Loans and Lease Finance Receivables and Allowance for Loan Losses | 6. LOANS AND LEASE FINANCE RECEIVABLES AND ALLOWANCE FOR LOAN LOSSES The following table provides a summary of total loans and lease finance receivables, excluding PCI loans, by type. September 30, 2015 December 31, 2014 (Dollars in thousands) Commercial and industrial $ 413,709 $ 390,011 SBA 116,126 134,265 Real estate: Commercial real estate 2,569,128 2,487,803 Construction 57,578 55,173 SFR mortgage 221,696 205,124 Dairy & livestock and agribusiness 212,670 279,173 Municipal lease finance receivables 75,839 77,834 Consumer and other loans 69,630 69,884 Gross loans, excluding PCI loans 3,736,376 3,699,267 Less: Deferred loan fees, net (8,636 ) (8,567 ) Gross loans, excluding PCI loans, net of deferred loan fees 3,727,740 3,690,700 Less: Allowance for loan losses (59,149 ) (59,825 ) Net loans, excluding PCI loans 3,668,591 3,630,875 PCI Loans 99,185 133,496 Discount on PCI loans (4,754 ) (7,129 ) PCI loans, net 94,431 126,367 Total loans and lease finance receivables $ 3,763,022 $ 3,757,242 As of September 30, 2015, 68.76% of the total gross loan portfolio (excluding PCI loans) consisted of commercial real estate loans and 1.54% of the total loan portfolio consisted of construction loans. Substantially all of the Company’s real estate loans and construction loans are secured by real properties located in California. As of September 30, 2015, $171.0 million, or 6.66% of the total commercial real estate loans included loans secured by farmland, compared to $165.6 million, or 6.66%, at December 31, 2014. The loans secured by farmland included $132.8 million for loans secured by dairy & livestock land and $38.2 million for loans secured by agricultural land at September 30, 2015, compared to $144.1 million for loans secured by dairy & livestock land and $21.5 million for loans secured by agricultural land at December 31, 2014. As of September 30, 2015, dairy & livestock and agribusiness loans of $212.7 million was comprised of $197.9 million for dairy & livestock loans and $14.8 million for agribusiness loans, compared to $268.1 million for dairy & livestock loans and $11.1 million for agribusiness loans at December 31, 2014. At September 30, 2015, the Company held approximately $1.84 billion of total fixed rate loans. At September 30, 2015 and December 31, 2014, loans totaling $2.89 billion and $2.78 billion, respectively, were pledged to secure borrowings and available lines of credit from the FHLB and the Federal Reserve Bank. Credit Quality Indicators Central to our credit risk management is our loan risk rating system. The originating credit officer assigns each loan an initial risk rating, which is reviewed and confirmed or changed, as appropriate, by Credit Management. Approvals are made based upon the amount of inherent credit risk specific to the transaction and are reviewed for appropriateness by senior line and credit management personnel. Credits are monitored by line and credit management personnel for deterioration in a borrower’s financial condition, which would impact the ability of the borrower to perform under the contract. Risk ratings are adjusted as necessary. Loans are risk rated into the following categories (Credit Quality Indicators): Pass, Pass Watch List, Special Mention, Substandard, Doubtful and Loss. Each of these groups is assessed for the proper amount to be used in determining the adequacy of our allowance for losses. These categories can be described as follows: Pass – These loans range from minimal credit risk to lower than average, but still acceptable, credit risk. Pass Watch List — Pass Watch list loans usually require more than normal management attention. Loans which qualify for the Pass Watch List may involve borrowers with adverse financial trends, higher debt/equity ratios, or weaker liquidity positions, but not to the degree of being considered a defined weakness or problem loan where risk of loss may be apparent. Special Mention — Loans assigned to this category are currently protected but are weak. Although concerns exist, the Company is currently protected and loss is unlikely. Such loans have potential weaknesses that may, if not checked or corrected, weaken the asset or inadequately protect the Company’s credit position at some future date. Substandard – Loans classified as substandard include poor liquidity, high leverage, and erratic earnings or losses. The primary source of repayment is no longer realistic, and asset or collateral liquidation may be the only source of repayment. Substandard loans are marginal and require continuing and close supervision by credit management. Substandard loans have the distinct possibility that the Company will sustain some loss if deficiencies are not corrected. Doubtful – Loans classified doubtful have all the weaknesses inherent in those classified substandard with the added provision that the weaknesses make collection or the liquidation, on the basis of currently existing facts, conditions and values, highly questionable and improbable. The possibility of loss is extremely high, but because of certain important and reasonable specific pending factors which may work to the advantage and strengthening of the assets, their classifications as losses are deferred until their more exact status may be determined. Loss — Loans classified as loss are considered uncollectible and of such little value that their continuance as active assets of the Company 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 this basically worthless asset even though partial recovery may be achieved in the future. The following tables summarize each class of loans, excluding PCI loans, according to our internal risk ratings for the periods presented. September 30, 2015 Pass Watch List Special Mention Substandard Doubtful & Loss Total (Dollars in thousands) Commercial and industrial $ 278,042 $ 95,419 $ 36,338 $ 3,668 $ 242 $ 413,709 SBA 72,280 22,218 13,648 6,531 1,449 116,126 Real estate: Commercial real estate Owner occupied 613,734 145,354 50,171 13,560 - 822,819 Non-owner occupied 1,462,203 216,513 27,413 40,180 - 1,746,309 Construction Speculative 28,962 6,302 - 7,651 - 42,915 Non-speculative 14,663 - - - - 14,663 SFR mortgage 194,265 20,104 4,241 3,086 - 221,696 Dairy & livestock and agribusiness 88,147 112,419 12,104 - - 212,670 Municipal lease finance receivables 46,084 24,787 4,968 - - 75,839 Consumer and other loans 53,327 11,797 1,667 2,748 91 69,630 Total gross loans, excluding PCI loans $ 2,851,707 $ 654,913 $ 150,550 $ 77,424 $ 1,782 $ 3,736,376 December 31, 2014 Pass Watch List Special Mention Substandard Doubtful & Loss Total (Dollars in thousands) Commercial and industrial $ 234,029 $ 105,904 $ 33,795 $ 16,031 $ 252 $ 390,011 SBA 84,769 24,124 15,858 7,920 1,594 134,265 Real estate: Commercial real estate Owner occupied 552,072 159,908 46,248 32,139 - 790,367 Non-owner occupied 1,347,006 241,809 56,353 52,268 - 1,697,436 Construction Speculative 28,310 613 - 7,651 - 36,574 Non-speculative 18,071 528 - - - 18,599 SFR mortgage 174,311 20,218 2,442 8,153 - 205,124 Dairy & livestock and agribusiness 174,783 85,660 8,612 10,015 103 279,173 Municipal lease finance receivables 35,463 22,349 20,022 - - 77,834 Consumer and other loans 62,904 2,233 1,789 2,763 195 69,884 Total gross loans, excluding PCI loans $ 2,711,718 $ 663,346 $ 185,119 $ 136,940 $ 2,144 $ 3,699,267 Allowance for Loan Losses The Company’s Credit Management Division is responsible for regularly reviewing the allowance for loan losses methodology, including loss factors and economic risk factors. The Bank’s Director Loan Committee provides Board oversight of the ALLL process and approves the ALLL methodology on a quarterly basis. Our methodology for assessing the appropriateness of the allowance is conducted on a regular basis and considers the Bank’s overall loan portfolio. Refer to Note 3 – Summary of Significant Accounting Policies of the 2014 Annual Report on Form 10-K for a more detailed discussion concerning the allowance for loan losses. Management believes that the ALLL was appropriate at September 30, 2015 and December 31, 2014. No assurance can be given that economic conditions which adversely affect the Company’s service areas or other circumstances will not be reflected in increased provisions for loan losses in the future. The following tables present the balance and activity related to the allowance for loan losses for held-for-investment loans, by portfolio segment for the periods presented. For the Three Months Ended September 30, 2015 Ending Charge-offs Recoveries (Recapture of) Ending (Dollars in thousands) Commercial and industrial $ 7,185 $ (82 ) $ 50 $ (620 ) $ 6,533 SBA 2,085 - 2 (122 ) 1,965 Real estate: Commercial real estate 35,414 (10 ) 2,018 (2,811 ) 34,611 Construction 746 - 8 119 873 SFR mortgage 2,564 - - 75 2,639 Dairy & livestock and agribusiness 3,974 - 98 796 4,868 Municipal lease finance receivables 1,014 - - 17 1,031 Consumer and other loans 834 - 11 (16 ) 829 Unallocated 5,738 - - 62 5,800 Total allowance for loan losses $ 59,554 $ (92 ) $ 2,187 $ (2,500 ) $ 59,149 For the Three Months Ended September 30, 2014 Ending Charge-offs Recoveries (Recapture of) Ending (Dollars in thousands) Commercial and industrial $ 6,037 $ (2 ) $ 187 $ 1,254 $ 7,476 SBA 2,365 - - (1,157 ) 1,208 Real estate: Commercial real estate 35,918 - 2 (286 ) 35,634 Construction 605 - 37 148 790 SFR mortgage 2,214 - 188 (97 ) 2,305 Dairy & livestock and agribusiness 5,428 (1,061 ) 151 (241 ) 4,277 Municipal lease finance receivables 1,464 - - 4 1,468 Consumer and other loans 930 (7 ) 113 (169 ) 867 Unallocated 6,013 - - (456 ) 5,557 Total allowance for loan losses $ 60,974 $ (1,070 ) $ 678 $ (1,000 ) $ 59,582 For the Nine Months Ended September 30, 2015 Ending Charge-offs Recoveries (Recapture of) Ending (Dollars in thousands) Commercial and industrial $ 7,074 $ (216 ) $ 282 $ (607 ) $ 6,533 SBA 2,557 (33 ) 39 (598 ) 1,965 Real estate: Commercial real estate 33,373 (117 ) 3,658 (2,303 ) 34,611 Construction 988 - 58 (173 ) 873 SFR mortgage 2,344 (215 ) 185 325 2,639 Dairy & livestock and agribusiness 5,479 - 308 (919 ) 4,868 Municipal lease finance receivables 1,412 - - (381 ) 1,031 Consumer and other loans 1,262 (197 ) 72 (308 ) 829 Unallocated 5,336 - - 464 5,800 Total allowance for loan losses $ 59,825 $ (778 ) $ 4,602 $ (4,500 ) $ 59,149 For the Nine Months Ended September 30, 2014 Ending Charge-offs Recoveries (Recapture of) Ending (Dollars in thousands) Commercial and industrial $ 8,502 $ (556 ) $ 685 $ (1,155 ) $ 7,476 SBA 2,332 - 63 (1,187 ) 1,208 Real estate: Commercial real estate 39,402 (352 ) 140 (3,556 ) 35,634 Construction 1,305 - 834 (1,349 ) 790 SFR mortgage 2,718 - 188 (601 ) 2,305 Dairy & livestock and agribusiness 11,728 (1,061 ) 393 (6,783 ) 4,277 Municipal lease finance receivables 2,335 - - (867 ) 1,468 Consumer and other loans 960 (26 ) 139 (206 ) 867 Unallocated 5,953 - - (396 ) 5,557 Total allowance for loan losses $ 75,235 $ (1,995 ) $ 2,442 $ (16,100 ) $ 59,582 The following tables present the recorded investment in loans held-for-investment, excluding PCI loans, and the related allowance for loan losses by portfolio segment, based on the Company’s methodology for determining the allowance for loan losses for the periods presented. September 30, 2015 Recorded Investment in Loans Allowance for Loan Losses Individually Collectively Individually Collectively (Dollars in thousands) Commercial and industrial $ 1,687 $ 412,022 $ 607 $ 5,926 SBA 3,319 112,807 4 1,961 Real estate: Commercial real estate 43,647 2,525,481 - 34,611 Construction 7,651 49,927 23 850 SFR mortgage 6,389 215,307 22 2,617 Dairy & livestock and agribusiness 5,262 207,408 - 4,868 Municipal lease finance receivables - 75,839 - 1,031 Consumer and other loans 906 68,724 6 823 Unallocated - - - 5,800 Total $ 68,861 $ 3,667,515 $ 662 $ 58,487 September 30, 2014 Recorded Investment in Loans Allowance for Loan Losses Individually Collectively Individually Collectively (Dollars in thousands) Commercial and industrial $ 4,467 $ 376,009 $ 652 $ 6,824 SBA 3,242 129,926 59 1,149 Real estate: Commercial real estate 31,375 2,434,540 - 35,634 Construction 26,419 40,810 - 790 SFR mortgage 7,755 185,450 39 2,266 Dairy & livestock and agribusiness 18,939 173,991 - 4,277 Municipal lease finance receivables - 80,013 - 1,468 Consumer and other loans 461 69,350 4 863 Unallocated - - - 5,557 Total $ 92,658 $ 3,490,089 $ 754 $ 58,828 Past Due and Nonperforming Loans We seek to manage asset quality and control credit risk through diversification of the loan portfolio and the application of policies designed to promote sound underwriting and loan monitoring practices. The Bank’s Credit Management Division is in charge of monitoring asset quality, establishing credit policies and procedures and enforcing the consistent application of these policies and procedures across the Bank. Reviews of nonperforming, past due loans and larger credits, designed to identify potential charges to the allowance for loan losses, and to determine the appropriateness of the allowance, are conducted on an ongoing basis. These reviews consider such factors as the financial strength of borrowers and any guarantors, the value of the applicable collateral, loan loss experience, estimated loan losses, growth in the loan portfolio, prevailing economic conditions and other factors. Refer to Note 3 – Summary of Significant Accounting Policies A loan is reported as a troubled debt restructuring (“TDR”) when the Bank grants a concession(s) to a borrower experiencing financial difficulties that the Bank would not otherwise consider. Examples of such concessions include a reduction in the interest rate, deferral of principal or accrued interest, extending the payment due dates or loan maturity date(s), or providing a lower interest rate than would be normally available for new debt of similar risk. As a result of these concessions, restructured loans are classified as impaired. Impairment reserves on non-collateral dependent restructured loans are measured by comparing the present value of expected future cash flows on the restructured loans discounted at the interest rate of the original loan agreement to the loan’s carrying value. These impairment reserves are recognized as a specific component to be provided for in the allowance for loan losses. Generally, when loans are identified as impaired they are moved to our Special Assets Department. When we identify a loan as impaired, we measure the loan for potential impairment using discounted cash flows, unless the loan is determined to be collateral dependent. In these cases, we use the current fair value of collateral, less selling costs. Generally, the determination of fair value is established through obtaining external appraisals of the collateral. The following tables present the recorded investment in the aging of, past due and nonaccrual loans, excluding PCI loans, by type of loans for the periods presented. September 30, 2015 30-59 60-89 Total Past Nonaccrual Current Total Loans (Dollars in thousands) Commercial and industrial $ - $ - $ - $ 1,051 $ 412,658 $ 413,709 SBA - - - 2,634 113,492 116,126 Real estate: Commercial real estate Owner occupied - - - 4,279 818,540 822,819 Non-owner occupied 266 - 266 12,417 1,733,626 1,746,309 Construction - Speculative (2) - - - - 42,915 42,915 Non-speculative - - - - 14,663 14,663 SFR mortgage - - - 2,778 218,918 221,696 Dairy & livestock and agribusiness - - - - 212,670 212,670 Municipal lease finance receivables - - - - 75,839 75,839 Consumer and other loans 52 - 52 489 69,089 69,630 Total gross loans, excluding PCI Loans $ 318 $ - $ 318 $ 23,648 $ 3,712,410 $ 3,736,376 (1) As of September 30, 2015, $19.1 million of nonaccruing loans were current, $371,000 were 30-59 days past due, $2.3 million were 60-89 days (2) Speculative construction loans are generally for properties where there is no identified buyer or renter. December 31, 2014 30-59 60-89 Total Past Nonaccrual Current Total Loans (Dollars in thousands) Commercial and industrial $ 943 $ 35 $ 978 $ 2,308 $ 386,725 $ 390,011 SBA 75 - 75 2,481 131,709 134,265 Real estate: Commercial real estate Owner occupied 36 86 122 4,072 786,173 790,367 Non-owner occupied - - - 19,246 1,678,190 1,697,436 Construction Speculative - - - - 36,574 36,574 Non-speculative - - - - 18,599 18,599 SFR mortgage 425 - 425 3,240 201,459 205,124 Dairy & livestock and agribusiness - - - 103 279,070 279,173 Municipal lease finance receivables - - - - 77,834 77,834 Consumer and other loans 64 17 81 736 69,067 69,884 Total gross loans, excluding PCI Loans $ 1,543 $ 138 $ 1,681 $ 32,186 $ 3,665,400 $ 3,699,267 (1) As of December 31, 2014, $20.1 million of nonaccruing loans were current, $3.7 million were 30-59 days past due, $8.5 million were 90+ days past due. Impaired Loans At September 30, 2015, the Company had impaired loans, excluding PCI loans, of $68.9 million. Of this amount, there were $16.7 million of nonaccrual commercial real estate loans, $2.8 million of nonaccrual SFR mortgage loans, $2.6 million of nonaccrual SBA loans, $1.1 million of nonaccrual commercial and industrial loans and $489,000 of nonaccrual consumer and other loans. These impaired loans included $60.4 million of loans whose terms were modified in a troubled debt restructuring, of which $15.2 million were classified as nonaccrual. The remaining balance of $45.2 million consisted of 32 loans performing according to the restructured terms. The impaired loans had a specific allowance of $662,000 at September 30, 2015. At December 31, 2014, the Company had classified as impaired loans, excluding PCI loans, with a balance of $85.8 million with a related allowance of $1.5 million. The following tables present information for held-for-investment loans, excluding PCI loans, individually evaluated for impairment by class of loans, as of and for the periods indicated below. As of and For the Nine Months Ended September 30, 2015 Recorded Unpaid Related Average Interest (Dollars in thousands) With no related allowance recorded: Commercial and industrial $ 1,067 $ 1,926 $ - $ 1,166 $ 23 SBA 3,273 3,911 - 3,385 39 Real estate: Commercial real estate Owner occupied 7,665 8,806 - 7,935 178 Non-owner occupied 35,982 40,591 - 36,490 1,338 Construction Speculative - - - - - Non-speculative - - - - - SFR mortgage 5,788 6,739 - 6,392 82 Dairy & livestock and agribusiness 5,262 5,650 - 5,569 180 Municipal lease finance receivables - - - - - Consumer and other loans 852 1,379 - 881 12 Total 59,889 69,002 - 61,818 1,852 With a related allowance recorded: Commercial and industrial 620 694 607 637 - SBA 46 47 4 58 - Real estate: Commercial real estate Owner occupied - - - - - Non-owner occupied - - - - - Construction Speculative 7,651 7,651 23 7,651 290 Non-speculative - - - - - SFR mortgage 601 653 22 612 9 Dairy & livestock and agribusiness - - - - - Municipal lease finance receivables - - - - - Consumer and other loans 54 59 6 56 - Total 8,972 9,104 662 9,014 299 Total impaired loans $ 68,861 $ 78,106 $ 662 $ 70,832 $ 2,151 As of and For the Nine Months Ended September 30, 2014 Recorded Unpaid Related Average Interest (Dollars in thousands) With no related allowance recorded: Commercial and industrial $ 2,913 $ 3,954 $ - $ 2,912 $ 44 SBA 3,183 3,907 - 2,937 - Real estate: Commercial real estate Owner occupied 8,742 9,896 - 9,025 238 Non-owner occupied 22,633 29,545 - 23,252 541 Construction Speculative 17,318 18,407 - 17,440 232 Non-speculative 9,101 9,101 - 9,145 463 SFR mortgage 7,285 9,685 - 7,934 82 Dairy & livestock and agribusiness 18,939 20,698 - 21,205 819 Municipal lease finance receivables - - - - - Consumer and other loans 450 876 - 455 - Total 90,564 106,069 - 94,305 2,419 With a related allowance recorded: Commercial and industrial 1,554 1,882 652 1,560 - SBA 59 69 59 66 - Real estate: Commercial real estate Owner occupied - - - - - Non-owner occupied - - - - - Construction Speculative - - - - - Non-speculative - - - - - SFR mortgage 470 484 39 476 - Dairy & livestock and agribusiness - - - - - Municipal lease finance receivables - - - - - Consumer and other loans 11 15 4 12 - Total 2,094 2,450 754 2,114 - Total impaired loans $ 92,658 $ 108,519 $ 754 $ 96,419 $ 2,419 As of December 31, 2014 Recorded Unpaid Related (Dollars in thousands) With no related allowance recorded: Commercial and industrial $ 2,391 $ 3,624 $ - SBA 1,853 2,197 - Real estate: Commercial real estate Owner occupied 16,961 18,166 - Non-owner occupied 30,068 38,156 - Construction Speculative 7,651 7,651 - Non-speculative - - - SFR mortgage 6,512 7,493 - Dairy & livestock and agribusiness 15,796 17,587 - Municipal lease finance receivables - - - Consumer and other loans 673 1,094 - Total 81,905 95,968 - With a related allowance recorded: Commercial and industrial 629 698 615 SBA 1,327 1,591 296 Real estate: Commercial real estate Owner occupied - - - Non-owner occupied 982 1,278 154 Construction Speculative - - - Non-speculative - - - SFR mortgage 467 484 35 Dairy & livestock and agribusiness - - - Municipal lease finance receivables - - - Consumer and other loans 482 508 449 Total 3,887 4,559 1,549 Total impaired loans $ 85,792 $ 100,527 $ 1,549 The Company recognizes the charge-off of the impairment allowance on impaired loans in the period in which a loss is identified for collateral dependent loans. Therefore, the majority of the nonaccrual loans as of September 30, 2015 and December 31, 2014 have already been written down to the estimated net realizable value. The impaired loans with a related allowance recorded are on nonaccrual loans where a charge-off is not yet processed, on nonaccrual SFR loans where there is a potential modification in process, or on smaller balance non-collateral-dependent loans. Reserve for Unfunded Loan Commitments The allowance for off-balance sheet credit exposure relates to commitments to extend credit, letters of credit and undisbursed funds on lines of credit. The Company evaluates credit risk associated with the off-balance sheet commitments at the same time it evaluates credit risk associated with the loan and lease portfolio. The Company recorded zero provision for unfunded loan commitments for the three months ended September 30, 2015, compared to a $1.3 million recapture of provision for unfunded commitments for the same period in 2014. A $500,000 recapture of provision for unfunded loan commitments was recorded for the nine months ended September 30, 2015, compared to a $1.3 million recapture of provision for unfunded commitments for the same period of 2014. At September 30, 2015 and December 31, 2014, the balance of the reserve was $7.2 million and $7.7 million, respectively, and was included in other liabilities. Troubled Debt Restructurings (“TDRs”) Loans that are reported as TDRs are considered impaired and charge-off amounts are taken on an individual loan basis, as deemed appropriate. The majority of restructured loans are loans for which the terms of repayment have been renegotiated, resulting in a reduction in interest rate or deferral of principal. Refer to Note 3 – Summary of Significant Accounting Policies As of September 30, 2015, there were $60.4 million of loans classified as TDRs, of which $15.2 million were nonperforming and $45.2 million were performing. TDRs on accrual status are comprised of loans that were accruing interest at the time of restructuring or have demonstrated repayment performance in compliance with the restructured terms for a sustained period and for which the Company anticipates full repayment of both principal and interest. At September 30, 2015, performing TDRs were comprised of 11 commercial real estate loans of $27.0 million, one construction loan of $7.6 million, three dairy & livestock and agribusiness loans of $5.3 million, 11 SFR mortgage loans of $3.6 million, four commercial and industrial loans of $636,000, one SBA loan of $685,000 and one consumer loan of $417,000. There were no loans removed from TDR classification during the three and nine months ended September 30, 2015 and 2014. The majority of TDRs have no specific allowance allocated as any impairment amount is normally charged off at the time a probable loss is determined. We have allocated $419,000 and $726,000 of specific allowance to TDRs as of September 30, 2015 and December 31, 2014, respectively. The following tables provide a summary of the activity related to TDRs for the periods presented. For the Three Months For the Nine Months Ended 2015 2014 2015 2014 (Dollars in thousands) Performing TDRs: Beginning balance $ 45,166 $ 61,878 $ 53,589 $ 66,955 New modifications (1) 2,353 - 2,383 41 Payoffs and payments, net (2,306 ) (6,270 ) (11,275 ) (11,388 ) TDRs returned to accrual status - - 516 - TDRs placed on nonaccrual status - - - - Ending balance $ 45,213 $ 55,608 $ 45,213 $ 55,608 Nonperforming TDRs: Beginning balance $ 15,167 $ 27,397 $ 20,285 $ 25,119 New modifications (1) 330 - 661 4,187 Charge-offs - (1,061 ) - (1,061 ) Transfer to OREO - - (842 ) - Payoffs and payments, net (349 ) (3,730 ) (4,440 ) (5,639 ) TDRs returned to accrual status - - (516 ) - TDRs placed on nonaccrual status - - - - Ending balance $ 15,148 $ 22,606 $ 15,148 $ 22,606 Total TDRs $ 60,361 $ 78,214 $ 60,361 $ 78,214 (1) New modifications for the three and nine months ended September 30, 2014 represent TDRs acquired from ASB. The following tables summarize loans modified as troubled debt restructurings for the periods presented. Modifications (1) For the Three Months Ended September 30, 2015 Number of Pre-Modification Post-Modification Outstanding Financial Effect (Dollars in thousands) Commercial and industrial: Interest rate reduction - $ - $ - $ - $ - Change in amortization period or maturity - - - - - Other - - - - - SBA: Interest rate reduction - - - - - Change in amortization period or maturity - - - - - Other - - - - - Real estate: Commercial real estate: Owner occupied Interest rate reduction - - - - - Change in amortization period or maturity - - - - - Other - - - - - Non-owner occupied Interest rate reduction 1 2,376 2,376 2,353 - Change in amortization period or maturity - - - - - Other - - - - - SFR mortgage: Interest rate reduction 1 322 322 330 - Change in amortization period or maturity - - - - - Other - - - - - Consumer: Interest rate reduction - - - - - Total loans 2 $ 2,698 $ 2,698 $ 2,683 $ - For the Three Months Ended September 30, 2014 Number of Pre-Modification Post-Modification Outstanding Financial Effect (Dollars in thousands) Commercial and industrial: Interest rate reduction - $ - $ - $ - $ - Change in amortization period or maturity - - - - - Other - - - - - SBA: Interest rate reduction - - - - - Change in amortization period or maturity - - - - - Other - - - - - 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 - - - - - Dairy & livestock and agribusiness: Interest rate reduction - - - - - Change in amortization period or maturity - - - - - Consumer: Interest rate reduction - - - - - Total loans - $ - $ - $ - $ - For the Nine Months Ended September 30, 2015 Number of Pre-Modification Post-Modification Outstanding Financial Effect (Dollars in thousands) Commercial and industrial: Interest rate reduction - $ - $ - $ - $ - Change in amortization period or maturity 1 30 30 15 12 Other - - - - - SBA: Interest rate reduction - - - - - Change in amortization period or maturity 1 330 330 325 - Other - - - - - Real estate: Commercial real estate: Owner occupied Interest rate reduction - - - - - Change in amortization period or maturity - - - - - Other - - - - - Non-owner occupied Interest rate reduction 1 2,376 2,376 2,353 - Change in amortization period or maturity - - - - - Other - - - - - SFR mortgage: Interest rate reduction 1 322 322 330 - Change in amortization period or maturity - - - - - Other - - - - - Dairy & livestock and agribusiness: Interest rate reduction - - - - - Change in amortization period or maturity - - - - - Consumer: Interest rate reduction - - - - - Total loans 4 $ 3,058 $ 3,058 $ 3,023 $ 12 For the Nine Months Ended September 30, 2014 Number of Pre-Modification Post-Modification Outstanding Financial Effect (Dollars in thousands) Commercial and industrial: Interest rate reduction (3) 2 $ 368 $ 368 $ 337 $ - Change in amortization period or maturity - - - - - SBA: Interest rate reduction - - - - - Change in amortization period or maturity - - - - - Other - - - - - Real estate: Commercial real estate: Owner occupied Interest rate reduction (3) 1 199 199 187 - Change in amortization period or maturity - - - - - Non-owner occupied Interest rate reduction (3) 3 3,573 3,573 3,469 - Change in amortization period or maturity - - - - - Dairy & livestock and agribusiness: Interest rate reduction - - - - - Change in amortization period or maturity - - - - - Consumer: Interest rate reduction - - - - - Total loans 6 $ 4,140 $ 4,140 $ 3,993 $ - (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. (3) New modifications for the nine months ended September 30, 2014 represent TDRs acquired from ASB. As of September 30, 2015, there were no loans that were previously modified as a TDR within the previous 12 months that subsequently defaulted during the three and nine months ended September 30, 2015. |