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 2018 2017 (Dollars in thousands) Commercial and industrial $ 1,002,209 $ 513,325 SBA 350,043 122,055 Real estate: Commercial real estate 5,394,229 3,376,713 Construction 122,782 77,982 SFR mortgage 296,504 236,202 Dairy & livestock and agribusiness 393,843 347,289 Municipal lease finance receivables 64,186 70,243 Consumer and other loans 128,429 64,229 Gross loans, excluding PCI loans 7,752,225 4,808,038 Less: Deferred loan fees, net (4,828 ) (6,289 ) Gross loans, excluding PCI loans, net of deferred loan fees 7,747,397 4,801,749 Less: Allowance for loan losses (63,409 ) (59,218 ) Net loans, excluding PCI loans 7,683,988 4,742,531 PCI Loans 17,214 30,908 Discount on PCI loans - (2,026 ) Less: Allowance for loan losses (204 ) (367 ) PCI loans, net 17,010 28,515 Total loans and lease finance receivables $ 7,700,998 $ 4,771,046 As of December 31, 2018, 74.99% of the total gross loan portfolio (excluding PCI loans) consisted of real estate loans, 69.58% of which consisted of commercial real estate 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, 2018, $229.8 million, or 4.26% of the total commercial real estate loans included loans secured by farmland, compared to $206.1 million, or 6.10%, at December 31, 2017. The loans secured by farmland included $126.9 million for loans secured by dairy & livestock land and $102.9 million for loans secured by agricultural land at December 31, 2018, compared to $118.2 million for loans secured by dairy & livestock land and $87.9 million for loans secured by agricultural land at December 31, 2017. As of December 31, 2018, dairy & livestock and agribusiness loans of $393.8 million were comprised of $340.5 million for dairy & livestock loans and $53.3 million for agribusiness loans, compared to $310.6 million for dairy & livestock loans and $36.7 million for agribusiness loans at December 31, 2017. At December 31, 2018, the Company held approximately $3.77 billion of total fixed rate loans, including PCI loans. At December 31, 2018 and 2017, loans totaling $5.71 billion and $3.68 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, 2018 and 2017. Credit Quality Indicators An important element of our approach to 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 or improvement 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 the 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 asset with insignificant value even though partial recovery may be affected in the future. The following table summarizes loans by type, excluding PCI loans, according to our internal risk ratings for the periods presented. December 31, 2018 Pass Special Mention Substandard (1) Doubtful & Loss Total (Dollars in thousands) Commercial and industrial $ 961,909 $ 29,358 $ 10,942 $ - $ 1,002,209 SBA 336,033 7,375 6,635 - 350,043 Real estate: Commercial real estate Owner occupied 2,008,169 95,841 13,980 - 2,117,990 Non-owner occupied 3,260,822 9,938 5,479 - 3,276,239 Construction Speculative 118,233 - - - 118,233 Non-speculative 4,549 - - - 4,549 SFR mortgage 289,607 3,310 3,587 - 296,504 Dairy & livestock and agribusiness 350,044 34,586 9,213 - 393,843 Municipal lease finance receivables 63,650 536 - - 64,186 Consumer and other loans 126,085 1,263 1,081 - 128,429 Total gross loans, excluding PCI loans $ 7,519,101 $ 182,207 $ 50,917 $ - $ 7,752,225 (1) Includes $ 19.0 million of classified loans acquired from CB in the third quarter of 2018 . December 31, 2017 Pass Special Mention Substandard Doubtful & Loss Total (Dollars in thousands) Commercial and industrial $ 483,641 $ 19,566 $ 10,118 $ - $ 513,325 SBA 112,835 5,358 3,862 - 122,055 Real estate: Commercial real estate Owner occupied 1,009,199 76,111 10,970 - 1,096,280 Non-owner occupied 2,257,130 16,434 6,869 - 2,280,433 Construction Speculative 60,042 - - - 60,042 Non-speculative 17,940 - - - 17,940 SFR mortgage 229,032 3,124 4,046 - 236,202 Dairy & livestock and agribusiness 321,413 9,047 16,829 - 347,289 Municipal lease finance receivables 69,644 599 - - 70,243 Consumer and other loans 61,715 1,255 1,259 - 64,229 Total gross loans, excluding PCI loans $ 4,622,591 $ 131,494 $ 53,953 $ - $ 4,808,038 Allowance for Loan Losses The Bank’s Audit and Director Loan Committees provide Board oversight of the ALLL process and approve 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 for a more detailed discussion concerning the allowance for loan losses. Management believes that the ALLL was appropriate at December 31, 2018 and 2017. 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 Year Ended December 31, 2018 Ending Balance December 31, 2017 Charge-offs Recoveries Provision for (Recapture of) Loan Losses Ending Balance December 31, 2018 (Dollars in thousands) Commercial and industrial $ 7,280 $ (10 ) $ 82 $ 168 $ 7,520 SBA 869 (257 ) 20 430 1,062 Real estate: Commercial real estate 41,722 - - 3,212 44,934 Construction 984 - 2,506 (2,509 ) 981 SFR mortgage 2,112 (13 ) 51 46 2,196 Dairy & livestock and agribusiness 4,647 - 19 549 5,215 Municipal lease finance receivables 851 - - (76 ) 775 Consumer and other loans 753 (11 ) 141 (157 ) 726 PCI loans 367 - - (163 ) 204 Total allowance for loan losses $ 59,585 $ (291 ) $ 2,819 $ 1,500 $ 63,613 For the Year Ended December 31, 2017 Ending Balance December 31, 2016 Charge-offs Recoveries (Recapture of) Provision for Loan Losses Ending Balance December 31, 2017 (Dollars in thousands) Commercial and industrial $ 8,154 $ (138 ) $ 118 $ (854 ) $ 7,280 SBA 871 - 78 (80 ) 869 Real estate: Commercial real estate 37,443 - 154 4,125 41,722 Construction 1,096 - 6,036 (6,148 ) 984 SFR mortgage 2,287 - 212 (387 ) 2,112 Dairy & livestock and agribusiness 8,541 - 19 (3,913 ) 4,647 Municipal lease finance receivables 941 - - (90 ) 851 Consumer and other loans 988 (13 ) 79 (301 ) 753 PCI loans 1,219 - - (852 ) 367 Total allowance for loan losses $ 61,540 $ (151 ) $ 6,696 $ (8,500 ) $ 59,585 For the Y ear Ended December 31, 2016 Ending Balance Charge-offs Recoveries (Recapture Ending Balance (Dollars in thousands) Commercial and industrial $ 8,588 $ (120 ) $ 630 $ (944 ) $ 8,154 SBA 993 — 40 (162 ) 871 Real estate: Commercial real estate 36,995 — 792 (344 ) 37,443 Construction 2,389 — 7,174 (8,467 ) 1,096 SFR mortgage 2,103 (102 ) — 286 2,287 Dairy & livestock and agribusiness 6,029 — 216 2,296 8,541 Municipal lease finance receivables 1,153 — — (212 ) 941 Consumer and other loans 906 (16 ) 170 (72 ) 988 PCI loans — — — 1,219 1,219 Total allowance for loan losses $ 59,156 $ (238 ) $ 9,022 $ (6,400 ) $ 61,540 The following tables present the recorded investment in loans held-for-investment and the related allowance for loan losses by loan type, based on the Company’s methodology for determining the allowance for loan losses for the periods presented. Acquired loans are also supported by a credit discount established through the determination of fair value for the acquired loan portfolio. December 31, 2018 Recorded Investment in Loans Allowance for Loan Losses Individually Collectively Acquired with Deterioriated Credit Quality Individually Collectively Acquired with Deterioriated Credit Quality (Dollars in thousands) Commercial and industrial $ 7,625 $ 994,584 $ — $ 3 $ 7,517 $ — SBA 3,467 346,576 — — 1,062 — Real estate: Commercial real estate 6,540 5,387,689 — 478 44,456 — Construction — 122,782 — — 981 — SFR mortgage 5,349 291,155 — — 2,196 — Dairy & livestock and agribusiness 78 393,765 — 12 5,203 — Municipal lease finance receivables — 64,186 — — 775 — Consumer and other loans 486 127,943 — 68 658 — PCI loans — — 17,214 — — 204 Total $ 23,545 $ 7,728,680 $ 17,214 $ 561 $ 62,848 $ 204 December 31, 2017 Recorded Investment in Loans Allowance for Loan Losses Individually Collectively Acquired with Deterioriated Credit Quality Individually Collectively Acquired with Deterioriated Credit Quality (Dollars in thousands) Commercial and industrial $ 440 $ 512,885 $ — $ — $ 7,280 $ — SBA 1,531 120,524 — 1 868 — Real estate: Commercial real estate 8,133 3,368,580 — — 41,722 — Construction — 77,982 — — 984 — SFR mortgage 4,040 232,162 — — 2,112 — Dairy & livestock and agribusiness 829 346,460 — — 4,647 — Municipal lease finance receivables — 70,243 — — 851 — Consumer and other loans 552 63,677 — 74 679 — PCI loans — — 28,882 — — 367 Total $ 15,525 $ 4,792,513 $ 28,882 $ 75 $ 59,143 $ 367 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 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, 2018 30-59 60 - 89 Total Past Due Nonaccrual (1) (3) Current Total Loans (Dollars in thousands) Commercial and industrial $ 820 $ 89 $ 909 $ 7,490 $ 993,810 $ 1,002,209 SBA 1,172 135 1,307 2,892 345,844 350,043 Real estate: Commercial real estate Owner occupied 2,439 350 2,789 589 2,114,612 2,117,990 Non-owner occupied — — — 5,479 3,270,760 3,276,239 Construction Speculative (2) — — — — 118,233 118,233 Non-speculative — — — — 4,549 4,549 SFR mortgage — 285 285 2,937 293,282 296,504 Dairy & livestock and agribusiness — — — 78 393,765 393,843 Municipal lease finance receivables — — — — 64,186 64,186 Consumer and other loans — — — 486 127,943 128,429 Total gross loans, excluding PCI loans $ 4,431 $ 859 $ 5,290 $ 19,951 $ 7,726,984 $ 7,752,225 (1) As of December 31, 2018, $2.3 million of nonaccruing loans were current, $33,000 were 30-59 days past due, $57,000 were 60-89 days past due and $17.6 million were 90+ days past due. (2) Speculative construction loans are generally for properties where there is no identified buyer or renter. (3) Includes $12.3 million of nonaccrual loans acquired from CB in the third quarter of 2018. December 31, 2017 30-59 60-89 Total Past Nonaccrual Current Total Loans (Dollars in thousands) Commercial and industrial $ 768 $ — $ 768 $ 250 $ 512,307 $ 513,325 SBA 403 — 403 906 120,746 122,055 Real estate: Commercial real estate Owner occupied — — — 4,365 1,091,915 1,096,280 Non-owner occupied — — — 2,477 2,277,956 2,280,433 Construction Speculative (2) — — — — 60,042 60,042 Non-speculative — — — — 17,940 17,940 SFR mortgage — — — 1,337 234,865 236,202 Dairy & livestock and agribusiness — — — 829 346,460 347,289 Municipal lease finance receivables — — — — 70,243 70,243 Consumer and other loans 1 — 1 552 63,676 64,229 Total gross loans, excluding PCI loans $ 1,172 $ — $ 1,172 $ 10,716 $ 4,796,150 $ 4,808,038 (1) As of December 31, 2017, $3.6 million of nonaccruing loans were current, $ 376 (2) Speculative construction loans are generally for properties where there is no identified buyer or renter. Impaired Loans At December 31, 2018, the Company had impaired loans, excluding PCI loans, of $23.5 million and included $12.3 million of loans acquired from CB in the third quarter of 2018. Impaired loans included $7.5 million of nonaccrual commercial and industrial loans, $6.1 million of nonaccrual SFR mortgage loans, $2.9 million of nonaccrual SBA loans, $486,000 of nonaccrual dairy & livestock and agribusiness loans. These impaired loans included $7.1 million of loans whose terms were modified in a troubled debt restructuring, of which $3.5 million are classified as nonaccrual. The remaining balance of $3.6 million consisted of 13 loans performing according to the restructured terms. The impaired loans had a specific allowance of $561,000 at December 31, 2018. At December 31, 2017, the Company had classified as impaired, loans, excluding PCI loans, with a balance of $15.5 million with a related allowance of $75,000. 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 Year Ended December 31, 2018 Recorded Investment Unpaid Principal Balance Related Allowance Average Recorded Investment Interest Income Recognized (Dollars in thousands) With no related allowance recorded: Commercial and industrial $ 7,436 $ 11,457 $ — $ 7,718 $ 7 SBA 3,467 5,746 — 3,919 44 Real estate: Commercial real estate Owner occupied 589 705 — 624 — Non-owner occupied 2,808 4,324 — 4,585 32 Construction Speculative — — — — — Non-speculative — — — — — SFR mortgage 5,349 6,270 — 5,484 80 Dairy & livestock and agribusiness — — — — — Municipal lease finance receivables — — — — — Consumer and other loans 418 526 — 459 — Total 20,067 29,028 — 22,789 163 With a related allowance recorded: Commercial and industrial 189 191 3 203 — SBA — — — — — Real estate: Commercial real estate Owner occupied — — — — — Non-owner occupied 3,143 3,144 478 3,144 — Construction Speculative — — — — — Non-speculative — — — — — SFR mortgage — — — — — Dairy & livestock and agribusiness 78 78 12 78 — Municipal lease finance receivables — — — — — Consumer and other loans 68 100 68 76 — Total 3,478 3,513 561 3,501 — Total impaired loans $ 23,545 $ 32,541 $ 561 $ 26,290 $ 163 As of and For the Year Ended December 31, 2017 Recorded Investment Unpaid Principal Balance Related Allowance Average Recorded Investment Interest Income Recognized (Dollars in thousands) With no related allowance recorded: Commercial and industrial $ 440 $ 980 $ — $ 548 $ 10 SBA 1,530 1,699 — 1,598 47 Real estate: Commercial real estate Owner occupied 4,365 4,763 — 4,414 36 Non-owner occupied 3,768 5,107 — 3,951 94 Construction Speculative — — — — — Non-speculative — — — — — SFR mortgage 4,040 4,692 — 4,119 118 Dairy & livestock and agribusiness 829 1,091 — 988 1 Municipal lease finance receivables — — — — — Consumer and other loans 174 370 — 202 — Total 15,146 18,702 — 15,820 306 With a related allowance recorded: Commercial and industrial — — — — — SBA 1 18 1 6 — Real estate: Commercial real estate Owner occupied — — — — — Non-owner occupied — — — — — Construction Speculative — — — — — Non-speculative — — — — — SFR mortgage — — — — — Dairy & livestock and agribusiness — — — — — Municipal lease finance receivables — — — — — Consumer and other loans 378 391 74 385 — Total 379 409 75 391 — Total impaired loans $ 15,525 $ 19,111 $ 75 $ 16,211 $ 306 As of and For the Year Ended December 31, 2016 Recorded Investment Unpaid Principal Balance Related Allowance Average Recorded Investment Interest Income Recognized (Dollars in thousands) With no related allowance recorded: Commercial and industrial $ 730 $ 1,646 $ — $ 832 $ 26 SBA 3,386 4,189 — 3,709 50 Real estate: Commercial real estate Owner occupied 1,797 2,276 — 1,410 70 Non-owner occupied 13,331 15,842 — 13,517 592 Construction Speculative — — — — — Non-speculative — — — — — SFR mortgage 5,174 6,075 — 5,327 135 Dairy & livestock and agribusiness 747 747 — 692 47 Municipal lease finance receivables — — — — — Consumer and other loans 853 1,423 — 919 18 Total 26,018 32,198 — 26,406 938 With a related allowance recorded: Commercial and industrial 171 171 114 233 9 SBA 196 212 27 206 14 Real estate: Commercial real estate Owner occupied — — — — — Non-owner occupied — — — — — Construction Speculative — — — — — Non-speculative — — — — — SFR mortgage — — — — — Dairy & livestock and agribusiness — — — — — Municipal lease finance receivables — — — — — Consumer and other loans — — — — — Total 367 383 141 439 23 Total impaired loans $ 26,385 $ 32,581 $ 141 $ 26,845 $ 961 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, 2018 and 2017 have already been written down to the estimated net realizable value. An allowance is recorded on impaired loans for the following: nonaccrual loans where a charge-off is not yet processed, nonaccrual SFR mortgage 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. Company recorded a recapture of the reserve for unfunded loan commitments of $250,000 for the year ended December 31, 2018, compared with a recapture of provision for unfunded loan commitments of $400,000 for the year ended December 31, 2017 and a recapture of provision for unfunded loan commitments of $450,000 for the year ended December 31, 2016. As of December 31, 2018 and December 31, 2017, the balance in this reserve was $9.0 million and $6.3 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 , included herein. As of December 31, 2018, there were $7.1 million of loans classified as a TDR, of which $3.5 million were nonperforming and $3.6 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, 2018, performing TDRs were comprised of nine SFR mortgage loans of $2.4 million, one SBA loan of $575,000, and two commercial and industrial loans of $135,000. 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 $490,000 and $1,000 of specific allowance to TDRs as of December 31, 2018 and December 31, 2017, respectively. The following table provides a summary of the activity related to TDRs for the periods presented. For the Year Ended December 31, 2018 2017 (Dollars in thousands) Performing TDRs: Beginning balance $ 4,809 $ 19,233 New modifications 311 3,143 Payoffs/payments, net and other (1,526 ) (14,752 ) TDRs returned to accrual status - 329 TDRs placed on nonaccrual status - (3,144 ) Ending balance $ 3,594 $ 4,809 Nonperforming TDRs: Beginning balance $ 4,200 $ 1,626 New modifications 316 2,066 Charge-offs - - Payoffs/payments, net and other (1,007 ) (2,307 ) TDRs returned to accrual status - (329 ) TDRs placed on nonaccrual status - 3,144 Ending balance $ 3,509 $ 4,200 Total TDRs $ 7,103 $ 9,009 The following tables summarize loans modified as troubled debt restructurings for the periods presented. Modifications (1) For the Year Ended December 31, 2018 Number Pre-Modification Post-Modification Outstanding Financial Effect (Dollars in thousands) Commercial and industrial: Interest rate reduction - $ - $ - $ - $ - Change in amortization period or maturity 1 38 38 20 - Real estate: Commercial real estate: Owner occupied Interest rate reduction - - - - - Change in amortization period or maturity - - - - - Non-owner occupied Interest rate reduction - - - - - Change in amortization period or maturity - - - - - SFR mortgage: Interest rate reduction - - - - - Change in amortization period or maturity 1 311 311 300 - Dairy & livestock and agribusiness: Interest rate reduction - - - - - Change in amortization period or maturity - - - - - Consumer: Interest rate reduction - - - - - Change in amortization period or maturity 1 278 278 267 - Total loans 3 $ 627 $ 627 $ 587 $ - For the Year Ended December 31, 2017 Number Pre-Modification Post-Modification Outstanding Financial Effect (Dollars in thousands) Commercial and industrial: Interest rate reduction - $ - $ - $ - $ - Change in amortization period or maturity - - - - - Real estate: Commercial real estate: Owner occupied Interest rate reduction - - - - - Change in amortization period or maturity 1 3,143 3,143 3,143 - Non-owner occupied Interest rate reduction - - - - - Change in amortization period or maturity - - - - - SFR mortgage: Interest rate reduction - - - - - Change in amortization period or maturity - - - - - Dairy & livestock and agribusiness: Interest rate reduction - - - - - Change in amortization period or maturity 1 1,984 1,984 78 - Consumer: Interest rate reduction - - - - - Change in amortization period or maturity - - - - - Total loans 2 $ 5,127 $ 5,127 $ 3,221 $ - For the Year Ended December 31, 2016 Number Pre-Modification Post-Modification Outstanding Financial Effect (Dollars in thousands) Commercial and industrial: Interest rate reduction 1 $ 112 $ 112 $ 103 $ - Change in amortization period or maturity - - - - - SBA: Interest rate reduction - - - - - Change in amortization period or maturity 2 214 214 196 28 Real estate: Commercial real estate: Owner occupied Interest rate reduction - - - - - Change in amortization period or maturity - - - - - Non-owner occupied Interest rate reduction 1 759 759 756 - Change in amortization period or maturity - - - - - Dairy & livestock and agribusiness: Interest rate reduction - - - - - Change in amortization period or maturity - - - - - SFR mortgage: Interest rate reduction - - - - - Change in amortization period or maturity 3 201 201 185 - Total loans 7 $ 1,286 $ 1,286 $ 1,240 $ 28 (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 December 31, 2018, there were no loans that were modified as a TDR within the previous 12 months that subsequently defaulted. As of December 31, 2017, there was one commercial real estate loan with an outstanding balance of $3.1 million loans that were previously modified as a troubled debt restructuring within the previous 12 months that subsequently . As of December 31, 2016, there were no loans that were previously modified as a troubled debt restructuring within the previous 12 months that subsequently defaulted during the year ended December 31, 2016 . |