Certain statements contained in this Quarterly Report on Form 10-Q that are not historical facts may constitute forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties. These statements, which are based on certain assumptions and describe our future plans, strategies and expectations, can generally be identified by the use of the words "may," "will," "should," "could," "would," "plan," "potential," "estimate," "project," "believe," "intend," "anticipate," "expect," "target" and similar expressions. These statements include, among others, statements regarding our strategy, evaluations of future interest rate trends and liquidity, prospects for growth in assets and prospects for overall results over the long term. You should not place undue reliance on our forward-looking statements. You should exercise caution in interpreting and relying on forward-looking statements because they are subject to significant risks, uncertainties and other factors which are, in some cases, beyond the Company's control.

Forward-looking statements are based on the current assumptions and beliefs of management and are only expectations of future results. The Company's actual results could differ materially from those projected in the forward-looking statements as a result of, among others, factors referenced herein under the section captioned "Risk Factors"; continued adverse conditions in the capital and debt markets and the impact of such conditions on the Company's private banking and asset investment advisory activities; changes in interest rates; competitive pressures from other financial institutions; continued deterioration in general economic conditions on a national basis or in the local markets in which the Company operates, including changes which adversely affect borrowers' ability to service and repay our loans; changes in loan default and charge-off rates; adequacy of loan loss reserves; reductions in deposit levels necessitating increased borrowing to fund loans and investments; the adoption of adverse government regulation; the risk that goodwill and intangibles recorded in the Company's financial statements will become further impaired; and risks related to the identification and implementation of acquisitions; as well as the other risks and uncertainties detailed in the Company's Annual Report on Form 10-K and other filings submitted to the Securities and Exchange Commission. Forward-looking statements speak only as of the date on which they are made. The Company does not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date the forward-looking statements are made.

Executive Summary

The Company offers a full range of wealth management services to high net worth individuals, families, businesses and select institutions through its three reportable segments, Private Banking, Investment Management, and Wealth Advisory. This Executive Summary provides an overview of the most significant aspects of our operating segments and the Company's operations in the first quarter of 2009. Details of the matters addressed in this summary are provided elsewhere in this document and, in particular, in the sections immediately following.

During the first quarter of 2009, the Company earned revenues of $98.3 million, a decrease of 14% compared to revenues of $114.1 million for the same period in 2008. Total operating expenses were $74.4 million for the first quarter of 2008, a decrease of 24% compared to total operating expenses of $98.4 million for the same period in 2008. The Company reported net income from continuing operations of $5.2 million, compared to a net loss from continuing operations of $9.4 million for the same period in 2008. Net income attributable to the Company for the first quarter of 2009 was $2.9 million, as compared to a net loss attributable to the Company of $9.8 million, for the same period in 2008; however, the Company reported a net loss available to common shareholders of $0.09 per share for the first quarter of 2009 compared to a net loss of $0.26 loss per share, for the same period in 2008. The first quarter 2009 loss per share is attributable to non-cash accounting adjustments which reduced the income available to the common shareholders by $8.4 million, or $0.13 per share.

The key items that affected the Company's first quarter results include:

1. A decrease in Assets Under Management ("AUM"), primarily due to market depreciation, resulted in a reduction in the Company's Investment Management fee line of $10.9 million compared to March 31, 2008.

2. The increase in non-performing and classified assets necessitated additional loan loss provisions. The increase in non-performing assets has negatively affected the Company's interest income and related net interest margin over the past year.

4. The Company recognized a $3.4 million net gain from the sale of investments at the Banks. The Banks periodically sell investments to lock in unrealized gains, primarily related to changes in interest rates, as well as to manage their interest rate risk.

5. In addition, the Company adopted plans of disposal for BPVI and Sand Hill during the first quarter of 2009; as a result all individual revenue and expense items have been reclassified to discontinued operations. Individual asset lines, as well as liability lines were also reclassified to assets from discontinued operations, and liabilities from discontinued operations, respectively. Accordingly, all goodwill and intangible assets associated with those affiliates were tested for impairment using a fair value established by the terms of each sale. The intangible impairment charge of $1.4 million, net of tax, resulting from the sale of BPVI, was included in the first quarter discontinued operations. There was no impairment of intangibles related to Sand Hill, and any potential gains from the Sand Hill divestiture are not expected to be significant. Any potential gains from any contingent payments or contingent consideration have also been deferred.

The Company's three segments reported positive earnings in the first quarter of 2009. Segment results exclude the effect of discontinued operations, interest expense on certain portions of long term debt and the results of unconsolidated affiliates; and are reduced by net income attributable to noncontrolling interests.

The Company's Private Banking segment reported net income of $5.9 million in the first quarter of 2009, compared to a net loss of $16.8 million for the same period in 2008. The Company's Private Banks reported revenue growth of $4.8 million, or 7%, in the first quarter of 2009 compared to the same period in 2008. Increased revenues were primarily due to the gains from the sale of investments, loans, and other real estate owned properties of $7.7 million. Net interest income at the Banks remained relatively flat compared to the first quarter of 2008 primarily due to the net interest margin compression caused by the increase in non-performing assets, offset by additional growth in loans at the Banks. Investment management and trust fees at the Banks decreased $1.2 million, or 16%, compared to the first quarter of 2008 as a result of declines in AUM of $0.9 billion, or 20%, from March 31, 2008. 82% of the decrease was attributable to market depreciation, and the remaining 18% was attributable to outflows. AUM at March 31, 2009 for the Banks was $3.8 billion. Total operating expenses at the Banks for the first quarter of 2009 decreased $18.5 million, or 29%, compared to the same period in 2008. The decrease is primarily due to the non-cash impairment charge recorded in the first quarter of 2008 of $20.6 million. Current quarter operating expenses include FDIC insurance expense of $1.9 million, a $0.8 million increase from the same period in 2008. On February 27, 2009 the FDIC Board of Directors ("the Board") adopted an interim rule imposing an emergency 20 basis point special assessment on June 30, 2009, which will be collected on September 30, 2009, and allowing the Board to impose possible additional special assessments of up to 10 basis points thereafter; however due to legislation recently passed by the U.S. Senate and expected to be passed by the U.S. House of Representatives, it is anticipated that the special assessment will be reduced to 10 basis points. The Banks will accrue this special assessment in the quarter when the new rule is final, which is expected to be in the second quarter of 2009. The Company estimates that this special assessment would result in a pre tax expense to the Banks of approximately $5 to $10 million depending on the assessment rate and level of deposits at June 30, 2009.

The Company's Investment Management segment reported net income of $2.4 million in the first quarter of 2009, compared to a net income of $5.6 million for the same period in 2008. The Company's Investment Management segment continues to be negatively affected by the declines in the equity markets. Revenues decreased $9.5 million, or 31%, in the first quarter of 2009 compared to the same period in 2008 as a result of declines in AUM of $6.2 billion, or 31%, from March 31, 2008. Market depreciation for the twelve months ended March 31, 2009 was $6.7 billion, slightly offset by inflows of $0.5 billion. Total operating expenses at the Investment Management firms for the first quarter of 2009 decreased $3.5 million, or 17%, compared to the same period in 2008. The decrease in expenses is primarily due to the decrease in revenues which reduced variable compensation expenses.

The Company's Wealth Advisory segment reported net income of $0.8 million in the first quarter of 2009, compared to net income of $1.3 million for the same period in 2008. The Company's Wealth Advisory segment also was negatively affected by the challenging market conditions. Revenues for the first quarter of 2009 were $10.2 million, compared to $10.9 million for the same period in 2008 as a result of declines in AUM of $1.5 billion, or 17%, from March 31, 2008. Market depreciation for the twelve months ended March 31, 2009 was $1.6 billion, slightly offset by inflows of $0.1 billion. AUM at March 31, 2009 at the Wealth Advisory firms was $7.2 billion. Total operating expenses at the Wealth Advisory firms for the first quarter of 2009 increased $0.5 million, or 7%, compared to the same period in 2008. The increase is primarily due to increases in fixed compensation expenses as a result of severance charges and the consolidation of DTC on February 1, 2008.

Critical Accounting Policies

Critical accounting policies are reflective of significant judgments and uncertainties, and could potentially result in materially different results under different assumptions and conditions. The Company believes that its most critical accounting policies upon which its financial condition depends, and which involve the most complex or subjective decisions or assessments are the allowance for loan losses, the valuation of goodwill and intangible assets and analysis for impairment, stock-based compensation, and tax estimates. These policies are discussed in Part II. Item 7.III.D. "Critical Accounting Policies" in the Company's 2008 Annual Report on 10-K. There have been no changes to these policies through the filing of this report on Form 10-Q.

Financial Condition

Total Assets. Total assets decreased $94.6 million, or 1%, to $7.2 billion at March 31, 2009 from $7.3 billion at December 31, 2008. This decrease was primarily driven by decreases in investments, cash and cash equivalents, income taxes receivable and deferred, and other assets, partially offset by increases in loans.

Investments. Total investments (consisting of investment securities available-for-sale, and held-to-maturity) decreased $47.3 million, or 6%, to $765.9 million, or 11% of total assets, at March 31, 2009, from $813.2 million, or 11% of total assets, at December 31, 2008. The decrease was primarily related to the sale of the Company's available for sale securities during the first quarter of 2009. The Banks acquire securities for various purposes such as providing a source of income through interest income or subsequent sale of the securities, liquidity, and to manage interest rate and liquidity risk. The sale of investments results in the Banks recognizing gains due to changes in interest rates which were previously recorded as unrealized gains within other comprehensive income. See Part I. Item 1. "Notes to Unaudited Consolidated Financial Statements, Note 4: Investments" for a summary of the Company's investment securities.

Loans held for sale. Loans held for sale decreased $6.4 million to $30.5 million at March 31, 2009 from $36.8 million at December 31, 2008. $4.9 million of the decrease was the result of the sale/recovery of five of the loans that were included in the Company's non-strategic Southern California loan portfolio. The remaining $1.5 million decrease was related to the timing of loans sold in the secondary market.

Loans. Total portfolio loans increased $37.7 million, or 1%, to $5.5 billion, or 77% of total assets, at March 31, 2009, from $5.5 billion, or 75% of total assets, at December 31, 2008. This increase was primarily driven by the organic growth of the commercial loan portfolio, which increased $69.6 million, or 3%. See Part I. Item 1. "Notes to Unaudited Consolidated Financial Statements, Note 6: Loans Receivable" for a summary of the Company's loan portfolio by geography.

Risk Elements. The Company's non-performing assets include non-accrual loans (including certain non-strategic loans held for sale), other real estate owned ("OREO"), and repossessed assets. OREO consists of real estate acquired through foreclosure proceedings and real estate acquired through acceptance of deeds in lieu of foreclosure. In addition, the Company may, under certain circumstances, restructure loans as a concession to a borrower. Such restructured loans are generally included in impaired loans. Non-performing assets increased $11.2 million, or 10%, to $119.9 million, or 1.67% of total assets, at March 31, 2009, from $108.6 million, or 1.49% of total assets, at December 31, 2008. See Part I. Item 1. "Notes to Unaudited Consolidated Financial Statements, Note 6: Loans Receivable" for a summary of the Company's Private Banking credit quality by geography.

The increases in non-performing assets, past due loans and classified loans are the result of continued weakness in the U.S. housing and labor markets and increased bankruptcy filings. This weakening has caused a related deterioration in real estate and land loans as prices for these assets continue to decline.

Total non-accrual loans at March 31, 2009 were $105.4 million, an increase of $11.5 million, or 12%, from $93.9 million at December 31, 2008. Approximately $97.5 million or 93% of the total non-accrual loans were located in the Southern California, South Florida, and Pacific Northwest regions. $22.3 million of the non-accrual loans in the Southern California region are in the loans held for sale category.

Of the total non-accrual loans, $33.2 million, or 32%, of the total is in construction and land loans, $22.4 million, or 21%, is in residential mortgage loans, $22.3 million, or 21%, is in loans held for sale, $12.3 million, or 12%, is in commercial real estate loans, $10.7 million, or 10%, is in commercial and industrial loans, and $4.5 million, or 4%, is in other loan categories.

OREO and repossessed assets consist of eleven properties with a carrying value of $14.5 million at March 31, 2009, a decrease of $0.2 million from December 31, 2008. The decrease was due to the disposition of two properties in Southern California, one property in New England and the partial disposition of another, also in New England, offset by three additional properties in Northern California and two additional properties in the Pacific Northwest. The fair value of OREO is defined as the cash price that might reasonably be anticipated in a current sale (within 12 months), less estimated selling costs, or, in the event that a current sale is unlikely, all cash flows generated by the property on a discounted basis. See Part I. Item 1. "Notes to Unaudited Consolidated Financial Statements, Note 6: Loans Receivable" for a summary of the Company's Private Banking credit quality by geography.

Additional write downs of $0.4 million were taken on loans in Southern California which were previously transferred to the loans held for sale category. These write downs were the result of further declines in the collateral values of two loans. The loss associated with the write downs is netted with the gain on sale of loans.

At March 31, 2009, loans with an aggregate balance of $27.9 million, or 0.51% of total loans, were 30-89 days past due, an increase of $4.1 million, or 17%, as compared to $23.7 million at December 31, 2008. The Company believes most of these loans are adequately secured at the present time and the payment performance of these borrowers varies from month to month. Further deterioration in the real estate market where the collateral is located or the local economy could lead to these delinquent loans going to a non-accrual status and a corresponding downgrade of the credit. Downgrades would generally result in additional provision for loan loss expenses.

The Banks' general policy is to discontinue the accrual of interest on a loan when the collectability of principal or interest is in doubt. In certain instances, loans that have become 90 days past due may remain on accrual status if the value of the collateral securing the loan is sufficient to cover principal and interest and the loan is in process of collection. There was one loan in the Pacific Northwest with a balance of $0.3 million, 90 days past due, but still accruing, as of March 31, 2009 as compared to no loans 90 days past due, but still accruing as of December 31, 2008.

$12.8 million of net charge-offs were recorded in the first quarter. $5.9 million, or 46%, of the net charge-offs were in the Pacific Northwest, $3.8 million, or 30%, were in Southern California, $3.0 million or 23% were in South Florida and $0.1 million or 1% were in the other regions.

Non-performing assets and delinquent loans are affected by factors such as the economic conditions in the Banks' geographic regions, interest rates, and seasonality. These factors are generally not within the Company's control. A decline in the fair values of the collateral for the non-performing assets could result in additional future expense depending on the timing and severity of the decline. The Banks continue to evaluate the underlying collateral of each non-accrual loan and pursue the collection of interest and principal. Where appropriate, the Banks obtain updated appraisals on the collateral.

Loans that evidence weakness or potential weakness related to repayment history, the borrower's financial condition, or other factors are reviewed by the Banks' management to determine if the loan should be adversely classified. Delinquent loans may or may not be adversely classified depending upon management's judgment with respect to each individual loan. Classified loans are classified as either substandard, doubtful or loss under the rating system adopted by the Banks based on the criteria established by federal bank regulatory authorities. At March 31, 2009, the Company had classified loans of $198.2 million, an increase of $50.2 million, or 34%, compared to $148.0 million at December 31, 2008. Increases in classified loans were recorded at all Banks during the first quarter of 2009. The largest change was in the Southern California region which increased $19.0 million, or 46%, as compared to December 31, 2008. The New England region increased $11.1 million, or 345%. The South Florida and Pacific Northwest regions both experienced increases of $8.2 million, or 14% and 23%, respectively. The Northern California region increased by $3.7 million, or 34%.

Total classified loans by region are $65.7 million in South Florida, or 33% of the total; $60.5 million in Southern California, or 31% of the total; $43.1 million in the Pacific Northwest, or 22% of the total; $14.6 million in Northern California, or 7% of the total; and $14.3 million in New England, or 7% of the total. Included in the Southern California classified loans are $22.3 million of loans in the held for sale category. The increases in classified loans were primarily due to deteriorating real estate and economic conditions in certain areas where the Banks conduct business. Impaired loans are generally included with the balance of classified loans. Impaired loans totaled $110.5 million at March 31, 2009, an increase of $15.7 million as compared to $94.8 million at December 31, 2008. $60.9 million of the impaired loans had specific reserves of $12.4 million, the remaining $49.6 million of impaired loans did not require any specific reserves. See Part I. Item 1. "Notes to Unaudited Consolidated Financial Statements, Note 6: Loans Receivable" for a summary of the Private Banking credit quality data by geography.

Allowance for Credit Losses. The allowance for loan losses and the reserve for unfunded loan commitments when combined are referred to as the allowance for credit losses. The allowance for loan losses is reported as a reduction of

outstanding loan balances and the reserve for unfunded loan commitments is included within other liabilities. At March 31, 2009, the allowance for credit losses totaled $97.1 million and was comprised of the allowance for loan losses of $93.1 million and the reserve for unfunded loan commitments of $3.9 million.

The allowance for credit losses increased $3.7 million, or 4%, from December 31, 2008. Increases in the allowance for loan losses resulting from the provision for loan losses of $16.6 million were partially offset by charge offs, net of recoveries, of $12.8 million. This increase reflects the higher level of non-performing, past-due, and classified loans as well as continued growth in the loan portfolio. Approximately 82% of the provision recorded in the first quarter of 2009 was related to the Southern California, South Florida and Pacific Northwest regions. Approximately 99% of the charge offs, net of recoveries, recorded in the first quarter of 2009 were related to the Southern California, South Florida and Pacific Northwest regions. See Part I. Item 1. "Notes to Unaudited Consolidated Financial Statements, Note 7: Allowance for Credit Losses" for an analysis of the Company's allowance for credit losses.

Management evaluates currently available internal and external factors in establishing the allowance for loan losses, such as changes in the local economic market, concentration of risk and decreases in local property values. While management's allowance for loan losses as of March 31, 2009 is considered adequate, under adversely different conditions or assumptions the Company would need to increase the allowance. In addition, various regulatory agencies, as an integral part of their examination process, periodically review a financial institution's allowance for loan losses. Such agencies may require the financial institution to recognize additions to the allowance based on their judgments about information available to them at the time of their examination. The full allowance for loan losses policy may be found in Part I, Item 2,"Management's Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies."

Income Taxes Receivable and Deferred. Income taxes receivable and deferred decreased $23.5 million, or 18%, to $107.0 million at March 31, 2009 from $130.4 million at December 31, 2008. The decrease is primarily due to the $22.8 million federal tax refund received during the first quarter of 2009.

Deposits. The Company experienced an increase in total deposits of $138.1 million, or 3%, to $5.1 billion, or 71% of total assets, at March 31, 2009, from $4.9 billion, or 68% of total assets, at December 31, 2008. The increase in deposits is primarily driven by the increase in CDARS deposits. The Certificate of Deposit Account Registry Service, or CDARS, provides depositors with up to $50 million in FDIC insurance coverage through its reciprocal deposit placement service. CDARS enables the Company's Private Banks to distribute depositors' monies among multiple CDs in increments less than the current FDIC insurance limit at other CDARS member banks across the country. CDARS deposits at March 31, 2009 were $270.4 million, as compared to $144.4 million at December 31, 2008.

The following table shows the composition of the Company's deposits at March 31, 2009 and December 31, 2008:

                                               March 31, 2009                     December 31, 2008
                                                           As a % of                           As a % of
                                            Balance          total              Balance          total
                                                                 (In thousands)
Demand deposits (non-interest
bearing)                                 $     969,615            19 %       $     957,336            19 %
NOW                                            428,172             8 %             390,338             8 %
Savings                                        144,694             3 %             146,179             3 %
Money market                                 1,491,069            30 %           1,523,092            32 %
Certificates of deposit under
$100,000 (1)                                 1,130,453            22 %             995,994            20 %
Certificates of deposit $100,000 or
greater (1)                                    894,730            18 %             907,666            18 %

Total deposits                           $   5,058,733           100 %       $   4,920,605           100 %

(1) Included in certificates of deposit are brokered and CDARS CDs of $582.8 million and $270.4 million, respectively, as of March 31, 2009. As of December 31, 2008, brokered and CDARS CDs were $628.6 million and $144.4 million, respectively.

Borrowings. Total borrowings (consisting of FHLB borrowings, federal funds purchased, securities sold under agreements to repurchase ("repurchase agreements") junior subordinated debentures, and other long-term debt) decreased $207.5 million, or 14%, to $1.3 billion at March 31, 2009 from $1.5 billion at December 31, 2008. FHLB borrowings (net of unamortized fair valuation adjustments) decreased $66.7 million, or 7%. Repurchase agreements decreased $132 million, or 45%. Repurchase agreements are generally used for commercial accounts with an overnight sweep feature. Federal funds purchased increased $40 million. Federal funds purchased provide short-term liquidity to the Banks and balances vary on a daily basis based on funding requirements. Junior subordinated debentures and other long-term debt decreased $48.9 million

. . .