FCB Financial 10-Q 2015 Q3 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2015

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                    to                    

Commission file number 001-36586

FCB FINANCIAL HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Delaware	001-36586	27-0775699
(State or other jurisdiction of incorporation)	(Commission file number)	(IRS Employer Identification Number)

2500 Weston Road, Suite 300

Weston, Florida 33331

(Address of principal executive offices)

(954) 984-3313

(Registrant’s telephone number, including area code)

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

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

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

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	x	Smaller reporting company	¨

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

As of November 2, 2015, the registrant had 36,901,374 shares of Class A Common Stock and 4,075,960 shares of Class B Non-voting Common Stock outstanding.

FCB FINANCIAL HOLDINGS, INC.

FORM 10-Q

INDEX

PART I.	FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements (Unaudited)
	Consolidated Balance Sheets	3
	Consolidated Statements of Income	4
	Consolidated Statements of Comprehensive Income	5
	Consolidated Statements of Changes in Stockholders’ Equity	6
	Consolidated Statements of Cash Flows	7
	Notes to Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	40
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	68
Item 4.	Controls and Procedures	68
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	69
Item 1A.	Risk Factors	69
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	69
Item 3.	Default Upon Senior Securities	69
Item 4.	Mine Safety Disclosures	69
Item 5.	Other Information	69
Item 6.	Exhibits	69
	Signatures	70

2

FCB FINANCIAL HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Dollars in thousands, except share and per share data)

	September 30, 2015			December 31, 2014
Assets:
Cash and due from banks	$	38,045		$	25,397
Interest-earning deposits in other banks		46,714			81,688
Investment securities:
Available for sale securities, at fair value		1,467,819			1,359,098
Federal Home Loan Bank and other bank stock, at cost		65,955			66,891
Total investment securities		1,533,774			1,425,989
Loans held for sale		2,573			707
Loans:
New loans		4,158,997			3,103,417
Acquired loans ($0 and $273,366 covered by FDIC loss share, respectively)		647,139			826,173
Allowance for loan losses		(27,394	)		(22,880	)
Loans, net		4,778,742			3,906,710
FDIC loss share indemnification asset		—			63,168
Due from FDIC		—			1,735
Premises and equipment, net		37,351			38,962
Other real estate owned ($0 and $25,130 of foreclosed property covered by FDIC loss share, respectively)		40,405			74,527
Goodwill and other intangible assets		87,484			88,615
Deferred tax assets, net (including valuation allowance of $9,126 and $9,151, respectively)		78,090			47,441
Bank-owned life insurance		166,931			139,829
Other assets		78,580			62,860
Total assets	$	6,888,689		$	5,957,628
Liabilities and Stockholders’ Equity
Liabilities:
Deposits:
Transaction accounts:
Noninterest-bearing	$	618,741		$	593,025
Interest-bearing		2,678,410			2,308,657
Total transaction accounts		3,297,151			2,901,682
Time deposits		1,524,693			1,076,853
Total deposits		4,821,844			3,978,535
Borrowings (including FHLB advances of $986,050 and $983,686, respectively)		1,149,920			1,067,981
Other liabilities		61,047			59,459
Total liabilities		6,032,811			5,105,975
Commitments and contingencies (Note 12)
Stockholders’ Equity:
Class A common stock, par value $0.001 per share; 100 million shares authorized; 38,661,335, 35,396,962 issued and 36,895,120, 34,469,650 outstanding		39			36
Class B common stock, par value $0.001 per share; 50 million shares authorized; 4,281,212, 7,132,180 issued and 4,089,080, 6,940,048 outstanding		4			7
Additional paid-in capital		846,017			834,538
Retained earnings		58,786			35,144
Accumulated other comprehensive income (loss)		(2,905	)		679
Treasury stock, at cost; 1,766,215, 927,312 Class A and 192,132, 192,132 Class B common shares		(46,063	)		(18,751	)
Total stockholders’ equity		855,878			851,653
Total liabilities and stockholders’ equity	$	6,888,689		$	5,957,628

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

3

FCB FINANCIAL HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(Dollars in thousands, except share and per share data)

	Three Months Ended September 30,					Nine Months Ended September 30,
	2015		2014			2015			2014
Interest income:
Interest and fees on loans	$	51,670	$	42,085		$	139,178		$	114,770
Interest and dividends on investment securities		13,315		11,530			38,594			32,094
Other interest income		38		37			111			158
Total interest income		65,023		53,652			177,883			147,022
Interest expense:
Interest on deposits		6,846		6,124			18,422			17,266
Interest on borrowings		1,408		1,633			3,634			4,363
Total interest expense		8,254		7,757			22,056			21,629
Net interest income		56,769		45,895			155,827			125,393
Provision for loan losses		675		2,805			4,494			7,131
Net interest income after provision for loan losses		56,094		43,090			151,333			118,262
Noninterest income:
Service charges and fees		823		738			2,358			2,183
Loan and other fees		1,783		1,238			6,186			4,523
Bank-owned life insurance income		1,101		1,151			3,295			3,007
FDIC loss share indemnification loss		—		(5,862	)		(65,529	)		(16,101	)
Income from resolution of acquired assets		2,225		1,109			8,495			3,838
Gain (loss) on sales of other real estate owned		228		(128	)		7,398			(56	)
Gain (loss) on investment securities		166		2,785			1,934			9,728
Other noninterest income		746		1,319			2,998			4,466
Total noninterest income		7,072		2,350			(32,865	)		11,588
Noninterest expense:
Salaries and employee benefits		16,840		28,525			51,271			58,356
Occupancy and equipment expenses		3,368		3,606			10,451			10,816
Loan and other real estate related expenses		1,939		3,203			5,440			10,302
Professional services		1,166		1,203			3,761			4,387
Data processing and network		2,433		2,538			7,952			8,105
Regulatory assessments and insurance		1,919		2,466			6,130			6,160
Amortization of intangibles		400		426			1,231			1,285
Other operating expenses		2,641		6,992			7,167			14,758
Total noninterest expense		30,706		48,959			93,403			114,169
Income (loss) before income tax expense (benefit)		32,460		(3,519	)		25,065			15,681
Income tax expense (benefit)		11,320		(97	)		1,423			6,409
Net income (loss)	$	21,140	$	(3,422	)	$	23,642		$	9,272
Earnings (loss) per share:
Basic	$	0.51	$	(0.09	)	$	0.57		$	0.25
Diluted	$	0.48	$	(0.09	)	$	0.55		$	0.25
Weighted average shares outstanding:
Basic		41,381,482		38,952,127			41,410,494			36,923,354
Diluted		43,798,378		38,952,127			43,112,947			37,094,590

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

4

FCB FINANCIAL HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(Dollars in thousands)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Net income (loss)	$	21,140		$	(3,422	)	$	23,642		$	9,272
Other comprehensive income (loss):
Unrealized net holding gains (losses) on investment securities available for sale, net of taxes of $1,784, $5,001, $1,283 and $(2,605), respectively		(2,841	)		(7,961	)		(2,042	)		4,148
Reclassification adjustment for realized (gains) losses on investment securities available for sale included in net income, net of taxes of $90, $818, $969, and $2,298, respectively		(142	)		(1,303	)		(1,542	)		(3,660	)
Total other comprehensive income (loss)		(2,983	)		(9,264	)		(3,584	)		488
Total comprehensive income (loss)	$	18,157		$	(12,686	)	$	20,058		$	9,760

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

5

FCB FINANCIAL HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited)

(Dollars in thousands, except for share data)

	Common Stock Shares Outstanding						Common Stock Issued					Additional Paid in			Retained Earnings		Treasury			Accumulated Other Comprehensive			Total Stockholders’
	Class A			Class B			Class A		Class B			Capital			(Deficit)		Stock			Income (Loss)			Equity
Balance as of January 1, 2014		28,065,002			7,827,152		$	29	$	8		$	723,631		$	12,772	$	(18,751	)	$	(1,575	)	$	716,114
Net income (loss)		—			—			—		—			—			9,272		—			—			9,272
Shares issued in offering, net		5,274,045			—			6		—			104,469			—		—			—			104,475
Settlement of RSU shares		243,499			—			—		—			(5,688	)		—		—			—			(5,688	)
Deferred placement fee		—			—			—		—			(10,000	)		—		—			—			(10,000	)
Exchange of B shares to A shares		885,367			(885,367	)		1		(1	)		—			—		—			—			—
Stock-based compensation, RSU and warrant expense		—			—			—		—			20,571			—		—			—			20,571
Other		—			—			—		—			495			—		—			—			495
Other comprehensive income (loss)		—			—			—		—			—			—		—			488			488
Balance as of September 30, 2014		34,467,913			6,941,785		$	36	$	7		$	833,478		$	22,044	$	(18,751	)	$	(1,087	)	$	835,727
Balance as of January 1, 2015		34,469,650			6,940,048		$	36	$	7		$	834,538		$	35,144	$	(18,751	)	$	679		$	851,653
Net income (loss)		—			—			—		—			—			23,642		—			—			23,642
Exchange of B shares to A shares		2,850,968			(2,850,968	)		3		(3	)		—			—		—			—			—
Stock-based compensation, RSU and warrant expense		—			—			—		—			4,588			—		—			—			4,588
Treasury stock purchase		(838,903	)															(27,312	)					(27,312	)
Exercise of stock options		413,405											6,935											6,935
Other		—			—			—		—			(44	)		—		—			—			(44	)
Other comprehensive income (loss)		—			—			—		—			—			—		—			(3,584	)		(3,584	)
Balance as of September 30, 2015		36,895,120			4,089,080		$	39	$	4		$	846,017		$	58,786	$	(46,063	)	$	(2,905	)	$	855,878

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

6

FCB FINANCIAL HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in thousands)

	Nine Months Ended September 30,
	2015			2014
Cash flows from operating activities:
Net income (loss)	$	23,642		$	9,272
Adjustments to reconcile net income to net cash provided by (used in) operating activities
Provision for loan losses		4,494			7,131
Amortization of intangible assets		1,231			1,285
Depreciation and amortization of premises and equipment		2,866			2,917
Amortization of discount on loans		(2,272	)		(2,899	)
Net amortization (accretion) of premium (discount) on investment securities		1,515			1,777
Net amortization (accretion) of premium (discount) on time deposits		(306	)		(1,358	)
Net amortization (accretion) on FHLB advances and other borrowings		(1,950	)		(870	)
Impairment of other real estate owned		296			1,690
FDIC loss share indemnification loss		65,529			16,101
(Gain) loss on investment securities		(1,934	)		(9,728	)
(Gain) loss on sale of loans		—			(611	)
(Gain) loss on sale of other real estate owned		(7,398	)		56
(Gain) loss on sale of premises and equipment		112			21
Deferred tax expense		(29,882	)		—
Stock-based compensation and warrant expense		4,156			20,571
Increase in cash surrender value of BOLI		(3,295	)		(3,007	)
Net change in operating assets and liabilities:
Net change in loans held for sale		(1,866	)		(50	)
Collection from FDIC on loss share indemnification asset		—			6,566
Settlement of FDIC loss share agreement		(14,815	)		—
Net change in other assets		(1,909	)		(22,438	)
Net change in other liabilities		1,977			16,463
Net cash provided by (used in) operating activities		40,191			42,889
Cash Flows From Investing Activities:
Purchase of investment securities available for sale		(584,979	)		(1,166,550	)
Sales of investment securities available for sale		351,620			696,919
Paydown and maturities of investment securities held to maturity		—			372
Paydown and maturities of investment securities available for sale		121,028			118,593
Purchase of FHLB and other bank stock		(51,881	)		(59,175	)
Sales of FHLB and other bank stock		52,817			24,144
Net cash paid in acquisition		—			(14,073	)
Net change in loans		(664,119	)		(557,435	)
Purchase of loans		(241,727	)		(234,473	)
Proceeds from sale of loans		12,770			23,329
Purchase of bank-owned life insurance		(25,000	)		(60,000	)
Proceeds from sale of other real estate owned		60,046			27,225
Purchase of premises and equipment		(1,367	)		(1,603	)
Proceeds from the sale of premises and equipment		—			22
Proceeds from life insurance		1,193			—
Net cash provided by (used in) investing activities		(969,599	)		(1,202,705	)
Cash Flows From Financing Activities:
Net change in deposits		843,615			335,209
Net change in FHLB advances and other borrowings		2,364			637,811
Net change in repurchase agreements		81,525			(1,073	)
Repurchase of stock		(27,312	)		—
Proceeds from capital raise, net		—			104,475
Deferred placement fee		—			(10,000	)
Settlement of RSU shares		—			(5,688	)
Exercise of stock options		6,935			—
Other financing costs		(45	)		495
Net cash provided by (used in) financing activities		907,082			1,061,229
Net Change in Cash and Cash Equivalents		(22,326	)		(98,587	)
Cash and Cash Equivalents at Beginning of Period		107,085			239,217
Cash and Cash Equivalents at End of Period	$	84,759		$	140,630
Supplemental Disclosures of Cash Flow Information:
Interest paid	$	21,906		$	21,030
Income taxes paid		36,304			9,932
Supplemental disclosure of noncash investing and financing activities:
Transfer of loans to other real estate owned	$	18,822		$	17,716
Fair value of assets acquired		—			957,324
Goodwill recorded		—			47,355
Liabilities assumed		—			962,194
Securities purchased not settled		9,166			18,151
Securities sold not settled		6,135			35,318

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

7

FCB FINANCIAL HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

General

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all information and notes to the consolidated financial statements necessary for a complete presentation of financial position, results of operations, comprehensive income and cash flows in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) and should be read in conjunction with the audited consolidated financial statements and the notes thereto for FCB Financial Holdings, Inc. (the “Company”) previously filed with the SEC in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. In the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation have been included. The results of operations for the interim periods are not necessarily indicative of the results that may be expected for the full year or any other interim period.

Nature of Operations

FCB Financial Holdings, Inc., formerly known as Bond Street Holdings, Inc., is a national bank holding company with one wholly-owned national bank subsidiary, Florida Community Bank, N.A. (“Florida Community Bank” or the “Bank”), headquartered in Weston, Florida, offering a comprehensive range of traditional banking products and services to individual and corporate customers through 49 banking centers located in Florida at September 30, 2015.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company, its wholly-owned subsidiary, the Bank, and the Bank’s subsidiaries, which consist of a group of real estate holding companies. Intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

The Company’s financial reporting and accounting policies conform to U.S. GAAP. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the 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 period. Actual results could differ from those estimates.

Material estimates subject to significant change include the allowance for loan losses, valuation of and accounting for loans covered by loss sharing arrangements with the Federal Deposit Insurance Corporation (“FDIC”) and the related loss share receivable, valuation of and accounting for acquired loans, the carrying value of OREO, the fair value of financial instruments, the valuation of goodwill and other intangible assets, contingent consideration liabilities, acquisition-related fair value computations, stock-based compensation and deferred taxes.

Reclassifications

In certain instances, amounts reported in prior periods consolidated financial statements have been reclassified to conform to the current period presentation. Such reclassifications had no effect on previously reported net income or total stockholders’ equity.

8

For the 2014 Consolidated Statements of Cash Flows, the Company reclassified $11.9 million to operating activities from investing activities related to the settlement of investment securities and $22.8 million to operating activities from investing activities related to accretion income on acquired loans. In addition, the Company reclassified cash collections of $6.6 million from the FDIC on loss share indemnification assets from investing activities to operating activities. Management does not believe these adjustments are material to the consolidated financial statements.

Recently Adopted Accounting Pronouncements

In July 2013, the FASB issued ASU No. 2013-11, “Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists” to provide guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists thereby reducing diversity in practice. The amendments in this update became effective for the first quarter ended March 31, 2015. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

Recently Issued Accounting Pronouncements

Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards affecting public companies. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to use the extended transition period provided in Section 7(a)(2)(B) of the Securities Act until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in Section 7(a)(2)(B).

In February 2015, the FASB issued ASU No. 2015-02, “Amendments to the Consolidated Analysis (ASC 810, Consolidation)” which amends the consolidation requirements of ASC 810 by reducing the number of consolidation models. The guidance places more emphasis on risk of loss when determining a controlling financial interest; reduces the frequency of the application of related-party guidance when determining a controlling financial interest and changes the consolidation requirements of limited partnerships. For public entities, this guidance is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. For all other entities, including emerging growth companies, the amendments in this Update are effective for fiscal years beginning after December 15, 2016, and for interim periods within fiscal years beginning after December 15, 2017. A reporting entity may apply the amendments in this ASU using a modified retrospective approach by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption or may apply the amendments retrospectively. The Company is currently evaluating this guidance to determine the impact on its consolidated financial position, results of operations and cash flows but does not expect the adoption of this ASU to have a material impact on our consolidated financial statements.

In January 2015, the FASB issued ASU No. 2015-01, “Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items (ASC 225-20, Extraordinary and Unusual Items)” which eliminates the concept of extraordinary items. The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015 for all entities. Under the ASU, extraordinary items will no longer be segregated from the results of ordinary operations and presented separately on the consolidated financial statements. The amendments may be applied prospectively or retrospectively to all prior periods. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements.

In September 2015, the FASB issued ASU No. 2015-16, “Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments” which requires an acquirer to recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The amendments in this ASU require that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. For public entities, this guidance is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. For all other entities, including emerging growth companies, the amendments

9

in this ASU are effective for fiscal years beginning after December 15, 2016, and for interim periods within fiscal years beginning after December 15, 2017. The amendments in this ASU should be applied prospectively to adjustments to provisional amounts that occur after the effective date of this ASU with earlier application permitted for financial statements that have not yet been made available for issuance. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements.

NOTE 2. INVESTMENT SECURITIES

The amortized cost, gross unrealized gains and losses and approximate fair values of securities available for sale are as follows:

	Amortized		Unrealized				Fair
September 30, 2015	Cost		Gains		Losses		Value
	(Dollars in thousands)
Available for sale:
U.S. Government agencies and sponsored enterprises obligations	$	5,098	$	130	$	—	$	5,228
U.S. Government agencies and sponsored enterprises mortgage-backed securities		360,892		6,646		278		367,260
State and municipal obligations		2,040		195		—		2,235
Asset-backed securities		502,855		995		4,756		499,094
Corporate bonds and other debt securities		430,503		2,184		6,219		426,468
Preferred stock and other equity securities		171,161		253		3,880		167,534
Total available for sale	$	1,472,549	$	10,403	$	15,133	$	1,467,819
	Amortized		Unrealized				Fair
December 31, 2014	Cost		Gains		Losses		Value
	(Dollars in thousands)
Available for sale:
U.S. Government agencies and sponsored enterprises obligations	$	6,078	$	18	$	—	$	6,096
U.S. Government agencies and sponsored enterprises mortgage-backed securities		497,384		5,172		904		501,652
State and municipal obligations		2,039		238		—		2,277
Asset-backed securities		482,969		1,424		6,192		478,201
Corporate bonds and other debt securities		256,155		3,024		496		258,683
Preferred stock and other equity securities		113,367		261		1,439		112,189
Total available for sale	$	1,357,992	$	10,137	$	9,031	$	1,359,098

As part of the Company’s liquidity management strategy, the Company pledges loans and securities to secure borrowings from the FHLB. The Company also pledges securities to collateralize public deposits, repurchase agreements and interest rate swaps. The carrying value of all pledged securities totaled $639.9 million and $685.3 million at September 30, 2015 and December 31, 2014, respectively.

10

The amortized cost and estimated fair value of securities available for sale, by contractual maturity, are as follows:

	Amortized		Fair
September 30, 2015	Cost		Value
	(Dollars in thousands)
Available for sale:
Due in one year or less	$	5,000	$	5,087
Due after one year through five years		83,209		82,394
Due after five years through ten years		77,505		76,346
Due after ten years		266,829		264,876
U.S. Government agencies and sponsored enterprises obligations, mortgage-backed securities and asset-backed securities		868,845		871,582
Preferred stock and other equity securities		171,161		167,534
Total available for sale	$	1,472,549	$	1,467,819

For purposes of the maturity table, U.S Government agencies and sponsored enterprises obligations, agency mortgage-backed securities and asset-backed securities, the principal of which are repaid periodically, are presented as a single amount. The expected lives of these securities will differ from contractual maturities because borrowers may have the right to prepay the underlying loans with or without prepayment penalties.

The following tables present the estimated fair values and gross unrealized losses on investment securities available for sale, aggregated by investment category and length of time individual securities have been in a continuous unrealized loss position as of the periods presented:

	Less than 12 Months				12 Months or More				Total
September 30, 2015	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
	(Dollars in thousands)
Available for sale:
U.S. Government agencies and sponsored enterprises obligations	$	—	$	—	$	—	$	—	$	—	$	—
U.S. Government agencies and sponsored enterprises mortgage-backed securities		19,128		168		13,476		110		32,604		278
State and municipal obligations		—		—		—		—		—		—
Asset-backed securities		269,746		2,776		79,459		1,980		349,205		4,756
Corporate bonds and other debt securities		308,728		6,219		—		—		308,728		6,219
Preferred stock and other equity securities		135,801		3,322		19,450		558		155,251		3,880
Total available for sale	$	733,403	$	12,485	$	112,385	$	2,648	$	845,788	$	15,133
	Less than 12 Months				12 Months or More				Total
December 31, 2014	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
	(Dollars in thousands)
Available for sale:
U.S. Government agencies and sponsored enterprises obligations	$	—	$	—	$	—	$	—	$	—	$	—
U.S. Government agencies and sponsored enterprises mortgage-backed securities		71,539		330		43,090		574		114,629		904
State and municipal obligations		—		—		—		—		—		—
Asset-backed securities		337,123		5,143		31,898		1,049		369,021		6,192
Corporate bonds and other debt securities		78,487		496		—		—		78,487		496
Preferred stock and other equity securities		53,064		737		10,606		702		63,670		1,439
Total available for sale	$	540,213	$	6,706	$	85,594	$	2,325	$	625,807	$	9,031

11

At September 30, 2015, the Company’s security portfolio consisted of 299 securities, of which 153 securities were in an unrealized loss position. A total of 128 were in an unrealized loss position for less than 12 months. The unrealized losses for these securities resulted primarily from changes in interest rates. All securities available for sale at September 30, 2015 and December 31, 2014 were investment grade based on ratings from recognized rating agencies.

The Company monitors its investment securities for other-than-temporary impairment (“OTTI”). Impairment is evaluated on an individual security basis considering numerous factors, with the relative significance varying by situation. The Company has evaluated the nature of unrealized losses in the investment securities portfolio to determine if OTTI exists. The unrealized losses relate to changes in market interest rates and specific market conditions that do not represent credit-related impairments. Furthermore, the Company does not intend to sell nor is it more likely than not that it will be required to sell these investments before the recovery of their amortized cost basis. Management has completed an assessment of each security in an unrealized loss position for credit impairment, including securities with existing characteristics that are covered under the Volcker Rule, and has determined that no individual security was other-than-temporarily impaired at September 30, 2015. The following describes the basis under which the Company has evaluated OTTI:

U.S. Government Agencies and Sponsored Enterprises Obligations and Agency Mortgage-Backed Securities (“MBS”):

The unrealized losses associated with U.S. Government agencies and sponsored enterprises obligations and agency MBS are primarily driven by changes in interest rates. These securities have either an explicit or implicit U.S. government guarantee.

Asset-Backed Securities and Corporate Bonds & Other Debt Securities:

Securities were generally underwritten in accordance with the Company’s investment standards prior to the decision to purchase, without relying on a bond issuer’s guarantee in making the investment decision. These investments are investment grade and will continue to be monitored as part of the Company’s ongoing impairment analysis, but are expected to perform in accordance with their terms.

Preferred Stock and Other Equity Securities:

The unrealized losses associated with preferred stock and other equity securities in large U.S. financial institutions are primarily driven by changes in interest rates. These securities were generally underwritten in accordance with the Company’s investment standards prior to the decision to purchase. These investments are investment grade and will continue to be monitored as part of the Company’s ongoing impairment analysis, but are expected to perform in accordance with their terms.

Gross realized gains and losses on the sale of securities available for sale are shown below. The cost of securities sold is based on the specific identification method.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
	(Dollars in thousands)
Gross realized gains	$	104		$	3,057		$	2,065		$	10,954
Gross realized losses		(106	)		(272	)		(1,019	)		(1,284	)
Net realized gains (losses)	$	(2	)	$	2,785		$	1,046		$	9,670

NOTE 3. LOANS, NET

The Company’s loan portfolio consists of new and acquired loans. The Company classifies originated loans and purchased loans not acquired through business combinations as New loans. The Company classifies loans acquired through business combinations as acquired loans. The acquired loan portfolio is further classified as “Covered Loans”, loans subject to loss sharing with the FDIC, and “Non-Covered Loans”, acquired loans without loss share reimbursement. Additionally, the New loan portfolio is classified as “Non-

12

Covered Loans”. A portion of the acquired loan portfolio, both Covered and Non-Covered Loans, exhibited evidence of deterioration in credit quality since origination, and are accounted for under ASC 310-30. The remaining portfolio of acquired loans consists of loans that were not considered ASC 310-30 loans at acquisition and are classified as Non-ASC 310-30 loans.

On March 4, 2015, the Bank entered into an agreement with the FDIC to terminate all loss sharing agreements which were entered into in 2010 and 2011 in conjunction with the Bank’s acquisition of substantially all of the assets (“covered assets”) and assumption of substantially all of the liabilities of six failed banks in FDIC-assisted acquisitions. Under the early termination, all rights and obligations of the Bank and the FDIC under the loss share agreements, including the clawback provisions, have been eliminated.

The following tables summarize the Company’s loans by portfolio and segment as of the periods presented, net of deferred fees, costs, premiums and discounts:

	Covered Loans				Non-Covered Loans
September 30, 2015	ASC 310-30 Loans		Non-ASC 310-30 Loans		ASC 310-30 Loans		Non-ASC 310-30 Loans		New Loans (1)		Total
	(Dollars in thousands)
Real estate loans:
Commercial real estate	$	—	$	—	$	259,411	$	60,804	$	991,451	$	1,311,666
Owner-occupied commercial real estate		—		—		—		19,699		452,991		472,690
1-4 single family residential		—		—		69,915		86,832		1,326,180		1,482,927
Construction, land and development		—		—		32,996		6,319		430,690		470,005
Home equity loans and lines of credit		—		—		—		50,566		28,185		78,751
Total real estate loans	$	—	$	—	$	362,322	$	224,220	$	3,229,497	$	3,816,039
Other loans:
Commercial and industrial	$	—	$	—	$	46,233	$	11,504	$	925,285	$	983,022
Consumer		—		—		2,434		426		4,215		7,075
Total other loans		—		—		48,667		11,930		929,500		990,097
Total loans held in portfolio	$	—	$	—	$	410,989	$	236,150	$	4,158,997	$	4,806,136
Allowance for loan losses												(27,394	)
Loans held in portfolio, net											$	4,778,742
	Covered Loans				Non-Covered Loans
December 31, 2014	ASC 310-30 Loans		Non-ASC 310-30 Loans		ASC 310-30 Loans		Non-ASC 310-30 Loans		New Loans (1)		Total
	(Dollars in thousands)
Real estate loans:
Commercial real estate	$	155,050	$	6,202	$	181,885	$	63,944	$	853,074	$	1,260,155
Owner-occupied commercial real estate		—		2,411		—		12,431		281,703		296,545
1-4 single family residential		34,297		7,286		52,011		94,993		922,657		1,111,244
Construction, land and development		19,903		—		46,797		9,729		232,601		309,030
Home equity loans and lines of credit		—		10,785		—		43,919		11,826		66,530
Total real estate loans	$	209,250	$	26,684	$	280,693	$	225,016	$	2,301,861	$	3,043,504
Other loans:
Commercial and industrial	$	32,531	$	4,308	$	34,967	$	9,240	$	795,000	$	876,046
Consumer		557		36		2,246		645		6,556		10,040
Total other loans		33,088		4,344		37,213		9,885		801,556		886,086
Total loans held in portfolio	$	242,338	$	31,028	$	317,906	$	234,901	$	3,103,417	$	3,929,590
Allowance for loan losses												(22,880	)
Loans held in portfolio, net											$	3,906,710

(1) Balance includes $4.3 million and $3.6 million of deferred fees, costs, premiums and discounts as of September 30, 2015 and December 31, 2014, respectively.

13

At September 30, 2015 and December 31, 2014, the unpaid principal balances (“UPB”) of ASC 310-30 loans were $530.9 million and $725.9 million, respectively. At September 30, 2015 and December 31, 2014, the Company had pledged loans as collateral for FHLB advances of $1.93 billion and $1.63 billion, respectively. The recorded investment of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process as of September 30, 2015 totaled $9.9 million. The Company held $481.1 million and $445.6 million of syndicated national loans as of September 30, 2015 and December 31, 2014, respectively.

During the three and nine months ended September 30, 2015, the Company purchased $0.0 and $233.6 million, respectively, in residential mortgage loans from third parties. During the three and nine months ended September 30, 2014, the Company purchased approximately $156.6 million and $227.8 million, respectively, in residential mortgage loans from third parties.

During the three and nine months ended September 30, 2015, the Company sold approximately $26.4 million and $45.9 million, respectively, in loans to third parties. During the three and nine months ended September 30, 2014, the Company sold approximately $4.3 million and $33.2 million, respectively, in loans to third parties.

The accretable discount on ASC 310-30 loan pools represents the amount by which the undiscounted expected cash flows on such pools exceed its carrying value. The increase in expected cash flows for certain ASC 310-30 loan pools resulted in the reclassification of $28.6 million and $19.5 million in non-accretable difference to accretable discount during the nine months ended September 30, 2015 and 2014, respectively.

Changes in accretable discount for ASC 310-30 loans for the nine months ended September 30, 2015 and 2014 were as follows:

	Nine Months Ended September 30,
	2015			2014
	(Dollars in thousands)
Balance at January 1,	$	156,197		$	148,501
Additions to accretable discount from GFB acquisition		—			40,444
Accretion		(38,273	)		(46,956	)
Reclassifications from non-accretable difference		28,638			19,543
Balance at September 30,	$	146,562		$	161,532

NOTE 4. ALLOWANCE FOR LOAN LOSSES

The Company’s accounting method for loans and the corresponding allowance for loan losses (“ALL”) differs depending on whether the loans are New or Acquired. The Company assesses and monitors credit risk and portfolio performance using distinct methodologies for Acquired loans, both ASC 310-30 Loans and Non-ASC 310-30 Loans, and New loans. Within each of these portfolios, the Company further disaggregates the portfolios into the following segments: Commercial real estate, Owner-occupied commercial real estate, 1-4 single family residential, Construction, land and development, Home equity loans and lines of credit, Commercial and industrial and Consumer. The ALL reflects management’s estimate of probable credit losses inherent in each of the segments.

14

Changes in the ALL by loan portfolio and segment for the three and nine months ended September 30, 2015 and 2014 are as follows:

	Commercial Real Estate			Owner- Occupied Commercial Real Estate		1- 4 Single Family Residential			Construction, Land and Development			Home Equity Loans and Lines of Credit			Commercial and Industrial		��	Consumer			Total
	(Dollars in thousands)
Balance at July 1, 2015	$	9,652		$	1,548	$	5,744		$	3,024		$	563		$	6,059		$	456		$	27,046
Provision (credit) for ASC 310-30 loans		(791	)		—		(38	)		(310	)		—			(67	)		30			(1,176	)
Provision (credit) for non-ASC 310-30 loans		(110	)		14		11			(20	)		74			41			6			16
Provision (credit) for New loans		(390	)		45		203			251			41			1,712			(27	)		1,835
Total provision		(1,291	)		59		176			(79	)		115			1,686			9			675
Charge-offs for ASC 310-30 loans		(65	)		—		(224	)		—			—			(57	)		—			(346	)
Charge-offs for non-ASC 310-30 loans		—			—		—			—			(37	)		—			(8	)		(45	)
Charge-offs for New loans		—			—		—			—			—			—			—			—
Total charge-offs		(65	)		—		(224	)		—			(37	)		(57	)		(8	)		(391	)
Recoveries for ASC 310-30 loans		—			—		18			18			—			23			—			59
Recoveries for non-ASC 310-30 loans		—			—		—			—			—			—			—			—
Recoveries for New loans		—			—		—			—			—			5			—			5
Total recoveries		—			—		18			18			—			28			—			64
Ending ALL balance
ASC 310-30 loans		1,729			—		26			501			—			1,032			417			3,705
Non-ASC 310-30 loans		1,265			68		346			36			469			82			4			2,270
New loans		5,302			1,539		5,342			2,426			172			6,602			36			21,419
Balance at September 30, 2015	$	8,296		$	1,607	$	5,714		$	2,963		$	641		$	7,716		$	457		$	27,394
	Commercial Real Estate			Owner- Occupied Commercial Real Estate		1- 4 Single Family Residential			Construction, Land and Development			Home Equity Loans and Lines of Credit			Commercial and Industrial			Consumer			Total
	(Dollars in thousands)
Balance at July 1, 2014	$	6,354		$	806	$	2,426		$	1,935		$	113		$	5,924		$	326		$	17,884
Provision (credit) for ASC 310-30 loans		785			—		—			(1	)		—			(290	)		(9	)		485
Provision (credit) for non-ASC 310-30 loans		109			16		144			29			264			15			1			578
Provision (credit) for New loans		221			90		1,015			137			7			273			(1	)		1,742
Total provision		1,115			106		1,159			165			271			(2	)		(9	)		2,805
Charge-offs for ASC 310-30 loans		—			—		—			1			—			(93	)		(10	)		(102	)
Charge-offs for non-ASC 310-30 loans		—			—		—			—			(173	)		—			—			(173	)
Charge-offs for New loans		—			—		—			—			—			—			—			—
Total charge-offs		—			—		—			1			(173	)		(93	)		(10	)		(275	)
Recoveries for ASC 310-30 loans		24			—		—			—			—			—			1			25
Recoveries for non-ASC 310-30 loans		—			—		—			—			—			—			—			—
Recoveries for New loans		—			—		—			—			—			1			—			1
Total recoveries		24			—		—			—			—			1			1			26
Ending ALL balance
ASC 310-30 loans		3,692			—		207			660			—			976			280			5,815
Non-ASC 310-30 loans		117			23		151			29			123			21			4			468
New loans		3,684			889		3,227			1,412			88			4,833			24			14,157
Balance at September 30, 2014	$	7,493		$	912	$	3,585		$	2,101		$	211		$	5,830		$	308		$	20,440

15

	Commercial Real Estate			Owner- Occupied Commercial Real Estate		1- 4 Single Family Residential			Construction, Land and Development			Home Equity Loans and Lines of Credit			Commercial and Industrial			Consumer			Total
	(Dollars in thousands)
Balance at January 1, 2015	$	8,206		$	1,020	$	4,740		$	2,456		$	355		$	5,745		$	358		$	22,880
Provision (credit) for ASC 310-30 loans		(1,656	)		—		(37	)		(508	)		—			52			187			(1,962	)
Provision (credit) for non-ASC 310-30 loans		770			10		60			(39	)		221			33			6			1,061
Provision (credit) for New loans		846			577		1,341			703			102			1,852			(26	)		5,395
Total provision		(40	)		587		1,364			156			323			1,937			167			4,494
Charge-offs for ASC 310-30 loans		(270	)		—		(431	)		(56	)		—			(132	)		(60	)		(949	)
Charge-offs for non-ASC 310-30 loans		—			—		(128	)		—			(37	)		—			(8	)		(173	)
Charge-offs for New loans		—			—		—			—			—			—			—			—
Total charge-offs		(270	)		—		(559	)		(56	)		(37	)		(132	)		(68	)		(1,122	)
Recoveries for ASC 310-30 loans		400			—		169			407			—			154			—			1,130
Recoveries for non-ASC 310-30 loans		—			—		—			—			—			—			—			—
Recoveries for New loans		—			—		—			—			—			12			—			12
Total recoveries		400			—		169			407			—			166			—			1,142
Ending ALL balance
ASC 310-30 loans		1,729			—		26			501			—			1,032			417			3,705
Non-ASC 310-30 loans		1,265			68		346			36			469			82			4			2,270
New loans		5,302			1,539		5,342			2,426			172			6,602			36			21,419
Balance at September 30, 2015	$	8,296		$	1,607	$	5,714		$	2,963		$	641		$	7,716		$	457		$	27,394
	Commercial Real Estate			Owner- Occupied Commercial Real Estate		1- 4 Single Family Residential			Construction, Land and Development			Home Equity Loans and Lines of Credit			Commercial and Industrial			Consumer			Total
	(Dollars in thousands)
Balance at January 1, 2014	$	4,458		$	376	$	1,443		$	1,819		$	265		$	6,198		$	174		$	14,733
Provision (credit) for ASC 310-30 loans		976			—		152			132			—			(1,161	)		223			322
Provision (credit) for non-ASC 310-30 loans		112			18		99			29			260			39			33			590
Provision (credit) for New loans		1,906			518		1,921			578			(38	)		1,327			7			6,219
Total provision		2,994			536		2,172			739			222			205			263			7,131
Charge-offs for ASC 310-30 loans		(74	)		—		(30	)		(1,244	)		—			(203	)		(101	)		(1,652	)
Charge-offs for non-ASC 310-30 loans		—			—		—			—			(276	)		(24	)		(29	)		(329	)
Charge-offs for New loans		—			—		—			—			—			(348	)		—			(348	)
Total charge-offs		(74	)		—		(30	)		(1,244	)		(276	)		(575	)		(130	)		(2,329	)
Recoveries for ASC 310-30 loans		115			—		—			787			—			1			1			904
Recoveries for non-ASC 310-30 loans		—			—		—			—			—			—			—			—
Recoveries for New loans		—			—		—			—			—			1			—			1
Total recoveries		115			—		—			787			—			2			1			905
Ending ALL balance
ASC 310-30 loans		3,692			—		207			660			—			976			280			5,815
Non-ASC 310-30 loans		117			23		151			29			123			21			4			468
New loans		3,684			889		3,227			1,412			88			4,833			24			14,157
Balance at September 30, 2014	$	7,493		$	912	$	3,585		$	2,101		$	211		$	5,830		$	308		$	20,440

Credit Quality Indicators

In evaluating credit risk, the Company looks at multiple factors; however, management considers delinquency status to be the most meaningful indicator of the credit quality of 1-4 single family residential, home equity loans and lines of credit and consumer loans. Delinquency statistics are updated at least monthly. Internal risk ratings are considered the most meaningful indicator of credit quality for Non-ASC 310-30 and New commercial, construction, land and development and commercial real estate loans. Internal risk ratings are updated on a continuous basis.

16

The following tables present an aging analysis of the recorded investment of delinquent loans by portfolio and segment (excluding loans accounted for under ASC 310-30):

	Accruing
September 30, 2015	30 to 59 Days Past Due		60 to 89 Days Past Due		90 Days or More Past Due		Non-Accrual		Total
	(Dollars in thousands)
New loans:
Real estate loans:
Commercial real estate	$	—	$	—	$	—	$	—	$	—
Owner-occupied commercial real estate		—		—		—		—		—
1-4 single family residential		—		2,354		—		455		2,809
Construction, land and development		—		—		—		—		—
Home equity loans and lines of credit		—		—		—		—		—
Total real estate loans		—		2,354		—		455		2,809
Other loans:
Commercial and industrial		—		—		—		14		14
Consumer		—		—		—		—		—
Total other loans		—		—		—		14		14
Total new loans	$	—	$	2,354	$	—	$	469	$	2,823
Acquired loans:
Real estate loans:
Commercial real estate	$	—	$	—	$	—	$	5,456	$	5,456
Owner-occupied commercial real estate		—		—		—		4		4
1-4 single family residential		—		99		—		2,900		2,999
Construction, land and development		—		—		—		—		—
Home equity loans and lines of credit		610		620		—		2,367		3,597
Total real estate loans		610		719		—		10,727		12,056
Other loans:
Commercial and industrial		233		—		—		2,799		3,032
Consumer		22		13		—		—		35
Total other loans		255		13		—		2,799		3,067
Total acquired loans	$	865	$	732	$	—	$	13,526	$	15,123

17

	Accruing
December 31, 2014	30 to 59 Days Past Due		60 to 89 Days Past Due		90 Days or More Past Due		Non-Accrual		Total
	(Dollars in thousands)
New loans:
Real estate loans:
Commercial real estate	$	—	$	—	$	—	$	—	$	—
Owner-occupied commercial real estate		—		—		—		—		—
1-4 single family residential		6,206		727		—		116		7,049
Construction, land and development		—		—		—		—		—
Home equity loans and lines of credit		—		—		—		—		—
Total real estate loans		6,206		727		—		116		7,049
Other loans:
Commercial and industrial		—		—		—		—		—
Consumer		—		—		—		—		—
Total other loans		—		—		—		—		—
Total new loans	$	6,206	$	727	$	—	$	116	$	7,049
Acquired Loans:
Real estate loans:
Commercial real estate	$	—	$	—	$	—	$	4,866	$	4,866
Owner-occupied commercial real estate		—		—		—		211		211
1-4 single family residential		1,877		86		—		1,766		3,729
Construction, land and development		—		—		—		—		—
Home equity loans and lines of credit		384		456		—		3,005		3,845
Total real estate loans		2,261		542		—		9,848		12,651
Other loans:
Commercial and industrial		—		192		—		1,222		1,414
Consumer		14		—		—		—		14
Total other loans		14		192		—		1,222		1,428
Total acquired loans	$	2,275	$	734	$	—	$	11,070	$	14,079

Loans exhibiting potential credit weaknesses that deserve management’s close attention and that if left uncorrected may result in deterioration of the repayment capacity of the borrower are categorized as special mention. Loans with well-defined credit weaknesses including payment defaults, declining collateral values, frequent overdrafts, operating losses, increasing balance sheet leverage, inadequate cash flow, project cost overruns, unreasonable construction delays, past due real estate taxes or exhausted interest reserves are assigned an internal risk rating of substandard. A loan with a weakness so severe that collection in full is highly questionable or improbable will be assigned an internal risk rating of doubtful.

18

The following table summarizes the Company’s commercial Non-ASC 310-30 and New loans by key indicators of credit quality. Loans accounted for under ASC 310-30 are excluded from the following analysis because their related allowance is determined by loan pool performance:

September 30, 2015	Pass		Special Mention		Substandard		Doubtful
	(Dollars in thousands)
New loans:
Commercial real estate	$	991,451	$	—	$	—	$	—
Owner-occupied commercial real estate		452,991		—		—		—
Construction, land and development		430,690		—		—		—
Commercial and industrial		925,271		—		14		—
Total new loans	$	2,800,403	$	—	$	14	$	—
Acquired loans:
Commercial real estate	$	54,970	$	—	$	5,834	$	—
Owner-occupied commercial real estate		19,695		—		4		—
Construction, land and development		6,319		—		—		—
Commercial and industrial		6,853		1,482		3,169		—
Total aquired loans	$	87,837	$	1,482	$	9,007	$	—
December 31, 2014	Pass		Special Mention		Substandard		Doubtful
	(Dollars in thousands)
New loans:
Commercial real estate	$	853,044	$	—	$	30	$	—
Owner-occupied commercial real estate		281,703		—		—		—
Construction, land and development		232,601		—		—		—
Commercial and industrial		795,000		—		—		—
Total new loans	$	2,162,348	$	—	$	30	$	—
Acquired loans:
Commercial real estate	$	65,173	$	107	$	4,866	$	—
Owner-occupied commercial real estate		13,822		421		599		—
Construction, land and development		9,729		—		—		—
Commercial and industrial		9,184		2,147		2,217		—
Total acquired loans	$	97,908	$	2,675	$	7,682	$	—

Internal risk ratings and other credit metrics are key factors in identifying loans to be individually evaluated for impairment and impact management’s estimates of loss factors used in determining the amount of the ALL.

19

The following table shows the Company’s investment in loans disaggregated based on the method of evaluating impairment:

	Loans—Recorded Investment						Allowance for Credit Loss
September 30, 2015	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		ASC 310- 30 Loans		Individually Evaluated for Impairment		Collectively Evaluated for Impairment		ASC 310-30 Loans
	(Dollars in thousands)
New loans:
Real estate loans:
Commercial real estate	$	—	$	991,451	$	—	$	—	$	5,302	$	—
Owner-occupied commercial real estate		—		452,991		—		—		1,539		—
1-4 single family residential		—		1,326,180		—		—		5,342		—
Construction, land and development		—		430,690		—		—		2,426		—
Home equity loans and lines of credit		—		28,185		—		—		172		—
Total real estate loans	$	—	$	3,229,497	$	—	$	—	$	14,781	$	—
Other loans
Commercial and industrial	$	—	$	925,285	$	—	$	—	$	6,602	$	—
Consumer		—		4,215		—		—		36		—
Total other loans	$	—	$	929,500	$	—	$	—	$	6,638	$	—
Acquired loans:
Real estate loans:
Commercial real estate	$	4,991	$	55,813	$	259,411	$	996	$	269	$	1,729
Owner-occupied commercial real estate		—		19,699		—		—		68		—
1-4 single family residential		—		86,832		69,915		—		346		26
Construction, land and development		—		6,319		32,996		—		36		501
Home equity loans and lines of credit		941		49,625		—		172		297		—
Total real estate loans	$	5,932	$	218,288	$	362,322	$	1,168	$	1,016	$	2,256
Other loans
Commercial and industrial	$	535	$	10,969	$	46,233	$	—	$	82	$	1,032
Consumer		—		426		2,434		—		4		417
Total other loans	$	535	$	11,395	$	48,667	$	—	$	86	$	1,449

20

	Loans - Recorded Investment						Allowance for Credit Loss
December 31, 2014	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		ASC 310- 30 Loans		Individually Evaluated for Impairment		Collectively Evaluated for Impairment		ASC 310-30 Loans
	(Dollars in thousands)
New loans:
Real estate loans:
Commercial real estate	$	—	$	853,074	$	—	$	—	$	4,456	$	—
Owner-occupied commercial real estate		—		281,703		—		—		962		—
1-4 single family residential		—		922,657		—		—		4,001		—
Construction, land and development		—		232,601		—		—		1,723		—
Home equity loans and lines of credit		—		11,826		—		—		70		—
Total real estate loans	$	—	$	2,301,861	$	—	$	—	$	11,212	$	—
Other loans
Commercial and industrial	$	—	$	795,000	$	—	$	—	$	4,738	$	—
Consumer		—		6,556		—		—		62		—
Total other loans	$	—	$	801,556	$	—	$	—	$	4,800	$	—
Acquired Loans:
Real estate loans:
Commercial real estate	$	4,754	$	65,392	$	336,935	$	174	$	321	$	3,255
Owner-occupied commercial real estate		—		14,842		—		—		58		—
1-4 single family residential		—		102,279		86,308		—		414		325
Construction, land and development		—		9,729		66,700		—		75		658
Home equity loans and lines of credit		—		54,704		—		—		285		—
Total real estate loans	$	4,754	$	246,946	$	489,943	$	174	$	1,153	$	4,238
Other loans
Commercial and industrial	$	—	$	13,548	$	67,498	$	—	$	49	$	958
Consumer		—		681		2,803		—		6		290
Total other loans	$	—	$	14,229	$	70,301	$	—	$	55	$	1,248

21

The following tables set forth certain information regarding the Company’s impaired loans (excluding loans accounted for under ASC 310-30) that were evaluated for specific reserves:

	Impaired Loans - With Allowance						Impaired Loans -  With no Allowance
September 30, 2015	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance
	(Dollars in thousands)
New loans:
Real estate loans:
Commercial real estate	$	—	$	—	$	—	$	—	$	—
Owner-occupied commercial real estate		—		—		—		—		—
1-4 single family residential		—		—		—		—		—
Construction, land and development		—		—		—		—		—
Home equity loans and lines of credit		—		—		—		—		—
Total real estate loans	$	—	$	—	$	—	$	—	$	—
Other loans
Commercial and industrial	$	—	$	—	$	—	$	—	$	—
Consumer		—		—		—		—		—
Total other loans	$	—	$	—	$	—	$	—	$	—
Acquired loans:
Real estate loans:
Commercial real estate	$	4,722	$	5,049	$	996	$	269	$	288
Owner-occupied commercial real estate		—		—		—		—		—
1-4 single family residential		—		—		—		—		—
Construction, land and development		—		—		—		—		—
Home equity loans and lines of credit		421		494		172		520		548
Total real estate loans	$	5,143	$	5,543	$	1,168	$	789	$	836
Other loans
Commercial and industrial	$	—	$	—	$	—	$	535	$	750
Consumer		—		—		—		—		—
Total other loans	$	—	$	—	$	—	$	535	$	750

22

	Impaired Loans - With Allowance						Impaired Loans -  With no Allowance
December 31, 2014	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance
	(Dollars in thousands)
New loans:
Real estate loans:
Commercial real estate	$	—	$	—	$	—	$	—	$	—
Owner-occupied commercial real estate		—		—		—		—		—
1-4 single family residential		—		—		—		—		—
Construction, land and development		—		—		—		—		—
Home equity loans and lines of credit		—		—		—		—		—
Total real estate loans	$	—	$	—	$	—	$	—	$	—
Other loans
Commercial and industrial	$	—	$	—	$	—	$	—	$	—
Consumer		—		—		—		—		—
Total other loans	$	—	$	—	$	—	$	—	$	—
Acquired loans:
Real estate loans:
Commercial real estate	$	354	$	354	$	174	$	4,400	$	4,595
Owner-occupied commercial real estate		—		—		—		—		—
1-4 single family residential		—		—		—		—		—
Construction, land and development		—		—		—		—		—
Home equity loans and lines of credit		—		—		—		—		—
Total real estate loans	$	354	$	354	$	174	$	4,400	$	4,595
Other loans
Commercial and industrial	$	—	$	—	$	—	$	—	$	—
Consumer		—		—		—		—		—
Total other loans	$	—	$	—	$	—	$	—	$	—

23

	Three Months Ended September 30,
	2015				2014
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(Dollars in thousands)
Impaired loans with no related allowance:
Real estate loans:
Commercial real estate	$	231	$	—	$	—	$	—
Owner-occupied commercial real estate		—		—		—		—
1-4 single family residential		—		—		—		—
Construction, land and development		—		—		—		—
Home equity loans and lines of credit		523		—		184		—
Total real estate loans	$	754	$	—	$	184	$	—
Other loans:
Commercial and industrial	$	547	$	—	$	—	$	—
Consumer		—		—		—		—
Total other loans	$	547	$	—	$	—	$	—
Impaired loans with an allowance:
Real estate loans:
Commercial real estate	$	4,734	$	—	$	4,624	$	—
Owner-occupied commercial real estate		—		—		—		—
1-4 single family residential		—		—		—		—
Construction, land and development		—		—		—		—
Home equity loans and lines of credit		424		—		—		—
Total real estate loans	$	5,158	$	—	$	4,624	$	—
Other loans:
Commercial and industrial	$	—	$	—	$	—	$	—
Consumer		—		—		—		—
Total other loans	$	—	$	—	$	—	$	—

24

		Nine Months Ended September 30,
		2015				2014
		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
		(Dollars in thousands)
Impaired loans with no related allowance:
Real estate loans:	��
Commercial real estate		$	151	$	—	$	—	$	—
Owner-occupied commercial real estate			—		—		—		—
1-4 single family residential			—		—		—		—
Construction, land and development			—		—		—		—
Home equity loans and lines of credit			527		—		184		—
Total real estate loans		$	678	$	—	$	184	$	—
Other loans:
Commercial and industrial		$	542	$	—	$	—	$	—
Consumer			—		—		—		—
Total other loans		$	542	$	—	$	—	$	—
Impaired loans with an allowance:
Real estate loans:
Commercial real estate		$	4,843	$	—	$	4,687	$	—
Owner-occupied commercial real estate			—		—		—		—
1-4 single family residential			—		—		—		—
Construction, land and development			—		—		—		—
Home equity loans and lines of credit			436		—		—		—
Total real estate loans		$	5,279	$	—	$	4,687	$	—
Other loans:
Commercial and industrial		$	—	$	—	$	—	$	—
Consumer			—		—		—		—
Total other loans		$	—	$	—	$	—	$	—

NOTE 5. COVERED ASSETS AND LOSS SHARING AGREEMENTS

On March 4, 2015, the Bank entered into an agreement with the FDIC to terminate all loss sharing agreements which were entered into in 2010 and 2011 in conjunction with the Bank’s acquisition of substantially all of the assets (“covered assets”) and assumption of substantially all of the liabilities of six failed banks in FDIC-assisted acquisitions. Under the early termination agreements, all rights and obligations of the Bank and the FDIC under the loss share agreements, including the clawback provisions, have been eliminated.

The Bank paid the FDIC $14.8 million as consideration for the early termination to settle its obligation under the FDIC Clawback Liability. The early termination was recorded in the Bank’s financial statements by removing the FDIC Indemnification Asset receivable, the FDIC Clawback liability and recording a one-time, pre-tax loss on termination of $65.5 million.

25

The following table summarizes the carrying value of assets covered by the loss sharing agreements:

	September 30, 2015		December 31, 2014
	(Dollars in thousands)
Loans, excluding allowance for loan losses	$	—	$	273,366
OREO		—		25,130
Total Covered Assets	$	—	$	298,496

Subsequent to acquisition, when a provision for loan loss is required for a loan that is covered under a loss sharing agreement, the Company records an increase in the loss share indemnification asset and an increase to noninterest income in the consolidated statements of income based on the applicable loss sharing ratio. Increases in the loss share indemnification asset of $2.7 million were included in noninterest income for the nine months ended September 30, 2014, related to the provision for loan losses on Covered Loans, including both ASC 310-30 and Non-ASC 310-30 loans.

Changes in the loss share indemnification asset for the periods presented were as follows:

	Three Months Ended September 30,					Nine Months Ended September 30,
	2015		2014			2015			2014
	(Dollars in thousands)
Balance at beginning of period	$	—	$	74,853		$	63,168		$	87,229
Termination of FDIC loss sharing agreements		—		—			(63,168	)		—
Reimbursable expenses		—		648			—			3,801
Amortization		—		(6,272	)		—			(17,677	)
Income resulting from impairment and charge-off of covered assets, net		—		1,474			—			2,680
Expense resulting from recoupment and disposition of covered assets, net		—		(678	)		—			(3,101	)
FDIC claims submissions		—		(105	)		—			(3,012	)
Balance at end of period	$	—	$	69,920		$	—		$	69,920

The following table summarizes the changes in the clawback liability, included in other liabilities, for the periods presented:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015			2014
	(Dollars in thousands)
Balance at beginning of period	$	—	$	12,525	$	13,846		$	11,753
Termination of FDIC loss sharing agreements		—		—		(13,846	)		—
Amortization impact		—		190		—			547
Remeasurement impact		—		842		—			1,257
Balance at end of period	$	—	$	13,557	$	—		$	13,557

NOTE 6. DERIVATIVES

The Company is a party to interest rate derivatives that are not designated as hedging instruments. These derivatives are interest rate swaps that the Company enters into with customers to allow customers to convert variable rate loans to fixed rates. At the same time the interest rate swap is entered into with the customer, an offsetting interest rate swap is entered into with another financial institution. The changes in the fair value of the swaps offset each other, except for any differences in the credit risk of the counterparties, which is determined by considering the risk rating, probability of default and loss of given default of each counterparty. The Company recorded $892 thousand and $813 thousand of customer swap fees in noninterest income in the accompanying consolidated statements of income for the three months ended September 30, 2015 and 2014, respectively and $3.7 million and $3.0 million for the nine months ended September 30, 2015 and 2014, respectively.

26

As of September 30, 2015, the Company has not recorded any credit adjustments related to the credit risk of the counterparties. There was no change in the fair value of derivative assets and derivative liabilities attributable to credit risk included in noninterest expense on the statements of income for the three or nine months ended September 30, 2015 or 2014. No derivative positions held by the Company as of September 30, 2015 were designated as hedging instruments under ASC 815-10.

The following tables summarize the Company’s derivatives outstanding included in other assets and other liabilities in the accompanying consolidated balance sheets:

September 30, 2015	Derivative Assets				Derivative Liabilities
	Notional		Fair Value		Notional		Fair Value
	(Dollars in thousands)
Derivatives not designated as hedging instruments under ASC 815-10
Interest rate contracts—pay floating, receive fixed	$	614,353	$	27,143	$	8,298	$	3
Interest rate contracts—pay fixed, receive floating		—		—		622,651		27,140
Total derivatives	$	614,353	$	27,143	$	630,949	$	27,143
December 31, 2014	Derivative Assets				Derivative Liabilities
	Notional		Fair Value		Notional		Fair Value
	(Dollars in thousands)
Derivatives not designated as hedging instruments under ASC 815-10
Interest rate contracts—pay floating, receive fixed	$	464,890	$	14,328	$	8,298	$	39
Interest rate contracts—pay fixed, receive floating		—		—		473,188		14,289
Total derivatives	$	464,890	$	14,328	$	481,486	$	14,328

The derivative transactions entered into with a financial institution are subject to an enforceable master netting arrangement. The following table summarizes the gross and net fair values of the Company’s derivatives outstanding with this counterparty included in other liabilities in the accompanying consolidated balance sheets:

September 30, 2015	Gross amounts of recognized liabilities		Gross amounts offset in the consolidated balance sheets			Net amounts in the consolidated balance sheets
	(Dollars in thousands)
Offsetting derivative liabilities
Counterparty A—Interest rate contracts	$	27,143	$	(3	)	$	27,140
Total	$	27,143	$	(3	)	$	27,140

27

December 31, 2014	Gross amounts of recognized liabilities		Gross amounts offset in the consolidated balance sheets			Net amounts in the consolidated balance sheets
	(Dollars in thousands)
Offsetting derivative liabilities
Counterparty A—Interest rate contracts	$	14,328	$	(39	)	$	14,289
Total	$	14,328	$	(39	)	$	14,289

At September 30, 2015, the Company has pledged investment securities available for sale with a carrying amount of $22.4 million as collateral for the interest rate swaps in a liability position. The amount of collateral required to be posted by the Company varies based on the settlement value of outstanding swaps.

As of September 30, 2015 and December 31, 2014, substantially all of the floating rate terms within the interest rate swaps held by the Company were indexed to 1-month LIBOR.

The fair value of the derivative assets and liabilities are included in a table in Note 13 “Fair Value Measurements,” in the line items “Derivative assets” and “Derivative liabilities.”

NOTE 7. DEPOSITS

The following table sets forth the Company’s deposits by category:

	September 30, 2015		December 31, 2014
	(Dollars in thousands)
Noninterest-bearing demand deposits	$	618,741	$	593,025
Interest-bearing demand deposits		404,085		122,380
Interest-bearing NOW accounts		350,602		374,399
Savings and money market accounts		1,923,723		1,811,878
Time deposits		1,524,693		1,076,853
Total deposits	$	4,821,844	$	3,978,535
Time deposits $100,000 and greater	$	1,051,929	$	689,439
Time deposits greater than $250,000		435,345		226,895

The aggregate amount of overdraft demand deposits reclassified to loans was $419 thousand at September 30, 2015. The aggregate amount of maturities for time deposits for each of the five years as of September 30, 2015 totaled $989.0 million, $362.9 million, $154.9 million, $11.0 million and $6.7 million, respectively. The Company holds brokered deposits through an insured deposit sweep program of $424.8 million and $338.2 million at September 30, 2015 and December 31, 2014, respectively.

28

NOTE 8. ACCUMULATED OTHER COMPREHENSIVE INCOME

Changes in AOCI for the periods indicated are summarized as follows:

	Three Months Ended September 30,
	2015									2014
	Before Tax			Tax Effect			Net of Tax			Before Tax			Tax Effect			Net of Tax
	(Dollars in thousands)
Balance at beginning of period	$	127		$	(49	)	$	78		$	13,313		$	(5,136	)	$	8,177
Unrealized gain (loss) on investment securities available for sale:
Net unrealized holdings gain (loss) arising during the period		(4,625	)		1,784			(2,841	)		(12,962	)		5,001			(7,961	)
Amounts reclassified to (gain) loss on investment securities		(232	)		90			(142	)		(2,121	)		818			(1,303	)
Balance at end of period	$	(4,730	)	$	1,825		$	(2,905	)	$	(1,770	)	$	683		$	(1,087	)
	Nine Months Ended September 30,
	2015									2014
	Before Tax			Tax Effect			Net of Tax			Before Tax			Tax Effect			Net of Tax
	(Dollars in thousands)
Balance at beginning of period	$	1,106		$	(427	)	$	679		$	(2,565	)	$	990		$	(1,575	)
Unrealized gain (loss) on investment securities available for sale:
Net unrealized holdings gain (loss) arising during the period		(3,325	)		1,283			(2,042	)		6,753			(2,605	)		4,148
Amounts reclassified to (gain) loss on investment securities		(2,511	)		969			(1,542	)		(5,958	)		2,298			(3,660	)
Balance at end of period	$	(4,730	)	$	1,825		$	(2,905	)	$	(1,770	)	$	683		$	(1,087	)

NOTE 9. BASIC AND DILUTED EARNINGS PER SHARE

Basic earnings per share (“EPS”) is calculated by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted EPS reflect the effect of common stock equivalents, including stock options and unvested shares, calculated using the treasury stock method. Common stock equivalents are excluded from the computation of diluted EPS in periods in which the effect is anti-dilutive.

The following table presents the computation of basic and diluted EPS:

	Three Months Ended September 30,					Nine Months Ended September 30,
	2015		2014			2015		2014
	(Dollars in thousands, except share and per share data)
Net income (loss) available to common stockholders	$	21,140	$	(3,422	)	$	23,642	$	9,272
Weighted average number of common shares—basic		41,381,482		38,952,127			41,410,494		36,923,354
Effect of dilutive securities:
Employee stock-based compensation awards and warrants		2,416,896		—			1,702,453		171,236
Weighted average number of common shares—diluted		43,798,378		38,952,127			43,112,947		37,094,590
Basic earnings (loss) per share	$	0.51	$	(0.09	)	$	0.57	$	0.25
Diluted earnings (loss) per share	$	0.48	$	(0.09	)	$	0.55	$	0.25
Anti-dilutive warrants, stock options and RSUs		120,500		9,534,756			531,610		8,378,217

29

NOTE 10. INCOME TAXES

The Company uses an estimated annual effective tax rate method in computing its interim tax provision. This effective tax rate is based on forecasted annual pre-tax income, permanent tax differences and statutory tax rates.

The effective tax rate for the three months ended September 30, 2015 was 34.9% compared to a tax benefit of 2.8% for the three months ended September 30, 2014. The increase in the effective tax rate for the third quarter of 2015 was primarily due to higher levels of pre-tax income, which is subject to the marginal tax rate, and changes in permanent tax differences. The tax rate differs from the statutory rate due to the impact of tax benefits related to bank-owned life insurance, dividends received deductions, and certain stock-based compensation awards.

The effective tax rates for the nine months ended September 30, 2015 and 2014, were 5.7% and 40.9%, respectively. The decrease in the effective tax rate for the nine months ended September 30, 2015 reflects a net tax benefit due to the loss associated with the early termination of the FDIC loss share agreements and a deferred tax asset benefit associated with a revaluation of net unrealized built-in losses related to the Company’s acquisition of Great Florida Bank on January 31, 2014.

NOTE 11. STOCK-BASED COMPENSATION AND OTHER BENEFIT PLANS

2009 Option Plan

On February 5, 2014, the Company granted 90,000 stock options from the 2009 Option Plan to directors that vest at a rate of 25% per calendar quarter in 2014. The options have an exercise price of $19.75, the estimated fair value of the Company’s stock on the date of grant and an aggregate fair value of $479 thousand. The options granted to directors expire 10 years from grant date.

On April 29, 2014, the Company granted 150,000 stock options with a three year vesting period from the 2009 Option Plan to employees with a weighted average exercise price of $19.75, the estimated fair value of the Company’s stock on the date of grant, and an aggregate fair value of $890 thousand. The options granted to employees expire 10 years from grant date.

On September 30, 2014, the Company granted 391,500 stock options with a three year vesting period from the 2009 Option Plan to employees with an exercise price of $22.69, the fair value of the Company’s stock on the date of grant, and an aggregate fair value of $3.1 million. The options granted to employees expire 10 years from grant date.

Option grant activities for the periods indicated are summarized as follows:

	2009 Option Plan
	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
	(Dollars in thousands)
Outstanding at beginning of period		4,074,583			3,686,000			4,135,250			3,688,500
Granted		—			391,500			—			631,500
Exercised		(272,671	)		—			(309,506	)		—
Forfeited		(750	)		(5,166	)		(24,081	)		(19,332	)
Expired		—			—			(501	)		(228,334	)
Outstanding at end of period		3,801,162			4,072,334			3,801,162			4,072,334

At September 30, 2015, there were no shares available for award from the 2009 Option Plan and total vested and exercisable shares of 3,199,397 were outstanding.

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The total unrecognized compensation cost of $3.1 million related to the 2009 Option Plan for share awards outstanding at September 30, 2015 will be recognized over a weighted average remaining period of 1.93 years.

2013 Stock Incentive Plan

For the three or nine months ended September 30, 2014, no awards were granted by the Company from the 2013 Stock Incentive Plan (“2013 Plan”).

For the three months ended September 30, 2015, no awards were granted by the Company from the 2013 Plan.

During the nine months ended September 30, 2015, the Company granted 129,000 stock options from the 2013 Plan to directors that vest at a rate of 25% per calendar quarter in 2015 and 120,500 stock options to employees that vest at a rate of 33 ¹/₃% on the first, second and third year anniversaries of the grant date (“Three Year Vesting Period”). The options have a weighted average exercise price of $25.61, based on the fair value of the Company’s stock on the date of grant and an aggregate fair value of $1.8 million. The options granted to directors and employees expire 10 years from grant date.

Option grant activities for the periods indicated are summarized as follows:

	2013 Option Plan
	Three Months Ended September 30,					Nine Months Ended September 30,
	2015			2014		2015			2014
	(Dollars in thousands)
Outstanding at beginning of period		2,400,000			2,170,500		2,170,500			2,173,000
Granted		—			—		249,500			—
Exercised		(26,313	)		—		(32,979	)		—
Forfeited		—			—		(13,334	)		(2,500	)
Expired		—			—		—			—
Outstanding at end of period		2,373,687			2,170,500		2,373,687			2,170,500

At September 30, 2015, based on the number of stock options outstanding, there were 93,334 shares available for award from the 2013 Plan and total vested and exercisable shares of 754,999.

The total unrecognized compensation cost of $2.2 million related to the 2013 Equity Incentive Plan for share awards outstanding at September 30, 2015 will be recognized over a weighted average remaining period of 1.59 years.

Long-Term Award Granted

During the nine months ended September 30, 2015, the Compensation Committee of the Board of Directors of the Company approved an executive long-term award for the period ending December 31, 2017. The award grants cash phantom units (“CPUs”), the value of which is determined by the Company’s common share price at the end of the award period. Based on the estimated value of the award, the Company recognized $0.9 million of compensation expense for the nine month period ended September 30, 2015.

NOTE 12. COMMITMENTS AND CONTINGENCIES

The Company issues off-balance sheet financial instruments in connection with its lending activities and to meet the financing needs of its customers. These financial instruments include commitments to fund loans and lines of credit as well as commercial and standby letters of credit. These commitments expose the Company to varying degrees of credit and market risk which are essentially the same as extending loans to customers. The Company follows the same credit policies in making commitments as it does for instruments recorded on the Company’s consolidated balance sheet. Collateral is obtained based on management’s assessment of the customer’s credit risk.

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The Company’s exposure to credit loss is represented by the contractual amount of commitments. As of September 30, 2015 and December 31, 2014 the Company’s reserve for unfunded commitments totaled $1.7 million and $1.2 million, respectively.

Fees collected on off-balance sheet financial instruments represent the fair value of those commitments and are deferred and amortized over their term. Amounts funded under non-cancelable commitments in effect at the date of acquisition are Covered Assets under the loss-sharing agreements, if applicable, and if certain conditions are met.

Financial Instruments Commitments

Unfunded commitments are as follows:

	September 30, 2015		December 31, 2014
	(Dollars in thousands)
Commitments to fund loans	$	508,721	$	351,369
Unused lines of credit		248,385		199,880
Commercial and standby letters of credit		14,515		10,223
Total	$	771,621	$	561,472

Commitments to fund loans:

Commitments to fund loans are agreements to lend funds to customers as long as there is no violation of any condition established in the contract. To accommodate the financial needs of customers, the Company makes commitments under various terms to lend funds to consumers and businesses. Commitments to fund loans generally have fixed expiration dates or other termination clauses and may require payment of a fee. Many of these commitments are expected to expire without being funded and, therefore, the total commitment amounts do not necessarily represent future liquidity requirements.

The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral required in connection with a commitment to fund is based on management’s credit evaluation of the counterparty.

Unused lines of credit:

Unfunded commitments under lines of credit include commercial, commercial real estate, home equity and consumer lines of credit to existing customers. Some of these commitments may mature without being fully funded.

Commercial and standby letters of credit:

Letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Letters of credit are primarily issued to support trade transactions or guarantee arrangements. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The Company generally holds collateral supporting those commitments if deemed necessary.

Other Commitments and Contingencies

Legal Proceedings

The Company, from time to time, is involved as plaintiff or defendant in various legal actions arising in the normal course of business. While the ultimate outcome of any such proceedings cannot be predicted with certainty, it is the opinion of management, based upon advice of legal counsel, that no proceedings exist, either individually or in the aggregate, which, if determined adversely to the Company, would have a material effect on the Company’s consolidated balance sheet, results of operations or cash flows.

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A bank-owned asset in Miami-Dade County was foreclosed in 2012, and later discovered to have been illegally infilled over protected wetlands by the prior owner. The Bank had been working with Miami-Dade County environmental agencies to address the situation, along with Bank environmental attorneys specializing in this area. The subject property was sold during Q1 2015 to a third party purchaser and the Bank has no further legal liability for the asset.

The SEC is investigating the valuation and accounting treatment by Great Florida Bank (“GFB”), prior to the Great Florida Acquisition by the Company, of an office building acquired by GFB in 2009 and the use of appraisals with respect to such valuation. The Bank is cooperating with the investigation. On the date of acquisition by the Bank, based on the Company’s plans and intended use of the acquired office building, the asset was classified as OREO and recorded at fair value, less estimated selling costs. The fair value of the office building was based on a third party real estate appraisal at the date of acquisition. The Company does not believe that the results of the SEC investigation relating to GFB are likely to have a material adverse effect on the financial condition or results of operations of the Company. The subject property was sold during Q2 2015 to a third party purchaser.

NOTE 13. FAIR VALUE MEASUREMENTS

When determining the fair value measurements for assets and liabilities and the related fair value hierarchy, the Company considers the principal or most advantageous market in which it would transact and the assumptions that market participants would use when pricing the asset or liability (observable inputs). When possible, the Company looks to active and observable markets to price identical assets or liabilities. When identical assets and liabilities are not traded in active markets, the Company looks to market observable data for similar assets and liabilities. It is the Company’s policy to maximize the use of observable inputs, minimize the use of unobservable inputs, and use unobservable inputs to measure fair value to the extent that observable inputs are not available. The need to use unobservable inputs generally results from the lack of market liquidity, resulting in diminished observability of both actual trades and assumptions that would otherwise be available to value these instruments, or the value of the underlying collateral is not market observable. Although third party price indications may be available for an asset or liability, limited trading activity would make it difficult to support the observability of these quotations.

Financial Instruments Carried at Fair Value on a Recurring Basis

The following is a description of the valuation methodologies used for financial instruments measured at fair value on a recurring basis, as well as the general classification of each instrument under the valuation hierarchy.

Investment Securities—Investment securities available for sale are carried at fair value on a recurring basis. When available, fair value is based on quoted prices for the identical security in an active market and as such, would be classified as Level 1. If quoted market prices are not available, fair values are estimated using quoted prices of securities with similar characteristics, discounted cash flows or matrix pricing models. Investment securities available for sale for which Level 1 valuations are not available are classified as Level 2, and include U.S. Government agencies and sponsored enterprises obligations and agency mortgage-backed securities; state and municipal obligations; asset-backed securities; and corporate debt and other securities. Pricing of these securities is generally spread driven.

Observable inputs that may impact the valuation of these securities include benchmark yield curves, credit spreads, reported trades, dealer quotes, bids, issuer spreads, current rating, historical constant prepayment rates, historical voluntary prepayment rates, structural and waterfall features of individual securities, published collateral data, and for certain securities, historical constant default rates and default severities.

Interest Rate Derivatives—Interest rate derivatives are reported at estimated fair value utilizing Level 2 inputs and are included in other assets and other liabilities and consist of interest rate swaps where there is no significant deterioration in the counterparties (loan customers) credit risk since origination of the interest rate swap. The Company values its interest rate swap positions using market prices provided by a third party which uses primarily observable market inputs. Interest rate derivatives are further described in Note 6 “Derivatives.”

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For purposes of potential valuation adjustments to our derivative positions, the Company evaluates the credit risk of its counterparties as well as our own credit risk. Accordingly, the Company has considered factors such as the likelihood of default, expected loss given default, net exposures and remaining contractual life, among other things, in determining if any estimated fair value adjustments related to credit risk are required. The Company reviews counterparty exposure quarterly, and when necessary, appropriate adjustments are made to reflect the exposure.

For the nine months ended September 30, 2015 and 2014, the Company has not realized any losses due to the counterparty’s inability to pay any net uncollateralized position. As of September 30, 2015, there were no interest rate derivatives classified as Level 3.

Contingent consideration issued to the FDIC—In conjunction with the 2010 and 2011 acquisitions, the Bank issued contingent consideration to the FDIC in the form of EAAs. The estimated fair value of the EAAs are derived from an estimation of the future fair value of the Company’s stock and a range of potential payment liabilities is determined in accordance with the terms of each agreement. Management assigns a probability to each potential payment liability based on its judgment about the likelihood of the event occurring. This expected value is the basis for estimating the fair value of the contingent consideration. As of September 30, 2015, the Company had no remaining EAAs, as the EAAs reached final settlement with the FDIC on September 29, 2014.

Clawback liability—The fair value of the FDIC clawback liability is estimated using a discounted cash flow technique based on projected cash flows related to the resolution of Covered Assets and a discount rate using a risk free rate, plus a premium that takes into account the Company’s credit risk, resulting in Level 3 classification.

On March 4, 2015, the Bank entered into an agreement with the FDIC to terminate all loss sharing agreements which were entered into in 2010 and 2011 in conjunction with the Bank’s acquisition of substantially all of the assets (“covered assets”) and assumption of substantially all of the liabilities of six failed banks in FDIC-assisted acquisitions. Under the early termination, all rights and obligations of the Bank and the FDIC under the loss share agreements, including the clawback liability, have been eliminated.

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The following table presents the assets and liabilities measured at fair value on a recurring basis:

	September 30, 2015
	Level 1		Level 2		Level 3		Total
	(Dollars in thousands)
Assets:
U.S. Government agencies and sponsored enterprises obligations	$	—	$	5,228	$	—	$	5,228
U.S. Government agencies and sponsored enterprises mortgage-backed securities		—		367,260		—		367,260
State and municipal obligations		—		2,235		—		2,235
Asset-backed securities		—		499,094		—		499,094
Corporate bonds and other debt securities		—		426,468		—		426,468
Preferred stocks and other equity securities		2,064		165,470		—		167,534
Derivative assets—Interest rate contracts		—		27,143		—		27,143
Total	$	2,064	$	1,492,898	$	—	$	1,494,962
Liabilities:
Derivative liabilities—Interest rate contracts	$	—	$	27,143	$	—	$	27,143
Clawback liability		—		—		—		—
Total	$	—	$	27,143	$	—	$	27,143
	December 31, 2014
	Level 1		Level 2		Level 3		Total
	(Dollars in thousands)
Assets:
U.S. Government agencies and sponsored enterprises obligations	$	—	$	6,096	$	—	$	6,096
U.S. Government agencies and sponsored enterprises mortgage-backed securities		—		501,652		—		501,652
State and municipal obligations		—		2,277		—		2,277
Asset-backed securities		—		478,201		—		478,201
Corporate bonds and other debt securities		—		258,683		—		258,683
Preferred stocks and other equity securities		23,594		88,595		—		112,189
Derivative assets—Interest rate contracts		—		14,328		—		14,328
Total	$	23,594	$	1,349,832	$	—	$	1,373,426
Liabilities:
Derivative liabilities—Interest rate contracts	$	—	$	14,328	$	—	$	14,328
Clawback liability		—		—		13,846		13,846
Total	$	—	$	14,328	$	13,846	$	28,174

There were no transfers of financial assets between levels of the fair value hierarchy during the nine months ended September 30, 2015 or 2014.

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The following tables reconcile changes in the fair value of liabilities measured at fair value on a recurring basis and classified in level 3 of the fair value hierarchy for the periods presented:

	Three Months Ended September 30,
	2015					2014
	Clawback Liability			EAAs		Clawback Liability		EAAs
	(Dollars in thousands)
Balance at beginnning of period	$	—		$	—	$	12,525	$	1,814
Losses (gains) included in other noninterest expenses		—			—		1,032		766
Termination of FDIC loss sharing agreements		—			—		—		—
Final EAA settlement on FCB		—			—		—		(1,458	)
Final EAA settlement on PAB		—			—		—		(1,122	)
Balance at end of period	$	—		$	—	$	13,557	$	—
	Nine Months Ended September 30,
	2015					2014
	Clawback Liability			EAAs		Clawback Liability		EAAs
	(Dollars in thousands)
Balance at beginnning of period	$	13,846		$	—	$	11,753	$	1,114
Losses (gains) included in other noninterest expenses		—			—		1,804		1,466
Termination of FDIC loss sharing agreements		(13,846	)		—		—		—
Final EAA settlement on FCB		—			—		—		(1,458	)
Final EAA settlement on PAB		—			—		—		(1,122	)
Balance at end of period	$	—		$	—	$	13,557	$	—

The inputs used to determine the estimated fair value of loans include market conditions, loan term, underlying collateral characteristics and discount rates. The inputs used to determine the fair value of OREO include market conditions, estimated marketing period or holding period, underlying collateral characteristics and discount rates.

For the nine months ended September 30, 2015 and 2014, there was not a change in the methods or significant assumptions used to estimate fair value.

Financial Instruments Measured at Fair Value on a Non-Recurring Basis

The following table shows significant unobservable inputs used in the non-recurring fair value measurement of level 3 assets and liabilities:

Level 3 Asset	Fair value		Valuation Technique	Unobservable Inputs	Range
	(Dollars in thousands)
Non-recurring:
Loans	$	4,847,857	Third party appraisals and discounted cash flows	Collateral discounts and discount rates		0% - 100	%
Other real estate owned		40,405	Third party appraisals	Collateral discounts and estimated cost to sell		10	%

The following is a description of the methodologies used to estimate the fair values of assets and liabilities measured at fair value on a non-recurring basis, and the level within the fair value hierarchy in which those measurements are typically classified.

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Impaired loans and OREO—The carrying amount of collateral dependent impaired loans is typically based on the fair value of the underlying collateral, which may be real estate or other business assets, less estimated costs to sell. The carrying value of OREO is initially measured based on the fair value, less estimated cost to sell, of the real estate acquired in foreclosure and subsequently adjusted to the lower of cost or estimated fair value, less estimated cost to sell. Fair values of real estate collateral are typically based on real estate appraisals which utilize market and income valuation techniques incorporating both observable and unobservable inputs. When current appraisals are not available, the Company may use brokers’ price opinions, home price indices, or other available information about changes in real estate market conditions to adjust the latest appraised value available. These adjustments to appraised values may be subjective and involve significant management judgment. The fair value of collateral consisting of other business assets is generally based on appraisals that use market approaches to valuation, incorporating primarily unobservable inputs. Fair value measurements related to collateral dependent impaired loans and OREO are classified within level 3 of the fair value hierarchy.

The following tables provide information about certain assets measured at fair value on a non-recurring basis:

	September 30, 2015		December 31, 2014
	(Dollars in thousands)
Assets that are still held (classified in Level 3):
Impaired loans	$	6,467	$	4,754
Foreclosed real estate		40,405		74,527

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
	(Dollars in thousands)
Negative valuation adjustments:
Impaired loans	$	—	$	4	$	1,011	$	4
Foreclosed real estate		122		958		242		1,690

Impairment charges resulting from the non-recurring changes in fair value of the underlying collateral of impaired loans are included in the provision for loan losses in the consolidated statement of income. Impairment charges resulting from the non-recurring changes in fair value of OREO are included in other real estate and acquired assets resolution expenses in the consolidated statement of income.

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The carrying amounts and estimated fair values, as well as the level within the fair value hierarchy, of the Company’s financial instruments are as follows:

September 30, 2015	Carrying Value		Fair Value		Level 1		Level 2		Level 3
	(Dollars in thousands)
Financial Assets:
Cash and cash equivalents	$	84,759	$	84,759	$	84,759	$	—	$	—
Available for sale securities		1,467,819		1,467,819		2,064		1,465,755		—
FHLB and other bank stock		65,955		65,955		—		65,955		—
Loans, net		4,778,742		4,847,857		—		—		4,847,857
Loans held for sale		2,573		2,573		—		2,573		—
Loss share indemnification asset		—		—		—		—		—
Due from FDIC		—		—		—		—		—
Bank-owned life insurance		166,931		166,931		—		166,931		—
Derivative assets—Interest rate contracts		27,143		27,143		—		27,143		—
Financial Liabilities:
Deposits	$	4,821,844	$	4,825,458	$	—	$	4,825,458	$	—
Advances from the FHLB and other borrowings		1,149,920		1,150,326		—		1,150,326		—
Derivative liabilities—Interest rate contracts		27,143		27,143		—		27,143		—
Clawback liability		—		—		—		—		—
December 31, 2014	Carrying Value		Fair Value		Level 1		Level 2		Level 3
	(Dollars in thousands)
Financial Assets:
Cash and cash equivalents	$	107,085	$	107,085	$	107,085	$	—	$	—
Available for sale securities		1,359,098		1,359,098		23,594		1,335,504		—
FHLB and other bank stock		66,891		66,891		—		66,891		—
Loans, net		3,906,710		3,959,771		—		—		3,959,771
Loans held for sale		707		707		—		707		—
Loss share indemnification asset		63,168		27,976		—		—		27,976
Due from FDIC		1,735		1,735		—		1,735		—
Bank-owned life insurance		139,829		139,829		—		139,829		—
Derivative assets—Interest rate contracts		14,328		14,328		—		14,328		—
Financial Liabilities:
Deposits	$	3,978,535	$	3,977,629	$	—	$	3,977,629	$	—
Advances from the FHLB and other borrowings		1,067,981		1,066,764		—		1,066,764		—
Derivative liabilities—Interest rate contracts		14,328		14,328		—		14,328		—
Clawback liability		13,846		13,846		—		—		13,846

Certain financial instruments are carried at amounts that approximate fair value due to their short-term nature and generally negligible credit risk. Financial instruments for which fair value approximates the carrying amount at September 30, 2015 and December 31, 2014, include cash and cash equivalents and due from FDIC.

The following methods and assumptions were used to estimate the fair value of each class of financial instruments.

FHLB and Other Bank Stock:

FHLB and other bank stock can be liquidated only by redemption by the issuer, as there is no market for these securities. These securities are carried at par, which has historically represented the redemption price and is therefore considered to approximate fair value.

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Loans:

Fair values for loans are based on a discounted cash flow methodology that considers various factors, including the type of loan and related collateral, classification status, fixed or variable interest rate, term of loan, whether or not the loan was amortizing and current discount rates. Loans are grouped together according to similar characteristics and are treated in the aggregate when applying various valuation techniques. The discount rates used for loans are based on current market rates for new originations of comparable credit risk and include adjustments for liquidity concerns. The ALL is considered a reasonable estimate of the required adjustment to fair value to reflect the impact of credit risk. This estimate may not represent an exit value as defined in ASC 820.

Loans Held for Sale:

Fair values of mortgage loans held for sale are based on commitments on hand from investors or prevailing market prices.

Loss Share Indemnification Asset:

The fair value of the loss share indemnification asset is estimated using a discounted cash flow technique based on projected cash flows related to the resolution of Covered Assets and a discount rate using a risk free rate, plus a premium to take into account the Company’s credit risk, that incorporates the uncertainty related to the amounts and timing of the cash flows and other liquidity concerns as well as the counterparties credit risk. As of September 30, 2015, the Company had no remaining loss share indemnification asset, as the Bank entered into an agreement with the FDIC to terminate all loss sharing agreements on March 4, 2015.

Due from FDIC:

The due from FDIC represents claims submitted to the Federal Deposit Insurance Corporation for reimbursement for which the Company expects to receive payment within 90 days. Due to their short term nature, the carrying amount of these instruments approximates the estimated fair value. As of September 30, 2015, the Company had no remaining receivable from the FDIC, as the Bank entered into an agreement with the FDIC to terminate all loss sharing agreements on March 4, 2015.

Bank-owned Life Insurance:

The Company holds life insurance policies on certain officers. The carrying value of these policies approximates fair value as it is based on the cash surrender value adjusted for other charges or amounts due that are probable at settlement.

Deposits:

The fair value of demand deposits, savings accounts and money market deposits is the amount payable on demand at the reporting date. The fair value of fixed-maturity certificates of deposit is estimated using discounted cash flow analysis and using the rates currently offered for deposits of similar remaining maturities.

Advances from the FHLB and Other Borrowings:

The fair value of advances from the FHLB and other borrowings are estimated by discounting the future cash flows using the current rate at which similar borrowings with similar remaining maturities could be obtained.

EAAs:

The estimated fair value of EAAs are derived from an estimation of the future fair value of the Company’s stock and a range of potential payment liabilities are determined in accordance with the terms of each agreement. As of September 30, 2015, the Company had no remaining EAAs, as the EAAs reached final settlement with the FDIC on September 29, 2014.

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

The following discussion and analysis is intended to assist readers in understanding the financial condition and results of operations of the Company during the three and nine month periods ended September 30, 2015 and should be read in conjunction with the consolidated financial statements and notes thereto included in this report on Form 10-Q and the Company’s Annual Report on Form 10-K filed for the year ended December 31, 2014 with the SEC.

In this report, unless the context suggests otherwise, references to “FCB Financial Holdings,” “the Company,” “we,” “us,” “and “our” mean the business of FCB Financial Holdings, Inc. (formerly known as Bond Street Holdings, Inc.) and its wholly-owned subsidiary, Florida Community Bank, National Association, and its consolidated subsidiaries; and references to “the Bank” refer to Florida Community Bank, National Association, and its consolidated subsidiaries. References to the “Old Failed Banks” include Premier American Bank, or Old Premier, Florida Community Bank, or Old FCB, Peninsula Bank, or Old Peninsula, Sunshine State Community Bank, or Old Sunshine, First National Bank of Central Florida, or Old FNBCF, Cortez Community Bank, or Old Cortez, Coastal Bank, or Old Coastal, First Peoples Bank, or Old FPB, in each case, before the acquisition of certain assets and assumption of certain liabilities of each of the Old Failed Banks by the Bank. References to Great Florida Bank, or GFB, refer to such bank before its acquisition by the Bank; Great Florida Bank and the Old Failed Banks are collectively referred to as the Old Banks. References to our Class A Common Stock refer to our Class A voting common stock, par value $0.001 per share; references to our Class B Common Stock refer to our Class B non-voting common stock, par value $0.001 per share; and references to our common stock include, collectively, our Class A Common Stock and our Class B Common Stock.

Cautionary Note Regarding Forward-Looking Information

This report may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, regarding the financial condition, results of operations, business plans and future performance of the Company. We generally identify forward looking statements by terminology such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “could,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of those words or other comparable words. Any forward-looking statements contained in this report are based on our historical performance, the historical performance of the Old Banks or on our current plans, estimates and expectations. The inclusion of this forward-looking information should not be regarded as a representation by us or any other person that the future plans, estimates or expectations contemplated by us will be achieved. Such forward-looking statements are subject to various risks and uncertainties and assumptions relating to our operations, financial results, financial condition, business prospects, growth strategy and liquidity. If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, our actual results may vary materially from those indicated in these statements. These factors should not be construed as exhaustive and should be read in conjunction with any other cautionary statements that are included elsewhere in this report. We do not undertake any obligation to publicly update or review any forward-looking statements, whether as a result of new information, future developments or otherwise. A number of important factors could cause actual results to differ materially from those indicated by the forward-looking statements, including but not limited to, those factors described under “Business”, “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 filed with the SEC.

You should read this report and the documents that we reference in this report and have filed as exhibits to various reports and registration statements that we have filed with the SEC completely and with the understanding that our actual future results, levels of activity, performance and achievements may be different from what we expect and that these difference may be material.

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Critical Accounting Policies

We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America and conform to the accounting and reporting guidelines prescribed by bank regulatory authorities. The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amount of revenues and expenses during the reporting period. The more critical accounting estimates and reporting policies include accounting for the ALL, determining fair value of financial instruments, valuation of goodwill and intangible assets, income taxes and the valuation of assets acquired and liabilities assumed in business combinations. Accordingly, the Company’s critical accounting estimates are discussed in detail in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K. The Company’s significant accounting policies and changes in accounting principles and effects of new accounting pronouncements are discussed in detail in Note 1 “Summary of Significant Accounting Policies” in the “Notes to Consolidated Financial Statements” in the Company’s Annual Report on Form 10-K. Additional disclosures regarding the effects of new accounting pronouncements are included in Note 1 “Summary of Significant Accounting Policies” included herein.

Corporate Profile

FCB Financial Holdings, Inc. is a bank holding company, headquartered in Weston, Florida, with one wholly-owned national bank subsidiary, Florida Community Bank, National Association. The Bank offers a comprehensive range of traditional banking products and services to individuals, small and medium-sized businesses, some large businesses, and other local organizations and entities through 49 branches in south and central Florida. The Bank targets retail and commercial customers engaged in a wide variety of industries including healthcare and professional services, retail and wholesale trade, tourism, agricultural services, manufacturing, distribution and distribution-related industries, technology, automotive, aviation, food products, building materials, residential housing and commercial real estate.

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act, or JOBS Act. As such, we are eligible to take advantage of certain exemptions from various reporting requirements that are generally unavailable to other public companies. In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards affecting public companies. We could remain an emerging growth company until the earliest to occur of (a) the last day of the fiscal year in which the fifth anniversary of our initial public offering occurred, (b) the last day of the first fiscal year in which our annual gross revenues exceed $1 billion, (c) the date on which we are deemed to be a “large accelerated filer,” which will occur at such time as (i) the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, (ii) we have been required to file annual and quarterly reports under the Securities Exchange Act of 1934, as amended, or Exchange Act, for a period of at least 12 months and (iii) we have filed at least one annual report pursuant to the Exchange Act or (d) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three-year period. We anticipate the Company will no longer remain an emerging growth company as of December 31, 2015 as we expect to be deemed a large accelerated filer.

Primary Factors Used to Evaluate Our Business

As a financial institution, we manage and evaluate various aspects of both our results of operations and our financial condition. We evaluate the levels and trends of the line items included in our consolidated balance sheets and income statements, as well as various financial ratios that are commonly used in our industry. We analyze these ratios and financial trends against our own historical performance, our budgeted performance and the financial condition and performance of comparable financial institutions in our region and nationally.

Results of Operations

Our results of operations depend substantially on net interest income, which is the difference between interest income on interest-earning assets, consisting primarily of interest income on loans receivable, including accretion income on acquired loans, securities and other short-term investments, and interest expense on interest-bearing liabilities, consisting primarily of deposits and borrowings. Our results of operations are also dependent upon our generation of noninterest income, consisting of income from banking service

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fees, interest rate swap services, BOLI and recoveries on acquired assets. Other factors contributing to our results of operations include our provisions for loan losses, gains or losses on securities and income taxes, as well as the level of our noninterest expenses, such as compensation and benefits, occupancy and equipment and other miscellaneous operating expenses.

Net Interest Income

Net interest income, a significant contributor to our revenues and net income, represents interest income less interest expense. We generate interest income from interest, dividends and fees received on interest-earning assets, including loans and investment securities. We incur interest expense from interest paid on interest-bearing liabilities, including interest-bearing deposits and borrowings. To evaluate net interest income, we measure and monitor (1) yields on our loans and other interest-earning assets, (2) the costs of our deposits and other funding sources, (3) our net interest spread, (4) our net interest margin and (5) our provision for loan losses. Net interest spread is the difference between rates earned on interest-earning assets and rates paid on interest-bearing liabilities. Net interest margin is calculated as net interest income divided by average interest-earning assets. Because noninterest-bearing sources of funds, such as noninterest-bearing deposits and stockholders’ equity, also fund interest-earning assets, net interest margin includes the benefit of these noninterest-bearing sources.

We also recognize income from the accretable discounts associated with the purchase of interest-earning assets. Our acquisitions in 2010 and 2011 and our January 31, 2014 acquisition of GFB, produce a portion of our interest income from the accretable discounts on acquired loans. This accretion will continue to have an impact on our net interest income as long as loans acquired with evidence of credit deterioration at acquisition represent a meaningful portion of our interest-earning assets.

Changes in market interest rates and the interest rates we earn on interest-earning assets or pay on interest-bearing liabilities, as well as the volume and types of interest-earning assets, interest-bearing and noninterest-bearing liabilities and stockholders’ equity, are usually the largest drivers of periodic changes in net interest spread, net interest margin and net interest income. In addition, our interest income includes the accretion of the fair value discounts on our acquired loans, which will also affect our net interest spread, net interest margin and net interest income. We measure net interest income before and after the provision for loan losses required to maintain our ALL at acceptable levels.

Noninterest Income

Our noninterest income includes the following:

• Service charges and fees;

• Interest rate swap services;

• BOLI income;

• Accretion income and amortization expense from FDIC loss share indemnification asset and clawback liability;

• Reimbursement of expenses on assets covered by loss sharing agreements;

• Income from resolution of acquired assets; and

• Net gains and losses from the sale of OREO assets and investment securities

Noninterest Expense

Our noninterest expense includes the following:

• Salaries and employee benefits;

• Occupancy and equipment expenses;

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• Other real estate and acquired loan resolution related expenses;

• Professional services;

• Data processing and network expense;

• Regulatory assessments and insurance; and

• Amortization of intangibles

Financial Condition

The primary factors we use to evaluate and manage our financial condition include liquidity, asset quality and capital.

Liquidity

We manage liquidity based upon factors that include the amount of core deposits as a percentage of total deposits, the level of diversification of our funding sources, the allocation and amount of our deposits among deposit types, the short-term funding sources used to fund assets, the amount of non-deposit funding used to fund assets, the availability of unused funding sources, off-balance sheet obligations, the availability of assets to be readily converted into cash without undue loss, the amount of cash and liquid securities we hold, and the re-pricing characteristics and maturities of our assets when compared to the re-pricing characteristics of our liabilities, the ability to securitize and sell certain pools of assets and other factors.

Asset Quality

We manage the diversification and quality of our assets based upon factors that include the level, distribution, severity and trend of problem, classified, delinquent, nonaccrual, nonperforming and restructured assets, the adequacy of our ALL, discounts and reserves for unfunded loan commitments, the diversification and quality of loan and investment portfolios, the extent of counterparty risks and credit risk concentrations.

Capital

We manage capital based upon factors that include the level and quality of capital and overall financial condition of the Company, the trend and volume of problem assets, the adequacy of discounts and reserves, the level and quality of earnings, the risk exposures in our balance sheet, the levels of core capital to adjusted average assets, common equity tier 1 capital to risk-weighted assets, tier 1 capital to risk-weighted assets, total risk-based capital to risk-weighted assets and other factors.

Performance Highlights

Operating and financial highlights for the three months ended September 30, 2015 include the following:

• Total net revenue of $63.8 million, up 32.3% year-over-year

• EPS and Core EPS of $0.48 on a fully diluted basis

• Total loan portfolio grew sequentially at an annualized rate of 24.4%

• New loan fundings of $362.6 million during the quarter

• Total deposits grew sequentially at an annualized rate of 31.6%

• Demand deposits grew to 21.2% of total deposits during the quarter

• Core efficiency ratio improved to 46.3%

• ROA and Core ROA of 1.26%

• Tangible book value per share was $18.75

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The reconciliation of certain non-GAAP financial measures, which management believes facilitates the assessment of its banking operations and peer comparability, are included in tabular form under “Non-GAAP Financial Measures”.

Analysis of Results of Operations

Net income available to common stockholders totaled $21.1 million, which generated diluted EPS of $0.48 in the third quarter of 2015. Net loss for the same period of 2014 totaled $3.4 million, which generated diluted EPS of $(0.09). The Company’s results of operations for the third quarter of 2015 produced an annualized return on average assets of 1.26% and an annualized return on average common stockholders’ equity of 9.73% compared to prior year ratios of (0.24)% and (1.70)%, respectively.

Net income available to common stockholders totaled $23.6 million for the nine months ended September 30, 2015, which generated diluted EPS of $0.55. Net income available to common stockholders for the nine months ended September 30, 2014 totaled $9.3 million, which generated diluted EPS of $0.25. The increase in earnings was driven by an increase in net interest income of $30.4 million and a decrease in noninterest expense of $20.8 million partially offset by a decrease in noninterest income of $44.5 million primarily due to the one-time, pre-tax charge of $65.5 million in conjunction with the early termination of the FDIC loss share agreements on March 4, 2015. The Company’s results of operations for the nine months ended September 30, 2015 produced an annualized return on average assets of 0.50% and an annualized return on average common stockholders’ equity of 3.68% compared to prior year ratios of 0.23% and 1.65%, respectively.

Net Interest Income and Net Interest Margin

Net interest income is the largest component of our income and is affected by the interest rate environment and the volume and composition of interest-earning assets and interest-bearing liabilities. Our interest-earning assets include loans, interest-bearing deposits in other banks and investment securities. Our interest-bearing liabilities include deposits, FHLB advances and other borrowings.

The following tables present, for the periods indicated, information about (i) average balances, the total dollar amount of interest income from interest-earning assets and the resultant average yields; (ii) average balances, the total dollar amount of interest expense on interest-bearing liabilities and the resultant average rates; (iii) net interest income; (iv) the interest rate spread; and (v) the net interest margin. Yields have been calculated on a pre-tax basis:

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	Three Months Ended September 30,
	2015							2014
	Average Balance (1)		Interest/ Expense (2)		Annualized Yield/Rate(3)			Average Balance (1)		Interest/ Expense (2)		Annualized Yield/Rate(3)
	(Dollars in thousands)
Interest-earning assets:
Interest-earning deposits in other banks	$	79,951	$	38		0.19	%	$	76,682	$	37		0.19	%
New loans		3,950,873		33,823		3.35	%		2,440,992		21,866		3.51	%
Acquired loans (4)(5)		685,403		17,847		10.42	%		903,941		20,219		8.95	%
Investment securities		1,499,640		13,315		3.47	%		1,800,988		11,530		2.51	%
Total interest-earning assets		6,215,867		65,023		4.12	%		5,222,603		53,652		4.05	%
Non-earning assets:
FDIC loss share indemnification asset (6)		—							75,191
Noninterest-earning assets		434,393							440,293
Total assets	$	6,650,260						$	5,738,087
Interest-bearing liabilities:
Interest-bearing demand deposits	$	369,381	$	431		0.46	%	$	—	$	—		0.00	%
Interest-bearing NOW accounts		397,831		342		0.34	%		396,361		347		0.35	%
Savings and money market accounts		1,895,582		2,569		0.54	%		1,721,444		2,790		0.64	%
Time deposits (7)		1,380,658		3,504		1.01	%		1,358,610		2,987		0.87	%
FHLB advances and other borrowings (7)		1,119,429		1,408		0.49	%		945,519		1,633		0.68	%
Total interest-bearing liabilities		5,162,881		8,254		0.63	%		4,421,934		7,757		0.69	%
Noninterest-bearing liabilities and stockholders’ equity:
Noninterest-bearing demand deposits		578,699							459,189
Other liabilities		46,709							57,797
Stockholders’ equity		861,971							799,167
Total liabilities and stockholders’ equity	$	6,650,260						$	5,738,087
Net interest income			$	56,769						$	45,895
Net interest rate spread						3.49	%						3.36	%
Net interest margin						3.62	%						3.49	%

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	Nine Months Ended September 30,
	2015							2014
	Average Balance (1)		Interest/ Expense (2)		Annualized Yield/Rate(3)			Average Balance (1)		Interest/ Expense (2)		Annualized Yield/Rate(3)
	(Dollars in thousands)
Interest-earning assets:
Cash and cash equivalents	$	77,826	$	111		0.19	%	$	99,923	$	158		0.21	%
New loans		3,538,684		89,665		3.34	%		2,116,530		56,722		3.53	%
Acquired loans (4)(5)		737,216		49,513		8.95	%		902,262		58,048		8.58	%
Investment securities and other		1,524,992		38,594		3.34	%		1,677,454		32,094		2.52	%
Total interest-earning assets		5,878,718		177,883		4.00	%		4,796,169		147,022		4.06	%
Non-earning assets:
FDIC loss share indemnification asset (6)		14,520							79,996
Noninterest-earning assets		447,102							400,034
Total assets	$	6,340,340						$	5,276,199
Interest-bearing liabilities:
Interest-bearing demand deposits	$	241,975	$	789		0.44	%	$	—	$	—		0.00	%
Interest-bearing NOW accounts		401,805		1,026		0.34	%		203,949		426		0.28	%
Savings and money market accounts		1,844,735		7,357		0.53	%		1,687,648		7,237		0.57	%
Time deposits (7)		1,257,259		9,250		0.98	%		1,411,376		9,603		0.91	%
FHLB advances and other borrowings (7)		1,111,569		3,634		0.43	%		761,555		4,363		0.76	%
Total interest-bearing liabilities		4,857,343		22,056		0.61	%		4,064,528		21,629		0.71	%
Noninterest-bearing liabilities and shareholders’ equity:
Noninterest-bearing demand deposits		575,004							411,180
Other liabilities		49,279							48,955
Stockholders’ equity		858,714							751,536
Total liabilities and stockholders’ equity	$	6,340,340						$	5,276,199
Net interest income			$	155,827						$	125,393
Net interest rate spread						3.39	%						3.35	%
Net interest margin						3.54	%						3.49	%

(1) Average balances presented are derived from daily average balances.

(2) Interest income is presented on an actual basis and does not include taxable equivalent adjustments.

(3) Average rates are presented on an annualized basis.

(4) Includes loans on nonaccrual status.

(5) Net of allowance for loan losses.

(6) Amortization expense of FDIC loss share indemnification asset is not included in net interest income presentation.

(7) Interest expense includes the impact from premium amortization.

Changes in interest income and interest expense result from changes in average balances (volume) of interest-earning assets and liabilities, as well as changes in average interest rates. The following tables show the effect that these factors had on the interest earned on our interest-earning assets and the interest incurred on our interest-bearing liabilities for the periods indicated. The effect of changes in volume is determined by multiplying the change in volume by the prior period’s average rate. Similarly, the effect of rate changes is calculated by multiplying the change in average rate by the previous period’s volume. Changes in both volume and rate have been allocated to these two categories based on the proportionate absolute changes in each category. Yields have been calculated on a pre-tax basis.

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A summary of increases and decreases in interest income and interest expense resulting from changes in average balances (volume) and average interest rates are as follows:

	Three Months Ended September 30, 2015 compared to 2014
	Increase (Decrease) Due to
	Volume (3)			Rate (3)			Total
	(Dollars in thousands)
Interest-earning assets:
Interest-earning deposits in other banks	$	1		$	—		$	1
New loans		18,412			(6,455	)		11,957
Acquired loans (1)		(17,237	)		14,865			(2,372	)
Investment securities		(9,981	)		11,766			1,785
Total change in interest income	$	(8,805	)	$	20,176		$	11,371
Interest-bearing liabilities:
Interest-bearing demand deposits	$	431		$	—		$	431
Interest-bearing NOW accounts		8			(13	)		(5	)
Savings and money market accounts		1,266			(1,487	)		(221	)
Time deposits (2)		47			470			517
FHLB advances and other borrowings (2)		1,337			(1,562	)		(225	)
Total change in interest expenses		3,089			(2,592	)		497
Total change in net interest income	$	(11,894	)	$	22,768		$	10,874

	Nine Months Ended September 30, 2015 compared to 2014
	Increase (Decrease) Due to
	Volume (3)			Rate (3)			Total
	(Dollars in thousands)
Interest-earning assets:
Interest-earning deposits in other banks	$	(33	)	$	(14	)	$	(47	)
New loans		37,946			(5,003	)		32,943
Acquired loans (1)		(12,309	)		3,774			(8,535	)
Investment securities		(4,587	)		11,087			6,500
Total change in interest income	$	21,017		$	9,844		$	30,861
Interest-bearing liabilities:
Interest-bearing demand deposits	$	789		$	—		$	789
Interest-bearing NOW accounts		492			108			600
Savings and money market accounts		838			(718	)		120
Time deposits (2)		(1,366	)		1,013			(353	)
FHLB advances and other borrowings (2)		2,210			(2,939	)		(729	)
Total change in interest expenses		2,963			(2,536	)		427
Total change in net interest income	$	18,054		$	12,380		$	30,434

(1) Includes loans on nonaccrual status.

(2) Interest expense includes the impact from premium amortization.

(3) Variances attributable to both volume and rate are allocated on a consistent basis between rate and volume based on the absolute value of the variances in each category.

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Third Quarter 2015 compared to Third Quarter 2014

Net interest income was $56.8 million for the third quarter of 2015, an increase of 23.7% compared to $45.9 million for the same period in 2014. The increase in net interest income reflects an $11.4 million increase in interest income, while interest expense remained flat over the period. For the three months ended September 30, 2015, average earning assets increased by $993.3 million, or 19.0%, compared to the same period of the prior year, while average interest-bearing liabilities increased $740.9 million, or 16.8%, compared to the three months ended September 30, 2014. The increase in interest income for the third quarter of 2015 was primarily due to a $12.0 million increase in interest income on New loans due to growth in the New loan portfolio. The average balance of New loans increased $1.51 billion, which offset the negative impact of the reduction in the average interest rate on New loans of 16 basis points. Interest income on acquired loans decreased $2.4 million for the three months ended September 30, 2015 compared to the third quarter of 2014, primarily driven by a decrease in the average balance of loans of $218.5 million due to runoff of the acquired loan portfolio, offset by an increase in the average interest rate on acquired loans of 147 basis points.

Interest expense on deposits increased $722 thousand for the three months ended September 30, 2015 compared to the three months ended September 30, 2014 primarily due to a $567.0 million, or 16.3%, increase in the average balance of interest-bearing deposits. The cost of deposits improved to 59 basis points for the period due to the shift from higher costing time deposits to lower costing demand deposits. The average rate paid on time deposits, including the impact of premium amortization, was 1.01% and 0.87% for the three months ended September 30, 2015 and 2014, respectively. Interest expense on FHLB advances and other borrowings totaled $1.4 million for the three months ended September 30, 2015 as compared to $1.6 million for the three months ended September 30, 2014. The decrease was primarily due to a 19 basis point decrease in average rate paid on borrowings, partially offset by an increase in the average balance of FHLB advances and other borrowings of $173.9 million.

The net interest margin for the three months ended September 30, 2015 was 3.62%, an increase of 13 basis points compared to 3.49% for the three months ended September 30, 2014. The average yield on interest-earning assets increased by 7 basis points for the three months ended September 30, 2015 as compared to the three months ended September 30, 2014, while the average rate paid on interest-bearing liabilities decreased by 6 basis points. The increase in the average yield on interest-earning assets was due primarily to the increase in the average interest rate on acquired loans.

Nine Months of 2015 compared to Nine Months of 2014

Net interest income was $155.8 million for the nine months ended September 30, 2015, an increase of 24.3% compared to $125.4 million for the same period in 2014. The increase in net interest income reflects a $30.9 million increase in interest income, while interest expense remained flat over the period. For the nine months ended September 30, 2015, average earning assets increased by $1.08 billion, or 22.6%, compared to the same period of the prior year, while average interest-bearing liabilities increased $792.8 million, or 19.5%, compared to the nine months ended September 30, 2014. The increase in interest income for the nine months ended September 30, 2015 was primarily due to a $32.9 million increase in interest income on New loans due to growth in the New loan portfolio. The average balance of New loans increased $1.42 billion, which offset the negative impact of the reduction in the average interest rate on New loans of 19 basis points. Interest income on acquired loans decreased $8.5 million for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014, primarily driven by a decrease in the average balance of loans of $165.0 million due to runoff of the acquired loan portfolio, slightly offset by an increase in the average interest rate on acquired loans of 37 basis points.

Interest expense on deposits increased $1.2 million for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014 primarily due to a $442.8 million, or 13.4%, increase in the average balance of interest-bearing deposits. The cost of deposits improved to 57 basis points for the period due to the shift from higher costing time deposits to lower costing demand deposits. The average rate paid on time deposits, including the impact of premium amortization, was 0.98% and 0.91% for the nine months ended September 30, 2015 and 2014, respectively. Interest expense on FHLB advances and other borrowings totaled $3.6 million for the nine months ended September 30, 2015 as compared to $4.4 million for the nine months ended September 30, 2014. The decrease was primarily due to a 33 basis point decrease in average rate paid on borrowings, partially offset by an increase in the average balance of FHLB advances and other borrowings of $350.0 million.

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The net interest margin for the nine months ended September 30, 2015 was 3.54%, an increase of 5 basis points compared to 3.49% for the nine months ended September 30, 2014. The average yield on interest-earning assets declined by 6 basis points for the nine months ended September 30, 2015 as compared to the nine months ended September 30, 2014, while the average rate paid on interest-bearing liabilities decreased by 10 basis points. The decline in the average yield on interest-earning assets was due primarily to the runoff of higher yielding acquired loan balances, and a reduction in the average interest rate on New loans.

Provision for Loan Losses

Third Quarter 2015 compared to Third Quarter 2014

The provision for loan losses is used to maintain the ALL at a level that, in management’s judgment, is appropriate to absorb probable losses inherent in the portfolio at the balance sheet date. The provision for loan losses decreased by $2.1 million, or 75.9%, to $675 thousand for the three months ended September 30, 2015 as compared to the three months ended September 30, 2014. Provision for loan loss expense for the three months ended September 30, 2015 included a $1.8 million provision related to New loans and a recoupment of provision of $1.1 million for the acquired loan portfolio.

Net charge-offs were $327 thousand for the third quarter of 2015, in comparison to net charge-offs of $249 thousand for the same period of 2014. Net charge-offs were 0.03% of average loans on an annualized basis for the third quarter of 2015 and the third quarter of 2014. There were no New loan portfolio charge-offs in the third quarter of 2015.

Nine Months of 2015 compared to Nine Months of 2014

The provision for loan losses decreased by $2.6 million, or 37.0%, to $4.5 million for the nine months ended September 30, 2015 as compared to the nine months ended September 30, 2014. Provision for loan loss expense for the nine months ended September 30, 2015 included a $5.4 million provision related to New loans and a recoupment of provision of $901 thousand for the acquired loan portfolio.

Net recoveries were $20 thousand for the nine months ended September 30, 2015, in comparison to net charge-offs of $1.4 million for the same period of 2014. The decrease in net charge-offs was due to resolution of acquired loans. Net recoveries were 0.00% of average loans on an annualized basis for the nine months ended September 30, 2015 compared to net charge-offs of 0.06% of average loans for the same period of 2014. There were no New loan portfolio charge-offs in the nine months ended September 30, 2015.

Noninterest Income

The following table presents a summary of noninterest income. For expanded discussion of certain significant noninterest income items, refer to the discussion of each component following the table presented.

	Three Months Ended September 30,					Nine Months Ended September 30,
	2015		2014			2015			2014
	(Dollars in thousands)
Noninterest income:
Service charges and fees	$	823	$	738		$	2,358		$	2,183
Loan and other fees		1,783		1,238			6,186			4,523
Bank-owned life insurance income		1,101		1,151			3,295			3,007
FDIC loss share indemnification loss		—		(5,862	)		(65,529	)		(16,101	)
Income from resolution of acquired assets		2,225		1,109			8,495			3,838
Gain (loss) on sales of other real estate owned		228		(128	)		7,398			(56	)
Gain (loss) on investment securities		166		2,785			1,934			9,728
Other noninterest income		746		1,319			2,998			4,466
Total noninterest income	$	7,072	$	2,350		$	(32,865	)	$	11,588

49

Third Quarter 2015 compared to Third Quarter 2014

The Company reported noninterest income of $7.1 million for the three months ended September 30, 2015, an increase of $4.7 million compared to the three months ended September 30, 2014. The increase was primarily due to the early termination of the FDIC loss share agreements and an increase in income from resolution of acquired assets, partially offset by a decrease in gains on investment securities.

During the three months ended September 30, 2015, the Company had no FDIC loss share indemnification loss as compared to $5.9 million for the three months ended September 30, 2014. The decrease was driven by the early termination of all loss share agreements.

Resolutions recognized for the three months ended September 30, 2015 totaled $2.2 million and were recognized through earnings as received, compared to $1.1 million for the three months ended September 30, 2014. The Company continues to recognize resolution of acquired asset income stemming from its acquired asset portfolio. As a result of the early termination of the FDIC loss share agreements, the Company recognized all recoveries related to what was previously “covered assets” in its consolidated statement of income as these amounts are no longer shared with the FDIC.

Net gain on investment securities totaled $166 thousand for the three months ended September 30, 2015, a decrease of $2.6 million, or 94.0%, compared to $2.8 million for the three months ended September 30, 2014. The decrease was the result of the lower volume of investment security sales.

Nine Months of 2015 compared to Nine Months of 2014

The Company reported noninterest income of $(32.9) million for the nine months ended September 30, 2015 a decrease of $44.5 million compared to the nine months ended September 30, 2014. The decrease was primarily due to the early termination of the FDIC loss share agreements and a decrease in gains on investment securities, partially offset by an increase in gains on sale of OREO, an increase in income from resolution of acquired assets, and increased loan and other fees income.

During the nine months ended September 30, 2015, the Company recognized $65.5 million in FDIC loss share indemnification loss as compared to $16.1 million for the nine months ended September 30, 2014. The increase was due to the one-time, pre-tax charge of $65.5 million in conjunction with the early termination of all loss share agreements.

Net gain on investment securities totaled $1.9 million for the nine months ended September 30, 2015, a decrease of $7.8 million, or 80.1%, compared to $9.7 million for the nine months ended September 30, 2014. The decrease was the result of the lower volume of investment security sales.

Net gain on sales of OREO increased by $7.5 million to $7.4 million for the nine months ended September 30, 2015. The increase is primarily attributable to a $25.4 million increase in sales of OREO during the nine months ended September 30, 2015.

Resolutions recognized for the nine months ended September 30, 2015 totaled $8.5 million and were recognized through earnings as received, compared to $3.8 million for the nine months ended September 30, 2014. The Company continues to recognize resolution of acquired asset income stemming from its acquired asset portfolio. As a result of the early termination of the FDIC loss share agreements, the Company recognized all recoveries related to what was previously “covered assets” in its consolidated statement of income as these amounts are no longer shared with the FDIC.

Loan and other fees totaled $6.2 million for the nine months ended September 30, 2015, an increase of $1.7 million compared to the nine months ended September 30, 2014. The increase was primarily due to an increase in interest rate swap service fees of $661 thousand and an increase in secondary market fee income of $938 thousand.

50

Noninterest Expense

The following table presents the components of noninterest expense for the periods indicated:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
	(Dollars in thousands)
Noninterest expense:
Salaries and employee benefits	$	16,840	$	28,525	$	51,271	$	58,356
Occupancy and equipment expenses		3,368		3,606		10,451		10,816
Loan and other real estate related expenses		1,939		3,203		5,440		10,302
Professional services		1,166		1,203		3,761		4,387
Data processing and network		2,433		2,538		7,952		8,105
Regulatory assessments and insurance		1,919		2,466		6,130		6,160
Amortization of intangibles		400		426		1,231		1,285
Other operating expenses		2,641		6,992		7,167		14,758
Total noninterest expense	$	30,706	$	48,959	$	93,403	$	114,169

Third Quarter 2015 compared to Third Quarter 2014

The Company reported noninterest expense of $30.7 million for the three months ended September 30, 2015, a decrease of $18.3 million, or 37.3%, compared to the three months ended September 30, 2014. The decrease for the period was primarily due to decreased salaries and employee benefits of $11.7 million, a decrease in other operating expenses of $4.4 million, and a decrease in loan and other real estate related expenses of $1.3 million.

Salaries and employee benefits expenses decreased by $11.7 million, or 41.0%, for the third quarter of 2015 compared to the prior year due to salaries and benefits reverting to run rate levels.

Other operating expenses decreased $4.4 million for the three months ended September 30, 2015, primarily due to decreased warrant expense of $4.1 million.

Loan and other real estate related expenses decreased by $1.3 million, or 39.5%, for the third quarter of 2015 compared to the prior year due to less workout activity and decreased volume of the legacy acquired loan and legacy OREO portfolios.

Nine Months of 2015 compared to Nine Months of 2014

The Company reported noninterest expense of $93.4 million for the nine months ended September 30, 2015 a decrease of $20.8 million, or 18.2%, compared to the nine months ended September 30, 2014. The decrease for the period was primarily due to decreased other operating expenses of $7.6 million, decreased salaries and employee benefits expenses of $7.1 million, and decreased loan and other real estate related expenses of $4.9 million.

Other operating expenses decreased $7.6 million for the nine months ended September 30, 2015, primarily due to a decrease in warrant expense of $4.1 million, decreased directors’ fees of $2.5 million, and a decrease in EAA value changes of $1.5 million.

Salaries and employee benefits expenses decreased by $7.1 million, or 12.1%, for the nine months ended September 30, 2015 compared to the prior year due to salaries and benefits reverting to run rate levels.

Loan and other real estate related expenses decreased by $4.9 million, or 47.2%, for the nine months ended September 30, 2015 compared to the prior year due to less workout activity and decreased volume of the legacy acquired loan and legacy OREO portfolios.

51

Provision for Income Taxes

Third Quarter 2015 compared to Third Quarter 2014

The income tax expense for the three months ended September 30, 2015 totaled $11.3 million, an increase of $11.4 million compared to an income tax benefit of $97 thousand for the three months ended September 30, 2014. The increase in income tax expense was primarily due to an increase in income before income taxes of $36.0 million for the three months ended September 30, 2015. The effective income tax rate for the three months ended September 30, 2015 was 34.9%, compared to 2.8% for the three months ended September 30, 2014. The increase in tax rate is primarily due to higher levels of pre-tax income, which is subject to the marginal tax rate and changes in permanent tax differences.

Nine Months of 2015 compared to Nine Months of 2014

The income tax expense for the nine months ended September 30, 2015 totaled $1.4 million, a decrease of $5.0 million compared to an income tax expense of $6.4 million for the nine months ended September 30, 2014. The effective income tax rate for the nine months ended September 30, 2015 was 5.7%, compared to 40.9% for the nine months ended September 30, 2014. The change in tax rate primarily reflects the impact of the one-time, pre-tax charge of $65.5 million in conjunction with the early termination of all loss share agreements and a deferred tax asset benefit associated with a revaluation of net unrealized built-in losses related to the Company’s acquisition of Great Florida Bank on January 31, 2014.

Analysis of Financial Condition

Total assets were $6.89 billion at September 30, 2015, an increase of $931.1 million, or 15.6%, from December 31, 2014. The increase in total assets includes an increase of $876.5 million in gross loans, of which New loans increased $1.06 billion over the period. Acquired loans decreased by $179.0 million as a result of the run-off of the acquired loan portfolio through receipt of payments, loan payoffs or resolution through foreclosure and transfers to other real estate owned. The total securities portfolio was $1.53 billion at September 30, 2015, an increase of $107.8 million from December 31, 2014. The remaining increase in total assets was mainly due to increases in deferred tax assets of $30.6 million, increases in bank-owned life insurance of $27.1 million, and other assets of $15.7 million which were offset by a decrease in the FDIC loss share indemnification asset of $63.2 million and a decrease in other real estate owned of $34.1 million.

Investment Securities

The Company’s investment policy has been established by the Board of Directors and dictates that investment decisions will be made based on, among other things, the safety of the investment, liquidity requirements, interest rate risk, potential returns, cash flow targets and consistency with our asset/liability management policy. The Bank’s Investment Committee is responsible for making investment security portfolio decisions in accordance with the established policies and in coordination with the Board’s Asset/Liability Committee. The Bank’s Investment Committee members, and Bank employees under the direction of such committee, have been delegated authority to purchase and sell securities within specified investment policy guidelines. Portfolio performance and activity are reviewed by the Bank’s Investment Committee and full Board of Directors on a periodic basis.

The Bank’s investment policy provides specific limits on investments depending on a variety of factors, including its asset class, issuer, credit rating, size, maturity, etc. The Bank’s current investment strategy includes maintaining a high credit quality, liquid, diversified portfolio invested in fixed and floating rate securities with short- to intermediate-term maturities. The purpose of this approach is to create a safe and sound investment portfolio that minimizes exposure to interest rate and credit risk while providing attractive relative yields given market conditions.

The Company’s investment securities portfolio primarily consists of U.S. government agencies and sponsored enterprises obligations and agency mortgage-backed securities, corporate debt, asset-backed securities and preferred stocks.

52

Total investment securities increased $107.8 million, or 7.6% compared to December 31, 2014.

No securities were determined to be OTTI as of September 30, 2015 or December 31, 2014. All securities at September 30, 2015 and December 31, 2014 were investment grade based on ratings from recognized rating agencies.

As a member institution of the FHLB and the Federal Reserve Bank (“FRB”), the Bank is required to own capital stock in the FHLB and the FRB. As of September 30, 2015 and December 31, 2014, the Bank held approximately $66.0 million and $66.9 million, respectively, in FHLB and FRB stock. No market exists for this stock, and the Bank’s investment can be liquidated only through repurchase by the FHLB or FRB. Such repurchases have historically been at par value. We monitor our investment in FHLB and FRB stock for impairment through review of recent financial results, dividend payment history and information from credit agencies. As of September 30, 2015 and December 31, 2014, respectively, management did not identify any indicators of impairment of FHLB and FRB stock.

The following table shows contractual maturities and yields on our investment securities available for sale. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Average yields are not presented on a tax equivalent basis.

	Maturity as of September 30, 2015
	One Year or Less					After One Year through Five Years					After Five Years through Ten Years					After Ten Years
	Amortized Cost		Average Yield			Amortized Cost		Average Yield			Amortized Cost		Average Yield			Amortized Cost		Average Yield
	(Dollars in thousands)
Available for sale:
U.S. Government agencies and sponsored enterprises obligations	$	—		—		$	—		—		$	5,098		2.60	%	$	—		—
U.S. Government agencies and sponsored enterprises mortgage-backed securities		—		—			5,584		2.23	%		246,342		2.25	%		108,966		2.24	%
State and municipal obligations		—		—			—		—			—		—			2,040		5.35	%
Asset-backed securities		—		—			19,414		3.77	%		337,105		2.87	%		146,336		2.61	%
Corporate bonds and other debt securities		5,000		2.79	%		83,209		3.97	%		77,505		4.00	%		264,789		4.88	%
Preferred stock and other equity securities (1)		—		—			—		—			—		—			171,161		5.47	%
Total available for sale	$	5,000		2.79	%	$	108,207		3.84	%	$	666,050		2.77	%	$	693,292		4.13	%

(1) Preferred stock securities are all fixed-to-floating rate perpetual preferred stock that are callable through June 2025.

As of September 30, 2015, the effective duration of the Bank’s investment portfolio is estimated to be approximately 3.13 years. This estimate is derived using a variety of inputs that are subject to change based on a variety of factors, including but not limited to, changes in interest rates and prepayment speeds.

The average balance of the securities portfolio for the quarter ended September 30, 2015 totaled $1.50 billion with an annualized pre-tax yield of 3.47%. The average balance of the securities portfolio for the nine months ended September 30, 2015 totaled $1.52 billion with an annualized pre-tax yield of 3.34%.

Except for securities issued by U.S. government agencies and sponsored enterprise obligations, we did not have any concentrations where the total outstanding balances issued by a single issuer exceeded 10% of our stockholders’ equity as of September 30, 2015 or December 31, 2014.

Loans

Loan concentration

The current concentrations in our loan portfolio may not be indicative of concentrations in our loan portfolio in the future. We plan to maintain a relatively diversified loan portfolio to help reduce the risk inherent in concentration in certain types of collateral.

53

The following table summarizes the allocation of New Loans, Acquired ASC 310-30 loans and Acquired Non-ASC 310-30 loans as of the dates presented:

	September 30, 2015					December 31, 2014
	Amount		% of Total			Amount		% of Total
	(Dollars in thousands)
New loans:
Commercial real estate	$	991,451		20.6	%	$	853,074		21.7	%
Owner-occupied commercial real estate		452,991		9.4	%		281,703		7.2	%
1-4 single family residential		1,326,180		27.6	%		922,657		23.5	%
Construction, land and development		430,690		9.0	%		232,601		5.9	%
Home equity loans and lines of credit		28,185		0.6	%		11,826		0.3	%
Total real estate loans	$	3,229,497		67.2	%	$	2,301,861		58.6	%
Commercial and industrial		925,285		19.2	%		795,000		20.2	%
Consumer		4,215		0.1	%		6,556		0.2	%
Total new loans	$	4,158,997		86.5	%	$	3,103,417		79.0	%
Acquired ASC 310-30 loans:
Commercial real estate		259,411		5.4	%	$	336,935		8.6	%
1-4 single family residential		69,915		1.4	%		86,308		2.2	%
Construction, land and development		32,996		0.7	%		66,700		1.7	%
Total real estate loans	$	362,322		7.5	%	$	489,943		12.5	%
Commercial and industrial		46,233		1.0	%		67,498		1.7	%
Consumer		2,434		0.1	%		2,803		0.1	%
Total acquired ASC 310-30 loans	$	410,989		8.6	%	$	560,244		14.3	%
Acquired non-ASC 310-30 loans:
Commercial real estate		60,804		1.3	%	$	70,146		1.8	%
Owner-occupied commercial real estate		19,699		0.4	%		14,842		0.4	%
1-4 single family residential		86,832		1.8	%		102,279		2.6	%
Construction, land and development		6,319		0.1	%		9,729		0.2	%
Home equity loans and lines of credit		50,566		1.1	%		54,704		1.4	%
Total real estate loans	$	224,220		4.7	%	$	251,700		6.4	%
Commercial and industrial		11,504		0.2	%		13,548		0.3	%
Consumer		426		0.0	%		681		0.0	%
Total acquired non-ASC 310-30 loans		236,150		4.9	%		265,929		6.7	%
Total loans	$	4,806,136		100.0	%	$	3,929,590		100.0	%

Total loans were $4.81 billion at September 30, 2015, an increase of 22.3% compared to $3.93 billion at December 31, 2014.

Our New loan portfolio increased by 34.0% to $4.16 billion as of September 30, 2015, as compared to $3.10 billion at December 31, 2014. The increase during the nine months ended September 30, 2015 was primarily due to an increase in 1-4 single family residential loans and organic growth in commercial real estate and commercial and industrial loans.

Acquired loans were $647.1 million at September 30, 2015, a decrease of 21.7% compared to $826.2 million at December 31, 2014. The decrease during the nine months ended September 30, 2015 was primarily due to the run-off of the acquired loan portfolio through receipt of payments, loan payoffs or resolution through foreclosure and transfers to other real estate owned.

54

Asset Quality

The following table sets forth the composition of our nonperforming assets, including nonaccrual loans, accruing loans 90 days or more days past due and foreclosed assets as of the dates indicated:

	September 30, 2015		December 31, 2014
	(Dollars in thousands)
Nonperforming assets (excluding acquired assets)
Nonaccrual loans:
Commercial real estate	$	—	$	—
Owner-occupied commercial real estate		—		—
1-4 single family residential		455		116
Construction, land and development		—		—
Home equity loans and lines of credit		—		—
Commercial and industrial		14		—
Consumer		—		—
Total nonaccrual loans		469		116
Accruing loans 90 days or more past due		—		—
Total nonperforming loans		469		116
Other real estate owned (OREO)		—		—
Other foreclosed property		—		—
Total new nonperforming assets	$	469	$	116
Nonperforming acquired assets
Nonaccrual loans:
Commercial real estate	$	5,456	$	4,866
Owner-occupied commercial real estate		4		211
1-4 single family residential		2,900		1,766
Construction, land and development		—		1,595
Home equity loans and lines of credit		2,367		3,005
Commercial and industrial		5,814		7,851
Consumer		336		—
Total nonaccrual loans		16,877		19,294
Accruing loans 90 days or more past due		—		—
Total nonperforming loans		16,877		19,294
Other real estate owned (OREO)		40,405		74,527
Other foreclosed property		—		—
Total acquired nonperforming assets	$	57,282	$	93,821
Total nonperforming assets	$	57,751	$	93,937

Nonaccrual loans totaled $17.3 million at September 30, 2015, a decrease of 10.6% from $19.4 million at December 31, 2014. Nonperforming assets totaled $57.8 million at September 30, 2015, a decrease of $36.2 million, or 38.5%, from December 31, 2014.

Our policies related to when loans are placed on nonaccrual status conform to guidelines prescribed by bank regulatory authorities. Loans are placed on nonaccrual status when it is probable that principal or interest is not fully collectible, or generally when principal or interest becomes 90 days past due, whichever occurs first. Certain loans past due 90 days or more may remain on accrual status if management determines that it does not have concern over the collectability of principal and interest because the loan is secured by assets with a value in excess of the amounts owed and is in the process of collection. Loans are removed from nonaccrual status when they become current as to both principal and interest and concern no longer exists as to the collectability of principal and interest.

55

Loans accounted for under ASC 310-30 that are delinquent and/or on nonaccrual status continue to accrue income provided the respective pool in which those assets reside maintains a discount and recognizes accretion income. The aforementioned loans are characterized as performing loans greater than 90 days past due. If the pool no longer has a discount and accretion income can no longer be recognized, any loan within that pool on nonaccrual status will be classified as nonaccrual for presentation purposes.

Loans are identified for restructuring based on their delinquency status, risk rating downgrade, or at the request of the borrower. Borrowers that are 90 days delinquent and/or have a history of being delinquent, or experience a risk rating downgrade, are contacted to discuss options to bring the loan current, cure credit risk deficiencies, or other potential restructuring options that will reduce the inherent risk and improve collectability of the loan. In some instances, a borrower will initiate a request for loan restructure. The Bank requires borrowers to provide current financial information to establish the need for financial assistance and satisfy applicable prerequisite conditions required by the Bank. The Bank may also require the borrower to enter into a forbearance agreement.

Modification of loan terms may include the following: reduction of the stated interest rate; extension of maturity date or other payment dates; reduction of the face amount or maturity amount of the loan; reduction in accrued interest; forgiveness of past-due interest; or a combination of the above.

The following table sets forth our asset quality ratios for the periods presented:

	September 30, 2015			December 31, 2014
Asset Quality Ratios
Asset and Credit Quality Ratios—New Loans
Nonperforming new loans to new loans receivable		0.01	%		0.00	%
New loan ALL to total gross new loans		0.52	%		0.52	%
Asset and Credit Quality Ratios—Acquired Loans
Nonperforming acquired loans to acquired loans receivable		2.61	%		2.34	%
Covered acquired loans to total gross acquired loans		0.00	%		33.09	%
Acquired loan ALL to total gross acquired loans		0.92	%		0.83	%
Asset and Credit Quality Ratios—Total loans
Nonperforming loans to loans receivable		0.36	%		0.49	%
Nonperforming assets to total assets		0.84	%		1.58	%
Covered loans to total gross loans		0.00	%		6.96	%
ALL to nonperforming assets		47.43	%		24.36	%
ALL to total gross loans		0.57	%		0.58	%

Analysis of the Allowance for Loan Losses

The ALL reflects management’s estimate of probable credit losses inherent in the loan portfolio. The computation of the ALL includes elements of judgment and subjectivity. As a portion of the Company’s loans were acquired in failed bank acquisitions and were purchased at a substantial discount to their original book value, we segregate loans into three portfolios when assessing and analyzing the ALL: New loans, Acquired ASC 310-30 loans, Acquired Non-ASC 310-30 loans.

56

The following table presents the allocation of the ALL for the periods presented. The entire amount of the allowance is available to absorb losses occurring in any category of loans.

	September 30, 2015					December 31, 2014
	Amount		% Loans in each category			Amount		% Loans in each category
	(Dollars in thousands)
New loans:
Real estate loans:
Commercial real estate	$	5,302		20.6	%	$	4,456		21.7	%
Owner-occupied commercial real estate		1,539		9.4	%		962		7.2	%
1-4 single family residential		5,342		27.6	%		4,001		23.5	%
Construction, land and development		2,426		9.0	%		1,723		5.9	%
Home equity loans and lines of credit		172		0.6	%		70		0.3	%
Total real estate loans		14,781		67.2	%		11,212		58.6	%
Other loans:
Commercial and industrial		6,602		19.2	%		4,738		20.2	%
Consumer		36		0.1	%		62		0.2	%
Total other loans		6,638		19.3	%		4,800		20.4	%
Total new loans	$	21,419		86.5	%	$	16,012		79.0	%
Acquired ASC 310-30 loans:
Real estate loans:
Commercial real estate	$	1,729		5.4	%	$	3,255		8.6	%
1-4 single family residential		26		1.4	%		325		2.2	%
Construction, land and development		501		0.7	%		658		1.7	%
Total real estate loans		2,256		7.5	%		4,238		12.5	%
Other loans:
Commercial and industrial		1,032		1.0	%		958		1.7	%
Consumer		417		0.1	%		290		0.1	%
Total other loans		1,449		1.1	%		1,248		1.8	%
Total Acquired ASC 310-30 loans	$	3,705		8.6	%	$	5,486		14.3	%
Acquired Non-ASC 310-30 loans:
Real estate loans:
Commercial real estate	$	1,265		1.3	%	$	495		1.8	%
Owner-occupied commercial real estate		68		0.4	%		58		0.4	%
1-4 single family residential		346		1.8	%		414		2.6	%
Construction, land and development		36		0.1	%		75		0.2	%
Home equity loans and lines of credit		469		1.1	%		285		1.4	%
Total real estate loans		2,184		4.7	%		1,327		6.4	%
Other loans:
Commercial and industrial		82		0.2	%		49		0.3	%
Consumer		4		0.0	%		6		0.0	%
Total other loans		86		0.2	%		55		0.3	%
Total Acquired Non-ASC 310-30 loans	$	2,270		4.9	%	$	1,382		6.7	%
Total loans	$	27,394		100.0	%	$	22,880		100.0	%

57

The following tables present information related to the ALL for the periods presented:

	Commercial Real Estate			Owner- Occupied Commercial Real Estate		1- 4 Single Family Residential			Construction, Land and Development			Home Equity Loans and Lines of Credit			Commercial and Industrial			Consumer			Total
	(Dollars in thousands)
Balance at July 1, 2015	$	9,652		$	1,548	$	5,744		$	3,024		$	563		$	6,059		$	456		$	27,046
Provision (credit) for ASC 310-30 loans		(791	)		—		(38	)		(310	)		—			(67	)		30			(1,176	)
Provision (credit) for non-ASC 310-30 loans		(110	)		14		11			(20	)		74			41			6			16
Provision (credit) for New loans		(390	)		45		203			251			41			1,712			(27	)		1,835
Total provision		(1,291	)		59		176			(79	)		115			1,686			9			675
Charge-offs for ASC 310-30 loans		(65	)		—		(224	)		—			—			(57	)		—			(346	)
Charge-offs for non-ASC 310-30 loans		—			—		—			—			(37	)		—			(8	)		(45	)
Charge-offs for New loans		—			—		—			—			—			—			—			—
Total charge-offs		(65	)		—		(224	)		—			(37	)		(57	)		(8	)		(391	)
Recoveries for ASC 310-30 loans		—			—		18			18			—			23			—			59
Recoveries for non-ASC 310-30 loans		—			—		—			—			—			—			—			—
Recoveries for New loans		—			—		—			—			—			5			—			5
Total recoveries		—			—		18			18			—			28			—			64
Ending ALL balance
ASC 310-30 loans		1,729			—		26			501			—			1,032			417			3,705
Non-ASC 310-30 loans		1,265			68		346			36			469			82			4			2,270
New loans		5,302			1,539		5,342			2,426			172			6,602			36			21,419
Balance at September 30, 2015	$	8,296		$	1,607	$	5,714		$	2,963		$	641		$	7,716		$	457		$	27,394

	Commercial Real Estate		Owner- Occupied Commercial Real Estate		1- 4 Single Family Residential		Construction, Land and Development			Home Equity Loans and Lines of Credit			Commercial and Industrial			Consumer			Total
	(Dollars in thousands)
Balance at July 1, 2014	$	6,354	$	806	$	2,426	$	1,935		$	113		$	5,924		$	326		$	17,884
Provision (credit) for ASC 310-30 loans		785		—		—		(1	)		—			(290	)		(9	)		485
Provision (credit) for non-ASC 310-30 loans		109		16		144		29			264			15			1			578
Provision (credit) for New loans		221		90		1,015		137			7			273			(1	)		1,742
Total provision		1,115		106		1,159		165			271			(2	)		(9	)		2,805
Charge-offs for ASC 310-30 loans		—		—		—		1			—			(93	)		(10	)		(102	)
Charge-offs for non-ASC 310-30 loans		—		—		—		—			(173	)		—			—			(173	)
Charge-offs for New loans		—		—		—		—			—			—			—			—
Total charge-offs		—		—		—		1			(173	)		(93	)		(10	)		(275	)
Recoveries for ASC 310-30 loans		24		—		—		—			—			—			1			25
Recoveries for non-ASC 310-30 loans		—		—		—		—			—			—			—			—
Recoveries for New loans		—		—		—		—			—			1			—			1
Total recoveries		24		—		—		—			—			1			1			26
Ending ALL balance
ASC 310-30 loans		3,692		—		207		660			—			976			280			5,815
Non-ASC 310-30 loans		117		23		151		29			123			21			4			468
New loans		3,684		889		3,227		1,412			88			4,833			24			14,157
Balance at September 30, 2014	$	7,493	$	912	$	3,585	$	2,101		$	211		$	5,830		$	308		$	20,440

58

	Commercial Real Estate			Owner- Occupied Commercial Real Estate		1- 4 Single Family Residential			Construction, Land and Development			Home Equity Loans and Lines of Credit			Commercial and Industrial			Consumer			Total
	(Dollars in thousands)
Balance at January 1, 2015	$	8,206		$	1,020	$	4,740		$	2,456		$	355		$	5,745		$	358		$	22,880
Provision (credit) for ASC 310-30 loans		(1,656	)		—		(37	)		(508	)		—			52			187			(1,962	)
Provision (credit) for non-ASC 310-30 loans		770			10		60			(39	)		221			33			6			1,061
Provision (credit) for New loans		846			577		1,341			703			102			1,852			(26	)		5,395
Total provision		(40	)		587		1,364			156			323			1,937			167			4,494
Charge-offs for ASC 310-30 loans		(270	)		—		(431	)		(56	)		—			(132	)		(60	)		(949	)
Charge-offs for non-ASC 310-30 loans		—			—		(128	)		—			(37	)		—			(8	)		(173	)
Charge-offs for New loans		—			—		—			—			—			—			—			—
Total charge-offs		(270	)		—		(559	)		(56	)		(37	)		(132	)		(68	)		(1,122	)
Recoveries for ASC 310-30 loans		400			—		169			407			—			154			—			1,130
Recoveries for non-ASC 310-30 loans		—			—		—			—			—			—			—			—
Recoveries for New loans		—			—		—			—			—			12			—			12
Total recoveries		400			—		169			407			—			166			—			1,142
Ending ALL balance
ASC 310-30 loans		1,729			—		26			501			—			1,032			417			3,705
Non-ASC 310-30 loans		1,265			68		346			36			469			82			4			2,270
New loans		5,302			1,539		5,342			2,426			172			6,602			36			21,419
Balance at September 30, 2015	$	8,296		$	1,607	$	5,714		$	2,963		$	641		$	7,716		$	457		$	27,394

	Commercial Real Estate			Owner- Occupied Commercial Real Estate		1- 4 Single Family Residential			Construction, Land and Development			Home Equity Loans and Lines of Credit			Commercial and Industrial			Consumer			Total
	(Dollars in thousands)
Balance at January 1, 2014	$	4,458		$	376	$	1,443		$	1,819		$	265		$	6,198		$	174		$	14,733
Provision (credit) for ASC 310-30 loans		976			—		152			132			—			(1,161	)		223			322
Provision (credit) for non-ASC 310-30 loans		112			18		99			29			260			39			33			590
Provision (credit) for New loans		1,906			518		1,921			578			(38	)		1,327			7			6,219
Total provision		2,994			536		2,172			739			222			205			263			7,131
Charge-offs for ASC 310-30 loans		(74	)		—		(30	)		(1,244	)		—			(203	)		(101	)		(1,652	)
Charge-offs for non-ASC 310-30 loans		—			—		—			—			(276	)		(24	)		(29	)		(329	)
Charge-offs for New loans		—			—		—			—			—			(348	)		—			(348	)
Total charge-offs		(74	)		—		(30	)		(1,244	)		(276	)		(575	)		(130	)		(2,329	)
Recoveries for ASC 310-30 loans		115			—		—			787			—			1			1			904
Recoveries for non-ASC 310-30 loans		—			—		—			—			—			—			—			—
Recoveries for New loans		—			—		—			—			—			1			—			1
Total recoveries		115			—		—			787			—			2			1			905
Ending ALL balance
ASC 310-30 loans		3,692			—		207			660			—			976			280			5,815
Non-ASC 310-30 loans		117			23		151			29			123			21			4			468
New loans		3,684			889		3,227			1,412			88			4,833			24			14,157
Balance at September 30, 2014	$	7,493		$	912	$	3,585		$	2,101		$	211		$	5,830		$	308		$	20,440

As of September 30, 2015, our New loans have exhibited limited delinquency and credit loss history to establish an observable loss trend. Given this lack of sufficient loss history on the New loan portfolio, general loan loss factors are established based on the following: historical loss factors derived from the Federal Financial Institutions Examination Council’s quarterly Unified Performance Branch Report for Group 1 banks (assets greater than $3 billion) using an annualized weighted average eight quarter rolling basis. Historical loss factors are adjusted for qualitative factors including trends in delinquencies and nonaccruals, production trends, average risk ratings and loan-to-value ratios, current industry conditions, general economic conditions, credit concentrations by portfolio and asset categories and portfolio quality. Other adjustments for qualitative factors may be made to the ALL after an assessment of internal and external influences on credit quality and loss severity that are not fully reflected in the historical loss or risk rating data. The Company uses assumptions and methodologies that are relevant to estimating the level of impairment and probable losses in the loan portfolio. To the extent that the data supporting such assumptions has limitations, management’s judgment and experience play a role in recording the allowance estimates.

The ALL increased $4.5 million to $27.4 million at September 30, 2015 from $22.9 million at December 31, 2014, primarily due to the increase in New loans of $1.06 billion. The ALL as a percentage of nonperforming assets and the ALL as a percentage of total gross loans was 47.43% and 0.57% as of September 30, 2015, compared to 24.36% and 0.58% at December 31, 2014. The increase in the ALL as a percentage of nonperforming assets ratio is the result of a decrease in nonperforming assets of $36.2 million. The ALL as a percentage of total gross loans remained relatively flat over the same period.

59

Net loan charge-offs for the third quarter of 2015 totaled $327 thousand, an increase of 31.3% compared to net loan charge-offs of $249 thousand for the same period of 2014. Net loan recoveries for the nine months ended September 30, 2015 totaled $20 thousand, a decrease of 101.4% compared to net loan charge-offs of $1.4 million for the same period of 2014.

FDIC Loss Share Indemnification Asset

On March 4, 2015, the Bank entered into an agreement with the FDIC to terminate all loss sharing agreements which were entered into in 2010 and 2011 in conjunction with the Bank’s acquisition of substantially all of the assets (“Covered Assets”) and assumption of substantially all of the liabilities of six failed banks in FDIC-assisted acquisitions. Under the early termination, all rights and obligations of the Bank and the FDIC under the loss share agreements, including the clawback provisions, have been eliminated.

The Bank paid the FDIC $14.8 million as consideration for the early termination to settle its obligation under the FDIC Clawback Liability. The early termination was recorded in the Bank’s financial statements by removing the FDIC Indemnification Asset receivable, the FDIC Clawback liability and recording a one-time, pre-tax loss on termination of $65.5 million.

The following tables summarize the activity related to the FDIC loss share indemnification asset for the periods presented:

	Three Months Ended September 30,					Nine Months Ended September 30,
	2015		2014			2015			2014
	(Dollars in thousands)
Balance at beginning of period	$	—	$	74,853		$	63,168		$	87,229
Termination of FDIC loss sharing agreements		—		—			(63,168	)		—
Reimbursable expenses		—		648			—			3,801
Amortization		—		(6,272	)		—			(17,677	)
Income resulting from impairment and charge-off of covered assets, net		—		1,474			—			2,680
Expense resulting from recoupment and disposition of covered assets, net		—		(678	)		—			(3,101	)
FDIC claims submissions		—		(105	)		—			(3,012	)
Balance at end of period	$	—	$	69,920		$	—		$	69,920

The following table summarizes the changes in the clawback liability, included in Other Liabilities, for the periods presented:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015			2014
	(Dollars in thousands)
Balance at beginning of period	$	—	$	12,525	$	13,846		$	11,753
Termination of FDIC loss sharing agreements		—		—		(13,846	)		—
Amortization impact		—		190		—			547
Remeasurement impact		—		842		—			1,257
Balance at end of period	$	—	$	13,557	$	—		$	13,557

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Other Real Estate Owned

The following table shows the composition of other real estate owned as of the periods presented:

	September 30, 2015		December 31, 2014
	(Dollars in thousands)
Commercial real estate	$	6,602	$	22,267
1-4 single family residential		3,162		12,623
Construction, land and development		30,641		39,637
Total	$	40,405	$	74,527

The following table summarizes the activity related to other real estate owned for the periods presented:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
	(Dollars in thousands)
Balance at beginning of period	$	42,654		$	80,988		$	74,527		$	34,682
Additions from acquisition		—			—			—			55,085
Transfers from loan portfolio		3,987			4,847			18,822			17,716
Impairments		(123	)		(958	)		(296	)		(1,690	)
Sales		(6,113	)		(6,365	)		(52,648	)		(27,281	)
Balance at end of period	$	40,405		$	78,512		$	40,405		$	78,512

Total OREO held by the Company was $40.4 million as of September 30, 2015, a decrease of $34.1 million from December 31, 2014. The decrease in other real estate owned was due to OREO sales of $52.6 million partially offset by transfers into OREO of $18.8 million for the nine months ended September 30, 2015.

Bank-owned Life Insurance

BOLI policies are held in order to insure the key officers and employees of the Bank. Per ASC 325-30, “Investments in Insurance Contracts,” this policy is recorded at the cash surrender value adjusted for other charges or other amounts due that are probable at settlement, if applicable.

The following table summarizes the changes in the cash surrender value of BOLI for the periods presented:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015			2014
	(Dollars in thousands)
Balance at beginning of period	$	140,830	$	117,113	$	139,829		$	75,257
Additions from premium payments		25,000		20,000		25,000			60,000
Net gain in cash surrender value		1,101		1,151		3,295			3,007
Mortality proceeds receivable		—		—		(1,193	)		—
Mortality-related reduction in cash surrender value		—		—		—			—
Balance at end of period	$	166,931	$	138,264	$	166,931		$	138,264

For the three months ended September 30, 2015 and 2014, the BOLI cash surrender value was $166.9 million and $138.3 million, respectively. The Company recognized $1.1 million and $1.2 million of BOLI income for the three months ended September 30, 2015 and 2014 resulting in a pre-tax yield of 2.91% and 3.48%, respectively. The Company recognized $3.3 million and $3.0 million of BOLI income for the nine months ended September 30, 2015 and 2014 resulting in a pre-tax yield of 3.07% and 3.44%, respectively. The total death benefit of the BOLI policies at September 30, 2015 and 2014 totaled $524.5 million and $442.2 million, respectively.

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Deposits

The following table shows the deposit mix as of the periods presented:

	September 30, 2015					December 31, 2014
	Amount		Percent of Total			Amount		Percent of Total
	(Dollars in thousands)
Noninterest-bearing demand deposits	$	618,741		12.8	%	$	593,025		14.9	%
Interest-bearing demand deposits		404,085		8.4	%		122,380		3.1	%
Interest-bearing NOW accounts		350,602		7.3	%		374,399		9.4	%
Savings and money market accounts		1,923,723		39.9	%		1,811,878		45.5	%
Time deposits		1,524,693		31.6	%		1,076,853		27.1	%
Total deposits	$	4,821,844		100.0	%	$	3,978,535		100.0	%

Deposits at September 30, 2015 totaled $4.82 billion, an increase of $843.3 million, or 21.2%, from December 31, 2014. The increase in deposits consisted of a $395.5 million increase in core deposits and a $447.8 million increase in time deposits. Core deposits include demand deposits, NOW accounts, savings and money market accounts and represents 68.4% of total deposits at September 30, 2015, a decrease from 72.9% at December 31, 2014.

The increase in core deposits was primarily due to growth in demand deposits due to retail marketing efforts and commercial relationship growth. The average rate paid on deposits for the three and nine months ended September 30, 2015 was 0.59% and 0.57%, respectively. This represents a decrease of 3 and 5 basis points as compared to the average rate paid on deposits of 0.62% and 0.62% for the three and nine months ended September 30, 2014. Continued reductions of high cost acquired time deposits and a higher composition of noninterest-bearing deposits drove the decrease in the cost of deposits. The average rate paid on time deposits for the three and nine months ended September 30, 2015 was 1.01% and 0.98%, respectively. This represents an increase of 14 and 7 basis points compared to the average rate paid on time deposits for the three and nine months ended September 30, 2014 of 0.87% and 0.91%, respectively.

The following table shows the remaining maturity of time deposits of $100,000 and greater as of the period presented:

	September 30, 2015
	(Dollars in thousands)
Time deposits $100,000 or greater with remaining maturity of:
Three months or less		155,629
After three months through six months		247,655
After six months through twelve months		269,071
After twelve months		379,574
Total	$	1,051,929

Borrowings

In addition to deposits, we utilize advances from the FHLB and other borrowings, such as securities sold under repurchase agreements, as a supplementary funding source to finance our operations. FHLB advances and other borrowings are secured by stock, qualifying first residential mortgages, commercial real estate loans, home equity loans and investment securities.

62

Total borrowings consisted of the following as of the periods presented:

	September 30, 2015		December 31, 2014
	(Dollars in thousands)
FHLB advances	$	986,050	$	983,686
Securities sold under repurchase agreements		153,715		72,500
Retail repurchase agreements		6,014		5,704
Total contractual outstanding		1,145,779		1,061,890
Fair value adjustment		4,141		6,091
Total borrowings	$	1,149,920	$	1,067,981

At September 30, 2015, total borrowings were $1.15 billion, an increase of $81.9 million, or 7.7%, from $1.07 billion at December 31, 2014. The increase in total borrowings was primarily driven by the $81.2 million increase in securities sold under repurchase agreements to fund new loan growth.

Short-term borrowings consist of debt with maturities of one year or less and the current portion of long-term debt. The following table is a summary of short-term borrowings for the periods presented:

	As of/For the Three Months Ended September 30,						As of/For the Nine Months Ended September 30,
	2015			2014			2015			2014
	(Dollars in thousands)
Short-Term FHLB advances:
Maximum outstanding at any month-end during the period	$	821,050		$	843,326		$	821,050		$	843,326
Balance outstanding at end of period		821,050			843,326			821,050			843,326
Average outstanding during the period		709,000			641,895			695,023			593,926
Average interest rate during the period		0.35	%		0.55	%		0.28	%		0.62	%
Average interest rate at the end of the period		0.39	%		0.27	%		0.39	%		0.27	%

Stockholders’ Equity

The following table summarizes the changes in our stockholders’ equity for the periods indicated:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
	(Dollars in thousands)
Balance at beginning of period	$	857,479		$	739,448		$	851,653		$	716,114
Net income (loss)		21,140			(3,422	)		23,642			9,272
Shares issued in offering, net		—			104,475			—			104,475
Settlement of RSU shares		—			(5,688	)		—			(5,688	)
Deferred placement fee		—			(10,000	)		—			(10,000	)
Stock-based compensation, RSU and warrant expense		714			19,683			4,588			20,571
Treasury stock purchase		(26,510	)		—			(27,312	)		—
Exercise of stock options		6,062			—			6,935			—
Other		(24	)		495			(44	)		495
Other comprehensive income (loss)		(2,983	)		(9,264	)		(3,584	)		488
Balance at end of period	$	855,878		$	835,727		$	855,878		$	835,727

For the three months ended September 30, 2015 the Company reported net income of $21.1 million, an increase of $24.6 million, compared to net loss of $3.4 million for the three months ended September 30, 2014. The Company’s results of operations for the three months ended September 30, 2015 produced an annualized return on average assets of 1.26% and an annualized return on average common stockholders’ equity of 9.73% compared to the three months ended September 30, 2014 ratios of (0.24)% and (1.70)%, respectively.

63

For the nine months ended September 30, 2015 the Company reported net income of $23.6 million, an increase of $14.4 million, compared to net income of $9.3 million for the nine months ended September 30, 2014. The Company’s results of operations for the period ended September 30, 2015 produced an annualized return on average assets of 0.50% and an annualized return on average common stockholders’ equity of 3.68% compared to prior year ratios of 0.23% and 1.65%, respectively.

Stockholders’ equity totaled $855.9 million as of September 30, 2015, an increase of $4.2 million from $851.7 million as of December 31, 2014, as net income of $23.6 was offset by $27.3 million in treasury stock repurchases.

Capital Resources

Our Company and Bank are subject to regulatory capital adequacy requirements promulgated by federal bank regulatory agencies. Failure by our Company or Bank to meet minimum capital requirements could result in certain mandatory and discretionary actions by regulators that could have a material adverse effect on our consolidated financial statements. The Federal Reserve establishes capital requirements for our Company and the OCC has similar requirements for our Bank. Information presented for September 30, 2015, reflects the Basel III capital requirements that became effective January 1, 2015 for both our Company and Bank. Under these capital requirements and the regulatory framework for prompt corrective action, our Company and Bank must meet specific capital guidelines that involve quantitative measures of our Company and Bank’s assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. Our Company’s and Bank’s capital amounts and classifications are also subject to qualitative judgments by regulators about components, risk weightings and other factors.

Quantitative measures established by regulation require our Company and Bank to maintain certain minimum capital amounts and ratios. Federal bank regulators require our Company and Bank to maintain minimum ratios of core capital to adjusted average assets of 4.0%, common equity tier 1 capital to risk-weighted assets of 4.5%, tier 1 capital to risk-weighted assets of 6.0% and total risk-based capital to risk-weighted assets of 8.0%. At September 30, 2015, our Company and Bank met all the capital adequacy requirements to which they were subject. At September 30, 2015, the Company and Bank were “well capitalized” under the regulatory framework for prompt corrective action. To be “well capitalized,” our Company and Bank must maintain minimum leverage, common equity tier 1 risk-based, tier 1 risk-based and total risk-based capital ratios of at least 5.0%, 6.5%, 8.0% and 10.0%, respectively. Management believes that no conditions or events have occurred since September 30, 2015 that would materially adversely change the Company’s or Bank’s capital classifications. From time to time, we may need to raise additional capital to support our Company’s and Bank’s further growth and to maintain their “well capitalized” status.

The Company and Bank’s regulatory capital ratios are as follows:

	Minimum Capital Requirement			Minimun to be Well Capitalized			September 30, 2015			December 31, 2014
Capital Ratios (Company)
Tier 1 leverage ratio		4.0	%		5.0	%		11.5	%		12.8	%
Common equity tier 1 capital ratio		4.5	%		6.5	%		13.6	%		N/A
Tier 1 risk-based capital ratio		6.0	%		8.0	%		13.6	%		17.0	%
Total risk-based capital ratio		8.0	%		10.0	%		14.1	%		17.6	%
Capital Ratios (Bank)
Tier 1 leverage ratio		4.0	%		5.0	%		10.3	%		10.4	%
Common equity tier 1 capital ratio		4.5	%		6.5	%		12.2	%		N/A
Tier 1 risk-based capital ratio		6.0	%		8.0	%		12.2	%		13.9	%
Total risk-based capital ratio		8.0	%		10.0	%		12.8	%		14.5	%

The Bank and, with respect to certain provisions, the Company, is also subject to an Order of the FDIC, dated January 22, 2010, issued in connection with the FDIC’s approval of the Bank’s application for federal deposit insurance. The Order requires, among other things, the Bank to maintain capital levels sufficient to be well capitalized under regulatory standards during the remaining period of ownership of the investors (as defined in the Order) subject to the SOP. As of September 30, 2015 and December 31, 2014, we believe the Company and Bank both had capital levels that exceeded the regulatory guidelines for a “well capitalized” institution.

64

As of September 30, 2015, the Company had a Tier 1 leverage ratio of 11.5%, which provided $433.9 million of excess capital relative to the minimum requirements to be considered well capitalized. As of September 30, 2015, the Bank had a Tier 1 leverage ratio of 10.3%, which provided $342.4 million of excess capital relative to the minimum requirements to be considered well capitalized.

Beginning January 1, 2016, Basel III implements a requirement for all banking organizations to maintain a capital conservation buffer above the minimum risk-based capital requirements in order to avoid certain limitations on capital distributions, stock repurchases and discretionary bonus payments to executive officers. The capital conservation buffer will be exclusively composed of common equity tier 1 capital, and it applies to each of the three risk-based capital ratios but not the leverage ratio. On January 1, 2016, our Company and Bank will be expected to comply with the capital conservation buffer requirement, which will increase the three risk-based capital ratios by 0.625% each year through 2019, at which point, the common equity tier 1 risk-based, tier 1 risk-based and total risk-based capital ratios will be 7.0%, 8.5% and 10.5%, respectively. If the capital conservation buffer were in effect at September 30, 2015, our Company and Bank would exceed the requirements. The capital planning process and position is monitored by the Enterprise Risk Committee.

Liquidity

Liquidity represents the Company’s ability to meet financial commitments through the maturity and sale of existing assets or availability of additional funds. Liquidity risk results from the mismatching of asset and liability cash flows. The Bank’s liquidity needs are primarily met by its cash and securities position, growth in deposits, cash flow from amortizing investment and loan portfolios and borrowings from the FHLB. For additional information regarding our operating, investing, and financing cash flows, see “Consolidated Financial Statements—Consolidated Statements of Cash Flows.”

The Bank has access to additional borrowings through secured FHLB advances, unsecured borrowing lines from correspondent banks, and repurchase agreements (secured). In addition, the Bank has an established borrowing line at the Federal Reserve Bank. At September 30, 2015, the Company had additional capacity to borrow from the FHLB of $554.8 million. Also, at September 30, 2015, the Company has unused credit lines with financial institutions of $72.5 million.

We believe the Bank’s cash and liquidity resources generated by operations and deposit growth will be sufficient to satisfy the Bank’s future funding requirements. The Bank’s ongoing liquidity position is monitored by the Asset Liability Committee (“ALCO”) and the Enterprise Risk Committee.

As a holding company, we are a corporation separate and apart from our subsidiary, the Bank, and therefore we provide for our own liquidity. Our main sources of funding include equity capital raised in our offerings of equity securities and dividends paid by the Bank, when applicable, and access to capital markets. We believe these sources will be sufficient to fund our capital needs for the foreseeable future. There are regulatory limitations that affect the ability of the Bank to pay dividends to us. See “Dividend Policy” and “Supervision and Regulation—Regulatory Limits on Dividends and Distributions” in our Annual Report on Form 10-K for the year ended December 31, 2014 previously filed with the SEC. Management believes that such limitations will not impact our ability to meet our ongoing short-term cash obligations.

The Company approved a stock repurchase program under which the Company is authorized to acquire up to $30 million of its Class A Common Stock. Repurchases under the program are made through open market or privately negotiated transactions at times and in such amounts as management deems appropriate, subject to market conditions, regulatory requirements and other factors. The program does not obligate the Company to repurchase any particular amount of common stock, and may be suspended or discontinued at any time without notice. Shares repurchased under the program are made using the Company’s own cash resources and are held as treasury shares.

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During the quarter, the Company repurchased 808,903 shares of treasury stock at a weighted average price of $32.75.

Off Balance Sheet Arrangements

In the normal course of business, we enter into various transactions, which, in accordance with GAAP, are not included in our consolidated balance sheets. We enter into these transactions to meet the financing needs of our customers. These transactions include commitments to extend credit and standby letters of credit, which involve, to varying degrees, elements of credit risk and interest rate risk in excess of the amounts recognized on the Bank’s consolidated balance sheets. We have limited off-balance sheet arrangements that have not had or are not reasonably likely to have a current or future material effect on our financial condition, revenues, and expenses, results of operations, liquidity, capital expenditures or capital resources.

We enter into contractual loan commitments to extend credit, normally with fixed expiration dates or termination clauses, at specified rates and for specific purposes. Since a portion of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Substantially all of our commitments to extend credit are contingent upon customers maintaining specific credit standards until the time of loan funding. We decrease our exposure to loss under these commitments by subjecting them to credit approval and monitoring procedures. We assess the credit risk associated with certain commitments to extend credit and establish a liability for probable credit losses.

Standby letters of credit are written conditional commitments issued by us to guarantee the performance of a customer to a third party. In the event the customer does not perform in accordance with the terms of the agreement with the third party, we would be required to fund the commitment. The maximum potential amount of future payments we could be required to make is represented by the contractual amount of the commitment. If the commitment is funded, we would be entitled to seek recovery from the customer. Our policies generally require that standby letter of credit arrangements contain security and debt covenants similar to those contained in loan agreements.

The following table summarizes commitments as of the dates presented:

	September 30, 2015		December 31, 2014
	(Dollars in thousands)
Commitments to fund loans	$	508,721	$	351,369
Unused lines of credit		248,385		199,880
Commercial and standby letters of credit		14,515		10,223
Total	$	771,621	$	561,472

Management believes that we have adequate liquidity to meet all known contractual obligations and unfunded commitments, including loan commitments over the next twelve months.

Non-GAAP Financial Measures

The Company views certain non-recurring items, including but not limited to merger related and restructuring charges, gain/(loss) on investment securities and their corresponding tax effect, as core adjustments to net income. Core adjustments for the third quarter of 2015 included $23 thousand of severance and other operating expenses and $166 thousand of gain on investment securities.

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The following reconciliation provides a more detailed analysis of this non-GAAP financial measure:

FCB FINANCIAL HOLDINGS, INC. AND SUBSIDIARIES

Reconciliation of Non-GAAP Financial Measures—Core Net Income

(Unaudited)

	Three Months Ended
	September 30, 2015			June 30, 2015			March 31, 2015			December 31, 2014			September 30, 2014
	(Dollars in thousands)
Net Income (loss)	$	21,140		$	19,376		$	(16,874	)	$	13,100		$	(3,422	)
Pre-tax Adjustments
Noninterest income
Less: Gain (loss) on investment securities		166			761			1,007			2,377			2,785
FDIC loss share indemnification loss		—			—			(65,529	)		—			—
Noninterest expense
Salaries and employee benefits		3			(17	)		185			1			15,379
Occupancy and equipment		—			—			—			—			—
Loan and other real estate related expenses		—			—			—			—			—
Professional services		—			45			245			—			—
Data processing and network fees		—			—			2			—			—
Regulatory assessments and insurance		—			—			—			—			—
Amortization of intangibles		—			—			—			—			—
Other operating expenses		20			203			64			(6	)		4,895
Taxes
Tax Effect of adjustments (1)		50			186			(30,065	)		1,881			(4,254	)
Core Net Income	$	21,047		$	19,031		$	18,079		$	12,599		$	9,813
Average assets	$	6,650,260		$	6,325,073		$	6,038,970		$	5,953,704		$	5,738,087
ROA (2)		1.26	%		1.23	%		-1.13	%		0.87	%		-0.24	%
Core ROA (3)		1.26	%		1.21	%		1.21	%		0.84	%		0.68	%

(1) Tax effected at marginal income tax rate of 39% except for non tax deductible and discreet items. Core tax rate of 35% in 2015.

(2) Return on assets: Annualized net income / average assets

(3) Core return on assets: Annualized core net income / average assets

Tangible book value per share is defined as total stockholders’ equity reduced by goodwill and other intangible assets divided by total common shares outstanding.

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The following table reconciles this non-GAAP financial measurement of tangible book value per common share to the comparable GAAP financial measurement of book value per common share for the periods presented:

FCB FINANCIAL HOLDINGS, INC. AND SUBSIDIARIES

Reconciliation of Non-GAAP Measures—Tangible Book Value Per Share

(Unaudited)

	September 30, 2015			June 30, 2015			March 31, 2015			December 31, 2014			September 30, 2014
	(Dollars in thousands, except share and per share data)
Total assets	$	6,888,689		$	6,607,198		$	6,217,083		$	5,957,628		$	6,054,944
Less:
Goodwill and other intangible assets		87,484			87,884			88,291			88,615			89,040
Tangible assets	$	6,801,205		$	6,519,314		$	6,128,792		$	5,869,013		$	5,965,904
Total stockholders’ equity	$	855,878		$	857,479		$	846,834		$	851,653		$	835,727
Less:
Goodwill and other intangible assets		87,484			87,884			88,291			88,615			89,040
Tangible stockholders’ equity	$	768,394		$	769,595		$	758,543		$	763,038		$	746,687
Shares outstanding		40,989,200			41,423,199			41,443,031			41,409,698			41,409,698
Tangible book value per share	$	18.75		$	18.58		$	18.30		$	18.43		$	18.03
Average assets	$	6,650,260		$	6,325,073		$	6,038,970		$	5,953,704		$	5,738,087
Average equity		861,971			855,128			859,011			844,572			799,167
Average goodwill and other intangible assets		87,701			88,091			88,536			88,835			89,276
Tangible average equity to tangible average assets		11.8	%		12.3	%		12.9	%		12.9	%		12.6	%
Tangible common equity ratio		11.3	%		11.8	%		12.4	%		13.0	%		12.5	%

Management believes these non-GAAP financial measures provide useful information to management and investors that is supplementary to our financial condition, results of operations and cash flows computed in accordance with GAAP. Disclosure of these non-GAAP financial measures is relevant to understanding the capital position and performance of the Company and provides a meaningful base for comparability to other financial institutions. We acknowledge that our non-GAAP financial measures have a number of limitations. As such, you should not view these disclosures as a substitute for results determined in accordance with GAAP.

Item 3. Quantitative and Qualitative Disclosure about Market Risk

As described in more detail in Part II, Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2014, risk management involves the monitoring and evaluation of interest rate risk, liquidity risk, operational risk, compliance risk and strategic and/or reputation risk. The Company has not experienced any material change in these risks from December 31, 2014 to September 30, 2015. For additional disclosure of our market risks, see the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 previously filed with the SEC.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of the Company’s management, including its Chief Executive Officer and Chief Financial Officer, the Company has evaluated the effectiveness of its “disclosure controls and procedures” (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective.

Internal Control over Financial Reporting

There was no change in the Company’s internal control over financial reporting that occurred during the Company’s last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The Company, from time to time, is involved as plaintiff or defendant in various legal actions arising in the normal course of business. While the ultimate outcome of any such proceedings cannot be predicted with certainty, it is the opinion of management, based upon advice of legal counsel, that no proceedings exist, either individually or in the aggregate, which, if determined adversely to the Company, would have a material effect on the Company’s consolidated balance sheet, statements of income or cash flows. See Note 12 “Commitments and Contingencies” in the “Notes to Consolidated Financial Statements.”

Item 1A. Risk Factors

There have been no material changes in the risk factors disclosed by the Company in its Annual Report on Form 10-K for the year ended December 31, 2014 filed with the SEC.

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

None

Item 3. Defaults upon Senior Securities

Not applicable

Item 4. Mine Safety Disclosures

Not applicable

Item 5. Other Information

None

Item 6. Exhibits

31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase

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Signatures

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

FCB Financial Holdings, Inc.

(Registrant)

Date: November 9, 2015	/s/ Kent S. Ellert
	Kent S. Ellert
	President and Chief Executive Officer
	(Principal Executive Officer)
Date: November 9, 2015	/s/ Paul D. Burner
	Paul D. Burner
	Executive Vice President and Chief
	Financial Officer
	(Principal Financial Officer and
	Principal Accounting Officer)

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