As of September 30, 2024, 80.50% of the Company’s total loan portfolio consisted of real estate loans, with commercial real estate loans representing 77.21% of total loans. The Company’s real estate loans and construction loans are secured by real properties primarily located in California. As of September 30, 2024, $460.7 million, or 6.96% of the total commercial real estate loans included loans secured by farmland, compared to $497.7 million, or 7.34%, at December 31, 2023. The loans secured by farmland included $121.9 million for loans secured by dairy & livestock land and $338.8 million for loans secured by agricultural land at September 30, 2024, compared to $122.4 million for loans secured by dairy & livestock land and $375.3 million for loans secured by agricultural land at December 31, 2023. As of September 30, 2024, dairy & livestock and agribusiness loans of $342.4 million were comprised of $298.3 million for dairy & livestock loans and $44.1 million for agribusiness loans, compared to $412.9 million comprised of $374.9 million of dairy & livestock loans and $38.0 million of agribusiness loans December 31, 2023.

At September 30, 2024 and December 31, 2023, loans totaling $4.32 billion and $4.04 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 September 30, 2024 and December 31, 2023.

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
September 30, 2024	2024		2023		2022		2021		2020		Prior		cost basis		term loans		Total
	(Dollars in thousands)
Commercial real estate loans:
Risk Rating:
Pass	$	234,801	$	427,623	$	1,262,430	$	1,080,704	$	838,577	$	2,270,791	$	187,981	$	36,610	$	6,339,517
Special Mention		671		4,501		23,795		25,259		17,022		106,569		3,075		1,296		182,188
Substandard		—		244		8,890		6,224		25,309		55,301		964		—		96,932
Doubtful & Loss		—		—		—		—		—		—		—		—		—
Total Commercial real estate loans:	$	235,472	$	432,368	$	1,295,115	$	1,112,187	$	880,908	$	2,432,661	$	192,020	$	37,906	$	6,618,637
Current YTD Period: Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	2,258	$	—	$	—	$	2,258

Construction loans:
Risk Rating:
Pass	$	2,977	$	1,986	$	7,730	$	—	$	—	$	—	$	—	$	—	$	12,693
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		2,062		—		—		—		—		2,062
Doubtful & Loss		—		—		—		—		—		—		—		—		—
Total Construction loans:	$	2,977	$	1,986	$	7,730	$	2,062	$	—	$	—	$	—	$	—	$	14,755
Current YTD Period: Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

SBA loans:
Risk Rating:
Pass	$	25,973	$	17,213	$	47,143	$	49,661	$	24,005	$	95,298	$	—	$	—	$	259,293
Special Mention		—		—		—		—		4,736		2,895		—		—		7,631
Substandard		—		—		1,591		—		—		3,486		—		—		5,077
Doubtful & Loss		—		—		—		—		—		—		—		—		—
Total SBA loans:	$	25,973	$	17,213	$	48,734	$	49,661	$	28,741	$	101,679	$	—	$	—	$	272,001
Current YTD Period: Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	165	$	—	$	—	$	165

SBA - PPP loans:
Risk Rating:
Pass	$	—	$	—	$	—	$	366	$	889	$	—	$	—	$	—	$	1,255
Special Mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—		—
Doubtful & Loss		—		—		—		—		—		—		—		—		—
Total SBA - PPP loans:	$	—	$	—	$	—	$	366	$	889	$	—	$	—	$	—	$	1,255
Current YTD Period: Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial and industrial loans:
Risk Rating:
Pass	$	77,027	$	123,195	$	119,246	$	72,164	$	72,604	$	124,580	$	307,261	$	5,131	$	901,208
Special Mention		674		3,414		999		2,357		444		4,370		9,664		5,173		27,095
Substandard		—		1,472		253		79		—		7		2,400		3,975		8,186
Doubtful & Loss		—		—		—		—		—		—		—		—		—
Total Commercial and industrial loans:	$	77,701	$	128,081	$	120,498	$	74,600	$	73,048	$	128,957	$	319,325	$	14,279	$	936,489
Current YTD Period: Gross charge-offs	$	—	$	—	$	300	$	—	$	—	$	1,186	$	—	$	431	$	1,917


	Origination Year												Revolving loans amortized		Revolving loans converted to
September 30, 2024	2024		2023		2022		2021		2020		Prior		cost basis		term loans		Total
	(Dollars in thousands)
Dairy & livestock and agribusiness loans:
Risk Rating:
Pass	$	427	$	—	$	—	$	642	$	889	$	210	$	286,841	$	—	$	289,009
Special Mention		—		—		—		—		—		—		41,349		408		41,757
Substandard		—		—		—		—		—		60		9,562		2,057		11,679
Doubtful & Loss		—		—		—		—		—		—		—		—		—
Total Dairy & livestock and agribusiness loans:	$	427	$	—	$	—	$	642	$	889	$	270	$	337,752	$	2,465	$	342,445
Current YTD Period: Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Municipal lease finance receivables loans:
Risk Rating:
Pass	$	1,711	$	—	$	5,345	$	25,008	$	5,354	$	30,026	$	—	$	—	$	67,444
Special Mention		—		—		—		—		—		141		—		—		141
Substandard		—		—		—		—		—		—		—		—		—
Doubtful & Loss		—		—		—		—		—		—		—		—		—
Total Municipal lease finance receivables loans:	$	1,711	$	—	$	5,345	$	25,008	$	5,354	$	30,167	$	—	$	—	$	67,585
Current YTD Period: Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

SFR mortgage loans:
Risk Rating:
Pass	$	14,861	$	21,171	$	60,051	$	41,849	$	39,384	$	87,473	$	—	$	—	$	264,789
Special Mention		—		—		—		—		902		823		—		294		2,019
Substandard		—		—		—		—		—		373		—		—		373
Doubtful & Loss		—		—		—		—		—		—		—		—		—
Total SFR mortgage loans:	$	14,861	$	21,171	$	60,051	$	41,849	$	40,286	$	88,669	$	—	$	294	$	267,181
Current YTD Period: Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Consumer and other loans:
Risk Rating:
Pass	$	4,110	$	3,324	$	2,189	$	2,065	$	359	$	696	$	37,201	$	1,815	$	51,759
Special Mention		—		—		—		157		—		—		4		—		161
Substandard		—		—		—		—		—		—		—		297		297
Doubtful & Loss		—		—		—		—		—		—		—		—		—
Total Consumer and other loans:	$	4,110	$	3,324	$	2,189	$	2,222	$	359	$	696	$	37,205	$	2,112	$	52,217
Current YTD Period: Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	1	$	3	$	4

Total Loans, at amortized cost:
Risk Rating:
Pass	$	361,887	$	594,512	$	1,504,134	$	1,272,459	$	982,061	$	2,609,074	$	819,284	$	43,556	$	8,186,967
Special Mention		1,345		7,915		24,794		27,773		23,104		114,798		54,092		7,171		260,992
Substandard		—		1,716		10,734		8,365		25,309		59,227		12,926		6,329		124,606
Doubtful & Loss		—		—		—		—		—		—		—		—		—
Total Loans at amortized cost:	$	363,232	$	604,143	$	1,539,662	$	1,308,597	$	1,030,474	$	2,783,099	$	886,302	$	57,056	$	8,572,565
Current YTD Period: Gross charge-offs	$	—	$	—	$	300	$	—	$	—	$	3,609	$	1	$	434	$	4,344


	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

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 Real 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 included in our Annual Report on Form 10-K for the year ended December 31, 2023 for a more detailed discussion concerning the allowance for credit losses.

The ACL totaled $82.9 million at September 30, 2024, compared to $86.8 million at December 31, 2023. The $3.9 million decrease in the ACL from December 31, 2023 to September 30, 2024 was comprised of $3.9 million in net charge-offs. At September 30, 2024, the ACL as a percentage of total loans and leases, at amortized cost, was 0.97%. This compares to 0.98% at December 31, 2023.The majority of the net charge-offs in 2024 were related to loans in which specific loan loss reserves had been established prior to December 31, 2023. 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. As of September 30, 2024, the resulting weighted forecast resulted in Real GDP declining slightly in the fourth quarter of 2024 and continuing to be negative in the first quarter of 2025. GDP growth is forecasted to be less than 1% for all of 2025, before increasing to 1.4% in 2026, and then growth of 1.9% in 2027. Unemployment is forecasted to increase, with unemployment averaging 5.5% for all of 2025. The unemployment rate is forecasted to stay higher than 5.5% until late 2027.

Management believes that the ACL was appropriate at September 30, 2024 and December 31, 2023. 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.


	Three Months Ended September 30, 2023
	Ending Balance June 30, 2023		Charge-offs			Recoveries		Provision for (Recapture of) Credit Losses			Ending Balance September 30, 2023
	(Dollars in thousands)
Commercial real estate	$	67,943	$	—		$	—	$	2,957		$	70,900
Construction		1,162		—			3		(166	)		999
SBA		2,656		(26	)		48		371			3,049
Commercial and industrial		9,121		—			—		161			9,282
Dairy & livestock and agribusiness		4,960		—			3		(1,396	)		3,567
Municipal lease finance receivables		273		—			—		(27	)		246
SFR mortgage		450		—			—		75			525
Consumer and other loans		402		—			—		25			427
Total allowance for credit losses	$	86,967	$	(26	)	$	54	$	2,000		$	88,995


	Nine Months Ended September 30, 2024
	Ending Balance December 31, 2023		Charge-offs			Recoveries		Provision for (Recapture of) Credit Losses			Ending Balance September 30, 2024
	(Dollars in thousands)
Commercial real estate	$	69,466	$	(2,258	)	$	—	$	2,533		$	69,741
Construction		1,277		—			61		(885	)		453
SBA		2,679		(165	)		94		(100	)		2,508
Commercial and industrial		9,116		(1,917	)		289		(2,217	)		5,271
Dairy & livestock and agribusiness		3,098		—			—		728			3,826
Municipal lease finance receivables		210		—			—		(24	)		186
SFR mortgage		535		—			—		(96	)		439
Consumer and other loans		461		(4	)		—		61			518
Total allowance for credit losses	$	86,842	$	(4,344	)	$	444	$	—		$	82,942


	Nine Months Ended September 30, 2023
	Ending Balance December 31, 2022		Charge-offs			Recoveries		Provision for (Recapture of) Credit Losses			Ending Balance September 30, 2023
	(Dollars in thousands)
Commercial real estate	$	64,806	$	—		$	—	$	6,094		$	70,900
Construction		1,702		—			9		(712	)		999
SBA		2,809		(207	)		69		378			3,049
Commercial and industrial		10,206		(16	)		14		(922	)		9,282
Dairy & livestock and agribusiness		4,400		—			10		(843	)		3,567
Municipal lease finance receivables		296		—			—		(50	)		246
SFR mortgage		366		—			—		159			525
Consumer and other loans		532		(1	)		—		(104	)		427
Total allowance for credit losses	$	85,117	$	(224	)	$	102	$	4,000		$	88,995

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 in our Annual Report on Form 10-K for the year ended December 31, 2023, 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 dates presented.


	September 30, 2024
	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	$	1,051	$	736	$	598	$	2,385	$	2,361,999	$	2,364,384
Non-owner occupied		12,899		23,928		10,283		47,110		4,207,143		4,254,253
Construction
Speculative (1)		—		—		—		—		7,892		7,892
Non-speculative		—		—		—		—		6,863		6,863
SBA		109		—		43		152		271,849		272,001
SBA - PPP		—		—		—		—		1,255		1,255
Commercial and industrial		—		64		2,619		2,683		933,806		936,489
Dairy & livestock and agribusiness		—		60		82		142		342,303		342,445
Municipal lease finance receivables		—		—		—		—		67,585		67,585
SFR mortgage		—		—		—		—		267,181		267,181
Consumer and other loans		—		—		—		—		52,217		52,217
Total loans	$	14,059	$	24,788	$	13,625	$	52,472	$	8,520,093	$	8,572,565

(1)

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


	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 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.

Amortized cost of our finance receivables and loans that are on nonaccrual status, including loans with no allowance are presented as of September 30, 2024 and December 31, 2023 by type of loan.

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 dates presented.


	September 30, 2024						Number of Loans
	Real Estate		Business Assets		Other		Dependent on Collateral
	(Dollars in thousands)
Commercial real estate	$	18,794	$	—	$	—		5
Construction		—		—		—		—
SBA		146		5		—		3
SBA - PPP		—		—		—		—
Commercial and industrial		80		2,744		—		4
Dairy & livestock and agribusiness		60		—		82		2
Municipal lease finance receivables		—		—		—		—
SFR mortgage		—		—		—		—
Consumer and other loans		—		—		—		—
Total collateral-dependent loans	$	19,080	$	2,749	$	82		14


	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

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 $6.3 million for the off-balance sheet credit exposures as of September 30, 2024. There was a $1.3 million recapture of provision for unfunded loan commitments for the nine months ended September 30, 2024, compared to no recapture or provision for the nine months ended September 30, 2023. As of September 30, 2024 and December 31, 2023, the balance in this reserve was $6.3 million and $7.5 million, respectively, and was included in other liabilities.

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, 2024. The amendments in ASU 2022-02 eliminated the recognition and measurement of TDRs and enhanced disclosures for loan modifications to borrowers experiencing financial difficulty.

As of September 30, 2024, total modified loans to borrowers experiencing financial difficulty of $15.8 million included 10 loans with an amortized cost totaling $8.0 million modified during the nine months ended September 30, 2024, including two dairy & livestock and agribusiness loans of $5.2 million, and eight commercial and industrial loans totaling $2.8 million.

The tables below reflect the amortized cost of loans by type made to borrowers experiencing financial difficulty that were modified as of September 30, 2024 and September 30, 2023.

As of September 30, 2024, the Company did not have any loans made to borrowers experiencing financial difficulty that were modified during the first nine months of 2024 that subsequently defaulted. Payment default is defined as movement to nonaccrual (nonperforming) status, foreclosure or charge-off, whichever occurs first.