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

9 Months Ended

Sep. 30, 2018

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

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


	September 30, 2018			December 31, 2017
	(Dollars in thousands)

Commercial and industrial	$	1,021,906		$	513,325
SBA		357,052			122,055
Real estate:
Commercial real estate		5,268,740			3,376,713
Construction		123,274			77,982
SFR mortgage		292,516			236,202
Dairy & livestock and agribusiness		304,598			347,289
Municipal lease finance receivables		67,581			70,243
Consumer and other loans		134,796			64,229

Gross loans, excluding PCI loans		7,570,463			4,808,038
Less: Deferred loan fees, net		(5,264	)		(6,289	)

Gross loans, excluding PCI loans, net of deferred loan fees		7,565,199			4,801,749
Less: Allowance for loan losses		(59,802	)		(59,218	)

Net loans, excluding PCI loans		7,505,397			4,742,531

PCI Loans		17,260			30,908
Discount on PCI loans		-			(2,026	)
Less: Allowance for loan losses		(205	)		(367	)

PCI loans, net		17,055			28,515

Total loans and lease finance receivables	$	7,522,452		$	4,771,046

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.


	September 30, 2018
	Pass		Special Mention		Substandard (1)		Doubtful & Loss		Total
	(Dollars in thousands)
Commercial and industrial	$	980,421	$	33,628	$	7,857	$	-	$	1,021,906
SBA		345,126		5,469		6,457		-		357,052
Real estate:
Commercial real estate
Owner occupied		1,931,062		97,990		12,079		-		2,041,131
Non-owner occupied		3,215,070		5,582		6,957		-		3,227,609
Construction
Speculative		32,081		-		-		-		32,081
Non-speculative		91,193		-		-		-		91,193
SFR mortgage		284,852		4,047		3,617		-		292,516
Dairy & livestock and agribusiness		268,328		26,877		9,393		-		304,598
Municipal lease finance receivables		67,045		536		-		-		67,581
Consumer and other loans		132,637		740		1,419		-		134,796

Total gross loans, excluding PCI loans	$	7,347,815	$	174,869	$	47,779	$	-	$	7,570,463

(1)

Includes $15.1 million of classified loans acquired from CB in the third quarter of 2018.


	December 31, 2017
	Pass		Special Mention		Substandard		Doubtful & Loss		Total
	(Dollars in thousands)
Commercial and industrial	$	483,641	$	19,566	$	10,118	$	-	$	513,325
SBA		112,835		5,358		3,862		-		122,055
Real estate:
Commercial real estate
Owner occupied		1,009,199		76,111		10,970		-		1,096,280
Non-owner occupied		2,257,130		16,434		6,869		-		2,280,433
Construction
Speculative		60,042		-		-		-		60,042
Non-speculative		17,940		-		-		-		17,940
SFR mortgage		229,032		3,124		4,046		-		236,202
Dairy & livestock and agribusiness		321,413		9,047		16,829		-		347,289
Municipal lease finance receivables		69,644		599		-		-		70,243
Consumer and other loans		61,715		1,255		1,259		-		64,229

Total gross loans, excluding PCI loans	$	4,622,591	$	131,494	$	53,953	$	-	$	4,808,038

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 September 30, 2018
	Ending Balance June 30, 2018		Charge-offs			Recoveries		(Recapture of) Provision for Loan Losses			Ending Balance September 30, 2018
	(Dollars in thousands)
Commercial and industrial	$	6,970	$	-		$	44	$	477		$	7,491
SBA		841		(257	)		5		369			958
Real estate:
Commercial real estate		42,597		-			-		(1,056	)		41,541
Construction		1,003		-			15		115			1,133
SFR mortgage		2,155		-			-		(30	)		2,125
Dairy & livestock and agribusiness		4,351		-			-		673			5,024
Municipal lease finance receivables		808		-			-		7			815
Consumer and other loans		642		(1	)		118		(44	)		715
PCI loans		216		-			-		(11	)		205

Total allowance for loan losses	$	59,583	$	(258	)	$	182	$	500		$	60,007

	For the Three Months Ended September 30, 2017
	Ending Balance June 30, 2017		Charge-offs			Recoveries		(Recapture of) Provision for Loan Losses			Ending Balance September 30, 2017
	(Dollars in thousands)
Commercial and industrial	$	8,060	$	(138	)	$	12	$	129		$	8,063
SBA		913		-			5		(54	)		864
Real estate:
Commercial real estate		39,927		-			-		943			40,870
Construction		1,059		-			2,055		(2,181	)		933
SFR mortgage		2,369		-			-		(49	)		2,320
Dairy & livestock and agribusiness		5,440		-			-		(66	)		5,374
Municipal lease finance receivables		852		-			-		54			906
Consumer and other loans		922		(9	)		5		(48	)		870
PCI loans		659		-			-		(228	)		431

Total allowance for loan losses	$	60,201	$	(147	)	$	2,077	$	(1,500	)	$	60,631

	For the Nine Months Ended September 30, 2018
	Ending Balance December 31, 2017		Charge-offs			Recoveries		(Recapture of) Provision for Loan Losses			Ending Balance September 30, 2018
	(Dollars in thousands)
Commercial and industrial	$	7,280	$	-		$	81	$	130		$	7,491
SBA		869		(257	)		15		331			958
Real estate:
Commercial real estate		41,722		-			-		(181	)		41,541
Construction		984		-			1,945		(1,796	)		1,133
SFR mortgage		2,112		-			-		13			2,125
Dairy & livestock and agribusiness		4,647		-			19		358			5,024
Municipal lease finance receivables		851		-			-		(36	)		815
Consumer and other loans		753		(10	)		129		(157	)		715
PCI loans		367		-			-		(162	)		205

Total allowance for loan losses	$	59,585	$	(267	)	$	2,189	$	(1,500	)	$	60,007

	For the Nine Months Ended September 30, 2017
	Ending Balance December 31, 2016		Charge-offs			Recoveries		(Recapture of) Provision for Loan Losses			Ending Balance September 30, 2017
	(Dollars in thousands)
Commercial and industrial	$	8,154	$	(138	)	$	106	$	(59	)	$	8,063
SBA		871		-			47		(54	)		864
Real estate:
Commercial real estate		37,443		-			154		3,273			40,870
Construction		1,096		-			5,774		(5,937	)		933
SFR mortgage		2,287		-			64		(31	)		2,320
Dairy & livestock and agribusiness		8,541		-			19		(3,186	)		5,374
Municipal lease finance receivables		941		-			-		(35	)		906
Consumer and other loans		988		(11	)		76		(183	)		870
PCI loans		1,219		-			-		(788	)		431

Total allowance for loan losses	$	61,540	$	(149	)	$	6,240	$	(7,000	)	$	60,631

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. Acquired loans are also supported by a credit discount established through the determination of fair value for the acquired loan portfolio.


	September 30, 2018
	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	$	3,168	$	1,018,738	$	-	$	-	$	7,491	$	-
SBA		3,593		353,459		-		-		958		-
Real estate:
Commercial real estate		6,348		5,262,392		-		-		41,541		-
Construction		-		123,274		-		-		1,133		-
SFR mortgage		5,492		287,024		-		13		2,112		-
Dairy & livestock and agribusiness		775		303,823		-		-		5,024		-
Municipal lease finance receivables		-		67,581		-		-		815		-
Consumer and other loans		807		133,989		-		70		645		-
PCI loans		-		-		17,260		-		-		205

Total	$	20,183	$	7,550,280	$	17,260	$	83	$	59,719	$	205

	September 30, 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	$	745	$	527,914	$	-	$	2	$	8,061	$	-
SBA		2,273		121,818		-		3		861		-
Real estate:
Commercial real estate		8,168		3,324,349		-		-		40,870		-
Construction		-		74,148		-		-		933		-
SFR mortgage		4,550		240,112		-		-		2,320		-
Dairy & livestock and agribusiness		829		269,653		-		-		5,374		-
Municipal lease finance receivables		-		71,352		-		-		906		-
Consumer and other loans		743		69,672		-		83		787		-
PCI loans		-		-		36,548		-		-		431

Total	$	17,308	$	4,699,018	$	36,548	$	88	$	60,112	$	431

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.


	September 30, 2018
	30-59 Days Past Due		60-89 Days Past Due		Total Past Due and Accruing		Nonaccrual (1) (3)		Current		Total Loans and Financing Receivables
	(Dollars in thousands)
Commercial and industrial	$	274	$	-	$	274	$	3,026	$	1,018,606	$	1,021,906
SBA		-		123		123		3,005		353,924		357,052
Real estate:
Commercial real estate
Owner occupied		-		-		-		615		2,040,516		2,041,131
Non-owner occupied		-		-		-		5,241		3,222,368		3,227,609
Construction
Speculative (2)		-		-		-		-		32,081		32,081
Non-speculative		-		-		-		-		91,193		91,193
SFR mortgage		-		-		-		2,961		289,555		292,516
Dairy & livestock and agribusiness		-		-		-		775		303,823		304,598
Municipal lease finance receivables		-		-		-		-		67,581		67,581
Consumer and other loans		98		-		98		807		133,891		134,796

Total gross loans, excluding PCI loans	$	372	$	123	$	495	$	16,430	$	7,553,538	$	7,570,463

(1)

As of September 30, 2018, $2.6 million of nonaccruing loans were current, $562,000 were 30-59 days past due, $1.3 million were 60-89 days past due and $12.0 million were 90+ days past due.

(2)

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

(3)

Includes $8.6 million of nonaccrual loans acquired from CB in the third quarter of 2018.


	December 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	$	768	$	-	$	768	$	250	$	512,307	$	513,325
SBA		403		-		403		906		120,746		122,055
Real estate:
Commercial real estate
Owner occupied		-		-		-		4,365		1,091,915		1,096,280
Non-owner occupied		-		-		-		2,477		2,277,956		2,280,433
Construction
Speculative (2)		-		-		-		-		60,042		60,042
Non-speculative		-		-		-		-		17,940		17,940
SFR mortgage		-		-		-		1,337		234,865		236,202
Dairy & livestock and agribusiness		-		-		-		829		346,460		347,289
Municipal lease finance receivables		-		-		-		-		70,243		70,243
Consumer and other loans		1		-		1		552		63,676		64,229

Total gross loans, excluding PCI loans	$	1,172	$	-	$	1,172	$	10,716	$	4,796,150	$	4,808,038

(1)

As of December 31, 2017, $3.6 million of nonaccruing loans were current, $376,000 were 60-89 days past due and $6.8 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 Nine Months Ended September 30, 2018
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
	(Dollars in thousands)
With no related allowance recorded:
Commercial and industrial	$	3,168	$	3,829	$	-	$	3,439	$	6
SBA		3,593		5,779		-		4,457		34
Real estate:
Commercial real estate
Owner occupied		615		726		-		644		-
Non-owner occupied		5,733		6,385		-		5,904		24
Construction
Speculative		-		-		-		-		-
Non-speculative		-		-		-		-		-
SFR mortgage		5,479		6,449		-		5,679		59
Dairy & livestock and agribusiness		775		1,091		-		808		-
Municipal lease finance receivables		-		-		-		-		-
Consumer and other loans		737		1,025		-		867		-

Total		20,100		25,284		-		21,798		123

With a related allowance recorded:
Commercial and industrial		-		-		-		-		-
SBA		-		-		-		-		-
Real estate:
Commercial real estate
Owner occupied		-		-		-		-		-
Non-owner occupied		-		-		-		-		-
Construction
Speculative		-		-		-		-		-
Non-speculative		-		-		-		-		-
SFR mortgage		13		13		13		13		-
Dairy & livestock and agribusiness		-		-		-		-		-
Municipal lease finance receivables		-		-		-		-		-
Consumer and other loans		70		101		70		85		-

Total		83		114		83		98		-

Total impaired loans	$	20,183	$	25,398	$	83	$	21,896	$	123


	As of and For the Nine Months Ended September 30, 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	$	726	$	1,256	$	-	$	870	$	15
SBA		2,270		2,573		-		2,489		38
Real estate:
Commercial real estate
Owner occupied		4,313		4,625		-		4,361		42
Non-owner occupied		3,855		5,155		-		4,010		72
Construction
Speculative		-		-		-		-		-
Non-speculative		-		-		-		-		-
SFR mortgage		4,550		5,345		-		4,620		109
Dairy & livestock and agribusiness		829		1,091		-		1,035		1
Municipal lease finance receivables		-		-		-		-		-
Consumer and other loans		356		571		-		381		-

Total		16,899		20,616		-		17,766		277

With a related allowance recorded:
Commercial and industrial		19		20		2		42		1
SBA		3		20		3		7		-
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		387		394		83		390		-

Total		409		434		88		439		1

Total impaired loans	$	17,308	$	21,050	$	88	$	18,205	$	278


	As of December 31, 2017
	Recorded Investment		Unpaid Principal Balance		Related Allowance
	(Dollars in thousands)
With no related allowance recorded:
Commercial and industrial	$	440	$	980	$	-
SBA		1,530		1,699		-
Real estate:
Commercial real estate
Owner occupied		4,365		4,763		-
Non-owner occupied		3,768		5,107		-
Construction
Speculative		-		-		-
Non-speculative		-		-		-
SFR mortgage		4,040		4,692		-
Dairy & livestock and agribusiness		829		1,091		-
Municipal lease finance receivables		-		-		-
Consumer and other loans		174		370		-

Total		15,146		18,702		-

With a related allowance recorded:
Commercial and industrial		-		-		-
SBA		1		18		1
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		378		391		74

Total		379		409		75

Total impaired loans	$	15,525	$	19,111	$	75

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 September 30,						For the Nine Months Ended September 30,
	2018			2017			2018			2017
	(Dollars in thousands)
Performing TDRs:
Beginning balance	$	4,530		$	16,574		$	4,809		$	19,233
New modifications		-			-			311			3,143
Payoffs/payments, net and other		(777	)		(10,839	)		(1,367	)		(13,826	)
TDRs returned to accrual status		-			-			-			329
TDRs placed on nonaccrual status		-			-			-			(3,144	)

Ending balance	$	3,753		$	5,735		$	3,753		$	5,735

Nonperforming TDRs:
Beginning balance	$	3,892		$	4,391		$	4,200		$	1,626
New modifications		278			-			316			2,066
Charge-offs		-			-			-			-
Payoffs/payments, net and other		(650	)		(81	)		(996	)		(2,197	)
TDRs returned to accrual status		-			-			-			(329	)
TDRs placed on nonaccrual status		-			-			-			3,144

Ending balance	$	3,520		$	4,310		$	3,520		$	4,310

Total TDRs	$	7,273		$	10,045		$	7,273		$	10,045

Summary of Loans Modified as Troubled Debt Restructurings

The following table summarizes loans modified as troubled debt restructurings for the period presented.

Modifications (1)


	For the Three Months Ended September 30, 2018
	Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Outstanding Recorded Investment at September 30, 2018		Financial Effect Resulting From Modifications (2)
	(Dollars in thousands)
Commercial and industrial:
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		-		-		-		-		-
SFR mortgage:
Interest rate reduction		-		-		-		-		-
Change in amortization period or maturity		-		-		-		-		-
Dairy & livestock and agribusiness:
Interest rate reduction		-		-		-		-		-
Change in amortization period or maturity		-		-		-		-		-
Consumer:
Interest rate reduction		-		-		-		-		-
Change in amortization period or maturity		1		278		278		272		-

Total loans		1	$	278	$	278	$	272	$	-

For the Three Months Ended September 30, 2017

Number of
Loans

Pre-Modification
Outstanding
Recorded
Investment

Post-Modification
Outstanding
Recorded
Investment

Outstanding
Recorded
Investment at
September 30, 2017

Financial Effect
Resulting From
Modifications (2)

(Dollars in thousands)

Commercial and industrial:

Interest rate reduction