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. June 30, 2016 December 31, 2015 (Dollars in thousands) Commercial and industrial $ 479,133 $ 434,099 SBA 111,762 106,867 Real estate: Commercial real estate 2,884,332 2,643,184 Construction 94,009 68,563 SFR mortgage 237,488 233,754 Dairy & livestock and agribusiness 213,830 305,509 Municipal lease finance receivables 71,929 74,135 Consumer and other loans 79,725 69,278 Gross loans, excluding PCI loans 4,172,208 3,935,389 Less: Deferred loan fees, net (7,872) (8,292) Gross loans, excluding PCI loans, net of deferred loan fees 4,164,336 3,927,097 Less: Allowance for loan losses (60,628) (59,156) Net loans, excluding PCI loans 4,103,708 3,867,941 PCI Loans 76,022 93,712 Discount on PCI loans (2,430) (3,872) Less: Allowance for loan losses (310) - PCI loans, net 73,282 89,840 Total loans and lease finance receivables $ 4,176,990 $ 3,957,781 As of June 30, 2016, 69.13% of the total gross loan portfolio (excluding PCI loans) consisted of commercial real estate loans and 2.25% 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 June 30, 2016, $190.5 million, or 6.60% of the total commercial real estate loans included loans secured by farmland, compared to $173.0 million, or 6.54%, at December 31, 2015. The loans secured by farmland included $135.6 million for loans secured by dairy & livestock land and $54.8 million for loans secured by agricultural land at June 30, 2016, compared to $128.4 million for loans secured by dairy & livestock land and $44.6 million for loans secured by agricultural land at December 31, 2015. As of June 30, 2016, dairy & livestock and agribusiness loans of $213.8 million were comprised of $200.2 million for dairy & livestock loans and $14.1 million for agribusiness loans, compared to $287.0 million for dairy & livestock loans and $18.5 million for agribusiness loans at December 31, 2015. At June 30, 2016, the Company held approximately $2.04 billion of total fixed rate loans, including PCI loans. At June 30, 2016 and December 31, 2015, loans totaling $3.13 billion and $2.91 billion, respectively, were pledged to secure the 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 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, 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, including loans on the Bank’s internal watch list, range from minimal credit risk to lower than average, but still acceptable, credit risk. Watch list loans usually require more than normal management attention. Loans on the 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 have potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in the deterioration of the repayment prospects for the asset or the Company’s credit position at some future date. Special mention assets are not adversely classified and do not expose the Company to sufficient risk to warrant adverse classification. Substandard – Loans classified as substandard are inadequately protected by current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Assets so classified must have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt. Substandard loans are characterized by 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 characteristic that the weaknesses make collection or the liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. Loss — Loans classified as loss are considered uncollectible and of such little value that their continuance as bankable assets 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 effected in the future. The following table summarizes each type of loans, excluding PCI loans, according to our internal risk ratings for the periods presented. June 30, 2016 Pass Special Substandard Doubtful & Total (Dollars in thousands) Commercial and industrial $ 440,455 $ 21,264 $ 17,407 $ 7 $ 479,133 SBA 93,259 11,697 6,582 224 111,762 Real estate: Commercial real estate Owner occupied 827,887 87,431 18,617 - 933,935 Non-owner occupied 1,909,707 24,804 15,886 - 1,950,397 Construction Speculative 47,301 - 7,651 - 54,952 Non-speculative 39,057 - - - 39,057 SFR mortgage 229,984 4,965 2,539 - 237,488 Dairy & livestock and agribusiness 145,897 48,122 19,811 - 213,830 Municipal lease finance receivables 67,188 4,741 - - 71,929 Consumer and other loans 75,378 1,867 2,377 103 79,725 Total gross loans, excluding PCI loans $ 3,876,113 $ 204,891 $ 90,870 $ 334 $ 4,172,208 December 31, 2015 Pass Special Substandard Doubtful & Total (Dollars in thousands) Commercial and industrial $ 398,651 $ 33,000 $ 2,403 $ 45 $ 434,099 SBA 87,441 13,169 4,854 1,403 106,867 Real estate: Commercial real estate Owner occupied 772,114 54,758 11,481 - 838,353 Non-owner occupied 1,741,615 26,170 37,046 - 1,804,831 Construction Speculative 38,186 - 7,651 - 45,837 Non-speculative 22,726 - - - 22,726 SFR mortgage 227,207 3,556 2,991 - 233,754 Dairy & livestock and agribusiness 285,647 19,862 - - 305,509 Municipal lease finance receivables 69,194 4,941 - - 74,135 Consumer and other loans 64,844 1,618 2,708 108 69,278 Total gross loans, excluding PCI loans $ 3,707,625 $ 157,074 $ 69,134 $ 1,556 $ 3,935,389 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 June 30, 2016 and December 31, 2015. 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 type for the periods presented. For the Three Months Ended June 30, 2016 Ending Charge-offs Recoveries (Recapture of) Ending (Dollars in thousands) Commercial and industrial $ 8,731 $ (24) $ 141 $ 539 $ 9,387 SBA 1,236 - 2 (61) 1,177 Real estate: Commercial real estate 38,286 - 496 1,137 39,919 Construction 1,151 - 875 (798) 1,228 SFR mortgage 2,202 - - 299 2,501 Dairy & livestock and agribusiness 5,176 - 107 (401) 4,882 Municipal lease finance receivables 1,165 - - (50) 1,115 Consumer and other loans 1,389 (1) 6 (975) 419 PCI loans - - - 310 310 Unallocated (1) - - - - - Total allowance for loan losses $ 59,336 $ (25) $ 1,627 $ - $ 60,938 For the Three Months Ended June 30, 2015 Ending Charge-offs Recoveries (Recapture of) Ending (Dollars in thousands) Commercial and industrial $ 7,502 $ - $ 197 $ (514) $ 7,185 SBA 2,196 - 3 (114) 2,085 Real estate: Commercial real estate 34,848 (107) 783 (110) 35,414 Construction 1,043 - 41 (338) 746 SFR mortgage 2,425 (215) - 354 2,564 Dairy & livestock and agribusiness 3,746 - 111 117 3,974 Municipal lease finance receivables 1,030 - - (16) 1,014 Consumer and other loans 825 (20) 52 (23) 834 Unallocated (1) 7,094 - - (1,356) 5,738 Total allowance for loan losses $ 60,709 $ (342) $ 1,187 $ (2,000) $ 59,554 For the Six Months Ended June 30, 2016 Ending Charge-offs Recoveries (Recapture of) Ending (Dollars in thousands) Commercial and industrial $ 8,588 $ (85) $ 204 $ 680 $ 9,387 SBA 993 - 3 181 1,177 Real estate: Commercial real estate 36,995 - 635 2,289 39,919 Construction 2,389 - 884 (2,045) 1,228 SFR mortgage 2,103 (102) - 500 2,501 Dairy & livestock and agribusiness 6,029 - 206 (1,353) 4,882 Municipal lease finance receivables 1,153 - - (38) 1,115 Consumer and other loans 906 (1) 38 (524) 419 PCI loans - - - 310 310 Unallocated (1) - - - - - Total allowance for loan losses $ 59,156 $ (188) $ 1,970 $ - $ 60,938 For the Six Months Ended June 30, 2015 Ending Charge-offs Recoveries (Recapture of) Ending (Dollars in thousands) Commercial and industrial $ 7,074 $ (134) $ 232 $ 13 $ 7,185 SBA 2,557 (33) 37 (476) 2,085 Real estate: Commercial real estate 33,373 (107) 1,640 508 35,414 Construction 988 - 50 (292) 746 SFR mortgage 2,344 (215) 185 250 2,564 Dairy & livestock and agribusiness 5,479 - 210 (1,715) 3,974 Municipal lease finance receivables 1,412 - - (398) 1,014 Consumer and other loans 1,262 (197) 61 (292) 834 Unallocated (1) 5,336 - - 402 5,738 Total allowance for loan losses $ 59,825 $ (686) $ 2,415 $ (2,000) $ 59,554 (1) Based upon changes to our ALLL methodology, as described in Note 3 – Summary of Significant Accounting Policies 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. June 30, 2016 Recorded Investment in Loans Allowance for Loan Losses Individually Collectively Acquired with Individually Collectively Acquired with (Dollars in thousands) Commercial and industrial $ 1,447 $ 477,686 $ - $ 526 $ 8,861 $ - SBA 3,498 108,264 - 42 1,135 - Real estate: Commercial real estate 17,908 2,866,424 - 1 39,918 - Construction 7,651 86,358 - 45 1,183 - SFR mortgage 5,734 231,754 - 13 2,488 - Dairy & livestock and agribusiness 697 213,133 - - 4,882 - Municipal lease finance receivables - 71,929 - - 1,115 - Consumer and other loans 829 78,896 - 3 416 - PCI loans - - 76,022 - - 310 Unallocated (1) - - - - - - Total $ 37,764 $ 4,134,444 $ 76,022 $ 630 $ 59,998 $ 310 June 30, 2015 Recorded Investment in Loans Allowance for Loan Losses Individually Collectively Acquired with Individually Collectively Acquired with (Dollars in thousands) Commercial and industrial $ 1,562 $ 404,861 $ - $ 435 $ 6,750 $ - SBA 3,146 117,420 - 12 2,073 - Real estate: Commercial real estate 39,981 2,529,430 - - 35,414 - Construction 7,651 39,276 - 24 722 - SFR mortgage 7,044 207,459 - 77 2,487 - Dairy & livestock and agribusiness 7,091 176,893 - - 3,974 - Municipal lease finance receivables - 74,691 - - 1,014 - Consumer and other loans 915 70,261 - 2 832 - PCI loans - - 110,746 - - - Unallocated (1) - - - - 5,738 - Total $ 67,390 $ 3,620,291 $ 110,746 $ 550 $ 59,004 $ - (1) Based upon changes to our ALLL methodology, as described in Note 3 – Summary of Significant Accounting Policies 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 Troubled Debt Restructured (“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. June 30, 2016 30-59 Days 60-89 Days Total Past Nonaccrual Current Total Loans (Dollars in thousands) Commercial and industrial $ 61 $ - $ 61 $ 568 $ 478,504 479,133 SBA - - - 2,637 109,125 111,762 Real estate: Commercial real estate Owner occupied - - - 1,759 932,176 933,935 Non-owner occupied 320 - 320 9,637 1,940,440 1,950,397 Construction Speculative (2) - - - - 54,952 54,952 Non-speculative - - - - 39,057 39,057 SFR mortgage - - - 2,443 235,045 237,488 Dairy & livestock and agribusiness - - - - 213,830 213,830 Municipal lease finance receivables - - - - 71,929 71,929 Consumer and other loans 97 - 97 428 79,200 79,725 Total gross loans, excluding PCI Loans $ 478 $ - $ 478 $ 17,472 $ 4,154,258 $ 4,172,208 (1) As of June 30, 2016, $15.6 million of nonaccruing loans were current, $84,000 were 30-59 days past due, $338,000 were 60-89 days past due and $1.4 million were 90+ days past due. (2) Speculative construction loans are generally for properties where there is no identified buyer or renter. December 31, 2015 30-59 Days 60-89 Days Total Past Nonaccrual 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. Impaired Loans At June 30, 2016, the Company had impaired loans, excluding PCI loans, of $37.8 million. Of this amount, there was $11.4 million of nonaccrual commercial real estate loans, $2.6 million of nonaccrual Small Business Administration (“SBA”) loans, $2.4 million of nonaccrual single-family residential (“SFR”) mortgage loans, $568,000 of nonaccrual commercial and industrial loans, and $428,000 of nonaccrual consumer and other loans. These impaired loans included $32.3 million of loans whose terms were modified in a troubled debt restructuring, of which $12.0 million were classified as nonaccrual. The remaining balance of $20.3 million consisted of 31 loans performing according to the restructured terms. The impaired loans had a specific allowance of $630,000 at June 30, 2016. At December 31, 2015, the Company had classified as impaired, loans, excluding PCI loans, with a balance of $63.7 million with a related allowance of $669,000. 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 Six Months Ended June 30, 2016 Recorded Unpaid Related Average Interest Income (Dollars in thousands) With no related allowance recorded: Commercial and industrial $ 840 $ 1,727 $ - $ 904 $ 14 SBA 3,266 4,026 - 3,347 25 Real estate: Commercial real estate Owner occupied 4,386 5,573 - 4,623 87 Non-owner occupied 12,522 15,110 - 12,760 83 Construction Speculative - - - - - Non-speculative - - - - - SFR mortgage 5,464 6,331 - 5,591 60 Dairy & livestock and agribusiness 697 697 - 709 17 Municipal lease finance receivables - - - - - Consumer and other loans 816 1,373 - 845 8 Total 27,991 34,837 - 28,779 294 With a related allowance recorded: Commercial and industrial 607 668 526 638 6 SBA 232 250 42 238 6 Real estate: Commercial real estate Owner occupied 1,000 1,000 1 392 28 Non-owner occupied - - - - - Construction Speculative 7,651 7,651 45 7,651 193 Non-speculative - - - - - SFR mortgage 270 270 13 277 3 Dairy & livestock and agribusiness - - - - - Municipal lease finance receivables - - - - - Consumer and other loans 13 13 3 13 - Total 9,773 9,852 630 9,209 236 Total impaired loans $ 37,764 $ 44,689 $ 630 $ 37,988 $ 530 As of and For the Six Months Ended June 30, 2015 Recorded Unpaid Related Average Interest Income (Dollars in thousands) With no related allowance recorded: Commercial and industrial $ 1,097 $ 1,941 $ - $ 1,172 $ 15 SBA 3,087 3,688 - 3,167 26 Real estate: Commercial real estate Owner occupied 5,987 7,080 - 5,865 127 Non-owner occupied 33,994 39,946 - 34,567 838 Construction Speculative - - - - - Non-speculative - - - - - SFR mortgage 6,228 7,175 - 6,102 50 Dairy & livestock and agribusiness 7,091 7,559 - 7,269 167 Municipal lease finance receivables - - - - - Consumer and other loans 906 1,426 - 940 8 Total 58,390 68,815 - 59,082 1,231 With a related allowance recorded: Commercial and industrial 465 536 435 478 1 SBA 59 59 12 63 - Real estate: Commercial real estate Owner occupied - - - - - Non-owner occupied - - - - - Construction Speculative 7,651 7,651 24 7,651 192 Non-speculative - - - - - SFR mortgage 816 824 77 826 3 Dairy & livestock and agribusiness - - - - - Municipal lease finance receivables - - - - - Consumer and other loans 9 14 2 10 - Total 9,000 9,084 550 9,028 196 Total impaired loans $ 67,390 $ 77,899 $ 550 $ 68,110 $ 1,427 As of December 31, 2015 Recorded Unpaid Related (Dollars in thousands) With no related allowance recorded: Commercial and industrial $ 1,017 $ 1,894 $ - SBA 3,207 3,877 - Real estate: Commercial real estate Owner occupied 6,252 7,445 - Non-owner occupied 34,041 37,177 - Construction Speculative - - - Non-speculative - - - SFR mortgage 5,665 6,453 - Dairy & livestock and agribusiness 3,685 3,684 - Municipal lease finance receivables - - - Consumer and other loans 890 1,454 - Total 54,757 61,984 - With a related allowance recorded: Commercial and industrial 626 695 626 SBA 41 47 10 Real estate: Commercial real estate Owner occupied - - - Non-owner occupied - - - Construction Speculative 7,651 7,651 13 Non-speculative - - - SFR mortgage 588 640 20 Dairy & livestock and agribusiness - - - Municipal lease finance receivables - - - Consumer and other loans 43 45 - Total 8,949 9,078 669 Total impaired loans $ 63,706 $ 71,062 $ 669 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 June 30, 2016 and December 31, 2015 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. There was no provision or recapture of provision for unfunded loan commitments for the three and six months ended June 30, 2016, compared to zero and a $500,000 recapture of provision for unfunded loan commitments for the three and six months ended June 30, 2015, respectively. As of June 30, 2016 and December 31, 2015, the balance in this reserve was $7.2 million 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 June 30, 2016, there were $32.3 million of loans classified as a TDR, of which $12.0 million were nonperforming and $20.3 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 June 30, 2016, performing TDRs were comprised of one construction loan of $7.7 million, nine commercial real estate loans of $6.5 million, 11 SFR mortgage loans of $3.3 million, six commercial and industrial loans of $879,000, two SBA loans of $861,000, one dairy & livestock and agribusiness loan of $697,000 and one consumer loan of $401,000. There were no loans removed from TDR classification during the three and six months ended June 30, 2016 and 2015. 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 $609,000 and $607,000 of specific allowance to TDRs as of June 30, 2016 and December 31, 2015, respectively. The following table provides a summary of the activity related to TDRs for the periods presented. For the Three Months Ended For the Six Months Ended 2016 2015 2016 2015 (Dollars in thousands) Performing TDRs: Beginning balance $ 37,321 $ 45,376 $ 42,687 $ 53,589 New modifications 112 30 1,118 30 Payoffs and payments, net (17,141) (240) (23,513) (8,969) TDRs returned to accrual status - - - 516 TDRs placed on nonaccrual status - - - - Ending balance $ 20,292 $ 45,166 $ 20,292 $ 45,166 Nonperforming TDRs: Beginning balance $ 12,360 $ 16,774 $ 12,622 $ 20,285 New modifications - 330 82 330 Charge-offs - - (38) - Transfer to OREO - - - (842) Payoffs and payments, net (331) (842) (637) (4,090) TDRs returned to accrual status - (1,095) - (516) TDRs placed on nonaccrual status - - - - Ending balance $ 12,029 $ 15,167 $ 12,029 $ 15,167 Total TDRs $ 32,321 $ 60,333 $ 32,321 $ 60,333 The following tables summarize loans modified as troubled debt restructurings for the periods presented. Modifications (1) For the Three Months Ended June 30, 2016 Number of Pre-Modification Recorded Investment Post-Modification Outstanding Financial Effect (Dollars in thousands) Commercial and industrial: Interest rate reduction - $ - $ - $ - $ - Change in amortization period or maturity 1 112 112 110 - SBA: Interest rate reduction - - - - - Change in amortization period or maturity - - - - - Real estate: Commercial real estate: Owner occupied Interest rate reduction - - - - - Change in amortization period or maturity - - - - - Non-owner occupied Interest rate reduction - - - - - Change in amortization period or maturity - - - - - Consumer: Interest rate reduction - - - - - Change in amortization period or maturity - - - - - Total loans 1 $ 112 $ 112 $ 110 $ - For the Three Months Ended June 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 30 - SBA: Interest rate reduction - - - - - Change in amortization period or maturity 1 330 330 330 12 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 - - - - - Consumer: Interest rate reduction - - - - - Change in amortization period or maturity - - - - - Total loans 2 $ 360 $ 360 $ 360 $ 12 For the Six Months Ended June 30, 2016 Number of Pre-Modification Recorded Investment Post-Modification Outstanding Financial Effect Resulting From (Dollars in thousands) Commercial and industrial: Interest rate reduction - $ - $ - $ - $ - Change in amortization period or maturity 1 112 112 110 - SBA: Interest rate reduction - - - - - Change in amortization period or maturity 1 194 194 190 28 Real estate: Commercial real estate: Owner occupied Interest rate reduction - - - - - Change in amortization period or maturity 2 812 812 761 - Non-owner occupied Interest rate reduction - - - - - Change in amortization period or maturity - - - - - Consumer: Interest rate reduction - - - - - Change in amortization period or maturity 2 82 82 72 - Total loans 6 $ 1,200 $ 1,200 $ 1,133 $ 28 For the Six Months Ended June 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 30 - SBA: Interest rate reduction - - - - - Change in amortization period or maturity 1 330 330 330 12 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 - - - - - Consumer: Interest rate reduction - - - - - Change in amortization period or maturity - - - - - Total loans 2 $ 360 $ 360 $ 360 $ 12 (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. As of June 30, 2016, there were no loans that were previously modified as a TDR within the previous 12 months that subsequently defaulted during the three and six months ended June 30, 2016. |