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Loans and Lease Finance Receivables and Allowance for Credit Losses | 12 Months Ended
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Dec. 31, 2020
Receivables [Abstract] |
Loans and Lease Finance Receivables and Allowance for Credit Losses |
6. | LOANS AND LEASE FINANCE RECEIVABLES AND ALLOWANCE FOR CREDIT LOSSES
The following table provides a summary of total loans and lease finance receivables by type.
|  | December 31, |
|  | 2020 |  |  | 2019 |
|  | (Dollars in thousands) |
Commercial real estate |  | $ | 5,501,509 |  |  | $ | 5,374,617 |
Construction |  |  | 85,145 |  |  |  | 116,925 |
SBA |  |  | 303,896 |  |  |  | 305,008 |
SBA - Paycheck Protection Program (PPP) |  |  | 882,986 |  |  |  | - |
Commercial and industrial |  |  | 812,062 |  |  |  | 935,127 |
Dairy & livestock and agribusiness |  |  | 361,146 |  |  |  | 383,709 |
Municipal lease finance receivables |  |  | 45,547 |  |  |  | 53,146 |
SFR mortgage |  |  | 270,511 |  |  |  | 283,468 |
Consumer and other loans |  |  | 86,006 |  |  |  | 116,319 |
Total loans |  |  | 8,348,808 |  |  |  | 7,568,319 |
Less: Deferred loan fees, net (1) |  |  | - |  |  |  | (3,742 | )
Total loans, net of deferred loan fees |  |  | 8,348,808 |  |  |  | 7,564,577 |
Less: Allowance for credit losses |  |  | (93,692 | ) |  |  | (68,660 | )
Total loans and lease finance receivables, net |  | $ | 8,255,116 |  |  | $ | 7,495,917 |
| (1) | Beginning with March 31, 2020, gross loans are presented net of deferred loan fees by respective class of financing receivables.
A s of December 31, 2020, 70.16% of the Company’s total gross loan portfolio consisted of real estate loans, with commercial real estate loans representing 65.90% of total loans. Substantially all of the Company’s real estate loans and construction loans are secured by real properties located in California. As of December 31, 2020, $314.4 million, or 5.72% of the total commercial real estate loans included loans secured by farmland, compared to $241.8 million, or 4.50%, at December 31, 2019. The loans secured by farmland included $132.9 million for loans secured by dairy & livestock land and $181.5 million for loans secured by agricultural land at December 31, 2020, compared to $125.9 million for loans secured by dairy & livestock land and $115.9 million for loans secured by agricultural land at December 31, 2019. As of December 31, 2020, dairy & livestock and agribusiness loans of $361.1 million were comprised of $320.1 million for dairy & livestock loans and $41.0 million for agribusiness loans, compared to $323.5 million for dairy & livestock loans and $60.2 million for agribusiness loans at December 31, 2019. At December 31, 2020 and 2019, loans totaling $6.07 billion and $6.03 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 December 31, 2020 and 2019. Credit Quality Indicators We monitor credit quality by evaluating various risk attributes and utilize such information in our evaluation of the appropriateness of the allowance for credit losses. Internal credit risk ratings, within our loan risk rating system, are the credit quality indicators that we most closely monitor. 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: 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, according to our internal risk ratings as of the dates presented.
|  | Origination Year |  |  | Revolving loans amortized cost basis |  |  | Revolving loans converted to term loans |  |  |  |
December 31, 2020 |  | 2020 |  |  | 2019 |  |  | 2018 |  |  | 2017 |  |  | 2016 |  |  | Prior |  |  | Total |
|  | (Dollars in thousands) |
Commercial real estate loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 979,499 |  |  | $ | 691,091 |  |  | $ | 607,753 |  |  | $ | 617,640 |  |  | $ | 550,105 |  |  | $ | 1,646,876 |  |  | $ | 192,583 |  |  | $ | 24,548 |  |  | $ | 5,310,095 |
Special Mention |  |  | 9,332 |  |  |  | 7,162 |  |  |  | 30,049 |  |  |  | 43,870 |  |  |  | 17,398 |  |  |  | 49,840 |  |  |  | 5,720 |  |  |  | 994 |  |  |  | 164,365 |
Substandard |  |  | - |  |  |  | 491 |  |  |  | 2,157 |  |  |  | 7,382 |  |  |  | 2,528 |  |  |  | 13,790 |  |  |  | 360 |  |  |  | 341 |  |  |  | 27,049 |
Doubtful & Loss |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total Commercial real estate loans: |  | $ | 988,831 |  |  | $ | 698,744 |  |  | $ | 639,959 |  |  | $ | 668,892 |  |  | $ | 570,031 |  |  | $ | 1,710,506 |  |  | $ | 198,663 |  |  | $ | 25,883 |  |  | $ | 5,501,509 |
Construction loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 14,511 |  |  | $ | 9,350 |  |  | $ | 14,945 |  |  | $ | 2,258 |  |  | $ | - |  |  | $ | 4 |  |  | $ | 44,077 |  |  | $ | - |  |  | $ | 85,145 |
Special Mention |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Substandard |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Doubtful & Loss |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total Construction loans: |  | $ | 14,511 |  |  | $ | 9,350 |  |  | $ | 14,945 |  |  | $ | 2,258 |  |  | $ | - |  |  | $ | 4 |  |  | $ | 44,077 |  |  | $ | - |  |  | $ | 85,145 |
SBA loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 47,901 |  |  | $ | 12,821 |  |  | $ | 44,950 |  |  | $ | 58,839 |  |  | $ | 26,136 |  |  | $ | 86,085 |  |  | $ | - |  |  | $ | 2,976 |  |  | $ | 279,708 |
Special Mention |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 5,446 |  |  |  | 1,336 |  |  |  | 5,648 |  |  |  | - |  |  |  | - |  |  |  | 12,430 |
Substandard |  |  | - |  |  |  | - |  |  |  | 904 |  |  |  | 5,503 |  |  |  | 1,554 |  |  |  | 3,797 |  |  |  | - |  |  |  | - |  |  |  | 11,758 |
Doubtful & Loss |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total SBA loans: |  | $ | 47,901 |  |  | $ | 12,821 |  |  | $ | 45,854 |  |  | $ | 69,788 |  |  | $ | 29,026 |  |  | $ | 95,530 |  |  | $ | - |  |  | $ | 2,976 |  |  | $ | 303,896 |
SBA - PPP loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 882,986 |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 882,986 |
Special Mention |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Substandard |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Doubtful & Loss |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total SBA - PPP loans: |  | $ | 882,986 |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 882,986 |
Commercial and industrial loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 104,478 |  |  | $ | 168,050 |  |  | $ | 62,453 |  |  | $ | 56,043 |  |  | $ | 32,149 |  |  | $ | 76,019 |  |  | $ | 257,250 |  |  | $ | 6,058 |  |  | $ | 762,500 |
Special Mention |  |  | 1,995 |  |  |  | 1,081 |  |  |  | 1,892 |  |  |  | 1,028 |  |  |  | 95 |  |  |  | 4,882 |  |  |  | 17,395 |  |  |  | 1,132 |  |  |  | 29,500 |
Substandard |  |  | 4,346 |  |  |  | 860 |  |  |  | 3,996 |  |  |  | 2,282 |  |  |  | 285 |  |  |  | 94 |  |  |  | 6,677 |  |  |  | 1,522 |  |  |  | 20,062 |
Doubtful & Loss |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total Commercial and industrial loans: |  | $ | 110,819 |  |  | $ | 169,991 |  |  | $ | 68,341 |  |  | $ | 59,353 |  |  | $ | 32,529 |  |  | $ | 80,995 |  |  | $ | 281,322 |  |  | $ | 8,712 |  |  | $ | 812,062 |
Dairy & livestock and agribusiness loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 1,041 |  |  | $ | 1,765 |  |  | $ | 1,199 |  |  | $ | 5,680 |  |  | $ | 120 |  |  | $ | 320 |  |  | $ | 319,211 |  |  | $ | 363 |  |  | $ | 329,699 |
Special Mention |  |  | 878 |  |  |  | - |  |  |  | 364 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 13,255 |  |  |  | 1,511 |  |  |  | 16,008 |
Substandard |  |  | - |  |  |  | - |  |  |  | 784 |  |  |  | 693 |  |  |  | 2,285 |  |  |  | - |  |  |  | - |  |  |  | 11,677 |  |  |  | 15,439 |
Doubtful & Loss |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total Dairy & livestock and agribusiness loans: |  | $ | 1,919 |  |  | $ | 1,765 |  |  | $ | 2,347 |  |  | $ | 6,373 |  |  | $ | 2,405 |  |  | $ | 320 |  |  | $ | 332,466 |  |  | $ | 13,551 |  |  | $ | 361,146 |
Municipal lease finance receivables loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 8,478 |  |  | $ | - |  |  | $ | 2,556 |  |  | $ | 10,249 |  |  | $ | 3,586 |  |  | $ | 20,266 |  |  | $ | - |  |  | $ | - |  |  | $ | 45,135 |
Special Mention |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 412 |  |  |  | - |  |  |  | - |  |  |  | 412 |
Substandard |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Doubtful & Loss |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total Municipal lease finance receivables loans: |  | $ | 8,478 |  |  | $ | - |  |  | $ | 2,556 |  |  | $ | 10,249 |  |  | $ | 3,586 |  |  | $ | 20,678 |  |  | $ | - |  |  | $ | - |  |  | $ | 45,547 |
|  |  | Origination Year |  |  | Revolving loans amortized cost basis |  |  | Revolving loans converted to term loans |  |  |  |
December 31, 2020 |  |  | 2020 |  |  | 2019 |  |  | 2018 |  |  | 2017 |  |  | 2016 |  |  | Prior |  |  | Total |
|  |  | (Dollars in thousands) |
SFR mortgage loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  |  | $ | 65,463 |  |  | $ | 59,596 |  |  | $ | 29,142 |  |  | $ | 22,452 |  |  | $ | 27,192 |  |  | $ | 62,593 |  |  | $ | 3 |  |  | $ | - |  |  | $ | 266,441 |
Special Mention |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 452 |  |  |  | - |  |  |  | - |  |  |  | 452 |
Substandard |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 229 |  |  |  | 2,957 |  |  |  | - |  |  |  | 432 |  |  |  | 3,618 |
Doubtful & Loss |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total SFR mortgage loans: |  |  | $ | 65,463 |  |  | $ | 59,596 |  |  | $ | 29,142 |  |  | $ | 22,452 |  |  | $ | 27,421 |  |  | $ | 66,002 |  |  | $ | 3 |  |  | $ | 432 |  |  | $ | 270,511 |
Consumer and other loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  |  | $ | 8,557 |  |  | $ | 2,077 |  |  | $ | 871 |  |  | $ | 969 |  |  | $ | 1,586 |  |  | $ | 961 |  |  | $ | 67,774 |  |  | $ | 1,688 |  |  | $ | 84,483 |
Special Mention |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 91 |  |  |  | 517 |  |  |  | 22 |  |  |  | 630 |
Substandard |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 172 |  |  |  | - |  |  |  | 721 |  |  |  | 893 |
Doubtful & Loss |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total Consumer and other loans: |  |  | $ | 8,557 |  |  | $ | 2,077 |  |  | $ | 871 |  |  | $ | 969 |  |  | $ | 1,586 |  |  | $ | 1,224 |  |  | $ | 68,291 |  |  | $ | 2,431 |  |  | $ | 86,006 |
Gross loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  |  | $ | 2,112,914 |  |  | $ | 944,750 |  |  | $ | 763,869 |  |  | $ | 774,130 |  |  | $ | 640,874 |  |  | $ | 1,893,124 |  |  | $ | 880,898 |  |  | $ | 35,633 |  |  | $ | 8,046,192 |
Special Mention |  |  |  | 12,205 |  |  |  | 8,243 |  |  |  | 32,305 |  |  |  | 50,344 |  |  |  | 18,829 |  |  |  | 61,325 |  |  |  | 36,887 |  |  |  | 3,659 |  |  |  | 223,797 |
Substandard |  |  |  | 4,346 |  |  |  | 1,351 |  |  |  | 7,841 |  |  |  | 15,860 |  |  |  | 6,881 |  |  |  | 20,810 |  |  |  | 7,037 |  |  |  | 14,693 |  |  |  | 78,819 |
Doubtful & Loss |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total Gross loans: |  |  | $ | 2,129,465 |  |  | $ | 954,344 |  |  | $ | 804,015 |  |  | $ | 840,334 |  |  | $ | 666,584 |  |  | $ | 1,975,259 |  |  | $ | 924,822 |  |  | $ | 53,985 |  |  | $ | 8,348,808 |
The following table summarizes loans by type, according to our internal risk ratings as of the date presented.
|  | December 31, 2019 |
|  | Pass |  |  | Special Mention |  |  | Substandard |  |  | Doubtful & Loss |  |  | Total |
|  | (Dollars in thousands) |
Commercial real estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner occupied |  | $ | 1,977,007 |  |  | $ | 78,208 |  |  | $ | 28,435 |  |  | $ | - |  |  | $ | 2,083,650 |
Non-owner occupied |  |  | 3,280,580 |  |  |  | 10,005 |  |  |  | 382 |  |  |  | - |  |  |  | 3,290,967 |
Construction |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Speculative |  |  | 106,895 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 106,895 |
Non-speculative |  |  | 10,030 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 10,030 |
SBA |  |  | 283,430 |  |  |  | 11,032 |  |  |  | 10,546 |  |  |  | - |  |  |  | 305,008 |
Commercial and industrial |  |  | 895,234 |  |  |  | 35,473 |  |  |  | 4,420 |  |  |  | - |  |  |  | 935,127 |
Dairy & livestock and agribusiness |  |  | 320,670 |  |  |  | 35,920 |  |  |  | 27,119 |  |  |  | - |  |  |  | 383,709 |
Municipal lease finance receivables |  |  | 52,676 |  |  |  | 470 |  |  |  | - |  |  |  | - |  |  |  | 53,146 |
SFR mortgage |  |  | 280,010 |  |  |  | 1,957 |  |  |  | 1,501 |  |  |  | - |  |  |  | 283,468 |
Consumer and other loans |  |  | 114,870 |  |  |  | 421 |  |  |  | 1,028 |  |  |  | - |  |  |  | 116,319 |
Total gross loans |  | $ | 7,321,402 |  |  | $ | 173,486 |  |  | $ | 73,431 |  |  | $ | - |  |  | $ | 7,568,319 |
Allowance for Credit Losses The allowance for credit losses for 2020 is based upon lifetime loss rate models developed from an estimation framework that uses historical lifetime loss experiences to derive loss rates at a collective pool level. We measure the expected credit losses on a collective (pooled) basis for those loans that share similar risk characteristics. We have three collective loan pools: Commercial Real Estate, Commercial and Industrial, and Consumer. Our ACL amounts are largely driven by portfolio characteristics, including loss history and various risk attributes, and the economic outlook for certain macroeconomic variables. Risk attributes for commercial real estate loans include OLTV, origination year, loan seasoning, and macroeconomic variables that include GDP growth, commercial real estate price index and unemployment rate. Risk attributes for commercial and industrial loans include internal risk ratings, borrower industry sector, loan credit spreads and macroeconomic variables that include unemployment rate and BBB spread. The macroeconomic variables for Consumer include unemployment rate and GDP. The Commercial Real Estate methodology is applied over commercial real estate loans, a portion of construction loans, and a portion of SBA loans (excluding Payment Protection Program loans). The Commercial and Industrial methodology is applied over a substantial portion of the Company’s commercial and industrial loans, all dairy & livestock and agribusiness loans, municipal lease receivables, as well as the remaining portion of SBA loans (excluding Payment Protection Program loans). The Consumer methodology is applied to SFR mortgage loans, consumer loans, as well as the remaining construction loans. In addition to determining the quantitative life of loan loss rate to be applied against the amortized cost basis of the portfolio segments, management reviews current conditions and forecasts to determine whether adjustments are needed to ensure that the life of loan loss rates reflect both the current state of the portfolio, and expectations for macroeconomic changes. Our methodology for assessing the appropriateness of the allowance is reviewed on a regular basis and considers overall risks in the Bank’s loan portfolio. Refer to Note 3 – Summary of Significant Accounting Policies contained herein for a more detailed discussion concerning the allowance for credit losses. Our allowance for credit losses decreased in the fourth quarter by $177,000, as a result of net charge-offs of $177,000. There was no provision for credit losses in the fourth quarter of 2020. Our allowance for credit losses at December 31, 2020 was $93.7 million or 1.12% of total loans. For the year ended December 31, 2020, the ACL increased by $25.0 million, including a $1.8 million increase from the adoption of CECL on January 1, 2020. The increase in the ACL was primarily due to $23.5 million in provision for credit losses recorded in the first half of 2020 resulting from the forecasted changes in macroeconomic variables related to the COVID-19 pandemic. Our economic forecast continues to be a blend of multiple forecasts produced by Moody ’s , including Moody’s baseline forecast , as well as upside and downside forecasts. The baseline forecast continues to represent the largest weighting in our multi-weighted forecast scenario , while due to economic uncertainty a greater weighting was placed on the downside economic forecast, relative to the upside forecast. Our forecast assumes GDP will increase by 2.5 % in 2021 and then grow by 3.6 % in 202 2 and 202 3 . The unemployment rate is forecasted to be 7.7 % in 2021, before declining to 7.2 % percent in 2022 and 5.7 % in 2023. Management believes that the ACL was appropriate at December 31, 2020 and 2019. As t here is a high degree of uncertainty around the epidemiological assumptions and impact of government responses to the pandemic that impact our economic forecast, no assurance can be given that economic conditions that adversely affect the Company’s service areas or other circumstances will not be reflected in increased provisions for credit losses in the future. The following tables present the balance and activity related to the allowance for credit losses for held-for-investment loans by type for the periods presented.
|  | Year Ended December 31, 2020 |
|  | Ending Balance, prior to adoption of ASU 2016-13 December 31, 2019 |  |  | Impact of Adoption of ASU 2016-13 |  |  | Charge- offs |  |  | Recoveries |  |  | Provision for (Recapture of) Credit Losses |  |  | Ending Balance December 31, 2020 |
|  | (Dollars in thousands) |  |  |  |
Commercial real estate |  | $ | 48,629 |  |  | $ | 3,547 |  |  | $ | - |  |  | $ | - |  |  | $ | 23,263 |  |  | $ | 75,439 |
Construction |  |  | 858 |  |  |  | 655 |  |  |  | - |  |  |  | 11 |  |  |  | 410 |  |  |  | 1,934 |
SBA |  |  | 1,453 |  |  |  | 1,818 |  |  |  | (362 | ) |  |  | 72 |  |  |  | 11 |  |  |  | 2,992 |
SBA - PPP |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Commercial and industrial |  |  | 8,880 |  |  |  | (2,442 | ) |  |  | (195 | ) |  |  | 10 |  |  |  | 889 |  |  |  | 7,142 |
Dairy & livestock and agribusiness |  |  | 5,255 |  |  |  | (186 | ) |  |  | - |  |  |  | - |  |  |  | (1,120 | ) |  |  | 3,949 |
Municipal lease finance receivables |  |  | 623 |  |  |  | (416 | ) |  |  | - |  |  |  | - |  |  |  | (133 | ) |  |  | 74 |
SFR mortgage |  |  | 2,339 |  |  |  | (2,043 | ) |  |  | - |  |  |  | 206 |  |  |  | (135 | ) |  |  | 367 |
Consumer and other loans |  |  | 623 |  |  |  | 907 |  |  |  | (109 | ) |  |  | 59 |  |  |  | 315 |  |  |  | 1,795 |
Total allowance for credit losses |  | $ | 68,660 |  |  | $ | 1,840 |  |  | $ | (666 | ) |  | $ | 358 |  |  | $ | 23,500 |  |  | $ | 93,692 |
|  | Year Ended December 31, 2019 |
|  | Ending Balance December 31, 2018 |  |  | Charge- offs |  |  | Recoveries |  |  | Provision for (Recapture of) Loan Losses |  |  | Ending Balance December 31, 2019 |
|  | (Dollars in thousands) |
Commercial real estate |  | $ | 45,097 |  |  | $ | - |  |  | $ | - |  |  | $ | 3,532 |  |  | $ | 48,629 |
Construction |  |  | 981 |  |  |  | - |  |  |  | 12 |  |  |  | (135 | ) |  |  | 858 |
SBA |  |  | 1,078 |  |  |  | (321 | ) |  |  | 9 |  |  |  | 687 |  |  |  | 1,453 |
Commercial and industrial |  |  | 7,528 |  |  |  | (48 | ) |  |  | 255 |  |  |  | 1,145 |  |  |  | 8,880 |
Dairy & livestock and agribusiness |  |  | 5,225 |  |  |  | (78 | ) |  |  | 19 |  |  |  | 89 |  |  |  | 5,255 |
Municipal lease finance receivables |  |  | 775 |  |  |  | - |  |  |  | - |  |  |  | (152 | ) |  |  | 623 |
SFR mortgage |  |  | 2,197 |  |  |  | - |  |  |  | 196 |  |  |  | (54 | ) |  |  | 2,339 |
Consumer and other loans |  |  | 732 |  |  |  | (7 | ) |  |  | 10 |  |  |  | (112 | ) |  |  | 623 |
Total allowance for loan losses |  | $ | 63,613 |  |  | $ | (454 | ) |  | $ | 501 |  |  | $ | 5,000 |  |  | $ | 68,660 |
|  | Year Ended December 31, 2018 |
|  | Ending Balance December 31, 2017 |  |  | Charge- offs |  |  | Recoveries |  |  | Provision for (Recapture of) Loan Losses |  |  | Ending Balance December 31, 2018 |
|  | (Dollars in thousands) |
Commercial real estate |  | $ | 41,722 |  |  | $ | - |  |  | $ | - |  |  | $ | 3,212 |  |  | $ | 44,934 |
Construction |  |  | 984 |  |  |  | - |  |  |  | 2,506 |  |  |  | (2,509 | ) |  |  | 981 |
SBA |  |  | 869 |  |  |  | (257 | ) |  |  | 20 |  |  |  | 430 |  |  |  | 1,062 |
Commercial and industrial |  |  | 7,280 |  |  |  | (10 | ) |  |  | 82 |  |  |  | 168 |  |  |  | 7,520 |
Dairy & livestock and agribusiness |  |  | 4,647 |  |  |  | - |  |  |  | 19 |  |  |  | 549 |  |  |  | 5,215 |
Municipal lease finance receivables |  |  | 851 |  |  |  | - |  |  |  | - |  |  |  | (76 | ) |  |  | 775 |
SFR mortgage |  |  | 2,112 |  |  |  | (13 | ) |  |  | 51 |  |  |  | 46 |  |  |  | 2,196 |
Consumer and other loans |  |  | 753 |  |  |  | (11 | ) |  |  | 141 |  |  |  | (157 | ) |  |  | 726 |
PCI loans |  |  | 367 |  |  |  | - |  |  |  | - |  |  |  | (163 | ) |  |  | 204 |
Total allowance for loan losses |  | $ | 59,585 |  |  | $ | (291 | ) |  | $ | 2,819 |  |  | $ | 1,500 |  |  | $ | 63,613 |
The following table presents the recorded investment in loans held-for-investment and the related ACL by loan type, based on the Company’s methodology for determining the ACL for the periods presented.
|  | December 31, 2019 |
|  | Recorded Investment in Loans |  |  | Allowance for Loan Losses |
|  | Individually Evaluated for Impairment |  |  | Collectively Evaluated for Impairment |  |  | Individually Evaluated for Impairment |  |  | Collectively Evaluated for Impairment |
|  | (Dollars in thousands) |
Commercial real estate |  | $ | 1,121 |  |  | $ | 5,373,496 |  |  | $ | - |  |  | $ | 48,629 |
Construction |  |  | - |  |  |  | 116,925 |  |  |  | - |  |  |  | 858 |
SBA |  |  | 2,568 |  |  |  | 302,440 |  |  |  | 257 |  |  |  | 1,196 |
Commercial and industrial |  |  | 1,344 |  |  |  | 933,783 |  |  |  | 251 |  |  |  | 8,629 |
Dairy & livestock and agribusiness |  |  | - |  |  |  | 383,709 |  |  |  | - |  |  |  | 5,255 |
Municipal lease finance receivables |  |  | - |  |  |  | 53,146 |  |  |  | - |  |  |  | 623 |
SFR mortgage |  |  | 2,979 |  |  |  | 280,489 |  |  |  | - |  |  |  | 2,339 |
Consumer and other loans |  |  | 377 |  |  |  | 115,942 |  |  |  | - |  |  |  | 623 |
Total |  | $ | 8,389 |  |  | $ | 7,559,930 |  |  | $ | 508 |  |  | $ | 68,152 |
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 credit losses, and to determine the adequacy of the ACL, 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 credit losses, growth in the loan portfolio, prevailing economic conditions and other factors. Refer to Note 3 – Summary of Significant Accounting Policies , included herein, for additional discussion concerning the Bank’s policy for past due and nonperforming loans. The following table presents the recorded investment in, and the aging of, past due loans (including nonaccrual loans), by type of loans as of the date presented.
|  | December 31, 2020 |
|  | 30-59 Days Past Due |  |  | 60-89 Days Past Due |  |  | Greater than 89 Days Past Due |  |  | Total Past Due |  |  | Loans Not Past Due |  |  | Total Loans and Financing Receivables |
|  | (Dollars in thousands) |
Commercial real estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner occupied |  | $ | - |  |  | $ | - |  |  | $ | 7,208 |  |  | $ | 7,208 |  |  | $ | 2,136,051 |  |  | $ | 2,143,259 |
Non-owner occupied |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 3,358,250 |  |  |  | 3,358,250 |
Construction |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Speculative (1) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 72,126 |  |  |  | 72,126 |
Non-speculative |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 13,019 |  |  |  | 13,019 |
SBA |  |  | 531 |  |  |  | 2,415 |  |  |  | 1,025 |  |  |  | 3,971 |  |  |  | 299,925 |  |  |  | 303,896 |
SBA - PPP |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 882,986 |  |  |  | 882,986 |
Commercial and industrial |  |  | 608 |  |  |  | 811 |  |  |  | 2,338 |  |  |  | 3,757 |  |  |  | 808,305 |  |  |  | 812,062 |
Dairy & livestock and agribusiness |  |  | - |  |  |  | - |  |  |  | 784 |  |  |  | 784 |  |  |  | 360,362 |  |  |  | 361,146 |
Municipal lease finance receivables |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 45,547 |  |  |  | 45,547 |
SFR mortgage |  |  | - |  |  |  | - |  |  |  | 229 |  |  |  | 229 |  |  |  | 270,282 |  |  |  | 270,511 |
Consumer and other loans |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 86,006 |  |  |  | 86,006 |
Total gross loans |  | $ | 1,139 |  |  | $ | 3,226 |  |  | $ | 11,584 |  |  | $ | 15,949 |  |  | $ | 8,332,859 |  |  | $ | 8,348,808 |
| (1) | Speculative construction loans are generally for properties where there is no identified buyer or renter.
Following the adoption of CECL on January 1, 2020, the definitions of impairment and related impaired loan disclosures were removed. Under CECL, amortized cost of our finance receivables and loans that are on nonaccrual status, including loans with no allowance, are presented as of December 31, 2020 by type of loan.
|  | December 31, 2020 |
|  | Nonaccrual with No Allowance for Credit Losses |  |  | Total Nonaccrual (1) (3) |  |  | Loans Past Due Over 89 Days Still Accruing |
|  | (Dollars in thousands) |
Commercial real estate |  |  |  |  |  |  |  |  |  |  |  |
Owner occupied |  | $ | 7,563 |  |  | $ | 7,563 |  |  | $ | - |
Non-owner occupied |  |  | - |  |  |  | - |  |  |  | - |
Construction |  |  |  |  |  |  |  |  |  |  |  |
Speculative (2) |  |  | - |  |  |  | - |  |  |  | - |
Non-speculative |  |  | - |  |  |  | - |  |  |  | - |
SBA |  |  | 2,035 |  |  |  | 2,273 |  |  |  | - |
SBA - PPP |  |  | - |  |  |  | - |  |  |  | - |
Commercial and industrial |  |  | 1,576 |  |  |  | 3,129 |  |  |  | - |
Dairy & livestock and agribusiness |  |  | 785 |  |  |  | 785 |  |  |  | - |
Municipal lease finance receivables |  |  | 430 |  |  |  | - |  |  |  | - |
SFR mortgage |  |  | - |  |  |  | 430 |  |  |  | - |
Consumer and other loans |  |  | 167 |  |  |  | 167 |  |  |  | - |
Total gross loans |  | $ | 12,556 |  |  | $ | 14,347 |  |  | $ | - |
| (1) | As of December 31, 2020, $1.4 million of nonaccruing loans were current, $2,000 were 30-59 days past due, $1.3 million were 60-89 days past due, and $11.6 million were 90+ days past due.
| (2) | Speculative construction loans are generally for properties where there is no identified buyer or renter.
| (3) | Excludes $184,000 of guaranteed portion of nonaccrual SBA loans that are in process of collection.
The following table presents the recorded investment in, and the aging of, past due and nonaccrual loans, by type of loans as of the date presented.
|  | December 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 real estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner occupied |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 479 |  |  | $ | 2,083,171 |  |  | $ | 2,083,650 |
Non-owner occupied |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 245 |  |  |  | 3,290,722 |  |  |  | 3,290,967 |
Construction |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Speculative (2) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 106,895 |  |  |  | 106,895 |
Non-speculative |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 10,030 |  |  |  | 10,030 |
SBA |  |  | 870 |  |  |  | 532 |  |  |  | 1,402 |  |  |  | 2,032 |  |  |  | 301,574 |  |  |  | 305,008 |
Commercial and industrial |  |  | 2 |  |  |  | - |  |  |  | 2 |  |  |  | 1,266 |  |  |  | 933,859 |  |  |  | 935,127 |
Dairy & livestock and agribusiness |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 383,709 |  |  |  | 383,709 |
Municipal lease finance receivables |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 53,146 |  |  |  | 53,146 |
SFR mortgage |  |  | 6 |  |  |  | 243 |  |  |  | 249 |  |  |  | 878 |  |  |  | 282,341 |  |  |  | 283,468 |
Consumer and other loans |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 377 |  |  |  | 115,942 |  |  |  | 116,319 |
Total gross loans |  | $ | 878 |  |  | $ | 775 |  |  | $ | 1,653 |  |  | $ | 5,277 |  |  | $ | 7,561,389 |  |  | $ | 7,568,319 |
| (1) | As of December 31, 2019, $1.2 million of nonaccruing loans were current, $59,000 were 30-59 days past due, $1.1 million were 60-89 days past due and $2.9 million were 90+ days past due.
| (2) | Speculative construction loans are generally for properties where there is no identified buyer or renter.
| (3) | Excludes $2.0 million of guaranteed portion of nonaccrual SBA loans that are in process of collection.
Impaired Loans (prior to adoption of CECL) Following the adoption of CECL as of January 1, 2020, the definitions of impairment and related impaired loan disclosures were removed. As a result of the change, the following tables present information about our impaired loans and lease finance receivables, individually evaluated for Impairment by type of loans, as of December 31, 2019 and 2018, prior to the date of adoption of the amendments to the credit loss standard.
|  | As of and For the Year Ended December 31, 2019 |
|  | Recorded Investment |  |  | Unpaid Principal Balance |  |  | Related Allowance |  |  | Average Recorded Investment |  |  | Interest Income Recognized |
|  |  |  |  |  |  |  | (Dollars in thousands) |  |  |  |
With no related allowance recorded: |
Commercial real estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner occupied |  | $ | 479 |  |  | $ | 613 |  |  | $ | - |  |  | $ | 505 |  |  | $ | - |
Non-owner occupied |  |  | 642 |  |  |  | 643 |  |  |  | - |  |  |  | 681 |  |  |  | 26 |
Construction |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Speculative |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Non-speculative |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
SBA |  |  | 2,243 |  |  |  | 2,734 |  |  |  | - |  |  |  | 2,389 |  |  |  | 41 |
Commercial and industrial |  |  | 1,091 |  |  |  | 1,261 |  |  |  | - |  |  |  | 1,369 |  |  |  | 4 |
Dairy & livestock and agribusiness |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Municipal lease finance receivables |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
SFR mortgage |  |  | 2,979 |  |  |  | 3,310 |  |  |  | - |  |  |  | 3,043 |  |  |  | 86 |
Consumer and other loans |  |  | 377 |  |  |  | 514 |  |  |  | - |  |  |  | 396 |  |  |  | - |
Total |  |  | 7,811 |  |  |  | 9,075 |  |  |  | - |  |  |  | 8,383 |  |  |  | 157 |
With a related allowance recorded: |
Commercial real estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner occupied |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Non-owner occupied |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Construction |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Speculative |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Non-speculative |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
SBA |  |  | 325 |  |  |  | 324 |  |  |  | 257 |  |  |  | 327 |  |  |  | - |
Commercial and industrial |  |  | 253 |  |  |  | 347 |  |  |  | 251 |  |  |  | 699 |  |  |  | - |
Dairy & livestock and agribusiness |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Municipal lease finance receivables |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
SFR mortgage |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Consumer and other loans |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total |  |  | 578 |  |  |  | 671 |  |  |  | 508 |  |  |  | 1,026 |  |  |  | - |
Total impaired loans |  | $ | 8,389 |  |  | $ | 9,746 |  |  | $ | 508 |  |  | $ | 9,409 |  |  | $ | 157 |
|  | As of and For the Year Ended December 31, 2018 (1) |
|  | Recorded Investment |  |  | Unpaid Principal Balance |  |  | Related Allowance |  |  | Average Recorded Investment |  |  | Interest Income Recognized |
|  |  |  |  |  |  |  | (Dollars in thousands) |  |  |  |
With no related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner occupied |  | $ | 589 |  |  | $ | 705 |  |  | $ | - |  |  | $ | 624 |  |  | $ | - |
Non-owner occupied |  |  | 2,808 |  |  |  | 4,324 |  |  |  | - |  |  |  | 4,585 |  |  |  | 32 |
Construction |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Speculative |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Non-speculative |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
SBA |  |  | 3,467 |  |  |  | 5,746 |  |  |  | - |  |  |  | 3,919 |  |  |  | 44 |
Commercial and industrial |  |  | 7,436 |  |  |  | 11,457 |  |  |  | - |  |  |  | 7,718 |  |  |  | 7 |
Dairy & livestock and agribusiness |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Municipal lease finance receivables |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
SFR mortgage |  |  | 5,349 |  |  |  | 6,270 |  |  |  | - |  |  |  | 5,484 |  |  |  | 80 |
Consumer and other loans |  |  | 418 |  |  |  | 526 |  |  |  | - |  |  |  | 459 |  |  |  | - |
Total |  |  | 20,067 |  |  |  | 29,028 |  |  |  | - |  |  |  | 22,789 |  |  |  | 163 |
With a related allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Owner occupied |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Non-owner occupied |  |  | 3,143 |  |  |  | 3,144 |  |  |  | 478 |  |  |  | 3,144 |  |  |  | - |
Construction |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Speculative |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Non-speculative |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
SBA |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Commercial and industrial |  |  | 189 |  |  |  | 191 |  |  |  | 3 |  |  |  | 203 |  |  |  | - |
Dairy & livestock and agribusiness |  |  | 78 |  |  |  | 78 |  |  |  | 12 |  |  |  | 78 |  |  |  | - |
Municipal lease finance receivables |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
SFR mortgage |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Consumer and other loans |  |  | 68 |  |  |  | 100 |  |  |  | 68 |  |  |  | 76 |  |  |  | - |
Total |  |  | 3,478 |  |  |  | 3,513 |  |  |  | 561 |  |  |  | 3,501 |  |  |  | - |
Total impaired loans |  | $ | 23,545 |  |  | $ | 32,541 |  |  | $ | 561 |  |  | $ | 26,290 |  |  | $ | 163 |
| (1) | Excludes PCI loans.
Collateral Dependent Loans A loan is considered collateral-dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. The following table presents the recorded investment in collateral-dependent loans by type of loans as of the date presented.
|  | December 31, 2020 |  |  | Number of Loans Dependent on Collateral |
|  | Real Estate |  |  | Business Assets |  |  | Other |
|  | (Dollars in thousands) |
Commercial real estate |  | $ | 7,883 |  |  | $ | - |  |  | $ | - |  |  |  | 8 |
Construction |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
SBA |  |  | 1,761 |  |  |  | 326 |  |  |  | 185 |  |  |  | 10 |
SBA - PPP |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Commercial and industrial |  |  | 470 |  |  |  | 5,542 |  |  |  | 95 |  |  |  | 18 |
Dairy & livestock and agribusiness |  |  | - |  |  |  | 785 |  |  |  | - |  |  |  | 1 |
Municipal lease finance receivables |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
SFR mortgage |  |  | 430 |  |  |  | - |  |  |  | - |  |  |  | 2 |
Consumer and other loans |  |  | 168 |  |  |  | - |  |  |  | - |  |  |  | 2 |
Total collateral-dependent loans |  | $ | 10,712 |  |  | $ | 6,653 |  |  | $ | 280 |  |  |  | 41 |
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 in the same manner as it evaluates credit risk associated with the loan and lease portfolio. As a result of the adoption of ASU 2016-13, the reserve for unfunded loan commitments included a transition adjustment of $41,000 as of January 1, 2020. There was no provision or recapture of provision for unfunded commitments for the years ended December 31, 2020 and 2019, compared with a recapture of provision for unfunded loan commitments of $250,000 for the year ended December 31, 2018. As of December 31, 2020 and 2019, the balance in this reserve was $9.0 million and was included in other liabilities. Troubled Debt Restructurings 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, Troubled Debt Restructurings , included herein. As of December 31, 2020, there were $2.2 million of loans classified as a TDR, all of which 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 December 31, 2020, performing TDRs were comprised of seven SFR mortgage loans of $1.8 million, one commercial real estate loan of $320,000, and one commercial and industrial loan of $43,000. 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 no allocated allowance to TDRs as of December 31, 2020 and December 31, 2019. The following table provides a summary of the activity related to TDRs for the periods presented.
|  | Year Ended December 31, |
|  | 2020 |  |  | 2019 |
|  | (Dollars in thousands) |
Performing TDRs: |  |  |  |  |  |  |  |
Beginning balance |  | $ | 3,112 |  |  | $ | 3,594 |
New modifications |  |  | - |  |  |  | - |
Payoffs/payments, net and other |  |  | (953 | ) |  |  | (482 | )
TDRs returned to accrual status |  |  | - |  |  |  | - |
TDRs placed on nonaccrual status |  |  | - |  |  |  | - |
Ending balance |  | $ | 2,159 |  |  | $ | 3,112 |
Nonperforming TDRs: |  |  |  |  |  |  |  |
Beginning balance |  | $ | 244 |  |  | $ | 3,509 |
New modifications |  |  | - |  |  |  | - |
Charge-offs |  |  | - |  |  |  | (78 | )
Transfer to OREO |  |  | - |  |  |  | (2,275 | )
Payoffs/payments, net and other |  |  | (244 | ) |  |  | (912 | )
TDRs returned to accrual status |  |  | - |  |  |  | - |
TDRs placed on nonaccrual status |  |  | - |  |  |  | - |
Ending balance |  | $ | - |  |  | $ | 244 |
Total TDRs |  | $ | 2,159 |  |  | $ | 3,356 |
The following tables summarize loans modified as TDRs for the periods presented. There were no loans that were modified as TDRs for the years ended December 31, 2020 and 2019. Modifications (1)
|  | For the Year Ended December 31, 2018 (2) |
|  | Number of Loans |  |  | Pre-Modification Outstanding Recorded Investment |  |  | Post-Modification Outstanding Recorded Investment |  |  | Outstanding Recorded Investment at December 31, 2018 |  |  | Financial Effect Resulting From Modifications (3) |
|  | (Dollars in thousands) |
Commercial real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate reduction |  |  | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Change in amortization period or maturity |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Commercial and industrial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate reduction |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Change in amortization period or maturity |  |  | 1 |  |  |  | 38 |  |  |  | 38 |  |  |  | 20 |  |  |  | - |
Dairy & livestock and agribusiness: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate reduction |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Change in amortization period or maturity |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
SFR mortgage: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate reduction |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Change in amortization period or maturity |  |  | 1 |  |  |  | 311 |  |  |  | 311 |  |  |  | 300 |  |  |  | - |
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate reduction |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Change in amortization period or maturity |  |  | 1 |  |  |  | 278 |  |  |  | 278 |  |  |  | 267 |  |  |  | - |
Total loans |  |  | 3 |  |  | $ | 627 |  |  | $ | 627 |  |  | $ | 587 |  |  | $ | - |
| (1) | The tables above exclude modified loans that were paid off prior to the end of the period.
| (2) | Excludes PCI loans.
| (3) | Financial effects resulting from modifications represent charge-offs and specific allowance recorded at modification date.
As of December 31, 2020 and 2019, there were no loans that were modified as a TDR within the previous 12 months that subsequently defaulted. In accordance with regulatory guidance, if borrowers are less than 30 days past due on their loans, upon implementation of the modification program, or as allowed under the CARES Act if borrowers are less than 30 days past due on their loans as of December 31, 2019, and enter into short-term loan modifications offered as a result of COVID-19, their loans generally continue to be considered performing loans and continue to accrue interest during the period of the loan modification. For borrowers who are 30 days or more past due when entering into loan modifications offered as a result of COVID-19, we evaluate the loan modifications under our existing troubled debt restructuring framework, and where such a loan modification would result in a concession to a borrower experiencing financial difficulty, the loan will be accounted for as a TDR and will generally not accrue interest. For all borrowers who enroll in these loan modification programs offered as a result of COVID-19, the delinquency status of the borrowers is frozen, resulting in a static delinquency metric during the deferral period. Upon exiting the deferral program, the measurement of loan delinquency will resume where it had left off upon entry into the program.

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