California Bank of Commerce NOTES TO FINANCIAL STATEMENTS 15.  OTHER EXPENSES 16.  PREFERRED STOCK  Small Business Lending Fund (“SBLF”) Capital Purchase Program (“CPP”) Other expenses for the years ended December 31, 2011 and 2010 consisted of the following: On September 15, 2011, as part of the Small Business Lending Fund (“SBLF”), the Bank entered into  a Small Business Lending Fund Securities Purchase Agreement (“SBLF Purchase Agreement”) with  the United States Department of the Treasury (“Treasury”). Under the SBLF Purchase Agreement,  the Company issued 11,000 shares of Senior Non-Cumulative Perpetual Preferred Stock, Series  C (the “Series C Preferred”) to the Treasury. The preferred stock series C shares qualify as Tier 1  capital and will pay quarterly dividends. The initial and current dividend as of December 31, 2011 is  1%. The dividend rate can fluctuate between 1% and 5% during the next 18 quarters based on the  growth in qualified small business loans. On September 15, 2011, as part of the SBLF Purchase Agreement and funding, the Bank redeemed its  outstanding Series A and B Preferred shares, issued to the U.S. Treasury under the Capital Purchase  Program, in the amount of $4,200,000 plus accrued interest to that date.  On February 27, 2009, the Bank entered into a Letter Agreement (the “Purchase Agreement”) with  the United States Department of the Treasury (the “Treasury”), pursuant to which the Bank issued  and sold 4,000 shares of the Bank’s Fixed Rate Non-cumulative Perpetual Preferred Stock, Series A  (the “Series A Preferred”) for a purchase price of $4,000,000. Additionally, the Bank created and  authorized 200.002 shares of the Bank’s Fixed Rate Non-cumulative Perpetual Preferred Stock,  Series B stock, (the “Series B Preferred”), which were issued to the United States Department of the  Treasury in exchange for warrants to purchase 200.002 shares of Preferred Stock with a liquidation  value of $1,000 per share. 47 2011 2010 Outsourced data processing and electronic banking  $  287,320 $  262,671 Computer network and internet support  181,274 165,913 Director’s stock-based and other compensation  112,885 102,574 Professional fees 246,333 214,214 Bank Insurance 53,220 49,994 Advertising, promotion and business development  233,650 183,012 Regulatory fees 285,413 376,625 Provision for unfunded loan commitments  85,000 - Correspondent Bank service charges  93,177 81,224 Other operating expenses  353,112 281,520 $ 1,931,384 $ 1,717,747