Heritage Commerce (HTBK) 10-Q 4 Aug 17 2017 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2017	Jul. 27, 2017
Document and Entity Information [Abstract]
Entity Registrant Name	HERITAGE COMMERCE CORP
Entity Central Index Key	1,053,352
Document Type	10-Q
Document Period End Date	Jun. 30, 2017
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		38,130,812
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q2

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Assets
Cash and due from banks	$ 36,223	$ 27,993
Other investments and interest-bearing deposits in other financial institutions	229,790	238,110
Total cash and cash equivalents	266,013	266,103
Securities available-for-sale, at fair value	369,901	306,589
Securities held-to-maturity, at amortized cost (fair value of $366,102 at June 30, 2017 and $318,748 at December 31, 2016)	368,266	324,010
Loans held-for-sale - SBA, at lower of cost or fair value, including deferred costs	3,720	5,705
Loans, net of deferred fees	1,566,324	1,502,607
Allowance for loan losses	(19,397)	(19,089)
Loans, net	1,546,927	1,483,518
Federal Home Loan Bank and Federal Reserve Bank stock and other investments, at cost	17,299	15,196
Company-owned life insurance	59,990	59,148
Premises and equipment, net	7,595	7,490
Goodwill	45,664	45,664
Other intangible assets	6,163	6,950
Accrued interest receivable and other assets	41,362	50,507
Total assets	2,732,900	2,570,880
Deposits:
Demand, noninterest-bearing	948,774	917,187
Demand, interest-bearing	573,699	541,282
Savings and money market	634,802	572,743
Time deposits-under $250	54,129	57,857
Time deposits-$250 and over	147,242	163,670
CDARS - interest-bearing demand, money market and time deposits	16,085	9,401
Total deposits	2,374,731	2,262,140
Subordinated debt, net of issuance costs	39,119
Accrued interest payable and other liabilities	49,819	48,890
Total liabilities	2,463,669	2,311,030
Shareholders' equity:
Common stock, no par value; 60,000,000 shares authorized; 38,120,263 shares issued and outstanding at June 30, 2017 and 37,941,007 shares issued and outstanding at December 31, 2016	216,788	215,237
Retained earnings	58,910	52,527
Accumulated other comprehensive loss	(6,467)	(7,914)
Total shareholders' equity	269,231	259,850
Total liabilities and shareholders' equity	$ 2,732,900	$ 2,570,880

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Securities held-to-maturity
Securities held-to-maturity, fair value (in dollars)	$ 366,102	$ 318,748
Common stock
Common stock, shares authorized	60,000,000	60,000,000
Common stock, shares issued	38,120,263	37,941,007
Common stock, shares outstanding	38,120,263	37,941,007

CONSOLIDATED STATEMENTS OF INCO

CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Interest income:
Loans, including fees	$ 21,207	$ 19,735	$ 41,605	$ 38,923
Securities, taxable	3,442	2,829	6,319	5,603
Securities, exempt from Federal tax	565	575	1,131	1,154
Other investments and interest-bearing deposits in other financial institutions	893	365	1,749	886
Total interest income	26,107	23,504	50,804	46,566
Interest expense:
Deposits	946	760	1,817	1,507
Subordinated debt	228		228
Short-term borrowings				11
Total interest expense	1,174	760	2,045	1,518
Net interest income before provision for loan losses	24,933	22,744	48,759	45,048
Provision for loan losses	46	(351)	(275)	(752)
Net interest income after provision for loan losses	24,979	22,393	48,484	44,296
Noninterest income:
Service charges and fees on deposit accounts	801	783	1,541	1,550
Increase in cash surrender value of life insurance	420	440	842	889
Servicing income	205	371	490	742
Gain on sales of SBA loans	164	279	488	584
Gain on proceeds from company owned life insurance		1,019		1,019
Gain (loss) on sales of securities		347	(6)	527
Other	703	421	1,233	963
Total noninterest income	2,293	3,660	4,588	6,274
Noninterest expense:
Salaries and employee benefits	9,209	8,742	18,695	17,689
Occupancy and equipment	1,216	1,081	2,284	2,157
Professional fees	673	708	1,744	1,533
Other	4,156	3,850	7,859	7,687
Total noninterest expense	15,254	14,381	30,582	29,066
Income before income taxes	12,018	11,672	22,490	21,504
Income tax expense	4,569	4,377	8,503	8,103
Net income	7,449	7,295	13,987	13,401
Dividends on preferred stock		(504)		(1,008)
Net income available to common shareholders	7,449	6,791	13,987	12,393
Undistributed earnings allocated to Series C preferred stock		(576)		(979)
Distributed and undistributed earnings allocated to common shareholders	$ 7,449	$ 6,215	$ 13,987	$ 11,414
Earnings per common share:
Basic (in dollars per share)	$ 0.20	$ 0.19	$ 0.37	$ 0.35
Diluted (in dollars per share)	$ 0.19	$ 0.19	$ 0.36	$ 0.35

CONSOLIDATED STATEMENTS OF COMP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net income	$ 7,449	$ 7,295	$ 13,987	$ 13,401
Other comprehensive income:
Change in net unrealized holding gains on available-for-sale securities and I/O strips securities and I/O strips	1,591	2,723	2,436	7,562
Deferred income taxes	(668)	(1,144)	(1,023)	(3,176)
Change in net unamortized unrealized gain on securities available-for-sale that were reclassified to securities held-to-maturity	(13)	(76)	(26)	(90)
Deferred income taxes	6	32	11	38
Reclassification adjustment for losses (gains) realized in income		(347)	6	(527)
Deferred income taxes		146	(2)	221
Change in unrealized gains on securities and I/O strips, net of deferred income taxes	916	1,334	1,402	4,028
Change in net pension and other benefit plan liability adjustment	38	38	77	86
Deferred income taxes	(16)	(16)	(32)	(36)
Change in pension and other benefit plan liability,	22	22	45	50
Other comprehensive income	938	1,356	1,447	4,078
Total comprehensive income	$ 8,387	$ 8,651	$ 15,434	$ 17,479

CONSOLIDATED STATEMENTS OF CHAN

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) $ in Thousands	Preferred Stock	Common Stock	Retained Earnings	Accumulated Other Comprehensive Income / (Loss)	Total
Balance at Dec. 31, 2015	$ 19,519	$ 193,364	$ 38,773	$ (6,220)	$ 245,436
Balance (in shares) at Dec. 31, 2015	21,004	32,113,479
Increase (Decrease) in Shareholders' Equity
Net income			13,401		13,401
Other comprehensive income				4,078	4,078
Issuance of restricted stock awards, net (in shares)		82,372
Amortization of restricted stock awards, net of forfeitures and taxes		$ 296			296
Cash dividend declared			(6,803)		(6,803)
Stock option expense, net of forfeitures and taxes		482			482
Stock options exercised		$ 623			623
Stock options exercised (in shares)		98,212
Balance at Jun. 30, 2016	$ 19,519	$ 194,765	45,371	(2,142)	257,513
Balance (in shares) at Jun. 30, 2016	21,004	32,294,063
Balance at Dec. 31, 2016		$ 215,237	52,527	(7,914)	259,850
Balance (in shares) at Dec. 31, 2016		37,941,007
Increase (Decrease) in Shareholders' Equity
Net income			13,987		13,987
Other comprehensive income				1,447	1,447
Issuance of restricted stock awards, net (in shares)		81,886
Amortization of restricted stock awards, net of forfeitures and taxes		$ 450			450
Cash dividend declared			(7,604)		(7,604)
Stock option expense, net of forfeitures and taxes		441			441
Stock options exercised		$ 660			660
Stock options exercised (in shares)		97,370
Balance at Jun. 30, 2017		$ 216,788	$ 58,910	$ (6,467)	$ 269,231
Balance (in shares) at Jun. 30, 2017		38,120,263

CONSOLIDATED STATEMENTS OF CHA7

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) - $ / shares	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
Cash dividend declared per share (in dollars per share)	$ 0.20	$ 0.18

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 13,987	$ 13,401
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of discounts and premiums on securities	2,079	1,746
(Gain) loss on sale of securities available-for-sale	6	(527)
Gain loss on sale of SBA loans	(488)	(584)
Proceeds from sale of SBA loans originated for sale	6,133	8,398
Net change in SBA loans originated for sale	(6,051)	(8,187)
Provision (credit) for loan losses	275	752
Increase in cash surrender value of life insurance	(842)	(889)
Depreciation and amortization	385	361
Amortization of intangible assets	787	784
Stock option expense, net	441	482
Amortization of restricted stock awards, net	450	296
Gain on proceeds from company owned life insurance		(1,019)
Effect of changes in:
Accrued interest receivable and other assets	1,340	3,280
Accrued interest payable and other liabilities	(1,385)	(3,359)
Net cash provided by operating activities	17,117	14,935
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of securities available-for-sale	(87,612)	(75,803)
Purchase of securities held-to-maturity	(62,594)	(109,934)
Maturities/paydowns/calls of securities available-for-sale	25,788	27,789
Maturities/paydowns/calls of securities held-to-maturity	19,795	8,591
Proceeds from sales of securities available-for-sale	6,536	49,171
Net change in loans	(61,293)	(102,413)
Changes in Federal Home Loan Bank stock and other investments	(2,103)	(2,496)
Purchase of premises and equipment	(490)	(130)
Proceeds from sale of foreclosed assets		49
Proceeds from company owned life insurance		3,164
Net cash used in investing activities	(161,973)	(202,012)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in deposits	112,591	11,009
Issuance of subordinated debt, net of issuance costs	39,119
Exercise of stock options	660	623
Repayment of short-term borrowings		(3,000)
Payment of cash dividends	(7,604)	(6,803)
Net cash provided by financing activities	144,766	1,829
Net decrease in cash and cash equivalents	(90)	(185,248)
Cash and cash equivalents, beginning of year	266,103	344,092
Cash and cash equivalents, end of year	266,013	158,844
Supplemental disclosures of cash flow information:
Interest paid	1,842	1,512
Income taxes paid	8,086	4,955
Supplemental schedule of non-cash investing activity:
Due from broker for securities purchased	2,391
Transfer of loans held-for-sale to loan portfolio	$ 2,391	2,791
Loans transferred to foreclosed assets		$ 49

Basis of Presentation

Basis of Presentation	6 Months Ended
	Jun. 30, 2017
Basis of Presentation
Basis of Presentation	1) Basis of Presentation The unaudited consolidated financial statements of Heritage Commerce Corp (the “Company” or “HCC”) and its wholly owned subsidiary, Heritage Bank of Commerce (“HBC”), have been prepared pursuant to the rules and regulations for reporting on Form 10-Q. Accordingly, certain information and notes required by accounting principles generally accepted in the United States of America (“GAAP”) for annual financial statements are not included herein. The interim statements should be read in conjunction with the consolidated financial statements and notes that were included in the Company’s Form 10-K for the year ended December 31, 2016. The Company acquired Focus Business Bank (“Focus”) on August 20, 2015. Focus was merged with HBC, with HBC as the surviving bank. HBC is a commercial bank serving customers primarily located in Santa Clara, Alameda, Contra Costa, and San Benito counties of California. BVF/CSNK Acquisition Corp., a Delaware corporation (“BVF/CSNK”), the parent company of CSNK Working Capital Finance Corp. dba Bay View Funding (“Bay View Funding”) is a wholly owned subsidiary of HBC, and provides business-essential working capital factoring financing to various industries throughout the United States. No customer accounts for more than 10 percent of revenue for HBC or the Company. The Company reports its results for two segments: banking and factoring. The Company’s management uses segment results in its operating and strategic planning. In management’s opinion, all adjustments necessary for a fair presentation of these consolidated financial statements have been included and are of a normal and recurring nature. All intercompany transactions and balances have been eliminated. The preparation of financial statements in conformity with 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ significantly from these estimates. The results for the three and six months ended June 30, 2017 are not necessarily indicative of the results expected for any subsequent period or for the entire year ending December 31, 2017. Reclassifications Certain reclassifications of prior year balances have been made to conform to the current year presentation. These reclassifications had no impact on the Company’s consolidated financial position, results of operations or net change in cash and cash equivalents. Adoption of New Accounting Standards In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-09, Compensation—Stock Compensation: Improvements to Employee Share Based Payment Accounting. The standard is intended to simplify several areas of accounting for share based compensation arrangements, including the income tax impact, classification on the statement of cash flows and forfeitures. All excess tax benefits and tax deficiencies (including tax benefits of dividends on share based payment awards) should be recognized as income tax expense or benefit in the income statement. The tax effects of exercised or vested awards should be treated as discrete items in the reporting period in which they occur. An entity also should recognize excess tax benefits regardless of whether the benefit reduces taxes payable in the current period. Excess tax benefits should be classified along with other income tax cash flows as an operating activity. An entity can make an entity wide accounting policy election to either estimate the number of awards that are expected to vest (current GAAP) or account for forfeitures when they occur. The threshold to qualify for equity classification permits withholding up to the maximum statutory tax rates in the applicable jurisdictions. The Company adopted the new guidance on January 1, 2017. The amount of the impact on the effective tax rate will be determined by the number of stock options exercised and the stock price of the Company when the stock options are exercised, and the amount of restricted stock awards vesting. The adoption of this guidance resulted in net income tax expense of $60,000 for the second quarter of 2017, and a reduction to income tax expense of ($112,000) for the first quarter of 2017, totaling a net reduction to income tax expense of ($52,000) for the first six months of 2017. In connection with the adoption, the Company has elected to estimate forfeitures each reporting period. Newly Issued, but not yet Effective Accounting Standards In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which was an update to the guidance for accounting for revenue from contracts with customers. The guidance in this update affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (for example, insurance contracts or lease contracts). The core principle of the guidance is that an entity should recognize revenue 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. The guidance provides steps to follow to achieve the core principle. An entity should disclose sufficient information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. Qualitative and quantitative information is required about contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. The amendments in this update become effective for annual periods and interim periods within those annual periods beginning after December 15, 2017. We are currently evaluating the impact of adopting the new guidance on the consolidated financial statements. Our preliminary finding is that the new pronouncement will not have a significant impact on the consolidated financial statements as the majority of our business transactions will not be subject to this pronouncement. In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Recognition and Measurement of Financial Assets and Liabilities. The new guidance is intended to improve the recognition and measurement of financial instruments by requiring: equity investments (other than equity method or consolidation) to be measured at fair value with changes in fair value recognized in net income; public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; separate presentation of financial assets and financial liabilities by measurement category and form of financial assets (i.e. securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements; eliminating the requirement to disclose the fair value of financial instruments measured at amortized cost for organizations that are not public business entities; eliminating the requirement for non-public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is to be required to be disclosed for financial instruments measured at amortized cost on the balance sheet; and requiring a reporting organization to present separately in other comprehensive income the portion of the total change in fair value of a liability resulting from the change in the instrument-specific credit risk (also referred to as “own credit”) when the organization has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. The new guidance is effective for public business entities for fiscal years beginning after December 15, 2017. We are currently evaluating the impact of adopting the new guidance on the consolidated financial statements. Our preliminary finding is that the new pronouncement will not have a significant impact on our Statement of Operations as the majority of the Company's investment securities are classified as available-for-sale and held-to-maturity debt securities. The pronouncement will require some revision to our disclosures within the consolidated financial statements and we are currently evaluating the impact. In February 2016, the FASB issued ASU No. 2016-02, Leases. The standard requires a lessee to recognize assets and liabilities on the balance sheet for leases with lease terms greater than 12 months. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right of use asset representing its right to use the underlying asset for the lease term. When measuring assets and liabilities arising from a lease, a lessee (and a lessor) should include payments to be made in optional periods only if the lessee is reasonably certain to exercise an option to extend the lease or not to exercise an option to terminate the lease. Similarly, optional payments to purchase the underlying asset should be included in the measurement of lease assets and lease liabilities only if the lessee is reasonably certain to exercise that purchase option. Reasonably certain is a high threshold that is consistent with and intended to be applied in the same way as the reasonably assured threshold in the previous leases guidance. In addition, also consistent with the previous leases guidance, a lessee (and a lessor) should exclude most variable lease payments in measuring lease assets and lease liabilities, other than those that depend on an index or a rate or are in substance fixed payments. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight line basis over the lease term. The new guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, and early adoption is permitted. We are currently evaluating the impact of adopting the new guidance on our consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses: Measurement of Credit Losses on Financial Instruments. The standard is the final guidance on the new current expected credit loss (“CECL”) model. The amendments in this update replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to estimate future credit loss estimates. As CECL encompasses all financial assets carried at amortized cost, the requirement that reserves be established based on an organization’s reasonable and supportable estimate of expected credit losses extends to held to maturity debt securities. The update amends the accounting for credit losses on available for sale securities, whereby credit losses will be presented as an allowance as opposed to a write down. In addition, CECL will modify the accounting for purchased loans with credit deterioration since origination, so that reserves are established at the date of acquisition for purchased loans. Lastly, the amendment requires enhanced disclosures on the significant estimates and judgments used to estimate credit losses, as well as on the credit quality and underwriting standards of an organization’s portfolio. These disclosures require organizations to present the currently required credit quality disclosures disaggregated by the year of origination or vintage. The guidance allows for a modified retrospective approach with a cumulative effect adjustment to the balance sheet upon adoption (charge to retained earnings instead of the income statement). The new guidance is effective for public business entities for fiscal years, and interim periods within those years, beginning after December 15, 2019, and early adoption is permitted. We have formed a committee that is assessing our data and system needs and are evaluating the impact of adopting the new guidance. We expect to recognize a one-time cumulative effect adjustment to the allowance for loan losses as of the beginning of the first reporting period in which the new standard is effective, but cannot yet determine the magnitude of any such one-time adjustment or the overall impact of the new guidance on the consolidated financial statements. In January 2017, the FASB issued accounting standards ASU No. 2017-04, Simplifying the Test for Goodwill Impairment. The provisions of the update eliminate the existing second step of the goodwill impairment test which provides for the allocation of reporting unit fair value among existing assets and liabilities, with the net remaining amount representing the implied fair value of goodwill. In replacement of the existing goodwill impairment rule, the update will provide that impairment should be recognized as the excess of any of the reporting unit’s goodwill over the fair value of the reporting unit. Under the provisions of this update, the amount of the impairment is limited to the carrying value of the reporting unit’s goodwill. For public business entities that are SEC filers, the amendments of the update will become effective in fiscal years beginning after December 15, 2019. Management does not expect the requirements of this update to have a material impact on the Company’s financial position, results of operations or cash flows.

Shareholders_ Equity and Earnin

Shareholders’ Equity and Earnings Per Share	6 Months Ended
	Jun. 30, 2017
Shareholders’ Equity and Earnings Per Share.
Shareholders' Equity and Earnings Per Share	2) Shareholders’ Equity and Earnings Per Share On September 12, 2016, the Company, entered into Exchange Agreements with Castle Creek Capital Partners IV, LP, Patriot Financial Partners, L.P. and Patriot Financial Partners Parallel, L.P. (collectively “Preferred Stockholders”) providing for the exchange of 21,004 shares of the Company’s Series C convertible perpetual preferred stock, no par value (“ Series C Preferred Stock”) for 5,601,000 shares of the Company’s common stock, no par value. The exchange ratio was equal to the equivalent number of shares the Preferred Stockholders would have received upon conversion of the Series C Preferred Stock. Earnings Per Share -- Basic earnings per common share is computed by dividing net income, less dividends and discount accretion on preferred stock, by the weighted average common shares outstanding. The Series C Preferred Stock participated in the earnings of the Company prior to the exchange for common stock and, therefore, the shares issued on the conversion of the Series C Preferred Stock were considered outstanding under the two class method of computing basic earnings per common share during periods of earnings. Diluted earnings per share reflect potential dilution from outstanding stock options using the treasury stock method. A reconciliation of these factors used in computing basic and diluted earnings per common share is as follows: Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 (Dollars in thousands, except per share amounts) Net income available to common shareholders $ 7,449 $ 6,791 $ 13,987 $ 12,393 Less: undistributed earnings allocated to Series C Preferred Stock — (576) — (979) Distributed and undistributed earnings allocated to common shareholders $ 7,449 $ 6,215 $ 13,987 $ 11,414 Weighted average common shares outstanding for basic earnings per common share 38,070,042 32,243,935 38,014,020 32,184,825 Dilutive effect of stock options oustanding, using the the treasury stock method 509,092 268,676 521,995 260,691 Shares used in computing diluted earnings per common share 38,579,134 32,512,611 38,536,015 32,445,516 Basic earnings per share $ $ 0.19 $ $ 0.35 Diluted earnings per share $ $ 0.19 $ $ 0.35

Accumulated Other Comprehensive

Accumulated Other Comprehensive Income (Loss) (''AOCI'')	6 Months Ended
	Jun. 30, 2017
Accumulated Other Comprehensive Income (Loss) ("AOCI")
Accumulated Other Comprehensive Income (Loss) ("AOCI")	3) Accumulated Other Comprehensive Income (Loss) (“AOCI”) The following table reflects the changes in AOCI by component for the periods indicated: Three Months Ended June 30, 2017 and 2016 Unamortized Unrealized Unrealized Gain on Gains (Losses) on Available- Available- for-Sale Defined for-Sale Securities Benefit Securities Reclassified Pension and I/O to Held-to- Plan Strips(1) Maturity Items Total (Dollars in thousands) Beginning balance April 1, 2017, net of taxes $ (46) $ 328 $ (7,687) $ (7,405) Other comprehensive income (loss) before reclassification, net of taxes 923 — (8) 915 Amounts reclassified from other comprehensive income (loss), net of taxes — (7) 30 23 Net current period other comprehensive income (loss), net of taxes 923 (7) 22 938 Ending balance June 30, 2017, net of taxes $ 877 $ 321 $ (7,665) $ (6,467) Beginning balance April 1, 2016, net of taxes $ 3,792 $ 395 $ (7,685) $ (3,498) Other comprehensive income before reclassification, net of taxes 1,579 — (5) 1,574 Amounts reclassified from other comprehensive income (loss), net of taxes (201) (44) 27 (218) Net current period other comprehensive income (loss), net of taxes 1,378 (44) 22 1,356 Ending balance June 30, 2016, net of taxes $ 5,170 $ 351 $ (7,663) $ (2,142) Six Months Ended June 30, 2017 and 2016 Unamortized Unrealized Unrealized Gain on Gains (Losses) on Available- Available- for-Sale Defined for-Sale Securities Benefit Securities Reclassified Pension and I/O to Held-to- Plan Strips Maturity Items Total (Dollars in thousands) Beginning balance January 1, 2017, net of taxes $ (540) $ 336 $ (7,710) $ (7,914) Other comprehensive (loss) before reclassification, net of taxes 1,413 — (15) 1,398 Amounts reclassified from other comprehensive income (loss), net of taxes 4 (15) 60 49 Net current period other comprehensive income (loss), net of taxes 1,417 (15) 45 1,447 Ending balance June 30, 2017, net of taxes $ 877 $ 321 $ (7,665) $ (6,467) Beginning balance January 1, 2016, net of taxes $ 1,090 $ 403 $ (7,713) $ (6,220) Other comprehensive (loss) before reclassification, net of taxes 4,386 — (5) 4,381 Amounts reclassified from other comprehensive income (loss), net of taxes (306) (52) 55 (303) Net current period other comprehensive loss, net of taxes 4,080 (52) 50 4,078 Ending balance June 30, 2016, net of taxes $ 5,170 $ 351 $ (7,663) $ (2,142) Amounts Reclassified from AOCI(1) Three Months Ended June 30, Affected Line Item Where Details About AOCI Components 2017 2016 Net Income is Presented (Dollars in thousands) Unrealized (loss) gains on available-for-sale securities and I/O strips $ — $ 347 Gain on sales of securities — (146) Income tax expense — 201 Net of tax Amortization of unrealized gain on securities available-for-sale that were reclassified to securities held-to-maturity 13 76 Interest income on taxable securities (6) (32) Income tax expense 7 44 Net of tax Amortization of defined benefit pension plan items (1) Prior transition obligation 17 13 Actuarial losses (69) (60) (52) (47) Income before income tax 22 20 Income tax benefit (30) (27) Net of tax Total reclassification for the year $ (23) $ 218 (1) This AOCI component is included in the computation of net periodic benefit cost (see Note 8—Benefit Plans) and includes split-dollar life insurance benefit plan. Amounts Reclassified from AOCI(1) Six Months Ended June 30, Details About AOCI Components 2017 2016 Net Income is Presented (Dollars in thousands) Unrealized gains on available-for-sale securities and I/O strips $ (6) $ 527 Gain (loss) on sales of securities 2 (221) Income tax expense (4) 306 Net of tax Amortization of unrealized gain on securities available-for-sale that were reclassified to securities held-to-maturity 26 90 Interest income on taxable securities (11) (38) Income tax expense 15 52 Net of tax Amortization of defined benefit pension plan items (1) Prior transition obligation 35 26 Actuarial losses (138) (120) (103) (94) Income before income tax 43 39 Income tax benefit (60) (55) Net of tax Total reclassification from AOCI for the year $ (49) $ 303 (1) This AOCI component is included in the computation of net periodic benefit cost (see Note 8—Benefit Plans) and includes split-dollar life insurance benefit plan.

Securities

Securities	6 Months Ended
	Jun. 30, 2017
Securities
Securities	4) Securities The amortized cost and estimated fair value of securities at June 30, 2017 and December 31, 2016 were as follows: Gross Gross Estimated Amortized Unrealized Unrealized Fair June 30, 2017 Cost Gains (Losses) Value (Dollars in thousands) Securities available-for-sale: Agency mortgage-backed securities $ 354,429 $ 1,146 $ (2,549) $ 353,026 Trust preferred securities 15,000 1,875 — 16,875 Total $ 369,429 $ 3,021 $ (2,549) $ 369,901 Securities held-to-maturity: Agency mortgage-backed securities $ 278,340 $ 151 $ (2,554) $ 275,937 Municipals - exempt from Federal tax 89,926 1,065 (826) 90,165 Total $ 368,266 $ 1,216 $ (3,380) $ 366,102 Gross Gross Estimated Amortized Unrealized Unrealized Fair December 31, 2016 Cost Gains (Losses) Value (Dollars in thousands) Securities available-for-sale: Agency mortgage-backed securities $ 293,598 $ 928 $ (3,537) $ 290,989 Trust preferred securities 15,000 600 — 15,600 Total $ 308,598 $ 1,528 $ (3,537) $ 306,589 Securities held-to-maturity: Agency mortgage-backed securities $ 233,409 $ 15 $ (3,554) $ 229,870 Municipals - exempt from Federal tax 90,601 521 (2,244) 88,878 Total $ 324,010 $ 536 $ (5,798) $ 318,748 Securities with unrealized losses at June 30, 2017 and December 31, 2016, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position are as follows: Less Than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized June 30, 2017 Value (Losses) Value (Losses) Value (Losses) (Dollars in thousands) Securities available-for-sale: Agency mortgage-backed securities $ 255,754 $ (2,549) $ — $ — $ 255,754 $ (2,549) Total $ 255,754 $ (2,549) $ — $ — $ 255,754 $ (2,549) Securities held-to-maturity: Agency mortgage-backed securities $ 220,640 $ (2,535) $ 417 $ (19) $ 221,057 $ (2,554) Municipals - exempt from Federal tax 36,035 (633) 3,868 (193) 39,903 (826) Total $ 256,675 $ (3,168) $ 4,285 $ (212) $ 260,960 $ (3,380) Less Than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized December 31, 2016 Value (Losses) Value (Losses) Value (Losses) (Dollars in thousands) Securities available-for-sale: Agency mortgage-backed securities $ 245,045 $ (3,537) $ — $ — $ 245,045 $ (3,537) Total $ 245,045 $ (3,537) $ — $ — $ 245,045 $ (3,537) Securities held-to-maturity: Agency mortgage-backed securities $ 222,132 $ (3,528) $ 612 $ (26) $ 222,744 (3,554) Municipals - exempt from Federal tax 57,304 (2,026) 2,046 (218) 59,350 (2,244) Total $ 279,436 $ (5,554) $ 2,658 $ (244) $ 282,094 $ (5,798) There were no holdings of securities of any one issuer, other than the U.S. Government and its sponsored entities, in an amount greater than 10% of shareholders’ equity. At June 30, 2017, the Company held 482 securities (166 available-for-sale and 316 held‑to‑maturity), of which 257 had fair values below amortized cost. At June 30, 2017, there were $3,868,000 of municipal bonds held-to-maturity, and $417,000 of agency mortgage-backed securities held-to-maturity carried with an unrealized loss for 12 months or more. The total unrealized loss for securities 12 months or more was $212,000 at June 30, 2017. The unrealized losses were due to higher interest rates. The issuers are of high credit quality and all principal amounts are expected to be paid when securities mature. The fair value is expected to recover as the securities approach their maturity date and/or market rates decline. The Company does not believe that it is more likely than not that the Company will be required to sell a security in an unrealized loss position prior to recovery in value. The Company does not consider these securities to be other than temporarily impaired at June 30, 2017. The proceeds from sales of securities and the resulting gains and losses were as follows for the periods indicated: Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 (Dollars in thousands) (Dollars in thousands) Proceeds $ — $ 43,573 $ 6,536 $ 49,171 Gross gains — 364 — 544 Gross losses — (17) (6) (17) The amortized cost and estimated fair values of securities as of June 30, 2017 are shown by contractual maturity below. The expected maturities will differ from contractual maturities if borrowers have the right to call or pre‑pay obligations with or without call or pre‑payment penalties. Securities not due at a single maturity date are shown separately. Available-for-sale Amortized Estimated Cost Fair Value (Dollars in thousands) Due after ten years $ 15,000 $ 16,875 Agency mortgage-backed securities 354,429 353,026 Total $ 369,429 $ 369,901 Held-to-maturity Amortized Estimated Cost Fair Value (Dollars in thousands) Due 3 months or less $ 757 $ 757 Due after 3 months through one year 880 881 Due after one through five years 3,201 3,253 Due after five through ten years 19,447 20,029 Due after ten years 65,641 65,245 Agency mortgage-backed securities 278,340 275,937 Total $ 368,266 $ 366,102

Loans

Loans	6 Months Ended
	Jun. 30, 2017
Loans
Loans	5) Loans Loans were as follows for the periods indicated: June 30, December 31, 2017 2016 (Dollars in thousands) Loans held-for-investment: Commercial $ 610,658 $ 604,331 Real estate: CRE 731,537 662,228 Land and construction 82,873 81,002 Home equity 79,930 82,459 Residential mortgages 48,732 52,887 Consumer 13,360 20,460 Loans 1,567,090 1,503,367 Deferred loan fees, net (766) (760) Loans, net of deferred fees 1,566,324 1,502,607 Allowance for loan losses (19,397) (19,089) Loans, net $ 1,546,927 $ 1,483,518 At June 30, 2017 and December 31, 2016, total net loans included in the table above include $73,810,000 and $88,453,000, respectively, of the loans acquired in the Focus transaction that were not purchased credit impaired loans. Changes in the allowance for loan losses were as follows for the periods indicated: Three Months Ended June 30, 2017 Commercial Real Estate Consumer Total (Dollars in thousands) Beginning of period balance $ 11,252 $ 7,743 $ 140 $ 19,135 Charge-offs (1,702) — — (1,702) Recoveries 1,122 888 — 2,010 Net (charge-offs) recoveries (580) 888 — 308 Provision (credit) for loan losses 587 (649) 16 (46) End of period balance $ 11,259 $ 7,982 $ 156 $ 19,397 Three Months Ended June 30, 2016 Commercial Real Estate Consumer Total (Dollars in thousands) Beginning of period balance $ 11,279 $ 8,068 $ 111 $ 19,458 Charge-offs (23) — — (23) Recoveries 129 6 — 135 Net recoveries 106 6 — 112 Provision for loan losses 143 203 5 351 End of period balance $ 11,528 $ 8,277 $ 116 $ 19,921 Six Months Ended June 30, 2017 Commercial Real Estate Consumer Total (Dollars in thousands) Beginning of period balance $ 10,656 $ 8,327 $ 106 $ 19,089 Charge-offs (2,068) — — (2,068) Recoveries 1,172 929 — 2,101 Net (charge-offs) recoveries (896) 929 — 33 Provision (credit) for loan losses 1,499 (1,274) 50 275 End of period balance $ 11,259 $ 7,982 $ 156 $ 19,397 Six Months Ended June 30, 2016 Commercial Real Estate Consumer Total (Dollars in thousands) Beginning of period balance $ 10,748 $ 8,076 $ 102 $ 18,926 Charge-offs (140) — — (140) Recoveries 161 222 — 383 Net recoveries 21 222 — 243 Provision (credit) for loan losses 759 (21) 14 752 End of period balance $ 11,528 $ 8,277 $ 116 $ 19,921 The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment, based on the impairment method at the following period‑ends: June 30, 2017 Commercial Real Estate Consumer Total (Dollars in thousands) Allowance for loan losses: Ending allowance balance attributable to loans: Individually evaluated for impairment $ 800 $ — $ — $ 800 Collectively evaluated for impairment 10,459 7,982 156 18,597 Acquired with deterioriated credit quality — — — — Total allowance balance $ 11,259 $ 7,982 $ 156 $ 19,397 Loans: Individually evaluated for impairment $ 2,188 $ 1,090 $ 1 $ 3,279 Collectively evaluated for impairment 608,470 941,982 13,359 1,563,811 Acquired with deterioriated credit quality — — — — Total loan balance $ 610,658 $ 943,072 $ 13,360 $ 1,567,090 December 31, 2016 Commercial Real Estate Consumer Total (Dollars in thousands) Allowance for loan losses: Ending allowance balance attributable to loans: Individually evaluated for impairment $ 329 $ — $ — $ 329 Collectively evaluated for impairment 10,327 8,327 106 18,760 Acquired with deterioriated credit quality — — — — Total allowance balance $ 10,656 $ 8,327 $ 106 $ 19,089 Loans: Individually evaluated for impairment $ 2,057 $ 885 $ 3 $ 2,945 Collectively evaluated for impairment 602,029 877,691 20,457 1,500,177 Acquired with deterioriated credit quality 245 — — 245 Total loan balance $ 604,331 $ 878,576 $ 20,460 $ 1,503,367 The following table presents loans held-for-investment individually evaluated for impairment by class of loans as of June 30, 2017 and December 31, 2016. The recorded investment included in the following table represents loan principal net of any partial charge-offs recognized on the loans. The unpaid principal balance represents the recorded balance prior to any partial charge-offs. The recorded investment in consumer loans collateralized by residential real estate property that are in process of foreclosure according to local requirements of the applicable jurisdiction are not material as of the periods indicated: June 30, 2017 December 31, 2016 Allowance Allowance Unpaid for Loan Unpaid for Loan Principal Recorded Losses Principal Recorded Losses Balance Investment Allocated Balance Investment Allocated (Dollars in thousands) With no related allowance recorded: Commercial $ 1,161 $ 1,161 $ — $ 1,808 $ 1,808 $ — Real estate: CRE 501 501 — 1,278 419 — Land and construction 208 189 — 218 199 — Home Equity 400 400 — 267 267 — Consumer 1 1 — 3 3 — Total with no related allowance recorded 2,271 2,252 — 3,574 2,696 — With an allowance recorded: Commercial 1,027 1,027 800 494 494 329 Total with an allowance recorded 1,027 1,027 800 494 494 329 Total $ 3,298 $ 3,279 $ 800 $ 4,068 $ 3,190 $ 329 The following tables present interest recognized and cash‑basis interest earned on impaired loans for the periods indicated: Three Months Ended June 30, 2017 Real Estate Land and Home Commercial CRE Construction Equity Consumer Total (Dollars in thousands) Average of impaired loans during the period $ 3,181 $ 706 $ 192 $ 325 $ 2 $ 4,406 Interest income during impairment $ — $ — $ — $ — $ — $ — Cash-basis interest earned $ — $ — $ — $ — $ — $ — Three Months Ended June 30, 2016 Real Estate Land and Home Commercial CRE Construction Equity Consumer Total (Dollars in thousands) Average of impaired loans during the period $ 560 $ 2,880 $ 210 $ 762 $ 3 $ 4,415 Interest income during impairment $ — $ — $ — $ — $ — $ — Cash-basis interest earned $ — $ — $ — $ — $ — $ — Six Months Ended June 30, 2017 Real Estate Land and Home Commercial CRE Construction Equity Consumer Total (Dollars in thousands) Average of impaired loans during the period $ 2,888 $ 611 $ 194 $ 306 $ 2 $ 4,001 Interest income during impairment $ — $ — $ — $ — $ — $ — Cash-basis interest earned $ — $ — $ — $ — $ — $ — Six Months Ended June 30, 2016 Real Estate Land and Home Commercial CRE Construction Equity Consumer Total (Dollars in thousands) Average of impaired loans during the period $ 1,124 $ 2,917 $ 213 $ 862 $ 3 $ 5,119 Interest income during impairment $ — $ — $ — $ — $ — $ — Cash-basis interest earned $ — $ — $ — $ — $ — $ — Nonperforming loans include both smaller dollar balance homogenous loans that are collectively evaluated for impairment and individually classified loans. Nonperforming loans were as follows at period‑end: June 30, December 31, 2017 2016 2016 (Dollars in thousands) Nonaccrual loans - held-for-investment $ 2,987 $ 4,360 $ 3,059 Restructured and loans over 90 days past due and still accruing 171 — — Total nonperforming loans 3,158 4,360 3,059 Other restructured loans 121 141 131 Total impaired loans $ 3,279 $ 4,501 $ 3,190 The following table presents the nonperforming loans by class for the periods indicated: June 30, 2017 December 31, 2016 Restructured Restructured and Loans and Loans over 90 Days over 90 Days Past Due Past Due and Still and Still Nonaccrual Accruing Total Nonaccrual Accruing Total (Dollars in thousands) Commercial $ 1,896 $ $ 2,067 $ 2,171 $ — $ 2,171 Real estate: CRE 501 — 501 419 — 419 Land and construction 189 — 189 199 — 199 Home equity 400 — 400 267 — 267 Consumer 1 — 1 3 — 3 Total $ 2,987 $ 171 $ 3,158 $ 3,059 $ — $ 3,059 The following tables present the aging of past due loans by class for the periods indicated: June 30, 2017 30 - 59 60 - 89 90 Days or Days Days Greater Total Loans Not Past Due Past Due Past Due Past Due Past Due Total (Dollars in thousands) Commercial $ 2,544 $ 524 $ 1,386 $ 4,454 $ 606,204 $ 610,658 Real estate: CRE 4 — — 4 731,533 731,537 Land and construction — — 189 189 82,684 82,873 Home equity — — — — 79,930 79,930 Residential mortgages — — — — 48,732 48,732 Consumer — — — — 13,360 13,360 Total $ 2,548 $ 524 $ 1,575 $ 4,647 $ 1,562,443 $ 1,567,090 December 31, 2016 30 - 59 60 - 89 90 Days or Days Days Greater Total Loans Not Past Due Past Due Past Due Past Due Past Due Total (Dollars in thousands) Commercial $ 3,998 $ 857 $ 2,036 $ 6,891 $ 597,440 $ 604,331 Real estate: CRE 632 — — 632 661,596 662,228 Land and construction — — 199 199 80,803 81,002 Home equity — 267 — 267 82,192 82,459 Residential mortgages — — — — 52,887 52,887 Consumer — — — — 20,460 20,460 Total $ 4,630 $ 1,124 $ 2,235 $ 7,989 $ 1,495,378 $ 1,503,367 Past due loans 30 days or greater totaled $4,647,000 and $7,989,000 at June 30, 2017 and December 31, 2016, respectively, of which $1,511,000 and $2,057,000 were on nonaccrual. At June 30, 2017, there were also $1,476,000 loans less than 30 days past due included in nonaccrual loans held-for-investment. At December 31, 2016, there were also $1,002,000 loans less than 30 days past due included in nonaccrual loans held-for-investment. Management’s classification of a loan as “nonaccrual” is an indication that there is reasonable doubt as to the full recovery of principal or interest on the loan. At that point, the Company stops accruing interest income, and reverses any uncollected interest that had been accrued as income. The Company begins recognizing interest income only as cash interest payments are received and it has been determined the collection of all outstanding principal is not in doubt. The loans may or may not be collateralized, and collection efforts are pursued. Credit Quality Indicators Concentrations of credit risk arise when a number of customers are engaged in similar business activities, or activities in the same geographic region, or have similar features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic conditions. The Company’s loan portfolio is concentrated in commercial (primarily manufacturing, wholesale, and service) and real estate lending, with the remaining balance in consumer loans. While no specific industry concentration is considered significant, the Company’s lending operations are located in the Company’s market areas that are dependent on the technology and real estate industries and their supporting companies. Thus, the Company’s borrowers could be adversely impacted by a downturn in these sectors of the economy which could reduce the demand for loans and adversely impact the borrowers’ ability to repay their loans. The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis is performed on a quarterly basis. Nonclassified loans generally include those loans that are expected to be repaid in accordance with contractual loans terms. Classified loans are those loans that are assigned a substandard, substandard-nonaccrual, or doubtful risk rating using the following Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well‑defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. Substandard‑Nonaccrual. Loans classified as substandard‑nonaccrual are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any, and it is probable that the Company will not receive payment of the full contractual principal and interest. Loans so classified have a well‑defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. In addition, the Company no longer accrues interest on the loan because of the underlying weaknesses. Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Loss. Loans classified as loss are considered uncollectable or of so little value that their continuance as assets is not warranted. This classification does not necessarily mean that a loan has no recovery or salvage value; but rather, there is much doubt about whether, how much, or when the recovery would occur. Loans classified as loss are immediately charged off against the allowance for loan losses. Therefore, there is no balance to report at June 30, 2017 and December 31, 2016. The following table provides a summary of the loan portfolio by loan type and credit quality classification at period end: June 30, 2017 December 31, 2016 Nonclassified Classified Total Nonclassified Classified Total Commercial $ 605,145 $ 5,513 $ 610,658 $ 594,255 $ 10,076 $ 604,331 Real estate: CRE 730,832 705 731,537 659,777 2,451 662,228 Land and construction 82,684 189 82,873 80,803 199 81,002 Home equity 79,036 894 79,930 81,866 593 82,459 Residential mortgages 48,732 — 48,732 52,887 — 52,887 Consumer 13,359 1 13,360 20,455 5 20,460 Total $ 1,559,788 $ 7,302 $ 1,567,090 $ 1,490,043 $ 13,324 $ 1,503,367 In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of 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 in accordance with the Company’s underwriting policy. The balance of troubled debt restructurings at June 30, 2017 was $121,000, which included $1,000 of nonaccrual loans and $120,000 of accruing loans. The balance of troubled debt restructurings at December 31, 2016 was $133,000, which included $2,000 of nonaccrual loans and $131,000 of accruing loans. Approximately $2,000 in specific reserves were established with respect to these loans as of June 30, 2017 and December 31, 2016, respectively. As of June 30, 2017 and December 31, 2016, the Company had no additional amounts committed on any loan classified as a troubled debt restructuring. There were no new loans modified as troubled debt restructurings during the three and six month periods ended June 30, 2017 and 2016. A loan is considered to be in payment default when it is 30 days contractually past due under the modified terms. There were no defaults on troubled debt restructurings, within twelve months following the modification, during the three and six month periods ended June 30, 2017 and 2016. A loan that is a troubled debt restructuring on nonaccrual status may return to accruing status after a period of at least six months of consecutive payments in accordance with the modified terms.

Goodwill and Other Intangible A

Goodwill and Other Intangible Assets	6 Months Ended
	Jun. 30, 2017
Goodwill and Other Intangible Assets
Goodwill and Other Intangible Assets	6) Goodwill and Other Intangible Assets Goodwill At June 30, 2017, the carrying value of goodwill was $45,664,000, which included $13,044,000 of goodwill related to its acquisition of Bay View Funding and $32,620,000 from its acquisition of Focus. Goodwill impairment exists when a reporting unit’s carrying value exceeds its fair value, which is determined through a qualitative assessment whether it is more likely than not that the fair value of equity of the reporting unit exceeds the carrying value (“Step Zero”). If the qualitative assessment indicates it is more likely than not that the fair value of equity of a reporting unit is less than book value, then a quantitative two-step impairment test is required. Step 1 includes the determination of the carrying value of the Company’s single reporting unit, including the existing goodwill and intangible assets, and estimating the fair value of the reporting unit. If the carrying amount of a reporting unit exceeds its fair value, the Company is required to perform a second step to the impairment test. Step 2 requires that the implied fair value of the reporting unit goodwill be compared to the carrying amount of that goodwill. If the carrying amount of the reporting unit goodwill exceeds the implied fair value of that goodwill, an impairment loss shall be recognized in an amount equal to that excess. The Company completed its annual impairment analysis on the goodwill from the Bay View Funding and Focus acquisitions as of November 30, 2016 with the assistance of an independent valuation firm. Based on the Step Zero qualitative analysis performed, the Company determined that it is more likely than not that the fair value of the reporting unit exceeded its reported book value of equity at November 30, 2016. As such, no impairment was indicated and no further testing was required. Other Intangible Assets The core deposit intangible asset originally acquired in the June 2007 acquisition of Diablo Valley Bank was $5,049,000. The core deposit intangible asset was amortized over its estimated useful life of 10 years, and was fully amortized at June 30, 2017. Accumulated amortization of the core deposit intangible asset was $4,854,000 at December 31, 2016. The core deposit intangible asset acquired in the acquisition of Focus in August 2015 was $6,285,000. This asset is amortized over its estimated useful life of 10 years. Accumulated amortiztion of this intangible asset was $1,557,000 and $1,120,000 at June 30, 2017 and December 31, 2016, respectively. Other intangible assets acquired in the acquisition of Bay View Funding in November 2014 included: a below market value lease intangible asset of $109,000 (amortized over 3 years), customer relationship and brokered relationship intangible assets of $1,900,000, (amortized over the 10 year estimated useful life), and a non-compete agreement intangible asset of $250,000 (amortized over 3 years). Accumulated amortization of these intangible assets was $824,000 and $669,000 at June 30, 2017 and December 31, 2016, respectively. Estimated amortization expense for 2017 and each of the next five years follows: Bay View Funding Diablo Valley Customer & Bank Core Focus Core Below Market Brokered Non-Compete Total Deposit Deposit Value Lease Relationship Agreement Amortization Year Intangible Intangible Intangible Intangible Intangible Expense (Dollars in thousands) 2017 $ 195 $ 875 $ 31 $ 190 $ 70 $ 1,361 2018 — 775 — 190 — 965 2019 — 734 — 190 — 924 2020 — 716 — 190 — 906 2021 — 596 — 190 — 786 2022 — 502 — 190 — 692 $ 195 $ 4,198 $ 31 $ 1,140 $ 70 $ 5,634 Impairment testing of the intangible assets is performed at the individual asset level. Impairment exists if the carrying amount of the asset is not recoverable and exceeds its fair value at the date of the impairment test. For intangible assets, estimates of expected future cash flows (cash inflows less cash outflows) that are directly associated with an intangible asset are used to determine the fair value of that asset. Management makes certain estimates and assumptions in determining the expected future cash flows from core deposit and customer relationship intangibles including account attrition, expected lives, discount rates, interest rates, servicing costs and other factors. Significant changes in these estimates and assumptions could adversely impact the valuation of these intangible assets. If an impairment loss exists, the carrying amount of the intangible asset is adjusted to a new cost basis. The new cost basis is then amortized over the remaining useful life of the asset. Based on its assessment, management concluded that there was no impairment of intangible assets at June 30, 2017 and December 31, 2016.

Income Taxes

Income Taxes	6 Months Ended
	Jun. 30, 2017
Income Taxes
Income Taxes	7) Income Taxes Some items of income and expense are recognized in different years for tax purposes than when applying generally accepted accounting principles, leading to timing differences between the Company’s actual current tax liability and the amount accrued for this liability based on book income. These temporary differences comprise the “deferred” portion of the Company’s tax expense or benefit, which is accumulated on the Company’s books as a deferred tax asset or deferred tax liability until such time as they reverse. Under generally accepted accounting principles, a valuation allowance is required if it is “more likely than not” that a deferred tax asset will not be realized. The determination of the realizability of the deferred tax assets is highly subjective and dependent upon judgment concerning management’s evaluation of both positive and negative evidence, including forecasts of future income, cumulative losses, applicable tax planning strategies, and assessments of current and future economic and business conditions. The Company had net deferred tax assets of $22,577,000, and $25,058,000, at June 30, 2017, and December 31, 2016, respectively. After consideration of the matters in the preceding paragraph, the Company determined that it is more likely than not that the net deferred tax asset at June 30, 2017 and December 31, 2016 will be fully realized in future years. The following table reflects the carry amounts of the low income housing investments included in accrued interest receivable and other assets, and the future commitments included in accrued interest payable and other liabilities for the periods indicated: June 30, December 31, 2017 2016 (Dollars in thousands) Low income housing investments $ 3,641 $ Future commitments $ 365 $ The Company expects future commitments of $68,000 to be paid in 2017, $14,000 in 2018, and $283,000 in 2019 through 2023. For tax purposes, the Company had low income housing tax credits of $110,000 and $111,000 for the three months ended June 30, 2017 and June 30, 2016, respectively, and low income housing investment losses of $115,000 and $118,000, respectively. For tax purposes, the Company had low income housing tax credits of $220,000 and $222,000 for the six months ended June 30, 2017 and June 30, 2016, respectively, and low income housing investment losses of $230,000 and $235,000, respectively. The Company recognized low income housing investment expense as a component of income tax expense.

Benefit Plans

Benefit Plans	6 Months Ended
	Jun. 30, 2017
Benefit Plans
Benefit Plans	8) Benefit Plans Supplemental Retirement Plan The Company has a supplemental retirement plan (the “Plan”) covering some current and some former key employees and directors. The Plan is a nonqualified defined benefit plan. Benefits are unsecured as there are no Plan assets. The following table presents the amount of periodic cost recognized for the periods indicated: Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 (Dollars in thousands) Components of net periodic benefit cost: Service cost $ 81 $ 133 $ 162 $ 266 Interest cost 259 259 518 518 Amortization of net actuarial loss 69 60 138 120 Net periodic benefit cost $ 409 $ 452 $ 818 $ 904 Split‑Dollar Life Insurance Benefit Plan The Company maintains life insurance policies for some current and some former directors and officers that are subject to split‑dollar life insurance agreements. The following table sets forth the funded status of the split‑dollar life insurance benefits for the periods indicated: June 30, December 31, 2017 2016 (Dollars in thousands) Change in projected benefit obligation: Projected benefit obligation at beginning of year $ 6,301 $ 6,215 Interest cost 121 248 Actuarial gain — (162) Projected benefit obligation at end of period $ 6,422 $ 6,301 June 30, December 31, 2017 2016 (Dollars in thousands) Net actuarial loss $ 2,206 $ 2,126 Prior transition obligation 1,283 1,328 Accumulated other comprehensive loss $ 3,489 $ 3,454 Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 (Dollars in thousands) Amortization of prior transition obligation $ (17) $ (13) $ (35) $ (26) Interest cost 60 62 121 124 Net periodic benefit cost $ 43 $ 49 $ 86 $ 98

Fair Value

Fair Value	6 Months Ended
	Jun. 30, 2017
Fair Value
Fair Value	9) Fair Value Accounting guidance establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value: Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date. Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data (for example, interest rates and yield curves observable at commonly quoted intervals, prepayment speeds, credit risks, and default rates). Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. Financial Assets and Liabilities Measured on a Recurring Basis 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 mathematical 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 value of interest‑only (“I/O”) strip receivable assets is based on a valuation model used by a third party. The Company is able to compare the valuation model inputs and results to widely available published industry data for reasonableness (Level 2 inputs). Fair Value Measurements Using Significant Quoted Prices in Other Significant Active Markets for Obeservable Unobservable Identical Assets Inputs Inputs Balance (Level 1) (Level 2) (Level 3) (Dollars in thousands) Assets at June 30, 2017 Available-for-sale securities: Agency mortgage-backed securities $ 353,026 — $ 353,026 — Trust preferred securities 16,875 — 16,875 — I/O strip receivables 1,028 — 1,028 — Assets at December 31, 2016 Available-for-sale securities: Agency mortgage-backed securities $ 290,989 — $ 290,989 — Trust preferred securities 15,600 — 15,600 — I/O strip receivables 1,067 — 1,067 — There were no transfers between Level 1 and Level 2 during the period for assets measured at fair value on a recurring basis. Assets and Liabilities Measured on a Non‑Recurring Basis The fair value of impaired loans with specific allocations of the allowance for loan losses is generally based on recent real estate appraisals. The appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Foreclosed assets are valued at the time the loan is foreclosed upon and the asset is transferred to foreclosed assets. The fair value is based primarily on third party appraisals, less costs to sell. The appraisals may utilize a single valuation approach or a combination of approaches including the comparable sales and 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 a Level 3 classification of the inputs for determining fair value. Fair Value Measurements Using Significant Quoted Prices in Other Significant Active Markets for Observable Unobservable Identical Assets Inputs Inputs Balance (Level 1) (Level 2) (Level 3) (Dollars in thousands) Assets at June 30, 2017 Impaired loans - held-for-investment: Commercial $ 227 — — $ 227 Real estate: Land and construction 189 — — 189 $ 416 — — $ 416 Assets at December 31, 2016 Impaired loans - held-for-investment: Commercial $ 165 — — $ 165 Real estate: CRE 419 — — 419 Land and construction 199 — — 199 $ 783 — — $ 783 Foreclosed assets: Land and construction $ — — $ $ $ The following table shows the detail of the impaired loans held-for-investment and the impaired loans held‑for‑investment carried at fair value for the periods indicated: June 30, 2017 December 31, 2016 (Dollars in thousands) Impaired loans held-for-investment: Book value of impaired loans held-for-investment carried at fair value $ 1,216 $ 1,112 Book value of impaired loans held-for-investment carried at cost 2,063 2,078 Total impaired loans held-for-investment $ 3,279 $ 3,190 Impaired loans held-for-investment carried at fair value: Book value of impaired loans held-for-investment carried at fair value $ 1,216 $ 1,112 Specific valuation allowance (800) (329) Impaired loans held-for-investment carried at fair value, net $ 416 $ 783 Impaired loans held‑for‑investment which are measured primarily for impairment using the fair value of the collateral were $3,279,000 at June 30, 2017. In addition, these loans had a specific valuation allowance of $800,000 at June 30, 2017. Impaired loans held‑for‑investment totaling $1,216,000 at June 30, 2017, were carried at fair value as a result of the aforementioned partial charge‑offs and specific valuation allowances at period‑end. The remaining $2,063,000 of impaired loans were carried at cost at June 30, 2017, as the fair value of the collateral exceeded the cost basis of each respective loan. Partial charge‑offs and changes in specific valuation allowances during the first six months of 2017 on impaired loans held‑for‑investment carried at fair value at June 30, 2017 resulted in an additional provision for loan losses of $766,000. At June 30, 2017, foreclosed assets had a carrying amount of $183,000, with no valuation allowance. Impaired loans held-for-investment were $3,190,000 at December 31, 2016. There were no partial charge-offs at December 31, 2016. In addition, these loans had a specific valuation allowance of $329,000 at December 31, 2016. Impaired loans held-for-investment totaling $1,112,000 at December 31, 2016 were carried at fair value as a result of the aforementioned partial charge-offs and specific valuation allowances at year-end. The remaining $2,078,000 of impaired loans were carried at cost at December 31, 2016, as the fair value collateral exceeded the cost basis of each respective loan. Partial charge-offs and changes in specific valuation allowances during 2016 on impaired loans held-for-investment carried at fair value at December 31, 2016 resulted in an additional provision for loan losses of $320,000. At December 31, 2016, foreclosed assets had a carrying amount of $229,000, with no valuation allowance. The following table presents quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non‑recurring basis at the periods indicated: June 30, 2017 Valuation Unobservable Range Fair Value Techniques Inputs (Weighted Average) (Dollars in thousands) Impaired loans - held-for-investment: Commercial $ 227 Market Approach Discount adjustment for differences between comparable sales Less than 1 % Real estate: Land and construction 189 Market Approach Discount adjustment for differences between comparable sales Less than 1% December 31, 2016 Valuation Unobservable Range Fair Value Techniques Inputs (Weighted Average) (Dollars in thousands) Impaired loans - held-for-investment: Commercial $ 165 Market Approach Discount adjustment for differences between comparable sales Less than 1% Real estate: CRE 419 Market Approach Discount adjustment for differences between comparable sales 0% to 3% (3)% Land and construction 199 Market Approach Discount adjustment for differences between comparable sales Less than 1% Foreclosed assets: Land and construction 229 Market Approach Discount adjustment for differences between comparable sales 0% to 2% (2)% The Company obtains third party appraisals on its impaired loans held-for-investment and foreclosed assets to determine fair value. Generally, the third party appraisals apply the “market approach,” which is a valuation technique that uses prices and other relevant information generated by market transactions involving identical or comparable (that is, similar) assets, liabilities, or a group of assets and liabilities, such as a business. Adjustments are then made based on the type of property, age of appraisal, current status of property and other related factors to estimate the current value of collateral. The carrying amounts and estimated fair values of financial instruments at June 30, 2017 are as follows: Estimated Fair Value Significant Quoted Prices in Other Significant Active Markets for Observable Unobservable Carrying Identical Assets Inputs Inputs Amounts (Level 1) (Level 2) (Level 3) Total (Dollars in thousands) Assets: Cash and cash equivalents $ 266,013 $ 266,013 $ — $ — $ 266,013 Securities available-for-sale 369,901 — 369,901 — 369,901 Securities held-to-maturity 368,266 — 366,102 — 366,102 Loans (including loans held-for-sale), net 1,550,647 — 3,720 1,497,069 1,500,789 FHLB stock, FRB stock, and other investments 17,299 — — — N/A Accrued interest receivable 7,194 — 2,224 4,970 7,194 I/O strips receivables 1,028 — 1,028 — 1,028 Liabilities: Time deposits $ 204,361 $ — $ 204,636 $ — $ 204,636 Other deposits 2,170,370 — 2,170,370 — 2,170,370 Subordinated debt 39,119 — — 39,319 39,319 Accrued interest payable 371 — 371 — 371 The carrying amounts and estimated fair values of the Company’s financial instruments at December 31, 2016: Estimated Fair Value Significant Quoted Prices in Other Significant Active Markets for Observable Unobservable Carrying Identical Assets Inputs Inputs Amounts (Level 1) (Level 2) (Level 3) Total (Dollars in thousands) Assets: Cash and cash equivalents $ 266,103 $ 266,103 $ — $ — $ 266,103 Securities available-for-sale 306,589 — 306,589 — 306,589 Securities held-to-maturity 324,010 — 318,748 — 318,748 Loans (including loans held-for-sale), net 1,489,223 — 5,705 1,444,076 1,449,781 FHLB stock, FRB stock, and other investments 15,196 — — — N/A Accrued interest receivable 6,859 — 1,961 4,898 6,859 I/O strips receivables 1,067 — 1,067 — 1,067 Liabilities: Time deposits $ 224,717 $ — $ 225,047 $ — $ 225,047 Other deposits 2,037,423 — 2,037,423 — 2,037,423 Accrued interest payable 168 — 168 — 168 The methods and assumptions, not previously discussed, used to estimate the fair value are described as follows: Cash and Cash Equivalents The carrying amounts of cash on hand, noninterest and interest-bearing due from bank accounts, and Fed funds sold approximate fair values and are classified as Level 1. Loans The fair value of loans held‑for‑sale is estimated based upon binding contracts and quotes from third parties resulting in a Level 2 classification. Fair values of loans, excluding loans held-for-sale, are estimated as follows: For variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values resulting in a Level 3 classification. Fair values for other loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality resulting in a Level 3 classification. Impaired loans are valued at the lower of cost or fair value as described previously. The methods utilized to estimate the fair value of loans do not necessarily represent an exit price. FHLB and FRB Stock It was not practical to determine the fair value of FHLB and FRB stock due to restrictions placed on their transferability. Accrued Interest Receivable/Payable The carrying amounts of accrued interest approximate fair value resulting in a Level 2 or Level 3 classification. Deposits The fair values disclosed for demand deposits (e.g., interest and noninterest checking, passbook savings, and certain types of money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amount) resulting in a Level 2 classification. The carrying amounts of variable rate, fixed‑term money market accounts approximate their fair values at the reporting date resulting in a Level 2 classification. The carrying amounts of variable rate, certificates of deposit approximate their fair values at the reporting date resulting in a Level 2 classification. Fair values for fixed rate certificates of deposit are estimated using a discounted cash flows calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits resulting in a Level 2 classification. Subordinated Debt The fair values of the subordinated debentures are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 3 classification. Off‑balance Sheet Instruments Fair values for off‑balance sheet, credit‑related financial instruments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing. The fair value of commitments is not material. Limitations Fair value estimates are made at a specific point in time, based on relevant market information about the financial instruments. These estimates do not reflect any premium or discount that could result from offering for sale at one time the entire holdings of a particular financial instrument. Fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

Equity Plan

Equity Plan	6 Months Ended
	Jun. 30, 2017
Equity Plan
Equity Plan	10) Equity Plan The Company maintained an Amended and Restated 2004 Equity Plan (the “2004 Plan”) for directors, officers, and key employees. The 2004 Plan was terminated on May 23, 2013. On May 23, 2013, the Company’s shareholders approved the 2013 Equity Incentive Plan (the “2013 Plan”). On May 25, 2017, the shareholders approved an amendment to the Heritage Commerce Corp 2013 Equity Incentive Plan to increase the number of shares available from 1,750,000 to 3,000,000 shares. The equity plans provide for the grant of incentive and nonqualified stock options and restricted stock. The equity plans provide that the option price for both incentive and nonqualified stock options will be determined by the Board of Directors at no less than the fair value at the date of grant. Options granted vest on a schedule determined by the Board of Directors at the time of grant. Generally options vest over four years. All options expire no later than ten years from the date of grant. Restricted stock is subject to time vesting. For the six months ended June 30, 2017, the Company granted 247,000 shares nonqualified stock options and 82,770 shares of restricted stock. There were 1,531,058 shares available for the issuance of equity awards under the 2013 Plan as of June 30, 2017. Stock option activity under the equity plans is as follows: Weighted Weighted Average Average Remaining Aggregate Number Exercise Contractual Intrinsic Total Stock Options of Shares Price Life (Years) Value Outstanding at January 1, 2017 1,719,091 $ 9.79 Granted 247,000 $ 14.48 Exercised (97,370) $ 6.78 Forfeited or expired (138,828) $ 23.32 Outstanding at June 30, 2017 1,729,893 $ 9.55 6.53 $ 7,849,383 Vested or expected to vest 1,626,099 6.53 $ 7,378,420 Exercisable at June 30, 2017 1,126,752 5.27 $ 6,387,424 As of June 30, 2017, there was $1,597,000 of total unrecognized compensation cost related to nonvested stock options granted under the equity plans. That cost is expected to be recognized over a weighted‑average period of approximately 2.86 years. Restricted stock activity under the equity plans is as follows: Weighted Average Grant Number Date Fair Total Restricted Stock Award of Shares Value Nonvested shares at January 1, 2017 199,503 $ 9.74 Granted 82,770 $ 14.36 Vested (57,454) $ 9.88 Forfeited or expired (884) $ 9.36 Nonvested shares at June 30, 2017 223,935 $ 11.41 As of June 30, 2017, there was $2,257,000 of total unrecognized compensation cost related to nonvested restricted stock awards granted under the equity plans. The cost is expected to be recognized over a weighted‑average period of approximately 2.66 years.

Subordinated Debt

Subordinated Debt	6 Months Ended
	Jun. 30, 2017
Subordinated Debt
Subordinated Debt	11) Subordinated Debt On May 26, 2017, the Company completed an underwritten public offering of $40,000,000 aggregate principal amount of its fixed-to-floating rate subordinated notes (“Subordinated Debt”) due June 1, 2027. The Subordinated Debt initially bears a fixed interest rate of 5.25% per year, payable semi-annually. Commencing on June 1, 2022, the interest rate on the Subordinated Debt resets quarterly to the three-month LIBOR rate plus a spread of 336.5 basis points, payable quarterly in arrears. Interest on the Subordinated Debt is payable semi-annually on June 1 and December 1 of each year through June 1, 2022 and quarterly thereafter on March 1, June 1, September 1 and December 1 of each year through the maturity date or early redemption date. The first interest payment will be made on December 1, 2017. The Company at its option may redeem the Subordinated Debt, in whole or in part, on any interest payment date on or after June 1, 2022 without a premium. The issuance costs of the Subordinated Debt totaled $898,000, which is being amortized through the Subordinated Debt maturity date. The Subordinated Debt, net of the unamortized issuance costs, totaled $39,119,000 at June 30, 2017, and qualifies as Tier 2 capital for the Company under the guidelines established by the Federal Reserve Bank.

Capital Requirements

Capital Requirements	6 Months Ended
	Jun. 30, 2017
Capital Requirements
Capital Requirements	12) Capital Requirements The Company and its subsidiary bank are subject to various regulatory capital requirements administered by the banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory—and possibly additional discretionary—actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements and operations. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and HBC must meet specific capital guidelines that involve quantitative measures of assets, liabilities, and certain off balance sheet items as calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. There are no conditions or events since June 30, 2017, that management believes have changed the categorization of the Company or HBC as “well-capitalized.” As of January 1, 2015, HCC and HBC along with other community banking organizations became subject to new capital requirements and certain provisions of the new rules will be phased in from 2015 through 2019. The Federal Banking regulators approved the new rules to implement the revised capital adequacy standards of the Basel Committee on Banking Supervision, commonly called Basel III, and address relevant provisions of The Dodd Frank Wall Street Reform and Consumer Protection Act of 2010, as amended. The Company’s consolidated capital ratios and the Bank’s capital ratios exceeded the regulatory guidelines for a well-capitalized financial institution under the Basel III regulatory requirements at June 30, 2017. Quantitative measures established by regulation to help ensure capital adequacy require the Company and HBC to maintain minimum amounts and ratios (set forth in the tables below) of total, Tier 1 capital, and common equity Tier 1 capital (as defined in the regulations) to risk weighted assets (as defined), and of Tier 1 capital to average assets (as defined). Management believes that, as of June 30, 2017 and December 31, 2016, the Company and HBC met all capital adequacy guidelines to which they were subject. The Company’s consolidated capital amounts and ratios are presented in the following table, together with capital adequacy requirements, under the Basel III regulatory requirements as of June 30, 2017, and December 31, 2016. Required For Capital Adequacy Purposes Actual Under Basel III Amount Ratio Amount Ratio (1) (Dollars in thousands) As of June 30, 2017 Total Capital $ 282,314 14.4 % $ 181,707 9.25 % (to risk-weighted assets) Tier 1 Capital $ 223,123 11.4 % $ 142,419 7.25 % (to risk-weighted assets) Common Equity Tier 1 Capital $ 223,123 11.4 % $ 112,953 5.75 % (to risk-weighted assets) Tier 1 Capital $ 223,123 8.5 % $ 104,736 4.00 % (to average assets) (1) Includes 1.25% capital conservation buffer, effective January 1, 2017, except the Tier 1 Capital to average assets ratio. Required For Capital Adequacy Purposes Actual Under Basel III Amount Ratio Amount Ratio (1) (Dollars in thousands) As of December 31, 2016 Total Capital $ 234,629 12.5 % $ 161,868 8.625 % (to risk-weighted assets) Tier 1 Capital $ 214,924 11.5 % $ 124,333 6.625 % (to risk-weighted assets) Common Equity Tier 1 Capital $ 214,924 11.5 % $ 96,183 5.125 % (to risk-weighted assets) Tier 1 Capital $ 214,924 8.5 % $ 100,625 4.000 % (to average assets) (1) Includes 0.625% capital conservation buffer, effective January 1, 2016, except the Tier 1 Capital to average assets ratio. HBC’s actual capital amounts and ratios are presented in the following table, together with capital adequacy requirements, under the Basel III regulatory requirements as of June 30, 2017, and December 31, 2016. Required For Capital To Be Well-Capitalized Adequacy Under Basel III Regulatory Purposes Actual Requirements Under Basel III Amount Ratio Amount Ratio Amount Ratio (1) (Dollars in thousands) As of June 30, 2017 Total Capital $ 258,796 13.2 % $ 196,333 10.0 % $ 181,608 9.25 % (to risk-weighted assets) Tier 1 Capital $ 238,724 12.2 % $ 157,067 8.0 % $ 142,342 7.25 % (to risk-weighted assets) Common Equity Tier 1 Capital $ 238,724 12.2 % $ 127,617 6.5 % $ 112,892 5.75 % (to risk-weighted assets) Tier 1 Capital $ 238,724 9.1 % $ 130,872 5.0 % $ 104,697 4.00 % (to average assets) (1) Includes 1.25% capital conservation buffer, effective January 1, 2017, except the Tier 1 Capital to average assets ratio. Required For Capital To Be Well-Capitalized Adequacy Under Basel III Regulatory Purposes Actual Requirements Under Basel III Amount Ratio Amount Ratio Amount Ratio (1) (Dollars in thousands) As of December 31, 2016 Total Capital $ 231,069 12.3 % $ 187,602 10.0 % $ 161,807 8.625 % (to risk-weighted assets) Tier 1 Capital $ 211,364 11.3 % $ 150,082 8.0 % $ 124,287 6.625 % (to risk-weighted assets) Common Equity Tier 1 Capital $ 211,364 11.3 % $ 121,942 6.5 % $ 96,146 5.125 % (to risk-weighted assets) Tier 1 Capital $ 211,364 8.4 % $ 125,746 5.0 % $ 100,597 4.000 % (to average assets) (1) Includes 0.625% capital conservation buffer, effective January 1, 2016, except the Tier 1 Capital to average assets ratio. The Subordinated Debt, net of unamortized issuance costs, totaled $39,119,000 at June 30, 2017, and qualifies as Tier 2 capital for the Company under the guidelines established by the Federal Reserve Bank. The issuance of Subordinated Debt resulted in an increase in the Company’s total risk‑based capital ratio at June 30, 2017, compared to December 31, 2016, but had no effect on the other regulatory capital ratios of the Company. All of HBC’s regulatory capital ratios increased at June 30, 2017, compared to December 31, 2016, primarily due to the downstream of $20,000,000 of the proceeds of the Subordinated Debt from the Company to HBC, partially offset by distributed dividends totaling $8,000,000 from HBC to the Company during the first six months of 2017. HCC is dependent upon dividends from HBC. Under California General Corporation Law, the holders of common stock are entitled to receive dividends when and as declared by the Board of Directors, out of funds legally available. The California Financial Code provides that a state licensed bank may not make a cash distribution to its shareholders in excess of the lesser of the following: (i) the bank’s retained earnings; or (ii) the bank’s net income for its last three fiscal years, less the amount of any distributions made by the bank to its shareholders during such period. However, a bank, with the prior approval of the Commissioner of the California Department of Business Oversight—Division of Financial Institutions (“DBO”) may make a distribution to its shareholders of an amount not to exceed the greater of (i) a bank’s retained earnings; (ii) its net income for its last fiscal year; or (iii) its net income for the current fiscal year. Also with the prior approval of the Commissioner of the DBO and the shareholders of the bank, the bank may make a distribution to its shareholders, as a reduction in capital of the bank. In the event that the Commissioner determines that the shareholders’ equity of a bank is inadequate or that the making of a distribution by a bank would be unsafe or unsound, the Commissioner may order a bank to refrain from making such a proposed distribution. As of June 30, 2017, HBC would not be required to obtain regulatory approval, and the amount available for cash dividends is $25,260,000. Similar restrictions applied to the amount and sum of loan advances and other transfers of funds from HBC to the parent company. During each of the second and first quarters of 2017, HBC distributed dividends of $4,000,000, for a total of $8,000,000 for the first six months of 2017.

Loss Contingencies

Loss Contingencies	6 Months Ended
	Jun. 30, 2017
Loss Contingencies
Loss Contingencies	13) Loss Contingencies The Company’s policy is to accrue for legal costs associated with both asserted and unasserted claims when it is probable that such costs will be incurred and such costs can be reasonably estimated. A number of parties filed complaints in the Superior Court of California for the County of Santa Clara asserting certain claims against the Company arising from the transfer of funds. During the fourth quarter of 2016, the Company reached settlements with each of the parties in amounts not material to the Company.

Noninterest Expense

Noninterest Expense	6 Months Ended
	Jun. 30, 2017
Noninterest Expense
Noninterest Expense	14) Noninterest Expense The following table sets forth the various components of the Company’s noninterest expense for the periods indicated: Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 (Dollars in thousands) Salaries and employee benefits $ 9,209 $ 8,742 $ 18,695 $ 17,689 Occupancy and equipment 1,216 1,081 2,284 2,157 Professional fees 673 708 1,744 1,533 Amortization on intangible assets 442 392 787 784 Software subscriptions 441 376 858 717 Insurance expense 370 307 722 606 Data processing 286 371 669 771 FDIC deposit insurance premiums 259 327 556 658 Other 2,358 2,077 4,267 4,151 Total $ 15,254 $ 14,381 $ 30,582 $ 29,066

Business Segment Information

Business Segment Information	6 Months Ended
	Jun. 30, 2017
Business Segment Information
Business Segment Information	15) Business Segment Information The following presents the Company’s operating segments. The Company operates through two business segments: Banking segment and Factoring segment. Transactions between segments consist primarily of borrowed funds. Intersegment interest expense is allocated to the Factoring segment based on the Company’s prime rate and funding costs. The provision for loan loss is allocated based on the segment’s allowance for loan loss determination which considers the effects of charge-offs. Noninterest income and expense directly attributable to a segment are assigned to it. Taxes are paid on a consolidated basis and allocated for segment purposes. The Factoring segment includes only factoring originated by Bay View Funding. Three Months Ended June 30, 2017 Banking(1) Factoring Consolidated (Dollars in thousands) Interest income $ 23,372 $ 2,735 $ 26,107 Intersegment interest allocations 242 (242) — Total interest expense 1,174 — 1,174 Net interest income 22,440 2,493 24,933 Provision (credit) for loan losses (46) — (46) Net interest income after provision 22,486 2,493 24,979 Noninterest income 1,937 356 2,293 Noninterest expense 13,424 1,830 15,254 Intersegment expense allocations 129 (129) — Income before income taxes 11,128 890 12,018 Income tax expense 4,196 373 4,569 Net income $ 6,932 $ 517 $ 7,449 Total assets $ 2,676,599 $ 56,301 $ 2,732,900 Loans, net of deferred fees $ 1,523,928 $ 42,396 $ 1,566,324 Goodwill $ 32,620 $ 13,044 $ 45,664 (1) Includes the holding company’s results of operations Three Months Ended June 30, 2016 Banking(1) Factoring Consolidated (Dollars in thousands) Interest income $ 20,301 $ 3,203 $ 23,504 Intersegment interest allocations 304 (304) — Total interest expense 760 — 760 Net interest income 19,845 2,899 22,744 Provision for loan losses 325 26 351 Net interest income after provision 19,520 2,873 22,393 Noninterest income 3,497 163 3,660 Noninterest expense 12,602 1,779 14,381 Intersegment expense allocations 214 (214) — Income before income taxes 10,629 1,043 11,672 Income tax expense 3,940 437 4,377 Net income $ 6,689 $ 606 $ 7,295 Total assets $ 2,311,058 $ 67,234 $ 2,378,292 Loans, net of deferred fees $ 1,412,317 $ 51,797 $ 1,464,114 Goodwill $ 32,620 $ 13,044 $ 45,664 (1) Includes the holding company’s results of operations Six Months Ended June 30, 2017 Banking(1) Factoring Consolidated (Dollars in thousands) Interest income $ 45,341 $ 5,463 $ 50,804 Intersegment interest allocations 502 (502) — Total interest expense 2,045 — 2,045 Net interest income 43,798 4,961 48,759 Provision for loan losses 265 10 275 Net interest income after provision 43,533 4,951 — 48,484 Noninterest income 4,052 536 4,588 Noninterest expense 27,003 3,579 30,582 Intersegment expense allocations 262 (262) — Income before income taxes 20,844 1,646 22,490 Income tax expense 7,812 691 8,503 Net income $ 13,032 $ 955 $ 13,987 Total assets $ 2,676,599 $ 56,301 $ 2,732,900 Loans, net of deferred fees $ 1,523,928 $ 42,396 $ 1,566,324 Goodwill $ 32,620 $ 13,044 $ 45,664 (1) Includes the holding company’s results of operations Six Months Ended June 30, 2016 Banking(1) Factoring Consolidated (Dollars in thousands) Interest income $ 40,509 $ 6,057 $ 46,566 Intersegment interest allocations 549 (549) — Total interest expense 1,518 — 1,518 Net interest income 39,540 5,508 45,048 Provision for loan losses 712 40 752 Net interest income after provision 38,828 5,468 44,296 Noninterest income 5,909 365 6,274 Noninterest expense 25,654 3,412 29,066 Intersegment expense allocations 389 (389) — Income before income taxes 19,472 2,032 21,504 Income tax expense 7,250 853 8,103 Net income $ 12,222 $ 1,179 $ 13,401 Total assets $ 2,311,058 $ 67,234 $ 2,378,292 Loans, net of deferred fees $ 1,412,317 $ 51,797 $ 1,464,114 Goodwill $ 32,620 $ 13,044 $ 45,664 (1) Includes the holding company’s results of operations

Subsequent Events

Subsequent Events	6 Months Ended
	Jun. 30, 2017
Subsequent Events
Subsequent Events	16) Subsequent Events On July 27, 2017, the Company announced that its Board of Directors declared a $0.10 per share quarterly cash dividend to holders of common stock. The dividend will be paid on August 24, 2017 to shareholders of record on August 10, 2017.

Basis of Presentation (Policies

Basis of Presentation (Policies)	6 Months Ended
	Jun. 30, 2017
Basis of Presentation
Basis of Presentation	Basis of Presentation The unaudited consolidated financial statements of Heritage Commerce Corp (the “Company” or “HCC”) and its wholly owned subsidiary, Heritage Bank of Commerce (“HBC”), have been prepared pursuant to the rules and regulations for reporting on Form 10-Q. Accordingly, certain information and notes required by accounting principles generally accepted in the United States of America (“GAAP”) for annual financial statements are not included herein. The interim statements should be read in conjunction with the consolidated financial statements and notes that were included in the Company’s Form 10-K for the year ended December 31, 2016. The Company acquired Focus Business Bank (“Focus”) on August 20, 2015. Focus was merged with HBC, with HBC as the surviving bank. HBC is a commercial bank serving customers primarily located in Santa Clara, Alameda, Contra Costa, and San Benito counties of California. BVF/CSNK Acquisition Corp., a Delaware corporation (“BVF/CSNK”), the parent company of CSNK Working Capital Finance Corp. dba Bay View Funding (“Bay View Funding”) is a wholly owned subsidiary of HBC, and provides business-essential working capital factoring financing to various industries throughout the United States. No customer accounts for more than 10 percent of revenue for HBC or the Company. The Company reports its results for two segments: banking and factoring. The Company’s management uses segment results in its operating and strategic planning. In management’s opinion, all adjustments necessary for a fair presentation of these consolidated financial statements have been included and are of a normal and recurring nature. All intercompany transactions and balances have been eliminated. The preparation of financial statements in conformity with 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ significantly from these estimates. The results for the three and six months ended June 30, 2017 are not necessarily indicative of the results expected for any subsequent period or for the entire year ending December 31, 2017.
Reclassifications	Reclassifications Certain reclassifications of prior year balances have been made to conform to the current year presentation. These reclassifications had no impact on the Company’s consolidated financial position, results of operations or net change in cash and cash equivalents.
Adoption of New Accounting Standards	Adoption of New Accounting Standards In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-09, Compensation—Stock Compensation: Improvements to Employee Share Based Payment Accounting. The standard is intended to simplify several areas of accounting for share based compensation arrangements, including the income tax impact, classification on the statement of cash flows and forfeitures. All excess tax benefits and tax deficiencies (including tax benefits of dividends on share based payment awards) should be recognized as income tax expense or benefit in the income statement. The tax effects of exercised or vested awards should be treated as discrete items in the reporting period in which they occur. An entity also should recognize excess tax benefits regardless of whether the benefit reduces taxes payable in the current period. Excess tax benefits should be classified along with other income tax cash flows as an operating activity. An entity can make an entity wide accounting policy election to either estimate the number of awards that are expected to vest (current GAAP) or account for forfeitures when they occur. The threshold to qualify for equity classification permits withholding up to the maximum statutory tax rates in the applicable jurisdictions. The Company adopted the new guidance on January 1, 2017. The amount of the impact on the effective tax rate will be determined by the number of stock options exercised and the stock price of the Company when the stock options are exercised, and the amount of restricted stock awards vesting. The adoption of this guidance resulted in net income tax expense of $60,000 for the second quarter of 2017, and a reduction to income tax expense of ($112,000) for the first quarter of 2017, totaling a net reduction to income tax expense of ($52,000) for the first six months of 2017. In connection with the adoption, the Company has elected to estimate forfeitures each reporting period. Newly Issued, but not yet Effective Accounting Standards In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which was an update to the guidance for accounting for revenue from contracts with customers. The guidance in this update affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (for example, insurance contracts or lease contracts). The core principle of the guidance is that an entity should recognize revenue 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. The guidance provides steps to follow to achieve the core principle. An entity should disclose sufficient information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. Qualitative and quantitative information is required about contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. The amendments in this update become effective for annual periods and interim periods within those annual periods beginning after December 15, 2017. We are currently evaluating the impact of adopting the new guidance on the consolidated financial statements. Our preliminary finding is that the new pronouncement will not have a significant impact on the consolidated financial statements as the majority of our business transactions will not be subject to this pronouncement. In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Recognition and Measurement of Financial Assets and Liabilities. The new guidance is intended to improve the recognition and measurement of financial instruments by requiring: equity investments (other than equity method or consolidation) to be measured at fair value with changes in fair value recognized in net income; public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; separate presentation of financial assets and financial liabilities by measurement category and form of financial assets (i.e. securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements; eliminating the requirement to disclose the fair value of financial instruments measured at amortized cost for organizations that are not public business entities; eliminating the requirement for non-public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is to be required to be disclosed for financial instruments measured at amortized cost on the balance sheet; and requiring a reporting organization to present separately in other comprehensive income the portion of the total change in fair value of a liability resulting from the change in the instrument-specific credit risk (also referred to as “own credit”) when the organization has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. The new guidance is effective for public business entities for fiscal years beginning after December 15, 2017. We are currently evaluating the impact of adopting the new guidance on the consolidated financial statements. Our preliminary finding is that the new pronouncement will not have a significant impact on our Statement of Operations as the majority of the Company's investment securities are classified as available-for-sale and held-to-maturity debt securities. The pronouncement will require some revision to our disclosures within the consolidated financial statements and we are currently evaluating the impact. In February 2016, the FASB issued ASU No. 2016-02, Leases. The standard requires a lessee to recognize assets and liabilities on the balance sheet for leases with lease terms greater than 12 months. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right of use asset representing its right to use the underlying asset for the lease term. When measuring assets and liabilities arising from a lease, a lessee (and a lessor) should include payments to be made in optional periods only if the lessee is reasonably certain to exercise an option to extend the lease or not to exercise an option to terminate the lease. Similarly, optional payments to purchase the underlying asset should be included in the measurement of lease assets and lease liabilities only if the lessee is reasonably certain to exercise that purchase option. Reasonably certain is a high threshold that is consistent with and intended to be applied in the same way as the reasonably assured threshold in the previous leases guidance. In addition, also consistent with the previous leases guidance, a lessee (and a lessor) should exclude most variable lease payments in measuring lease assets and lease liabilities, other than those that depend on an index or a rate or are in substance fixed payments. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight line basis over the lease term. The new guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, and early adoption is permitted. We are currently evaluating the impact of adopting the new guidance on our consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses: Measurement of Credit Losses on Financial Instruments. The standard is the final guidance on the new current expected credit loss (“CECL”) model. The amendments in this update replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to estimate future credit loss estimates. As CECL encompasses all financial assets carried at amortized cost, the requirement that reserves be established based on an organization’s reasonable and supportable estimate of expected credit losses extends to held to maturity debt securities. The update amends the accounting for credit losses on available for sale securities, whereby credit losses will be presented as an allowance as opposed to a write down. In addition, CECL will modify the accounting for purchased loans with credit deterioration since origination, so that reserves are established at the date of acquisition for purchased loans. Lastly, the amendment requires enhanced disclosures on the significant estimates and judgments used to estimate credit losses, as well as on the credit quality and underwriting standards of an organization’s portfolio. These disclosures require organizations to present the currently required credit quality disclosures disaggregated by the year of origination or vintage. The guidance allows for a modified retrospective approach with a cumulative effect adjustment to the balance sheet upon adoption (charge to retained earnings instead of the income statement). The new guidance is effective for public business entities for fiscal years, and interim periods within those years, beginning after December 15, 2019, and early adoption is permitted. We have formed a committee that is assessing our data and system needs and are evaluating the impact of adopting the new guidance. We expect to recognize a one-time cumulative effect adjustment to the allowance for loan losses as of the beginning of the first reporting period in which the new standard is effective, but cannot yet determine the magnitude of any such one-time adjustment or the overall impact of the new guidance on the consolidated financial statements. In January 2017, the FASB issued accounting standards ASU No. 2017-04, Simplifying the Test for Goodwill Impairment. The provisions of the update eliminate the existing second step of the goodwill impairment test which provides for the allocation of reporting unit fair value among existing assets and liabilities, with the net remaining amount representing the implied fair value of goodwill. In replacement of the existing goodwill impairment rule, the update will provide that impairment should be recognized as the excess of any of the reporting unit’s goodwill over the fair value of the reporting unit. Under the provisions of this update, the amount of the impairment is limited to the carrying value of the reporting unit’s goodwill. For public business entities that are SEC filers, the amendments of the update will become effective in fiscal years beginning after December 15, 2019. Management does not expect the requirements of this update to have a material impact on the Company’s financial position, results of operations or cash flows.

Shareholders_ Equity and Earn26

Shareholders’ Equity and Earnings Per Share (Tables)	6 Months Ended
	Jun. 30, 2017
Shareholders’ Equity and Earnings Per Share.
Schedule of reconciliation of factors used in computing basic and diluted earnings per common share	Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 (Dollars in thousands, except per share amounts) Net income available to common shareholders $ 7,449 $ 6,791 $ 13,987 $ 12,393 Less: undistributed earnings allocated to Series C Preferred Stock — (576) — (979) Distributed and undistributed earnings allocated to common shareholders $ 7,449 $ 6,215 $ 13,987 $ 11,414 Weighted average common shares outstanding for basic earnings per common share 38,070,042 32,243,935 38,014,020 32,184,825 Dilutive effect of stock options oustanding, using the the treasury stock method 509,092 268,676 521,995 260,691 Shares used in computing diluted earnings per common share 38,579,134 32,512,611 38,536,015 32,445,516 Basic earnings per share $ $ 0.19 $ $ 0.35 Diluted earnings per share $ $ 0.19 $ $ 0.35

Accumulated Other Comprehensi27

Accumulated Other Comprehensive Income (Loss) (''AOCI'') (Tables)	6 Months Ended
	Jun. 30, 2017
Accumulated Other Comprehensive Income (Loss) ("AOCI")
Schedule of changes in AOCI by component	Three Months Ended June 30, 2017 and 2016 Unamortized Unrealized Unrealized Gain on Gains (Losses) on Available- Available- for-Sale Defined for-Sale Securities Benefit Securities Reclassified Pension and I/O to Held-to- Plan Strips(1) Maturity Items Total (Dollars in thousands) Beginning balance April 1, 2017, net of taxes $ (46) $ 328 $ (7,687) $ (7,405) Other comprehensive income (loss) before reclassification, net of taxes 923 — (8) 915 Amounts reclassified from other comprehensive income (loss), net of taxes — (7) 30 23 Net current period other comprehensive income (loss), net of taxes 923 (7) 22 938 Ending balance June 30, 2017, net of taxes $ 877 $ 321 $ (7,665) $ (6,467) Beginning balance April 1, 2016, net of taxes $ 3,792 $ 395 $ (7,685) $ (3,498) Other comprehensive income before reclassification, net of taxes 1,579 — (5) 1,574 Amounts reclassified from other comprehensive income (loss), net of taxes (201) (44) 27 (218) Net current period other comprehensive income (loss), net of taxes 1,378 (44) 22 1,356 Ending balance June 30, 2016, net of taxes $ 5,170 $ 351 $ (7,663) $ (2,142) Six Months Ended June 30, 2017 and 2016 Unamortized Unrealized Unrealized Gain on Gains (Losses) on Available- Available- for-Sale Defined for-Sale Securities Benefit Securities Reclassified Pension and I/O to Held-to- Plan Strips Maturity Items Total (Dollars in thousands) Beginning balance January 1, 2017, net of taxes $ (540) $ 336 $ (7,710) $ (7,914) Other comprehensive (loss) before reclassification, net of taxes 1,413 — (15) 1,398 Amounts reclassified from other comprehensive income (loss), net of taxes 4 (15) 60 49 Net current period other comprehensive income (loss), net of taxes 1,417 (15) 45 1,447 Ending balance June 30, 2017, net of taxes $ 877 $ 321 $ (7,665) $ (6,467) Beginning balance January 1, 2016, net of taxes $ 1,090 $ 403 $ (7,713) $ (6,220) Other comprehensive (loss) before reclassification, net of taxes 4,386 — (5) 4,381 Amounts reclassified from other comprehensive income (loss), net of taxes (306) (52) 55 (303) Net current period other comprehensive loss, net of taxes 4,080 (52) 50 4,078 Ending balance June 30, 2016, net of taxes $ 5,170 $ 351 $ (7,663) $ (2,142)
Schedule of reclassifications out of AOCI into net income	Amounts Reclassified from AOCI(1) Three Months Ended June 30, Affected Line Item Where Details About AOCI Components 2017 2016 Net Income is Presented (Dollars in thousands) Unrealized (loss) gains on available-for-sale securities and I/O strips $ — $ 347 Gain on sales of securities — (146) Income tax expense — 201 Net of tax Amortization of unrealized gain on securities available-for-sale that were reclassified to securities held-to-maturity 13 76 Interest income on taxable securities (6) (32) Income tax expense 7 44 Net of tax Amortization of defined benefit pension plan items (1) Prior transition obligation 17 13 Actuarial losses (69) (60) (52) (47) Income before income tax 22 20 Income tax benefit (30) (27) Net of tax Total reclassification for the year $ (23) $ 218 (1) This AOCI component is included in the computation of net periodic benefit cost (see Note 8—Benefit Plans) and includes split-dollar life insurance benefit plan. Amounts Reclassified from AOCI(1) Six Months Ended June 30, Details About AOCI Components 2017 2016 Net Income is Presented (Dollars in thousands) Unrealized gains on available-for-sale securities and I/O strips $ (6) $ 527 Gain (loss) on sales of securities 2 (221) Income tax expense (4) 306 Net of tax Amortization of unrealized gain on securities available-for-sale that were reclassified to securities held-to-maturity 26 90 Interest income on taxable securities (11) (38) Income tax expense 15 52 Net of tax Amortization of defined benefit pension plan items (1) Prior transition obligation 35 26 Actuarial losses (138) (120) (103) (94) Income before income tax 43 39 Income tax benefit (60) (55) Net of tax Total reclassification from AOCI for the year $ (49) $ 303 (1) This AOCI component is included in the computation of net periodic benefit cost (see Note 8—Benefit Plans) and includes split-dollar life insurance benefit plan.

Securities (Tables)

Securities (Tables)	6 Months Ended
	Jun. 30, 2017
Securities
Schedule of amortized cost and estimated fair value of securities	Gross Gross Estimated Amortized Unrealized Unrealized Fair June 30, 2017 Cost Gains (Losses) Value (Dollars in thousands) Securities available-for-sale: Agency mortgage-backed securities $ 354,429 $ 1,146 $ (2,549) $ 353,026 Trust preferred securities 15,000 1,875 — 16,875 Total $ 369,429 $ 3,021 $ (2,549) $ 369,901 Securities held-to-maturity: Agency mortgage-backed securities $ 278,340 $ 151 $ (2,554) $ 275,937 Municipals - exempt from Federal tax 89,926 1,065 (826) 90,165 Total $ 368,266 $ 1,216 $ (3,380) $ 366,102 Gross Gross Estimated Amortized Unrealized Unrealized Fair December 31, 2016 Cost Gains (Losses) Value (Dollars in thousands) Securities available-for-sale: Agency mortgage-backed securities $ 293,598 $ 928 $ (3,537) $ 290,989 Trust preferred securities 15,000 600 — 15,600 Total $ 308,598 $ 1,528 $ (3,537) $ 306,589 Securities held-to-maturity: Agency mortgage-backed securities $ 233,409 $ 15 $ (3,554) $ 229,870 Municipals - exempt from Federal tax 90,601 521 (2,244) 88,878 Total $ 324,010 $ 536 $ (5,798) $ 318,748
Schedule of securities with unrealized losses	Less Than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized June 30, 2017 Value (Losses) Value (Losses) Value (Losses) (Dollars in thousands) Securities available-for-sale: Agency mortgage-backed securities $ 255,754 $ (2,549) $ — $ — $ 255,754 $ (2,549) Total $ 255,754 $ (2,549) $ — $ — $ 255,754 $ (2,549) Securities held-to-maturity: Agency mortgage-backed securities $ 220,640 $ (2,535) $ 417 $ (19) $ 221,057 $ (2,554) Municipals - exempt from Federal tax 36,035 (633) 3,868 (193) 39,903 (826) Total $ 256,675 $ (3,168) $ 4,285 $ (212) $ 260,960 $ (3,380) Less Than 12 Months 12 Months or More Total Fair Unrealized Fair Unrealized Fair Unrealized December 31, 2016 Value (Losses) Value (Losses) Value (Losses) (Dollars in thousands) Securities available-for-sale: Agency mortgage-backed securities $ 245,045 $ (3,537) $ — $ — $ 245,045 $ (3,537) Total $ 245,045 $ (3,537) $ — $ — $ 245,045 $ (3,537) Securities held-to-maturity: Agency mortgage-backed securities $ 222,132 $ (3,528) $ 612 $ (26) $ 222,744 (3,554) Municipals - exempt from Federal tax 57,304 (2,026) 2,046 (218) 59,350 (2,244) Total $ 279,436 $ (5,554) $ 2,658 $ (244) $ 282,094 $ (5,798)
Schedule of proceeds from sales of securities and the resulting gains and losses	Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 (Dollars in thousands) (Dollars in thousands) Proceeds $ — $ 43,573 $ 6,536 $ 49,171 Gross gains — 364 — 544 Gross losses — (17) (6) (17)
Schedule of amortized cost and estimated fair values of securities, by contractual maturity	Available-for-sale Amortized Estimated Cost Fair Value (Dollars in thousands) Due after ten years $ 15,000 $ 16,875 Agency mortgage-backed securities 354,429 353,026 Total $ 369,429 $ 369,901 Held-to-maturity Amortized Estimated Cost Fair Value (Dollars in thousands) Due 3 months or less $ 757 $ 757 Due after 3 months through one year 880 881 Due after one through five years 3,201 3,253 Due after five through ten years 19,447 20,029 Due after ten years 65,641 65,245 Agency mortgage-backed securities 278,340 275,937 Total $ 368,266 $ 366,102

Loans (Tables)

Loans (Tables)	6 Months Ended
	Jun. 30, 2017
Loans
Schedule of loans	June 30, December 31, 2017 2016 (Dollars in thousands) Loans held-for-investment: Commercial $ 610,658 $ 604,331 Real estate: CRE 731,537 662,228 Land and construction 82,873 81,002 Home equity 79,930 82,459 Residential mortgages 48,732 52,887 Consumer 13,360 20,460 Loans 1,567,090 1,503,367 Deferred loan fees, net (766) (760) Loans, net of deferred fees 1,566,324 1,502,607 Allowance for loan losses (19,397) (19,089) Loans, net $ 1,546,927 $ 1,483,518
Schedule of changes in allowance for loan losses	Three Months Ended June 30, 2017 Commercial Real Estate Consumer Total (Dollars in thousands) Beginning of period balance $ 11,252 $ 7,743 $ 140 $ 19,135 Charge-offs (1,702) — — (1,702) Recoveries 1,122 888 — 2,010 Net (charge-offs) recoveries (580) 888 — 308 Provision (credit) for loan losses 587 (649) 16 (46) End of period balance $ 11,259 $ 7,982 $ 156 $ 19,397 Three Months Ended June 30, 2016 Commercial Real Estate Consumer Total (Dollars in thousands) Beginning of period balance $ 11,279 $ 8,068 $ 111 $ 19,458 Charge-offs (23) — — (23) Recoveries 129 6 — 135 Net recoveries 106 6 — 112 Provision for loan losses 143 203 5 351 End of period balance $ 11,528 $ 8,277 $ 116 $ 19,921 Six Months Ended June 30, 2017 Commercial Real Estate Consumer Total (Dollars in thousands) Beginning of period balance $ 10,656 $ 8,327 $ 106 $ 19,089 Charge-offs (2,068) — — (2,068) Recoveries 1,172 929 — 2,101 Net (charge-offs) recoveries (896) 929 — 33 Provision (credit) for loan losses 1,499 (1,274) 50 275 End of period balance $ 11,259 $ 7,982 $ 156 $ 19,397 Six Months Ended June 30, 2016 Commercial Real Estate Consumer Total (Dollars in thousands) Beginning of period balance $ 10,748 $ 8,076 $ 102 $ 18,926 Charge-offs (140) — — (140) Recoveries 161 222 — 383 Net recoveries 21 222 — 243 Provision (credit) for loan losses 759 (21) 14 752 End of period balance $ 11,528 $ 8,277 $ 116 $ 19,921
Schedule of balance in allowance for loan losses and recorded investment in loans by portfolio segment, based on impairment method	June 30, 2017 Commercial Real Estate Consumer Total (Dollars in thousands) Allowance for loan losses: Ending allowance balance attributable to loans: Individually evaluated for impairment $ 800 $ — $ — $ 800 Collectively evaluated for impairment 10,459 7,982 156 18,597 Acquired with deterioriated credit quality — — — — Total allowance balance $ 11,259 $ 7,982 $ 156 $ 19,397 Loans: Individually evaluated for impairment $ 2,188 $ 1,090 $ 1 $ 3,279 Collectively evaluated for impairment 608,470 941,982 13,359 1,563,811 Acquired with deterioriated credit quality — — — — Total loan balance $ 610,658 $ 943,072 $ 13,360 $ 1,567,090 December 31, 2016 Commercial Real Estate Consumer Total (Dollars in thousands) Allowance for loan losses: Ending allowance balance attributable to loans: Individually evaluated for impairment $ 329 $ — $ — $ 329 Collectively evaluated for impairment 10,327 8,327 106 18,760 Acquired with deterioriated credit quality — — — — Total allowance balance $ 10,656 $ 8,327 $ 106 $ 19,089 Loans: Individually evaluated for impairment $ 2,057 $ 885 $ 3 $ 2,945 Collectively evaluated for impairment 602,029 877,691 20,457 1,500,177 Acquired with deterioriated credit quality 245 — — 245 Total loan balance $ 604,331 $ 878,576 $ 20,460 $ 1,503,367
Schedule of loans held-for-investment individually evaluated for impairment by class of loans	June 30, 2017 December 31, 2016 Allowance Allowance Unpaid for Loan Unpaid for Loan Principal Recorded Losses Principal Recorded Losses Balance Investment Allocated Balance Investment Allocated (Dollars in thousands) With no related allowance recorded: Commercial $ 1,161 $ 1,161 $ — $ 1,808 $ 1,808 $ — Real estate: CRE 501 501 — 1,278 419 — Land and construction 208 189 — 218 199 — Home Equity 400 400 — 267 267 — Consumer 1 1 — 3 3 — Total with no related allowance recorded 2,271 2,252 — 3,574 2,696 — With an allowance recorded: Commercial 1,027 1,027 800 494 494 329 Total with an allowance recorded 1,027 1,027 800 494 494 329 Total $ 3,298 $ 3,279 $ 800 $ 4,068 $ 3,190 $ 329
Schedule of average impaired loans with interest recognized and cash-basis interest earned on impaired loans	Three Months Ended June 30, 2017 Real Estate Land and Home Commercial CRE Construction Equity Consumer Total (Dollars in thousands) Average of impaired loans during the period $ 3,181 $ 706 $ 192 $ 325 $ 2 $ 4,406 Interest income during impairment $ — $ — $ — $ — $ — $ — Cash-basis interest earned $ — $ — $ — $ — $ — $ — Three Months Ended June 30, 2016 Real Estate Land and Home Commercial CRE Construction Equity Consumer Total (Dollars in thousands) Average of impaired loans during the period $ 560 $ 2,880 $ 210 $ 762 $ 3 $ 4,415 Interest income during impairment $ — $ — $ — $ — $ — $ — Cash-basis interest earned $ — $ — $ — $ — $ — $ — Six Months Ended June 30, 2017 Real Estate Land and Home Commercial CRE Construction Equity Consumer Total (Dollars in thousands) Average of impaired loans during the period $ 2,888 $ 611 $ 194 $ 306 $ 2 $ 4,001 Interest income during impairment $ — $ — $ — $ — $ — $ — Cash-basis interest earned $ — $ — $ — $ — $ — $ — Six Months Ended June 30, 2016 Real Estate Land and Home Commercial CRE Construction Equity Consumer Total (Dollars in thousands) Average of impaired loans during the period $ 1,124 $ 2,917 $ 213 $ 862 $ 3 $ 5,119 Interest income during impairment $ — $ — $ — $ — $ — $ — Cash-basis interest earned $ — $ — $ — $ — $ — $ —
Schedule of nonperforming loans	June 30, December 31, 2017 2016 2016 (Dollars in thousands) Nonaccrual loans - held-for-investment $ 2,987 $ 4,360 $ 3,059 Restructured and loans over 90 days past due and still accruing 171 — — Total nonperforming loans 3,158 4,360 3,059 Other restructured loans 121 141 131 Total impaired loans $ 3,279 $ 4,501 $ 3,190
Schedule of nonperforming loans by class	June 30, 2017 December 31, 2016 Restructured Restructured and Loans and Loans over 90 Days over 90 Days Past Due Past Due and Still and Still Nonaccrual Accruing Total Nonaccrual Accruing Total (Dollars in thousands) Commercial $ 1,896 $ $ 2,067 $ 2,171 $ — $ 2,171 Real estate: CRE 501 — 501 419 — 419 Land and construction 189 — 189 199 — 199 Home equity 400 — 400 267 — 267 Consumer 1 — 1 3 — 3 Total $ 2,987 $ 171 $ 3,158 $ 3,059 $ — $ 3,059
Schedule of aging of past due loans by class of loans	June 30, 2017 30 - 59 60 - 89 90 Days or Days Days Greater Total Loans Not Past Due Past Due Past Due Past Due Past Due Total (Dollars in thousands) Commercial $ 2,544 $ 524 $ 1,386 $ 4,454 $ 606,204 $ 610,658 Real estate: CRE 4 — — 4 731,533 731,537 Land and construction — — 189 189 82,684 82,873 Home equity — — — — 79,930 79,930 Residential mortgages — — — — 48,732 48,732 Consumer — — — — 13,360 13,360 Total $ 2,548 $ 524 $ 1,575 $ 4,647 $ 1,562,443 $ 1,567,090 December 31, 2016 30 - 59 60 - 89 90 Days or Days Days Greater Total Loans Not Past Due Past Due Past Due Past Due Past Due Total (Dollars in thousands) Commercial $ 3,998 $ 857 $ 2,036 $ 6,891 $ 597,440 $ 604,331 Real estate: CRE 632 — — 632 661,596 662,228 Land and construction — — 199 199 80,803 81,002 Home equity — 267 — 267 82,192 82,459 Residential mortgages — — — — 52,887 52,887 Consumer — — — — 20,460 20,460 Total $ 4,630 $ 1,124 $ 2,235 $ 7,989 $ 1,495,378 $ 1,503,367
Summary of loan portfolio by loan type and credit quality classification	June 30, 2017 December 31, 2016 Nonclassified Classified Total Nonclassified Classified Total Commercial $ 605,145 $ 5,513 $ 610,658 $ 594,255 $ 10,076 $ 604,331 Real estate: CRE 730,832 705 731,537 659,777 2,451 662,228 Land and construction 82,684 189 82,873 80,803 199 81,002 Home equity 79,036 894 79,930 81,866 593 82,459 Residential mortgages 48,732 — 48,732 52,887 — 52,887 Consumer 13,359 1 13,360 20,455 5 20,460 Total $ 1,559,788 $ 7,302 $ 1,567,090 $ 1,490,043 $ 13,324 $ 1,503,367

Goodwill and Other Intangible30

Goodwill and Other Intangible Assets (Tables)	6 Months Ended
	Jun. 30, 2017
Goodwill and Other Intangible Assets
Schedule of estimated amortization expense	Estimated amortization expense for 2017 and each of the next five years follows: Bay View Funding Diablo Valley Customer & Bank Core Focus Core Below Market Brokered Non-Compete Total Deposit Deposit Value Lease Relationship Agreement Amortization Year Intangible Intangible Intangible Intangible Intangible Expense (Dollars in thousands) 2017 $ 195 $ 875 $ 31 $ 190 $ 70 $ 1,361 2018 — 775 — 190 — 965 2019 — 734 — 190 — 924 2020 — 716 — 190 — 906 2021 — 596 — 190 — 786 2022 — 502 — 190 — 692 $ 195 $ 4,198 $ 31 $ 1,140 $ 70 $ 5,634

Income Taxes (Tables)

Income Taxes (Tables)	6 Months Ended
	Jun. 30, 2017
Income Taxes
Summary of carrying amount of income tax housing investment	June 30, December 31, 2017 2016 (Dollars in thousands) Low income housing investments $ 3,641 $ Future commitments $ 365 $

Benefit Plans (Tables)

Benefit Plans (Tables)	6 Months Ended
	Jun. 30, 2017
Supplemental Retirement Plan
Benefit plans
Schedule of components of net periodic benefit cost	Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 (Dollars in thousands) Components of net periodic benefit cost: Service cost $ 81 $ 133 $ 162 $ 266 Interest cost 259 259 518 518 Amortization of net actuarial loss 69 60 138 120 Net periodic benefit cost $ 409 $ 452 $ 818 $ 904
Split-Dollar Life Insurance Benefit Plan
Benefit plans
Schedule of change in projected benefit obligation	June 30, December 31, 2017 2016 (Dollars in thousands) Change in projected benefit obligation: Projected benefit obligation at beginning of year $ 6,301 $ 6,215 Interest cost 121 248 Actuarial gain — (162) Projected benefit obligation at end of period $ 6,422 $ 6,301
Schedule of amounts recognized in accumulated other comprehensive loss	June 30, December 31, 2017 2016 (Dollars in thousands) Net actuarial loss $ 2,206 $ 2,126 Prior transition obligation 1,283 1,328 Accumulated other comprehensive loss $ 3,489 $ 3,454
Schedule of components of net periodic benefit cost	Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 (Dollars in thousands) Amortization of prior transition obligation $ (17) $ (13) $ (35) $ (26) Interest cost 60 62 121 124 Net periodic benefit cost $ 43 $ 49 $ 86 $ 98

Fair Value (Tables)

Fair Value (Tables)	6 Months Ended
	Jun. 30, 2017
Fair Value
Schedule of financial assets and liabilities measured on a recurring basis	Fair Value Measurements Using Significant Quoted Prices in Other Significant Active Markets for Obeservable Unobservable Identical Assets Inputs Inputs Balance (Level 1) (Level 2) (Level 3) (Dollars in thousands) Assets at June 30, 2017 Available-for-sale securities: Agency mortgage-backed securities $ 353,026 — $ 353,026 — Trust preferred securities 16,875 — 16,875 — I/O strip receivables 1,028 — 1,028 — Assets at December 31, 2016 Available-for-sale securities: Agency mortgage-backed securities $ 290,989 — $ 290,989 — Trust preferred securities 15,600 — 15,600 — I/O strip receivables 1,067 — 1,067 —
Schedule of assets and liabilities measured on a non-recurring basis	Fair Value Measurements Using Significant Quoted Prices in Other Significant Active Markets for Observable Unobservable Identical Assets Inputs Inputs Balance (Level 1) (Level 2) (Level 3) (Dollars in thousands) Assets at June 30, 2017 Impaired loans - held-for-investment: Commercial $ 227 — — $ 227 Real estate: Land and construction 189 — — 189 $ 416 — — $ 416 Assets at December 31, 2016 Impaired loans - held-for-investment: Commercial $ 165 — — $ 165 Real estate: CRE 419 — — 419 Land and construction 199 — — 199 $ 783 — — $ 783 Foreclosed assets: Land and construction $ — — $ $ $
Schedule of impaired loans held-for-investment and impaired loans held-for-investment carried at fair value	June 30, 2017 December 31, 2016 (Dollars in thousands) Impaired loans held-for-investment: Book value of impaired loans held-for-investment carried at fair value $ 1,216 $ 1,112 Book value of impaired loans held-for-investment carried at cost 2,063 2,078 Total impaired loans held-for-investment $ 3,279 $ 3,190 Impaired loans held-for-investment carried at fair value: Book value of impaired loans held-for-investment carried at fair value $ 1,216 $ 1,112 Specific valuation allowance (800) (329) Impaired loans held-for-investment carried at fair value, net $ 416 $ 783
Schedule of quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis	June 30, 2017 Valuation Unobservable Range Fair Value Techniques Inputs (Weighted Average) (Dollars in thousands) Impaired loans - held-for-investment: Commercial $ 227 Market Approach Discount adjustment for differences between comparable sales Less than 1 % Real estate: Land and construction 189 Market Approach Discount adjustment for differences between comparable sales Less than 1% December 31, 2016 Valuation Unobservable Range Fair Value Techniques Inputs (Weighted Average) (Dollars in thousands) Impaired loans - held-for-investment: Commercial $ 165 Market Approach Discount adjustment for differences between comparable sales Less than 1% Real estate: CRE 419 Market Approach Discount adjustment for differences between comparable sales 0% to 3% (3)% Land and construction 199 Market Approach Discount adjustment for differences between comparable sales Less than 1% Foreclosed assets: Land and construction 229 Market Approach Discount adjustment for differences between comparable sales 0% to 2% (2)%
Schedule of carrying amounts and estimated fair values of financial instruments	The carrying amounts and estimated fair values of financial instruments at June 30, 2017 are as follows: Estimated Fair Value Significant Quoted Prices in Other Significant Active Markets for Observable Unobservable Carrying Identical Assets Inputs Inputs Amounts (Level 1) (Level 2) (Level 3) Total (Dollars in thousands) Assets: Cash and cash equivalents $ 266,013 $ 266,013 $ — $ — $ 266,013 Securities available-for-sale 369,901 — 369,901 — 369,901 Securities held-to-maturity 368,266 — 366,102 — 366,102 Loans (including loans held-for-sale), net 1,550,647 — 3,720 1,497,069 1,500,789 FHLB stock, FRB stock, and other investments 17,299 — — — N/A Accrued interest receivable 7,194 — 2,224 4,970 7,194 I/O strips receivables 1,028 — 1,028 — 1,028 Liabilities: Time deposits $ 204,361 $ — $ 204,636 $ — $ 204,636 Other deposits 2,170,370 — 2,170,370 — 2,170,370 Subordinated debt 39,119 — — 39,319 39,319 Accrued interest payable 371 — 371 — 371 The carrying amounts and estimated fair values of the Company’s financial instruments at December 31, 2016: Estimated Fair Value Significant Quoted Prices in Other Significant Active Markets for Observable Unobservable Carrying Identical Assets Inputs Inputs Amounts (Level 1) (Level 2) (Level 3) Total (Dollars in thousands) Assets: Cash and cash equivalents $ 266,103 $ 266,103 $ — $ — $ 266,103 Securities available-for-sale 306,589 — 306,589 — 306,589 Securities held-to-maturity 324,010 — 318,748 — 318,748 Loans (including loans held-for-sale), net 1,489,223 — 5,705 1,444,076 1,449,781 FHLB stock, FRB stock, and other investments 15,196 — — — N/A Accrued interest receivable 6,859 — 1,961 4,898 6,859 I/O strips receivables 1,067 — 1,067 — 1,067 Liabilities: Time deposits $ 224,717 $ — $ 225,047 $ — $ 225,047 Other deposits 2,037,423 — 2,037,423 — 2,037,423 Accrued interest payable 168 — 168 — 168

Equity Plan (Tables)

Equity Plan (Tables)	6 Months Ended
	Jun. 30, 2017
Equity Plan
Schedule of stock option activity under the equity plans	Weighted Weighted Average Average Remaining Aggregate Number Exercise Contractual Intrinsic Total Stock Options of Shares Price Life (Years) Value Outstanding at January 1, 2017 1,719,091 $ 9.79 Granted 247,000 $ 14.48 Exercised (97,370) $ 6.78 Forfeited or expired (138,828) $ 23.32 Outstanding at June 30, 2017 1,729,893 $ 9.55 6.53 $ 7,849,383 Vested or expected to vest 1,626,099 6.53 $ 7,378,420 Exercisable at June 30, 2017 1,126,752 5.27 $ 6,387,424
Schedule of restricted stock activity under the equity plans	Weighted Average Grant Number Date Fair Total Restricted Stock Award of Shares Value Nonvested shares at January 1, 2017 199,503 $ 9.74 Granted 82,770 $ 14.36 Vested (57,454) $ 9.88 Forfeited or expired (884) $ 9.36 Nonvested shares at June 30, 2017 223,935 $ 11.41

Capital Requirements (Tables)

Capital Requirements (Tables)	6 Months Ended
	Jun. 30, 2017
Capital Requirements
Schedule of actual capital and required amounts and ratios	Required For Capital Adequacy Purposes Actual Under Basel III Amount Ratio Amount Ratio (1) (Dollars in thousands) As of June 30, 2017 Total Capital $ 282,314 14.4 % $ 181,707 9.25 % (to risk-weighted assets) Tier 1 Capital $ 223,123 11.4 % $ 142,419 7.25 % (to risk-weighted assets) Common Equity Tier 1 Capital $ 223,123 11.4 % $ 112,953 5.75 % (to risk-weighted assets) Tier 1 Capital $ 223,123 8.5 % $ 104,736 4.00 % (to average assets) (1) Includes 1.25% capital conservation buffer, effective January 1, 2017, except the Tier 1 Capital to average assets ratio. Required For Capital Adequacy Purposes Actual Under Basel III Amount Ratio Amount Ratio (1) (Dollars in thousands) As of December 31, 2016 Total Capital $ 234,629 12.5 % $ 161,868 8.625 % (to risk-weighted assets) Tier 1 Capital $ 214,924 11.5 % $ 124,333 6.625 % (to risk-weighted assets) Common Equity Tier 1 Capital $ 214,924 11.5 % $ 96,183 5.125 % (to risk-weighted assets) Tier 1 Capital $ 214,924 8.5 % $ 100,625 4.000 % (to average assets) (1) Includes 0.625% capital conservation buffer, effective January 1, 2016, except the Tier 1 Capital to average assets ratio.
HBC (Wholly-owned Subsidiary)
Capital Requirements
Schedule of actual capital and required amounts and ratios	Required For Capital To Be Well-Capitalized Adequacy Under Basel III Regulatory Purposes Actual Requirements Under Basel III Amount Ratio Amount Ratio Amount Ratio (1) (Dollars in thousands) As of June 30, 2017 Total Capital $ 258,796 13.2 % $ 196,333 10.0 % $ 181,608 9.25 % (to risk-weighted assets) Tier 1 Capital $ 238,724 12.2 % $ 157,067 8.0 % $ 142,342 7.25 % (to risk-weighted assets) Common Equity Tier 1 Capital $ 238,724 12.2 % $ 127,617 6.5 % $ 112,892 5.75 % (to risk-weighted assets) Tier 1 Capital $ 238,724 9.1 % $ 130,872 5.0 % $ 104,697 4.00 % (to average assets) (1) Includes 1.25% capital conservation buffer, effective January 1, 2017, except the Tier 1 Capital to average assets ratio. Required For Capital To Be Well-Capitalized Adequacy Under Basel III Regulatory Purposes Actual Requirements Under Basel III Amount Ratio Amount Ratio Amount Ratio (1) (Dollars in thousands) As of December 31, 2016 Total Capital $ 231,069 12.3 % $ 187,602 10.0 % $ 161,807 8.625 % (to risk-weighted assets) Tier 1 Capital $ 211,364 11.3 % $ 150,082 8.0 % $ 124,287 6.625 % (to risk-weighted assets) Common Equity Tier 1 Capital $ 211,364 11.3 % $ 121,942 6.5 % $ 96,146 5.125 % (to risk-weighted assets) Tier 1 Capital $ 211,364 8.4 % $ 125,746 5.0 % $ 100,597 4.000 % (to average assets) (1) Includes 0.625% capital conservation buffer, effective January 1, 2016, except the Tier 1 Capital to average assets ratio.

Noninterest Expense (Tables)

Noninterest Expense (Tables)	6 Months Ended
	Jun. 30, 2017
Noninterest Expense
Schedule of noninterest expense	Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 (Dollars in thousands) Salaries and employee benefits $ 9,209 $ 8,742 $ 18,695 $ 17,689 Occupancy and equipment 1,216 1,081 2,284 2,157 Professional fees 673 708 1,744 1,533 Amortization on intangible assets 442 392 787 784 Software subscriptions 441 376 858 717 Insurance expense 370 307 722 606 Data processing 286 371 669 771 FDIC deposit insurance premiums 259 327 556 658 Other 2,358 2,077 4,267 4,151 Total $ 15,254 $ 14,381 $ 30,582 $ 29,066

Business Segment Information (T

Business Segment Information (Tables)	6 Months Ended
	Jun. 30, 2017
Business Segment Information
Schedule of information by operating segment	Three Months Ended June 30, 2017 Banking(1) Factoring Consolidated (Dollars in thousands) Interest income $ 23,372 $ 2,735 $ 26,107 Intersegment interest allocations 242 (242) — Total interest expense 1,174 — 1,174 Net interest income 22,440 2,493 24,933 Provision (credit) for loan losses (46) — (46) Net interest income after provision 22,486 2,493 24,979 Noninterest income 1,937 356 2,293 Noninterest expense 13,424 1,830 15,254 Intersegment expense allocations 129 (129) — Income before income taxes 11,128 890 12,018 Income tax expense 4,196 373 4,569 Net income $ 6,932 $ 517 $ 7,449 Total assets $ 2,676,599 $ 56,301 $ 2,732,900 Loans, net of deferred fees $ 1,523,928 $ 42,396 $ 1,566,324 Goodwill $ 32,620 $ 13,044 $ 45,664 (1) Includes the holding company’s results of operations Three Months Ended June 30, 2016 Banking(1) Factoring Consolidated (Dollars in thousands) Interest income $ 20,301 $ 3,203 $ 23,504 Intersegment interest allocations 304 (304) — Total interest expense 760 — 760 Net interest income 19,845 2,899 22,744 Provision for loan losses 325 26 351 Net interest income after provision 19,520 2,873 22,393 Noninterest income 3,497 163 3,660 Noninterest expense 12,602 1,779 14,381 Intersegment expense allocations 214 (214) — Income before income taxes 10,629 1,043 11,672 Income tax expense 3,940 437 4,377 Net income $ 6,689 $ 606 $ 7,295 Total assets $ 2,311,058 $ 67,234 $ 2,378,292 Loans, net of deferred fees $ 1,412,317 $ 51,797 $ 1,464,114 Goodwill $ 32,620 $ 13,044 $ 45,664 (1) Includes the holding company’s results of operations Six Months Ended June 30, 2017 Banking(1) Factoring Consolidated (Dollars in thousands) Interest income $ 45,341 $ 5,463 $ 50,804 Intersegment interest allocations 502 (502) — Total interest expense 2,045 — 2,045 Net interest income 43,798 4,961 48,759 Provision for loan losses 265 10 275 Net interest income after provision 43,533 4,951 — 48,484 Noninterest income 4,052 536 4,588 Noninterest expense 27,003 3,579 30,582 Intersegment expense allocations 262 (262) — Income before income taxes 20,844 1,646 22,490 Income tax expense 7,812 691 8,503 Net income $ 13,032 $ 955 $ 13,987 Total assets $ 2,676,599 $ 56,301 $ 2,732,900 Loans, net of deferred fees $ 1,523,928 $ 42,396 $ 1,566,324 Goodwill $ 32,620 $ 13,044 $ 45,664 (1) Includes the holding company’s results of operations Six Months Ended June 30, 2016 Banking(1) Factoring Consolidated (Dollars in thousands) Interest income $ 40,509 $ 6,057 $ 46,566 Intersegment interest allocations 549 (549) — Total interest expense 1,518 — 1,518 Net interest income 39,540 5,508 45,048 Provision for loan losses 712 40 752 Net interest income after provision 38,828 5,468 44,296 Noninterest income 5,909 365 6,274 Noninterest expense 25,654 3,412 29,066 Intersegment expense allocations 389 (389) — Income before income taxes 19,472 2,032 21,504 Income tax expense 7,250 853 8,103 Net income $ 12,222 $ 1,179 $ 13,401 Total assets $ 2,311,058 $ 67,234 $ 2,378,292 Loans, net of deferred fees $ 1,412,317 $ 51,797 $ 1,464,114 Goodwill $ 32,620 $ 13,044 $ 45,664 (1) Includes the holding company’s results of operations

Basis of Presentation (Details)

Basis of Presentation (Details) $ in Thousands	3 Months Ended			6 Months Ended
	Jun. 30, 2017USD ($)	Mar. 31, 2017USD ($)	Jun. 30, 2016USD ($)	Jun. 30, 2017USD ($)segmentcustomer	Jun. 30, 2016USD ($)
Segment Reporting
Number of customers accounting for more than 10 percent of revenue for HBC or the Company | customer				0
Number of operating segments | segment				2
Income tax expense	$ 4,569		$ 4,377	$ 8,503	$ 8,103
Adjustments for New Accounting Pronouncement
Segment Reporting
Income tax expense	$ 60	$ (112)		$ (52)

Shareholders_ Equity and Earn39

Shareholders’ Equity and Earnings Per Share - Series C Preferred Stock (Details) - Preferred Stockholders	Sep. 12, 2016$ / sharesshares
Series C Preferred Stock
Common shares issued in exchange of convertible perpetual preferred stock (in shares) | shares	5,601,000
Par value of common stock (in dollars per share) | $ / shares	$ 0
Series C Preferred Stock
Series C Preferred Stock
Number of convertible preferred shares converted (in shares) | shares	21,004
Preferred stock, par value (in dollars per share) | $ / shares	$ 0

Shareholders_ Equity and Earn40

Shareholders’ Equity and Earnings Per Share - Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Reconciliation of factors used in computing basic and diluted earnings per common share
Net income available to common shareholders	$ 7,449	$ 6,791	$ 13,987	$ 12,393
Less: undistributed earnings allocated to Series C Preferred Stock		(576)		(979)
Distributed and undistributed earnings allocated to common shareholders	$ 7,449	$ 6,215	$ 13,987	$ 11,414
Weighted average common shares outstanding for basic earnings per common share (in shares)	38,070,042	32,243,935	38,014,020	32,184,825
Dilutive effect of stock options outstanding, using the treasury stock method (in shares)	509,092	268,676	521,995	260,691
Shares used in computing diluted earnings per common share (in shares)	38,579,134	32,512,611	38,536,015	32,445,516
Basic earnings per share (in dollars per share)	$ 0.20	$ 0.19	$ 0.37	$ 0.35
Diluted earnings per share (in dollars per share)	$ 0.19	$ 0.19	$ 0.36	$ 0.35

Accumulated Other Comprehensi41

Accumulated Other Comprehensive Income (Loss) (''AOCI'') - Changes in AOCI by Component (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Changes in AOCI by Component
Balance at the beginning of the period, net of taxes			$ (7,914)
Net current period other comprehensive income (loss), net of taxes	$ 938	$ 1,356	1,447	$ 4,078
Balance at the end of the period, net of taxes	(6,467)		(6,467)
Accumulated Other Comprehensive Income / (Loss)
Changes in AOCI by Component
Balance at the beginning of the period, net of taxes	(7,405)	(3,498)	(7,914)	(6,220)
Other comprehensive income before reclassification, net of taxes	915	1,574	1,398	4,381
Amounts reclassified from other comprehensive income (loss), net of taxes	23	(218)	49	(303)
Net current period other comprehensive income (loss), net of taxes	938	1,356	1,447	4,078
Balance at the end of the period, net of taxes	(6,467)	(2,142)	(6,467)	(2,142)
Unrealized Gains on Available-for-Sale Securities and I/O Strips
Changes in AOCI by Component
Balance at the beginning of the period, net of taxes	(46)	3,792	(540)	1,090
Other comprehensive income before reclassification, net of taxes	923	1,579	1,413	4,386
Amounts reclassified from other comprehensive income (loss), net of taxes		(201)	4	(306)
Net current period other comprehensive income (loss), net of taxes	923	1,378	1,417	4,080
Balance at the end of the period, net of taxes	877	5,170	877	5,170
Unamortized Unrealized Gain on Available-for-Sale Securities Reclassified to Held-to-Maturity
Changes in AOCI by Component
Balance at the beginning of the period, net of taxes	328	395	336	403
Amounts reclassified from other comprehensive income (loss), net of taxes	(7)	(44)	(15)	(52)
Net current period other comprehensive income (loss), net of taxes	(7)	(44)	(15)	(52)
Balance at the end of the period, net of taxes	321	351	321	351
Defined Benefit Pension Plan Items
Changes in AOCI by Component
Balance at the beginning of the period, net of taxes	(7,687)	(7,685)	(7,710)	(7,713)
Other comprehensive income before reclassification, net of taxes	(8)	(5)	(15)	(5)
Amounts reclassified from other comprehensive income (loss), net of taxes	30	27	60	55
Net current period other comprehensive income (loss), net of taxes	22	22	45	50
Balance at the end of the period, net of taxes	$ (7,665)	$ (7,663)	$ (7,665)	$ (7,663)

Accumulated Other Comprehensi42

Accumulated Other Comprehensive Income (Loss) (''AOCI'') - Amount Reclassified from AOCI (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Amount Reclassified from AOCI
Gain (loss) on sales of securities		$ 347	$ (6)	$ 527
Interest income on taxable securities	$ 3,442	2,829	6,319	5,603
Income tax expense	(4,569)	(4,377)	(8,503)	(8,103)
Net income	7,449	7,295	13,987	13,401
Unrealized Gains on Available-for-Sale Securities and I/O Strips
Amount Reclassified from AOCI
Net of tax		201	(4)	306
Unrealized Gains on Available-for-Sale Securities and I/O Strips | Amount Reclassified from AOCI
Amount Reclassified from AOCI
Gain (loss) on sales of securities		347	(6)	527
Income tax expense		(146)	2	(221)
Net income		201
Net of tax			(4)	306
Unamortized Unrealized Gain on Available-for-Sale Securities Reclassified to Held-to-Maturity
Amount Reclassified from AOCI
Net of tax	7	44	15	52
Unamortized Unrealized Gain on Available-for-Sale Securities Reclassified to Held-to-Maturity | Amount Reclassified from AOCI
Amount Reclassified from AOCI
Interest income on taxable securities	13	76	26	90
Income tax expense	(6)	(32)	(11)	(38)
Net income	7	44
Net of tax			15	52
Defined Benefit Pension Plan Items
Amount Reclassified from AOCI
Net of tax	(30)	(27)	(60)	(55)
Defined Benefit Pension Plan Items | Amount Reclassified from AOCI
Amount Reclassified from AOCI
Income before income tax	(52)	(47)	(103)	(94)
Income tax benefit	22	20	43	39
Net of tax	(30)	(27)	(60)	(55)
Prior transition obligation | Amount Reclassified from AOCI
Amount Reclassified from AOCI
Income before income tax	17	13	35	26
Actuarial losses | Amount Reclassified from AOCI
Amount Reclassified from AOCI
Income before income tax	(69)	(60)	(138)	(120)
Accumulated Other Comprehensive Income / (Loss)
Amount Reclassified from AOCI
Net of tax	(23)	218	(49)	303
Accumulated Other Comprehensive Income / (Loss) | Amount Reclassified from AOCI
Amount Reclassified from AOCI
Net of tax	$ (23)	$ 218	$ (49)	$ 303

Securities - Amortized Cost and

Securities - Amortized Cost and Estimated Fair Value of Securities - Securities Available-for-sale (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Securities available-for-sale:
Amortized Cost	$ 369,429	$ 308,598
Gross Unrealized Gains	3,021	1,528
Gross Unrealized Losses	(2,549)	(3,537)
Estimated Fair Value	369,901	306,589
Agency mortgage-backed securities
Securities available-for-sale:
Amortized Cost	354,429	293,598
Gross Unrealized Gains	1,146	928
Gross Unrealized Losses	(2,549)	(3,537)
Estimated Fair Value	353,026	290,989
Trust preferred securities
Securities available-for-sale:
Amortized Cost	15,000	15,000
Gross Unrealized Gains	1,875	600
Estimated Fair Value	$ 16,875	$ 15,600

Securities - Amortized Cost a44

Securities - Amortized Cost and Estimated Fair Value of Securities - Securities Held-to-maturity (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Securities held-to-maturity:
Amortized Cost	$ 368,266	$ 324,010
Gross Unrealized Gains	1,216	536
Gross Unrealized Losses	(3,380)	(5,798)
Estimated Fair Value	366,102	318,748
Agency mortgage-backed securities
Securities held-to-maturity:
Amortized Cost	278,340	233,409
Gross Unrealized Gains	151	15
Gross Unrealized Losses	(2,554)	(3,554)
Estimated Fair Value	275,937	229,870
Municipals - exempt from Federal tax
Securities held-to-maturity:
Amortized Cost	89,926	90,601
Gross Unrealized Gains	1,065	521
Gross Unrealized Losses	(826)	(2,244)
Estimated Fair Value	$ 90,165	$ 88,878

Securities - Securities with Un

Securities - Securities with Unrealized Losses - Securities Available-for-sale (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Available-for-sale, Fair Value
Less Than 12 Months	$ 255,754	$ 245,045
Total	255,754	245,045
Available-for-sale, Unrealized Losses
Less Than 12 Months	(2,549)	(3,537)
Total	(2,549)	(3,537)
Agency mortgage-backed securities
Available-for-sale, Fair Value
Less Than 12 Months	255,754	245,045
Total	255,754	245,045
Available-for-sale, Unrealized Losses
Less Than 12 Months	(2,549)	(3,537)
Total	$ (2,549)	$ (3,537)

Securities - Securities with 46

Securities - Securities with Unrealized Losses - Securities Held-to-maturity (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Held-to-maturity, Fair Value
Less Than 12 Months	$ 256,675	$ 279,436
12 Months or More	4,285	2,658
Total	260,960	282,094
Held-to-maturity, Unrealized Losses
Less Than 12 Months	(3,168)	(5,554)
12 Months or More	(212)	(244)
Total	(3,380)	(5,798)
Agency mortgage-backed securities
Held-to-maturity, Fair Value
Less Than 12 Months	220,640	222,132
12 Months or More	417	612
Total	221,057	222,744
Held-to-maturity, Unrealized Losses
Less Than 12 Months	(2,535)	(3,528)
12 Months or More	(19)	(26)
Total	(2,554)	(3,554)
Municipals - exempt from Federal tax
Held-to-maturity, Fair Value
Less Than 12 Months	36,035	57,304
12 Months or More	3,868	2,046
Total	39,903	59,350
Held-to-maturity, Unrealized Losses
Less Than 12 Months	(633)	(2,026)
12 Months or More	(193)	(218)
Total	(826)	$ (2,244)
Municipals - exempt from Federal tax
Held-to-maturity, Fair Value
12 Months or More	$ 3,868

Securities - Additional Informa

Securities - Additional Information (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2017USD ($)security	Dec. 31, 2016USD ($)
Additional Information
The number of holdings of securities of any one issuer other than the U.S. Government and its sponsored entities	0
Holdings of securities as percentage of shareholders' equity, considered as threshold for disclosure purpose	10.00%
Number of securities held	482
Number of available for sale securities held	166
Number of held to maturity securities held	316
Number of securities with fair values below amortized cost	257
Total unrealized loss for securities 12 months or more | $	$ 212
12 Months or More | $	4,285	$ 2,658
Municipals - exempt from Federal tax
Additional Information
12 Months or More | $	$ 3,868	$ 2,046

Securities - Proceeds from Sale

Securities - Proceeds from Sales of Securities and the Resulting Gains and Losses (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Proceeds from Sales of Securities and the Resulting Gains and Losses
Proceeds	$ 43,573	$ 6,536	$ 49,171
Gross gains	364		544
Gross losses	$ (17)	$ (6)	$ (17)

Securities - Amortized Cost a49

Securities - Amortized Cost and Fair Value of Debt Securities by Contractual Maturity – Securities Available-for-sale (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Available-for-sale, Amortized Cost
Due after ten years	$ 15,000
Agency mortgage-backed securities	354,429
Total	369,429
Available-for-sale, Estimated Fair Value
Due after ten years	16,875
Agency mortgage-backed securities	353,026
Estimated Fair Value	$ 369,901	$ 306,589

Securities - Amortized Cost a50

Securities - Amortized Cost and Fair Value of Debt Securities by Contractual Maturity – Securities Held-to-maturity (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Held-to-maturity, Amortized Cost
Due after 3 months or less	$ 757
Due after 3 months through one year	880
Due after one year through five years	3,201
Due after five years through ten years	19,447
Due after ten years	65,641
Agency mortgage-backed securities	278,340
Total	368,266	$ 324,010
Held-to-maturity, Estimated Fair Value
Due after 3 months through one year	881
Due after one year through five years	3,253
Due after five years through ten years	20,029
Due after ten years	65,245
Agency mortgage-backed securities	275,937
Estimated Fair Value	$ 366,102	$ 318,748

Loans -Loans Balance (Details)

Loans -Loans Balance (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015
Loans held-for-investment:
Total loan balance	$ 1,567,090		$ 1,503,367
Deferred loan fees, net	(766)		(760)
Loans, net of deferred fees	1,566,324		1,502,607	$ 1,464,114
Allowance for loan losses	(19,397)	$ (19,135)	(19,089)	(19,921)	$ (19,458)	$ (18,926)
Loans, net	1,546,927		1,483,518
Non-PCI loans acquired	73,810
Commercial
Loans held-for-investment:
Total loan balance	610,658		604,331
Allowance for loan losses	(11,259)	(11,252)	(10,656)	(11,528)	(11,279)	(10,748)
Real estate
Loans held-for-investment:
Total loan balance	943,072		878,576
Allowance for loan losses	(7,982)	(7,743)	(8,327)	(8,277)	(8,068)	(8,076)
Real estate | Commercial
Loans held-for-investment:
Total loan balance	731,537		662,228
Real estate | Land and construction
Loans held-for-investment:
Total loan balance	82,873		81,002
Real estate | Home equity
Loans held-for-investment:
Total loan balance	79,930		82,459
Real estate | Residential mortgages
Loans held-for-investment:
Total loan balance	48,732		52,887
Consumer
Loans held-for-investment:
Total loan balance	13,360		20,460
Allowance for loan losses	$ (156)	(140)	(106)	$ (116)	$ (111)	$ (102)
Focus Business Bank
Loans held-for-investment:
Non-PCI loans acquired		$ 73,810	$ 88,453

Loans - Changes in the Allowanc

Loans - Changes in the Allowance for Loan Losses (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Changes in the Allowance for Loan Losses
Balance, beginning of period	$ 19,135	$ 19,458	$ 19,089	$ 18,926
Charge-offs	(1,702)	(23)	(2,068)	(140)
Recoveries	2,010	135	2,101	383
Net (charge-offs) recoveries	308	112	33	243
Provision (credit) for loan losses	(46)	351	275	752
Balance, end of period	19,397	19,921	19,397	19,921
Commercial
Changes in the Allowance for Loan Losses
Balance, beginning of period	11,252	11,279	10,656	10,748
Charge-offs	(1,702)	(23)	(2,068)	(140)
Recoveries	1,122	129	1,172	161
Net (charge-offs) recoveries	(580)	106	(896)	21
Provision (credit) for loan losses	587	143	1,499	759
Balance, end of period	11,259	11,528	11,259	11,528
Real estate
Changes in the Allowance for Loan Losses
Balance, beginning of period	7,743	8,068	8,327	8,076
Recoveries	888	6	929	222
Net (charge-offs) recoveries	888	6	929	222
Provision (credit) for loan losses	(649)	203	(1,274)	(21)
Balance, end of period	7,982	8,277	7,982	8,277
Consumer
Changes in the Allowance for Loan Losses
Balance, beginning of period	140	111	106	102
Provision (credit) for loan losses	16	5	50	14
Balance, end of period	$ 156	$ 116	$ 156	$ 116

Loans - Balance in the Allowanc

Loans - Balance in the Allowance for Loan Losses and the Recorded Investment in Loans by Portfolio Segment, Based on the Impairment Method (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015
Balance in the Allowance for Loan Losses and the Recorded Investment in Loans by Portfolio Segment, Based on the Impairment Method
Allowance for loan losses, Individually evaluated for impairment	$ 800		$ 329
Allowance for loan losses, Collectively evaluated for impairment	18,597		18,760
Total allowance balance	19,397	$ 19,135	19,089	$ 19,921	$ 19,458	$ 18,926
Loans, Individually evaluated for impairment	3,279		2,945
Loans, Collectively evaluated for impairment	1,563,811		1,500,177
Loans, Acquired with deteriorated credit quality			245
Loans and Leases Receivable, Gross	1,567,090		1,503,367
Commercial
Balance in the Allowance for Loan Losses and the Recorded Investment in Loans by Portfolio Segment, Based on the Impairment Method
Allowance for loan losses, Individually evaluated for impairment	800		329
Allowance for loan losses, Collectively evaluated for impairment	10,459		10,327
Total allowance balance	11,259	11,252	10,656	11,528	11,279	10,748
Loans, Individually evaluated for impairment	2,188		2,057
Loans, Collectively evaluated for impairment	608,470		602,029
Loans, Acquired with deteriorated credit quality			245
Loans and Leases Receivable, Gross	610,658		604,331
Real estate
Balance in the Allowance for Loan Losses and the Recorded Investment in Loans by Portfolio Segment, Based on the Impairment Method
Allowance for loan losses, Collectively evaluated for impairment	7,982		8,327
Total allowance balance	7,982	7,743	8,327	8,277	8,068	8,076
Loans, Individually evaluated for impairment	1,090		885
Loans, Collectively evaluated for impairment	941,982		877,691
Loans and Leases Receivable, Gross	943,072		878,576
Consumer
Balance in the Allowance for Loan Losses and the Recorded Investment in Loans by Portfolio Segment, Based on the Impairment Method
Allowance for loan losses, Collectively evaluated for impairment	156		106
Total allowance balance	156	$ 140	106	$ 116	$ 111	$ 102
Loans, Individually evaluated for impairment	1		3
Loans, Collectively evaluated for impairment	13,359		20,457
Loans and Leases Receivable, Gross	$ 13,360		$ 20,460

Loans - Loans Held for Investme

Loans - Loans Held for Investment Individually Evaluated for Impairment by Class of Loans (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016	Jun. 30, 2016
Unpaid Principal Balance
Total with no related allowance recorded	$ 2,271	$ 3,574
Total with an allowance recorded	1,027	494
Total	3,298	4,068
Recorded Investment
Total with no related allowance recorded	2,252	2,696
Total with an allowance recorded	1,027	494
Total	3,279	3,190	$ 4,501
Total with an allowance recorded, Allowance for Loan Losses Allocated	800	329
Commercial
Unpaid Principal Balance
Total with no related allowance recorded	1,161	1,808
Total with an allowance recorded	1,027
Recorded Investment
Total with no related allowance recorded	1,161	1,808
Total with an allowance recorded	1,027	494
Total with an allowance recorded, Allowance for Loan Losses Allocated	800	329
Consumer
Unpaid Principal Balance
Total with no related allowance recorded	1	3
Recorded Investment
Total with no related allowance recorded	1	3
Commercial | Real estate
Unpaid Principal Balance
Total with no related allowance recorded	501	1,278
Recorded Investment
Total with no related allowance recorded	501	419
Land and construction | Real estate
Unpaid Principal Balance
Total with no related allowance recorded	208	218
Recorded Investment
Total with no related allowance recorded	189	199
Home equity | Real estate
Unpaid Principal Balance
Total with no related allowance recorded	400	267
Recorded Investment
Total with no related allowance recorded	$ 400	$ 267

Loans - Interest Recognized and

Loans - Interest Recognized and Cash Basis Interest Earned on Impaired Loans (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Interest Recognized and Cash Basis Interest Earned on Impaired Loans
Average of impaired loans during the period	$ 4,406	$ 4,415	$ 4,001	$ 5,119
Commercial
Interest Recognized and Cash Basis Interest Earned on Impaired Loans
Average of impaired loans during the period	3,181	560
Real estate
Interest Recognized and Cash Basis Interest Earned on Impaired Loans
Average of impaired loans during the period				3
Consumer
Interest Recognized and Cash Basis Interest Earned on Impaired Loans
Average of impaired loans during the period	2	3	2
Commercial | Real estate
Interest Recognized and Cash Basis Interest Earned on Impaired Loans
Average of impaired loans during the period			2,888	1,124
CRE | Real estate
Interest Recognized and Cash Basis Interest Earned on Impaired Loans
Average of impaired loans during the period	706	2,880	611	2,917
Land and construction | Real estate
Interest Recognized and Cash Basis Interest Earned on Impaired Loans
Average of impaired loans during the period	192	210	194	213
Home equity | Real estate
Interest Recognized and Cash Basis Interest Earned on Impaired Loans
Average of impaired loans during the period	$ 325	$ 762	$ 306	$ 862

Loans - Nonperforming Loans (De

Loans - Nonperforming Loans (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016	Jun. 30, 2016
Nonaccrual loans	$ 2,987	$ 3,059	$ 4,360
Restructured and loans over 90 days past due and still accruing	171
Total nonperforming loans	3,158	3,059	4,360
Other restructured loans	121	131	141
Total	$ 3,279	$ 3,190	$ 4,501

Loans - Nonperforming Loans by

Loans - Nonperforming Loans by Class (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016	Jun. 30, 2016
Nonperforming Loans by Class
Nonaccrual loans	$ 2,987	$ 3,059	$ 4,360
Restructured and Loans Over 90 Days Past Due and Still Accruing	171
Total	3,158	3,059	$ 4,360
Commercial
Nonperforming Loans by Class
Nonaccrual loans	1,896	2,171
Restructured and Loans Over 90 Days Past Due and Still Accruing	171
Total	2,067	2,171
Consumer
Nonperforming Loans by Class
Nonaccrual loans	1	3
Total	1	3
CRE | Real estate
Nonperforming Loans by Class
Nonaccrual loans	501	419
Total	501	419
Land and construction | Real estate
Nonperforming Loans by Class
Nonaccrual loans	189	199
Total	189	199
Home equity | Real estate
Nonperforming Loans by Class
Nonaccrual loans	400	267
Total	$ 400	$ 267

Loans - Aging of Past Due Loans

Loans - Aging of Past Due Loans by Class of Loans - Tabular Disclosure (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Aging of Past Due Loans by Class of Loans
Total Past Due	$ 4,647	$ 7,989
Loans Not Past Due	1,562,443	1,495,378
Total loan balance	1,567,090	1,503,367
30-59 Days Past Due
Aging of Past Due Loans by Class of Loans
Total Past Due	2,548	4,630
60-89 Days Past Due
Aging of Past Due Loans by Class of Loans
Total Past Due	524	1,124
90 Days or Greater Past Due
Aging of Past Due Loans by Class of Loans
Total Past Due	1,575	2,235
Commercial
Aging of Past Due Loans by Class of Loans
Total Past Due	4,454	6,891
Loans Not Past Due	606,204	597,440
Total loan balance	610,658	604,331
Commercial | 30-59 Days Past Due
Aging of Past Due Loans by Class of Loans
Total Past Due	2,544	3,998
Commercial | 60-89 Days Past Due
Aging of Past Due Loans by Class of Loans
Total Past Due	524	857
Commercial | 90 Days or Greater Past Due
Aging of Past Due Loans by Class of Loans
Total Past Due	1,386	2,036
Real estate
Aging of Past Due Loans by Class of Loans
Total loan balance	943,072	878,576
Consumer
Aging of Past Due Loans by Class of Loans
Loans Not Past Due	13,360	20,460
Total loan balance	13,360	20,460
Commercial | Real estate
Aging of Past Due Loans by Class of Loans
Total Past Due		632
Loans Not Past Due		661,596
Total loan balance	731,537	662,228
Commercial | Real estate | 30-59 Days Past Due
Aging of Past Due Loans by Class of Loans
Total Past Due		632
CRE | Real estate
Aging of Past Due Loans by Class of Loans
Total Past Due	4
Loans Not Past Due	731,533
Total loan balance	731,537	662,228
CRE | Real estate | 30-59 Days Past Due
Aging of Past Due Loans by Class of Loans
Total Past Due	4
Land and construction | Real estate
Aging of Past Due Loans by Class of Loans
Total Past Due	189	199
Loans Not Past Due	82,684	80,803
Total loan balance	82,873	81,002
Land and construction | Real estate | 90 Days or Greater Past Due
Aging of Past Due Loans by Class of Loans
Total Past Due	189	199
Home equity | Real estate
Aging of Past Due Loans by Class of Loans
Total Past Due		267
Loans Not Past Due	79,930	82,192
Total loan balance	79,930	82,459
Home equity | Real estate | 60-89 Days Past Due
Aging of Past Due Loans by Class of Loans
Total Past Due		267
Residential mortgages | Real estate
Aging of Past Due Loans by Class of Loans
Loans Not Past Due	48,732	52,887
Total loan balance	$ 48,732	$ 52,887

Loans - Aging of Past Due Loa59

Loans - Aging of Past Due Loans by Class of Loans - Additional Information (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016	Jun. 30, 2016
Aging of Past Due Loans by Class of Loans
Past due loans 30 day or greater	$ 4,647	$ 7,989
Nonaccrual loans	2,987	3,059	$ 4,360
30 days or greater past due
Aging of Past Due Loans by Class of Loans
Nonaccrual loans	1,511	2,057
Less than 30 days past due
Aging of Past Due Loans by Class of Loans
Nonaccrual loans	$ 1,476	$ 1,002

Loans - Credit Quality Indicato

Loans - Credit Quality Indicators (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Loans
Balance to report	$ 1,546,927	$ 1,483,518
Loan classified as loss
Loans
Balance to report	$ 0	$ 0

Loans - Summary of the Loan Por

Loans - Summary of the Loan Portfolio by Loan Type and Credit Quality Classification (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Loans
Total	$ 1,567,090	$ 1,503,367
Nonclassified
Loans
Total	1,559,788	1,490,043
Classified
Loans
Total	7,302	13,324
Commercial
Loans
Total	610,658	604,331
Commercial | Nonclassified
Loans
Total	605,145	594,255
Commercial | Classified
Loans
Total	5,513	10,076
Real estate
Loans
Total	943,072	878,576
Consumer
Loans
Total	13,360	20,460
Consumer | Nonclassified
Loans
Total	13,359	20,455
Consumer | Classified
Loans
Total	1	5
Commercial | Real estate
Loans
Total	731,537	662,228
CRE | Real estate
Loans
Total	731,537	662,228
CRE | Real estate | Nonclassified
Loans
Total	730,832	659,777
CRE | Real estate | Classified
Loans
Total	705	2,451
Land and construction | Real estate
Loans
Total	82,873	81,002
Land and construction | Real estate | Nonclassified
Loans
Total	82,684	80,803
Land and construction | Real estate | Classified
Loans
Total	189	199
Home equity | Real estate
Loans
Total	79,930	82,459
Home equity | Real estate | Nonclassified
Loans
Total	79,036	81,866
Home equity | Real estate | Classified
Loans
Total	894	593
Residential mortgages | Real estate
Loans
Total	48,732	52,887
Residential mortgages | Real estate | Nonclassified
Loans
Total	$ 48,732	$ 52,887

Loans - Troubled Debt Restructu

Loans - Troubled Debt Restructurings (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Loans
Recorded investment of troubled debt restructurings	$ 121	$ 133
Troubled debt restructurings, nonaccrual loans	1	2
Troubled debt restructurings, accruing loans	120	131
Specific reserves	2
Additional loan committed on any loans classified as troubled debt restructuring.	$ 0	$ 0

Loans - Troubled Debt Restruc63

Loans - Troubled Debt Restructurings by Class (Details) - contract	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Loans
Number of Contracts	0	0	0	0

Loans - Defaults on Troubled De

Loans - Defaults on Troubled Debt Restructurings (Details) - item	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Loans
Default period contractually past due under modified terms (in days)			30 days
Number of defaults on troubled debt restructurings	0	0	0	0
Period of consecutive payments (in months)			6 months

Goodwill and Other Intangible65

Goodwill and Other Intangible Assets - Goodwill (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2017	Dec. 31, 2016	Jun. 30, 2016
Goodwill
Goodwill	$ 45,664	$ 45,664	$ 45,664
BVF/CSNK
Goodwill
Goodwill acquired	13,044
Focus Business Bank
Goodwill
Goodwill acquired	$ 32,620

Goodwill and Other Intangible66

Goodwill and Other Intangible Assets - Other Intangible Assets (Details) - USD ($) $ in Thousands	Aug. 20, 2015	Nov. 01, 2014	Jun. 30, 2007	Jun. 30, 2017	Dec. 31, 2016
Diablo Valley Bank
Other Intangible Assets
Accumulated amortization					$ 4,854
Diablo Valley Bank | Core deposit
Other Intangible Assets
Intangible assets acquired			$ 5,049
Useful life, amortization period			10 years
Focus Business Bank | Core deposit
Other Intangible Assets
Intangible assets acquired	$ 6,285
Accumulated amortization				$ 1,557	1,120
Useful life, amortization period	10 years
BVF/CSNK
Other Intangible Assets
Accumulated amortization				$ 824	$ 669
BVF/CSNK | Below market-value lease
Other Intangible Assets
Intangible assets acquired		$ 109
Useful life, amortization period		3 years
BVF/CSNK | Customer relationship and brokered relationship
Other Intangible Assets
Intangible assets acquired		$ 1,900
Useful life, amortization period		10 years
BVF/CSNK | Non-compete agreement
Other Intangible Assets
Intangible assets acquired		$ 250
Useful life, amortization period		3 years

Goodwill and Other Intangible67

Goodwill and Other Intangible Assets - Estimated Amortization Expense (Details) $ in Thousands	Jun. 30, 2017USD ($)
Estimated Amortization Expense
2,017	$ 1,361
2,018	965
2,019	924
2,020	906
2,021	786
2,022	692
Total	5,634
Diablo Valley Bank | Core deposit
Estimated Amortization Expense
2,017	195
Total	195
Focus Business Bank | Core deposit
Estimated Amortization Expense
2,017	875
2,018	775
2,019	734
2,020	716
2,021	596
2,022	502
Total	4,198
BVF/CSNK | Below market-value lease
Estimated Amortization Expense
2,017	31
Total	31
BVF/CSNK | Customer relationship and brokered relationship
Estimated Amortization Expense
2,017	190
2,018	190
2,019	190
2,020	190
2,021	190
2,022	190
Total	1,140
BVF/CSNK | Non-compete agreement
Estimated Amortization Expense
2,017	70
Total	$ 70

Goodwill and Other Intangible68

Goodwill and Other Intangible Assets - Impairment of Intangible Assets (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Impairment of Intangible Assets
Impairment of intangible assets	$ 0	$ 0

Income Taxes - Net Deferred Tax

Income Taxes - Net Deferred Tax Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Net deferred tax assets
Net deferred tax assets	$ 22,577	$ 25,058

Income Taxes - Carry Amounts of

Income Taxes - Carry Amounts of the Low Income Housing Investments (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Income Taxes
Low income housing investments	$ 3,641	$ 3,880
Future commitments	$ 365	$ 365

Income Taxes - Future Commitmen

Income Taxes - Future Commitments of the Low Income Housing Investments (Details) - Low income housing investments $ in Thousands	Jun. 30, 2017USD ($)
Future Commitments
2,017	$ 68
2,018	14
2019 through 2023	$ 283

Income Taxes - Components of Lo

Income Taxes - Components of Low Income Housing Investment (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Income Taxes
Low income housing tax credits	$ 110	$ 111	$ 220	$ 222
Low income housing investment losses	$ 115	$ 118	$ 230	$ 235

Benefit Plans - Defined Benefit

Benefit Plans - Defined Benefit Plans - Nonqualified Defined Benefit Pension Plan (Details) $ in Thousands	Jun. 30, 2017USD ($)
Supplemental Retirement Plan
Supplemental Retirement Plan
Plan assets associated with the plan	$ 0

Benefit Plans - Defined Benef74

Benefit Plans - Defined Benefit Plans - Components of Pension Cost (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Supplemental Retirement Plan
Components of net periodic benefit cost:
Service cost	$ 81	$ 133	$ 162	$ 266
Interest cost	259	259	518	518
Amortization of net actuarial loss	69	60	138	120
Net periodic benefit cost	409	452	818	904
Split-Dollar Life Insurance Benefit Plan
Components of net periodic benefit cost:
Amortization of prior transition obligation	(17)	(13)	(35)	(26)
Interest cost	60	62	121	124	$ 248
Net periodic benefit cost	$ 43	$ 49	$ 86	$ 98

Benefit Plans - Defined Benef75

Benefit Plans - Defined Benefit Plans - Change in Projected Benefit Obligation (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Split-Dollar Life Insurance Benefit Plan
Change in projected benefit obligation:
Projected benefit obligation at beginning of year			$ 6,301	$ 6,215	$ 6,215
Actuarial gain					(162)
Interest cost	$ 60	$ 62	121	124	248
Projected benefit obligation at end of period	6,422		6,422		$ 6,301
Supplemental Retirement Plan
Change in projected benefit obligation:
Service cost	81	133	162	266
Interest cost	$ 259	$ 259	$ 518	$ 518

Benefit Plans - Defined Benef76

Benefit Plans - Defined Benefit Plans - Amounts Recognized in Accumulated Other Comprehensive Loss (Details) - Split-Dollar Life Insurance Benefit Plan - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Amounts Recognized in Accumulated Other Comprehensive Loss
Net actuarial loss	$ 2,206	$ 2,126
Prior transition obligation	1,283	1,328
Accumulated other comprehensive loss	$ 3,489	$ 3,454

Fair Value - Financial Assets a

Fair Value - Financial Assets and Liabilities Measured on a Recurring Basis (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Financial Assets and Liabilities Measured on a Recurring Basis
Securities available-for-sale	$ 369,901	$ 306,589
I/O strip receivables	1,028	1,067
Agency mortgage-backed securities
Financial Assets and Liabilities Measured on a Recurring Basis
Securities available-for-sale	353,026	290,989
Trust preferred securities
Financial Assets and Liabilities Measured on a Recurring Basis
Securities available-for-sale	16,875	15,600
Significant Other Observable Inputs (Level 2)
Financial Assets and Liabilities Measured on a Recurring Basis
I/O strip receivables	1,028	1,067
Significant Other Observable Inputs (Level 2) | Agency mortgage-backed securities
Financial Assets and Liabilities Measured on a Recurring Basis
Securities available-for-sale	353,026	290,989
Significant Other Observable Inputs (Level 2) | Trust preferred securities
Financial Assets and Liabilities Measured on a Recurring Basis
Securities available-for-sale	16,875	15,600
Recurring basis
Transfers between Level 1 and Level 2
Transfers between Level 1 and Level 2	0	0
Transfers between Level 2 and Level 1	$ 0	$ 0

Fair Value - Financial Assets78

Fair Value - Financial Assets and Liabilities Measured on a Non-Recurring Basis (Details) - Non-recurring basis - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Financial Assets and Liabilities Measured on a Non-Recurring Basis
Impaired loans - held-for-investment:	$ 416	$ 783
Foreclosed Assets Fair Value Disclosure		229
Significant Unobservable Inputs (Level 3)
Financial Assets and Liabilities Measured on a Non-Recurring Basis
Impaired loans - held-for-investment:	416	783
Foreclosed Assets Fair Value Disclosure		229
Commercial | Commercial
Financial Assets and Liabilities Measured on a Non-Recurring Basis
Impaired loans - held-for-investment:	227	165
Commercial | Commercial | Significant Unobservable Inputs (Level 3)
Financial Assets and Liabilities Measured on a Non-Recurring Basis
Impaired loans - held-for-investment:	227	165
Land and construction
Financial Assets and Liabilities Measured on a Non-Recurring Basis
Foreclosed Assets Fair Value Disclosure		229
Land and construction | Significant Unobservable Inputs (Level 3)
Financial Assets and Liabilities Measured on a Non-Recurring Basis
Foreclosed Assets Fair Value Disclosure		229
Land and construction | Real estate
Financial Assets and Liabilities Measured on a Non-Recurring Basis
Impaired loans - held-for-investment:	189	199
Land and construction | Real estate | Significant Unobservable Inputs (Level 3)
Financial Assets and Liabilities Measured on a Non-Recurring Basis
Impaired loans - held-for-investment:	$ 189	199
CRE | Real estate
Financial Assets and Liabilities Measured on a Non-Recurring Basis
Impaired loans - held-for-investment:		419
CRE | Real estate | Significant Unobservable Inputs (Level 3)
Financial Assets and Liabilities Measured on a Non-Recurring Basis
Impaired loans - held-for-investment:		$ 419

Fair Value - Impaired Loans Hel

Fair Value - Impaired Loans Held-for-investment - Tabular Disclosure (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Impaired Loans Held-for-investment
Impaired loans held-for-investment	$ 3,279	$ 3,190
Carried at fair value
Impaired Loans Held-for-investment
Impaired loans held-for-investment	1,216	1,112
Specific valuation allowance	(800)	(329)
Impaired loans held-for-investment carried at fair value, net	416	783
Portion carried at cost
Impaired Loans Held-for-investment
Impaired loans held-for-investment	$ 2,063	$ 2,078

Fair Value - Impaired Loans H80

Fair Value - Impaired Loans Held-for-investment - Additional Disclosures (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Impaired Loans Held-for-investment
Impaired loans held-for-investment	$ 3,279	$ 3,190
Additional provision (credit) for loan losses	766	320
Valuation allowance on foreclosed assets	0	0
Partial charge-offs		0
Carrying amount
Impaired Loans Held-for-investment
Foreclosed assets	183	229
Carried at fair value
Impaired Loans Held-for-investment
Impaired loans held-for-investment	1,216	1,112
Specific valuation allowance	800	329
Portion carried at cost
Impaired Loans Held-for-investment
Impaired loans held-for-investment	$ 2,063	$ 2,078

Fair Value - Quantitative Infor

Fair Value - Quantitative Information about Level 3 Fair Value Measurements (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Non-recurring basis
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis
Impaired loans - held-for-investment, Fair Value	$ 416	$ 783
Non-recurring basis | Significant Unobservable Inputs (Level 3)
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis
Impaired loans - held-for-investment, Fair Value	$ 416	783
Commercial | Non-recurring basis | Significant Unobservable Inputs (Level 3) | Market Approach
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis
Impaired loans - held-for-investment, Fair Value		$ 165
Commercial | Non-recurring basis | Significant Unobservable Inputs (Level 3) | Market Approach | Maximum
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis
Discount adjustment for differences between comparable sales (as a percent)	1.00%	1.00%
Foreclosed Assets | Non-recurring basis | Significant Unobservable Inputs (Level 3) | Foreclosed assets - commercial | Market Approach | Minimum
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis
Discount adjustment for differences between comparable sales (as a percent)		0.00%
Foreclosed Assets | Non-recurring basis | Significant Unobservable Inputs (Level 3) | Foreclosed assets - commercial | Market Approach | Maximum
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis
Discount adjustment for differences between comparable sales (as a percent)		2.00%
Foreclosed Assets | Non-recurring basis | Significant Unobservable Inputs (Level 3) | Foreclosed assets - land and construction | Market Approach
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis
Impaired loans - held-for-investment, Fair Value		$ 229
Commercial | Commercial | Significant Unobservable Inputs (Level 3) | Market Approach
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis
Impaired loans - held-for-investment, Fair Value	$ 227
Commercial | Commercial | Non-recurring basis
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis
Impaired loans - held-for-investment, Fair Value	227	165
Commercial | Commercial | Non-recurring basis | Significant Unobservable Inputs (Level 3)
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis
Impaired loans - held-for-investment, Fair Value	$ 227	165
Commercial | Real estate | Non-recurring basis | Significant Unobservable Inputs (Level 3) | Market Approach
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis
Impaired loans - held-for-investment, Fair Value		$ 419
Commercial | Real estate | Non-recurring basis | Significant Unobservable Inputs (Level 3) | Market Approach | Minimum
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis
Discount adjustment for differences between comparable sales (as a percent)		0.00%
Commercial | Real estate | Non-recurring basis | Significant Unobservable Inputs (Level 3) | Market Approach | Maximum
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis
Discount adjustment for differences between comparable sales (as a percent)		3.00%
Commercial | Real estate | Non-recurring basis | Significant Unobservable Inputs (Level 3) | Market Approach | Weighted average
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis
Discount adjustment for differences between comparable sales (as a percent)		3.00%
Commercial | Foreclosed Assets | Non-recurring basis | Significant Unobservable Inputs (Level 3) | Foreclosed assets - commercial | Market Approach | Weighted average
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis
Discount adjustment for differences between comparable sales (as a percent)		2.00%
Land and construction | Non-recurring basis | Significant Unobservable Inputs (Level 3) | Market Approach | Maximum
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis
Discount adjustment for differences between comparable sales (as a percent)	1.00%
Land and construction | Real estate | Significant Unobservable Inputs (Level 3) | Market Approach
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis
Impaired loans - held-for-investment, Fair Value	$ 189
Land and construction | Real estate | Non-recurring basis
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis
Impaired loans - held-for-investment, Fair Value	189	$ 199
Land and construction | Real estate | Non-recurring basis | Significant Unobservable Inputs (Level 3)
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis
Impaired loans - held-for-investment, Fair Value	$ 189	199
Land and construction | Real estate | Non-recurring basis | Significant Unobservable Inputs (Level 3) | Market Approach
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis
Impaired loans - held-for-investment, Fair Value		$ 199
Land and construction | Real estate | Non-recurring basis | Significant Unobservable Inputs (Level 3) | Market Approach | Maximum
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis
Discount adjustment for differences between comparable sales (as a percent)		1.00%
CRE | Real estate | Non-recurring basis
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis
Impaired loans - held-for-investment, Fair Value		$ 419
CRE | Real estate | Non-recurring basis | Significant Unobservable Inputs (Level 3)
Quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis
Impaired loans - held-for-investment, Fair Value		$ 419

Fair Value - Carrying Amounts a

Fair Value - Carrying Amounts and Estimated Fair Values of Financial Instruments (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Assets
Securities available-for-sale	$ 369,901	$ 306,589
Securities held-to-maturity	366,102	318,748
I/O strips receivables	1,028	1,067
Liabilities
Subordinated Debt.	39,119
Significant Other Observable Inputs (Level 2)
Assets
I/O strips receivables	1,028	1,067
Carrying amount
Assets
Cash and cash equivalents	266,013	266,103
Securities available-for-sale	369,901	306,589
Securities held-to-maturity	368,266	324,010
Loans (including loans held-for-sale), net	1,550,647	1,489,223
FHLB and FRB stock and other investments	17,299	15,196
Accrued interest receivable	7,194	6,859
I/O strips receivables	1,028	1,067
Liabilities
Time deposits	204,361	224,717
Other deposits	2,170,370	2,037,423
Subordinated Debt.	39,119
Accrued interest payable	371	168
Carried at fair value
Assets
Cash and cash equivalents	266,013	266,103
Securities available-for-sale	369,901	306,589
Securities held-to-maturity	366,102	318,748
Loans (including loans held-for-sale), net	1,500,789	1,449,781
Accrued interest receivable	7,194	6,859
I/O strips receivables	1,028	1,067
Liabilities
Time deposits	204,636	225,047
Other deposits	2,170,370	2,037,423
Subordinated Debt.	39,319
Accrued interest payable	371	168
Carried at fair value | Quoted Prices in Active Markets for Identical Assets (Level 1)
Assets
Cash and cash equivalents	266,013	266,103
Carried at fair value | Significant Other Observable Inputs (Level 2)
Assets
Securities available-for-sale	369,901	306,589
Securities held-to-maturity	366,102	318,748
Loans (including loans held-for-sale), net	3,720	5,705
Accrued interest receivable	2,224	1,961
I/O strips receivables	1,028	1,067
Liabilities
Time deposits	204,636	225,047
Other deposits	2,170,370	2,037,423
Accrued interest payable	371	168
Carried at fair value | Significant Unobservable Inputs (Level 3)
Assets
Loans (including loans held-for-sale), net	1,497,069	1,444,076
Accrued interest receivable	4,970	$ 4,898
Liabilities
Subordinated Debt.	$ 39,319

Equity Plan - General Disclosur

Equity Plan - General Disclosures (Details) - shares	6 Months Ended
	Jun. 30, 2017	May 25, 2017	May 24, 2017
2013 Plan
Equity Plan
Number of shares authorized for equity plan		3,000,000	1,750,000
Number of shares available for future grants	1,531,058
Options
Equity Plan
Vesting period	4 years
Options | Maximum
Equity Plan
Expiration term	10 years
Restricted stock
Equity Plan
Number of equity awards issued (in shares)	82,770
Nonqualified stock options
Equity Plan
Number of equity awards issued (in shares)	247,000

Equity Plan - Stock Option Acti

Equity Plan - Stock Option Activity (Details) - Options $ / shares in Units, $ in Thousands	6 Months Ended
	Jun. 30, 2017USD ($)$ / sharesshares
Number of Shares
Outstanding at the beginning of the period (in shares)	1,719,091
Granted (in shares)	247,000
Exercised (in shares)	(97,370)
Forfeited or expired (in shares)	(138,828)
Outstanding at the end of the period (in shares)	1,729,893
Vested or expected to vest (in shares)	1,626,099
Exercisable at the end of the period (in shares)	1,126,752
Weighted Average Exercise Price
Outstanding at the beginning of the period (in dollars per share) | $ / shares	$ 9.79
Granted (in dollars per share) | $ / shares	14.48
Exercised (in dollars per share) | $ / shares	6.78
Forfeited or expired (in dollars per share) | $ / shares	23.32
Outstanding at the end of the period (in dollars per share) | $ / shares	$ 9.55
Additional Information
Weighted Average Remaining Contractual Life - Outstanding at the end of the period (in years)	6 years 6 months 11 days
Weighted Average Remaining Contractual Life - Vested or expected to vest (in years)	6 years 6 months 11 days
Weighted Average Remaining Contractual Life - Exercisable at the end of the period (in years)	5 years 3 months 7 days
Aggregate Intrinsic Value - Outstanding at the end of the period (in dollars) | $	$ 7,849,383
Aggregate Intrinsic Value - Vested or expected to vest (in dollars) | $	7,378,420
Aggregate Intrinsic Value - Exercisable at the end of the period (in dollars) | $	$ 6,387,424

Equity Plan - Unrecognized Comp

Equity Plan - Unrecognized Compensation Cost - Nonvested Stock Options (Details) - Options $ in Thousands	6 Months Ended
	Jun. 30, 2017USD ($)
Unrecognized Compensation Cost
Total unrecognized compensation cost related to nonvested stock options granted	$ 1,597
Expected weighted-average period for recognition of compensation costs related to nonvested stock options	2 years 10 months 10 days

Equity Plan - Restricted Stock

Equity Plan - Restricted Stock Activity (Details) - Restricted stock	6 Months Ended
	Jun. 30, 2017$ / sharesshares
Number of Shares
Nonvested shares at the beginning of the period (in shares) | shares	199,503
Granted (in shares) | shares	82,770
Vested (in shares) | shares	(57,454)
Forfeited or expired (in shares) | shares	(884)
Nonvested shares at the end of the period (in shares) | shares	223,935
Weighted Average Grant Date Fair Value
Nonvested shares at the beginning of the period (in dollars per share) | $ / shares	$ 9.74
Granted (in dollars per share) | $ / shares	14.36
Vested (in dollars per share) | $ / shares	9.88
Forfeited or expired (in dollars per share) | $ / shares	9.36
Nonvested shares at the end of the period (in dollars per share) | $ / shares	$ 11.41

Equity Plan - Unrecognized Co87

Equity Plan - Unrecognized Compensation Cost - Nonvested Restricted Stock Awards (Details) - Restricted stock $ in Thousands	6 Months Ended
	Jun. 30, 2017USD ($)
Unrecognized Compensation Cost
Total unrecognized compensation cost related to nonvested restricted stock awards	$ 2,257
Expected weighted-average period for recognition of compensation costs related to nonvested restricted stock awards	2 years 7 months 28 days

Subordinate Debt (Details)

Subordinate Debt (Details) - USD ($)	Jun. 01, 2022	Jun. 30, 2017	May 17, 2017
Debt Instrument [Line Items]
Principal amount			$ 40,000,000
Fixed interest rate (as a percent)		5.25%
Debt Issuance Costs		$ 898,000
Subordinated debt, net of issuance costs		$ 39,119,000
LIBOR
Debt Instrument [Line Items]
Base rate	three-month LIBOR
Rate of interest added to base rate	3.365%

Capital Requirements - General

Capital Requirements - General Information (Details) - USD ($)	3 Months Ended		6 Months Ended	12 Months Ended
	Jun. 30, 2017	Mar. 31, 2017	Jun. 30, 2017	Dec. 31, 2016
Capital Requirements
Capital conservation buffer (as a percent)			1.25%	0.625%
Subordinated debt, net of issuance costs	$ 39,119,000		$ 39,119,000
Downstream of proceeds from subordinated debt to HBC			20,000,000
HCC (Parent)
Capital Requirements
Dividends paid to parent company	$ 4,000,000	$ 4,000,000	$ 8,000,000
HBC (Wholly-owned Subsidiary)
Capital Requirements
Capital conservation buffer (as a percent)			1.25%	0.625%

Capital Requirements - Tabular

Capital Requirements - Tabular Disclosure (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Total Capital (to risk-weighted assets)
Actual, Amount	$ 282,314	$ 234,629
Required For Capital Adequacy Purposes, Amount	$ 181,707	$ 161,868
Actual, Ratio (as a percent)	14.40%	12.50%
Required For Capital Adequacy Purposes, Ratio (as a percent)	9.25%	8.625%
Capital conservation buffer (as a percent)	1.25%	0.625%
Tier 1 Capital (to risk-weighted assets)
Actual, Amount	$ 223,123	$ 214,924
Required For Capital Adequacy Purposes, Amount	$ 142,419	$ 124,333
Actual, Ratio (as a percent)	11.40%	11.50%
Required For Capital Adequacy Purposes, Ratio (as a percent)	7.25%	6.625%
Common Equity Tier 1 Capital (to risk-weighted assets)
Actual, Amount	$ 223,123	$ 214,924
Required For Capital Adequacy Purposes, Amount	$ 112,953	$ 96,183
Actual, Ratio (as a percent)	11.40%	11.50%
Required For Capital Adequacy Purposes, Ratio (as a percent)	5.75%	5.125%
Tier 1 Capital (to average assets)
Actual, Amount	$ 223,123	$ 214,924
Required For Capital Adequacy Purposes, Amount	$ 104,736	$ 100,625
Actual, Ratio (as a percent)	8.50%	8.50%
Required For Capital Adequacy Purposes, Ratio (as a percent)	4.00%	4.00%
HBC (Wholly-owned Subsidiary)
Total Capital (to risk-weighted assets)
Actual, Amount	$ 258,796	$ 231,069
To Be Well Capitalized Under Regulatory Requirements, Amount	196,333	187,602
Required For Capital Adequacy Purposes, Amount	$ 181,608	$ 161,807
Actual, Ratio (as a percent)	13.20%	12.30%
To Be Well Capitalized Under Regulatory Requirements, Ratio (as a percent)	10.00%	10.00%
Required For Capital Adequacy Purposes, Ratio (as a percent)	9.25%	8.625%
Capital conservation buffer (as a percent)	1.25%	0.625%
Tier 1 Capital (to risk-weighted assets)
Actual, Amount	$ 238,724	$ 211,364
To Be Well Capitalized Under Regulatory Requirements, Amount	157,067	150,082
Required For Capital Adequacy Purposes, Amount	$ 142,342	$ 124,287
Actual, Ratio (as a percent)	12.20%	11.30%
To Be Well Capitalized Under Regulatory Requirements, Ratio (as a percent)	8.00%	8.00%
Required For Capital Adequacy Purposes, Ratio (as a percent)	7.25%	6.625%
Common Equity Tier 1 Capital (to risk-weighted assets)
Actual, Amount	$ 238,724	$ 211,364
To Be Well Capitalized Under Regulatory Requirements, Amount	127,617	121,942
Required For Capital Adequacy Purposes, Amount	$ 112,892	$ 96,146
Actual, Ratio (as a percent)	12.20%	11.30%
To Be Well Capitalized Under Regulatory Requirements, Ratio (as a percent)	6.50%	6.50%
Required For Capital Adequacy Purposes, Ratio (as a percent)	5.75%	5.125%
Tier 1 Capital (to average assets)
Actual, Amount	$ 238,724	$ 211,364
To Be Well Capitalized Under Regulatory Requirements, Amount	130,872	125,746
Required For Capital Adequacy Purposes, Amount	$ 104,697	$ 100,597
Actual, Ratio (as a percent)	9.10%	8.40%
To Be Well Capitalized Under Regulatory Requirements, Ratio (as a percent)	5.00%	5.00%
Required For Capital Adequacy Purposes, Ratio (as a percent)	4.00%	4.00%

Capital Requirements - Dividend

Capital Requirements - Dividends to Parent (Details) - HCC (Parent) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Mar. 31, 2017	Jun. 30, 2017
Cash dividend
Cash dividend available	$ 25,260,000		$ 25,260,000
Dividends paid to parent company	$ 4,000,000	$ 4,000,000	$ 8,000,000

Noninterest Expense (Details)

Noninterest Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Noninterest Expense
Salaries and employee benefits	$ 9,209	$ 8,742	$ 18,695	$ 17,689
Occupancy and equipment	1,216	1,081	2,284	2,157
Professional fees	673	708	1,744	1,533
Amortization on intangible assets	442	392	787	784
Software subscriptions	441	376	858	717
Insurance expense	370	307	722	606
Data processing	286	371	669	771
FDIC deposit insurance premiums	259	327	556	658
Other	2,358	2,077	4,267	4,151
Total noninterest expense	$ 15,254	$ 14,381	$ 30,582	$ 29,066

Business Segment Information -

Business Segment Information - Business Segments (Details)	6 Months Ended
	Jun. 30, 2017segmentitem
Business Segment Information
Number of business segments | segment	2
Focus Business Bank
Business Segment Information
Number of business segments | item	2

Business Segment Information 94

Business Segment Information - Operating Statements (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Operating Income
Interest income	$ 26,107	$ 23,504	$ 50,804	$ 46,566
Total interest expense	1,174	760	2,045	1,518
Net interest income	24,933	22,744	48,759	45,048
Provision for loan losses	(46)	351	275	752
Net interest income after provision	24,979	22,393	48,484	44,296
Noninterest income	2,293	3,660	4,588	6,274
Noninterest expense	15,254	14,381	30,582	29,066
Income before income taxes	12,018	11,672	22,490	21,504
Income tax expense	4,569	4,377	8,503	8,103
Net income	7,449	7,295	13,987	13,401
Total assets	2,732,900	2,378,292	2,732,900	2,378,292	$ 2,570,880
Loans, net of deferred fees	1,566,324	1,464,114	1,566,324	1,464,114	1,502,607
Goodwill	45,664	45,664	45,664	45,664	$ 45,664
Banking
Operating Income
Interest income	23,372	20,301	45,341	40,509
Intersegment interest allocations	242	304	502	549
Total interest expense	1,174	760	2,045	1,518
Net interest income	22,440	19,845	43,798	39,540
Provision for loan losses	(46)	325	265	712
Net interest income after provision	22,486	19,520	43,533	38,828
Noninterest income	1,937	3,497	4,052	5,909
Noninterest expense	13,424	12,602	27,003	25,654
Intersegment expense allocations	129	214	262	389
Income before income taxes	11,128	10,629	20,844	19,472
Income tax expense	4,196	3,940	7,812	7,250
Net income	6,932	6,689	13,032	12,222
Total assets	2,676,599	2,311,058	2,676,599	2,311,058
Loans, net of deferred fees	1,523,928	1,412,317	1,523,928	1,412,317
Goodwill	32,620	32,620	32,620	32,620
Factoring
Operating Income
Interest income	2,735	3,203	5,463	6,057
Intersegment interest allocations	(242)	(304)	(502)	(549)
Net interest income	2,493	2,899	4,961	5,508
Provision for loan losses		26	10	40
Net interest income after provision	2,493	2,873	4,951	5,468
Noninterest income	356	163	536	365
Noninterest expense	1,830	1,779	3,579	3,412
Intersegment expense allocations	(129)	(214)	(262)	(389)
Income before income taxes	890	1,043	1,646	2,032
Income tax expense	373	437	691	853
Net income	517	606	955	1,179
Total assets	56,301	67,234	56,301	67,234
Loans, net of deferred fees	42,396	51,797	42,396	51,797
Goodwill	$ 13,044	$ 13,044	$ 13,044	$ 13,044

Subsequent Events (Details)

Subsequent Events (Details) - $ / shares	Jul. 27, 2017	Jun. 30, 2017	Jun. 30, 2016
Common stock
Quarterly cash dividends declared to holders of common stock		$ 0.20	$ 0.18
Subsequent Event
Common stock
Quarterly cash dividends declared to holders of common stock	$ 0.10