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Loans and Allowance for Loan Losses | 9 Months Ended
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Sep. 30, 2017
Receivables [Abstract] |
Loans and Allowance for Loan Losses | NOTE 5 - LOANS AND ALLOWANCE FOR LOAN LOSSES The Company's loan portfolio consists primarily of loans to borrowers within Los Angeles, Ventura and Orange County, California and Las Vegas, Nevada. Although the Company seeks to avoid concentrations of loans to a single industry or based upon a single class of collateral, real estate and real estate associated businesses are among the principal industries in the Company's market area and, as a result, the Company's loan and collateral portfolios are, to some degree, concentrated in those industries. The following tables present the balance and activity related to the allowance for loan losses for held for investment loans by type for the periods presented.
|  | Three Months Ended September 30, |
|  | 2017 |  |  | 2016 |
(dollars in thousands) |  | Real Estate |  |  | Commercial |  |  | Unallocated |  |  | Total |  |  | Real Estate |  |  | Commercial |  |  | Unallocated |  |  | Total |
Beginning balance |  | $ | 6,433 |  |  | $ | 3,384 |  |  | $ | 810 |  |  | $ | 10,627 |  |  | $ | 9,455 |  |  | $ | 2,694 |  |  | $ | — |  |  | $ | 12,149 |
Additions (reductions) to the allowance charged to expense |  |  | 1,239 |  |  |  | (115 | ) |  |  | (424 | ) |  |  | 700 |  |  |  | 820 |  |  |  | 430 |  |  |  | — |  |  |  | 1,250 |
Recoveries on loans charged-off |  |  | — |  |  |  | 93 |  |  |  | — |  |  |  | 93 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Less loans charged-off |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Ending balance |  | $ | 7,672 |  |  | $ | 3,362 |  |  | $ | 386 |  |  | $ | 11,420 |  |  | $ | 10,275 |  |  | $ | 3,124 |  |  | $ | — |  |  | $ | 13,399 |
|  | Nine Months Ended September 30, |
|  | 2017 |  |  | 2016 |
(dollars in thousands) |  | Real Estate |  |  | Commercial |  |  | Unallocated |  |  | Total |  |  | Real Estate |  |  | Commercial |  |  | Unallocated |  |  | Total |
Beginning balance |  | $ | 8,111 |  |  | $ | 6,051 |  |  | $ | — |  |  | $ | 14,162 |  |  | $ | 5,788 |  |  | $ | 4,235 |  |  | $ | — |  |  | $ | 10,023 |
Additions (reductions) to the allowance charged to expense |  |  | (439 | ) |  |  | (3,435 | ) |  |  | 386 |  |  |  | (3,488 | ) |  |  | 4,487 |  |  |  | (888 | ) |  |  | — |  |  |  | 3,599 |
Recoveries on loans charged-off |  |  | — |  |  |  | 746 |  |  |  | — |  |  |  | 746 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Less loans charged-off |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (223 | ) |  |  | — |  |  |  | (223 | )
Ending balance |  | $ | 7,672 |  |  | $ | 3,362 |  |  | $ | 386 |  |  | $ | 11,420 |  |  | $ | 10,275 |  |  | $ | 3,124 |  |  | $ | — |  |  | $ | 13,399 |
The following table presents the recorded investment in loans and impairment method as of and for the nine months ended September 30, 2017 and September 30, 2016, and the activity in the allowance for loan losses for the year ended December 31, 2016, by portfolio segment:
(dollars in thousands) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
As of September 30, 2017 |  | Real Estate |  |  | Commercial |  |  | Unallocated |  |  | Total |
Reserves: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Specific |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
General |  |  | 7,672 |  |  |  | 3,362 |  |  |  | 386 |  |  |  | 11,420 |
Loans acquired with deteriorated credit quality |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
|  | $ | 7,672 |  |  | $ | 3,362 |  |  | $ | 386 |  |  | $ | 11,420 |
Loans evaluated for impairment: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually |  | $ | 2,580 |  |  | $ | 1,370 |  |  | $ | — |  |  | $ | 3,950 |
Collectively |  |  | 819,654 |  |  |  | 372,602 |  |  |  | — |  |  |  | 1,192,256 |
Loans acquired with deteriorated credit quality |  |  | 316 |  |  |  | — |  |  |  | — |  |  |  | 316 |
|  | $ | 822,550 |  |  | $ | 373,972 |  |  | $ | — |  |  | $ | 1,196,522 |
As of December 31, 2016 |  | Real Estate |  |  | Commercial |  |  | Unallocated |  |  | Total |
Allowance for loan losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning of year |  | $ | 5,788 |  |  | $ | 4,235 |  |  | $ | — |  |  | $ | 10,023 |
Provisions |  |  | 2,323 |  |  |  | 2,651 |  |  |  | — |  |  |  | 4,974 |
Charge-offs |  |  | — |  |  |  | (835 | ) |  |  | — |  |  |  | (835 | )
Recoveries |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
|  | $ | 8,111 |  |  | $ | 6,051 |  |  | $ | — |  |  | $ | 14,162 |
Reserves: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Specific |  | $ | — |  |  | $ | 1,782 |  |  | $ | — |  |  | $ | 1,782 |
General |  |  | 8,111 |  |  |  | 4,269 |  |  |  | — |  |  |  | 12,380 |
Loans acquired with deteriorated credit quality |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
|  | $ | 8,111 |  |  | $ | 6,051 |  |  | $ | — |  |  | $ | 14,162 |
Loans evaluated for impairment: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually |  | $ | 2,556 |  |  | $ | 3,577 |  |  | $ | — |  |  | $ | 6,133 |
Collectively |  |  | 744,349 |  |  |  | 359,234 |  |  |  | — |  |  |  | 1,103,583 |
Loans acquired with deteriorated credit quality |  |  | 730 |  |  |  | — |  |  |  | — |  |  |  | 730 |
|  | $ | 747,635 |  |  | $ | 362,811 |  |  | $ | — |  |  | $ | 1,110,446 |
The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as current financial information, historical payment experience, collateral adequacy, credit documentation, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis typically includes larger, non-homogeneous loans such as commercial real estate and commercial and industrial loans. This analysis is performed on an ongoing basis as new information is obtained. The Company uses the following definitions for risk ratings: Pass - Loans classified as pass include loans not meeting the risk ratings defined below. Special Mention - Loans classified as special mention have a potential weakness that deserves management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution's credit position at some future date. Substandard - Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. Impaired - A loan is considered impaired, when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. Additionally, all loans classified as troubled debt restructurings are considered impaired. The risk category of loans by class of loans was as follows at September 30, 2017 and December 31, 2016:
(dollars in thousands) |  |  |  |  |  | Special |  |  |  |  |  |  |  |  |  |  |  |  |
September 30, 2017 |  | Pass |  |  | Mention |  |  | Substandard |  |  | Impaired |  |  | Total |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Construction and land development |  | $ | 94,004 |  |  | $ | — |  |  | $ | — |  |  | $ | 293 |  |  | $ | 94,297 |
Commercial real estate |  |  | 444,108 |  |  |  | 4,517 |  |  |  | 40,174 |  |  |  | 2,287 |  |  |  | 491,086 |
Single-family residential mortgages |  |  | 237,167 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 237,167 |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other |  |  | 222,743 |  |  |  | 960 |  |  |  | 971 |  |  |  | 1,293 |  |  |  | 225,967 |
SBA |  |  | 143,507 |  |  |  | 1,819 |  |  |  | 2,602 |  |  |  | 77 |  |  |  | 148,005 |
|  | $ | 1,141,529 |  |  | $ | 7,296 |  |  | $ | 43,747 |  |  | $ | 3,950 |  |  | $ | 1,196,522 |
December 31, 2016 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Construction and land development |  | $ | 87,174 |  |  | $ | 1,932 |  |  | $ | — |  |  | $ | 303 |  |  | $ | 89,409 |
Commercial real estate |  |  | 475,499 |  |  |  | 4,562 |  |  |  | 19,484 |  |  |  | 2,253 |  |  |  | 501,798 |
Single-family residential mortgages |  |  | 136,206 |  |  |  | 13,950 |  |  |  | 6,272 |  |  |  | — |  |  |  | 156,428 |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other |  |  | 194,227 |  |  |  | — |  |  |  | 9,616 |  |  |  | — |  |  |  | 203,843 |
SBA |  |  | 151,066 |  |  |  | 1,934 |  |  |  | 2,391 |  |  |  | 3,577 |  |  |  | 158,968 |
|  | $ | 1,044,172 |  |  | $ | 22,378 |  |  | $ | 37,763 |  |  | $ | 6,133 |  |  | $ | 1,110,446 |
The following table presents the recorded investment in non-accrual loans by class of loans. There were no loans past due 90 days and still on accrual at September 30, 2017 and December 31, 2016:
|  | September 30 |  |  | December 31, |
(dollars in thousands) |  | 2017 |  |  | 2016 |
Commercial: |  |  |  |  |  |  |  |
SBA |  | $ | 77 |  |  | $ | 3,577 |
The following table presents the aging of the recorded investment in past-due loans at September 30, 2017 and December 31, 2016 by class of loans:
|  | 30-59 |  |  | 60-89 |  |  | Greater Than |  |  |  |  |  |  |  |  |  |  |  |  |
(dollars in thousands) |  | Days |  |  | Days |  |  | 89 Days |  |  | Total |  |  | Loans Not |  |  |  |  |
September 30, 2017 |  | Past Due |  |  | Past Due |  |  | Past Due |  |  | Past Due |  |  | Past Due |  |  | Total |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Construction and land development |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 94,297 |  |  | $ | 94,297 |
Commercial real estate |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 491,086 |  |  |  | 491,086 |
Single-family residential mortgages |  |  | 531 |  |  |  | — |  |  |  | — |  |  |  | 531 |  |  |  | 236,636 |  |  |  | 237,167 |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  | — |  |  |  |  |  |  |  |  |
Other |  |  | 213 |  |  |  | — |  |  |  | — |  |  |  | 213 |  |  |  | 225,754 |  |  |  | 225,967 |
SBA |  |  | 254 |  |  |  | 1,434 |  |  |  | — |  |  |  | 1,688 |  |  |  | 146,317 |  |  |  | 148,005 |
|  | $ | 998 |  |  | $ | 1,434 |  |  | $ | — |  |  | $ | 2,432 |  |  | $ | 1,194,090 |  |  | $ | 1,196,522 |
December 31, 2016 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Construction and land development |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 89,409 |  |  | $ | 89,409 |
Commercial real estate |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 501,798 |  |  |  | 501,798 |
Single-family residential mortgages |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 156,428 |  |  |  | 156,428 |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other |  |  | 343 |  |  |  | — |  |  |  | — |  |  |  | 343 |  |  |  | 203,500 |  |  |  | 203,843 |
SBA |  |  | — |  |  |  | — |  |  |  | 3,577 |  |  |  | 3,577 |  |  |  | 155,391 |  |  |  | 158,968 |
|  | $ | 343 |  |  | $ | — |  |  | $ | 3,577 |  |  | $ | 3,920 |  |  | $ | 1,106,526 |  |  | $ | 1,110,446 |
Information relating to individually impaired loans presented by class of loans was as follows at September 30, 2017 and December 31, 2016:
|  | Unpaid |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
(dollars in thousands) |  | Principal |  |  | Recorded |  |  | Average |  |  | Interest |  |  | Related |
September 30, 2017 |  | Balance |  |  | Investment |  |  | Balance |  |  | Income |  |  | Allowance |
With no related allowance recorded |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Construction and land development |  | $ | 293 |  |  | $ | 293 |  |  | $ | 298 |  |  | $ | 16 |  |  | $ | — |
Commercial real estate |  |  | 2,287 |  |  |  | 2,287 |  |  |  | 2,270 |  |  |  | 253 |  |  |  | — |
Commercial - SBA |  |  | 1,370 |  |  |  | 1,370 |  |  |  | 685 |  |  |  | 79 |  |  |  | — |
Total |  | $ | 3,950 |  |  | $ | 3,950 |  |  | $ | 3,253 |  |  | $ | 348 |  |  | $ | — |
December 31, 2016 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
With no related allowance recorded |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Construction and land development |  | $ | 303 |  |  | $ | 303 |  |  | $ | 309 |  |  | $ | 21 |  |  | $ | — |
Commercial real estate |  |  | 2,253 |  |  |  | 2,253 |  |  |  | 1,710 |  |  |  | 280 |  |  |  | — |
Commercial - SBA |  |  | 18 |  |  |  | 18 |  |  |  | 93 |  |  |  | — |  |  |  | — |
Subtotal |  |  | 2,574 |  |  |  | 2,574 |  |  |  | 2,112 |  |  |  | 301 |  |  |  | — |
With an allowance recorded |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial - SBA |  |  | 3,559 |  |  |  | 3,559 |  |  |  | 3,559 |  |  |  | — |  |  |  | 1,782 |
Total |  | $ | 6,133 |  |  | $ | 6,133 |  |  | $ | 5,671 |  |  | $ | 301 |  |  | $ | 1,782 |
No interest income was recognized on a cash basis for the nine months ended September 30, 2017 and 2016 and for the year ended December 31, 2016. The Company had five and six loans identified as troubled debt restructurings ("TDR's") at September 30, 2017 and December 31, 2016, respectively. A specific reserve of $1,782,000 had been allocated for one loan at December 31, 2016. There were no specific reserves on TDRs as of September 30, 2017. There are no commitments to lend additional amounts at September 30, 2017 and December 31, 2016 to customers with outstanding loans that are classified as TDR's. During the year ended December 31, 2016 and for the nine months ended September 30, 2017, the terms of certain loans were modified as TDR's. The modification of the terms generally included loans where a moratorium on loan payments was granted. Such moratoriums ranged from three months to twelve months on the loans restructured in 2017 and 2016. The following table presents loans by class modified as TDRs that occurred during the nine months ended September 30, 2017 and the year ended December 31, 2016;
|  |  |  |  |  | Pre- |  |  | Post- |
|  |  |  |  |  | Modification |  |  | Modification |
(dollars in thousands) |  | Number of |  |  | Recorded |  |  | Recorded |
September 30, 2017 |  | Loans |  |  | Investment |  |  | Investment |
Commercial |  |  | 1 |  |  | $ | 1,293 |  |  | $ | 1,293 |
|  |  |  |  |  | Pre- |  |  | Post- |
|  |  |  |  |  | Modification |  |  | Modification |
(dollars in thousands) |  | Number of |  |  | Recorded |  |  | Recorded |
December 31, 2016 |  | Loans |  |  | Investment |  |  | Investment |
Commercial real estate |  |  | 1 |  |  | $ | 1,047 |  |  | $ | 1,047 |
The Company has purchased loans as part of its whole bank acquisitions, for which there was at acquisition, evidence of deterioration of credit quality since origination and it was probable, at acquisition, that all contractually required payments would not be collected. The outstanding balance and carrying amount of purchased credit-impaired loans at September 30, 2017 and December 31, 2016 were as follows:
|  | September 30, |  |  | December 31, |
(dollars in thousands) |  | 2017 |  |  | 2016 |
Outstanding balance |  | $ | 324 |  |  | $ | 878 |
Carrying amount |  | $ | 316 |  |  | $ | 730 |
For these purchased credit-impaired loans, the Company did not increase the allowance for loan losses during the nine months ended September 30, 2017 or for the year ended December 31, 2016, as there were no significant reductions in the expected cash flows. Below is a summary of activity in the accretable yield on purchased credit-impaired loans for the nine months ended September 30, 2017 and for the year ended December 31, 2016:
|  | September 30, |  |  | December 31, |
(dollars in thousands) |  | 2017 |  |  | 2016 |
Beginning balance |  | $ | 142 |  |  | $ | 349 |
Restructuring as TDR |  |  | — |  |  |  | (22 | )
Accretion of income |  |  | (134 | ) |  |  | (185 | )
Ending balance |  | $ | 8 |  |  | $ | 142 |

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- Definition The entire disclosure for claims held for amounts due a entity, excluding financing receivables. Examples include, but are not limited to, trade accounts receivables, notes receivables, loans receivables. Includes disclosure for allowance for credit losses. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=84173941&loc=d3e5066-111524 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02(4)) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 946 -SubTopic 210 -Section S99 -Paragraph 1 -Subparagraph (SX 210.6-04(6)) -URI http://asc.fasb.org/extlink&oid=6488278&loc=d3e603758-122996 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02(3)) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -Section 50 -Paragraph 11 -URI http://asc.fasb.org/extlink&oid=84173941&loc=d3e5162-111524 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 944 -SubTopic 210 -Section S99 -Paragraph 1 -Subparagraph (SX 210.7-03(a)(5)) -URI http://asc.fasb.org/extlink&oid=6879938&loc=d3e572229-122910 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 210 -Section S99 -Paragraph 1 -Subparagraph (SX 210.9-03(7)) -URI http://asc.fasb.org/extlink&oid=6876686&loc=d3e534808-122878 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=84173941&loc=d3e5074-111524 + Details
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