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

3 Months Ended

Mar. 31, 2017

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.


	March 31, 2017			December 31, 2016
	(Dollars in thousands)

Commercial and industrial	$	528,945		$	485,078
SBA		112,690			97,184
Real estate:
Commercial real estate		3,219,299			2,930,141
Construction		72,782			85,879
SFR mortgage		245,362			250,605
Dairy & livestock and agribusiness		244,264			338,631
Municipal lease finance receivables		62,416			64,639
Consumer and other loans		80,163			78,274

Gross loans, excluding PCI loans		4,565,921			4,330,431
Less: Deferred loan fees, net		(6,951	)		(6,952	)

Gross loans, excluding PCI loans, net of deferred loan fees		4,558,970			4,323,479
Less: Allowance for loan losses		(58,487	)		(60,321	)

Net loans, excluding PCI loans		4,500,483			4,263,158

PCI Loans		57,785			73,093
Discount on PCI loans		(1,258	)		(1,508	)
Less: Allowance for loan losses		(725	)		(1,219	)

PCI loans, net		55,802			70,366

Total loans and lease finance receivables	$	4,556,285		$	4,333,524

Summary of Loan, Excluding PCI Loans by Internal Risk Ratings

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


	March 31, 2017
	Pass		Special Mention		Substandard		Doubtful & Loss		Total
	(Dollars in thousands)
Commercial and industrial	$	491,534	$	25,393	$	12,018	$	-	$	528,945
SBA		97,795		10,098		4,788		9		112,690
Real estate:
Commercial real estate
Owner occupied		939,031		85,700		22,700		-		1,047,431
Non-owner occupied		2,132,104		22,541		17,223		-		2,171,868
Construction
Speculative		53,305		-		384		-		53,689
Non-speculative		19,093		-		-		-		19,093
SFR mortgage		239,390		4,989		983		-		245,362
Dairy & livestock and agribusiness		137,440		75,054		31,770		-		244,264
Municipal lease finance receivables		58,088		4,328		-		-		62,416
Consumer and other loans		75,864		2,198		2,098		3		80,163

Total gross loans, excluding PCI loans	$	4,243,644	$	230,301	$	91,964	$	12	$	4,565,921


	December 31, 2016
	Pass		Special Mention		Substandard		Doubtful & Loss		Total
	(Dollars in thousands)
Commercial and industrial	$	449,658	$	21,610	$	13,809	$	1	$	485,078
SBA		80,138		10,553		6,482		11		97,184
Real estate:
Commercial real estate
Owner occupied		842,992		87,781		19,046		-		949,819
Non-owner occupied		1,941,203		23,534		15,585		-		1,980,322
Construction
Speculative		48,841		-		-		-		48,841
Non-speculative		37,038		-		-		-		37,038
SFR mortgage		243,374		4,930		2,301		-		250,605
Dairy & livestock and agribusiness		187,819		114,106		36,706		-		338,631
Municipal lease finance receivables		60,102		4,537		-		-		64,639
Consumer and other loans		74,328		2,123		1,819		4		78,274

Total gross loans, excluding PCI loans	$	3,965,493	$	269,174	$	95,748	$	16	$	4,330,431

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 March 31, 2017

	Ending Balance December 31, 2016		Charge-offs			Recoveries		(Recapture of) Provision for Loan Losses			Ending Balance March 31, 2017
	(Dollars in thousands)
Commercial and industrial	$	8,154	$	-		$	52	$	(250	)	$	7,956
SBA		871		-			4		(4	)		871
Real estate:
Commercial real estate		37,443		-			-		1,543			38,986
Construction		1,096		-			2,025		(2,301	)		820
SFR mortgage		2,287		-			64		(165	)		2,186
Dairy & livestock and agribusiness		8,541		-			-		(2,699	)		5,842
Municipal lease finance receivables		941		-			-		(52	)		889
Consumer and other loans		988		(2	)		29		(78	)		937
PCI loans		1,219		-			-		(494	)		725

Total allowance for loan losses	$	61,540	$	(2	)	$	2,174	$	(4,500	)	$	59,212


	For the Three Months Ended March 31, 2016
	Ending Balance December 31, 2015		Charge-offs			Recoveries		(Recapture of) Provision for Loan Losses			Ending Balance March 31, 2016
	(Dollars in thousands)
Commercial and industrial	$	8,588	$	(61	)	$	63	$	141		$	8,731
SBA		993		-			1		242			1,236
Real estate:
Commercial real estate		36,995		-			139		1,152			38,286
Construction		2,389		-			9		(1,247	)		1,151
SFR mortgage		2,103		(102	)		-		201			2,202
Dairy & livestock and agribusiness		6,029		-			99		(952	)		5,176
Municipal lease finance receivables		1,153		-			-		12			1,165
Consumer and other loans		906		-			32		451			1,389
PCI loans		-		-			-		-			-

Total allowance for loan losses	$	59,156	$	(163	)	$	343	$	-		$	59,336

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. The Company’s ALLL methodology for the first quarter of 2017 excludes the impact of the recent VBB acquisition from certain of the Bank’s qualitative factors that are otherwise designed to capture incremental risk in the legacy loan portfolio. The VBB acquired loans are also supported by a credit mark established through the determination of fair value for the acquired loan portfolio.


	March 31, 2017
	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	$	1,150	$	527,795	$	-	$	88	$	7,868	$	-
SBA		1,926		110,764		-		9		862		-
Real estate:
Commercial real estate		20,216		3,199,083		-		-		38,986		-
Construction		384		72,398		-		-		820		-
SFR mortgage		4,248		241,114		-		-		2,186		-
Dairy & livestock and agribusiness		1,324		242,940		-		-		5,842		-
Municipal lease finance receivables		-		62,416		-		-		889		-
Consumer and other loans		801		79,362		-		-		937		-
PCI loans		-		-		56,527		-		-		725

Total	$	30,049	$	4,535,872	$	56,527	$	97	$	58,390	$	725


	March 31, 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	$	1,477	$	465,484	$	-	$	575	$	8,156	$	-
SBA		3,304		110,399		-		55		1,181		-
Real estate:
Commercial real estate		35,577		2,783,542		-		-		38,286		-
Construction		7,651		81,997		-		48		1,103		-
SFR mortgage		5,874		227,091		-		16		2,186		-
Dairy & livestock and agribusiness		714		226,996		-		-		5,176		-
Municipal lease finance receivables		-		73,098		-		-		1,165		-
Consumer and other loans		868		75,235		-		-		1,389		-
PCI loans		-		-		81,850		-		-		-

Total	$	55,465	$	4,043,842	$	81,850	$	694	$	58,642	$	-

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.


	March 31, 2017

	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	$	42	$	177	$	219	$	506	$	528,220	$	528,945
SBA		328		1		329		1,089		111,272		112,690
Real estate:
Commercial real estate
Owner occupied		-		-		-		2,374		1,045,057		1,047,431
Non-owner occupied		-		-		-		3,249		2,168,619		2,171,868
Construction
Speculative (2)		-		-		-		384		53,305		53,689
Non-speculative		-		-		-		-		19,093		19,093
SFR mortgage		403		-		403		983		243,976		245,362
Dairy & livestock and agribusiness		-		-		-		1,324		242,940		244,264
Municipal lease finance receivables		-		-		-		-		62,416		62,416
Consumer and other loans		30		399		429		438		79,296		80,163

Total gross loans, excluding PCI Loans	$	803	$	577	$	1,380	$	10,347	$	4,554,194	$	4,565,921

(1) As of March 31, 2017, $6.2 million of nonaccruing loans were current, $2.2 million were 30-59 days past due, $81,000 were 60-89 days past due and $1.9 million were 90+ days past due.

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


	December 31, 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	$	-	$	-	$	-	$	156	$	484,922	$	485,078
SBA		352		-		352		2,737		94,095		97,184
Real estate:
Commercial real estate
Owner occupied		-		-		-		635		949,184		949,819
Non-owner occupied		-		-		-		1,048		1,979,274		1,980,322
Construction
Speculative (2)		-		-		-		-		48,841		48,841
Non-speculative		-		-		-		-		37,038		37,038
SFR mortgage		-		-		-		2,207		248,398		250,605
Dairy & livestock and agribusiness		-		-		-		-		338,631		338,631
Municipal lease finance receivables		-		-		-		-		64,639		64,639
Consumer and other loans		84		-		84		369		77,821		78,274

Total gross loans, excluding PCI Loans	$	436	$	-	$	436	$	7,152	$	4,322,843	$	4,330,431

(1)

As of December 31, 2016, $4.7 million of nonaccruing loans were current, $514,000 were 30-59 days past due, $435,000 were 60-89 days past due and $1.5 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 Three Months Ended March 31, 2017

	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
	(Dollars in thousands)
With no related allowance recorded:
Commercial and industrial	$	1,015	$	1,985	$	-	$	1,045	$	6
SBA		1,917		2,272		-		1,960		16
Real estate:
Commercial real estate
Owner occupied		6,669		7,081		-		6,434		32
Non-owner occupied		13,547		16,198		-		13,479		401
Construction
Speculative		384		402		-		384		-
Non-speculative		-		-		-		-		-
SFR mortgage		4,248		5,024		-		4,259		34
Dairy & livestock and agribusiness		1,324		1,610		-		1,839		1
Municipal lease finance receivables		-		-		-		-		-
Consumer and other loans		801		1,379		-		809		5

Total		29,905		35,951		-		30,209		495

With a related allowance recorded:
Commercial and industrial		135		136		88		152		2
SBA		9		25		9		10		-
Real estate:
Commercial real estate
Owner occupied		-		-		-		-		-
Non-owner occupied		-		-		-		-		-
Construction
Speculative		-		-		-		-		-
Non-speculative		-		-		-		-		-
SFR mortgage		-		-		-		-		-
Dairy & livestock and agribusiness		-		-		-		-		-
Municipal lease finance receivables		-		-		-		-		-
Consumer and other loans		-		-		-		-		-

Total		144		161		97		162		2

Total impaired loans	$	30,049	$	36,112	$	97	$	30,371	$	497


	As of and For the Three Months Ended March 31, 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	$	805	$	1,677	$	-	$	831	$	7
SBA		3,050		3,765		-		3,089		13
Real estate:
Commercial real estate
Owner occupied		5,315		6,507		-		5,095		51
Non-owner occupied		30,262		33,368		-		30,400		343
Construction
Speculative		-		-		-		-		-
Non-speculative		-		-		-		-		-
SFR mortgage		5,499		6,406		-		5,512		27
Dairy & livestock and agribusiness		714		714		-		710		8
Municipal lease finance receivables		-		-		-		-		-
Consumer and other loans		868		1,420		-		888		4

Total		46,513		53,857		-		46,525		453

With a related allowance recorded
Commercial and industrial		672		741		575		687		3
SBA		254		274		55		254		2
Real estate:
Commercial real estate
Owner occupied		-		-		-		-		-
Non-owner occupied		-		-		-		-		-
Construction
Speculative		7,651		7,651		48		7,651		97
Non-speculative		-		-		-		-		-
SFR mortgage		375		426		16		515		2
Dairy & livestock and agribusiness		-		-		-		-		-
Municipal lease finance receivables		-		-		-		-		-
Consumer and other loans		-		-		-		-		-

Total		8,952		9,092		694		9,107		104

Total impaired loans	$	55,465	$	62,949	$	694	$	55,632	$	557


	As of December 31, 2016
	Recorded Investment		Unpaid Principal Balance		Related Allowance
	(Dollars in thousands)
With no related allowance recorded
Commercial and industrial	$	730	$	1,646	$	-
SBA		3,386		4,189		-
Real estate:
Commercial real estate
Owner occupied		1,797		2,276		-
Non-owner occupied		13,331		15,842		-
Construction
Speculative		-		-		-
Non-speculative		-		-		-
SFR mortgage		5,174		6,075		-
Dairy & livestock and agribusiness		747		747		-
Municipal lease finance receivables		-		-		-
Consumer and other loans		853		1,423		-

Total		26,018		32,198		-

With a related allowance recorded
Commercial and industrial		171		171		114
SBA		196		212		27
Real estate:
Commercial real estate
Owner occupied		-		-		-
Non-owner occupied		-		-		-
Construction
Speculative		-		-		-
Non-speculative		-		-		-
SFR mortgage		-		-		-
Dairy & livestock and agribusiness		-		-		-
Municipal lease finance receivables		-		-		-
Consumer and other loans		-		-		-

Total		367		383		141

Total impaired loans	$	26,385	$	32,581	$	141

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 March 31,
	2017			2016
	(Dollars in thousands)
Performing TDRs:
Beginning balance	$	19,233		$	42,687
New modifications		3,143			1,006
Payoffs and payments, net		(3,003	)		(6,372	)
TDRs returned to accrual status		329			-
TDRs placed on nonaccrual status		-			-

Ending balance	$	19,702		$	37,321

Nonperforming TDRs:
Beginning balance	$	1,626		$	12,622
New modifications		2,066			82
Charge-offs		-			(38	)
Payoffs and payments, net		(1,956	)		(306	)
TDRs returned to accrual status		(329	)		-
TDRs placed on nonaccrual status		-			-

Ending balance	$	1,407		$	12,360

Total TDRs	$	21,109		$	49,681

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 March 31, 2017
	Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Outstanding Recorded Investment at March 31, 2017		Financial Effect Resulting From Modifications (2)
	(Dollars in thousands)
Commercial and industrial:
Interest rate reduction		-	$	-	$	-	$	-	$	-
Change in amortization period or maturity		-		-		-		-		-
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		1		3,143		3,143		3,143		-
Non-owner occupied
Interest rate reduction		-		-		-		-		-
Change in amortization period or maturity		-		-		-		-		-
Dairy & livestock and agribusiness:
Interest rate reduction		-		-		-		-		-
Change in amortization period or maturity		1		1,984		1,984		78		-
Consumer:
Interest rate reduction		-		-		-		-		-
Change in amortization period or maturity		1		82		82		80		-

Total loans		3	$	5,209	$	5,209	$	3,301	$	-


	For the Three Months Ended March 31, 2016
	Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Outstanding Recorded Investment at March 31, 2016		Financial Effect Resulting From Modifications (2)
	(Dollars in thousands)
Commercial and industrial:
Interest rate reduction		-	$	-	$	-	$	-	$	-
Change in amortization period or maturity		-		-		-		-		-
SBA:
Interest rate reduction		-		-		-		-		-
Change in amortization period or maturity		1		194		194		193		28
Real estate:
Commercial real estate:
Owner occupied
Interest rate reduction		-		-		-		-		-
Change in amortization period or maturity		2		812		812		778		-
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		75		-

Total loans		5	$	1,088	$	1,088	$	1,046	$	28

(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.