
	Allowance for Loan Losses – Three Months Ended March 31, 2020
(in thousands)	Beginning Balance		Impact of CECL Adoption		Charge-offs		Recoveries		Provision (benefit)		Ending Balance
Mortgage loans on real estate:
Residential 1-4 family	$	2,306	$	2,675	$	—	$	410	$	259	$	5,650
Commercial	11,995		11,848		—		194		5,216		29,253
Total mortgage loans on real estate	14,301		14,523		—		604		5,475		34,903
Consumer:
Home equity lines of credit	5,572		4,549		—		33		369		10,523
Home equity loans	611		89		—		15		(42)		673
Other	1,595		971		(130)		94		216		2,746
Total consumer loans	7,778		5,609		(130)		142		543		13,942
Commercial	5,149		(2,152)		(380)		146		1,708		4,471
Construction:
Residential	630		189		—		—		5		824
Commercial	2,758		744		—		—		269		3,771
Total construction loans	3,388		933		—		—		274		4,595
Total	$	30,616	$	18,913	$	(510)	$	892	$	8,000	$	57,911

In determining the allowance for credit losses, accruing loans with similar risk characteristics are generally evaluated collectively. To estimate expected losses the Company generally utilizes historical loss trends and the remaining contractual lives of the loan portfolios to determine estimated credit losses through a reasonable and supportable forecast period. Individual loan credit quality indicators including loan grade and borrower repayment performance have been statistically correlated with historical credit losses and various econometrics, including California unemployment, gross domestic product, and corporate bond yields. Model forecasts may be adjusted for inherent limitations or biases that have been identified through independent validation and back-testing of model performance to actual realized results. At both January 1, 2020, the adoption and implementation date of ASC Topic 326, and March 31, 2020, the Company utilized a reasonable and supportable forecast period of approximately eight quarters and obtained the forecast data from publicly available sources. The Company also considered the impact of portfolio concentrations, changes in underwriting practices, imprecision in its economic forecasts, and other risk factors that might influence its loss estimation process. During the quarter ended March 31, 2020 the levels of actual and forecasted California unemployment and gross domestic product continued to deteriorate and as a result, were the primary cause for the increase in allowance for credit losses. Management believes that the allowance for credit losses at March 31, 2020 appropriately reflected expected credit losses inherent in the loan portfolio at that date.


	Allowance for Loan Losses – Year Ended December 31, 2019
(in thousands)	Beginning Balance		Charge-offs		Recoveries		Provision (benefit)		Ending Balance
Mortgage loans on real estate:
Residential 1-4 family	$	2,676	$	(2)	$	54	$	(422)	$	2,306
Commercial	12,944		(746)		1,528		(1,731)		11,995
Total mortgage loans on real estate	15,620		(748)		1,582		(2,153)		14,301
Consumer:
Home equity lines of credit	6,042		—		504		(974)		5,572
Home equity loans	1,540		(3)		431		(1,357)		611
Other	793		(765)		321		1,246		1,595
Total consumer loans	8,375		(768)		1,256		(1,085)		7,778
Commercial	6,090		(2,123)		525		657		5,149
Construction:
Residential	464		—		—		166		630
Commercial	2,033		—		—		725		2,758
Total construction loans	2,497		—		—		891		3,388
Total	$	32,582	$	(3,639)	$	3,363	$	(1,690)	$	30,616


	Allowance for Loan Losses – Three Months Ended March 31, 2019
(in thousands)	Beginning Balance		Charge-offs		Recoveries		Provision (benefit)		Ending Balance
Mortgage loans on real estate:
Residential 1-4 family	$	2,676	$	—	$	2	$	(178)	$	2,500
Commercial	12,944		—		1,381		(1,995)		12,330
Total mortgage loans on real estate	15,620		—		1,383		(2,173)		14,830
Consumer:
Home equity lines of credit	6,042		—		95		(122)		6,015
Home equity loans	1,540		—		87		(341)		1,286
Other	793		(207)		75		379		1,040
Total consumer loans	8,375		(207)		257		(84)		8,341
Commercial	6,090		(519)		168		339		6,078
Construction:
Residential	464		—		—		84		548
Commercial	2,033		—		—		234		2,267
Total construction loans	2,497		—		—		318		2,815
Total	$	32,582	$	(726)	$	1,808	$	(1,600)	$	32,064

As part of the on-going monitoring of the credit quality of the Company’s loan portfolio, management tracks certain credit quality indicators including, but not limited to, trends relating to (i) the level of criticized and classified loans, (ii) net charge-offs, (iii) non-performing loans, and (iv) delinquency within the portfolio. The Company analyzes loans individually to classify the loans as to credit risk and grading. This analysis is performed annually for all outstanding balances greater than $1,000,000 and non-homogeneous loans, such as commercial real estate loans, unless other indicators, such as delinquency, trigger more frequent evaluation. Loans below the $1,000,000 threshold and homogenous in nature are evaluated as needed based on delinquency and borrower credit scores.

•Special Mention– This grade represents “Other Assets Especially Mentioned” in accordance with regulatory guidelines and includes loans that display some potential weaknesses which, if left unaddressed, may result in deterioration of the repayment prospects for the asset or may inadequately protect the Company’s position in the future. These loans warrant more than normal supervision and attention.

•Substandard– This grade represents “Substandard” loans in accordance with regulatory guidelines. Loans within this rating typically exhibit weaknesses that are well defined to the point that repayment is jeopardized. Loss potential is, however, not necessarily evident. The underlying collateral supporting the credit appears to have sufficient value to protect the Company from loss of principal and accrued interest, or the loan has been written down to the point where this is true. There is a definite need for a well-defined workout/rehabilitation program.

•Doubtful– This grade represents “Doubtful” loans in accordance with regulatory guidelines. An asset classified as Doubtful has all the weaknesses inherent in a loan classified Substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. Pending factors include proposed merger, acquisition, or liquidation procedures, capital injection, perfecting liens on additional collateral, and financing plans.

•Loss– This grade represents “Loss” loans in accordance with regulatory guidelines. A loan classified as Loss is considered uncollectible and of such little value that its continuance as a bankable asset 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 the loan, even though some recovery may be affected in the future. The portion of the loan that is graded loss should be charged off no later than the end of the quarter in which the loss is identified.


(in thousands)	Term Loans Amortized Cost Basis by Origination Year – As of March 31, 2020
	2020	2019	2018	2017	2016	Prior	Revolving Loans Amortized Cost Basis	Revolving Loans Converted to Term	Total
Mortgage loans on real estate:
Residential 1-4 family risk ratings
Pass	$25,698	$102,369	$59,278	$69,504	$60,063	$179,461	—	$117	$496,490
Special Mention	—	—	—	868	18	2,953	—	105	3,944
Substandard	—	—	574	996	51	4,778	—	—	6,399
Doubtful/Loss	—	—	—	—	—	—	—	—	—
Total residential 1-4 family - mortgage loans	$25,698	$102,369	$59,852	$71,368	$60,132	$187,192	$—	$222	$506,833


Mortgage loans on real estate:
Commercial risk ratings
Pass	$82,428	$457,462	$364,082	$443,054	$407,011	$967,584	$102,830	$1,501	$2,825,952
Special Mention	70	2,288	—	7,618	11,562	10,722	12,588	—	44,848
Substandard	200	1,394	1,445	1,580	3,191	9,801	772	—	18,383
Doubtful/Loss	—	—	—	—	—	—	—	—	—
Total commercial - mortgage loans	$82,698	$461,144	$365,527	$452,252	$421,764	$988,107	$116,190	$1,501	$2,889,183


Consumer loans:
Home equity line of credit risk ratings
Pass	$2,859	$8,591	$2,967	$714	$1,561	$10,815	$304,911	$627	$333,045
Special Mention	80	—	36	46	70	644	3,524	—	4,400
Substandard	—	—	57	529	80	1,078	2,266	6	4,016
Doubtful/Loss	—	—	—	—	—	—	—	—	—
Total home equity lines of credit - consumer loans	$2,939	$8,591	$3,060	$1,289	$1,711	$12,537	$310,701	$633	$341,461


(in thousands)	Term Loans Amortized Cost Basis by Origination Year – As of March 31, 2020
	2020	2019	2018	2017	2016	Prior	Revolving Loans Amortized Cost Basis	Revolving Loans Converted to Term	Total
Consumer loans:
Home equity loans risk ratings
Pass	$2	$580	$290	$378	$673	$21,191	$500	$16	$23,630
Special Mention	—	—	19	—	—	906	—	—	925
Substandard	153	—	—	—	145	2,257	—	—	2,555
Doubtful/Loss	—	—	—	—	—	—	—	—	—
Total home equity loans - consumer loans	$155	$580	$309	$378	$818	$24,354	$500	$16	$27,110


Commercial loans:
Commercial risk ratings
Pass	$15,616	$66,145	$32,209	$25,226	$10,041	$17,434	$112,189	$5,164	$284,024
Special Mention	—	—	75	539	149	110	604	700	2,177
Substandard	—	153	382	1,236	1,262	201	725	174	4,133
Doubtful/Loss	—	—	—	—	—	—	—	—	—
Total commercial loans	$15,616	$66,298	$32,666	$27,001	$11,452	$17,745	$113,518	$6,038	$290,334


(in thousands)	Term Loans Amortized Cost Basis by Origination Year – As of March 31, 2020
	2020	2019	2018	2017	2016	Prior	Revolving Loans Amortized Cost Basis	Revolving Loans Converted to Term	Total
Construction loans:
Residential risk ratings
Pass	$1,725	$15,703	$17,067	$0	$3,459	$0	$0	$0	$37,954
Special Mention	—	—	—	—	4,379	—	—	—	4,379
Substandard	—	—	—	—	—	—	—	—	—
Doubtful/Loss	—	—	—	—	—	—	—	—	—
Total residential - construction loans	$1,725	$15,703	$17,067	$0	$7,838	$0	$0	$0	$42,333


Construction loans:
Commercial risk ratings
Pass	$14,081	$35,515	$82,740	$43,455	$15,793	$5,709	$0	$0	$197,293
Special Mention	—	—	—	—	—	1,845	—	—	1,845
Substandard	—	—	—	—	—	243	—	—	243
Doubtful/Loss	—	—	—	—	—	—	—	—	—
Total commercial - construction loans	$14,081	$35,515	$82,740	$43,455	$15,793	$7,797	$0	$0	$199,381


Total loans:
Risk ratings
Pass	$150,088	$726,819	$579,098	$588,552	$500,484	$1,203,981	$522,177	$8,832	$4,280,031
Special Mention	150	2,341	300	9,212	16,222	17,338	16,799	807	63,169
Substandard	353	1,606	2,458	4,353	4,740	18,393	3,779	180	35,862
Doubtful/Loss	—	—	—	—	—	—	—	—	—
Total loans	$150,591	$730,766	$581,856	$602,117	$521,446	$1,239,712	$542,755	$9,819	$4,379,062


(in thousands)	Term Loans Amortized Cost Basis by Origination Year – As of December 31, 2019
		2019	2018	2017	2016	Prior	Revolving Loans Amortized Cost Basis	Revolving Loans Converted to Term	Total
Mortgage loans on real estate:
Residential 1-4 family risk ratings
Pass		$102,613	$63,542	$73,195	$65,050	$194,214	—	—	$498,614
Special Mention		—	—	1,408	19	3,287	—	—	4,714
Substandard		—	813	711	52	4,604	—	—	6,180
Doubtful/Loss		—	—	—	—	—	—	—	$0
Total residential 1-4 family - mortgage loans		$102,613	$64,355	$75,314	$65,121	$202,105	$—	$—	$509,508


Mortgage loans on real estate:
Commercial risk ratings
Pass	$446,597	$373,065	$421,901	$415,568	$1,010,057	$107,965	$748	$2,775,901
Special Mention	—	—	4,965	9,373	8,467	2,253	—	25,058
Substandard	830	1,454	1,591	3,216	9,937	795	—	17,823
Doubtful/Loss	—	—	—	—	—	—	—	—
Total commercial - mortgage loans	$447,427	$374,519	$428,457	$428,157	$1,028,461	$111,013	$748	$2,818,782


Consumer loans:
Home equity line of credit risk ratings
Pass	$10,195	$3,436	$1,015	$1,729	$11,821	$297,458	$663	$326,317
Special Mention	—	11	47	31	665	3,398	37	4,189
Substandard	—	59	253	77	1,223	2,146	36	3,794
Doubtful/Loss	—	—	—	—	—	—	—	—
Total home equity lines of credit - consumer loans	$10,195	$3,506	$1,315	$1,837	$13,709	$303,002	$736	$334,300


(in thousands)	Term Loans Amortized Cost Basis by Origination Year – As of December 31, 2019
		2019	2018	2017	2016	Prior	Revolving Loans Amortized Cost Basis	Revolving Loans Converted to Term	Total
Consumer loans:
Home equity loans risk ratings
Pass		$607	$300	$382	$712	$22,655	$399	$37	$25,092
Special Mention		—	20	—	—	1,172	—	—	1,192
Substandard		—	—	—	156	2,146	—	—	2,302
Doubtful/Loss		—	—	—	—	—	—	—	—
Total home equity loans - consumer loans		$607	$320	$382	$868	$25,973	$399	$37	$28,586


Commercial loans:
Commercial risk ratings
Pass	$77,614	$37,411	$27,195	$11,906	$17,806	$100,098	$3,623	$275,653
Special Mention	—	339	1,236	167	164	1,921	—	3,827
Substandard	—	48	1,481	1,646	393	611	48	4,227
Doubtful/Loss	—	—	—	—	—	—	—	—
Total commercial loans	$77,614	$37,798	$29,912	$13,719	$18,363	$102,630	$3,671	$283,707


(in thousands)	Term Loans Amortized Cost Basis by Origination Year – As of December 31, 2019
		2019	2018	2017	2016	Prior	Revolving Loans Amortized Cost Basis	Revolving Loans Converted to Term	Total
Construction loans:
Residential risk ratings
Pass		$18,516	$12,990	$0	$3,319	$0	$6,230	$889	$41,944
Special Mention		—	—	—	4,202	—	—	—	4,202
Substandard		—	—	—	—	—	—	—	—
Doubtful/Loss		—	—	—	—	—	—	—	—
Total residential - construction loans		$18,516	$12,990	$0	$7,521	$0	$6,230	$889	$46,146


Total loans:
Risk ratings
Pass	$732,848	$586,097	$606,907	$516,183	$1,265,974	$514,727	$5,963	$4,228,699
Special Mention	56	552	7,832	13,844	14,244	7,653	37	44,218
Substandard	890	2,374	4,049	5,148	18,348	3,553	87	34,449
Doubtful/Loss	—	—	—	—	—	—	—	—
Total loans	$733,794	$589,023	$618,788	$535,175	$1,298,566	$525,933	$6,087	$4,307,366


	Analysis of Past Due Loans - As of March 31, 2020
(in thousands)	30-59 days		60-89 days		> 90 days		Total Past Due Loans		Current		Total
Mortgage loans on real estate:
Residential 1-4 family	$	699	$	—	$	1,763	$	2,462	$	504,371	$	506,833
Commercial	18,445		1,283		2,675		22,403		2,866,780		2,889,183
Total mortgage loans on real estate	19,144		1,283		4,438		24,865		3,371,151		3,396,016
Consumer:
Home equity lines of credit	572		85		1,118		1,775		339,686		341,461
Home equity loans	200		64		193		457		26,653		27,110
Other	100		12		114		226		82,201		82,427
Total consumer loans	872		161		1,425		2,458		448,540		450,998
Commercial	1,014		932		70		2,016		288,318		290,334
Construction:
Residential	—		—		—		—		42,333		42,333
Commercial	—		—		—		—		199,381		199,381
Total construction loans	—		—		—		—		241,714		241,714
Total originated loans	$	21,030	$	2,376	$	5,933	$	29,339	$	4,349,723	$	4,379,062


	Analysis of Past Due Loans - As of December 31, 2019
(in thousands)	30-59 days		60-89 days		> 90 days		Total Past Due Loans		Current		Total
Mortgage loans on real estate:
Residential 1-4 family	$	1,149	$	371	$	1,957	$	3,477	$	506,031	$	509,508
Commercial	581		136		2,431		3,148		2,815,634		2,818,782
Total mortgage loans on real estate	1,730		507		4,388		6,625		3,321,665		3,328,290
Consumer:
Home equity lines of credit	1,083		363		956		2,402		331,898		334,300
Home equity loans	175		216		132		523		28,063		28,586
Other	172		1		23		196		82,460		82,656
Total consumer loans	1,430		580		1,111		3,121		442,421		445,542
Commercial	652		298		24		974		282,733		283,707
Construction:
Residential	—		—		—		—		46,146		46,146
Commercial	—		—		—		—		203,681		203,681
Total construction loans	—		—		—		—		249,827		249,827
Total loans	$	3,812	$	1,385	$	5,523	$	10,720	$	4,296,646	$	4,307,366


	Non Accrual Loans
	As of March 31, 2020										As of December 31, 2019
(in thousands)	Non accrual with no allowance for credit losses		Total non accrual		Past due 90 days or more and still accruing		Non accrual with no allowance for credit losses		Total non accrual		Past due 90 days or more and still accruing
Mortgage loans on real estate:
Residential 1-4 family	$	5,169	$	5,784	$	—	$	5,023	$	5,192	$	—
Commercial	5,451		5,514		—		5,316		5,316		—
Total mortgage loans on real estate	10,620		11,298		—		10,339		10,508		—
Consumer:
Home equity lines of credit	2,760		3,210		—		2,419		2,590		—
Home equity loans	1,523		1,654		—		1,574		1,626		—
Other	—		140		—		4		51		11
Total consumer loans	4,283		5,004				3,997		4,267		11
Commercial	298		1,653		—		489		2,089		—
Construction:
Residential	—		—		—		—		—		—
Commercial	—		—		—		—		—		—
Total construction	—		—		—		—		—		—
Total non accrual loans	$	15,201	$	17,955	$	—	$	14,825	$	16,864	$	11

Interest income on non accrual loans that would have been recognized during the three months ended March 31, 2020 and 2019, if all such loans had been current in accordance with their original terms, totaled $431,000 and $400,000, respectively. Interest income actually recognized on these originated loans during the three months ended March 31, 2020 and 2019 was $47,000 and $93,000, respectively.


	As of March 31, 2020
(in thousands)	Retail		Office		Warehouse		Other		Multifamily		Farmland		SFR -1st Deed		SFR -2nd Deed		Automobile/Truck		A/R and Inventory		Equipment		Unsecured		Total
Mortgage loans on real estate:
Residential 1-4 family	$	—	$	—	$	—	$	—	$	—	$	—	$	5,815	$	—	$	—	$	—	$	—	$	—	$	5,815
Commercial	2,483		161		1,866		506		2,060		1,203		—		—		—		—		—		—		8,279
Total mortgage loans on real estate	2,483		161		1,866		506		2,060		1,203		5,815		—		—		—		—		—		14,094
Consumer:
Home equity lines of credit	—		—		—		—		—		—		—		1,936		—		—		—		—		1,936
Home equity loans	—		—		—		—		—		—		—		2,106		—		—		—		—		2,106
Other	—		—		—		—		—		156		47		—		127		—		—		4		334
Total consumer loans	—		—		—		—		—		156		47		4,042		127		—		—		4		4,376
Commercial	—		—		—		—		—		—		—		—		—		1,824		1,012		116		2,952




Total collateral dependent loans	$	2,483	$	161	$	1,866	$	506	$	2,060	$	1,359	$	5,862	$	4,042	$	127	$	1,824	$	1,012	$	120	$	21,422


	As of December 31, 2019
(in thousands)	Retail		Office		Warehouse		Other		Multifamily		Farmland		SFR -1st Deed		SFR -2nd Deed		Automobile/Truck		A/R and Inventory		Equipment		Unsecured		Total
Mortgage loans on real estate:
Residential 1-4 family	$	—	$	—	$	—	$	—	$	—	$	—	$	5,293	$	—	$	—	$	—	$	—	$	—	$	5,293
Commercial	2,506		163		1,640		509		2,060		1,242		—		—		—		—		—		—		8,120
Total mortgage loans on real estate	2,506		163		1,640		509		2,060		1,242		5,293		—		—		—		—		—		13,413
Consumer:
Home equity lines of credit	—		—		—		—		—		—		—		1,808		—		—		—		—		1,808
Home equity loans	—		—		—		—		—		—		—		2,040		—		—		—		—		2,040
Other	—		—		—		—		—		—		48		—		27		—		—		4		79
Total consumer loans	—		—		—		—		—		—		48		3,848		27		—		—		4		3,927
Commercial	—		—		—		—		—		—		—		—		—		1,952		1,026		107		3,085




Total collateral dependent loans	$	2,506	$	163	$	1,640	$	509	$	2,060	$	1,242	$	5,341	$	3,848	$	27	$	1,952	$	1,026	$	111	$	20,425


	TDR Information for the three months ended March 31, 2020
(dollars in thousands)	Number	Pre-mod outstanding principal balance		Post-mod outstanding principal balance		Financial impact due to TDR taken as additional provision		Number that defaulted during the period	Recorded investment of TDRs that defaulted during the period		Financial impact due to the default of previous TDR taken as charge- offs or additional provisions
Mortgage loans on real estate:
Residential 1-4 family	—	$	—	$	—	$	—	1	$	302	$	—
Commercial	3	487		549		—		—	—		—
Total mortgage loans on real estate	3	487		549		—		1	302		—
Consumer:
Home equity lines of credit	—	—		—		—		—	—		—
Home equity loans	2	172		169		—		—	—		—
Other	—	—		—		—		—	—		—
Total consumer loans	2	172		169		—		—	—		—
Commercial	1	21		20		21		—	—		—
Construction:
Residential	—	—		—		—		—	—		—
Commercial	—	—		—		—		—	—		—
Total construction loans	—	—		—		—		—	—		—
Total	6	$	680	$	738	$	21	1	$	302	$	—


	TDR Information for the three months ended March 31, 2019
(dollars in thousands)	Number	Pre-mod outstanding principal balance		Post-mod outstanding principal balance		Financial impact due to TDR taken as additional provision		Number that defaulted during the period		Recorded investment of TDRs that defaulted during the period		Financial impact due to the default of previous TDR taken as charge- offs or additional provisions
Mortgage loans on real estate:
Residential 1-4 family	—	$	163	$	162	$	—	$	—	$	—	$	—
Commercial	—	—		—		—		—		—		—
Total mortgage loans on real estate	1	163		162		—		—		—		—
Consumer:
Home equity lines of credit	—	—		—		—		—		—		—
Home equity loans	1	121		120		1		—		—		—
Other	—	—		—		—		—		—		—
Total consumer loans	1	121		120		1		—		—		—
Commercial	2	15		15		—		1		7		—
Construction:
Residential	—	—				—		—		—		—
Commercial	—	—				—		—		—		—
Total construction loans	—	—		—		—		—		—		—
Total	4	$	299	$	297	$	1	1		$	7	$	—

The Company also modified the terms of select loans in an effort to assist borrowers that were not related to the COVID-19 pandemic. If the borrower was experiencing financial difficulty and a concession was granted, the Company considered such modifications as troubled debt restructurings. Modifications classified as TDRs can include one or a combination of the following: rate modifications, term extensions, interest only modifications, either temporary or long-term, payment modifications, and collateral substitutions/additions. The objective of the modifications was to increase loan repayments by customers and thereby reduce net charge-offs. The modified loans are included in impaired loans for purposes of determining the level of the allowance for credit losses.

For all new TDRs, an impairment analysis is conducted. If the loan is determined to be collateral dependent, any additional amount of impairment will be calculated based on the difference between estimated collectible value and the current carrying balance of the loan. This difference could result in an increased provision and is typically charged off. If the asset is determined not to be collateral dependent, the impairment is measured on the net present value difference between the expected cash flows of the restructured loan and the cash flows which would have been received under the original terms. The effect of this could result in a requirement for additional provision to the reserve. The effect of these required provisions for the period are indicated above.

Typically if a TDR defaults during the period, the loan is then considered collateral dependent and, if it was not already considered collateral dependent, an appropriate provision will be reserved or charge will be taken. The additional provisions required resulting from default of previously modified TDR’s are noted above. Loans that defaulted within the twelve month period subsequent to modification were not considered significant for financial reporting purposes.