	March 31, 2019			December 31, 2018
	(Dollars in thousands)
Commercial and industrial	$	957,126		$	1,002,209
SBA		337,957			350,043
Real estate:
Commercial real estate		5,388,866			5,394,229
Construction		121,912			122,782
SFR mortgage		285,787			296,504
Dairy & livestock and agribusiness		322,321			393,843
Municipal lease finance receivables		61,249			64,186
Consumer and other loans		120,768			128,429
Gross loans, excluding PCI loans		7,595,986			7,752,225
Less: Deferred loan fees, net		(4,479	)		(4,828	)
Gross loans, excluding PCI loans, net of deferred loan fees		7,591,507			7,747,397
Less: Allowance for loan losses		(65,021	)		(63,409	)
Net loans, excluding PCI loans		7,526,486			7,683,988
PCI Loans		15,356			17,214
Discount on PCI loans		-			-
Less: Allowance for loan losses		(180	)		(204	)
PCI loans, net		15,176			17,010
Total loans and lease finance receivables	$	7,541,662		$	7,700,998

As of March 31, 2019, 76.31% of the Company’s total gross loan portfolio (excluding PCI loans) consisted of real estate loans, 70.94% 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 March 31, 2019, $231.1 million, or 4.29% of the total commercial real estate loans included loans secured by farmland, compared to $229.8 million, or 4.26%, at December 31, 2018. The loans secured by farmland included $124.2 million for loans secured by dairy & livestock land and $106.9 million for loans secured by agricultural land at March 31, 2019, compared to $126.9 million for loans secured by dairy & livestock land and $102.9 million for loans secured by agricultural land at December 31, 2018. As of March 31, 2019, dairy & livestock and agribusiness loans of $322.3 million were comprised of $264.8 million for dairy & livestock loans and $57.6 million for agribusiness loans, compared to $340.5 million for dairy & livestock loans and $53.3 million for agribusiness loans at December 31, 2018.

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.

	March 31, 2019
	Pass		Special Mention		Substandard (1)		Doubtful & Loss		Total
	(Dollars in thousands)
Commercial and industrial	$	913,059	$	32,685	$	11,382	$	-	$	957,126
SBA		322,393		7,704		7,860		-		337,957
Real estate:
Commercial real estate
Owner occupied		1,986,030		96,262		16,849		-		2,099,141
Non-owner occupied		3,279,696		9,290		739		-		3,289,725
Construction
Speculative		120,801		-		-		-		120,801
Non-speculative		1,111		-		-		-		1,111
SFR mortgage		278,962		3,287		3,538		-		285,787
Dairy & livestock and agribusiness		261,438		50,451		10,432		-		322,321
Municipal lease finance receivables		60,745		504		-		-		61,249
Consumer and other loans		118,596		1,215		957		-		120,768
Total gross loans, excluding PCI loans	$	7,342,831	$	201,398	$	51,757	$	-	$	7,595,986

	December 31, 2018
	Pass		Special Mention		Substandard (1)		Doubtful & Loss		Total
	(Dollars in thousands)
Commercial and industrial	$	961,909	$	29,358	$	10,942	$	-	$	1,002,209
SBA		336,033		7,375		6,635		-		350,043
Real estate:
Commercial real estate
Owner occupied		2,008,169		95,841		13,980		-		2,117,990
Non-owner occupied		3,260,822		9,938		5,479		-		3,276,239
Construction
Speculative		118,233		-		-		-		118,233
Non-speculative		4,549		-		-		-		4,549
SFR mortgage		289,607		3,310		3,587		-		296,504
Dairy & livestock and agribusiness		350,044		34,586		9,213		-		393,843
Municipal lease finance receivables		63,650		536		-		-		64,186
Consumer and other loans		126,085		1,263		1,081		-		128,429
Total gross loans, excluding PCI loans	$	7,519,101	$	182,207	$	50,917	$	-	$	7,752,225

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 2018 Annual Report on Form 10-K for the year ended December 31, 2018 for a more detailed discussion concerning the allowance for loan losses.

Management believes that the ALLL was appropriate at March 31, 2019 and December 31, 2018. 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.

	For the Three Months Ended March 31, 2019
	Ending Balance December 31, 2018		Charge-offs			Recoveries		Provision for (Recapture of) Loan Losses			Ending Balance March 31, 2019
	(Dollars in thousands)
Commercial and industrial	$	7,520	$	-		$	110	$	(31	)	$	7,599
SBA		1,062		(20	)		5		232			1,279
Real estate:				-			-
Commercial real estate		44,934		-			-		1,144			46,078
Construction		981		-			3		(120	)		864
SFR mortgage		2,196		-			68		(76	)		2,188
Dairy & livestock and agribusiness		5,215		(78	)		-		562			5,699
Municipal lease finance receivables		775		-			-		(37	)		738
Consumer and other loans		726		(1	)		1		(150	)		576
PCI loans		204		-			-		(24	)		180
Total allowance for loan losses	$	63,613	$	(99	)	$	187	$	1,500		$	65,201

	For the Three Months Ended March 31, 2018
	Ending Balance December 31, 2017		Charge-offs			Recoveries		Provision for (Recapture of) Loan Losses			Ending Balance March 31, 2018
	(Dollars in thousands)
Commercial and industrial	$	7,280	$	-		$	10	$	209		$	7,499
SBA		869		-			5		10			884
Real estate:				-			-
Commercial real estate		41,722		-			-		141			41,863
Construction		984		-			1,334		(1,331	)		987
SFR mortgage		2,112		-			-		90			2,202
Dairy & livestock and agribusiness		4,647		-			-		19			4,666
Municipal lease finance receivables		851		-			-		(17	)		834
Consumer and other loans		753		(7	)		8		(66	)		688
PCI loans		367		-			-		(55	)		312
Total allowance for loan losses	$	59,585	$	(7	)	$	1,357	$	(1,000	)	$	59,935

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.

	March 31, 2019
	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	$	8,512	$	948,614	$	-	$	117	$	7,482	$	-
SBA		4,661		333,296		-		317		962		-
Real estate:
Commercial real estate		1,589		5,387,277		-		-		46,078		-
Construction		-		121,912		-		-		864		-
SFR mortgage		5,051		280,736		-		-		2,188		-
Dairy & livestock and agribusiness		-		322,321		-		-		5,699		-
Municipal lease finance receivables		-		61,249		-		-		738		-
Consumer and other loans		477		120,291		-		1		575		-
PCI loans		-		-		15,356		-		-		180
Total	$	20,290	$	7,575,696	$	15,356	$	435	$	64,586	$	180

	March 31, 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	$	432	$	513,797	$	-	$	-	$	7,499	$	-
SBA		1,201		122,231		-		-		884		-
Real estate:
Commercial real estate		7,992		3,403,224		-		-		41,863		-
Construction		-		79,898		-		-		987		-
SFR mortgage		3,576		234,042		-		-		2,202		-
Dairy & livestock and agribusiness		818		275,561		-		-		4,666		-
Municipal lease finance receivables		-		67,892		-		-		834		-
Consumer and other loans		438		63,721		-		-		688		-
PCI loans		-		-		25,861		-		-		312
Total	$	14,457	$	4,760,366	$	25,861	$	-	$	59,623	$	312

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, 2018, for additional discussion concerning the Bank’s policy for past due and nonperforming loans.

A loan is reported as a 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.

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.

	March 31, 2019
	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	$	339	$	30	$	369	$	8,388	$	948,369	$	957,126
SBA		601		-		601		4,098		333,258		337,957
Real estate:
Commercial real estate
Owner occupied		-		-		-		519		2,098,622		2,099,141
Non-owner occupied		124		-		124		615		3,288,986		3,289,725
Construction
Speculative (2)		-		-		-		-		120,801		120,801
Non-speculative		-		-		-		-		1,111		1,111
SFR mortgage		-		-		-		2,894		282,893		285,787
Dairy & livestock and agribusiness		-		-		-		-		322,321		322,321
Municipal lease finance receivables		-		-		-		-		61,249		61,249
Consumer and other loans		98		3		101		477		120,190		120,768
Total gross loans, excluding PCI loans	$	1,162	$	33	$	1,195	$	16,991	$	7,577,800	$	7,595,986

	December 31, 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	$	820	$	89	$	909	$	7,490	$	993,810	$	1,002,209
SBA		1,172		135		1,307		2,892		345,844		350,043
Real estate:
Commercial real estate
Owner occupied		2,439		350		2,789		589		2,114,612		2,117,990
Non-owner occupied		-		-		-		5,479		3,270,760		3,276,239
Construction
Speculative (2)		-		-		-		-		118,233		118,233
Non-speculative		-		-		-		-		4,549		4,549
SFR mortgage		-		285		285		2,937		293,282		296,504
Dairy & livestock and agribusiness		-		-		-		78		393,765		393,843
Municipal lease finance receivables		-		-		-		-		64,186		64,186
Consumer and other loans		-		-		-		486		127,943		128,429
Total gross loans, excluding PCI loans	$	4,431	$	859	$	5,290	$	19,951	$	7,726,984	$	7,752,225

At March 31, 2019, the Company had impaired loans, excluding PCI loans, of

$20.3

million. Impaired loans included

$8.4

million of nonaccrual commercial and industrial loans,

$2.9

million of nonaccrual single-family residential (“SFR”) mortgage loans,

$4.1

million of nonaccrual Small Business Administration (“SBA”) loans, $1.1 million of nonaccrual commercial real estate loans, and

$477,000

of nonaccrual consumer and other loans. These impaired loans included

$3.6

million of loans whose terms were modified in a troubled debt restructuring, of which

$277,000

were classified as nonaccrual. The remaining balance of

$3.3

million consisted of 12 loans performing according to the restructured terms. The impaired loans had a specific allowance of

$435,000

at March 31, 2019. At December 31, 2018, the Company had classified as impaired, loans, excluding PCI loans, with a balance of

$23.5 million with a related allowance of $561,000.

	As of and For the Three Months Ended March 31, 2019
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
			(Dollars in thousands)
With no related allowance recorded:
Commercial and industrial	$	8,208	$	12,317	$	-	$	8,230	$	2
SBA		3,400		5,779		-		3,511		11
Real estate:
Commercial real estate
Owner occupied		519		618		-		521		-
Non-owner occupied		1,070		1,231		-		1,084		7
Construction
Speculative		-		-		-		-		-
Non-speculative		-		-		-		-		-
SFR mortgage		5,051		5,865		-		5,082		21
Dairy & livestock and agribusiness		-		-		-		-		-
Municipal lease finance receivables		-		-		-		-		-
Consumer and other loans		476		625		-		482		-
Total		18,724		26,435		-		18,910		41
With a related allowance recorded:
Commercial and industrial		304		309		117		323		-
SBA		1,261		1,236		317		1,261		-
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		1		1		1		1		-
Total		1,566		1,546		435		1,585		-
Total impaired loans	$	20,290	$	27,981	$	435	$	20,495	$	41

	As of and For the Three Months Ended March 31, 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	$	432	$	986	$	—	$	461	$	2
SBA		1,201		1,327		—		1,220		12
Real estate:
Commercial real estate
Owner occupied		4,332		4,755		—		4,348		—
Non-owner occupied		3,660		5,033		—		3,715		22
Construction
Speculative		—		—		—		—		—
Non-speculative		—		—		—		—		—
SFR mortgage		3,576		4,236		—		3,599		25
Dairy & livestock and agribusiness		818		1,091		—		826		—
Municipal lease finance receivables		—		—		—		—		—
Consumer and other loans		438		640		—		519		—
Total		14,457		18,068		—		14,688		61
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		—		—		—		—		—
Dairy & livestock and agribusiness		—		—		—		—		—
Municipal lease finance receivables		—		—		—		—		—
Consumer and other loans		—		—		—		—		—
Total		—		—		—		—		—
Total impaired loans	$	14,457	$	18,068	$	—	$	14,688	$	61

	As of December 31, 2018
	Recorded Investment		Unpaid Principal Balance		Related Allowance
	(Dollars in thousands)
With no related allowance recorded:
Commercial and industrial	$	7,436	$	11,457	$	—
SBA		3,467		5,746		—
Real estate:
Commercial real estate
Owner occupied		589		705		—
Non-owner occupied		2,808		4,324		—
Construction
Speculative		—		—		—
Non-speculative		—		—		—
SFR mortgage		5,349		6,270		—
Dairy & livestock and agribusiness		—		—		—
Municipal lease finance receivables		—		—		—
Consumer and other loans		418		526		—
Total		20,067		29,028		—
With a related allowance recorded:
Commercial and industrial		189		191		3
SBA		—		—		—
Real estate:
Commercial real estate
Owner occupied		—		—		—
Non-owner occupied		3,143		3,144		478
Construction
Speculative		—		—		—
Non-speculative		—		—		—
SFR mortgage		—		—		—
Dairy & livestock and agribusiness		78		78		12
Municipal lease finance receivables		—		—		—
Consumer and other loans		68		100		68
Total		3,478		3,513		561
Total impaired loans	$	23,545	$	32,541	$	561

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 March 31, 2019, December 31, 2018 and March 31, 2018 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.

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 months ended March 31, 2019, and 2018. The acquisition of CB resulted in $2.9 million in reserve for unfunded loan commitments at fair value in the third quarter of 2018. As of March 31, 2019 and December 31, 2018, the balance in this reserve was $0.0 million and $9.0 million, respectively, and was included in other liabilities.

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, 2018 for a more detailed discussion regarding TDRs.

As of March 31, 2019, there were $0.0 million of loans classified as a TDR, of which $0.0 million were nonperforming and $0.0 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 March 31, 2019, performing TDRs were comprised of ten SFR mortgage loans of $0.0 million, one SBA loan of $0,000, one commercial real estate loan of $0,000, and two commercial and industrial loans of $0,000.

	For the Three Months Ended
	March 31,
	2019			2018
	(Dollars in thousands)
Performing TDRs:
Beginning balance	$	3,594		$	4,809
New modifications		-			-
Payoffs/payments, net and other		(295	)		(524	)
TDRs returned to accrual status		-			-
TDRs placed on nonaccrual status		-			-
Ending balance	$	3,299		$	4,285
Nonperforming TDRs:
Beginning balance	$	3,509		$	4,200
New modifications		-			-
Charge-offs		(78	)		-
Transfer to OREO		(2,275	)		-
Payoffs/payments, net and other		(879	)		(291	)
TDRs returned to accrual status		-			-
TDRs placed on nonaccrual status		-			-
Ending balance	$	277		$	3,909
Total TDRs	$	3,576		$	8,194