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Loans and Lease Finance Receivables and Allowance for Loan Losses | 9 Months Ended
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Sep. 30, 2018
Receivables [Abstract] |
Loans and Lease Finance Receivables and Allowance for Loan Losses |
7. | LOANS AND LEASE FINANCE RECEIVABLES AND ALLOWANCE FOR LOAN LOSSES
The following table provides a summary of the Company’s total loans and lease finance receivables, excluding PCI loans, by type.
|  | September 30, 2018 |  | December 31, 2017
|  | (Dollars in thousands)
Commercial and industrial |  | $ | 1,021,906 |  |  | $ | 513,325 |
SBA |  |  | 357,052 |  |  |  | 122,055 |
Real estate: |  |  |  |  |  |  |  |
Commercial real estate |  |  | 5,268,740 |  |  |  | 3,376,713 |
Construction |  |  | 123,274 |  |  |  | 77,982 |
SFR mortgage |  |  | 292,516 |  |  |  | 236,202 |
Dairy & livestock and agribusiness |  |  | 304,598 |  |  |  | 347,289 |
Municipal lease finance receivables |  |  | 67,581 |  |  |  | 70,243 |
Consumer and other loans |  |  | 134,796 |  |  |  | 64,229 |
Gross loans, excluding PCI loans |  |  | 7,570,463 |  |  |  | 4,808,038 |
Less: Deferred loan fees, net |  |  | (5,264 | ) |  |  | (6,289 | )
Gross loans, excluding PCI loans, net of deferred loan fees |  |  | 7,565,199 |  |  |  | 4,801,749 |
Less: Allowance for loan losses |  |  | (59,802 | ) |  |  | (59,218 | )
Net loans, excluding PCI loans |  |  | 7,505,397 |  |  |  | 4,742,531 |
PCI Loans |  |  | 17,260 |  |  |  | 30,908 |
Discount on PCI loans |  |  | - |  |  |  | (2,026 | )
Less: Allowance for loan losses |  |  | (205 | ) |  |  | (367 | )
PCI loans, net |  |  | 17,055 |  |  |  | 28,515 |
Total loans and lease finance receivables |  | $ | 7,522,452 |  |  | $ | 4,771,046 |
As of September 30, 2018, 75.09% of the Company’s total gross loan portfolio (excluding PCI loans) consisted of real estate loans, 69.60% of which consisted of commercial real estate loans. Substantially all of the Company’s real estate loans and construction loans are secured by real properties located in California. As of September 30, 2018, $219.6 million, or 4.17% of the total commercial real estate loans included loans secured by farmland, compared to $206.1 million, or 6.10%, at December 31, 2017. The loans secured by farmland included $128.8 million for loans secured by dairy & livestock land and $90.8 million for loans secured by agricultural land at September 30, 2018, compared to $118.2 million for loans secured by dairy & livestock land and $87.9 million for loans secured by agricultural land at December 31, 2017. As of September 30, 2018, dairy & livestock and agribusiness loans of $304.6 million were comprised of $251.4 million for dairy & livestock loans and $53.2 million for agribusiness loans, compared to $310.6 million for dairy & livestock loans and $36.7 million for agribusiness loans at December 31, 2017. At September 30, 2018, the Company held approximately $3.70 billion of total fixed rate loans, including PCI loans. At September 30, 2018 and December 31, 2017, loans totaling $5.53 billion and $3.68 billion, respectively, were pledged to secure the borrowings and available lines of credit from the FHLB and the Federal Reserve Bank. There were no outstanding loans held-for-sale as of September 30, 2018 and December 31, 2017. Credit Quality Indicators An important element of our approach to credit risk management is our loan risk rating system. The originating officer assigns each loan an initial risk rating, which is reviewed and confirmed or changed, as appropriate, by credit management. Approvals are made based upon the amount of inherent credit risk specific to the transaction and are reviewed for appropriateness by senior line and credit management personnel. Credits are monitored by line and credit management personnel for deterioration or improvement in a borrower’s financial condition, which would impact the ability of the borrower to perform under the contract. Risk ratings are adjusted as necessary. Loans are risk rated into the following categories (Credit Quality Indicators): Pass, Special Mention, Substandard, Doubtful and Loss. Each of these groups is assessed for the proper amount to be used in determining the adequacy of our allowance for losses. These categories can be described as follows: Pass — These loans, including loans on the Bank’s internal watch list, range from minimal credit risk to lower than average, but still acceptable, credit risk. Watch list loans usually require more than normal management attention. Loans on the watch list may involve borrowers with adverse financial trends, higher debt/equity ratios, or weaker liquidity positions, but not to the degree of being considered a defined weakness or problem loan where risk of loss may be apparent. Special Mention — Loans assigned to this category have potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in the deterioration of the repayment prospects for the asset or the Company’s credit position at some future date. Special mention assets are not adversely classified and do not expose the Company to sufficient risk to warrant adverse classification. Substandard — Loans classified as substandard are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Assets so classified must have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt. Substandard loans are characterized by the distinct possibility that the Company will sustain some loss if deficiencies are not corrected. Doubtful — Loans classified as doubtful have all the weaknesses inherent in those classified substandard with the added characteristic that the weaknesses make collection or the liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. Loss — Loans classified as loss are considered uncollectible and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the loan has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off this asset with insignificant value even though partial recovery may be affected in the future. The following table summarizes loans by type, excluding PCI loans, according to our internal risk ratings for the periods presented.
|  | September 30, 2018
|  | Pass |  | Special Mention |  | Substandard (1) |  | Doubtful & Loss |  | Total
|  | (Dollars in thousands)
Commercial and industrial |  | $ | 980,421 |  |  | $ | 33,628 |  |  | $ | 7,857 |  |  | $ | - |  |  | $ | 1,021,906 |
SBA |  |  | 345,126 |  |  |  | 5,469 |  |  |  | 6,457 |  |  |  | - |  |  |  | 357,052 |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner occupied |  |  | 1,931,062 |  |  |  | 97,990 |  |  |  | 12,079 |  |  |  | - |  |  |  | 2,041,131 |
Non-owner occupied |  |  | 3,215,070 |  |  |  | 5,582 |  |  |  | 6,957 |  |  |  | - |  |  |  | 3,227,609 |
Construction |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Speculative |  |  | 32,081 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 32,081 |
Non-speculative |  |  | 91,193 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 91,193 |
SFR mortgage |  |  | 284,852 |  |  |  | 4,047 |  |  |  | 3,617 |  |  |  | - |  |  |  | 292,516 |
Dairy & livestock and agribusiness |  |  | 268,328 |  |  |  | 26,877 |  |  |  | 9,393 |  |  |  | - |  |  |  | 304,598 |
Municipal lease finance receivables |  |  | 67,045 |  |  |  | 536 |  |  |  | - |  |  |  | - |  |  |  | 67,581 |
Consumer and other loans |  |  | 132,637 |  |  |  | 740 |  |  |  | 1,419 |  |  |  | - |  |  |  | 134,796 |
Total gross loans, excluding PCI loans |  | $ | 7,347,815 |  |  | $ | 174,869 |  |  | $ | 47,779 |  |  | $ | - |  |  | $ | 7,570,463 |
| (1) | Includes $15.1 million of classified loans acquired from CB in the third quarter of 2018.
|  | 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 |
Allowance for Loan Losses (“ALLL”) The Bank’s Audit and Director Loan Committees provide Board oversight of the ALLL process and approves the ALLL on a quarterly basis. Our methodology for assessing the appropriateness of the allowance is conducted on a regular basis and considers the Bank’s overall loan portfolio. Refer to Note 3 – Summary of Significant Accounting Policies of the 2017 Annual Report on Form 10-K for the year ended December 31, 2017 for a more detailed discussion concerning the allowance for loan losses. Management believes that the ALLL was appropriate at September 30, 2018 and December 31, 2017. No assurance can be given that economic conditions which adversely affect the Company’s service areas or other circumstances will not be reflected in increased provisions for loan losses in the future. 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 September 30, 2018
|  | Ending Balance June 30, 2018 |  | Charge-offs |  | Recoveries |  | (Recapture of) Provision for Loan Losses |  | Ending Balance September 30, 2018
|  | (Dollars in thousands)
Commercial and industrial |  | $ | 6,970 |  |  | $ | - |  |  | $ | 44 |  |  | $ | 477 |  |  | $ | 7,491 |
SBA |  |  | 841 |  |  |  | (257 | ) |  |  | 5 |  |  |  | 369 |  |  |  | 958 |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate |  |  | 42,597 |  |  |  | - |  |  |  | - |  |  |  | (1,056 | ) |  |  | 41,541 |
Construction |  |  | 1,003 |  |  |  | - |  |  |  | 15 |  |  |  | 115 |  |  |  | 1,133 |
SFR mortgage |  |  | 2,155 |  |  |  | - |  |  |  | - |  |  |  | (30 | ) |  |  | 2,125 |
Dairy & livestock and agribusiness |  |  | 4,351 |  |  |  | - |  |  |  | - |  |  |  | 673 |  |  |  | 5,024 |
Municipal lease finance receivables |  |  | 808 |  |  |  | - |  |  |  | - |  |  |  | 7 |  |  |  | 815 |
Consumer and other loans |  |  | 642 |  |  |  | (1 | ) |  |  | 118 |  |  |  | (44 | ) |  |  | 715 |
PCI loans |  |  | 216 |  |  |  | - |  |  |  | - |  |  |  | (11 | ) |  |  | 205 |
Total allowance for loan losses |  | $ | 59,583 |  |  | $ | (258 | ) |  | $ | 182 |  |  | $ | 500 |  |  | $ | 60,007 |
|  | For the Three Months Ended September 30, 2017
|  | Ending Balance June 30, 2017 |  | Charge-offs |  | Recoveries |  | (Recapture of) Provision for Loan Losses |  | Ending Balance September 30, 2017
|  | (Dollars in thousands)
Commercial and industrial |  | $ | 8,060 |  |  | $ | (138 | ) |  | $ | 12 |  |  | $ | 129 |  |  | $ | 8,063 |
SBA |  |  | 913 |  |  |  | - |  |  |  | 5 |  |  |  | (54 | ) |  |  | 864 |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate |  |  | 39,927 |  |  |  | - |  |  |  | - |  |  |  | 943 |  |  |  | 40,870 |
Construction |  |  | 1,059 |  |  |  | - |  |  |  | 2,055 |  |  |  | (2,181 | ) |  |  | 933 |
SFR mortgage |  |  | 2,369 |  |  |  | - |  |  |  | - |  |  |  | (49 | ) |  |  | 2,320 |
Dairy & livestock and agribusiness |  |  | 5,440 |  |  |  | - |  |  |  | - |  |  |  | (66 | ) |  |  | 5,374 |
Municipal lease finance receivables |  |  | 852 |  |  |  | - |  |  |  | - |  |  |  | 54 |  |  |  | 906 |
Consumer and other loans |  |  | 922 |  |  |  | (9 | ) |  |  | 5 |  |  |  | (48 | ) |  |  | 870 |
PCI loans |  |  | 659 |  |  |  | - |  |  |  | - |  |  |  | (228 | ) |  |  | 431 |
Total allowance for loan losses |  | $ | 60,201 |  |  | $ | (147 | ) |  | $ | 2,077 |  |  | $ | (1,500 | ) |  | $ | 60,631 |
|  | For the Nine Months Ended September 30, 2018
|  | Ending Balance December 31, 2017 |  | Charge-offs |  | Recoveries |  | (Recapture of) Provision for Loan Losses |  | Ending Balance September 30, 2018
|  | (Dollars in thousands)
Commercial and industrial |  | $ | 7,280 |  |  | $ | - |  |  | $ | 81 |  |  | $ | 130 |  |  | $ | 7,491 |
SBA |  |  | 869 |  |  |  | (257 | ) |  |  | 15 |  |  |  | 331 |  |  |  | 958 |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate |  |  | 41,722 |  |  |  | - |  |  |  | - |  |  |  | (181 | ) |  |  | 41,541 |
Construction |  |  | 984 |  |  |  | - |  |  |  | 1,945 |  |  |  | (1,796 | ) |  |  | 1,133 |
SFR mortgage |  |  | 2,112 |  |  |  | - |  |  |  | - |  |  |  | 13 |  |  |  | 2,125 |
Dairy & livestock and agribusiness |  |  | 4,647 |  |  |  | - |  |  |  | 19 |  |  |  | 358 |  |  |  | 5,024 |
Municipal lease finance receivables |  |  | 851 |  |  |  | - |  |  |  | - |  |  |  | (36 | ) |  |  | 815 |
Consumer and other loans |  |  | 753 |  |  |  | (10 | ) |  |  | 129 |  |  |  | (157 | ) |  |  | 715 |
PCI loans |  |  | 367 |  |  |  | - |  |  |  | - |  |  |  | (162 | ) |  |  | 205 |
Total allowance for loan losses |  | $ | 59,585 |  |  | $ | (267 | ) |  | $ | 2,189 |  |  | $ | (1,500 | ) |  | $ | 60,007 |
|  | For the Nine Months Ended September 30, 2017
|  | Ending Balance December 31, 2016 |  | Charge-offs |  | Recoveries |  | (Recapture of) Provision for Loan Losses |  | Ending Balance September 30, 2017
|  | (Dollars in thousands)
Commercial and industrial |  | $ | 8,154 |  |  | $ | (138 | ) |  | $ | 106 |  |  | $ | (59 | ) |  | $ | 8,063 |
SBA |  |  | 871 |  |  |  | - |  |  |  | 47 |  |  |  | (54 | ) |  |  | 864 |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate |  |  | 37,443 |  |  |  | - |  |  |  | 154 |  |  |  | 3,273 |  |  |  | 40,870 |
Construction |  |  | 1,096 |  |  |  | - |  |  |  | 5,774 |  |  |  | (5,937 | ) |  |  | 933 |
SFR mortgage |  |  | 2,287 |  |  |  | - |  |  |  | 64 |  |  |  | (31 | ) |  |  | 2,320 |
Dairy & livestock and agribusiness |  |  | 8,541 |  |  |  | - |  |  |  | 19 |  |  |  | (3,186 | ) |  |  | 5,374 |
Municipal lease finance receivables |  |  | 941 |  |  |  | - |  |  |  | - |  |  |  | (35 | ) |  |  | 906 |
Consumer and other loans |  |  | 988 |  |  |  | (11 | ) |  |  | 76 |  |  |  | (183 | ) |  |  | 870 |
PCI loans |  |  | 1,219 |  |  |  | - |  |  |  | - |  |  |  | (788 | ) |  |  | 431 |
Total allowance for loan losses |  | $ | 61,540 |  |  | $ | (149 | ) |  | $ | 6,240 |  |  | $ | (7,000 | ) |  | $ | 60,631 |
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.
|  | September 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 |  | $ | 3,168 |  |  | $ | 1,018,738 |  |  | $ | - |  |  | $ | - |  |  | $ | 7,491 |  |  | $ | - |
SBA |  |  | 3,593 |  |  |  | 353,459 |  |  |  | - |  |  |  | - |  |  |  | 958 |  |  |  | - |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate |  |  | 6,348 |  |  |  | 5,262,392 |  |  |  | - |  |  |  | - |  |  |  | 41,541 |  |  |  | - |
Construction |  |  | - |  |  |  | 123,274 |  |  |  | - |  |  |  | - |  |  |  | 1,133 |  |  |  | - |
SFR mortgage |  |  | 5,492 |  |  |  | 287,024 |  |  |  | - |  |  |  | 13 |  |  |  | 2,112 |  |  |  | - |
Dairy & livestock and agribusiness |  |  | 775 |  |  |  | 303,823 |  |  |  | - |  |  |  | - |  |  |  | 5,024 |  |  |  | - |
Municipal lease finance receivables |  |  | - |  |  |  | 67,581 |  |  |  | - |  |  |  | - |  |  |  | 815 |  |  |  | - |
Consumer and other loans |  |  | 807 |  |  |  | 133,989 |  |  |  | - |  |  |  | 70 |  |  |  | 645 |  |  |  | - |
PCI loans |  |  | - |  |  |  | - |  |  |  | 17,260 |  |  |  | - |  |  |  | - |  |  |  | 205 |
Total |  | $ | 20,183 |  |  | $ | 7,550,280 |  |  | $ | 17,260 |  |  | $ | 83 |  |  | $ | 59,719 |  |  | $ | 205 |
|  | September 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 |  | $ | 745 |  |  | $ | 527,914 |  |  | $ | - |  |  | $ | 2 |  |  | $ | 8,061 |  |  | $ | - |
SBA |  |  | 2,273 |  |  |  | 121,818 |  |  |  | - |  |  |  | 3 |  |  |  | 861 |  |  |  | - |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate |  |  | 8,168 |  |  |  | 3,324,349 |  |  |  | - |  |  |  | - |  |  |  | 40,870 |  |  |  | - |
Construction |  |  | - |  |  |  | 74,148 |  |  |  | - |  |  |  | - |  |  |  | 933 |  |  |  | - |
SFR mortgage |  |  | 4,550 |  |  |  | 240,112 |  |  |  | - |  |  |  | - |  |  |  | 2,320 |  |  |  | - |
Dairy & livestock and agribusiness |  |  | 829 |  |  |  | 269,653 |  |  |  | - |  |  |  | - |  |  |  | 5,374 |  |  |  | - |
Municipal lease finance receivables |  |  | - |  |  |  | 71,352 |  |  |  | - |  |  |  | - |  |  |  | 906 |  |  |  | - |
Consumer and other loans |  |  | 743 |  |  |  | 69,672 |  |  |  | - |  |  |  | 83 |  |  |  | 787 |  |  |  | - |
PCI loans |  |  | - |  |  |  | - |  |  |  | 36,548 |  |  |  | - |  |  |  | - |  |  |  | 431 |
Total |  | $ | 17,308 |  |  | $ | 4,699,018 |  |  | $ | 36,548 |  |  | $ | 88 |  |  | $ | 60,112 |  |  | $ | 431 |
Past Due and Nonperforming Loans We seek to manage asset quality and control credit risk through diversification of the loan portfolio and the application of policies designed to promote sound underwriting and loan monitoring practices. The Bank’s Credit Management Division is in charge of monitoring asset quality, establishing credit policies and procedures and enforcing the consistent application of these policies and procedures across the Bank. Reviews of nonperforming, past due loans and larger credits, designed to identify potential charges to the allowance for loan losses, and to determine the adequacy of the allowance, are conducted on an ongoing basis. These reviews consider such factors as the financial strength of borrowers and any guarantors, the value of the applicable collateral, loan loss experience, estimated loan losses, growth in the loan portfolio, prevailing economic conditions and other factors. Refer to Note 3 – Summary of Significant Accounting Policies, included in our Annual Report on Form 10-K for the year ended December 31, 2017, for additional discussion concerning the Bank’s policy for past due and nonperforming loans. A loan is reported as a Troubled Debt Restructuring (“TDR”) when the Bank grants a concession(s) to a borrower experiencing financial difficulties that the Bank would not otherwise consider. Examples of such concessions include a reduction in the interest rate, deferral of principal or accrued interest, extending the payment due dates or loan maturity date(s), or providing a lower interest rate than would be normally available for new debt of similar risk. As a result of one or more of these concessions, restructured loans are classified as impaired. Impairment reserves on non-collateral dependent restructured loans are measured by comparing the present value of expected future cash flows on the restructured loans discounted at the interest rate of the original loan agreement to the carrying value of the loan. These impairment reserves are recognized as a specific component to be provided for in the allowance for loan losses. Generally, when loans are identified as impaired they are moved to our Special Assets Department. When we identify a loan as impaired, we measure the loan for potential impairment using discounted cash flows, unless the loan is determined to be collateral dependent. In these cases, we use the current fair value of collateral, less selling costs. Generally, the determination of fair value is established through obtaining external appraisals of the collateral. 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.
|  | September 30, 2018
|  | 30-59 Days Past Due |  | 60-89 Days Past Due |  | Total Past Due and Accruing |  | Nonaccrual (1) (3) |  | Current |  | Total Loans and Financing Receivables
|  | (Dollars in thousands)
Commercial and industrial |  | $ | 274 |  |  | $ | - |  |  | $ | 274 |  |  | $ | 3,026 |  |  | $ | 1,018,606 |  |  | $ | 1,021,906 |
SBA |  |  | - |  |  |  | 123 |  |  |  | 123 |  |  |  | 3,005 |  |  |  | 353,924 |  |  |  | 357,052 |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner occupied |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 615 |  |  |  | 2,040,516 |  |  |  | 2,041,131 |
Non-owner occupied |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 5,241 |  |  |  | 3,222,368 |  |  |  | 3,227,609 |
Construction |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Speculative (2) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 32,081 |  |  |  | 32,081 |
Non-speculative |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 91,193 |  |  |  | 91,193 |
SFR mortgage |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 2,961 |  |  |  | 289,555 |  |  |  | 292,516 |
Dairy & livestock and agribusiness |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 775 |  |  |  | 303,823 |  |  |  | 304,598 |
Municipal lease finance receivables |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 67,581 |  |  |  | 67,581 |
Consumer and other loans |  |  | 98 |  |  |  | - |  |  |  | 98 |  |  |  | 807 |  |  |  | 133,891 |  |  |  | 134,796 |
Total gross loans, excluding PCI loans |  | $ | 372 |  |  | $ | 123 |  |  | $ | 495 |  |  | $ | 16,430 |  |  | $ | 7,553,538 |  |  | $ | 7,570,463 |
| (1) | As of September 30, 2018, $2.6 million of nonaccruing loans were current, $562,000 were 30-59 days past due, $1.3 million were 60-89 days past due and $12.0 million were 90+ days past due.
| (2) | Speculative construction loans are generally for properties where there is no identified buyer or renter.
| (3) | Includes $8.6 million of nonaccrual loans acquired from CB in the third quarter of 2018.
|  | 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.
Impaired Loans At September 30, 2018, the Company had impaired loans, excluding PCI loans, of $20.2 million. Impaired loans included $5.9 million of nonaccrual commercial real estate loans, $3.0 million of nonaccrual commercial and industrial loans, $3.0 million of nonaccrual Small Business Administration (“SBA”) loans, $3.0 million of nonaccrual single-family residential (“SFR”) mortgage loans, $807,000 of nonaccrual consumer and other loans, and $775,000 of nonaccrual dairy & livestock and agribusiness loans. These impaired loans included $7.3 million of loans whose terms were modified in a troubled debt restructuring, of which $3.5 million were classified as nonaccrual. The remaining balance of $3.8 million consisted of 14 loans performing according to the restructured terms. The impaired loans had a specific allowance of $83,000 at September 30, 2018. At December 31, 2017, the Company had classified as impaired, loans, excluding PCI loans, with a balance of $15.5 million with a related allowance of $75,000. 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 Nine Months Ended September 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 |  | $ | 3,168 |  |  | $ | 3,829 |  |  | $ | - |  |  | $ | 3,439 |  |  | $ | 6 |
SBA |  |  | 3,593 |  |  |  | 5,779 |  |  |  | - |  |  |  | 4,457 |  |  |  | 34 |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner occupied |  |  | 615 |  |  |  | 726 |  |  |  | - |  |  |  | 644 |  |  |  | - |
Non-owner occupied |  |  | 5,733 |  |  |  | 6,385 |  |  |  | - |  |  |  | 5,904 |  |  |  | 24 |
Construction |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Speculative |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Non-speculative |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
SFR mortgage |  |  | 5,479 |  |  |  | 6,449 |  |  |  | - |  |  |  | 5,679 |  |  |  | 59 |
Dairy & livestock and agribusiness |  |  | 775 |  |  |  | 1,091 |  |  |  | - |  |  |  | 808 |  |  |  | - |
Municipal lease finance receivables |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Consumer and other loans |  |  | 737 |  |  |  | 1,025 |  |  |  | - |  |  |  | 867 |  |  |  | - |
Total |  |  | 20,100 |  |  |  | 25,284 |  |  |  | - |  |  |  | 21,798 |  |  |  | 123 |
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 |  |  | 70 |  |  |  | 101 |  |  |  | 70 |  |  |  | 85 |  |  |  | - |
Total |  |  | 83 |  |  |  | 114 |  |  |  | 83 |  |  |  | 98 |  |  |  | - |
Total impaired loans |  | $ | 20,183 |  |  | $ | 25,398 |  |  | $ | 83 |  |  | $ | 21,896 |  |  | $ | 123 |
|  | As of and For the Nine Months Ended September 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 |  | $ | 726 |  |  | $ | 1,256 |  |  | $ | - |  |  | $ | 870 |  |  | $ | 15 |
SBA |  |  | 2,270 |  |  |  | 2,573 |  |  |  | - |  |  |  | 2,489 |  |  |  | 38 |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner occupied |  |  | 4,313 |  |  |  | 4,625 |  |  |  | - |  |  |  | 4,361 |  |  |  | 42 |
Non-owner occupied |  |  | 3,855 |  |  |  | 5,155 |  |  |  | - |  |  |  | 4,010 |  |  |  | 72 |
Construction |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Speculative |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Non-speculative |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
SFR mortgage |  |  | 4,550 |  |  |  | 5,345 |  |  |  | - |  |  |  | 4,620 |  |  |  | 109 |
Dairy & livestock and agribusiness |  |  | 829 |  |  |  | 1,091 |  |  |  | - |  |  |  | 1,035 |  |  |  | 1 |
Municipal lease finance receivables |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Consumer and other loans |  |  | 356 |  |  |  | 571 |  |  |  | - |  |  |  | 381 |  |  |  | - |
Total |  |  | 16,899 |  |  |  | 20,616 |  |  |  | - |  |  |  | 17,766 |  |  |  | 277 |
With a related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial |  |  | 19 |  |  |  | 20 |  |  |  | 2 |  |  |  | 42 |  |  |  | 1 |
SBA |  |  | 3 |  |  |  | 20 |  |  |  | 3 |  |  |  | 7 |  |  |  | - |
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 |  |  | 387 |  |  |  | 394 |  |  |  | 83 |  |  |  | 390 |  |  |  | - |
Total |  |  | 409 |  |  |  | 434 |  |  |  | 88 |  |  |  | 439 |  |  |  | 1 |
Total impaired loans |  | $ | 17,308 |  |  | $ | 21,050 |  |  | $ | 88 |  |  | $ | 18,205 |  |  | $ | 278 |
|  | 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 |
The Company recognizes the charge-off of the impairment allowance on impaired loans in the period in which a loss is identified for collateral dependent loans. Therefore, the majority of the nonaccrual loans as of September 30, 2018, December 31, 2017 and September 30, 2017 have already been written down to the estimated net realizable value. An allowance is recorded on impaired loans for the following: nonaccrual loans where a charge-off is not yet processed, nonaccrual SFR mortgage loans where there is a potential modification in process, or on smaller balance non-collateral dependent loans. Reserve for Unfunded Loan Commitments The allowance for off-balance sheet credit exposure relates to commitments to extend credit, letters of credit and undisbursed funds on lines of credit. The Company evaluates credit risk associated with the off-balance sheet loan commitments at the same time it evaluates credit risk associated with the loan and lease portfolio. There was no provision or recapture of provision for unfunded loan commitments for the three and nine months ended September 30, 2018, and 2017. As a result of the acquisition of CB, the reserve for unfunded loan commitments increased by $2.9 million in the third quarter of 2018. As of September 30, 2018 and December 31, 2017, the balance in this reserve was $9.2 million and $6.3 million, respectively, and was included in other liabilities. Troubled Debt Restructurings (“TDRs”) Loans that are reported as TDRs are considered impaired and charge-off amounts are taken on an individual loan basis, as deemed appropriate. The majority of restructured loans are loans for which the terms of repayment have been renegotiated, resulting in a reduction in interest rate or deferral of principal. Refer to Note 3 – Summary of Significant Accounting Policies, included in our Annual Report on Form 10-K for the year ended December 31, 2017 for a more detailed discussion regarding TDRs. As of September 30, 2018, there were $7.3 million of loans classified as a TDR, of which $3.5 million were nonperforming and $3.8 million were performing. TDRs on accrual status are comprised of loans that were accruing interest at the time of restructuring or have demonstrated repayment performance in compliance with the restructured terms for a sustained period and for which the Company anticipates full repayment of both principal and interest. At September 30, 2018, performing TDRs were comprised of 10 SFR mortgage loans of $2.5 million, one SBA loan of $588,000, one commercial real estate loan of $492,000, and two commercial and industrial loans of $142,000. The majority of TDRs have no specific allowance allocated as any impairment amount is normally charged off at the time a probable loss is determined. We have allocated zero and $1,000 of specific allowance to TDRs as of September 30, 2018 and December 31, 2017, respectively. The following table provides a summary of the activity related to TDRs for the periods presented.
|  | For the Three Months Ended September 30, |  | For the Nine Months Ended September 30,
|  | 2018 |  | 2017 |  | 2018 |  | 2017
|  | (Dollars in thousands)
Performing TDRs: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 4,530 |  |  | $ | 16,574 |  |  | $ | 4,809 |  |  | $ | 19,233 |
New modifications |  |  | - |  |  |  | - |  |  |  | 311 |  |  |  | 3,143 |
Payoffs/payments, net and other |  |  | (777 | ) |  |  | (10,839 | ) |  |  | (1,367 | ) |  |  | (13,826 | )
TDRs returned to accrual status |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 329 |
TDRs placed on nonaccrual status |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (3,144 | )
Ending balance |  | $ | 3,753 |  |  | $ | 5,735 |  |  | $ | 3,753 |  |  | $ | 5,735 |
Nonperforming TDRs: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 3,892 |  |  | $ | 4,391 |  |  | $ | 4,200 |  |  | $ | 1,626 |
New modifications |  |  | 278 |  |  |  | - |  |  |  | 316 |  |  |  | 2,066 |
Charge-offs |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Payoffs/payments, net and other |  |  | (650 | ) |  |  | (81 | ) |  |  | (996 | ) |  |  | (2,197 | )
TDRs returned to accrual status |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (329 | )
TDRs placed on nonaccrual status |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 3,144 |
Ending balance |  | $ | 3,520 |  |  | $ | 4,310 |  |  | $ | 3,520 |  |  | $ | 4,310 |
Total TDRs |  | $ | 7,273 |  |  | $ | 10,045 |  |  | $ | 7,273 |  |  | $ | 10,045 |
The following table summarizes loans modified as troubled debt restructurings for the period presented. Modifications (1)
|  | For the Three Months Ended September 30, 2018
|  | Number of Loans |  | Pre-Modification Outstanding Recorded Investment |  | Post-Modification Outstanding Recorded Investment |  | Outstanding Recorded Investment at September 30, 2018 |  | Financial Effect Resulting From Modifications (2)
|  | (Dollars in thousands)
Commercial and industrial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate reduction |  |  | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Change in amortization period or maturity |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
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 |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
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 |  |  | 1 |  |  |  | 278 |  |  |  | 278 |  |  |  | 272 |  |  |  | - |
Total loans |  |  | 1 |  |  | $ | 278 |  |  | $ | 278 |  |  | $ | 272 |  |  | $ | - |
|  | For the Three Months Ended September 30, 2017
|  | Number of Loans |  | Pre-Modification Outstanding Recorded Investment |  |  | Post-Modification Outstanding Recorded Investment |  |  | Outstanding Recorded Investment at September 30, 2017 |  |  | Financial Effect Resulting From Modifications (2)
|  | (Dollars in thousands)
Commercial and industrial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate reduction |  |  | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Change in amortization period or maturity |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
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 |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
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 |  |  | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
|  | For the Nine Months Ended September 30, 2018
|  | Number of Loans |  | Pre-Modification Outstanding Recorded Investment |  | Post-Modification Outstanding Recorded Investment |  | Outstanding Recorded Investment at September 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 |  |  |  | 27 |  |  |  | - |
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 |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Change in amortization period or maturity |  |  | 1 |  |  |  | 311 |  |  |  | 311 |  |  |  | 304 |  |  |  | - |
Dairy & livestock and agribusiness: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate reduction |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Change in amortization period or maturity |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate reduction |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Change in amortization period or maturity |  |  | 1 |  |  |  | 278 |  |  |  | 278 |  |  |  | 272 |  |  |  | - |
Total loans |  |  | 3 |  |  | $ | 627 |  |  | $ | 627 |  |  | $ | 603 |  |  | $ | - |
|  | For the Nine Months Ended September 30, 2017
|  | Number of Loans |  | Pre-Modification Outstanding Recorded Investment |  | Post-Modification Outstanding Recorded Investment |  | Outstanding Recorded Investment at September 30, 2017 |  | Financial Effect Resulting From Modifications (2)
|  | (Dollars in thousands)
Commercial and industrial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate reduction |  |  | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Change in amortization period or maturity |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner occupied |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate reduction |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Change in amortization period or maturity |  |  | 1 |  |  |  | 3,143 |  |  |  | 3,143 |  |  |  | 3,143 |  |  |  | - |
Non-owner occupied |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate reduction |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Change in amortization period or maturity |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
SFR mortgage: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate reduction |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Change in amortization period or maturity |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Dairy & livestock and agribusiness: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate reduction |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Change in amortization period or maturity |  |  | 1 |  |  |  | 1,984 |  |  |  | 1,984 |  |  |  | 78 |  |  |  | - |
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate reduction |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Change in amortization period or maturity |  |  | 1 |  |  |  | 82 |  |  |  | 82 |  |  |  | 76 |  |  |  | - |
Total loans |  |  | 3 |  |  | $ | 5,209 |  |  | $ | 5,209 |  |  | $ | 3,297 |  |  | $ | - |
| (1) | The tables above exclude modified loans that were paid off prior to the end of the period.
| (2) | Financial effects resulting from modifications represent charge-offs and specific allowance recorded at modification date.
As of September 30, 2018, there were no loans that were previously modified as a TDR within the previous 12 months that subsequently defaulted during the three and nine months ended September 30, 2018. As of September 30, 2017, there was one commercial real estate loan with an outstanding balance of $3.1 million and one dairy & livestock and agribusiness loan with an outstanding balance of $78,000 that was modified as a TDR within the previous 12 months that subsequently defaulted during the nine months ended September 30, 2017.

X
- Definition The entire disclosure for financing receivables. Examples of financing receivables include, but are not limited to, loans, trade accounts receivables, notes receivable, credit cards, and receivables relating to a lessor's right(s) to payment(s) from a lease other than an operating lease that is recognized as assets. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -URI http://asc.fasb.org/topic&trid=2196771 + Details
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X
- References No definition available. + Details
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Namespace Prefix: | us-gaap_
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