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Loans and Lease Finance Receivables and Allowance for Credit Losses | 12 Months Ended
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Dec. 31, 2023
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, |
| 2023 |  |  | 2022 |
| (Dollars in thousands) |
Commercial real estate | $ | 6,784,505 |  |  | $ | 6,884,948 |
Construction |  | 66,734 |  |  |  | 88,271 |
SBA |  | 270,619 |  |  |  | 290,908 |
SBA - Paycheck Protection Program (PPP) |  | 2,736 |  |  |  | 9,087 |
Commercial and industrial |  | 969,895 |  |  |  | 948,683 |
Dairy & livestock and agribusiness |  | 412,891 |  |  |  | 433,564 |
Municipal lease finance receivables |  | 73,590 |  |  |  | 81,126 |
SFR mortgage |  | 269,868 |  |  |  | 266,024 |
Consumer and other loans |  | 54,072 |  |  |  | 76,781 |
Total loans, at amortized cost |  | 8,904,910 |  |  |  | 9,079,392 |
Less: Allowance for credit losses |  | (86,842 | ) |  |  | (85,117 | )
Total loans and lease finance receivables, net | $ | 8,818,068 |  |  | $ | 8,994,275 |
As of December 31, 2023, 79.97% of the Company’s total gross loan portfolio consisted of real estate loans, with commercial real estate loans representing 76.19% 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, 2023, $497.7 million, or 7.34% o f the total commercial real estate loans included loans secured by farmland, compared to $517.8 million, or 7.52%, at December 31, 2022. The loans secured by farmland included $122.4 million for loans secured by dairy & livestock land and $375.3 million for loans secured by agricultural land at December 31, 2023, compared to $140.5 million for loans secured by dairy & livestock land and $377.3 million for loans secured by agricultural land at December 31, 2022. As of December 31, 2023, dairy & livestock and agribusiness loans of $412.9 million were comprised of $374.9 million for dairy & livestock loans and $38.0 million for agribusiness loans, compared to $388.5 million of dairy & livestock loans and $45.1 million for agribusiness loans at December 31, 2022. At December 31, 2023 and 2022, loans totaling $4.04 bi llion and $4.30 billion, respectively, were pledged to secure available lines of credit from the FHLB and the Federal Reserve Bank. There were no outstanding loans held-for-sale as of December 31, 2023 and 2022. 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 and origination year, according to our internal risk ratings as of the dates presented.
| Origination Year |  |  | Revolving loans amortized |  |  | Revolving loans converted to |  |  |  |
December 31, 2023 | 2023 |  |  | 2022 |  |  | 2021 |  |  | 2020 |  |  | 2019 |  |  | Prior |  |  | cost basis |  |  | term loans |  |  | Total |
| (Dollars in thousands) |
Commercial real estate loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | $ | 447,991 |  |  | $ | 1,315,563 |  |  | $ | 1,133,331 |  |  | $ | 885,590 |  |  | $ | 497,541 |  |  | $ | 2,041,329 |  |  | $ | 171,223 |  |  | $ | 38,568 |  |  | $ | 6,531,136 |
Special Mention |  | 3,241 |  |  |  | 3,897 |  |  |  | 15,868 |  |  |  | 19,368 |  |  |  | 43,824 |  |  |  | 74,673 |  |  |  | 2,911 |  |  |  | — |  |  |  | 163,782 |
Substandard |  | 744 |  |  |  | 8,127 |  |  |  | 2,891 |  |  |  | 33,401 |  |  |  | 12,986 |  |  |  | 30,637 |  |  |  | 801 |  |  |  | — |  |  |  | 89,587 |
Doubtful & Loss |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total Commercial real estate loans: | $ | 451,976 |  |  | $ | 1,327,587 |  |  | $ | 1,152,090 |  |  | $ | 938,359 |  |  | $ | 554,351 |  |  | $ | 2,146,639 |  |  | $ | 174,935 |  |  | $ | 38,568 |  |  | $ | 6,784,505 |
Current YTD Period: Gross charge-offs | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Construction loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | $ | 1,274 |  |  | $ | 15,046 |  |  | $ | 22,288 |  |  | $ | 8,058 |  |  | $ | — |  |  | $ | — |  |  | $ | 17,938 |  |  | $ | — |  |  | $ | 64,604 |
Special Mention |  | — |  |  |  | — |  |  |  | 2,130 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2,130 |
Substandard |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Doubtful & Loss |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total Construction loans: | $ | 1,274 |  |  | $ | 15,046 |  |  | $ | 24,418 |  |  | $ | 8,058 |  |  | $ | — |  |  | $ | — |  |  | $ | 17,938 |  |  | $ | — |  |  | $ | 66,734 |
Current YTD Period: Gross charge-offs | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
SBA loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | $ | 20,701 |  |  | $ | 48,212 |  |  | $ | 51,038 |  |  | $ | 29,306 |  |  | $ | 6,236 |  |  | $ | 101,856 |  |  | $ | — |  |  | $ | — |  |  | $ | 257,349 |
Special Mention |  | — |  |  |  | 1,627 |  |  |  | — |  |  |  | 4,784 |  |  |  | 1,132 |  |  |  | 1,760 |  |  |  | — |  |  |  | — |  |  |  | 9,303 |
Substandard |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 749 |  |  |  | 3,218 |  |  |  | — |  |  |  | — |  |  |  | 3,967 |
Doubtful & Loss |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total SBA loans: | $ | 20,701 |  |  | $ | 49,839 |  |  | $ | 51,038 |  |  | $ | 34,090 |  |  | $ | 8,117 |  |  | $ | 106,834 |  |  | $ | — |  |  | $ | — |  |  | $ | 270,619 |
Current YTD Period: Gross charge-offs | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 288 |  |  | $ | — |  |  | $ | — |  |  | $ | 288 |
SBA - PPP loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | $ | — |  |  | $ | — |  |  | $ | 699 |  |  | $ | 2,037 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 2,736 |
Special Mention |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Substandard |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Doubtful & Loss |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total SBA - PPP loans: | $ | — |  |  | $ | — |  |  | $ | 699 |  |  | $ | 2,037 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 2,736 |
Current YTD Period: Gross charge-offs | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Commercial and industrial loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | $ | 141,080 |  |  | $ | 143,847 |  |  | $ | 100,059 |  |  | $ | 88,743 |  |  | $ | 68,352 |  |  | $ | 94,027 |  |  | $ | 289,539 |  |  | $ | 5,460 |  |  | $ | 931,107 |
Special Mention |  | 7,829 |  |  |  | 738 |  |  |  | 745 |  |  |  | 552 |  |  |  | 4,114 |  |  |  | 3,986 |  |  |  | 10,529 |  |  |  | 5,347 |  |  |  | 33,840 |
Substandard |  | — |  |  |  | 257 |  |  |  | — |  |  |  | — |  |  |  | 89 |  |  |  | 1,296 |  |  |  | 2,487 |  |  |  | 819 |  |  |  | 4,948 |
Doubtful & Loss |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total Commercial and industrial loans: | $ | 148,909 |  |  | $ | 144,842 |  |  | $ | 100,804 |  |  | $ | 89,295 |  |  | $ | 72,555 |  |  | $ | 99,309 |  |  | $ | 302,555 |  |  | $ | 11,626 |  |  | $ | 969,895 |
Current YTD Period: Gross charge-offs | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 109 |  |  | $ | 109 |
| Origination Year |  |  | Revolving loans amortized |  |  | Revolving loans converted to |  |  |  |
December 31, 2023 | 2023 |  |  | 2022 |  |  | 2021 |  |  | 2020 |  |  | 2019 |  |  | Prior |  |  | cost basis |  |  | term loans |  |  | Total |
| (Dollars in thousands) |
Dairy & livestock and agribusiness loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | $ | 296 |  |  | $ | — |  |  | $ | 1,586 |  |  | $ | 931 |  |  | $ | 80 |  |  | $ | 208 |  |  | $ | 337,525 |  |  | $ | — |  |  | $ | 340,626 |
Special Mention |  | 448 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 25 |  |  |  | — |  |  |  | 69,232 |  |  |  | — |  |  |  | 69,705 |
Substandard |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 60 |  |  |  | 2,500 |  |  |  | — |  |  |  | 2,560 |
Doubtful & Loss |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total Dairy & livestock and agribusiness loans: | $ | 744 |  |  | $ | — |  |  | $ | 1,586 |  |  | $ | 931 |  |  | $ | 105 |  |  | $ | 268 |  |  | $ | 409,257 |  |  | $ | — |  |  | $ | 412,891 |
Current YTD Period: Gross charge-offs | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Municipal lease finance receivables loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | $ | — |  |  | $ | 5,735 |  |  | $ | 25,803 |  |  | $ | 5,981 |  |  | $ | 4,267 |  |  | $ | 31,622 |  |  | $ | — |  |  | $ | — |  |  | $ | 73,408 |
Special Mention |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 182 |  |  |  | — |  |  |  | — |  |  |  | 182 |
Substandard |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Doubtful & Loss |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total Municipal lease finance receivables loans: | $ | — |  |  | $ | 5,735 |  |  | $ | 25,803 |  |  | $ | 5,981 |  |  | $ | 4,267 |  |  | $ | 31,804 |  |  | $ | — |  |  | $ | — |  |  | $ | 73,590 |
Current YTD Period: Gross charge-offs | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
SFR mortgage loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | $ | 22,248 |  |  | $ | 61,070 |  |  | $ | 43,573 |  |  | $ | 44,076 |  |  | $ | 28,049 |  |  | $ | 67,750 |  |  | $ | — |  |  | $ | — |  |  | $ | 266,766 |
Special Mention |  | 789 |  |  |  | — |  |  |  | — |  |  |  | 918 |  |  |  | 544 |  |  |  | 327 |  |  |  | — |  |  |  | — |  |  |  | 2,578 |
Substandard |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 200 |  |  |  | — |  |  |  | 324 |  |  |  | 524 |
Doubtful & Loss |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total SFR mortgage loans: | $ | 23,037 |  |  | $ | 61,070 |  |  | $ | 43,573 |  |  | $ | 44,994 |  |  | $ | 28,593 |  |  | $ | 68,277 |  |  | $ | — |  |  | $ | 324 |  |  | $ | 269,868 |
Current YTD Period: Gross charge-offs | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Consumer and other loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | $ | 4,911 |  |  | $ | 4,122 |  |  | $ | 2,707 |  |  | $ | 702 |  |  | $ | 644 |  |  | $ | 486 |  |  | $ | 38,595 |  |  | $ | 871 |  |  | $ | 53,038 |
Special Mention |  | — |  |  |  | — |  |  |  | 246 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 4 |  |  |  | 173 |  |  |  | 423 |
Substandard |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 12 |  |  |  | 1 |  |  |  | 598 |  |  |  | 611 |
Doubtful & Loss |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total Consumer and other loans: | $ | 4,911 |  |  | $ | 4,122 |  |  | $ | 2,953 |  |  | $ | 702 |  |  | $ | 644 |  |  | $ | 498 |  |  | $ | 38,600 |  |  | $ | 1,642 |  |  | $ | 54,072 |
Current YTD Period: Gross charge-offs | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 4 |  |  | $ | — |  |  | $ | 4 |  |  | $ | 8 |
Total Loans, at amortized cost: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | $ | 638,501 |  |  | $ | 1,593,595 |  |  | $ | 1,381,084 |  |  | $ | 1,065,424 |  |  | $ | 605,169 |  |  | $ | 2,337,278 |  |  | $ | 854,820 |  |  | $ | 44,899 |  |  | $ | 8,520,770 |
Special Mention |  | 12,307 |  |  |  | 6,262 |  |  |  | 18,989 |  |  |  | 25,622 |  |  |  | 49,639 |  |  |  | 80,928 |  |  |  | 82,676 |  |  |  | 5,520 |  |  |  | 281,943 |
Substandard |  | 744 |  |  |  | 8,384 |  |  |  | 2,891 |  |  |  | 33,401 |  |  |  | 13,824 |  |  |  | 35,423 |  |  |  | 5,789 |  |  |  | 1,741 |  |  |  | 102,197 |
Doubtful & Loss |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total Loans at amortized cost: | $ | 651,552 |  |  | $ | 1,608,241 |  |  | $ | 1,402,964 |  |  | $ | 1,124,447 |  |  | $ | 668,632 |  |  | $ | 2,453,629 |  |  | $ | 943,285 |  |  | $ | 52,160 |  |  | $ | 8,904,910 |
Current YTD Period: Gross charge-offs | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 292 |  |  | $ | — |  |  | $ | 113 |  |  | $ | 405 |
| Origination Year |  |  | Revolving loans amortized |  |  | Revolving loans converted to |  |  |  |
December 31, 2022 | 2022 |  |  | 2021 |  |  | 2020 |  |  | 2019 |  |  | 2018 |  |  | Prior |  |  | cost basis |  |  | term loans |  |  | Total |
| (Dollars in thousands) |
Commercial real estate loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | $ | 1,363,733 |  |  | $ | 1,197,290 |  |  | $ | 957,965 |  |  | $ | 542,827 |  |  | $ | 506,613 |  |  | $ | 1,889,478 |  |  | $ | 175,373 |  |  | $ | 39,616 |  |  | $ | 6,672,895 |
Special Mention |  | 3,285 |  |  |  | 12,114 |  |  |  | 11,284 |  |  |  | 32,976 |  |  |  | 21,646 |  |  |  | 76,290 |  |  |  | 908 |  |  |  | — |  |  |  | 158,503 |
Substandard |  | — |  |  |  | — |  |  |  | 15,624 |  |  |  | 16,297 |  |  |  | 94 |  |  |  | 21,535 |  |  |  | — |  |  |  | — |  |  |  | 53,550 |
Doubtful & Loss |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total Commercial real estate loans: | $ | 1,367,018 |  |  | $ | 1,209,404 |  |  | $ | 984,873 |  |  | $ | 592,100 |  |  | $ | 528,353 |  |  | $ | 1,987,303 |  |  | $ | 176,281 |  |  | $ | 39,616 |  |  | $ | 6,884,948 |
Construction loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | $ | 17,203 |  |  | $ | 26,689 |  |  | $ | 16,578 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 22,850 |  |  | $ | — |  |  | $ | 83,320 |
Special Mention |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 4,951 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 4,951 |
Substandard |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Doubtful & Loss |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total Construction loans: | $ | 17,203 |  |  | $ | 26,689 |  |  | $ | 16,578 |  |  | $ | — |  |  | $ | 4,951 |  |  | $ | — |  |  | $ | 22,850 |  |  | $ | — |  |  | $ | 88,271 |
SBA loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | $ | 60,623 |  |  | $ | 54,781 |  |  | $ | 35,243 |  |  | $ | 7,460 |  |  | $ | 28,886 |  |  | $ | 96,473 |  |  | $ | 1,026 |  |  | $ | — |  |  | $ | 284,492 |
Special Mention |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,321 |  |  |  | 1,293 |  |  |  | 2,065 |  |  |  | — |  |  |  | — |  |  |  | 4,679 |
Substandard |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 556 |  |  |  | 1,181 |  |  |  | — |  |  |  | — |  |  |  | 1,737 |
Doubtful & Loss |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total SBA loans: | $ | 60,623 |  |  | $ | 54,781 |  |  | $ | 35,243 |  |  | $ | 8,781 |  |  | $ | 30,735 |  |  | $ | 99,719 |  |  | $ | 1,026 |  |  | $ | — |  |  | $ | 290,908 |
SBA - PPP loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | $ | — |  |  | $ | 5,515 |  |  | $ | 3,572 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 9,087 |
Special Mention |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Substandard |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Doubtful & Loss |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total SBA - PPP loans: | $ | — |  |  | $ | 5,515 |  |  | $ | 3,572 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 9,087 |
Commercial and industrial loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | $ | 154,765 |  |  | $ | 135,162 |  |  | $ | 80,763 |  |  | $ | 101,192 |  |  | $ | 42,731 |  |  | $ | 85,406 |  |  | $ | 305,589 |  |  | $ | 7,775 |  |  | $ | 913,383 |
Special Mention |  | 3,955 |  |  |  | 761 |  |  |  | 459 |  |  |  | 1,693 |  |  |  | 462 |  |  |  | 8 |  |  |  | 15,156 |  |  |  | 544 |  |  |  | 23,038 |
Substandard |  | 494 |  |  |  | — |  |  |  | 728 |  |  |  | 959 |  |  |  | 5,624 |  |  |  | 496 |  |  |  | 3,200 |  |  |  | 761 |  |  |  | 12,262 |
Doubtful & Loss |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total Commercial and industrial loans: | $ | 159,214 |  |  | $ | 135,923 |  |  | $ | 81,950 |  |  | $ | 103,844 |  |  | $ | 48,817 |  |  | $ | 85,910 |  |  | $ | 323,945 |  |  | $ | 9,080 |  |  | $ | 948,683 |
| Origination Year |  |  | Revolving loans amortized |  |  | Revolving loans converted to |  |  |  |
December 31, 2022 | 2022 |  |  | 2021 |  |  | 2020 |  |  | 2019 |  |  | 2018 |  |  | Prior |  |  | cost basis |  |  | term loans |  |  | Total |
| (Dollars in thousands) |
Dairy & livestock and agribusiness loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | $ | 207 |  |  | $ | 2,318 |  |  | $ | 1,515 |  |  | $ | 187 |  |  | $ | 69 |  |  | $ | 628 |  |  | $ | 400,229 |  |  | $ | 450 |  |  | $ | 405,603 |
Special Mention |  | — |  |  |  | — |  |  |  | — |  |  |  | 599 |  |  |  | 46 |  |  |  | — |  |  |  | 17,129 |  |  |  | 853 |  |  |  | 18,627 |
Substandard |  | 1,041 |  |  |  | — |  |  |  | 40 |  |  |  | — |  |  |  | 95 |  |  |  | 113 |  |  |  | 1,841 |  |  |  | 6,204 |  |  |  | 9,334 |
Doubtful & Loss |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total Dairy & livestock and agribusiness loans: | $ | 1,248 |  |  | $ | 2,318 |  |  | $ | 1,555 |  |  | $ | 786 |  |  | $ | 210 |  |  | $ | 741 |  |  | $ | 419,199 |  |  | $ | 7,507 |  |  | $ | 433,564 |
Municipal lease finance receivables loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | $ | 6,442 |  |  | $ | 26,858 |  |  | $ | 6,814 |  |  | $ | 4,327 |  |  | $ | 4,948 |  |  | $ | 31,292 |  |  | $ | — |  |  | $ | — |  |  | $ | 80,681 |
Special Mention |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 262 |  |  |  | — |  |  |  | — |  |  |  | 262 |
Substandard |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 183 |  |  |  | — |  |  |  | — |  |  |  | 183 |
Doubtful & Loss |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total Municipal lease finance receivables loans: | $ | 6,442 |  |  | $ | 26,858 |  |  | $ | 6,814 |  |  | $ | 4,327 |  |  | $ | 4,948 |  |  | $ | 31,737 |  |  | $ | — |  |  | $ | — |  |  | $ | 81,126 |
SFR mortgage loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | $ | 63,761 |  |  | $ | 46,748 |  |  | $ | 45,819 |  |  | $ | 33,585 |  |  | $ | 15,836 |  |  | $ | 58,730 |  |  | $ | — |  |  | $ | — |  |  | $ | 264,479 |
Special Mention |  | — |  |  |  | — |  |  |  | 943 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 943 |
Substandard |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 214 |  |  |  | — |  |  |  | 388 |  |  |  | 602 |
Doubtful & Loss |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total SFR mortgage loans: | $ | 63,761 |  |  | $ | 46,748 |  |  | $ | 46,762 |  |  | $ | 33,585 |  |  | $ | 15,836 |  |  | $ | 58,944 |  |  | $ | — |  |  | $ | 388 |  |  | $ | 266,024 |
Consumer and other loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | $ | 7,653 |  |  | $ | 3,722 |  |  | $ | 1,298 |  |  | $ | 926 |  |  | $ | 79 |  |  | $ | 1,277 |  |  | $ | 58,578 |  |  | $ | 1,107 |  |  | $ | 74,640 |
Special Mention |  | — |  |  |  | 561 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 590 |  |  |  | — |  |  |  | 1,151 |
Substandard |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 13 |  |  |  | 5 |  |  |  | 972 |  |  |  | 990 |
Doubtful & Loss |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total Consumer and other loans: | $ | 7,653 |  |  | $ | 4,283 |  |  | $ | 1,298 |  |  | $ | 926 |  |  | $ | 79 |  |  | $ | 1,290 |  |  | $ | 59,173 |  |  | $ | 2,079 |  |  | $ | 76,781 |
Total Loans, at amortized cost: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk Rating: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass | $ | 1,674,387 |  |  | $ | 1,499,083 |  |  | $ | 1,149,567 |  |  | $ | 690,504 |  |  | $ | 599,162 |  |  | $ | 2,163,284 |  |  | $ | 963,645 |  |  | $ | 48,948 |  |  | $ | 8,788,580 |
Special Mention |  | 7,240 |  |  |  | 13,436 |  |  |  | 12,686 |  |  |  | 36,589 |  |  |  | 28,398 |  |  |  | 78,625 |  |  |  | 33,783 |  |  |  | 1,397 |  |  |  | 212,154 |
Substandard |  | 1,535 |  |  |  | — |  |  |  | 16,392 |  |  |  | 17,256 |  |  |  | 6,369 |  |  |  | 23,735 |  |  |  | 5,046 |  |  |  | 8,325 |  |  |  | 78,658 |
Doubtful & Loss |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total Loans at amortized cost: | $ | 1,683,162 |  |  | $ | 1,512,519 |  |  | $ | 1,178,645 |  |  | $ | 744,349 |  |  | $ | 633,929 |  |  | $ | 2,265,644 |  |  | $ | 1,002,474 |  |  | $ | 58,670 |  |  | $ | 9,079,392 |
Allowance for Credit Losses The Company's allowance models calculate reserves over the average life of the loan, which includes the remaining time to maturity, adjusted for estimated prepayments applied as an adjustment to our commercial real estate and commercial and industrial loans. Our allowance for credit losses 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. A substantial portion of the ACL relates to loans within the Commercial Real Estate and Commercial and Industrial methodologies, each evaluated on a collective basis. Our ACL amounts are largely driven by portfolio characteristics, including loss history, internal risk grading, various risk attributes, and the economic outlook for certain macroeconomic variables. Risk attributes for commercial real estate loans include Original Loan to Value ratios ("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. 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 Paycheck 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. The Company’s ACL estimate incorporates a reasonable and supportable forecast of various macroeconomic variables over the remaining average life of our loans. This forecast incorporates an assumption that each macroeconomic variable will revert to a long-term expectation, starting in years two through three, of the reasonable and supportable forecast period, with the reversion largely completed within the first five years of the forecast. The economic forecast is based on probability weighted scenarios to address macroeconomic uncertainty. 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. The ACL totaled $86.8 million as of December 31, 2023, compared to $85.1 million as of December 31, 2022. The $1.7 million increase is comprised of $2.0 million in provision for credit losses, offset by $275,000 in net charge-offs. At December 31, 2023, the ACL as a percentage of total loans and leases, at amortized cost was 0.98% of total loans. This compares to 0.94% at December 31, 2022. As a result of the acquisition of Suncrest, we recorded a provision for credit loss of $4.9 million on January 7, 2022 to establish the ACL for the acquired loans that were not considered PCD. The ACL at January 7, 2022, also included $8.6 million for the acquired Suncrest PCD loans. The 20.1 million increase in the ACL from December 31, 2021 to December 31, 2022 was comprised of approximately $893,000 in net recoveries, the $8.6 million for the Suncrest PCD loans and a $10.5 million provision for credit losses, including the $4.9 million provision recorded to establish the ACL for the non-PCD loans acquired from Suncrest. Our economic forecast continues to be a blend of multiple forecasts produced by Moody’s. These U.S. economic forecasts include a baseline forecast, as well as downside forecasts. The baseline forecast continues to represent the largest weighting in our multi-weighted forecast scenario, with downside risks weighted among multiple forecasts. The resulting economic forecast reflects a modest decline in GDP in the first three quarters of 2024, with a return to positive GDP growth in the fourth quarter of 2024. GDP is forecasted to increase by 0.92% in 2025, before reaching a more robust growth rate of 2.6% in 2026. Commercial Real Estate values are forecasted to continue their decline until reaching their lowest level in the third quarter 2024. Unemployment is forecasted to rise in 2024 and throughout 2025. The unemployment rate is forecasted to exceed 5% in 2024 and then peak at 5.7% in the first quarter of 2025. The unemployment rate is then forecasted to decline to less than 5% in the third quarter of 2026. Management believes that the ACL was appropriate at December 31, 2023 and 2022. Due to inflationary pressures, high interest rates, lower commercial real estate values, and geopolitical events, 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, 2023 |
|  | Ending Balance December 31, 2022 |  |  | Charge-offs |  |  | Recoveries |  |  | Provision for (Recapture of) Credit Losses |  |  | Ending Balance December 31, 2023 |
|  | (Dollars in thousands) |
Commercial real estate |  | $ | 64,806 |  |  | $ | — |  |  | $ | — |  |  | $ | 4,660 |  |  | $ | 69,466 |
Construction |  |  | 1,702 |  |  |  | — |  |  |  | 12 |  |  |  | (437 | ) |  |  | 1,277 |
SBA |  |  | 2,809 |  |  |  | (288 | ) |  |  | 73 |  |  |  | 85 |  |  |  | 2,679 |
SBA - PPP |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Commercial and industrial |  |  | 10,206 |  |  |  | (109 | ) |  |  | 14 |  |  |  | (995 | ) |  |  | 9,116 |
Dairy & livestock and agribusiness |  |  | 4,400 |  |  |  | — |  |  |  | 31 |  |  |  | (1,333 | ) |  |  | 3,098 |
Municipal lease finance receivables |  |  | 296 |  |  |  | — |  |  |  | — |  |  |  | (86 | ) |  |  | 210 |
SFR mortgage |  |  | 366 |  |  |  | — |  |  |  | — |  |  |  | 169 |  |  |  | 535 |
Consumer and other loans |  |  | 532 |  |  |  | (8 | ) |  |  | — |  |  |  | (63 | ) |  |  | 461 |
Total allowance for credit losses |  | $ | 85,117 |  |  | $ | (405 | ) |  | $ | 130 |  |  | $ | 2,000 |  |  | $ | 86,842 |
|  | Year Ended December 31, 2022 |
|  | Ending Balance December 31, 2021 |  |  | Charge-offs |  |  | Recoveries |  |  | Initial ACL for PCD Loans at Acquisition |  |  | Provision Recorded at Acquisition |  |  | Provision for (Recapture of) Credit Losses |  |  | Ending Balance December 31, 2022 |
|  | (Dollars in thousands) |
Commercial real estate |  | $ | 50,950 |  |  | $ | — |  |  | $ | — |  |  | $ | 5,086 |  |  | $ | 4,127 |  |  | $ | 4,643 |  |  | $ | 64,806 |
Construction |  |  | 765 |  |  |  | — |  |  |  | 12 |  |  | 122 |  |  | 58 |  |  |  | 745 |  |  |  | 1,702 |
SBA |  |  | 2,668 |  |  |  | (127 | ) |  |  | 107 |  |  | 62 |  |  | 64 |  |  |  | 35 |  |  |  | 2,809 |
SBA - PPP |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Commercial and industrial |  |  | 6,669 |  |  |  | (66 | ) |  |  | 503 |  |  | 500 |  |  | 508 |  |  |  | 2,092 |  |  |  | 10,206 |
Dairy & livestock and agribusiness |  |  | 3,066 |  |  |  | — |  |  |  | 468 |  |  | 2832 |  |  | 149 |  |  |  | (2,115 | ) |  |  | 4,400 |
Municipal lease finance receivables |  |  | 100 |  |  |  | — |  |  |  | — |  |  | 3 |  |  | 26 |  |  |  | 167 |  |  |  | 296 |
SFR mortgage |  |  | 188 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 178 |  |  |  | 366 |
Consumer and other loans |  |  | 613 |  |  |  | (4 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (77 | ) |  |  | 532 |
Total allowance for loan losses |  | $ | 65,019 |  |  | $ | (197 | ) |  | $ | 1,090 |  |  | $ | 8,605 |  |  | $ | 4,932 |  |  | $ | 5,668 |  |  | $ | 85,117 |
|  | Year Ended December 31, 2021 |
|  | Ending Balance December 31, 2020 |  |  | Charge-offs |  |  | Recoveries |  |  | Provision for (Recapture of) Credit Losses |  |  | Ending Balance December 31, 2021 |
|  | (Dollars in thousands) |  |  |  |
Commercial real estate |  | $ | 75,439 |  |  | $ | — |  |  | $ | — |  |  | $ | (24,489 | ) |  | $ | 50,950 |
Construction |  |  | 1,934 |  |  |  | — |  |  |  | 58 |  |  |  | (1,227 | ) |  |  | 765 |
SBA |  |  | 2,992 |  |  |  | (223 | ) |  |  | 23 |  |  |  | (124 | ) |  |  | 2,668 |
SBA - PPP |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Commercial and industrial |  |  | 7,142 |  |  |  | (3,019 | ) |  |  | 12 |  |  |  | 2,534 |  |  |  | 6,669 |
Dairy & livestock and agribusiness |  |  | 3,949 |  |  |  | (118 | ) |  |  | — |  |  |  | (765 | ) |  |  | 3,066 |
Municipal lease finance receivables |  |  | 74 |  |  |  | — |  |  |  | — |  |  |  | 26 |  |  |  | 100 |
SFR mortgage |  |  | 367 |  |  |  | — |  |  |  | 79 |  |  |  | (258 | ) |  |  | 188 |
Consumer and other loans |  |  | 1,795 |  |  |  | (11 | ) |  |  | 26 |  |  |  | (1,197 | ) |  |  | 613 |
Total allowance for credit losses |  | $ | 93,692 |  |  | $ | (3,371 | ) |  | $ | 198 |  |  | $ | (25,500 | ) |  | $ | 65,019 |
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 responsible for 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, 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, 2023 |
| 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 | $ | 300 |  |  | $ | — |  |  | $ | 2,505 |  |  | $ | 2,805 |  |  | $ | 2,430,447 |  |  | $ | 2,433,252 |
Non-owner occupied |  | 16 |  |  |  | — |  |  |  | 531 |  |  |  | 547 |  |  |  | 4,350,706 |  |  |  | 4,351,253 |
Construction |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Speculative (1) |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 57,921 |  |  |  | 57,921 |
Non-speculative |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 8,813 |  |  |  | 8,813 |
SBA |  | — |  |  |  | 108 |  |  |  | 969 |  |  |  | 1,077 |  |  |  | 269,542 |  |  |  | 270,619 |
SBA - PPP |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2,736 |  |  |  | 2,736 |
Commercial and industrial |  | 12 |  |  |  | — |  |  |  | 4,253 |  |  |  | 4,265 |  |  |  | 965,630 |  |  |  | 969,895 |
Dairy & livestock and agribusiness |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 412,891 |  |  |  | 412,891 |
Municipal lease finance receivables |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 73,590 |  |  |  | 73,590 |
SFR mortgage |  | 201 |  |  |  | — |  |  |  | — |  |  |  | 201 |  |  |  | 269,667 |  |  |  | 269,868 |
Consumer and other loans |  | 18 |  |  |  | — |  |  |  | — |  |  |  | 18 |  |  |  | 54,054 |  |  |  | 54,072 |
Total gross loans | $ | 547 |  |  | $ | 108 |  |  | $ | 8,258 |  |  | $ | 8,913 |  |  | $ | 8,895,997 |  |  | $ | 8,904,910 |
(1) Speculative construction loans are generally for properties where there is no identified buyer or renter.
| December 31, 2022 |
| 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 | $ | — |  |  | $ | — |  |  | $ | 2,639 |  |  | $ | 2,639 |  |  | $ | 2,482,471 |  |  | $ | 2,485,110 |
Non-owner occupied |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 4,399,838 |  |  |  | 4,399,838 |
Construction |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Speculative (1) |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 67,436 |  |  |  | 67,436 |
Non-speculative |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 20,835 |  |  |  | 20,835 |
SBA |  | 374 |  |  |  | 182 |  |  |  | 443 |  |  |  | 999 |  |  |  | 289,909 |  |  |  | 290,908 |
SBA - PPP |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 9,087 |  |  |  | 9,087 |
Commercial and industrial |  | — |  |  |  | — |  |  |  | 1,318 |  |  |  | 1,318 |  |  |  | 947,365 |  |  |  | 948,683 |
Dairy & livestock and agribusiness |  | — |  |  |  | — |  |  |  | 269 |  |  |  | 269 |  |  |  | 433,295 |  |  |  | 433,564 |
Municipal lease finance receivables |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 81,126 |  |  |  | 81,126 |
SFR mortgage |  | — |  |  |  | 388 |  |  |  | — |  |  |  | 388 |  |  |  | 265,636 |  |  |  | 266,024 |
Consumer and other loans |  | 175 |  |  |  | — |  |  |  | 33 |  |  |  | 208 |  |  |  | 76,573 |  |  |  | 76,781 |
Total gross loans | $ | 549 |  |  | $ | 570 |  |  | $ | 4,702 |  |  | $ | 5,821 |  |  | $ | 9,073,571 |  |  | $ | 9,079,392 |
(1) Speculative construction loans are generally for properties where there is no identified buyer or renter. Amortized cost of our finance receivables and loans that are on nonaccrual status, including loans with no allowance are presented as of December 31, 2023 and December 31, 2022 by type of loan.
| December 31, 2023 |
| Nonaccrual with No Allowance for Credit Losses |  |  | Total Nonaccrual (1) |  |  | Loans Past Due Over 89 Days Still Accruing |
| (Dollars in thousands) |
Commercial real estate |  |  |  |  |  |  |  |
Owner occupied | $ | 2,505 |  |  | $ | 2,505 |  |  | $ | — |
Non-owner occupied |  | 548 |  |  |  | 12,935 |  |  |  | — |
Construction |  |  |  |  |  |  |  |
Speculative (2) |  | — |  |  |  | — |  |  |  | — |
Non-speculative |  | — |  |  |  | — |  |  |  | — |
SBA |  | 787 |  |  |  | 969 |  |  |  | — |
SBA - PPP |  | — |  |  |  | — |  |  |  | — |
Commercial and industrial |  | 908 |  |  |  | 4,509 |  |  |  | — |
Dairy & livestock and agribusiness |  | 60 |  |  |  | 60 |  |  |  | — |
Municipal lease finance receivables |  | — |  |  |  | — |  |  |  | — |
SFR mortgage |  | 323 |  |  |  | 324 |  |  |  | — |
Consumer and other loans |  | — |  |  |  | — |  |  |  | — |
Total loans | $ | 5,131 |  |  | $ | 21,302 |  |  | $ | — |
(1) As of December 31, 2023, $13.0 million of nonaccruing loans were current, $16,000 were 30-59 days past due, and $8.3 million were 90+ days past due. (2) Speculative construction loans are generally for properties where there is no identified buyer or renter.
| December 31, 2022 |
| 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 | $ | 2,639 |  |  | $ | 2,639 |  |  | $ | — |
Non-owner occupied |  | 18 |  |  |  | 18 |  |  |  | — |
Construction |  |  |  |  |  |  |  |
Speculative (2) |  | — |  |  |  | — |  |  |  | — |
Non-speculative |  | — |  |  |  | — |  |  |  | — |
SBA |  | 268 |  |  |  | 443 |  |  |  | — |
SBA - PPP |  | — |  |  |  | — |  |  |  | — |
Commercial and industrial |  | 771 |  |  |  | 1,320 |  |  |  | — |
Dairy & livestock and agribusiness |  | 364 |  |  |  | 477 |  |  |  | — |
Municipal lease finance receivables |  | — |  |  |  | — |  |  |  | — |
SFR mortgage |  | — |  |  |  | — |  |  |  | — |
Consumer and other loans |  | 34 |  |  |  | 33 |  |  |  | — |
Total loans | $ | 4,094 |  |  | $ | 4,930 |  |  | $ | — |
(1) As of December 31, 2022, $228,000 of nonaccruing loans were current and $4.7 million were 90+ days past due. (2) Speculative construction loans are generally for properties where there is no identified buyer or renter. (3) Excludes $221,000 of guaranteed portion of nonaccrual SBA loans that are in process of collection. 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, 2023 |  |  | Number of Loans |
| Real Estate |  |  | Business Assets |  |  | Other |  |  | Dependent on Collateral |
| (Dollars in thousands) |
Commercial real estate | $ | 15,440 |  |  | $ | — |  |  | $ | — |  |  |  | 5 |
Construction |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
SBA |  | 749 |  |  |  | 220 |  |  |  | — |  |  |  | 4 |
SBA - PPP |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Commercial and industrial |  | 392 |  |  |  | 2,950 |  |  |  | 1,167 |  |  |  | 8 |
Dairy & livestock and agribusiness |  | 60 |  |  |  | — |  |  |  | — |  |  |  | 1 |
Municipal lease finance receivables |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
SFR mortgage |  | 324 |  |  |  | — |  |  |  | — |  |  |  | 1 |
Consumer and other loans |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total collateral-dependent loans | $ | 16,965 |  |  | $ | 3,170 |  |  | $ | 1,167 |  |  |  | 19 |
| December 31, 2022 |  |  | Number of Loans |
| Real Estate |  |  | Business Assets |  |  | Other |  |  | Dependent on Collateral |
| (Dollars in thousands) |
Commercial real estate | $ | 17,935 |  |  | $ | — |  |  | $ | — |  |  |  | 4 |
Construction |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
SBA |  | 151 |  |  |  | 292 |  |  |  | — |  |  |  | 6 |
SBA - PPP |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Commercial and industrial |  | 87 |  |  |  | 2,774 |  |  |  | 81 |  |  |  | 13 |
Dairy & livestock and agribusiness |  | 269 |  |  |  | 2,000 |  |  |  | 208 |  |  |  | 4 |
Municipal lease finance receivables |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
SFR mortgage |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Consumer and other loans |  | 33 |  |  |  | — |  |  |  | — |  |  |  | 1 |
Total collateral-dependent loans | $ | 18,475 |  |  | $ | 5,066 |  |  | $ | 289 |  |  |  | 28 |
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. The Bank's ACL methodology produced an allowance of $7.5 million for the off-balance sheet credit exposures as of December 31, 2023. There was $500,000 in recapture of provision for unfunded loan commitments for the year ended December 31, 2023 and no provision for the year ended December 31, 2022. As of December 31, 2023 and December 31, 2022 the balance in this reserve was $7.5 million and $8.0 million, respectively, and was included in other liabilities. Modifications of Loans to Borrowers Experiencing Financial Difficulty The Company adopted Accounting Standards Update (“ASU”) 2022-02, Financial Instruments - Credit Losses (Topic 326) Troubled Debt Restructurings and Vintage Disclosures (“ASU 2022-02”) effective January 1,2023. The amendments in ASU 2022-02 eliminated the recognition and measurement of TDRs and enhanced disclosures for loan modifications to borrowers experiencing financial difficulty. The table below reflects the amortized cost of loans by type made to borrowers experiencing financial difficulty that were modified as of December 31, 2023.
|  |  | Term Extension |
|  |  | Amortized Cost Basis |  |  | % of Total Class of |
|  |  | at December 31, 2023 |  |  | Financing Receivables |
|  |  | (Dollars in thousands) |  |  |  |
| Commercial real estate loans |  | $ | 2,550 |  |  |  | 0.03 | %
| Commercial and industrial |  |  | 1,305 |  |  |  | 0.01 | %
| Dairy & livestock and agribusiness |  |  | 4,639 |  |  |  | 0.05 | %
| Total |  | $ | 8,494 |  |  |  |
|  |  | Combination-Term Extension and Interest Rate Reduction |
|  |  | Amortized Cost Basis |  |  | % of Total Class of |
|  |  | at December 31, 2023 |  |  | Financing Receivables |
| Commercial real estate loans |  | $ | 688 |  |  |  | 0.01 | %
| Commercial and industrial |  |  | 278 |  |  |  | 0.00 | %
| Total |  | $ | 966 |  |  |  |
The following table describes the financial effect of the loan modifications made to borrowers experiencing financial difficulty as of December 31, 2023.
| Loan Type |  | Financial Effect
|  |  | Term Extension
| Commercial real estate loans |  | Added a weighted-average 1.0 years to the life of loans, which reduced monthly payment amounts for the borrowers.
| Commercial and industrial |  | Added a weighted-average 0.3 years to the life of loans, which reduced monthly payment amounts for the borrowers.
| Dairy & livestock and agribusiness |  | Added a weighted-average 0.5 years to the life of loans, which reduced monthly payment amounts for the borrowers.
|  |  | Combination-Term Extension and Interest Rate Reduction
| Commercial real estate loans |  | Added a weighted-average 7.6 years to the life of loans, which reduced monthly payment amounts for the borrowers; reduced weighted-average contractual interest rate from 10% to 7.25%.
| Commercial and industrial |  | Added a weighted-average 2.0 years to the life of loans, which reduced monthly payment amounts for the borrowers; reduced weighted-average contractual interest rate from 10% to 7.75%.
As of December 31, 2023, the Company did not have any loans made to borrowers experiencing financial difficulty that were modified during 2023 that subsequently defaulted. Payment default is defined as movement to nonaccrual (nonperforming) status, foreclosure or charge-off, whichever occurs first. The following table presents the recorded investment in, and the aging of, past due loans at amortized cost (including nonaccrual loans), by type of loans, made to borrowers experiencing financial difficulty that were modified on or after January 1, 2023, the date we adopted ASU 2022-02.
|  |  | Payment Status (amortized cost basis) |
|  |  | Current |  |  | 30-89 Days Past Due |  |  | 90+ Days Past Due |
|  |  | (Dollars in thousands) |
| Commercial real estate loans |  | $ | 3,238 |  |  | $ | — |  |  | $ | — |
| Commercial and industrial |  |  | 1,583 |  |  |  | — |  |  |  | — |
| Dairy & livestock and agribusiness |  |  | 4,639 |  |  |  | — |  |  |  | — |
| Total |  | $ | 9,460 |  |  | $ | — |  |  | $ | — |
Troubled Debt Restructurings ("TDRs") Prior to January 1, 2023, loans reported as TDRs were considered impaired and charge-off amounts were 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. Loans that are reported as TDRs and are considered uncollectible, 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, for a more detailed discussion regarding TDRs. As of December 31, 2022, there were $7.8 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, 2022, performing TDRs were comprised of four commercial and industrial loans of $4.8 million, one dairy & livestock and agribusiness loan of $2.0 million, and five SFR mortgage loans of $1.0 million. The majority of TDRs have no specific allowance allocated as any impairment amount is normally charged off at the time the loan is considered uncollectible. We had no allocated allowance to TDRs as of December 31, 2022. The following table provides a summary of the activity related to TDRs for the periods presented.
|  | Year Ended December 31, |
|  | 2022 |
Performing TDRs: |  |  |
Beginning balance |  | $ | 5,293 |
New modifications |  |  | 5,204 |
Payoffs/payments, net and other |  |  | (2,680 | )
TDRs returned to accrual status |  |  | — |
TDRs placed on nonaccrual status |  |  | — |
Ending balance |  | $ | 7,817 |
Nonperforming TDRs: |  |  |
Beginning balance |  | $ | — |
New modifications |  |  | — |
Charge-offs |  |  | — |
Transfer to OREO |  |  | — |
Payoffs/payments, net and other |  |  | — |
TDRs returned to accrual status |  |  | — |
TDRs placed on nonaccrual status |  |  | — |
Ending balance |  | $ | — |
Total TDRs |  | $ | 7,817 |
The following tables summarize loans modified as TDRs for the periods presented. Modifications (1)
| For the Year Ended December 31, 2022 |
| Number of Loans |  |  | Pre-Modification Outstanding Recorded Investment |  |  | Post-Modification Outstanding Recorded Investment |  |  | Outstanding Recorded Investment at December 31, 2022 |  |  | Financial Effect Resulting From Modifications (2) |
| (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 |  | 2 |  |  |  | 3,204 |  |  |  | 3,204 |  |  |  | 3,204 |  |  |  | — |
Dairy & livestock and agribusiness: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate reduction |  | 1 |  |  |  | 2,000 |  |  |  | 2,000 |  |  |  | 2,000 |  |  |  | — |
Change in amortization period or maturity |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
SFR mortgage: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate reduction |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Change in amortization period or maturity |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total loans |  | 3 |  |  | $ | 5,204 |  |  | $ | 5,204 |  |  | $ | 5,204 |  |  | $ | — |
(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 current allowance for credit losses at modification date. As of December 31, 2022, there were no loans that were modified as a TDR within the previous 12 months that subsequently defaulted during the twelve months ended December 31, 2022.

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