Allowance for Loan Losses (Tables)

3 Months Ended

Mar. 31, 2020

Provision for Loan and Lease Losses [Abstract]

Summary of allocation of the allowance for loan losses

The following table provides the allocation of the ACL for loans held for investment as well as the activity in the ACL attributed to various segments in the loan portfolio as of and for the period indicated:



	For the Three Months Ended March 31, 2020
	Beginning ACL Balance ⁽⁶⁾		Adoption of ASC 326			Charge-offs			Recoveries		Provision for Loan Losses			Ending ACL Balance
	(Dollars in thousands)
Investor loans secured by real estate
CRE non-owner-occupied	$	1,899	$	8,423		$	(387	)	$	—	$	5,961		$	15,896
Multifamily	729		9,174			—			—		4,819			14,722
Construction and land	4,484		(124		)	—			—		4,862			9,222
SBA secured by real estate ⁽¹⁾	1,915		(1,401		)	—			—		421			935
Business loans secured by real estate ⁽²⁾
CRE owner-occupied	2,781		20,166			—			12		3,834			26,793
Franchise real estate secured	592		5,199			—			—		1,712			7,503
SBA secured by real estate ⁽³⁾	2,119		2,207			(315		)	71		(38		)	4,044
Commercial loans ⁽⁴⁾
Commercial and industrial	13,857		87			(490		)	5		2,283			15,742
Franchise non-real estate secured	5,816		9,214			—			—		1,586			16,616
SBA non-real estate secured	445		218			(236		)	4		85			516
Retail loans
Single family residential ⁽⁵⁾	655		541			—			—		(59		)	1,137
Consumer loans	406		1,982			(8		)	—		(84		)	2,296
Totals	$	35,698	$	55,686		$	(1,436	)	$	92	$	25,382		$	115,422

______________________________

⁽¹⁾ SBA loans that are collateralized by hotel/motel real property.

⁽²⁾ Loans to businesses that are collateralized by real estate where the operating cash flow of the business is the primary source of repayment.

⁽³⁾ SBA loans that are collateralized by real property other than hotel/motel real property.

⁽⁴⁾ Loans to businesses where the operating cash flow of the business is the primary source of repayment.

⁽⁵⁾Single family residential includes home equity lines of credit, as well as second trust deeds

⁽⁶⁾Beginning ACL balance represents the ALLL accounted for under ASC 450 and ASC 310, which is reflective of probable incurred losses as of the balance sheet date.

The following table summarizes the allocation of the ALLL as well as the related activity attributed to various segments in the loan portfolio as of and for the period indicated, as determined in accordance with ASC 450 and ASC 310, prior to the adoption of ASC 326:



	For the Three Months Ended March 31, 2019
	Beginning ALLL Balance		Charge-offs			Recoveries		Provision for Credit Losses			Ending ALLL Balance
	(Dollars in thousands)
Investor loans secured by real estate
CRE non-owner-occupied	$	1,624	$	—		$	—	$	44		$	1,668
Multifamily	740		—			—		(71		)	669
Construction and land	5,964		—			—		(4		)	5,960
SBA secured by real estate ⁽¹⁾	1,827		—			—		877			2,704
Business loans secured by real estate ⁽²⁾
CRE owner-occupied	1,908		—			8		53			1,969
Franchise real estate secured	743		—			—		1,430			2,173
SBA secured by real estate ⁽³⁾	1,824		—			—		142			1,966
Commercial loans ⁽⁴⁾
Commercial and industrial	13,695		(302		)	67		127			13,587
Franchise non-real estate secured	6,066		—			—		(368		)	5,698
SBA non-real estate secured	654		—			3		(154		)	503
Retail loans
Single family residential ⁽⁵⁾	808		—			—		(50		)	758
Consumer loans	219		(5		)	1		(14		)	201
Totals	$	36,072	$	(307	)	$	79	$	2,012		$	37,856

______________________________

⁽¹⁾ SBA loans that are collateralized by hotel/motel real property.

⁽²⁾ Loans to businesses that are collateralized by real estate where the operating cash flow of the business is the primary source of repayment.

⁽³⁾ SBA loans that are collateralized by real property other than hotel/motel real property.

⁽⁴⁾ Loans to businesses where the operating cash flow of the business is the primary source of repayment.

⁽⁵⁾Single family residential includes home equity lines of credit, as well as second trust deeds

The following table presents loans individually and collectively evaluated for impairment and their respective ALLL allocation at December 31, 2019 as determined in accordance with ASC 450 and ASC 310, prior to the adoption of ASC 326:



	December 31, 2019
	Loans Evaluated Individually for Impairment		ALLL Attributed to Individually Evaluated Loans		Loans Evaluated Collectively for Impairment		ALLL Attributed to Collectively Evaluated Loans
	(Dollars in thousands)
Investor loans secured by real estate
CRE non-owner-occupied	$	1,088	$	—	$	2,069,053	$	1,899
Multifamily	—		—		1,575,726		729
Construction and land	—		—		438,786		4,484
SBA secured by real estate ⁽¹⁾	390		—		68,041		1,915
Business loans secured by real estate ⁽²⁾
CRE owner-occupied	—		—		1,846,554		2,781
Franchise real estate secured	—		—		353,240		592
SBA secured by real estate ⁽³⁾	1,517		—		86,864		2,119
Commercial loans ⁽⁴⁾
Commercial and industrial	7,529		—		1,385,741		13,857
Franchise non-real estate secured	10,834		—		553,523		5,816
SBA non-real estate secured	1,118		—		16,308		445
Retail loans
Single family residential ⁽⁵⁾	366		—		254,658		655
Consumer loans	—		—		50,975		406
Totals	$	22,842	$	—	$	8,699,469	$	35,698

______________________________

⁽¹⁾ SBA loans that are collateralized by hotel/motel real property.

⁽²⁾ Loans to businesses that are collateralized by real estate where the operating cash flow of the business is the primary source of repayment.

⁽³⁾ SBA loans that are collateralized by real property other than hotel/motel real property.

⁽⁴⁾ Loans to businesses where the operating cash flow of the business is the primary source of repayment.

⁽⁵⁾Single family residential includes home equity lines of credit, as well as second trust deeds.

Schedule of allowance for credit quality indicators

The following table stratifies the loans held for investment portfolio by the Company’s internal risk grading, and by year of origination, as of March 31, 2020:



	Term Loans by Vintage
	2020		2019		2018		2017		2016		Prior		Revolving		Revolving Converted to Term During the Period		Total
March 31, 2020	(Dollars in thousands)
Investor loans secured by real estate
CRE non-owner-occupied
Pass	$	104,083	$	382,006	$	381,751	$	302,979	$	207,185	$	644,656	$	11,085	$	—	$	2,033,745
Special mention	—		—		—		—		—		4,904		—		—		4,904
Substandard	—		—		318		—		—		672		559		—		1,549
Doubtful and loss	—		—		—		—		—		—		—				—
Multifamily
Pass	105,208		308,369		315,462		241,938		291,126		362,377		987		—		1,625,467
Special mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		215		—		—		215
Doubtful and loss	—		—		—		—		—		—		—				—
Construction and land
Pass	2,250		118,550		139,340		106,230		—		8,962		391		—		375,723
Special mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		1,802		—		$	—	—		—		1,802
Doubtful and loss	—		—		—		—		—		—		—				—
SBA secured by real estate ⁽¹⁾
Pass	494		10,726		12,324		16,189		7,160		11,032		—		—		57,925
Special mention	—		—		—		699		—		271		—		—		970
Substandard	—		—		1,494		—		392		884		—		—		2,770
Doubtful and loss	—		—		—		—		—		—		—				—
Total investor loans secured by real estate	$	212,035	$	819,651	$	850,689	$	669,837	$	505,863	$	1,033,973	$	13,022	$	—	$	4,105,070
Business loans secured by real estate ⁽²⁾
CRE owner-occupied
Pass	$	114,657	$	315,128	$	304,390	$	311,399	$	268,077	$	540,945	$	5,820	$	—	$	1,860,416
Special mention	—		—		—		8,251		—		6,875		—		—		15,126
Substandard	—		—		3,635		727		2,180		5,298		250		—		12,090
Doubtful and loss	—		—		—		—		—		—		—				—
Franchise real estate secured
Pass	19,326		87,574		76,587		109,203		31,652		46,184		—		—		370,526
Special mention	—		—		—		—		—		902		—		—		902
Substandard	—		—		—		—		—		—		—		—		—
Doubtful and loss	—		—		—		—		—		—		—				—
SBA secured by real estate ⁽³⁾
Pass	2,109		7,723		14,253		17,388		11,027		25,896		364		—		78,760
Special mention	—		—		—		1,015		351		466		—		—		1,832
Substandard	—		—		—		1,033		413		1,602		—		—		3,048
Doubtful and loss	—		—		—		—		—		—		—		—		—
Total loans secured by business real estate	$	136,092	$	410,425	$	398,865	$	449,016	$	313,700	$	628,168	$	6,434	$	—	$	2,342,700



	Term Loans by Vintage
	2020		2019		2018		2017		2016		Prior		Revolving		Revolving Converted to Term During the Period		Total
March 31, 2020	(Dollars in thousands)
Commercial Loans ⁽⁴⁾
Commercial and industrial
Pass	$	31,625	$	125,432	$	102,018	$	103,546	$	37,006	$	115,500	$	899,341	$	1,574	$	1,416,042
Special mention	—		79		352		2,504		137		1,195		18,254		1,250		23,771
Substandard	—		524		2,769		467		1,915		2,443		11,038		—		19,156
Doubtful and loss	—		—		—		—		—		—		—				—
Franchise non-real estate secured
Pass	10,261		212,785		125,954		79,395		52,726		47,724		2,062		—		530,907
Special mention	—		—		—		3,914		—		2,861		—		—		6,775
Substandard	—		—		—		9,137		—		974		—		—		10,111
Doubtful and loss	—		—		—		—		—		—		—				—
SBA non-real estate secured
Pass	265		2,383		1,798		2,258		695		3,737		1,572		285		12,993
Special mention	—		—		—		—		293		173		—		—		466
Substandard	—		88		138		261		—		1,532		787		—		2,806
Doubtful and loss	—		—		—		—		—		—		—				—
Total commercial loans	$	42,151	$	341,291	$	233,029	$	201,482	$	92,772	$	176,139	$	933,054	$	3,109	$	2,023,027
Retail Loans
Single family residential ⁽⁵⁾
Pass	$	3,466	$	11,064	$	17,759	$	16,931	$	38,556	$	108,224	$	39,981	—		$	235,981
Special mention	—		—		—		—		—		649		—		—		649
Substandard	—		—		—		—		—		192		358		—		550
Doubtful and loss	—		—		—		—		—		—		—				—
Consumer loans
Pass	89		214		874		38,045		29		3,311		4,282		—		46,844
Special mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		48		—		—		48
Doubtful and loss	—		—		—		—		—		—		—				—
Total retail loans	$	3,555	$	11,278	$	18,633	$	54,976	$	38,585	$	112,424	$	44,621	$	—	$	284,072
Totals gross loans	$	393,833	$	1,582,645	$	1,501,216	$	1,375,311	$	950,920	$	1,950,704	$	997,131	$	3,109	$	8,754,869

______________________________

⁽¹⁾ SBA loans that are collateralized by hotel/motel real property.

⁽²⁾ Loans to businesses that are collateralized by real estate where the operating cash flow of the business is the primary source of repayment.

⁽³⁾ SBA loans that are collateralized by real property other than hotel/motel real property.

⁽⁴⁾ Loans to businesses where the operating cash flow of the business is the primary source of repayment.

⁽⁵⁾Single family residential includes home equity lines of credit, as well as second trust deeds.

The following tables stratify the loan portfolio by the Company’s internal risk grading as of December 31, 2019:



	Credit Risk Grades
	Pass		Special Mention		Substandard		Total Gross Loans
December 31, 2019	(Dollars in thousands)
Investor loans secured by real estate
CRE non-owner-occupied	$	2,067,875	$	1,178	$	1,088	$	2,070,141
Multifamily	1,575,510		—		216		1,575,726
Construction and land	438,769		—		17		438,786
SBA secured by real estate ⁽¹⁾	65,835		973		1,623		68,431
Total investor loans secured by real estate	4,147,989		2,151		2,944		4,153,084
Business loans secured by real estate ⁽²⁾
CRE owner-occupied	1,831,853		11,167		3,534		1,846,554
Franchise real estate secured	352,319		921		—		353,240
SBA secured by real estate ⁽³⁾	83,106		1,842		3,433		88,381
Total business loans secured by real estate	2,267,278		13,930		6,967		2,288,175
Commercial loans ⁽⁴⁾
Commercial and industrial	1,359,662		13,226		20,382		1,393,270
Franchise non-real estate secured	546,594		6,930		10,833		564,357
SBA not secured by real estate	13,933		485		3,008		17,426
Total commercial loans	1,920,189		20,641		34,223		1,975,053
Retail loans
Single family residential ⁽⁵⁾	254,463		—		561		255,024
Consumer loans	50,921		—		54		50,975
Total retail loans	305,384		—		615		305,999
Total gross loans	$	8,640,840	$	36,722	$	44,749	$	8,722,311

______________________________

⁽¹⁾ SBA loans that are collateralized by hotel/motel real property.

⁽²⁾ Loans to businesses that are collateralized by real estate where the operating cash flow of the business is the primary source of repayment.

⁽³⁾ SBA loans that are collateralized by real property other than hotel/motel real property.

⁽⁴⁾ Loans to businesses where the operating cash flow of the business is the primary source of repayment.

⁽⁵⁾Single family residential includes home equity lines of credit, as well as second trust deeds.

The following table summarizes the amortized cost of loans in these segments by current estimated LTV and by year of origination as of the date indicated:



	Term Loans by Vintage
	2020		2019		2018		2017		2016		Prior		Revolving		Revolving Converted to Term During the Period		Total
March 31, 2020	(Dollars in thousands)
Investor loans secured by real estate
CRE non-owner-occupied
55% and below	$	56,085	$	174,693	$	137,386	$	179,286	$	144,084	$	515,589	$	11,085	—		$	1,218,208
>55-65%	27,173		114,711		104,810		97,883		52,649		104,802		559		—		502,587
>65-75%	20,825		92,602		136,934		23,455		10,238		29,568		—		—		313,622
Greater than 75%	—		—		2,939		2,355		214		273		—		—		5,781
Multifamily
55% and below	26,605		108,109		133,038		93,938		72,385		159,449		511		—		594,035
>55-65%	32,070		140,824		121,292		83,532		85,911		160,662		—		—		624,291
>65-75%	46,533		49,354		40,497		62,560		132,830		37,319		476		—		369,569
Greater than 75%	—		10,082		20,635		1,908		—		5,162		—		—		37,787
Construction and land
55% and below	2,250		114,230		116,970		32,535		—		7,581		391		—		273,957
>55-65%	—		4,320		19,439		57,988		—		—		—		—		81,747
>65-75%	—		—		1,887		17,509		—		—		—		—		19,396
Greater than 75%	—		—		1,044		—		—		1,381		—		—		2,425
SBA secured by real estate ⁽¹⁾
55% and below	—		1,150		658		844		725		439		—		—		3,816
>55-65%	—		3,194		710		3,869		980		4,079		—		—		12,832
>65-75%	494		3,730		8,821		6,523		4,371		3,601		—		—		27,540
Greater than 75%	—		2,652		3,629		5,652		1,476		4,068		—		—		17,477
Total investor loans secured by real estate	$	212,035	$	819,651	$	850,689	$	669,837	$	505,863	$	1,033,973	$	13,022	$	—	$	4,105,070
Business loan secured by real estate ⁽²⁾
CRE owner-occupied
55% and below	$	44,737	$	113,567	$	154,056	$	194,126	$	143,274	$	361,762	$	4,951	—		$	1,016,473
>55-65%	14,963		91,000		85,230		61,426		75,933		87,639		—		—		416,191
>65-75%	15,560		89,702		44,579		59,813		47,717		60,839		1,119		—		319,329
Greater than 75%	39,397		20,859		24,160		5,012		3,333		42,878		—		—		135,639
Franchise real estate secured
55% and below	9,342		18,866		14,141		16,765		11,413		21,859		—		—		92,386
>55-65%	—		11,447		11,696		24,812		7,010		6,891		—		—		61,856
>65-75%	—		44,892		27,393		10,261		12,102		17,098		—		—		111,746
Greater than 75%	9,984		12,369		23,357		57,365		1,127		1,238		—		—		105,440
SBA secured by real estate ⁽³⁾
55% and below	2,109		7,723		14,253		19,436		11,791		27,964		364		—		83,640
>55-65%	—		—		—		—		—		—		—		—		—
>65-75%	—		—		—		—		—		—		—		—		—
Greater than 75%	—		—		—		—		—		—		—		—		—
Total business loans secured by real estate	$	136,092	$	410,425	$	398,865	$	449,016	$	313,700	$	628,168	$	6,434	$	—	$	2,342,700

______________________________

⁽¹⁾ SBA loans that are collateralized by hotel/motel real property.

⁽²⁾ Loans to businesses that are collateralized by real estate where the operating cash flow of the business is the primary source of repayment.

⁽³⁾ SBA loans that are collateralized by real property other than hotel/motel real property.

The following table presents FICO bands for the retail segment of the loan portfolio as of the date indicated:



	Term Loans by Vintage
	2020		2019		2018		2017		2016		Prior		Revolving		Revolving Converted to Term During the Period		Total
March 31, 2020	(Dollars in thousands)
Retail Loans
Single family residential⁽¹⁾
Greater than 740	$	3,466	$	9,868	$	13,973	$	11,586	$	32,709	$	90,860	$	29,710	—		$	192,172
>680 - 740	—		1,196		3,786		4,824		2,678		10,893		9,273		—		32,650
>580 - 680	—		—		—		521		3,169		6,549		1,319		—		11,558
Less than 580	—		—		—		—		—		763		37		—		800
Consumer loans
Greater than 740	89		126		866		55		25		2,682		2,366		—		6,209
>680 - 740	—		64		8		37,990		—		501		1,765		—		40,328
>580 - 680	—		24		—		—		4		155		110		—		293
Less than 580	—		—		—		—		—		21		41		—		62
Total retail loans	$	3,555	$	11,278	$	18,633	$	54,976	$	38,585	$	112,424	$	44,621	$	—	$	284,072

______________________________

⁽¹⁾Single family residential includes home equity lines of credit, as well as second trust deeds.

The following table presents PD bands for commercial real estate and commercial loan segments of the loan portfolio as of the date indicated:



	Commercial Real Estate Term Loans by Vintage
	2020		2019		2018		2017		2016		Prior		Revolving		Revolving Converted to Term During the Period		Total
March 31, 2020	(Dollars in thousands)
Investor loans secured by real estate
CRE non-owner-occupied
0% - 5.00%	$	104,083	$	373,078	$	365,350	$	282,641	$	200,867	$	629,141	$	11,644	$	—	$	1,966,804
>5.00% - 10.00%	—		8,928		16,401		19,982		6,318		5,364		—		—		56,993
Greater than 10%	—		—		318		356		—		15,727		—		—		16,401
Multifamily
0% - 5.00%	99,379		268,267		308,116		241,432		291,126		356,870		987		—		1,566,177
>5.00% - 10.00%	5,829		40,102		3,522		506		—		4,263		—		—		54,222
Greater than 10%	—		—		3,824		—		—		1,459		—		—		5,283
Construction and Land
0% - 5.00%	2,250		62,553		14,444		12,823		—		7,408		391		—		99,869
>5.00% - 10.00%	—		26,376		21,927		40,704		—		298		—		—		89,305
Greater than 10%	—		29,621		102,969		54,505		—		1,256		—		—		188,351
SBA secured by real estate ⁽¹⁾
0% - 5.00%	494		10,726		12,158		16,888		7,160		11,664		—		—		59,090
>5.00% - 10.00%	—		—		1,660		—		—		523		—		—		2,183
Greater than 10%	—		—		—		—		392		—		—		—		392
Total investor loans secured by real estate	$	212,035	$	819,651	$	850,689	$	669,837	$	505,863	$	1,033,973	$	13,022	$	—	$	4,105,070
Business loans secured by real estate ⁽²⁾
CRE owner-occupied
0% - 5.00%	$	114,657	$	296,223	$	274,727	$	303,164	$	244,460	$	515,875	$	5,573	$	—	$	1,754,679
>5.00% - 10.00%	—		18,905		29,663		16,248		23,617		31,941		247		—		120,621
Greater than 10%	—		—		3,635		965		2,180		5,302		250		—		12,332
Franchise real estate secured
0% - 5.00%	19,326		78,086		74,790		105,669		30,643		38,631		—		—		347,145
>5.00% - 10.00%	—		1,575		1,069		3,534		1,009		7,553		—		—		14,740
Greater than 10%	—		7,913		728		—		—		902		—		—		9,543
SBA secured by real estate ⁽³⁾
0% - 5.00%	2,109		7,723		13,559		16,143		8,948		23,564		364		—		72,410
>5.00% - 10.00%	—		—		694		2,260		2,430		2,780		—		—		8,164
Greater than 10%	—		—		—		1,033		413		1,620		—		—		3,066
Total business loans secured by real estate	$	136,092	$	410,425	$	398,865	$	449,016	$	313,700	$	628,168	$	6,434	$	—	$	2,342,700



	Commercial Real Estate Term Loans by Vintage
	2020		2019		2018		2017		2016		Prior		Revolving		Revolving Converted to Term During the Period		Total
March 31, 2020	(Dollars in thousands)
Commercial Loans ⁽⁴⁾
Commercial and industrial
0% - 5.00%	$	31,625	$	114,904	$	94,899	$	67,070	$	34,540	$	110,090	$	881,734	$	1,204	$	1,336,066
>5.00% - 10.00%	—		10,607		7,471		38,578		2,603		6,021		27,259		370		92,909
Greater than 10%	—		524		2,769		869		1,915		3,027		19,640		1,250		29,994
Franchise non-real estate secured
0% - 5.00%	9,938		210,415		121,918		77,413		48,552		44,294		2,062		—		514,592
>5.00% - 10.00%	323		2,370		4,036		1,977		4,174		3,430		—		—		16,310
Greater than 10%	—		—		—		13,056		—		3,835		—		—		16,891
SBA not secured by real estate
0% - 5.00%	265		2,383		1,326		2,258		601		3,503		1,572		285		12,193
>5.00% - 10.00%	—		—		469		—		387		230		—		—		1,086
Greater than 10%	—		88		141		261		—		1,709		787		—		2,986
Total commercial loans	$	42,151	$	341,291	$	233,029	$	201,482	$	92,772	$	176,139	$	933,054	$	3,109	$	2,023,027

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⁽¹⁾ SBA loans that are collateralized by hotel/motel real property.

⁽²⁾ Loans to businesses that are collateralized by real estate where the operating cash flow of the business is the primary source of repayment.

⁽³⁾ SBA loans that are collateralized by real property other than hotel/motel real property.

⁽⁴⁾ Loans to businesses where the operating cash flow of the business is the primary source of repayment.