| Allowance for Credit Losses | Allowance for Credit Losses For the periods indicated, the following tables summarize the activity in the allowance for credit losses on loans which is recorded as a contra asset, and the reserve for unfunded commitments which is recorded on the balance sheet within other liabilities: Allowance for credit losses – Three months ended September 30, 2023 (in thousands) Beginning Charge-offs Recoveries Provision (benefit) Ending Commercial real estate: CRE non-owner occupied $ 33,042 $ — $ — $ 681 $ 33,723 CRE owner occupied 20,208 (3,608) — (2,097) 14,503 Multifamily 14,075 — — 164 14,239 Farmland 3,691 — — 519 4,210 Total commercial real estate loans 71,016 (3,608) — (733) 66,675 Consumer: SFR 1-4 1st DT liens 13,134 — 262 139 13,535 SFR HELOCs and junior liens 10,608 — 314 (759) 10,163 Other 2,771 (133) 52 230 2,920 Total consumer loans 26,513 (133) 628 (390) 26,618 Commercial and industrial 11,647 (1,616) 91 2,168 12,290 Construction 7,031 — — 1,066 8,097 Agriculture production 1,105 — 1 1,019 2,125 Leases 17 — — (10) 7 Allowance for credit losses on loans 117,329 (5,357) 720 3,120 115,812 Reserve for unfunded commitments 4,865 — — 1,035 5,900 Total $ 122,194 $ (5,357) $ 720 $ 4,155 $ 121,712 Allowance for credit losses – Nine months ended September 30, 2023 (in thousands) Beginning Charge-offs Recoveries Provision (benefit) Ending Commercial real estate: CRE non-owner occupied $ 30,962 $ — $ — $ 2,761 $ 33,723 CRE owner occupied 14,014 (3,608) 1 4,096 14,503 Multifamily 13,132 — — 1,107 14,239 Farmland 3,273 — — 937 4,210 Total commercial real estate loans 61,381 (3,608) 1 8,901 66,675 Consumer: SFR 1-4 1st DT liens 11,268 — 262 2,005 13,535 SFR HELOCs and junior liens 11,413 (42) 416 (1,624) 10,163 Other 1,958 (438) 129 1,271 2,920 Total consumer loans 24,639 (480) 807 1,652 26,618 Commercial and industrial 13,597 (3,303) 267 1,729 12,290 Construction 5,142 — — 2,955 8,097 Agriculture production 906 — 33 1,186 2,125 Leases 15 — — (8) 7 Allowance for credit losses on loans 105,680 (7,391) 1,108 16,415 115,812 Reserve for unfunded commitments 4,315 — — 1,585 5,900 Total $ 109,995 $ (7,391) $ 1,108 $ 18,000 $ 121,712 In determining the allowance for credit losses, accruing loans with similar risk characteristics are generally evaluated collectively. To estimate expected losses the Company generally utilizes historical loss trends and the remaining contractual lives of the loan portfolios to determine estimated credit losses through a reasonable and supportable forecast period. Individual loan credit quality indicators including loan grade and borrower repayment performance have been statistically correlated with historical credit losses and various econometrics, including California unemployment, gross domestic product, and corporate bond yields. Model forecasts may be adjusted for inherent limitations or biases that have been identified through independent validation and back-testing of model performance to actual realized results. The Company utilizes a forecast period of approximately eight quarters and obtains the forecast data from publicly available sources as of the balance sheet date. This forecast data continues to evolve and includes improving shifts in the magnitude of changes for both the unemployment and GDP factors leading up to the balance sheet date, particularly CA unemployment trends. Despite continued declines on a year over year comparative basis, core inflation remains elevated from wage pressures, and higher living costs such as housing and food prices. Management notes the rapid intervals of rate increases by the Federal Reserve and flattening or inversion of the yield curve, have formed expectations of the US entering a recession within 12 months. As a result, management continues to believe that certain credit weaknesses are likely present in the overall economy and that it is appropriate to cautiously maintain a reserve level that incorporates such risk factors. Purchased loans and leases that reflect a more-than-insignificant deterioration of credit from origination are considered PCD. For PCD loans and leases, the initial estimate of expected credit losses is recognized in the ACL on the date of acquisition using the same methodology as other loans and leases held-for-investment. The following table provides a summary of loans and leases purchased as part of the VRB acquisition with credit deterioration at acquisition: As of March 25, 2022 (in thousands) Commercial Real Estate Consumer Commercial and Industrial Construction Agriculture Production Total Par value $ 27,237 $ 3,877 $ 2,674 $ 25,645 $ 9,080 $ 68,513 ACL at acquisition (1,573) (144) (81) (201) (38) (2,037) Non-credit discount (2,305) (360) (47) (232) (12) (2,956) Purchase price $ 23,359 $ 3,373 $ 2,546 $ 25,212 $ 9,030 $ 63,520 For the periods indicated, the following tables summarize the activity in the allowance for credit losses on loans which is recorded as a contra asset, and the reserve for unfunded commitments which is recorded on the balance sheet within other liabilities: Allowance for credit losses – Year ended December 31, 2022 (in thousands) Beginning ACL of PCD Loans Charge-offs Recoveries Provision Ending Balance Commercial real estate: CRE non-owner occupied $ 25,739 $ 746 $ — $ 1 $ 4,476 $ 30,962 CRE owner occupied 10,691 63 — 2 3,258 14,014 Multifamily 12,395 — — — 737 13,132 Farmland 2,315 764 (294) — 488 3,273 Total commercial real estate loans 51,140 1,573 (294) 3 8,959 61,381 Consumer: SFR 1-4 1st DT liens 10,723 144 — 79 322 11,268 SFR HELOCs and junior liens 10,510 — (22) 429 496 11,413 Other 2,241 — (572) 235 54 1,958 Total consumer loans 23,474 144 (594) 743 872 24,639 Commercial and industrial 3,862 81 (697) 1,157 9,194 13,597 Construction 5,667 201 — — (726) 5,142 Agriculture production 1,215 38 — 4 (351) 906 Leases 18 — — — (3) 15 Allowance for credit losses on loans 85,376 2,037 (1,585) 1,907 17,945 105,680 Reserve for unfunded commitments 3,790 — — — 525 4,315 Total $ 89,166 $ 2,037 $ (1,585) $ 1,907 $ 18,470 $ 109,995 Allowance for credit losses – Three months ended September 30, 2022 (in thousands) Beginning Charge-offs Recoveries Provision (benefit) Ending Balance Commercial real estate: CRE non-owner occupied $ 28,081 $ — $ 1 $ 1,162 $ 29,244 CRE owner occupied 12,620 — 1 904 13,525 Multifamily 11,795 — — 954 12,749 Farmland 2,954 — — 168 3,122 Total commercial real estate loans 55,450 — 2 3,188 58,640 Consumer: SFR 1-4 1st DT liens 10,311 — 38 322 10,671 SFR HELOCs and junior liens 11,591 — 98 (306) 11,383 Other 2,029 (185) 53 (19) 1,878 Total consumer loans 23,931 (185) 189 (3) 23,932 Commercial and industrial 9,979 (82) 119 384 10,400 Construction 7,522 — — (1,390) 6,132 Agriculture production 1,046 — 1 1,321 2,368 Leases 16 — — — 16 Allowance for credit losses on loans 97,944 (267) 311 3,500 101,488 Reserve for unfunded commitments 4,075 — — 295 4,370 Total $ 102,019 $ (267) $ 311 $ 3,795 $ 105,858 Allowance for credit losses – Nine months ended September 30, 2022 (in thousands) Beginning Adoption of CECL Charge-offs Recoveries Provision (benefit) Ending Balance Commercial real estate: CRE non-owner occupied $ 25,739 $ 746 $ — $ 1 $ 2,758 $ 29,244 CRE owner occupied 10,691 63 — 2 2,769 13,525 Multifamily 12,395 — — — 354 12,749 Farmland 2,315 764 (294) — 337 3,122 Total commercial real estate loans 51,140 1,573 (294) 3 6,218 58,640 Consumer: SFR 1-4 1st DT liens 10,723 144 — 79 (275) 10,671 SFR HELOCs and junior liens 10,510 — — 426 447 11,383 Other 2,241 — (470) 200 (93) 1,878 Total consumer loans 23,474 144 (470) 705 79 23,932 Commercial and industrial 3,862 81 (647) 1,130 5,974 10,400 Construction 5,667 201 — — 264 6,132 Agriculture production 1,215 38 — 3 1,112 2,368 Leases 18 — — — (2) 16 Allowance for credit losses on loans 85,376 2,037 (1,411) 1,841 13,645 101,488 Reserve for unfunded commitments 3,790 — — — 580 4,370 Total $ 89,166 $ 2,037 $ (1,411) $ 1,841 $ 14,225 $ 105,858 As part of the on-going monitoring of the credit quality of the Company’s loan portfolio, management tracks certain credit quality indicators including, but not limited to, trends relating to (i) the level of criticized and classified loans, (ii) net charge-offs, (iii) non-performing loans, and (iv) delinquency within the portfolio. The Company analyzes loans individually to classify the loans as to credit risk and grading. This analysis is performed annually for all outstanding balances greater than $1 million and non-homogeneous loans, such as commercial real estate loans, unless other indicators, such as delinquency, trigger more frequent evaluation. Loans below the $1 million threshold and homogenous in nature are evaluated as needed for proper grading based on delinquency and borrower credit scores. The Company utilizes a risk grading system to assign a risk grade to each of its loans. Loans are graded on a scale ranging from Pass to Loss. A description of the general characteristics of the risk grades is as follows: • Pass – This grade represents loans ranging from acceptable to very little or no credit risk. These loans typically meet most if not all policy standards in regard to: loan amount as a percentage of collateral value, debt service coverage, profitability, leverage, and working capital. • Special Mention – This grade represents “Other Assets Especially Mentioned” in accordance with regulatory guidelines and includes loans that display some potential weaknesses which, if left unaddressed, may result in deterioration of the repayment prospects for the asset or may inadequately protect the Company’s position in the future. These loans warrant more than normal supervision and attention. • Substandard – This grade represents “Substandard” loans in accordance with regulatory guidelines. Loans within this rating typically exhibit weaknesses that are well defined to the point that repayment is jeopardized. Loss potential is, however, not necessarily evident. The underlying collateral supporting the credit appears to have sufficient value to protect the Company from loss of principal and accrued interest, or the loan has been written down to the point where this is true. There is a definite need for a well-defined workout/rehabilitation program. • Doubtful – This grade represents “Doubtful” loans in accordance with regulatory guidelines. An asset classified as Doubtful has all the weaknesses inherent in a loan classified Substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. Pending factors include proposed merger, acquisition, or liquidation procedures, capital injection, perfecting liens on additional collateral, and financing plans. • Loss – This grade represents “Loss” loans in accordance with regulatory guidelines. A loan classified as Loss is considered uncollectible and of such little value that its continuance as a bankable asset is not warranted. This classification does not mean that the loan has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off the loan, even though some recovery may be affected in the future. The portion of the loan that is graded loss should be charged off no later than the end of the quarter in which the loss is identified. Based on the most recent analysis performed, the risk category of loans by class of loans is as follows for the period indicated: Term Loans Amortized Cost Basis by Origination Year – As of September 30, 2023 (in thousands) 2023 2022 2021 2020 2019 Prior Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term Total Commercial real estate: CRE non-owner occupied risk ratings Pass $ 115,862 $ 416,733 $ 285,875 $ 138,751 $ 221,819 $ 820,605 $ 118,512 $ — $ 2,118,157 Special Mention — — 7,412 5,366 17,329 4,460 1,348 — 35,915 Substandard — — 767 — 2,371 14,000 212 — 17,350 Doubtful/Loss — — — — — — — — — Total $ 115,862 $ 416,733 $ 294,054 $ 144,117 $ 241,519 $ 839,065 $ 120,072 $ — $ 2,171,422 Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Commercial real estate: CRE owner occupied risk ratings Pass $ 64,781 $ 189,041 $ 194,280 $ 120,636 $ 60,562 $ 282,391 $ 27,536 $ — $ 939,227 Special Mention — 838 4,417 2,783 710 2,486 — — 11,234 Substandard — 3,012 3,546 — 112 843 80 — 7,593 Doubtful/Loss — — — — — — — — — Total $ 64,781 $ 192,891 $ 202,243 $ 123,419 $ 61,384 $ 285,720 $ 27,616 $ — $ 958,054 Current period gross charge-offs $ — $ — $ — $ 1,380 $ — $ 2,228 $ — $ — $ 3,608 Term Loans Amortized Cost Basis by Origination Year – As of September 30, 2023 (in thousands) 2023 2022 2021 2020 2019 Prior Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term Total Commercial real estate: Multifamily risk ratings Pass $ 21,860 $ 178,946 $ 279,961 $ 89,658 $ 106,982 $ 232,474 $ 37,569 $ — $ 947,450 Special Mention — — 11,911 — — — — — 11,911 Substandard — — — — — — — — — Doubtful/Loss — — — — — — — — — Total $ 21,860 $ 178,946 $ 291,872 $ 89,658 $ 106,982 $ 232,474 $ 37,569 $ — $ 959,361 Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Commercial real estate: Farmland risk ratings Pass $ 17,998 $ 46,403 $ 43,434 $ 16,139 $ 17,007 $ 44,792 $ 53,072 $ — $ 238,845 Special Mention — 3,119 — 391 261 759 163 — 4,693 Substandard 101 — 9,058 — 4,928 13,863 7,120 — 35,070 Doubtful/Loss — — — — — — — — — Total $ 18,099 $ 49,522 $ 52,492 $ 16,530 $ 22,196 $ 59,414 $ 60,355 $ — $ 278,608 Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Consumer loans: SFR 1-4 1st DT liens risk ratings Pass $ 108,061 $ 191,360 $ 263,602 $ 125,005 $ 31,255 $ 133,233 $ — $ 4,164 $ 856,680 Special Mention 72 — — 1,694 — 2,296 — 4 4,066 Substandard — 144 1,314 1,500 533 5,609 — 363 9,463 Doubtful/Loss — — — — — — — — — Total $ 108,133 $ 191,504 $ 264,916 $ 128,199 $ 31,788 $ 141,138 $ — $ 4,531 $ 870,209 Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Consumer loans: SFR HELOCs and junior liens risk ratings Pass $ 297 $ — $ — $ — $ — $ 102 $ 340,616 $ 6,947 $ 347,962 Special Mention — — — — — — 1,522 170 1,692 Substandard — — — — — — 2,759 385 3,144 Doubtful/Loss — — — — — — — — — Total $ 297 $ — $ — $ — $ — $ 102 $ 344,897 $ 7,502 $ 352,798 Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Consumer loans: Other risk ratings Pass $ 23,352 $ 9,854 $ 9,908 $ 8,119 $ 7,640 $ 5,286 $ 649 $ — $ 64,808 Special Mention — — 93 13 90 4 13 — 213 Substandard 89 190 217 30 195 59 2 — 782 Doubtful/Loss — — — — — — — — — Total $ 23,441 $ 10,044 $ 10,218 $ 8,162 $ 7,925 $ 5,349 $ 664 $ — $ 65,803 Current period gross charge-offs $ 103 $ 28 $ — $ — $ — $ — $ 2 $ — $ 133 Term Loans Amortized Cost Basis by Origination Year – As of September 30, 2023 (in thousands) 2023 2022 2021 2020 2019 Prior Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term Total Commercial and industrial loans: Commercial and industrial risk ratings Pass $ 59,305 $ 87,646 $ 55,348 $ 11,173 $ 13,469 $ 8,473 $ 352,476 $ 276 $ 588,166 Special Mention 44 2,665 205 40 — 217 4,135 — 7,306 Substandard — 374 768 126 11 835 2,073 98 4,285 Doubtful/Loss — — — — — — — — — Total $ 59,349 $ 90,685 $ 56,321 $ 11,339 $ 13,480 $ 9,525 $ 358,684 $ 374 $ 599,757 Current period gross charge-offs $ 26 $ 287 $ 240 $ 735 $ — $ — $ 328 $ — $ 1,616 Construction loans: Construction risk ratings Pass $ 32,433 $ 144,274 $ 77,013 $ 47,525 $ 4,661 $ 6,330 $ — $ — $ 312,236 Special Mention — 8,656 — — — — — — 8,656 Substandard — — — — 71 — — — 71 Doubtful/Loss — — — — — — — — — Total $ 32,433 $ 152,930 $ 77,013 $ 47,525 $ 4,732 $ 6,330 $ — $ — $ 320,963 Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Agriculture production loans: Agriculture production risk ratings Pass $ 457 $ 2,984 $ 2,260 $ 716 $ 684 $ 8,562 $ 95,011 $ — $ 110,674 Special Mention — — — — — — 8,928 — 8,928 Substandard — — — — — — 3,870 — 3,870 Doubtful/Loss — — — — — — — — — Total $ 457 $ 2,984 $ 2,260 $ 716 $ 684 $ 8,562 $ 107,809 $ — $ 123,472 Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Leases: Lease risk ratings Pass $ 8,219 $ — $ — $ — $ — $ — $ — $ — $8,219 Special Mention — — — — — — — — — Substandard — — — — — — — — — Doubtful/Loss — — — — — — — — — Total $ 8,219 $ — $ — $ — $ — $ — $ — $ — $ 8,219 Current period gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Total loans outstanding: Risk ratings Pass $ 452,625 $ 1,267,241 $ 1,211,681 $ 557,722 $ 464,079 $ 1,542,248 $ 1,025,441 $ 11,387 $ 6,532,424 Special Mention 116 15,278 24,038 10,287 18,390 10,222 16,109 174 94,614 Substandard 190 3,720 15,670 1,656 8,221 35,209 16,116 846 81,628 Doubtful/Loss — — — — — — — — — Total $ 452,931 $ 1,286,239 $ 1,251,389 $ 569,665 $ 490,690 $ 1,587,679 $ 1,057,666 $ 12,407 $ 6,708,666 Current period gross charge-offs $ 129 $ 315 $ 240 $ 2,115 $ — $ 2,228 $ 330 $ — $ 5,357 Term Loans Amortized Cost Basis by Origination Year – As of December 31, 2022 (in thousands) 2022 2021 2020 2019 2018 Prior Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term Total Commercial real estate: CRE non-owner occupied risk ratings Pass $ 399,910 $ 304,636 $ 152,960 $ 221,659 $ 147,842 $ 748,994 $ 123,794 $ — $ 2,099,795 Special Mention — — — 20,033 — 21,681 1,346 — 43,060 Substandard — 864 768 — 1,059 4,179 — — 6,870 Doubtful/Loss — — — — — — — — — Total $ 399,910 $ 305,500 $ 153,728 $ 241,692 $ 148,901 $ 774,854 $ 125,140 $ — $ 2,149,725 Commercial real estate: CRE owner occupied risk ratings Pass $ 210,101 $ 197,787 $ 120,929 $ 64,244 $ 49,755 $ 251,137 $ 43,343 $ — $ 937,296 Special Mention 131 16,296 234 731 — 6,971 879 — 25,242 Substandard 3,213 — 5,249 1,893 1,103 10,654 157 — 22,269 Doubtful/Loss — — — — — — — — — Total $ 213,445 $ 214,083 $ 126,412 $ 66,868 $ 50,858 $ 268,762 $ 44,379 $ — $ 984,807 Commercial real estate: Multifamily risk ratings Pass $ 159,318 $ 290,170 $ 96,937 $ 108,586 $ 106,287 $ 154,125 $ 28,989 $ — $ 944,412 Special Mention — — — — — — — — — Substandard — — — — — 125 — — 125 Doubtful/Loss — — — — — — — — — Total $ 159,318 $ 290,170 $ 96,937 $ 108,586 $ 106,287 $ 154,250 $ 28,989 $ — $ 944,537 Commercial real estate: Farmland risk ratings Pass $ 47,067 $ 53,275 $ 16,739 $ 18,589 $ 12,386 $ 34,528 $ 53,684 $ — $ 236,268 Special Mention 3,139 783 246 5,000 — 3,991 14,275 — 27,434 Substandard — — 1,772 765 3,158 7,094 3,523 — 16,312 Doubtful/Loss — — — — — — — — — Total $ 50,206 $ 54,058 $ 18,757 $ 24,354 $ 15,544 $ 45,613 $ 71,482 $ — $ 280,014 Consumer loans: SFR 1-4 1st DT liens risk ratings Pass $ 194,933 $ 265,370 $ 131,922 $ 33,395 $ 28,545 $ 115,469 $ 8 $ 2,924 $ 772,566 Special Mention — — 1,531 282 3,277 5,854 — 465 11,409 Substandard — 1,204 — — 1,004 3,521 — 645 6,374 Doubtful/Loss — — — — — — — — — Total $ 194,933 $ 266,574 $ 133,453 $ 33,677 $ 32,826 $ 124,844 $ 8 $ 4,034 $ 790,349 Term Loans Amortized Cost Basis by Origination Year – As of December 31, 2022 (in thousands) 2022 2021 2020 2019 2018 Prior Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term Total Consumer loans: SFR HELOCs and Junior Liens Pass $ 505 $ — $ — $ — $ — $ 127 $ 378,939 $ 8,462 $ 388,033 Special Mention — — — — — — 1,842 81 1,923 Substandard — — — — — — 3,072 638 3,710 Doubtful/Loss — — — — — — — — — Total $ 505 $ — $ — $ — $ — $ 127 $ 383,853 $ 9,181 $ 393,666 Consumer loans: Other risk ratings Pass $ 14,070 $ 12,990 $ 10,211 $ 10,650 $ 5,225 $ 1,945 $ 899 $ — $ 55,990 Special Mention — 18 77 135 176 32 47 — 485 Substandard — — 42 92 — 96 23 — 253 Doubtful/Loss — — — — — — — — — Total $ 14,070 $ 13,008 $ 10,330 $ 10,877 $ 5,401 $ 2,073 $ 969 $ — $ 56,728 Commercial and industrial loans: Commercial and industrial risk ratings Pass $ 125,710 $ 64,966 $ 17,746 $ 23,131 $ 7,628 $ 5,051 $ 297,341 $ 483 $ 542,056 Special Mention 3,032 139 21 49 138 768 11,547 — 15,694 Substandard 1,293 1,142 5,179 14 33 611 3,798 101 12,171 Doubtful/Loss — — — — — — — — — Total $ 130,035 $ 66,247 $ 22,946 $ 23,194 $ 7,799 $ 6,430 $ 312,686 $ 584 $ 569,921 Construction loans: Construction risk ratings Pass $ 72,840 $ 72,308 $ 43,409 $ 15,358 $ 2,159 $ 4,900 $ — $ — $ 210,974 Special Mention — — — — — — — — — Substandard — — — 457 — 129 — — 586 Doubtful/Loss — — — — — — — — — Total $ 72,840 $ 72,308 $ 43,409 $ 15,815 $ 2,159 $ 5,029 $ — $ — $ 211,560 Agriculture production loans: Agriculture production risk ratings Pass $ 3,414 $ 2,777 $ 1,149 $ 1,104 $ 8,902 $ 1,058 $ 38,425 $ — $ 56,829 Special Mention — — — — 90 31 1,632 — 1,753 Substandard — — — — — — 2,832 — 2,832 Doubtful/Loss — — — — — — — — — Total $ 3,414 $ 2,777 $ 1,149 $ 1,104 $ 8,992 $ 1,089 $ 42,889 $ — $ 61,414 Term Loans Amortized Cost Basis by Origination Year – As of December 31, 2022 (in thousands) 2022 2021 2020 2019 2018 Prior Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term Total Leases: Lease risk ratings Pass $ 7,726 $ — $ — $ — $ — $ — $ — $ — $ 7,726 Special Mention — — — — — — — — — Substandard — — — — — — — — — Doubtful/Loss — — — — — — — — — Total $ 7,726 $ — $ — $ — $ — $ — $ — $ — $ 7,726 Total loans outstanding: Risk ratings Pass $ 1,235,594 $ 1,264,279 $ 592,002 $ 496,716 $ 368,729 $ 1,317,334 $ 965,422 $ 11,869 $ 6,251,945 Special Mention 6,302 17,236 2,109 26,230 3,681 39,328 31,568 546 127,000 Substandard 4,506 3,210 13,010 3,221 6,357 26,409 13,405 1,384 71,502 Doubtful/Loss — — — — — — — — — Total $ 1,246,402 $ 1,284,725 $ 607,121 $ 526,167 $ 378,767 $ 1,383,071 $ 1,010,395 $ 13,799 $ 6,450,447 The following table shows the ending balance of current and past due originated loans by loan category as of the date indicated: Analysis of Past Due Loans - As of September 30, 2023 (in thousands) 30-59 days 60-89 days > 90 days Total Past Current Total Commercial real estate: CRE non-owner occupied $ 403 $ — $ 212 $ 615 $ 2,170,807 $ 2,171,422 CRE owner occupied 138 117 230 485 957,569 958,054 Multifamily — — — — 959,361 959,361 Farmland — — 264 264 278,344 278,608 Total commercial real estate loans 541 117 706 1,364 4,366,081 4,367,445 Consumer: SFR 1-4 1st DT liens 398 560 572 1,530 868,679 870,209 SFR HELOCs and junior liens 1,570 1,391 294 3,255 349,543 352,798 Other 119 21 75 215 65,588 65,803 Total consumer loans 2,087 1,972 941 5,000 1,283,810 1,288,810 Commercial and industrial 53 108 1,514 1,675 598,082 599,757 Construction — — — — 320,963 320,963 Agriculture production — — 33 33 123,439 123,472 Leases — — — — 8,219 8,219 Total $ 2,681 $ 2,197 $ 3,194 $ 8,072 $ 6,700,594 $ 6,708,666 Analysis of Past Due Loans - As of December 31, 2022 (in thousands) 30-59 days 60-89 days > 90 days Total Past Current Total Commercial real estate: CRE non-owner occupied $ — $ — $ — $ — $ 2,149,725 $ 2,149,725 CRE owner occupied — 98 75 173 984,634 984,807 Multifamily 159 — — 159 944,378 944,537 Farmland — — — — 280,014 280,014 Total commercial real estate loans 159 98 75 332 4,358,751 4,359,083 Consumer: SFR 1-4 1st DT liens 24 — 279 303 790,046 790,349 SFR HELOCs and junior liens 172 166 707 1,045 392,621 393,666 Other 26 34 55 115 56,613 56,728 Total consumer loans 222 200 1,041 1,463 1,239,280 1,240,743 Commercial and industrial 2,300 190 283 2,773 567,148 569,921 Construction — — 379 379 211,181 211,560 Agriculture production — — — — 61,414 61,414 Leases — — — — 7,726 7,726 Total $ 2,681 $ 488 $ 1,778 $ 4,947 $ 6,445,500 $ 6,450,447 The following table shows the ending balance of non accrual loans by loan category as of the date indicated: Non Accrual Loans As of September 30, 2023 As of December 31, 2022 (in thousands) Non accrual with no allowance for credit losses Total non accrual Past due 90 days or more and still accruing Non accrual with no allowance for credit losses Total non accrual Past due 90 days or more and still accruing Commercial real estate: CRE non-owner occupied $ 1,105 $ 1,105 $ — $ 1,739 $ 1,739 $ — CRE owner occupied 3,898 3,898 — 4,938 4,938 — Multifamily — — — 125 125 — Farmland 6,132 11,707 — 1,772 1,772 — Total commercial real estate loans 11,135 16,710 — 8,574 8,574 — Consumer: SFR 1-4 1st DT liens 2,883 2,884 — 4,117 4,220 — SFR HELOCs and junior liens 2,751 3,158 — 2,498 3,155 — Other 82 156 — 47 84 — Total consumer loans 5,716 6,198 — 6,662 7,459 — Commercial and industrial 1,479 2,907 43 1,224 3,518 — Construction 71 71 — 491 491 — Agriculture production 3,357 3,870 — 1,279 1,279 — Leases — — — — — — Sub-total 21,758 29,756 43 18,230 21,321 — Less: Guaranteed loans (797) (936) — (105) (225) Total, net $ 20,961 $ 28,820 $ 43 $ 18,125 $ 21,096 $ — Interest income on non accrual loans that would have been recognized during the three months ended September 30, 2023 and 2022, if all such loans had been current in accordance with their original terms, totaled $0.4 million and $0.5 million, respectively. Interest income actually recognized on these originated loans during the three months ended September 30, 2023 and 2022 was $0.1 million and $0.3 million, respectively. The following tables present the amortized cost basis of collateral dependent loans by class of loans as of the following periods: As of September 30, 2023 (in thousands) Retail Office Warehouse Other Multifamily Farmland SFR-1st Deed SFR-2nd Deed Automobile/Truck A/R and Inventory Equipment Total Commercial real estate: CRE non-owner occupied $ 127 $ 212 $ — $ 766 $ — $ — $ — $ — $ — $ — $ — $ 1,105 CRE owner occupied 641 75 165 3,017 — — — — — — — 3,898 Multifamily — — — — — — — — — — — — Farmland — — — 743 — 10,964 — — — — — 11,707 Total commercial real estate loans 768 287 165 4,526 — 10,964 — — — — — 16,710 Consumer: SFR 1-4 1st DT liens — — — — — — 2,883 — — — — 2,883 SFR HELOCs and junior liens — — — — — — 1,705 1,011 — — — 2,716 Other — — — — — — — — 146 — — 146 Total consumer loans — — — — — — 4,588 1,011 146 — — 5,745 Commercial and industrial — — — — — — — — — 1,828 1,079 2,907 Construction — — — — — — 71 — — — — 71 Agriculture production — — — 1,404 — — — — — — 2,466 3,870 Leases — — — — — — — — — — — — Total $ 768 $ 287 $ 165 $ 5,930 $ — $ 10,964 $ 4,659 $ 1,011 $ 146 $ 1,828 $ 3,545 $ 29,303 As of December 31, 2022 (in thousands) Retail Office Warehouse Other Multifamily Farmland SFR -1st Deed SFR -2nd Deed Automobile/Truck A/R and Inventory Equipment Total Commercial real estate: CRE non-owner occupied $ 777 $ 98 $ — $ 864 $ — $ — $ — $ — $ — $ — $ — $ 1,739 CRE owner occupied 548 75 1,103 3,212 — — — — — — — 4,938 Multifamily — — — — 125 — — — — — — 125 Farmland — — — — — 1,772 — — — — — 1,772 Total commercial real estate loans 1,325 173 1,103 4,076 125 1,772 — — — — — 8,574 Consumer: SFR 1-4 1st DT liens — — — — — — 4,220 — — — — 4,220 SFR HELOCs and junior liens — — — — — — 1,664 1,121 — — — 2,785 Other — — — 5 — — — — 61 — 2 68 Total consumer loans — — — 5 — — 5,884 1,121 61 — 2 7,073 Commercial and industrial — — — 1,874 — — — — — 1,596 48 3,518 Construction — — — 379 — — 112 — — — — 491 Agriculture production — — — — — — — — — — 1,279 1,279 Leases — — — — — — — — — — — — Total $ 1,325 $ 173 $ 1,103 $ 6,334 $ 125 $ 1,772 $ 5,996 $ 1,121 $ 61 $ 1,596 $ 1,329 $ 20,935 Modifications to borrowers experiencing financial difficulty may include interest rate reductions, principal or interest forgiveness, forbearances, term extensions, and other actions intended to minimize economic loss and to avoid foreclosure or repossession of collateral. The following tables show the amortized cost basis of loans that were both experiencing financial difficulty and modified during the periods presented. The percentage of the amortized cost basis of loans that were modified to borrowers in financial distress as compared to the amortized cost basis of each class of financing receivables is also presented below. For the three months ended September 30, 2023 (in thousands) Principal Forgiveness Payment Delay/Term Extension Interest Rate Reduction Combination - Payment Delay/Term Reduction Total % of Loans Outstanding Commercial real estate: Farmland $ — $ — $ — $ 1,043 0.37 % Commercial and industrial — 45 — — 0.01 % Total $ — $ 45 $ — $ 1,043 0.38 % For the nine months ended September 30, 2023 (in thousands) Principal Forgiveness Payment Delay/Term Extension Interest Rate Reduction Combination - Payment Delay/Term Reduction Total % of Loans Outstanding Commercial real estate: Farmland $ — $ — $ — $ 1,043 0.37 % Commercial and industrial — 206 — — 0.03 % Total $ — $ 206 $ — $ 1,043 0.40 % The following table presents the financial effect of loan modifications made to borrowers experiencing financial difficulty during the three and nine months ended September 30, 2023. Three months ended September 30, 2023 Nine months ended September 30, 2023 Term Change from Amortizing to I/O 12 Months Term Extension Term Change from Amortizing to I/O 12 Months Term Extension Farmland $ 1,043 $ — $ 1,043 $ — Commercial and industrial 45 — 45 206 Total $ 1,088 $ — $ 1,088 $ 206 There were no loans with payment defaults by borrowers experiencing financial difficulty during the quarter ended September 30, 2023 which had material modifications in rate, term or principal forgiveness during the twelve months prior to default. |
