Loans and Lease Finance Receivables and Allowance for Loan Losses (Tables)

6 Months Ended

Jun. 30, 2016

Summary of Components of Loans and Lease Finance Receivables, Excluding PCI Loans

The following table provides a summary of total loans and lease finance receivables, excluding PCI loans, by type.


	June 30, 2016		December 31, 2015
		(Dollars in thousands)
Commercial and industrial	$	479,133	$	434,099
SBA		111,762		106,867
Real estate:
Commercial real estate		2,884,332		2,643,184
Construction		94,009		68,563
SFR mortgage		237,488		233,754
Dairy & livestock and agribusiness		213,830		305,509
Municipal lease finance receivables		71,929		74,135
Consumer and other loans		79,725		69,278

Gross loans, excluding PCI loans		4,172,208		3,935,389
Less: Deferred loan fees, net		(7,872)		(8,292)

Gross loans, excluding PCI loans, net of deferred loan fees		4,164,336		3,927,097
Less: Allowance for loan losses		(60,628)		(59,156)

Net loans, excluding PCI loans		4,103,708		3,867,941

PCI Loans		76,022		93,712
Discount on PCI loans		(2,430)		(3,872)
Less: Allowance for loan losses		(310)		-

PCI loans, net		73,282		89,840

Total loans and lease finance receivables	$	4,176,990	$	3,957,781

Summary of Loan, Excluding PCI Loans by Internal Risk Ratings

The following table summarizes each type of loans, excluding PCI loans, according to our internal risk ratings for the periods presented.


	June 30, 2016
	Pass		Special Mention		Substandard		Doubtful & Loss		Total
	(Dollars in thousands)
Commercial and industrial	$	440,455	$	21,264	$	17,407	$	7	$	479,133
SBA		93,259		11,697		6,582		224		111,762
Real estate:
Commercial real estate
Owner occupied		827,887		87,431		18,617		-		933,935
Non-owner occupied		1,909,707		24,804		15,886		-		1,950,397
Construction
Speculative		47,301		-		7,651		-		54,952
Non-speculative		39,057		-		-		-		39,057
SFR mortgage		229,984		4,965		2,539		-		237,488
Dairy & livestock and agribusiness		145,897		48,122		19,811		-		213,830
Municipal lease finance receivables		67,188		4,741		-		-		71,929
Consumer and other loans		75,378		1,867		2,377		103		79,725

Total gross loans, excluding PCI loans	$	3,876,113	$	204,891	$	90,870	$	334	$	4,172,208


	December 31, 2015
	Pass		Special Mention		Substandard		Doubtful & Loss		Total
	(Dollars in thousands)
Commercial and industrial	$	398,651	$	33,000	$	2,403	$	45	$	434,099
SBA		87,441		13,169		4,854		1,403		106,867
Real estate:
Commercial real estate
Owner occupied		772,114		54,758		11,481		-		838,353
Non-owner occupied		1,741,615		26,170		37,046		-		1,804,831
Construction
Speculative		38,186		-		7,651		-		45,837
Non-speculative		22,726		-		-		-		22,726
SFR mortgage		227,207		3,556		2,991		-		233,754
Dairy & livestock and agribusiness		285,647		19,862		-		-		305,509
Municipal lease finance receivables		69,194		4,941		-		-		74,135
Consumer and other loans		64,844		1,618		2,708		108		69,278

Total gross loans, excluding PCI loans	$	3,707,625	$	157,074	$	69,134	$	1,556	$	3,935,389

Schedule of Balance and Activity Related to Allowance for Loan Losses for Held-for-Investment Loans by Type

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.


	For the Three Months Ended June 30, 2016
	Ending Balance March 31, 2016		Charge-offs		Recoveries		(Recapture of) Provision for Loan Losses		Ending Balance June 30, 2016
	(Dollars in thousands)
Commercial and industrial	$	8,731	$	(24)	$	141	$	539	$	9,387
SBA		1,236		-		2		(61)		1,177
Real estate:
Commercial real estate		38,286		-		496		1,137		39,919
Construction		1,151		-		875		(798)		1,228
SFR mortgage		2,202		-		-		299		2,501
Dairy & livestock and agribusiness		5,176		-		107		(401)		4,882
Municipal lease finance receivables		1,165		-		-		(50)		1,115
Consumer and other loans		1,389		(1)		6		(975)		419
PCI loans		-		-		-		310		310
Unallocated (1)		-		-		-		-		-

Total allowance for loan losses	$	59,336	$	(25)	$	1,627	$	-	$	60,938


	For the Three Months Ended June 30, 2015
	Ending Balance March 31, 2015		Charge-offs		Recoveries		(Recapture of) Provision for Loan Losses		Ending Balance June 30, 2015
	(Dollars in thousands)
Commercial and industrial	$	7,502	$	-	$	197	$	(514)	$	7,185
SBA		2,196		-		3		(114)		2,085
Real estate:
Commercial real estate		34,848		(107)		783		(110)		35,414
Construction		1,043		-		41		(338)		746
SFR mortgage		2,425		(215)		-		354		2,564
Dairy & livestock and agribusiness		3,746		-		111		117		3,974
Municipal lease finance receivables		1,030		-		-		(16)		1,014
Consumer and other loans		825		(20)		52		(23)		834
Unallocated (1)		7,094		-		-		(1,356)		5,738

Total allowance for loan losses	$	60,709	$	(342)	$	1,187	$	(2,000)	$	59,554


	For the Six Months Ended June 30, 2016
	Ending Balance December 31, 2015		Charge-offs		Recoveries		(Recapture of) Provision for Loan Losses		Ending Balance June 30, 2016
	(Dollars in thousands)
Commercial and industrial	$	8,588	$	(85)	$	204	$	680	$	9,387
SBA		993		-		3		181		1,177
Real estate:
Commercial real estate		36,995		-		635		2,289		39,919
Construction		2,389		-		884		(2,045)		1,228
SFR mortgage		2,103		(102)		-		500		2,501
Dairy & livestock and agribusiness		6,029		-		206		(1,353)		4,882
Municipal lease finance receivables		1,153		-		-		(38)		1,115
Consumer and other loans		906		(1)		38		(524)		419
PCI loans		-		-		-		310		310
Unallocated (1)		-		-		-		-		-

Total allowance for loan losses	$	59,156	$	(188)	$	1,970	$	-	$	60,938


	For the Six Months Ended June 30, 2015
	Ending Balance December 31, 2014		Charge-offs		Recoveries		(Recapture of) Provision for Loan Losses		Ending Balance June 30, 2015
	(Dollars in thousands)
Commercial and industrial	$	7,074	$	(134)	$	232	$	13	$	7,185
SBA		2,557		(33)		37		(476)		2,085
Real estate:
Commercial real estate		33,373		(107)		1,640		508		35,414
Construction		988		-		50		(292)		746
SFR mortgage		2,344		(215)		185		250		2,564
Dairy & livestock and agribusiness		5,479		-		210		(1,715)		3,974
Municipal lease finance receivables		1,412		-		-		(398)		1,014
Consumer and other loans		1,262		(197)		61		(292)		834
Unallocated (1)		5,336		-		-		402		5,738

Total allowance for loan losses	$	59,825	$	(686)	$	2,415	$	(2,000)	$	59,554

(1)

Based upon changes to our ALLL methodology, as described in Note 3 – Summary of Significant Accounting Policies of the 2015 Annual Report on Form 10-K for the year ended December 31, 2015, beginning with the fourth quarter of 2015 and coinciding with the implementation of the new ALLL methodology, the Bank’s previous “unallocated reserve” was absorbed into the qualitative component of the allowance.

Schedule of Recorded Investment in Loans Held-for-Investment and Related Allowance for Loan Losses by Loan Type

The following tables present the recorded investment in loans held-for-investment and the related allowance for loan losses by loan type, based on the Company’s methodology for determining the allowance for loan losses for the periods presented.


	June 30, 2016
	Recorded Investment in Loans						Allowance for Loan Losses
	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Acquired with Deterioriated Credit Quality		Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Acquired with Deterioriated Credit Quality
	(Dollars in thousands)
Commercial and industrial	$	1,447	$	477,686	$	-	$	526	$	8,861	$	-
SBA		3,498		108,264		-		42		1,135		-
Real estate:
Commercial real estate		17,908		2,866,424		-		1		39,918		-
Construction		7,651		86,358		-		45		1,183		-
SFR mortgage		5,734		231,754		-		13		2,488		-
Dairy & livestock and agribusiness		697		213,133		-		-		4,882		-
Municipal lease finance receivables		-		71,929		-		-		1,115		-
Consumer and other loans		829		78,896		-		3		416		-
PCI loans		-		-		76,022		-		-		310
Unallocated (1)		-		-		-		-		-		-

Total	$	37,764	$	4,134,444	$	76,022	$	630	$	59,998	$	310


	June 30, 2015
	Recorded Investment in Loans						Allowance for Loan Losses
	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Acquired with Deterioriated Credit Quality		Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Acquired with Deterioriated Credit Quality
	(Dollars in thousands)
Commercial and industrial	$	1,562	$	404,861	$	-	$	435	$	6,750	$	-
SBA		3,146		117,420		-		12		2,073		-
Real estate:
Commercial real estate		39,981		2,529,430		-		-		35,414		-
Construction		7,651		39,276		-		24		722		-
SFR mortgage		7,044		207,459		-		77		2,487		-
Dairy & livestock and agribusiness		7,091		176,893		-		-		3,974		-
Municipal lease finance receivables		-		74,691		-		-		1,014		-
Consumer and other loans		915		70,261		-		2		832		-
PCI loans		-		-		110,746		-		-		-
Unallocated (1)		-		-		-		-		5,738		-

Total	$	67,390	$	3,620,291	$	110,746	$	550	$	59,004	$	-

(1)

Schedule of Recorded Investment in, and Aging of, Past Due and Nonaccrual Loans, Excluding PCI Loans by Class of Loans

The following tables present the recorded investment in, and the aging of, past due and nonaccrual loans, excluding PCI loans, by type of loans for the periods presented.


	June 30, 2016

	30-59 Days Past Due		60-89 Days Past Due		Total Past Due and Accruing		Nonaccrual (1)		Current		Total Loans and Financing Receivables
		(Dollars in thousands)
Commercial and industrial	$	61	$	-	$	61	$	568	$	478,504		479,133
SBA		-		-		-		2,637		109,125		111,762
Real estate:
Commercial real estate
Owner occupied		-		-		-		1,759		932,176		933,935
Non-owner occupied		320		-		320		9,637		1,940,440		1,950,397
Construction
Speculative (2)		-		-		-		-		54,952		54,952
Non-speculative		-		-		-		-		39,057		39,057
SFR mortgage		-		-		-		2,443		235,045		237,488
Dairy & livestock and agribusiness		-		-		-		-		213,830		213,830
Municipal lease finance receivables		-		-		-		-		71,929		71,929
Consumer and other loans		97		-		97		428		79,200		79,725

Total gross loans, excluding PCI Loans	$	478	$	-	$	478	$	17,472	$	4,154,258	$	4,172,208

(1)

As of June 30, 2016, $15.6 million of nonaccruing loans were current, $84,000 were 30-59 days past due, $338,000 were 60-89 days past due and $1.4 million were 90+ days past due.

(2)

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


	December 31, 2015

	30-59 Days Past Due		60-89 Days Past Due		Total Past Due and Accruing		Nonaccrual (1)		Current		Total Loans and Financing Receivables
		(Dollars in thousands)
Commercial and industrial	$	-	$	-	$	-	$	704	$	433,395	$	434,099
SBA		-		-		-		2,567		104,300		106,867
Real estate:
Commercial real estate
Owner occupied		-		-		-		4,174		834,179		838,353
Non-owner occupied		354		-		354		10,367		1,794,110		1,804,831
Construction
Speculative (2)		-		-		-		-		45,837		45,837
Non-speculative		-		-		-		-		22,726		22,726
SFR mortgage		1,082		-		1,082		2,688		229,984		233,754
Dairy & livestock and agribusiness		-		-		-		-		305,509		305,509
Municipal lease finance receivables		-		-		-		-		74,135		74,135
Consumer and other loans		-		-		-		519		68,759		69,278

Total gross loans, excluding PCI Loans	$	1,436	$	-	$	1,436	$	21,019	$	3,912,934	$	3,935,389

(1)

As of December 31, 2015, $7.9 million of nonaccruing loans were current, $456,000 were 30-59 days past due, $9.1 million were 60-89 days past due and $3.5 million were 90+ days past due.

(2)

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

Schedule of Held-for-Investment Loans, Excluding PCI Loans, Individually Evaluated for Impairment by Class of Loans

The following tables present information for held-for-investment loans, excluding PCI loans, individually evaluated for impairment by type of loans, as and for the periods presented.


	As of and For the Six Months Ended June 30, 2016
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
		(Dollars in thousands)
With no related allowance recorded:
Commercial and industrial	$	840	$	1,727	$	-	$	904	$	14
SBA		3,266		4,026		-		3,347		25
Real estate:
Commercial real estate
Owner occupied		4,386		5,573		-		4,623		87
Non-owner occupied		12,522		15,110		-		12,760		83
Construction
Speculative		-		-		-		-		-
Non-speculative		-		-		-		-		-
SFR mortgage		5,464		6,331		-		5,591		60
Dairy & livestock and agribusiness		697		697		-		709		17
Municipal lease finance receivables		-		-		-		-		-
Consumer and other loans		816		1,373		-		845		8

Total		27,991		34,837		-		28,779		294

With a related allowance recorded:
Commercial and industrial		607		668		526		638		6
SBA		232		250		42		238		6
Real estate:
Commercial real estate
Owner occupied		1,000		1,000		1		392		28
Non-owner occupied		-		-		-		-		-
Construction
Speculative		7,651		7,651		45		7,651		193
Non-speculative		-		-		-		-		-
SFR mortgage		270		270		13		277		3
Dairy & livestock and agribusiness		-		-		-		-		-
Municipal lease finance receivables		-		-		-		-		-
Consumer and other loans		13		13		3		13		-

Total		9,773		9,852		630		9,209		236

Total impaired loans	$	37,764	$	44,689	$	630	$	37,988	$	530


	As of and For the Six Months Ended June 30, 2015
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
		(Dollars in thousands)
With no related allowance recorded:
Commercial and industrial	$	1,097	$	1,941	$	-	$	1,172	$	15
SBA		3,087		3,688		-		3,167		26
Real estate:
Commercial real estate
Owner occupied		5,987		7,080		-		5,865		127
Non-owner occupied		33,994		39,946		-		34,567		838
Construction
Speculative		-		-		-		-		-
Non-speculative		-		-		-		-		-
SFR mortgage		6,228		7,175		-		6,102		50
Dairy & livestock and agribusiness		7,091		7,559		-		7,269		167
Municipal lease finance receivables		-		-		-		-		-
Consumer and other loans		906		1,426		-		940		8

Total		58,390		68,815		-		59,082		1,231

With a related allowance recorded:
Commercial and industrial		465		536		435		478		1
SBA		59		59		12		63		-
Real estate:
Commercial real estate
Owner occupied		-		-		-		-		-
Non-owner occupied		-		-		-		-		-
Construction
Speculative		7,651		7,651		24		7,651		192
Non-speculative		-		-		-		-		-
SFR mortgage		816		824		77		826		3
Dairy & livestock and agribusiness		-		-		-		-		-
Municipal lease finance receivables		-		-		-		-		-
Consumer and other loans		9		14		2		10		-

Total		9,000		9,084		550		9,028		196

Total impaired loans	$	67,390	$	77,899	$	550	$	68,110	$	1,427


	As of December 31, 2015
	Recorded Investment		Unpaid Principal Balance		Related Allowance
		(Dollars in thousands)
With no related allowance recorded:
Commercial and industrial	$	1,017	$	1,894	$	-
SBA		3,207		3,877		-
Real estate:
Commercial real estate
Owner occupied		6,252		7,445		-
Non-owner occupied		34,041		37,177		-
Construction
Speculative		-		-		-
Non-speculative		-		-		-
SFR mortgage		5,665		6,453		-
Dairy & livestock and agribusiness		3,685		3,684		-
Municipal lease finance receivables		-		-		-
Consumer and other loans		890		1,454		-

Total		54,757		61,984		-

With a related allowance recorded:
Commercial and industrial		626		695		626
SBA		41		47		10
Real estate:
Commercial real estate
Owner occupied		-		-		-
Non-owner occupied		-		-		-
Construction
Speculative		7,651		7,651		13
Non-speculative		-		-		-
SFR mortgage		588		640		20
Dairy & livestock and agribusiness		-		-		-
Municipal lease finance receivables		-		-		-
Consumer and other loans		43		45		-

Total		8,949		9,078		669

Total impaired loans	$	63,706	$	71,062	$	669

Summary of Activity Related to Troubled Debt Restructurings

The following table provides a summary of the activity related to TDRs for the periods presented.


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2016		2015		2016		2015
	(Dollars in thousands)
Performing TDRs:
Beginning balance	$	37,321	$	45,376	$	42,687	$	53,589
New modifications		112		30		1,118		30
Payoffs and payments, net		(17,141)		(240)		(23,513)		(8,969)
TDRs returned to accrual status		-		-		-		516
TDRs placed on nonaccrual status		-		-		-		-

Ending balance	$	20,292	$	45,166	$	20,292	$	45,166

Nonperforming TDRs:
Beginning balance	$	12,360	$	16,774	$	12,622	$	20,285
New modifications		-		330		82		330
Charge-offs		-		-		(38)		-
Transfer to OREO		-		-		-		(842)
Payoffs and payments, net		(331)		(842)		(637)		(4,090)
TDRs returned to accrual status		-		(1,095)		-		(516)
TDRs placed on nonaccrual status		-		-		-		-

Ending balance	$	12,029	$	15,167	$	12,029	$	15,167

Total TDRs	$	32,321	$	60,333	$	32,321	$	60,333

Summary of Loans Modified as Troubled Debt Restructurings

The following tables summarize loans modified as troubled debt restructurings for the periods presented.

Modifications (1)


	For the Three Months Ended June 30, 2016
	Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Outstanding Recorded Investment at June 30, 2016		Financial Effect Resulting From Modifications (2)
	(Dollars in thousands)
Commercial and industrial:
Interest rate reduction		-	$	-	$	-	$	-	$	-
Change in amortization period or maturity		1		112		112		110		-
SBA:
Interest rate reduction		-		-		-		-		-
Change in amortization period or maturity		-		-		-		-		-
Real estate:
Commercial real estate:
Owner occupied
Interest rate reduction		-		-		-		-		-
Change in amortization period or maturity		-		-		-		-		-
Non-owner occupied
Interest rate reduction		-		-		-		-		-
Change in amortization period or maturity		-		-		-		-		-
Consumer:
Interest rate reduction		-		-		-		-		-
Change in amortization period or maturity		-		-		-		-		-

Total loans		1	$	112	$	112	$	110	$	-


	For the Three Months Ended June 30, 2015
	Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Outstanding Recorded Investment at June 30, 2015		Financial Effect Resulting From Modifications (2)
	(Dollars in thousands)
Commercial and industrial:
Interest rate reduction		-	$	-	$	-	$	-	$	-
Change in amortization period or maturity		1		30		30		30		-
SBA:
Interest rate reduction		-		-		-		-		-
Change in amortization period or maturity		1		330		330		330		12
Real estate:
Commercial real estate:
Owner occupied
Interest rate reduction		-		-		-		-		-
Change in amortization period or maturity		-		-		-		-		-
Non-owner occupied
Interest rate reduction		-		-		-		-		-
Change in amortization period or maturity		-		-		-		-		-
Consumer:
Interest rate reduction		-		-		-		-		-
Change in amortization period or maturity		-		-		-		-		-

Total loans		2	$	360	$	360	$	360	$	12


	For the Six Months Ended June 30, 2016
	Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Outstanding Recorded Investment at June 30, 2016		Financial Effect Resulting From Modifications (2)
	(Dollars in thousands)
Commercial and industrial:
Interest rate reduction		-	$	-	$	-	$	-	$	-
Change in amortization period or maturity		1		112		112		110		-
SBA:
Interest rate reduction		-		-		-		-		-
Change in amortization period or maturity		1		194		194		190		28
Real estate:
Commercial real estate:
Owner occupied
Interest rate reduction		-		-		-		-		-
Change in amortization period or maturity		2		812		812		761		-
Non-owner occupied
Interest rate reduction		-		-		-		-		-
Change in amortization period or maturity		-		-		-		-		-
Consumer:
Interest rate reduction		-		-		-		-		-
Change in amortization period or maturity		2		82		82		72		-

Total loans		6	$	1,200	$	1,200	$	1,133	$	28


	For the Six Months Ended June 30, 2015
	Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Outstanding Recorded Investment at June 30, 2015		Financial Effect Resulting From Modifications (2)
	(Dollars in thousands)
Commercial and industrial:
Interest rate reduction		-	$	-	$	-	$	-	$	-
Change in amortization period or maturity		1		30		30		30		-
SBA:
Interest rate reduction		-		-		-		-		-
Change in amortization period or maturity		1		330		330		330		12
Real estate:
Commercial real estate:
Owner occupied
Interest rate reduction		-		-		-		-		-
Change in amortization period or maturity		-		-		-		-		-
Non-owner occupied
Interest rate reduction		-		-		-		-		-
Change in amortization period or maturity		-		-		-		-		-
Consumer:
Interest rate reduction		-		-		-		-		-
Change in amortization period or maturity		-		-		-		-		-

Total loans		2	$	360	$	360	$	360	$	12

(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 specific allowance recorded at modification date.