month maturities with a weighted average interest rate of ~~1.08%~~1.44% at ~~September 30, 2017~~March 31, 2018 and were collateralized with securities with a carrying value of ~~$330.3~~$337.5 million. Time deposits of more than $250 thousand ~~or more~~ at ~~September 30, 2017~~March 31, 2018 totaled ~~$1.62~~$1.38 billion compared to ~~$1.55~~$1.28 billion at December 31, ~~2016.~~2017.

The following is a schedule of certificates of deposit maturities as of ~~September 30, 2017~~March 31, 2018:


	Balance		Percent (%)		Balance		Percent (%)
	(Dollars in thousands)				(Dollars in thousands)
Three months or less	$	991,555	25	%	$	1,206,141	25	%
Over three months through six months	842,945		21	%	1,113,082		23	%
Over six months through nine months	784,384		20	%	884,970		19	%
Over nine months through twelve months	1,017,666		25	%	1,174,407		25	%
Over twelve months	377,577		9	%	396,114		8	%
Total time deposits	$	4,014,127	100	%	$	4,774,714	100	%

Other Borrowings

From time to time we utilize FHLB advances as a secondary 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 ~~September 30, 2017,~~March 31, 2018, FHLB advances totaled ~~$1.02 billion~~$862.3 million with an average weighted remaining maturity of ~~1.5~~2.4 years compared to ~~$754.3 million~~$1.16 billion with average remaining maturities of ~~2.2~~2.0 years at December 31, ~~2016.~~2017. Total FHLB advances included ~~$3.0~~$2.3 million in premiums recorded from prior acquisitions at ~~September 30, 2017~~March 31, 2018 compared to ~~$4.3~~$2.7 million in premiums at December 31, ~~2016.~~2017.

We did not have federal funds purchased as of March 31, 2018. At December 31, 2017, we had $69.9 million in federal funds purchased which were all fully repaid during the first quarter of 2018.

Subordinated debentures totaled ~~$100.6~~$101.1 million at ~~September 30, 2017~~March 31, 2018 and ~~$99.8~~$100.9 million at December 31, ~~2016.~~2017. The Trust Preferred Securities accrue and pay distributions periodically at specified annual rates as provided in the related indentures for the securities. The trusts used the net proceeds from their respective offerings to purchase a like amount of subordinated debentures (the “Debentures”) issued by us. The Debentures are the sole assets of the trusts. Our obligations under the Debentures and related documents, taken together, constitute a full and unconditional guarantee by us of the obligations of the trusts. The Trust Preferred Securities are mandatorily redeemable upon the maturity of the Debentures, or upon earlier redemption as provided in the indentures. We have the right to redeem the Debentures in whole (but not in part) on or after specific dates, at a redemption price specified in the indentures plus any accrued but unpaid interest to the redemption date.

Off-Balance-Sheet Activities and Contractual Obligations

We routinely engage in activities that involve, to varying degrees, elements of risk that are not reflected, in whole or in part, in the consolidated financial statements. These activities are part of our normal course of business and include traditional off-balance-sheet credit-related financial instruments, interest rate swap contracts, operating leases and long-term debt.

Traditional off-balance-sheet credit-related financial instruments are primarily commitments to extend credit and standby letters of credit. These activities could require us to make cash payments to third parties if certain specified future events occur. The contractual amounts represent the extent of our exposure in these off-balance-sheet activities. These activities are necessary to meet the financing needs of our customers.

We enter into interest rate swap contracts under which we are required to either receive cash from or pay cash to counterparties depending on changes in interest rates. We also purchase interest rate caps to protect against increases in market interest rates. We utilize interest rate swap contracts and interest rate caps to help manage the risk of changing interest rates.

We sell interest rate swaps to certain adjustable rate commercial loan customers to fix the interest rate on their floating rate loans. When the fixed rate swap is originated with the customer, an identical offsetting swap is also entered into by us with a correspondent bank.

~~With~~We enter into various stand-alone mortgage-banking derivatives in order to hedge the ~~acquisition in~~risk associated with the ~~merger~~fluctuation of ~~Wilshire’s mortgage lending platform, we began utilizing mortgage banking derivatives during the third quarter of 2016.~~interest rates. The first type of derivative, an interest rate lock commitment, is a commitment to originate loans whereby the interest rate on the loan is determined prior to funding. To mitigate interest rate risk on these rate lock commitments, we also enter into forward commitments, or commitments to deliver residential mortgage loans on a future date, also considered derivatives. Net

change in the fair value of derivatives represents income recorded from changes of fair value for these mortgage derivatives instruments.

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.”

Stockholders’ Equity and Regulatory Capital

Historically, our primary source of capital has been the retention of earnings, net of dividend payments to stockholders. We seek to maintain capital at a level sufficient to assure our stockholders, our customers, and our regulators that we and the Bank 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 ~~$1.93~~$1.95 billion at ~~September 30, 2017~~March 31, 2018 compared to ~~$1.86~~$1.93 billion at December 31, ~~2016.~~2017.

The federal banking agencies require a minimum ratio of qualifying total capital to risk-weighted assets of 8.0%, a minimum ratio of Tier I capital to risk-weighted assets of 6.0%, and a minimum ratio of Tier I common equity capital to risk-weighted assets of 4.5% to generally be considered “adequately capitalized” under the Prompt Corrective Action regulations. In addition to the risk-based guidelines, federal banking agencies require banking organizations to maintain a minimum amount of Tier I capital to average total assets, referred to as the leverage ratio, of 4.0% to generally be considered “adequately capitalized” under the Prompt Corrective Action regulations. Beginning January 1, 2016, federal banking agencies required a capital conservation buffer of 0.625% in addition to the ratios required to generally be considered “adequately capitalized” under the Prompt Corrective Action regulations. The capital conservation buffer increases at an annual increment of 0.625% until January 2019 and stands at ~~1.25%~~1.875% as of ~~September 30, 2017.~~March 31, 2018. Failure to maintain this capital conservation buffer results in limits or prohibitions on capital distributions and discretionary compensation payments. Capital requirements apply to us 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 ~~September 30, 2017,~~March 31, 2018, our ~~Common Equity~~common equity Tier 1 capital was ~~$1.47~~$1.50 billion compared to ~~$1.40~~$1.47 billion at December 31, ~~2016.~~2017. Our Tier I capital, defined as stockholders’ equity less intangible assets and including our trust preferred securities, was ~~$1.56~~$1.60 billion at ~~September 30, 2017~~March 31, 2018 compared to ~~$1.50~~$1.57 billion at December 31, ~~2016,~~2017, representing an increase of ~~$67.9~~$32.0 million, or ~~4.54%~~2.04%. At ~~September 30, 2017,~~March 31, 2018, the ~~Common Equity~~common equity Tier 1 capital ratio was ~~12.29%~~12.35%. The total capital to risk-weighted assets ratio was ~~13.81%~~13.86% and the Tier I capital to risk-weighted assets ratio was ~~13.10%~~13.15%. The Tier I leverage capital ratio was ~~11.78%~~11.61%.

As of ~~September 30, 2017~~March 31, 2018 and December 31, ~~2016,~~2017, the most recent regulatory notification generally categorized the Bank as “well capitalized” under the general regulatory framework for prompt corrective action. To be generally categorized as “well-capitalized”, the Bank must maintain minimum common equity Tier 1 capital, total risk-based, Tier I risk-based and Tier I leverage capital ratios as set forth in the table below:


	As of September 30, 2017												As of March 31, 2018
	Actual				To Be Well-Capitalized				Excess				Actual				To Be Well-Capitalized				Excess
	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
	(Dollars in thousands)												(Dollars in thousands)
Hope Bancorp, Inc.
Common equity Tier 1 capital ratio (to risk-weighted assets)	$	1,467,385	12.29	%	N/A		N/A		N/A		N/A		$	1,502,969	12.35	%	N/A		N/A		N/A		N/A
Total risk-based capital ratio (to risk-weighted assets)	$	1,648,543	13.81	%	N/A		N/A		N/A		N/A		$	1,687,281	13.86	%	N/A		N/A		N/A		N/A
Tier 1 risk-based capital ratio (to risk-weighted assets)	$	1,564,074	13.10	%	N/A		N/A		N/A		N/A		$	1,600,185	13.15	%	N/A		N/A		N/A		N/A
Tier 1 capital to total assets (to average assets)	$	1,564,074	11.78	%	N/A		N/A		N/A		N/A		$	1,600,185	11.61	%	N/A		N/A		N/A		N/A
Bank of Hope
Common equity Tier 1 capital ratio (to risk-weighted assets)	$	1,543,700	12.94	%	$	775,425	6.50	%	$	768,275	6.44	%	$	1,580,728	12.99	%	$	790,790	6.50	%	$	789,938	6.49	%
Total risk-based capital ratio (to risk-weighted assets)	$	1,628,169	13.65	%	$	1,192,961	10.00	%	$	435,208	3.65	%	$	1,667,824	13.71	%	$	1,216,600	10.00	%	$	451,224	3.71	%
Tier 1 risk-based capital ratio (to risk-weighted assets)	$	1,543,700	12.94	%	$	954,369	8.00	%	$	589,331	4.94	%	$	1,580,728	12.99	%	$	973,280	8.00	%	$	607,448	4.99	%
Tier 1 capital to total assets (to average assets)	$	1,543,700	11.63	%	$	663,508	5.00	%	$	880,192	6.63	%	$	1,580,728	11.47	%	$	688,983	5.00	%	$	891,745	6.47	%


	As of December 31, 2016												As of December 31, 2017
	Actual				To Be Well-Capitalized				Excess				Actual				To Be Well-Capitalized				Excess
	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
	(Dollars in thousands)												(Dollars in thousands)
Hope Bancorp, Inc.
Common equity Tier 1 capital ratio (to risk-weighted assets)	$	1,400,246	12.10	%	N/A		N/A		N/A		N/A		$	1,471,193	12.30	%	N/A		N/A		N/A		N/A
Total risk-based capital ratio (to risk-weighted assets)	$	1,578,690	13.64	%	N/A		N/A		N/A		N/A		$	1,653,521	13.82	%	N/A		N/A		N/A		N/A
Tier 1 risk-based capital ratio (to risk-weighted assets)	$	1,496,153	12.92	%	N/A		N/A		N/A		N/A		$	1,568,144	13.11	%	N/A		N/A		N/A		N/A
Tier 1 capital to total assets (to average assets)	$	1,496,153	11.49	%	N/A		N/A		N/A		N/A		$	1,568,144	11.54	%	N/A		N/A		N/A		N/A
Bank of Hope
Common equity Tier 1 capital ratio (to risk-weighted assets)	$	1,475,228	12.75	%	$	752,022	6.50	%	$	723,206	6.25	%	$	1,548,401	12.95	%	$	777,368	6.50	%	$	771,033	6.45	%
Total risk-based capital ratio (to risk-weighted assets)	$	1,557,765	13.46	%	$	1,156,957	10.00	%	$	400,808	3.46	%	$	1,633,778	13.66	%	$	1,195,951	10.00	%	$	437,827	3.66	%
Tier 1 risk-based capital ratio (to risk-weighted assets)	$	1,475,228	12.75	%	$	925,566	8.00	%	$	549,662	4.75	%	$	1,548,401	12.95	%	$	956,761	8.00	%	$	591,640	4.95	%
Tier 1 capital to total assets (to average assets)	$	1,475,228	11.33	%	$	651,129	5.00	%	$	824,099	6.33	%	$	1,548,401	11.40	%	$	679,301	5.00	%	$	869,100	6.40	%

Liquidity Management

Liquidity risk is the risk of reduction in our earnings or capital that would result if we were not able to meet our obligations when they come due without incurring unacceptable losses. Liquidity risk includes the risk of unplanned decreases or changes in funding sources and changes in market conditions that affect our ability to liquidate assets quickly and with minimum loss of value. Factors considered in liquidity risk management are the stability of the deposit base; the marketability, maturity, and pledging of our investments; the availability of alternative sources of funds; and our demand for credit. The objective of our liquidity management is to have funds available to meet cash flow requirements arising from fluctuations in deposit levels and the demands of daily operations, which include funding of securities purchases, providing for customers’ credit needs, and ongoing repayment of borrowings.

Our primary sources of liquidity are derived from financing activities, which include customer and broker deposits, federal funds facilities, and borrowings from the FHLB and the FRB Discount Window. These funding sources are augmented by payments of principal and interest on loans and securities, proceeds from sale of loans and the liquidation or sale of securities from our available for sale portfolio. Primary uses of funds include withdrawal of and interest payments on deposits, originations of loans, purchases of investment securities, and payment of operating expenses.

At ~~September 30, 2017,~~March 31, 2018, our total borrowing capacity from the FHLB was ~~$3.34~~$3.55 billion of which ~~$2.32~~$2.67 billion was unused and available to borrow. At ~~September 30, 2017,~~March 31, 2018, our total borrowing capacity from the FRB was ~~$555.2~~$606.9 million, all of which was unused and available to borrow. In addition to these lines, our liquid assets, consisting of cash and cash equivalents, interest bearing cash deposits and time deposits with other banks, overnight federal funds sold to other banks, liquid investment securities available for sale, and loan repayments within 30 days, were ~~$1.82~~$1.88 billion at ~~September 30, 2017~~March 31, 2018 compared to ~~$1.53~~$1.73 billion at December 31, ~~2016.~~2017. Cash and cash equivalents were ~~$405.3~~$612.4 million at ~~September 30, 2017~~March 31, 2018 compared to ~~$437.3~~$492.0 million at December 31, ~~2016.~~2017. We believe our liquidity sources are sufficient to meet all reasonably foreseeable short-term and intermediate-term needs.


Item 3.	Quantitative and Qualitative Disclosures About Market Risk

The objective of our asset and liability management activities is to maximize our earnings while maintaining adequate liquidity and an exposure to interest rate risk deemed by management to be acceptable by adjusting the type and mix of assets and liabilities to seek to effectively address changing conditions and risks. Through overall management of our balance sheet and by seeking to manage various risks, we seek to optimize our financial returns within safe and sound parameters. Our operating strategies for attaining this objective include managing net interest margin through appropriate risk/return pricing of assets and liabilities and emphasizing growth in retail deposits, as a percentage of interest bearing liabilities, to reduce our cost of funds. We also seek to improve earnings by controlling noninterest expense, and enhancing noninterest income. We also use risk management instruments to modify interest rate characteristics of certain assets and liabilities to hedge against our exposure to interest rate fluctuations with the objective of reducing the effects fluctuations might have on associated cash flows or values. Finally, we perform internal analysis to measure, evaluate, and monitor risk.

Interest Rate Risk

Interest rate risk is the most significant market risk impacting us. Interest rate risk occurs when interest rate sensitive assets and liabilities do not reprice simultaneously and in equal volume. A key objective of asset and liability management is to manage interest rate risk associated with changing asset and liability cash flows, values of our assets and liabilities, and market interest rate movements. The management of interest rate risk is governed by policies reviewed and approved annually by the Board of Directors. Our Board delegates responsibility for interest rate risk management to the Asset and Liability Committee of the Board (“ALCO”) and to the Asset and Liability Management Committee (“ALM”), which is composed of the Bank’s senior executives and other designated officers.

The fundamental objective of our ALM is to manage our exposure to interest rate fluctuations while maintaining adequate levels of liquidity and capital. Our ALM meets regularly to monitor interest rate risk, the sensitivity of our assets and liabilities to interest rate changes, the book and market values of our assets and liabilities, and our investment activities. It also directs changes in the composition of our assets and liabilities. Our strategy has been to reduce the sensitivity of our earnings to interest rate fluctuations by more closely matching the effective maturities or repricing characteristics of our assets and liabilities. Certain assets and liabilities, however, may react in different degrees to changes in market interest rates. Furthermore, interest rates on certain types of assets and liabilities may fluctuate prior to changes in market interest rates, while interest rates on other types may lag behind changes in market interest rates. We consider the anticipated effects of these factors when implementing our interest rate risk management objectives.

Interest Rate Sensitivity

We monitor interest rate risk through the use of a simulation model that provides us with the ability to simulate our net interest income. In order to measure, at ~~September 30, 2017~~March 31, 2018, 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:


	September 30, 2017				December 31, 2016					March 31, 2018						December 31, 2017
Simulated 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			Estimated Net Interest Income Sensitivity			Market Value Of Equity Volatility
Simulated Rate Changes	Estimated Net Interest Income Sensitivity		Market Value Of Equity Volatility					Market Value Of Equity Volatility		Estimated Net Interest Income Sensitivity						Estimated Net Interest Income Sensitivity			Market Value Of Equity Volatility
+ 200 basis points	0.93	%	(4.51	)%	Estimated Net Interest Income Sensitivity	2.58	%		(4.05	)%	2.47	%	Market Value Of Equity Volatility		(5.26	)%		2.18	%		(4.42	)%
+ 100 basis points	0.60	%	(2.08	)%	1.15	%		(1.91	)%	1.16	%		(2.58	)%		1.12	%		(2.08	)%
- 100 basis points	(2.02	)%	0.76	%	(0.60	)%		1.41	%	(1.76	)%		1.92	%		(2.22	)%		1.00	%
- 200 basis points	(9.29	)%	(0.11	)%	(9.66	)%		0.42	%	(8.66	)%		1.97	%		(8.56	)%		0.60	%


Item 4.	Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are controls and procedures designed to ensure that information required to be disclosed by us in reports filed or submitted under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our President and Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

In designing and evaluating disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

We conducted an evaluation under the supervision and with the participation of our management, including our President and Chief Executive Officer and our 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 Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q.

Based ~~on the~~upon that evaluation, our President and Chief Executive Officer and our Chief Financial Officer ~~have concluded~~determined that ~~as of the end of the period covered by this Quarterly Report on Form 10-Q,~~ our disclosure controls and procedures were ~~not~~ effective ~~due to the material weaknesses disclosed in our Annual Report on Form 10-K for the year ended December~~as of March 31, ~~2016 filed with the SEC on May 18, 2017.~~2018.

Changes in Internal Control over Financial Reporting

~~The Company has made enhancements to its~~There have been no changes in our internal control over financial reporting during the quarter ended ~~September 30, 2017 as part of the Company’s remediation efforts for material weaknesses disclosed in our Annual Report on Form 10-K for the year ended December~~March 31, ~~2016, but no other changes have been made~~2018 that have materially affected, or are reasonably likely to materially affect, ~~the Company’s~~our internal control over financial reporting.

~~The Company’s remediation efforts and internal control enhancements identified as of September 30, 2017 relate to, but are not limited to, the following:~~

Internal control over financial reporting related to the review process for the allowance for loan losses was enhanced by strengthening the review and approval process of the allowance for loan losses components, in particular the qualitative adjustment factors. The controls were also enhanced to include a detailed review of the allowance for loan losses by the Company’s Management Allowance Committee;

Internal control over financial reporting and documentation related to the review process for impaired loans on accrual status and the allowance for loan losses calculation was enhanced through an additional layer of monitoring and review. The Company also enhanced its policies and procedures so that impaired loans on accrual status are reviewed to ensure that the principal and interest is expected to be recovered; and

~~The Company hired additional staff in key areas of the Company including hiring a SOX Compliance Manager and a SOX Compliance Officer.~~

Management believes that the Company has made significant progress as of September 30, 2017 with respect to the remediation of material weaknesses identified as of December 31, 2016. However, our material weaknesses will not be considered remediated until our internal controls are operational for a period of time and are tested, and management concludes that these controls are operating effectively. Additionally, as it relates to the material weaknesses related to business combinations, to date there has been no such activity and it is not contemplated that such a transaction will be entered into during the year ending December 31, 2017. At the conclusion of the year, management will assess the severity of these deficiencies and the maximum potential impact to our consolidated financial statements.

PART II

OTHER INFORMATION


Item 1.	Legal Proceedings

In the normal course of business, the Company is involved in various legal claims. The Company has reviewed all legal claims against us with counsel and have taken into consideration the views of such counsel as to the potential outcome of the claims in determining our accrued loss contingency. Accrued loss contingencies for all legal claims totaled approximately ~~$428~~$420 thousand at ~~September 30, 2017.~~March 31, 2018. It is reasonably possible the Company may incur losses in addition to the amounts currently accrued. However, at this time, the Company is unable to estimate the range of additional losses that are reasonably possible because of a number of factors, including the fact that certain of these litigation matters are still in their early stages and involve claims for which, at this point, the Company believes have little to no merit. Management has considered these and other possible loss contingencies and does not expect the amounts to be material to ~~any of~~ the consolidated financial statements.


Item 1A.	Risk Factors

Management is not aware of any material changes to the risk factors discussed in Part 1, Item 1A, of the Annual Report on Form 10-K for the year ended December 31, ~~2016 and in Part 2, Item 1A, of the Quarterly Report on Form 10-Q for the quarter ended March 31,~~ 2017. In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the risk factors discussed in Part 1, Item 1A , of the Annual Report on Form 10-K for the year ended December ~~31, 2016 and in Part 2, Item 1A, of the Quarterly Report on Form 10-Q for the quarter ended March~~ 31, 2017, which could materially and adversely affect the Company’s business, financial condition, results of operations and stock price. The risks described in the Annual Report on Form 10-K and the Quarterly Report on Form 10-Q are not the only risks facing the Company. Additional risks and uncertainties not presently known to management or that management presently believes not to be material may also result in material and adverse effects on our business, financial condition and results of operations.


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

None.


Item 3.	Defaults Upon Senior Securities

None.


Item 4.	Mine Safety Disclosures

Not Applicable.


Item 5.	Other Information

None


Item 6.	Exhibits

See “Index to Exhibits.”

INDEX TO EXHIBITS



Exhibit Number		Description

~~10.1~~3.1		~~Bank~~Certificate of ~~Hope 2017 Employee Stock Purchase Program+~~Amendment of Certificate of Incorporation of the Company, filed with the Delaware Secretary of State on October 17, 2011

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 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the ~~Public Company Accounting Reform and Investor Protection~~Sarbanes-Oxley Act of 2002*

32.2		Certification of Chief Financial Officer pursuant to ~~section~~18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the ~~Public Company Accounting Reform and Investor Protection~~Sarbanes-Oxley 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


+	~~Management contract or compensatory plan or arrangement~~

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.



		HOPE BANCORP, INC.


Date:	~~November 8, 2017~~May 7, 2018	/s/ Kevin S. Kim
		Kevin S. Kim
		President and Chief Executive Officer


Date:	~~November 8, 2017~~May 7, 2018	/s/ Alex Ko
		Alex Ko
		Executive Vice President and Chief Financial Officer

8179



	(Dollars in thousands)
Consideration Paid:
Hope common stock issued in exchange for Wilshire common stock	$	852,939
Cash paid for fractional shares	3
Hope stock options issued in exchange Wilshire stock options	3,370
Total consideration paid	$	856,312

Assets Acquired:
Cash and cash equivalents	$	100,127
Investment securities available for sale	478,938
Loans receivable	3,800,807
FRB and FHLB stock	16,539
OREO	13,173
Premises and equipment	16,812
Bank owned life insurance	25,240
Servicing assets	16,203
Low income housing tax credit investments	47,111
Core deposit intangibles	18,138
Deferred tax assets, net	17,698
Other assets	76,818
Liabilities Assumed:
Deposits	(3,812,367		)
Borrowings	(206,282		)
Subordinated debentures	(56,942		)
Other liabilities	(54,751		)
Total identifiable net assets	$	497,262
Excess of consideration paid over fair value of net assets acquired (goodwill)	$	359,050



	Contractual Maturities		Maturity/ Put Date
	(Dollars in thousands)
Due within one year	$	480,000	$	480,000
Due after one year through five years	538,046		538,046
Total	$	1,018,046	$	1,018,046



	Nine Months Ended,
	September 30, 2017			September 30, 2016
	(Dollars in thousands)
Balance at beginning of period	$	(14,657	)	$	(1,832	)
Unrealized gains on securities available for sale and interest only strips	7,697			19,347
Reclassification adjustments for gains realized in income	—			(948		)
Less tax effect	3,251			8,150
Total other comprehensive income	4,446			10,249
Balance at end of period	$	(10,211	)	$	8,417