content_image/199987.jpg
## NOTES TO FINANCIAL STATEMENTS 

## 11. SHARE-BASED COMPENSATION (Continued) 

## Stock Option Awards (Continued) 

<img src='content_image/199987.jpg'>

The weighted average grant date fair value and significant fair value assumptions above are for 64,400 shares of new options granted during 2011. There were also 347,250 shares of exchanged options as described on the previous page. The exchanged options had a weighted average incremental fair value of $0.55 per share over the awards’ original grant date fair values. 

## Restricted Stock Award 

During 2011, no restricted stock awards were granted. Compensation cost related to the one outstanding restricted Stock award of $3,892 was recognized for the year ended December 31, 2011. As of December 31, 2011, the unrecognized compensation cost related to the restricted stock award totaled $5,837. That cost is expected to be amortized over 1.6 years and will be adjusted for subsequent changes in forfeitures. None of the restricted stock was vested as of December 31, 2011. 

During 2010, the Bank granted one award of 3,243 shares of restricted stock under the Plan with a grant date fair value of $7.00 per share. Compensation cost of $1,948 was recognized for the year ended December 31, 2010. As of December 31, 2010, the unrecognized compensation cost related to non-vested restricted stock awards totaled $9,729. None of the restricted stock was vested as of December 31, 2010. 

## 12. SHAREHOLDERS’ EQUITY 

## Dividends 

Upon declaration by the Board of Directors, all shareholders of record will be entitled to receive dividends. The California Financial Code restricts the total dividend payment of any state banking association in any calendar year to the lesser of (1) the bank’s retained earnings or (2) the bank’s net income for its last three fiscal years, less distributions made to shareholders during the same three- year period. At December 31, 2011, no amounts were free of such restrictions, however, the Bank has received regulatory approval from the State of California Department of Financial Institutions to pay quarterly dividends on its Series C Preferred Stock issued under the Small Business Lending Fund, without restriction. 

