Loans and Lease Finance Receivables and Allowance for Loan Losses | 7. 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. December 31, 2015 2014 (Dollars in thousands) Commercial and industrial $ 434,099 $ 390,011 SBA 106,867 134,265 Real estate: Commercial real estate 2,643,184 2,487,803 Construction 68,563 55,173 SFR mortgage 233,754 205,124 Dairy & livestock and agribusiness 305,509 279,173 Municipal lease finance receivables 74,135 77,834 Consumer and other loans 69,278 69,884 Gross loans, excluding PCI loans 3,935,389 3,699,267 Less: Deferred loan fees, net (8,292 ) (8,567 ) Gross loans, excluding PCI loans, net of deferred loan fees 3,927,097 3,690,700 Less: Allowance for loan losses (59,156 ) (59,825 ) Net loans, excluding PCI loans 3,867,941 3,630,875 PCI Loans 93,712 133,496 Discount on PCI loans (3,872 ) (7,129 ) PCI loans, net 89,840 126,367 Total loans and lease finance receivables $ 3,957,781 $ 3,757,242 As of December 31, 2015, 67.16% of the total gross loan portfolio (excluding PCI loans) consisted of commercial real estate loans and 1.74% 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 December 31, 2015, $173.0 million, or 6.54% 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 $128.4 million for loans secured by dairy & livestock land and $44.6 million for loans secured by agricultural land at December 31, 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 December 31, 2015, dairy & livestock and agribusiness loans of $305.5 million was comprised of $287.0 million for dairy & livestock loans and $18.5 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 December 31, 2015, the Company held approximately $1.97 billion of total fixed rate loans, including PCI loans. At December 31, 2015 and 2014, loans totaling $2.91 billion and $2.78 billion, respectively, were pledged to secure the borrowings and available lines of credit from the FHLB and the Federal Reserve Bank. There were no outstanding loans held-for-sale as of December 31, 2015 and 2014. 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 that 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 as 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 table summarizes each type of loans, excluding PCI loans, according to our internal risk ratings for the periods presented. December 31, 2015 Pass Watch List Special Substandard Doubtful & Total (Dollars in thousands) Commercial and industrial $ 299,436 $ 99,215 $ 33,000 $ 2,403 $ 45 $ 434,099 SBA 65,827 21,614 13,169 4,854 1,403 106,867 Real estate: Commercial real estate Owner occupied 638,026 134,088 54,758 11,481 — 838,353 Non-owner occupied 1,545,688 195,927 26,170 37,046 — 1,804,831 Construction Speculative 31,999 6,187 — 7,651 — 45,837 Non-speculative 22,726 — — — — 22,726 SFR mortgage 209,518 17,689 3,556 2,991 — 233,754 Dairy & livestock and agribusiness 131,026 154,621 19,862 — — 305,509 Municipal lease finance receivables 44,805 24,389 4,941 — — 74,135 Consumer and other loans 53,027 11,817 1,618 2,708 108 69,278 Total gross loans, excluding PCI loans $ 3,042,078 $ 665,547 $ 157,074 $ 69,134 $ 1,556 $ 3,935,389 December 31, 2014 Pass Watch List Special Substandard Doubtful & 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 ALLL 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 Management believes that the ALLL was appropriate at December 31, 2015 and 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, excluding PCI loans, by portfolio segment for the periods presented. For the Year Ended December 31, 2015 Ending Charge-offs Recoveries (Recapture of) Ending (Dollars in thousands) Commercial and industrial $ 7,074 $ (411 ) $ 319 $ 1,606 $ 8,588 SBA 2,557 (37 ) 41 (1,568 ) 993 Real estate: Commercial real estate 33,373 (117 ) 4,330 (591 ) 36,995 Construction 988 — 581 820 2,389 SFR mortgage 2,344 (215 ) 186 (212 ) 2,103 Dairy & livestock and agribusiness 5,479 — 407 143 6,029 Municipal lease finance receivables 1,412 — — (259 ) 1,153 Consumer and other loans 1,262 (229 ) 76 (203 ) 906 Unallocated (1) 5,336 — — (5,336 ) — Total allowance for loan losses $ 59,825 $ (1,009 ) $ 5,940 $ (5,600 ) $ 59,156 For the Year Ended December 31, 2014 Ending Charge-offs Recoveries (Recapture of) Ending (Dollars in thousands) Commercial and industrial $ 8,502 $ (888 ) $ 873 $ (1,413 ) $ 7,074 SBA 2,332 (50 ) 114 161 2,557 Real estate: Commercial real estate 39,402 (353 ) 140 (5,816 ) 33,373 Construction 1,305 — 885 (1,202 ) 988 SFR mortgage 2,718 — 401 (775 ) 2,344 Dairy & livestock and agribusiness 11,728 (1,061 ) 492 (5,680 ) 5,479 Municipal lease finance receivables 2,335 — — (923 ) 1,412 Consumer and other loans 960 (17 ) 154 165 1,262 Unallocated (1) 5,953 — — (617 ) 5,336 Total allowance for loan losses $ 75,235 $ (2,369 ) $ 3,059 $ (16,100 ) $ 59,825 (1) Based upon changes to our ALLL methodology, as described earlier in this document, 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. For the Year Ended December 31, 2013 Ending Charge-offs Recoveries (Recapture of) Provision for Ending Balance (Dollars in thousands) Commercial and industrial $ 8,901 $ (2,491 ) $ 544 $ 1,548 $ 8,502 SBA 2,751 — 215 (634 ) 2,332 Real estate: Commercial real estate 47,457 — 402 (8,457 ) 39,402 Construction 2,291 — 703 (1,689 ) 1,305 SFR mortgage 3,448 (252 ) 367 (845 ) 2,718 Dairy & livestock and agribusiness 18,696 — 109 (7,077 ) 11,728 Municipal lease finance receivables 1,588 — — 747 2,335 Consumer and other loans 1,170 (108 ) 55 (157 ) 960 Unallocated 6,139 — — (186 ) 5,953 Total allowance for loan losses $ 92,441 $ (2,851 ) $ 2,395 $ (16,750 ) $ 75,235 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. December 31, 2015 Recorded Investment in Loans Allowance for Loan Losses Individually Collectively Individually Collectively Evaluated for Impairment (Dollars in thousands) Commercial and industrial $ 1,643 $ 432,456 $ 626 $ 7,962 SBA 3,248 103,619 10 983 Real estate: Commercial real estate 40,293 2,602,891 — 36,995 Construction 7,651 60,912 13 2,376 SFR mortgage 6,253 227,501 20 2,083 Dairy & livestock and agribusiness 3,685 301,824 — 6,029 Municipal lease finance receivables — 74,135 — 1,153 Consumer and other loans 933 68,345 — 906 Unallocated — — — — Total $ 63,706 $ 3,871,683 $ 669 $ 58,487 December 31, 2014 Recorded Investment in Loans Allowance for Loan Losses Individually Collectively Individually Collectively (Dollars in thousands) Commercial and industrial $ 3,020 $ 386,991 $ 615 $ 6,459 SBA 3,180 131,085 296 2,261 Real estate: Commercial real estate 48,011 2,439,792 154 33,219 Construction 7,651 47,522 — 988 SFR mortgage 6,979 198,145 35 2,309 Dairy & livestock and agribusiness 15,796 263,377 — 5,479 Municipal lease finance receivables — 77,834 — 1,412 Consumer and other loans 1,155 58,749 449 813 Unallocated — 9,980 — 5,336 Total $ 85,792 $ 3,613,475 $ 1,549 $ 58,276 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 adequacy 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 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, and the aging of, past due and nonaccrual loans, excluding PCI loans, by type of loans for the periods presented. December 31, 2015 30-59 60-89 Total Past Nonaccrual (1) Current Total Loans (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. December 31, 2014 30-59 60-89 Total Past Nonaccrual (1) 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 (2) — — — — 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. (2) Speculative construction loans are generally for properties where there is no identified buyer or renter. Impaired Loans At December 31, 2015, the Company had impaired loans, excluding PCI loans, of $63.7 million. Of this amount, there was $14.5 million of nonaccrual commercial real estate loans, $2.7 million of nonaccrual SFR mortgage loans, $2.6 million of nonaccrual SBA loans, $704,000 of nonaccrual commercial and industrial loans, and $519,000 of nonaccrual consumer and other loans. These impaired loans included $55.3 million of loans whose terms were modified in a troubled debt restructuring, of which $12.6 million are classified as nonaccrual. The remaining balance of $42.7 million consisted of 34 loans performing according to the restructured terms. The impaired loans had a specific allowance of $669,000 at December 31, 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 type of loans, as and for the periods presented. As of and For the Year Ended Recorded Unpaid Related Average Interest (Dollars in thousands) With no related allowance recorded: Commercial and industrial $ 1,017 $ 1,894 $ — $ 1,122 $ 38 SBA 3,207 3,877 — 3,333 51 Real estate: Commercial real estate Owner occupied 6,252 7,445 — 6,718 97 Non-owner occupied 34,041 37,177 — 34,639 1,787 Construction Speculative — — — — — Non-speculative — — — — — SFR mortgage 5,665 6,453 — 5,771 109 Dairy & livestock and agribusiness 3,685 3,684 — 3,687 177 Municipal lease finance receivables — — — — — Consumer and other loans 890 1,454 — 922 17 Total 54,757 61,984 — 56,192 2,276 With a related allowance recorded: Commercial and industrial 626 695 626 637 — SBA 41 47 10 45 — Real estate: Commercial real estate Owner occupied — — — — — Non-owner occupied — — — — — Construction Speculative 7,651 7,651 13 7,651 388 Non-speculative — — — — — SFR mortgage 588 640 20 607 12 Dairy & livestock and agribusiness — — — — — Municipal lease finance receivables — — — — — Consumer and other loans 43 45 — 45 — Total 8,949 9,078 669 8,985 400 Total impaired loans $ 63,706 $ 71,062 $ 669 $ 65,177 $ 2,676 As of and For the Year Ended Recorded Unpaid Related Average Interest (Dollars in thousands) With no related allowance recorded: Commercial and industrial $ 2,391 $ 3,624 $ — $ 2,487 $ 41 SBA 1,853 2,197 — 1,886 53 Real estate: Commercial real estate Owner occupied 16,961 18,166 — 18,027 938 Non-owner occupied 30,068 38,156 — 30,133 723 Construction Speculative 7,651 7,651 — 7,651 310 Non-speculative — — — — — SFR mortgage 6,512 7,493 — 6,566 110 Dairy & livestock and agribusiness 15,796 17,587 — 19,060 1,057 Municipal lease finance receivables — — — — — Consumer and other loans 673 1,094 — 623 2 Total 81,905 95,968 — 86,433 3,234 With a related allowance recorded: Commercial and industrial 629 698 615 552 — SBA 1,327 1,591 296 714 — Real estate: Commercial real estate Owner occupied — — — — — Non-owner occupied 982 1,278 154 573 — Construction Speculative — — — — — Non-speculative — — — — — SFR mortgage 467 484 35 474 — Dairy & livestock and agribusiness — — — — — Municipal lease finance receivables — — — — — Consumer and other loans 482 508 449 285 — Total 3,887 4,559 1,549 2,598 — Total impaired loans $ 85,792 $ 100,527 $ 1,549 $ 89,031 $ 3,234 As of and For the Year Ended December 31, 2013 Recorded Unpaid Related Average Interest (Dollars in thousands) With no related allowance recorded: Commercial and industrial $ 3,055 $ 3,843 $ — $ 3,248 $ 66 SBA 1,613 2,084 — 1,717 — Real estate: Commercial real estate Owner occupied 13,041 14,133 — 13,463 548 Non-owner occupied 20,399 26,155 — 21,313 817 Construction Speculative 17,617 18,408 — 18,043 310 Non-speculative 9,201 9,201 — 9,217 572 SFR mortgage 10,919 12,516 — 10,408 103 Dairy & livestock and agribusiness 17,702 17,702 — 19,205 434 Municipal lease finance receivables — — — — — Consumer and other loans 385 445 — 389 — Total 93,932 104,487 — 97,003 2,850 With a related allowance recorded: Commercial and industrial 293 301 293 305 — SBA 72 78 72 81 — Real estate: Commercial real estate Owner occupied — — — — — Non-owner occupied — — — — — Construction Speculative — — — — — Non-speculative — — — — — SFR mortgage 486 489 103 479 — Dairy & livestock and agribusiness 12,110 12,783 2,702 13,377 209 Municipal lease finance receivables — — — — — Consumer and other loans 16 19 4 18 — Total 12,977 13,670 3,174 14,260 209 Total impaired loans $ 106,909 $ 118,157 $ 3,174 $ 111,263 $ 3,059 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 December 31, 2015 and 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 loan commitments at the same time it evaluates credit risk associated with the loan and lease portfolio. The Company recorded a recapture of the reserve for unfunded loan commitments of $500,000 for the year ended December 31, 2015, compared with a recapture of provision for unfunded loan commitments of $1.3 million for the year ended December 31, 2014 and a provision for unfunded loan commitments of $500,000 for the year ended December 31, 2013. As of December 31, 2015 and December 31, 2014, the balance in this reserve was $7.2 million and $7.7 million, respectively, and was included in other liabilities. Troubled Debt Restructurings 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, Troubled Debt Restructurings As of December 31, 2015, there were $55.3 million of loans classified as a TDR, of which $12.6 million were nonperforming and $42.7 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 December 31, 2015, performing TDRs were comprised of 13 commercial real estate loans of $25.8 million, one construction loan of $7.7 million, two dairy & livestock and agribusiness loans of $3.7 million, 11 SFR mortgage loans of $3.6 million, five commercial and industrial loans of $939,000, one consumer loan of $414,000 and one SBA loan of $681,000. There were no loans removed from TDR classification for the years ended December 31, 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 $607,000 and $726,000 of specific allowance to TDRs as of December 31, 2015 and December 31, 2014, respectively. The following table provides a summary of the activity related to TDRs for the periods presented. For the Year Ended December 31, 2015 2014 (1) (Dollars in thousands) Performing TDRs: Beginning balance $ 53,589 $ 66,955 New modifications 3,689 462 Payoffs and payments, net (15,235 ) (14,527 ) TDRs returned to accrual status 644 699 TDRs placed on nonaccrual status — — Ending balance $ 42,687 $ 53,589 Nonperforming TDRs: Beginning balance $ 20,285 $ 25,119 New modifications 661 4,372 Charge-offs — (1,061 ) Transfer to OREO (842 ) — Payoffs and payments, net (6,838 ) (7,446 ) TDRs returned to accrual status (644 ) (699 ) TDRs placed on nonaccrual status — — Ending balance $ 12,622 $ 20,285 Total TDRs $ 55,309 $ 73,874 (1) New modifications for the year ended December 31, 2014 included six TDRs acquired from ASB. The following tables summarize loans modified as troubled debt restructurings for the periods presented. Modifications (1) For the Year Ended December 31, 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 1 203 203 203 203 SBA: Interest rate reduction — — — — — Change in amortization period or maturity 1 330 330 320 — Real estate: Commercial real estate: Owner occupied Interest rate reduction — — — — — Change in amortization period or maturity 2 823 823 821 — Non-owner occupied Interest rate reduction 1 2,376 2,376 2,316 — Change in amortization period or maturity 1 280 280 280 — SFR mortgage: Interest rate reduction 1 322 322 326 — Change in amortization period or maturity — — — — — Total loans 7 $ 4,334 $ 4,334 $ 4,266 $ 203 For the Year Ended December 31, 2014 Number of Pre-Modification Post-Modification Outstanding Financial Effect (Dollars in thousands) Commercial and industrial: Interest rate reduction (3) (4) 3 $ 553 $ 553 $ 522 $ 185 Change in amortization period or maturity — — — — — 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 (4) 1 421 421 419 — Change in amortization period or maturity — — — — — Total loans 8 $ 4,746 $ 4,746 $ 4,597 $ 185 For the Year Ended December 31, 2013 Number Pre-Modification Post-Modification Outstanding Financial Effect (Dollars in thousands) Commercial and industrial: Interest rate reduction — $ — $ — $ — $ — Change in amortization period or maturity 4 621 621 570 95 Real estate: Commercial real estate: Owner occupied Interest rate reduction — — — — — Change in amortization period or maturity 1 168 168 138 — Non-owner occupied Interest rate reduction — — — — — Change in amortization period or maturity — — — — — Construction: Speculative Interest rate reduction — — — — — Change in amortization period or maturity — — — — — SFR mortgage: Interest rate reduction 3 1,365 1,365 1,349 — Change in amortization period or maturity — — — — — Dairy & livestock and agribusiness: Interest rate reduction — — — — — Change in amortization period or maturity 10 26,915 26,915 22,662 149 Total loans 18 $ 29,069 $ 29,069 $ 24,719 $ 244 (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 year ended December 31, 2014 included six TDRs acquired from ASB. (4) New modifications for the year ended December 31, 2014 included three TDRs that include both an interest rate reduction and a maturity extension. As of December 31, 2015, 2014 and 2013, there were no loans that were previously modified as a troubled debt restructuring within the previous 12 months that subsequently defaulted during each of the years ended December 31, 2015, 2014 and 2013, respectively. |