Loans and Lease Finance Receivables and Allowance for Loan Losses (Tables)

6 Months Ended

Jun. 30, 2018

Summary of Components of Loans and Lease Finance Receivables, Excluding PCI Loans

The following table provides a summary of the Company’s total loans and lease finance receivables, excluding PCI loans, by type.


	June 30, 2018			December 31, 2017
	(Dollars in thousands)
Commercial and industrial	$	509,188		$	513,325
SBA		121,048			122,055
Real estate:
Commercial real estate		3,454,030			3,376,713
Construction		84,400			77,982
SFR mortgage		237,154			236,202
Dairy & livestock and agribusiness		268,489			347,289
Municipal lease finance receivables		67,721			70,243
Consumer and other loans		60,875			64,229

Gross loans, excluding PCI loans		4,802,905			4,808,038
Less: Deferred loan fees, net		(5,375	)		(6,289	)

Gross loans, excluding PCI loans, net of deferred loan fees		4,797,530			4,801,749
Less: Allowance for loan losses		(59,367	)		(59,218	)

Net loans, excluding PCI loans		4,738,163			4,742,531

PCI Loans		19,426			30,908
Discount on PCI loans		-			(2,026	)
Less: Allowance for loan losses		(216	)		(367	)

PCI loans, net		19,210			28,515

Total loans and lease finance receivables	$	4,757,373		$	4,771,046

Summary of Loan, Excluding PCI Loans by Internal Risk Ratings

The following table summarizes loans by type, excluding PCI loans, according to our internal risk ratings for the periods presented.


	June 30, 2018
	Pass		Special Mention		Substandard		Doubtful & Loss		Total
	(Dollars in thousands)
Commercial and industrial	$	490,231	$	16,415	$	2,542	$	-	$	509,188
SBA		111,616		6,686		2,746		-		121,048
Real estate:
Commercial real estate
Owner occupied		1,063,163		61,509		19,102		-		1,143,774
Non-owner occupied		2,290,652		13,880		5,724		-		2,310,256
Construction
Speculative		74,785		-		-		-		74,785
Non-speculative		9,615		-		-		-		9,615
SFR mortgage		229,831		3,070		4,253		-		237,154
Dairy & livestock and agribusiness		244,408		19,581		4,500		-		268,489
Municipal lease finance receivables		67,153		568		-		-		67,721
Consumer and other loans		59,076		921		878		-		60,875

Total gross loans, excluding PCI loans	$	4,640,530	$	122,630	$	39,745	$	-	$	4,802,905


	December 31, 2017
	Pass		Special Mention		Substandard		Doubtful & Loss		Total
	(Dollars in thousands)
Commercial and industrial	$	483,641	$	19,566	$	10,118	$	-	$	513,325
SBA		112,835		5,358		3,862		-		122,055
Real estate:
Commercial real estate
Owner occupied		1,009,199		76,111		10,970		-		1,096,280
Non-owner occupied		2,257,130		16,434		6,869		-		2,280,433
Construction
Speculative		60,042		-		-		-		60,042
Non-speculative		17,940		-		-		-		17,940
SFR mortgage		229,032		3,124		4,046		-		236,202
Dairy & livestock and agribusiness		321,413		9,047		16,829		-		347,289
Municipal lease finance receivables		69,644		599		-		-		70,243
Consumer and other loans		61,715		1,255		1,259		-		64,229

Total gross loans, excluding PCI loans	$	4,622,591	$	131,494	$	53,953	$	-	$	4,808,038

Schedule of Balance and Activity Related to Allowance for Loan Losses for Held-for-Investment Loans by Type

The following tables present the balance and activity related to the allowance for loan losses for held-for-investment loans by type for the periods presented.


	For the Three Months Ended June 30, 2018
	Ending Balance March 31, 2018		Charge-offs			Recoveries		(Recapture of) Provision for Loan Losses			Ending Balance June 30, 2018
	(Dollars in thousands)
Commercial and industrial	$	7,499	$	-		$	27	$	(556	)	$	6,970
SBA		884		-			5		(48	)		841
Real estate:
Commercial real estate		41,863		-			-		734			42,597
Construction		987		-			596		(580	)		1,003
SFR mortgage		2,202		-			-		(47	)		2,155
Dairy & livestock and agribusiness		4,666		-			19		(334	)		4,351
Municipal lease finance receivables		834		-			-		(26	)		808
Consumer and other loans		688		(2	)		3		(47	)		642
PCI loans		312		-			-		(96	)		216

Total allowance for loan losses	$	59,935	$	(2	)	$	650	$	(1,000	)	$	59,583


	For the Three Months Ended June 30, 2017
	Ending Balance March 31, 2017		Charge-offs			Recoveries		(Recapture of) Provision for Loan Losses			Ending Balance June 30, 2017
	(Dollars in thousands)
Commercial and industrial	$	7,956	$	-		$	42	$	62		$	8,060
SBA		871		-			38		4			913
Real estate:
Commercial real estate		38,986		-			154		787			39,927
Construction		820		-			1,694		(1,455	)		1,059
SFR mortgage		2,186		-			-		183			2,369
Dairy & livestock and agribusiness		5,842		-			19		(421	)		5,440
Municipal lease finance receivables		889		-			-		(37	)		852
Consumer and other loans		937		-			42		(57	)		922
PCI loans		725		-			-		(66	)		659

Total allowance for loan losses	$	59,212	$	-		$	1,989	$	(1,000	)	$	60,201


	For the Six Months Ended June 30, 2018
	Ending Balance December 31, 2017		Charge-offs			Recoveries		(Recapture of) Provision for Loan Losses			Ending Balance June 30, 2018
	(Dollars in thousands)
Commercial and industrial	$	7,280	$	-		$	37	$	(347	)	$	6,970
SBA		869		-			10		(38	)		841
Real estate:
Commercial real estate		41,722		-			-		875			42,597
Construction		984		-			1,930		(1,911	)		1,003
SFR mortgage		2,112		-			-		43			2,155
Dairy & livestock and agribusiness		4,647		-			19		(315	)		4,351
Municipal lease finance receivables		851		-			-		(43	)		808
Consumer and other loans		753		(9	)		11		(113	)		642
PCI loans		367		-			-		(151	)		216

Total allowance for loan losses	$	59,585	$	(9	)	$	2,007	$	(2,000	)	$	59,583


	For the Six Months Ended June 30, 2017
	Ending Balance December 31, 2016		Charge-offs			Recoveries		(Recapture of) Provision for Loan Losses			Ending Balance June 30, 2017
	(Dollars in thousands)
Commercial and industrial	$	8,154	$	-		$	94	$	(188	)	$	8,060
SBA		871		-			42		-			913
Real estate:
Commercial real estate		37,443		-			154		2,330			39,927
Construction		1,096		-			3,719		(3,756	)		1,059
SFR mortgage		2,287		-			64		18			2,369
Dairy & livestock and agribusiness		8,541		-			19		(3,120	)		5,440
Municipal lease finance receivables		941		-			-		(89	)		852
Consumer and other loans		988		(2	)		71		(135	)		922
PCI loans		1,219		-			-		(560	)		659

Total allowance for loan losses	$	61,540	$	(2	)	$	4,163	$	(5,500	)	$	60,201

Schedule of Recorded Investment in Loans Held-for-Investment and Related Allowance for Loan Losses by Loan Type

The following tables present the recorded investment in loans held-for-investment and the related allowance for loan losses by loan type, based on the Company’s methodology for determining the allowance for loan losses for the periods presented. Acquired loans are also supported by a credit discount established through the determination of fair value for the acquired loan portfolio.


	June 30, 2018
	Recorded Investment in Loans						Allowance for Loan Losses
	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Acquired with Deterioriated Credit Quality		Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Acquired with Deterioriated Credit Quality
					(Dollars in thousands)
Commercial and industrial	$	355	$	508,833	$	-	$	-	$	6,970	$	-
SBA		1,174		119,874		-		-		841		-
Real estate:
Commercial real estate		7,741		3,446,289		-		-		42,597		-
Construction		-		84,400		-		-		1,003		-
SFR mortgage		4,133		233,021		-		13		2,142		-
Dairy & livestock and agribusiness		800		267,689		-		-		4,351		-
Municipal lease finance receivables		-		67,721		-		-		808		-
Consumer and other loans		509		60,366		-		3		639		-
PCI loans		-		-		19,426		-		-		216

Total	$	14,712	$	4,788,193	$	19,426	$	16	$	59,351	$	216


	June 30, 2017
	Recorded Investment in Loans						Allowance for Loan Losses
	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Acquired with Deterioriated Credit Quality		Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Acquired with Deterioriated Credit Quality
					(Dollars in thousands)
Commercial and industrial	$	1,605	$	535,742	$	-	$	13	$	8,047	$	-
SBA		2,478		126,805		-		6		907		-
Real estate:
Commercial real estate		18,558		3,247,300		-		-		39,927		-
Construction		-		77,294		-		-		1,059		-
SFR mortgage		4,195		245,738		-		-		2,369		-
Dairy & livestock and agribusiness		829		244,426		-		-		5,440		-
Municipal lease finance receivables		-		66,048		-		-		852		-
Consumer and other loans		1,131		72,778		-		94		828		-
PCI loans		-		-		49,869		-		-		659

Total	$	28,796	$	4,616,131	$	49,869	$	113	$	59,429	$	659

Schedule of Recorded Investment in, and Aging of, Past Due and Nonaccrual Loans, Excluding PCI Loans by Class of Loans

The following tables present the recorded investment in, and the aging of, past due and nonaccrual loans, excluding PCI loans, by type of loans for the periods presented.


	June 30, 2018
	30-59 Days Past Due		60-89 Days Past Due		Total Past Due and Accruing		Nonaccrual (1)		Current		Total Loans and Financing Receivables
					(Dollars in thousands)
Commercial and industrial	$	-	$	-	$	-	$	204	$	508,984	$	509,188
SBA		-		-		-		574		120,474		121,048
Real estate:
Commercial real estate
Owner occupied		-		-		-		4,294		1,134,706		1,139,000
Non-owner occupied		-		-		-		2,223		2,312,807		2,315,030
Construction
Speculative (2)		-		-		-		-		74,785		74,785
Non-speculative		-		-		-		-		9,615		9,615
SFR mortgage		-		-		-		1,578		235,576		237,154
Dairy & livestock and agribusiness		-		-		-		800		267,689		268,489
Municipal lease finance receivables		-		-		-		-		67,721		67,721
Consumer and other loans		47		-		47		509		60,319		60,875

Total gross loans, excluding PCI loans	$	47	$	-	$	47	$	10,182	$	4,792,676	$	4,802,905

(1)

As of June 30, 2018, $3.2 million of nonaccruing loans were current, $164,000 were 30-59 days past due, $129,000 were 60-89 days past due and $6.7 million were 90+ days past due.

(2)

Speculative construction loans are generally for properties where there is no identified buyer or renter.


	December 31, 2017
	30-59 Days Past Due		60-89 Days Past Due		Total Past Due and Accruing		Nonaccrual (1)		Current		Total Loans and Financing Receivables
					(Dollars in thousands)
Commercial and industrial	$	768	$	-	$	768	$	250	$	512,307	$	513,325
SBA		403		-		403		906		120,746		122,055
Real estate:
Commercial real estate
Owner occupied		-		-		-		4,365		1,091,915		1,096,280
Non-owner occupied		-		-		-		2,477		2,277,956		2,280,433
Construction
Speculative (2)		-		-		-		-		60,042		60,042
Non-speculative		-		-		-		-		17,940		17,940
SFR mortgage		-		-		-		1,337		234,865		236,202
Dairy & livestock and agribusiness		-		-		-		829		346,460		347,289
Municipal lease finance receivables		-		-		-		-		70,243		70,243
Consumer and other loans		1		-		1		552		63,676		64,229

Total gross loans, excluding PCI loans	$	1,172	$	-	$	1,172	$	10,716	$	4,796,150	$	4,808,038

(1)

As of December 31, 2017, $3.6 million of nonaccruing loans were current, $376,000 were 60-89 days past due and $6.8 million were 90+ days past due.

(2)

Speculative construction loans are generally for properties where there is no identified buyer or renter.

Schedule of Held-for-Investment Loans, Excluding PCI Loans, Individually Evaluated for Impairment by Class of Loans

The following tables present information for held-for-investment loans, excluding PCI loans, individually evaluated for impairment by type of loans, as and for the periods presented.


	As of and For the Six Months Ended June 30, 2018
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
					(Dollars in thousands)
With no related allowance recorded:
Commercial and industrial	$	355	$	864	$	-	$	378	$	4
SBA		1,174		1,302		-		1,204		23
Real estate:
Commercial real estate
Owner occupied		4,294		4,747		-		4,331		-
Non-owner occupied		3,447		4,894		-		3,565		44
Construction
Speculative		-		-		-		-		-
Non-speculative		-		-		-		-		-
SFR mortgage		4,120		4,860		-		4,159		55
Dairy & livestock and agribusiness		800		1,091		-		819		-
Municipal lease finance receivables		-		-		-		-		-
Consumer and other loans		506		716		-		568		-

Total		14,696		18,474		-		15,024		126

With a related allowance recorded:
Commercial and industrial		-		-		-		-		-
SBA		-		-		-		-		-
Real estate:
Commercial real estate
Owner occupied		-		-		-		-		-
Non-owner occupied		-		-		-		-		-
Construction
Speculative		-		-		-		-		-
Non-speculative		-		-		-		-		-
SFR mortgage		13		13		13		13		-
Dairy & livestock and agribusiness		-		-		-		-		-
Municipal lease finance receivables		-		-		-		-		-
Consumer and other loans		3		3		3		3		-

Total		16		16		16		16		-

Total impaired loans	$	14,712	$	18,490	$	16	$	15,040	$	126


	As of and For the Six Months Ended June 30, 2017
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
					(Dollars in thousands)
With no related allowance recorded:
Commercial and industrial	$	1,465	$	1,939	$	-	$	1,572	$	13
SBA		2,472		2,750		-		2,538		32
Real estate:
Commercial real estate
Owner occupied		5,541		5,866		-		5,240		69
Non-owner occupied		13,017		15,469		-		12,908		798
Construction
Speculative		-		-		-		-		-
Non-speculative		-		-		-		-		-
SFR mortgage		4,195		4,983		-		4,242		73
Dairy & livestock and agribusiness		829		1,091		-		1,123		1
Municipal lease finance receivables		-		-		-		-		-
Consumer and other loans		734		941		-		752		9

Total		28,253		33,039		-		28,375		995

With a related allowance recorded:
Commercial and industrial		140		187		13		157		1
SBA		6		23		6		9		-
Real estate:
Commercial real estate
Owner occupied		-		-		-		-		-
Non-owner occupied		-		-		-		-		-
Construction
Speculative		-		-		-		-		-
Non-speculative		-		-		-		-		-
SFR mortgage		-		-		-		-		-
Dairy & livestock and agribusiness		-		-		-		-		-
Municipal lease finance receivables		-		-		-		-		-
Consumer and other loans		397		402		94		399		-

Total		543		612		113		565		1

Total impaired loans	$	28,796	$	33,651	$	113	$	28,940	$	996


	As of December 31, 2017
	Recorded Investment		Unpaid Principal Balance		Related Allowance
			(Dollars in thousands)
With no related allowance recorded:
Commercial and industrial	$	440	$	980	$	-
SBA		1,530		1,699		-
Real estate:
Commercial real estate
Owner occupied		4,365		4,763		-
Non-owner occupied		3,768		5,107		-
Construction
Speculative		-		-		-
Non-speculative		-		-		-
SFR mortgage		4,040		4,692		-
Dairy & livestock and agribusiness		829		1,091		-
Municipal lease finance receivables		-		-		-
Consumer and other loans		174		370		-

Total		15,146		18,702		-

With a related allowance recorded:
Commercial and industrial		-		-		-
SBA		1		18		1
Real estate:
Commercial real estate
Owner occupied		-		-		-
Non-owner occupied		-		-		-
Construction
Speculative		-		-		-
Non-speculative		-		-		-
SFR mortgage		-		-		-
Dairy & livestock and agribusiness		-		-		-
Municipal lease finance receivables		-		-		-
Consumer and other loans		378		391		74

Total		379		409		75

Total impaired loans	$	15,525	$	19,111	$	75

Summary of Activity Related to Troubled Debt Restructurings

The following table provides a summary of the activity related to TDRs for the periods presented.


	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2018			2017			2018			2017
	(Dollars in thousands)
Performing TDRs:
Beginning balance	$	4,285		$	19,702		$	4,809		$	19,233
New modifications		311			-			311			3,143
Payoffs/payments, net and other		(66	)		16			(590	)		(2,987	)
TDRs returned to accrual status		-			-			-			329
TDRs placed on nonaccrual status		-			(3,144	)		-			(3,144	)

Ending balance	$	4,530		$	16,574		$	4,530		$	16,574

Nonperforming TDRs:
Beginning balance	$	3,909		$	1,407		$	4,200		$	1,626
New modifications		38			-			38			2,066
Charge-offs		-			-			-			-
Payoffs/payments, net and other		(55	)		(160	)		(346	)		(2,116	)
TDRs returned to accrual status		-			-			-			(329	)
TDRs placed on nonaccrual status		-			3,144			-			3,144

Ending balance	$	3,892		$	4,391		$	3,892		$	4,391

Total TDRs	$	8,422		$	20,965		$	8,422		$	20,965

Summary of Loans Modified as Troubled Debt Restructurings

The following table summarizes loans modified as troubled debt restructurings for the period presented.

Modifications (1)


	For the Three Months Ended June 30, 2018
	Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Outstanding Recorded Investment at June 30, 2018		Financial Effect Resulting From Modifications (2)
	(Dollars in thousands)
Commercial and industrial:
Interest rate reduction		-	$	-	$	-	$	-	$	-
Change in amortization period or maturity		1		38		38		31		-
Real estate:
Commercial real estate:
Owner occupied
Interest rate reduction		-		-		-		-		-
Change in amortization period or maturity		-		-		-		-		-
Non-owner occupied
Interest rate reduction		-		-		-		-		-
Change in amortization period or maturity		-		-		-		-		-
SFR mortgage:
Interest rate reduction		1		311		311		307		-
Change in amortization period or maturity		-		-		-		-		-
Dairy & livestock and agribusiness:
Interest rate reduction		-		-		-		-		-
Change in amortization period or maturity		-		-		-		-		-
Consumer:
Interest rate reduction		-		-		-		-		-
Change in amortization period or maturity		-		-		-		-		-

Total loans		2	$	349	$	349	$	338	$	-

For the Three Months Ended June 30, 2017

Number of
Loans

Pre-Modification
Outstanding
Recorded
Investment

Post-Modification
Outstanding
Recorded
Investment

Outstanding
Recorded
Investment at
June 30, 2017

Financial Effect
Resulting From
Modifications (2)

(Dollars in thousands)

Commercial and industrial:

Interest rate reduction