ppbi-20200630

Other comprehensive income, net of tax:

$ (99,091)

$ 25,740

$ 38,527

$ (73,351)

$ 77,245

Unrealized holding gain (loss) on securities available-for-sale arising during the period, net of income taxes

13,800

^[1]

28,420

^[1]

17,449

^[1]

42,220

28,416

Reclassification adjustment for net gain on sale of securities included in net income, net of income taxes

^[2]

(5,534)

^[2]

(151)

^[2]

(5,519)

(457)

Other comprehensive income, net of tax

13,815

22,886

17,298

36,701

27,959

Comprehensive (loss) income, net of tax

(85,276)

48,626

55,825

(36,650)

105,204

Unrealized holding gain (loss) on securities arising during the period, income tax expense (benefit)

5,500

11,400

7,100

17,000

11,600

Reclassification adjustment for net (gains) losses on sale of securities included in net income, income tax expense (benefit)

$ (6)

$ 2,200

$ 61

$ 2,200

$ 182

[1]	Income tax expense on the unrealized gain on securities was $5.5 million for the three months ended June 30, 2020, $11.4 million for the three months ended March 31, 2020 and $7.1 million for the three months ended June 30, 2019, $17.0 million for the six months ended June 30, 2020 and $11.6 million for the six months ended June 30, 2019.
[2]	Income tax expense (benefit) on the reclassification adjustment for net gain (loss) on sales of securities included in net income was $(6,000) for the three months ended June 30, 2020, $2.2 million for the three months ended March 31, 2020, $61,000 for the three months ended June 30, 2019, $2.2 million for the six months ended June 30, 2020 and $182,000 for the six months ended June 30, 2019.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($)
$ in Thousands

Total

Impact of CECL Adoption

^[1]

Common Stock

Additional Paid-in Capital

Accumulated Retained Earnings

Impact of CECL Adoption

^[1]

Accumulated Other Comprehensive Income (Loss)

Balance at Dec. 31, 2018

$ 1,969,697

$ 617

$ 1,674,274

$ 300,407

$ (5,601)

Balance (in shares) at Dec. 31, 2018

62,480,755

77,245

Repurchase and retirement of common stock

27,959

(65,969)

$ (22)

(59,253)

(6,694)

Repurchase and retirement of common stock (in shares)

(2,219,246)

(27,541)

(51)

5,313

304,754

Restricted stock surrendered and canceled (in shares)

(2,629)

(99,206)

381

Balance (in shares) at Jun. 30, 2019

42,937

Balance at Jun. 30, 2019

1,984,456

$ 595

1,618,137

343,366

22,358

60,509,994

Balance at Dec. 31, 2018

1,969,697

$ 617

1,674,274

300,407

(5,601)

Balance (in shares) at Dec. 31, 2018

62,480,755

Balance at Dec. 31, 2019

$ 2,012,594

$ (45,625)

$ 586

1,594,434

396,051

$ (45,625)

21,523

Balance (in shares) at Dec. 31, 2019

59,506,057

Accounting Standards Update [Extensible List]

us-gaap:AccountingStandardsUpdate201613Member

Balance at Mar. 31, 2019

$ 2,007,064

$ 617

1,676,024

325,363

5,060

Balance (in shares) at Mar. 31, 2019

62,773,299

38,527

Repurchase and retirement of common stock

17,298

(65,969)

$ (22)

(59,253)

(6,694)

Repurchase and retirement of common stock (in shares)

(2,219,246)

(13,792)

(38)

2,860

15,000

Restricted stock surrendered and canceled (in shares)

(1,582)

(61,927)

Balance (in shares) at Jun. 30, 2019

2,868

Balance at Jun. 30, 2019

1,984,456

$ 595

1,618,137

343,366

22,358

60,509,994

Balance at Dec. 31, 2019

$ 2,012,594

(45,625)

$ 586

1,594,434

396,051

(45,625)

21,523

Balance (in shares) at Dec. 31, 2019

59,506,057

$ 25,740

Balance (in shares) at Mar. 31, 2020

22,886

Balance at Mar. 31, 2020

2,002,917

$ 586

1,596,680

361,242

44,409

59,975,281

Balance at Dec. 31, 2019

$ 2,012,594

$ (45,625)

$ 586

1,594,434

396,051

$ (45,625)

21,523

Balance (in shares) at Dec. 31, 2019

59,506,057

$ (73,351)

(73,351)

36,701

(29,874)

123

(123)

4,848

Issuance of common stock - acquisition

473,509

749,603

$ 344

749,259

Issuance of common stock - acquisition (in shares)

34,407,403

Restricted stock surrendered and canceled (in shares)

(1,273)

(94,306)

1,024

Balance (in shares) at Jun. 30, 2020

58,239

Balance at Jun. 30, 2020

$ 2,654,647

$ 930

2,348,415

247,078

58,224

94,350,902

Balance at Mar. 31, 2020

$ 2,002,917

$ 586

1,596,680

361,242

44,409

Balance (in shares) at Mar. 31, 2020

59,975,281

(99,091)

13,815

(14,992)

(81)

2,539

Issuance of common stock - acquisition

23,229

749,603

$ 344

749,259

Issuance of common stock - acquisition (in shares)

34,407,403

Restricted stock surrendered and canceled (in shares)

(265)

(61,367)

121

Balance (in shares) at Jun. 30, 2020

6,356

Balance at Jun. 30, 2020

$ 2,654,647

$ 930

$ 2,348,415

$ 247,078

$ 58,224

94,350,902

[1]	Related to the adoption of Accounting Standards Update 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. See Note 2 - Recently Issue Accounting Pronouncements for further discussion.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Statement of Stockholders' Equity [Abstract]
Cash dividends declared (in dollars per share)	$ 0.25	$ 0.22	$ 0.50	$ 0.44
Dividend equivalents declared (in dollars per share)	$ 0.25	$ 0.22	$ 0.50	$ 0.44

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Cash flows from operating activities:
Net (loss) income	$ (73,351)	$ 77,245
Adjustments to net income:
Depreciation and amortization expense	5,525	4,636
Provision for credit losses	186,089	1,860
Share-based compensation expense	4,848	5,313
Loss (gain) on sales and disposals of premises and equipment	211	(170)
Loss (gain) on sale of or write down of other real estate owned	55	(75)
Net amortization on securities	3,739	2,573
Net (accretion) of discounts/premiums for acquired loans and deferred loan fees/costs	(9,652)	(12,271)
Gain on sales of investment securities available-for-sale	(7,739)	(639)
Originations of loans held for sale	(10,163)	(59,801)
Proceeds from the sales of and principal payments from loans held for sale	13,490	61,356
Loss (gain) on sales of loans	1,261	(2,631)
Deferred income tax (benefit) expense	(46,608)	1,988
Change in accrued expenses and other liabilities, net	70,342	(11,315)
Income from bank owned life insurance, net	(2,119)	(1,367)
Amortization of core deposit intangible	8,005	8,717
Change in accrued interest receivable and other assets, net	(46,110)	(462)
Net cash provided by operating activities	97,823	74,957
Cash flows from investing activities:
Net increase in interest-bearing time deposits with financial institutions	0	3,187
Proceeds from sale of other real estate owned	0	390
Loan originations and payments, net	(527,053)	46,104
Proceeds from loans held for sale previously classified as portfolio loans	38,246	74,070
Purchase of loans held for investment	(66,470)	(48,903)
Proceeds from prepayments and maturities of held-to-maturity securities	5,208	2,214
Purchase of securities available-for-sale	(458,667)	(400,409)
Proceeds from prepayments and maturities of securities available-for-sale	63,985	55,549
Proceeds from sale of securities available-for-sale	339,853	227,138
Proceeds from the sales of premises and equipment	42	11,108
Proceeds from bank owned insurance death benefit	0	405
Purchases of premises and equipment	(1,198)	(5,101)
Change in FHLB, FRB and other stock, at cost	(44)	2,416
Funding of CRA investments	(7,375)	(5,338)
Change in cash acquired in acquisitions, net	937,100	0
Net cash provided by (used in) investing activities	323,627	(37,170)
Cash flows from financing activities:
Net increase in deposit accounts	1,162,194	203,571
Net change in short-term borrowings	(681,000)	(86,075)
Repayment of long-term FHLB borrowings	(5,000)	(10,000)
Proceeds from issuance of subordinated debt, net	147,359	122,453
Cash dividends paid	(29,874)	(27,541)
Repurchase and retirement of common stock	0	(65,969)
Proceeds from exercise of stock options	1,024	381
Restricted stock surrendered and canceled	(1,273)	(2,629)
Net cash provided by financing activities	593,430	134,191
Net increase in cash and cash equivalents	1,014,880	171,978
Cash and cash equivalents, beginning of period	326,850	203,406
Cash and cash equivalents, end of period	1,341,730	375,384
Supplemental cash flow disclosures:
Interest paid	28,057	39,469
Income taxes paid	125	26,634
Noncash investing activities during the period:
Transfers from portfolio loans to loans held for sale	42,169	75,175
Transfers from loans to other real estate owned	0	203
Recognition of operating lease right-of-use assets	(11,118)	(48,685)
Recognition of operating lease liabilities	11,118	(48,685)
Receivable on unsettled security sales	6,529	0
Due on unsettled security purchases	(33,960)	0
Acquisitions (See Note 4):
Fair value of stock and equity award consideration	749,603	0
Cash consideration	2	0
Fair value of assets acquired	8,097,225	0
Liabilities assumed	$ 7,347,620	$ 0

Basis of Presentation	6 Months Ended
Basis of Presentation	Jun. 30, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of Presentation	Basis of Presentation The consolidated financial statements include the accounts of Pacific Premier Bancorp, Inc. (the “Corporation”) and its wholly owned subsidiaries, including Pacific Premier Bank (the “Bank”) (collectively, the “Company,” “we,” “our” or “us”). All significant intercompany accounts and transactions have been eliminated in consolidation. In the opinion of management, the unaudited consolidated financial statements reflect all normal recurring adjustments that are necessary for a fair presentation of the results for the interim periods presented. The results of operations for the six months ended June 30, 2020 are not necessarily indicative of the results that may be expected for any other interim period or the full year ending December 31, 2020. Certain items in the prior year financial statements were reclassified to conform to the current year presentation. Reclassification had no effect on prior year net income or stockholders’ equity. Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 (the “2019 Form 10-K”). The Company accounts for its investments in its wholly owned special purpose entities, Heritage Oaks Capital Trust II and Santa Lucia Bancorp (CA) Capital Trust, under the equity method whereby the subsidiary’s net earnings are recognized in the Company’s statement of income and the investment in these entities is included in other assets on the Company’s Consolidated Statements of Financial Condition. See Note 9 - Subordinated Debentures for additional information. Effective June 1, 2020, the Corporation completed the acquisition of Opus Bank (“Opus”), a California-chartered state bank headquartered in Irvine, California, for a total consideration of approximately $749.6 million, payable primarily in Corporation common stock, pursuant to the definitive agreement dated as of January 31, 2020. At closing, Opus had $8.32 billion in total assets, $5.94 billion in gross loans and $6.91 billion in total deposits and operated 46 banking offices located throughout California, Washington, Oregon and Arizona. Prior to the Opus acquisition, PENSCO Trust Company LLC, a Colorado-chartered non-depository trust company (“PENSCO”), operated as an indirect, wholly-owned subsidiary of Opus and served as a custodian for self-directed IRAs, the funds of which account owners used for self-directed investments in various alternative asset classes. Immediately following the Opus acquisition, PENSCO merged with and into the Bank and operates its custodial business under the name of Pacific Premier Trust as a division of the Bank. See further discussion in Note 4 – Acquisitions.

Recently Issued Accounting Pronouncements

6 Months Ended

Jun. 30, 2020

Accounting Standards Update and Change in Accounting Principle [Abstract]

Recently Issued Accounting Pronouncements

Accounting Standards Adopted in 2020

Additionally, there were no investment securities with previously recorded other-than-temporary impairment as of January 1, 2020.

The following table illustrates the impact of the adoption of the CECL model under ASC 326 on the Company’s consolidated statements of financial position as of January 1, 2020:


	January 1, 2020
	Pre-CECL Adoption		Impact of CECL Adoption		As Reported Under CECL
	(Dollars in thousands)
Assets:
Allowance for credit losses on debt securities:
Held-to-maturity	$	—	$	—	$	—
Available-for-sale	—		—		—
Allowance for credit losses on loans:
Investor loans secured by real estate	9,027		16,072		25,099
Business loans secured by real estate	5,492		27,572		33,064
Commercial loans	20,118		9,519		29,637
Retail loans	1,061		2,523		3,584
Deferred tax (liabilities) assets	(1,371)		18,346		16,975
Liabilities:
Allowance for credit losses on off-balance sheet credit exposures	$	3,279	$	8,285	$	11,564
Stockholders' equity:
Retained earnings	$	396,051	$	(45,625)	$	350,426

The following disclosure requirements for public companies were removed from Topic 820:

•The amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy

•The policy for timing of transfers between levels

•The valuation processes for Level 3 fair value measurements

The following disclosure requirements for public companies were modified in Topic 820:

•The amendments clarify that the measurement uncertainty disclosure is to communicate information about the uncertainty in measurement as of the reporting date

The following disclosure requirements for public companies were added to Topic 820:

•The changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period.

The amendments in this Update became effective for the Company beginning on January 1, 2020. This ASU did not have a material effect on the Company’s financial statements.

Recent Accounting Guidance Not Yet Effective

Significant Accounting Policies	6 Months Ended
Significant Accounting Policies	Jun. 30, 2020
Accounting Policies [Abstract]
Significant Accounting Policies	Significant Accounting Policies Our accounting policies are described in Note 1. Description of Business and Summary of Significant Accounting Policies, of our audited consolidated financial statements included in our 2019 Form 10-K. Select policies have been reiterated below that have a particular affiliation to our interim financial statements. Revenue Recognition. The Company accounts for certain of its revenue streams in accordance with ASC 606 - Revenue from Contracts with Customers. Revenue streams within the scope of and accounted for under ASC 606 include: service charges and fees on deposit accounts, debit card interchange fees, trust administrative fees, fees from other services the Bank provides its customers and gains and losses from the sale of other real estate owned and property, premises and equipment. ASC 606 requires revenue to be recognized when the Company satisfies related performance obligations by transferring to the customer a good or service. The recognition of revenue under ASC 606 requires the Company to first identify the contract with the customer, identify the performance obligations, determine the transaction price, allocate the transaction price to the performance obligations and finally recognize revenue when the performance obligations have been satisfied and the good or service has been transferred. The majority of the Company’s contracts with customers associated with revenue streams that are within the scope of ASC 606 are considered short-term in nature and can be canceled at any time by the customer or the Bank, such as a deposit account agreement. Other more significant revenue streams for the Company such as interest income on loans and investment securities are specifically excluded from the scope of ASC 606 and are accounted for under other applicable U.S. GAAP. Goodwill and Other Intangible Assets. Goodwill is generally determined as the excess of the fair value of the consideration transferred, plus the fair value of any noncontrolling interests in the acquiree, over the fair value of the net assets acquired and liabilities assumed as of the acquisition date. Goodwill and intangible assets acquired in a purchase business combination and determined to have an indefinite useful life are not amortized, but tested for impairment at least annually or more frequently if events and circumstances exist that indicate the necessity for such impairment tests to be performed. The Company has a policy to test goodwill for impairment annually in the fourth quarter of each year, or more frequently if events or circumstances lead management to believe the value of goodwill may be impaired. Impairment testing is performed at the reporting unit level, which is considered the Company level as management has identified the Company is its sole reporting unit as of the date of the consolidated balance sheets. Management’s assessment of goodwill first consists of a qualitative assessment to determine if it is more likely than not the fair value of the Company’s equity is below its carrying value. Should the results of this analysis indicate it is likely the fair value of the Company’s equity is below its carrying value, the Company performs a quantitative assessment of goodwill to determine the fair value of the reporting unit and compares it to its carrying value. If the fair value of the reporting unit is below its carrying value, the Company would then compare the implied fair value of the reporting unit goodwill to its carrying value to determine the amount of impairment to recognize. Impairment losses are recorded as a charge to noninterest expense. Intangible assets with definite useful lives are amortized over their estimated useful lives to their estimated residual values. Goodwill is the only intangible asset with an indefinite life on our balance sheet. In light of the COVID-19 pandemic and the deterioration of economic conditions as a result, the Company performed a goodwill impairment assessment as of June 30, 2020. The Company’s goodwill impairment assessment consisted of a qualitative analysis to first determine if it is more likely than not the estimated fair value of the Company exceeds its carrying value. The results of this analysis indicated no impairment of goodwill. Additionally, as part of the Company’s qualitative analysis, the Company looked at market related data as additional corroborating evidence in its assessment of whether it was more likely than not the carrying value of the Company exceeds its estimated fair value. This assessment of market related data included an initial assessment of the fair value of the Company’s equity as compared to its carrying value with the assistance from an independent third party. The assessment of market related data included factors such as: the Company’s stock price on an actual, 15-day and 30-day average basis as of June 30, 2020, and an implied 40% market participant acquisition premium, which was based upon control premiums for regional banks during the 2008 and 2009 financial crisis. This initial assessment of the fair value of the Company’s equity through observations of market related data provided additional supporting evidence as of June 30, 2020 that the carrying value of goodwill was not impaired. As of June 30, 2020, the balance of goodwill was $901.2 million. Other intangible assets consist of core deposit intangible (“CDI”) and customer relationship intangible assets associated with PENSCO arising from whole bank acquisitions, and are amortized on either an accelerated basis, reflecting the pattern in which the economic benefits of the intangible assets are consumed or otherwise used up, or on a straight-line amortization method over their estimated useful lives, which range from 6 to 11 years. Leases. The Company accounts for its leases in accordance with ASC 842, which requires the Company to record liabilities for future lease obligations as well as assets representing the right to use the underlying leased asset. Leases with a term of 12 months or less are accounted for using straight-line expense recognition with no liability or asset being recorded for such leases. Other than short-term leases, the Company classifies its leases as either finance leases or operating leases. Leases are classified as finance leases when any of the following are met: (a) the lease transfers ownership of the underlying asset to the lessee by the end of the lease term, (b) the lease contains an option to purchase the underlying asset that the lessee is reasonably certain to exercise, (c) the term of the lease represents a major part of the remaining life of the underlying asset, (d) the present value of the future lease payments equals or exceeds substantially all of the fair value of the underlying asset or (e) the underling leased asset is expected to have no alternative use to the lessor at the end of the lease term due to its specialized nature. When the Company’s assessment of a lease does not meet the foregoing criteria, and the term of the lease is in excess of 12 months, the lease is classified as an operating lease. Liabilities to make lease payments and right-of-use assets are determined based on the total contractual base rents for each lease, discounted at the rate implicit in the lease or at the Company’s estimated incremental borrowing rate if the rate is not implicit in the lease. The Company measures future base rents based on the minimum payments specified in the lease agreement, giving consideration for periodic contractual rent increases which are based on an escalation rate or a specified index. When future rent payments are based on an index, the Company uses the index rate observed at the time of lease commencement to measure future lease payments. Liabilities to make lease payments are accounted for using the interest method, which are reduced by periodic rent payments, net of interest accretion. Right-of-use assets for finance leases are amortized on a straight-line basis over the term of the lease, while right-of-use assets for operating leases are amortized over the term of the lease by amounts that represent the difference between periodic straight-line lease expense and periodic interest accretion on the related liability to make lease payments. Expense recognition for finance leases is representative of the sum of periodic amortization of the associated right-of-use asset as well as the periodic interest accretion on the liability to make lease payments. Expense recognition for operating leases is recorded on a straight-line basis. As of June 30, 2020, all of the Company’s leases were classified as either operating leases or short-term leases. From time to time the Company leases portions of the space it leases to other parties through sublease transactions. Income received from these transactions is recorded on a straight-line basis over the term of the sublease. Securities. The Company has established written guidelines and objectives for its investing activities. At the time of purchase, management designates the security as either held to maturity, available-for-sale or held for trading based on the Company’s investment objectives, operational needs and intent. The investments are monitored to ensure that those activities are consistent with the established guidelines and objectives. Securities Held-to-Maturity. Investments in debt securities that management has the positive intent and ability to hold to maturity are reported at cost and adjusted for periodic principal payments and the amortization of premiums and accretion of discounts, which are recognized in interest income using the interest method over the period of time remaining to investment’s maturity. Securities Available-for-Sale. Investments in debt securities that management has no immediate plan to sell, but which may be sold in the future, are carried at fair value. Premiums and discounts are amortized using the interest method over the remaining period to the call date for premiums or contractual maturity for discounts and, in the case of mortgage-backed securities, the estimated average life, which can fluctuate based on the anticipated prepayments on the underlying collateral of the securities. Unrealized holding gains and losses, net of tax, are recorded in a separate component of stockholders’ equity as accumulated other comprehensive income. Realized gains and losses on the sales of securities are determined on the specific identification method, recorded on a trade date basis based on the amortized cost basis of the specific security and are included in noninterest income as net gain (loss) on investment securities. Allowance for Credit Losses on Investment Securities. The ACL on investment securities is determined for both the held-to-maturity and available-for-sale classifications of the investment portfolio in accordance with ASC 326. For available-for-sale investment securities, the Company performs a quarterly qualitative evaluation for securities in an unrealized loss position to determine if, for those investments in an unrealized loss position, the decline in fair value is credit related or non-credit related. In determining whether a security’s decline in fair value is credit related, the Company considers a number of factors including, but not limited to: (i) the extent to which the fair value of the investment is less than its amortized cost; (ii) the financial condition and near-term prospects of the issuer; (iii) downgrades in credit ratings; (iv) payment structure of the security, (v) the ability of the issuer of the security to make scheduled principal and interest payments and (vi) general market conditions which reflect prospects for the economy as a whole, including interest rates and sector credit spreads. If it is determined that the unrealized loss can be attributed to credit loss, the Company records the amount of credit loss through a charge to provision for credit losses in current period earnings. However, the amount of credit loss recorded in current period earnings is limited to the amount of the total unrealized loss on the security, which is measured as the amount by which the security’s fair value is below its amortized cost. If it is likely the Company will be required to sell the security in an unrealized loss position, the total amount of the loss is recognized in current period earnings. Unrealized losses deemed non-credit related, the Company records the loss, net of tax, through accumulated other comprehensive income. The Company determines expected credit losses on available-for-sale and held-to-maturity securities through a discounted cash flow approach, using the security’s effective interest rate. However, as previously mentioned, the measurement of credit losses on available-for-sale securities only occurs when, through the Company’s qualitative assessment, it is determined all or a portion of the unrealized loss is deemed to be credit related. The Company’s discounted cash flow approach incorporates assumptions about the collectability of future cash flows. The amount of credit loss is measured as the amount by which the security’s amortized cost exceeds the present value of expected future cash flows. Credit losses on available-for-sale securities are measured on an individual basis, while credit losses on held-to-maturity securities are measured on a collective basis according to shared risk characteristics. Credit losses on held-to-maturity securities are only recognized at the individual security level when the Company determines a security no longer possesses risk characteristics similar to others in the portfolio. The Company does not measure credit losses on an investment’s accrued interest receivable, but rather promptly reverses from current period earnings the amount of accrued interest that is no longer deemed collectable. Accrued interest receivable for investment securities is included in accrued interest receivable balances in the consolidated statements of financial condition. Loans Held for Investment. Loans held for investment are loans the Company has the ability and intent to hold until their maturity. These loans are carried at amortized cost, including discounts and premiums on purchased and acquired loans, and net deferred loan origination fees and costs. Purchase discounts and premiums and net deferred loan origination fees and costs on loans are accreted or amortized as an adjustment of yield, using the interest method, over the expected lives of the loans. Income recognition of deferred loan fees and costs is discontinued for loans placed on nonaccrual. Any remaining discounts, premiums, deferred fees or costs and prepayment fees associated with loans that payoff prior to contractual maturity are included in loan interest income in the period of payoff. Loan commitment fees received to originate or purchase a loan are deferred and, if the commitment is exercised, recognized over the life of the loan using the interest method as an adjustment of yield or, if the commitment expires unexercised, recognized as income upon expiration of the commitment. The Company accrues interest on loans using the interest method and only if deemed collectible. Loans for which the accrual of interest has been discontinued are designated as nonaccrual loans. The accrual of interest on loans is discontinued when principal or interest is past due 90 days based on contractual terms of the loan or when, in the opinion of management, there is reasonable doubt as to collection of principal and or interest. When loans are placed on nonaccrual status, all interest previously accrued but not collected is promptly reversed against current period interest income, and as such an ACL for accrued interest receivable is not established. Interest income generally is not recognized on nonaccrual loans unless the likelihood of further loss is remote. Interest payments received on nonaccrual loans are applied as a reduction to the loan principal balance. Interest accruals are resumed on such loans only when they are brought current with respect to interest and principal and when, in the judgment of management, the loans are estimated to be fully collectible as to all principal and interest. Allowance for Credit Losses on Loans. The Company accounts for credit losses on loans in accordance with ASC 326, which requires the Company to record an estimate of expected lifetime credit losses for loans at the time of origination or acquisition. The ACL is maintained at a level deemed appropriate by management to provide for expected credit losses in the portfolio as of the date of the consolidated statements of financial condition. Estimating expected credit losses requires management to use relevant forward-looking information, including the use of reasonable and supportable forecasts. The measurement of the ACL is performed by collectively evaluating loans with similar risk characteristics. The Company measures the ACL on commercial real estate loans and commercial loans using a discounted cash flow approach, and a historical loss rate methodology is used to determine the ACL on retail loans. The Company’s discounted cash flow methodology incorporates a probability of default and loss given default model, as well as expectations of future economic conditions, using reasonable and supportable forecasts. Together, the probability of default and loss given default model with the use of reasonable and supportable forecasts generate estimates for cash flows expected to be collected over the estimated life of a loan. Estimates of future expected cash flows ultimately reflect assumptions made concerning net credit losses over the life of a loan. The use of reasonable and supportable forecasts requires significant judgment, such as selecting forecast scenarios and related scenario-weighting, as well as determining the appropriate length of the forecast horizon. Management leverages economic projections from a reputable and independent third party to inform and provide its reasonable and supportable economic forecasts. Other internal and external indicators of economic forecasts may also be considered by management when developing the forecast metrics. The Company’s ACL model reverts to long-term average loss rates for purposes of estimating expected cash flows beyond a period deemed reasonable and supportable. The Company forecasts economic conditions and expected credit losses over a two-year time horizon before reverting to long-term average loss rates. The duration of the forecast horizon, the period over which forecasts revert to long-term averages, the economic forecasts that management utilizes, as well as additional internal and external indicators of economic forecasts that management considers, may change over time depending on the nature and composition of our loan portfolio. Changes in economic forecasts, in conjunction with changes in loan specific attributes, impact a loan’s probability of default and loss given default, which can drive changes in the determination of the ACL. Expectations of future cash flows are discounted at the loan’s effective interest rate. The resulting ACL represents the amount by which the loan’s amortized cost exceeds the net present value of a loan’s discounted cash flows. The ACL is recorded through a charge to provision for credit losses and is reduced by charge-offs, net of recoveries on loans previously charged-off. It is the Company’s policy to charge-off loan balances at the time they have been deemed uncollectable. Please also see Note 7 - Allowance for Credit Losses, of these consolidated financial statements for additional discussion concerning the Company’s ACL methodology. The Company’s ACL model also includes adjustments for qualitative factors, where appropriate. Since historical information (such as historical net losses and economic cycles) may not always, by itself, provide a sufficient basis for determining future expected credit losses, the Company periodically considers the need for qualitative adjustments to the ACL. Qualitative adjustments may be related to and include, but not limited to factors such as: (i) management’s assessment of economic forecasts used in the model and how those forecasts align with management’s overall evaluation of current and expected economic conditions, (ii) organization specific risks such as credit concentrations, collateral specific risks, regulatory risks, and external factors that may ultimately impact credit quality, (iii) potential model limitations such as limitations identified through back-testing, and other limitations associated with factors such as underwriting changes, acquisition of new portfolios and changes in portfolio segmentation and (iv) management’s overall assessment of the adequacy of the ACL, including an assessment of model data inputs used to determine the ACL. The Company has a credit portfolio review process designed to detect problem loans. Problem loans are typically those of a substandard or worse internal risk grade, and may consist of loans on nonaccrual status, troubled debt restructurings (“TDRs”), loans where the likelihood of foreclosure on underlying collateral has increased, collateral dependent loans and other loans where concern or doubt over the ultimate collectability of all contractual amounts due has become elevated. Such loans may, in the opinion of management, be deemed to no longer possess risk characteristics similar to other loans in the loan portfolio, and as such may require individual evaluation to determine an appropriate ACL for the loan. When a loan is individually evaluated, the Company typically measures the expected credit loss for the loan based on a discounted cash flow approach, unless the loan has been deemed collateral dependent. Collateral dependent loans are loans where the repayment of the loan is expected to come from the operation of and/or eventual liquidation of the underlying collateral. The ACL for collateral dependent loans is determined using estimates for the fair value of the underlying collateral, less costs to sell. Although management uses the best information available to derive estimates necessary to measure an appropriate level of ACL, future adjustments to the ACL may be necessary due to economic, operating, regulatory and other conditions that may extend beyond the Company’s control. Various regulatory agencies, as an integral part of their examination process, periodically review the Company’s ACL and credit review process. Such agencies may require the Company to recognize additions to the allowance based on judgments different from those of management. The Company has segmented the loan portfolio according to loans that share similar attributes and risk characteristics. Each segment possesses varying degrees of risk based on, among other things, the type of loan, the type of collateral and the sensitivity of the borrower or industry to changes in external factors such as economic conditions. These segment groupings are: investor real estate secured loans, business real estate secured loans, commercial loans and retail loans. Within each segment grouping there are various classes of loans as disclosed below. The Company determines the ACL for loans based on this more detailed loan segmentation and classification. At June 30, 2020, the Company had the following detailed segmentation on classes of loans: Investor Loans Secured by Real Estate: •Commercial real estate non-owner-occupied - Commercial real estate (“CRE”) non-owner-occupied includes loans for which the Company holds real property as collateral, but where the borrower does not occupy the underlying property. The primary risks associated with these loans include the borrower’s inability to pay, material decreases in the value of the real estate that is being held as collateral, significant increases in interest rates, which may make the real estate loan unprofitable to the borrower, changes in market rents and vacancy of the underlying property. Real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy. •Multifamily - Multifamily loans are secured by multi-tenant (5 or more units) residential real properties. Payments on multifamily loans are dependent on the successful operation or management of the properties, and repayment of these loans may be subject to adverse conditions in the real estate market or the economy. •Construction and land - We originate loans for the construction of one-to-four family and multi-family residences and CRE properties in our primary market area. We concentrate our efforts on single homes and small infill projects in established neighborhoods where there is not abundant land available for development. Construction loans are considered to have higher risks due to construction completion and timing risk, and the ultimate repayment being sensitive to interest rate changes, government regulation of real property and the availability of long-term financing. Additionally, economic conditions may impact the Company’s ability to recover its investment in construction loans, as adverse economic conditions may negatively impact the real estate market, which could affect the borrower’s ability to complete and sell the project. Additionally, the fair value of the underlying collateral may fluctuate as market conditions change. We occasionally originate land loans located predominantly in California for the purpose of facilitating the ultimate construction of a home or commercial building. The primary risks include the borrower’s inability to pay and the inability of the Company to recover its investment due to a decline in the fair value of the underlying collateral. Business Loans Secured by Real Estate: •Commercial real estate owner-occupied - CRE owner-occupied includes loans for which the Company holds real property as collateral and where the underlying property is occupied by the borrower, such as with a place of business. These loans are primarily underwritten based on the cash flows of the business and secondarily on the real estate. The primary risks associated with CRE owner-occupied loans include the borrower’s inability to pay, material decreases in the value of the real estate that is being held as collateral and significant increases in interest rates, which may make the real estate loan unprofitable to the borrower. Real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy. •Franchise secured by real estate - Franchise real estate secured loans are business loans secured by real property occupied by franchised restaurants, generally quick-service restaurants. These loans are primarily underwritten based on the cash flows of the business and secondarily on the real estate. •Small Business Administration (“SBA”) - We are approved to originate loans under the SBA’s Preferred Lenders Program (“PLP”). The PLP lending status affords us a higher level of delegated credit autonomy, translating to a significantly shorter turnaround time from application to funding, which is critical to our marketing efforts. We originate loans nationwide under the SBA’s 7(a), SBAExpress, International Trade and 504(a) loan programs, in conformity with SBA underwriting and documentation standards. SBA loans are similar to commercial business loans, but have additional credit enhancement provided by the U.S. Small Business Administration, for up to 85% of the loan amount for loans up to $150,000 and 75% of the loan amount for loans of more than $150,000. The Company originates SBA loans with the intent to sell the guaranteed portion into the secondary market on a quarterly basis. Certain loans classified as SBA are secured by commercial real estate property. SBA loans secured by hotels are included in the segment investor loans secured by real estate, and SBA loans secured by all other forms of real estate are included in the business loans secured by real estate segment. All other SBA loans are included in the commercial loans segment below, and are secured by business assets. Commercial Loans: •Commercial and industrial (including franchise commercial loans) (“C&I”) - Loans secured by business assets including inventory, receivables and machinery and equipment to businesses located generally in our primary market area. Loan types includes revolving lines or credit, term loans, seasonal loans and loans secured by liquid collateral such as cash deposits or marketable securities. Franchise credit facilities not secured by real estate and Home Owners’ Association (“HOA”) credit facilities are included in C&I loans. We also issue letters of credit on behalf of our customers. Risk arises primarily due to the difference between expected and actual cash flows of the borrowers. In addition, the recoverability of the Company’s investment in these loans is also dependent on other factors primarily dictated by the type of collateral securing these loans. The fair value of the collateral securing these loans may fluctuate as market conditions change. In the case of loans secured by accounts receivable, the recovery of the Company’s investment is dependent upon the borrower’s ability to collect amounts due from its customers. •SBA Paycheck Protection Program (“PPP”) loans - Federally guaranteed loans designed to assist small and medium sized businesses through the disruptions in business brought on by the COVID-19 pandemic. The Paycheck Protection Program is part of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act that was signed into law in March 2020. The loans are designed to help businesses meet the on-going costs associated with running and maintaining a business through the COVID-19 pandemic and provide the potential for forgiveness of the loan if the borrower uses the funds for certain purposes, such maintaining employees on payroll for a specified period of time. Additionally, the PPP allows for a deferral period until the date when the amount of loan forgiveness is determined and remitted to the lender. For borrowers who do not apply for forgiveness, the loan deferral period is 10 months after the applicable forgiveness period ends. Retail Loans: •One-to-four family - Although we do not originate, we have acquired first lien single family loans through bank acquisitions. The primary risks of one-to-four family loans include the borrower’s inability to pay, material decreases in the value of the real estate that is being held as collateral and significant increases in interest rates, which may make loans unprofitable to the borrower. •Consumer loans - In addition to consumer loans acquired through our various bank acquisitions, we originate a limited number of consumer loans, generally for banking clients only, which consist primarily of home equity lines of credit, savings account secured loans and auto loans. Repayment of these loans is dependent on the borrower’s ability to pay and the fair value of the underlying collateral. Troubled Debt Restructurings (“TDRs”). From time-to-time, the Company makes modifications to certain loans when a borrower is experiencing financial difficulty. These modifications are made to alleviate temporary impairments in the borrower’s financial condition and/or constraints on the borrower’s ability to repay the loan, and to minimize potential losses to the Company. Modifications typically include: changes in the amortization terms of the loan, reductions in interest rates, acceptance of interest only payments and, in limited cases, concessions to the outstanding loan balance. Such loans are typically placed on nonaccrual status and are returned to accrual status when all contractual amounts past due have been brought current, the loan has performed under the modified terms of the loan agreement for a period of at least six months and the ultimate collectability of all contractual amounts due under the modified terms of the loan agreement is no longer in doubt. The Company typically measures the ACL for TDRs on an individual basis when the loans are deemed to no longer share similar risk characteristics with other loans in the portfolio. The determination of the ACL for TDRs is based on a discounted cash flow approach for both those measured collectively and individually, unless the loan is deemed collateral dependent, which requires measurement of the ACL based on the fair value of the collateral less cost to sell. The CARES Act, signed into law on March 27, 2020, permits financial institutions to suspend requirements under GAAP for loan modifications to borrowers affected by COVID-19 that would otherwise be characterized as TDRs and suspend any determination related thereto if (i) the loan modification is made between March 1, 2020 and the earlier of December 31, 2020 or 60 days after the end of the coronavirus emergency declaration and (ii) the applicable loan was not more than 30 days past due as of December 31, 2019. The Company has elected to apply this guidance to qualifying loan modifications. For additional information, see Note 6 - Lons Held for Investment. Acquired Loans. Loans acquired through a purchase or a business combination are recorded at their fair value at the acquisition date. The Company performs an assessment of acquired loans to first determine if such loans have experienced more than insignificant deterioration in credit quality since their origination and thus should be classified and accounted for as purchased credit deteriorated (“PCD”) loans. For loans that have not experienced more than insignificant deterioration in credit quality since origination, referred to as non-PCD loans, the Company records such loans at fair value, with any resulting discount or premium accreted or amortized into interest income over the remaining life of the loan using the interest method. Additionally, upon the purchase or acquisition of non-PCD loans, the Company measures and records an ACL based on the Company’s methodology for determining the ACL. The ACL for non-PCD loans is recorded through a charge to the provision for credit losses in the period in which the loans were purchased or acquired. Acquired loans that are classified as PCD are acquired at fair value, which includes any resulting premiums or discounts. Premiums and discounts are amortized or accreted into interest income over the remaining life of the loan using the interest method. Unlike non-PCD loans, the initial ACL for PCD loans is established through an adjustment to the acquired loan balance and not through a charge to the provision for credit losses in the period in which the loans were acquired. The ACL for PCD loans is determined with the use of the Company’s ACL methodology. Characteristics of PCD loans include: delinquency, downgrade in credit quality since origination, loans on nonaccrual status and/or other factors the Company may become aware of through its initial analysis of acquired loans that may indicate there has been more than insignificant deterioration in credit quality since a loan’s origination. In connection with the Opus acquisition on June 1, 2020, the Company acquired PCD loans with an aggregate fair value of approximately $841.2 million, and recorded a ACL of approximately $21.2 million, which was added to the amortized cost of the loans. Subsequent to acquisition, the ACL for both non-PCD and PCD loans are determined with the use of the Company’s ACL methodology in the same manner as all other loans. Other Real Estate Owned (“OREO”). Real estate properties acquired through, or in lieu of, loan foreclosure are recorded at fair value, less cost to sell, with any excess of the loan’s amortized cost balance over the fair value of the property recorded as a charge against the ACL. The Company obtains an appraisal and/or market valuation on all other real estate owned at the time of possession. After foreclosure, valuations are periodically performed by management. Any subsequent declines in fair value are recorded as a charge to non-interest expense in current period earnings with a corresponding write-down to the asset. All legal fees and direct costs, including foreclosure and other related costs are expensed as incurred. Use of Estimates. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates.

Acquisitions

6 Months Ended

Jun. 30, 2020

Business Combinations [Abstract]

Acquisitions

Acquisition of Opus


	May 29, 2020
Merger consideration	(Dollars in thousands)


Value of stock consideration paid to shareholders	$	747,458
Cash paid in lieu of fractional shares	2
Value of restricted stock awards	328
Value of options and warrants	1,817
Total merger consideration	$	749,605

The following table summarizes the estimated fair value of assets acquired and liabilities assumed of Opus as of June 1, 2020 under the acquisition method of accounting:


Identifiable net assets acquired, at fair value		June 1, 2020
	(Dollars in thousands)
Assets acquired
Cash and cash equivalents		$	937,102
Interest bearing time deposits with financial institutions		137
Investment securities		829,891
Loans		5,805,655
Allowance for credit losses		(21,242)
Premises and equipment		22,121
Intangible assets		19,267
Deferred tax assets		44,335
Other assets		367,115
Total assets acquired		$	8,004,381
Liabilities assumed
Deposits		$	6,915,990
FHLB advances and other borrowings		213,491
Subordinated debt		138,653
Other liabilities		79,486
Total liabilities assumed		7,347,620
Total fair value of identifiable net assets		656,761
Total merger consideration		749,605
Goodwill recognized		$	92,844

The Company determined the fair value of loans, intangible assets, investment securities, real property, leases, deposits and borrowings with the assistance of third-party valuations.

Loans

Core deposit intangible

Customer relationship intangible

Fixed maturity deposits

FHLB advances

Subordinated debt

The fair value of subordinated debt was determined by using a discounted cash flow method using a market participant discount rate for similar instruments.


	Three Months Ended						Six Months Ended
	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
	(Dollar in thousands, except per share data)
Net interest and other income	$	203,240	$	190,946	$	375,984	$	383,408
Net (loss) income	(62,479)		54,711		(119,391)		111,644
Basic (loss) earnings per share	(0.67)		0.59		(1.29)		1.20
Diluted (loss) earnings per share	(0.67)		0.58		(1.29)		1.18

Investment Securities

6 Months Ended

Jun. 30, 2020

Investments, Debt and Equity Securities [Abstract]

Investment Securities

The amortized cost and estimated fair value of securities were as follows:


	June 30, 2020
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Estimated Fair Value
	(Dollars in thousands)
Investment securities available-for-sale:
U.S. Treasury	$	30,170	$	2,700	$	—	$	32,870
Agency	315,927		24,419		(356)		339,990
Corporate	274,076		1,698		(1,775)		273,999
Municipal bonds	439,772		21,629		(66)		461,335
Collateralized mortgage obligations	380,527		4,260		(48)		384,739
Mortgage-backed securities	814,012		29,375		(254)		843,133
Total investment securities available-for-sale	2,254,484		84,081		(2,499)		2,336,066
Investment securities held-to-maturity:
Mortgage-backed securities	30,892		1,622		—		32,514
Other	1,665		—		—		1,665
Total investment securities held-to-maturity	32,557		1,622		—		34,179
Total investment securities	$	2,287,041	$	85,703	$	(2,499)	$	2,370,245


	December 31, 2019
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Estimated Fair Value
	(Dollars in thousands)
Investment securities available-for-sale:
U.S. Treasury	$	60,457	$	3,137	$	(39)	$	63,555
Agency	240,348		7,686		(1,676)		246,358
Corporate	149,150		2,217		(14)		151,353
Municipal bonds	384,032		13,450		(184)		397,298
Collateralized mortgage obligations	9,869		123		(8)		9,984
Mortgage-backed securities	494,404		7,603		(2,171)		499,836
Total investment securities available-for-sale	1,338,260		34,216		(4,092)		1,368,384
Investment securities held-to-maturity:
Mortgage-backed securities	36,114		922		—		37,036
Other	1,724		—		—		1,724
Total investment securities held-to-maturity	37,838		922		—		38,760
Total investment securities	$	1,376,098	$	35,138	$	(4,092)	$	1,407,144


	June 30, 2020
	Less than 12 Months								12 Months or Longer							Total
	Number	Fair Value		Gross Unrealized Losses		Number	Fair Value		Gross Unrealized Losses		Number	Fair Value		Gross Unrealized Losses
	(Dollars in thousands)
Investment securities available-for-sale:
U.S. Treasury	—	$	—	$	—	—	$	—	$	—	—	$	—	$	—
Agency	1	12,361		(10)		9	11,687		(346)		10	24,048		(356)
Corporate	13	84,559		(1,775)		—	—		—		13	84,559		(1,775)
Municipal bonds	7	19,326		(66)		—	—		—		7	19,326		(66)
Collateralized mortgage obligations	3	26,593		(47)		1	522		(1)		4	27,115		(48)
Mortgage-backed securities.	11	93,393		(254)		—	—		—		11	93,393		(254)
Total investment securities available-for-sale	35	236,232		(2,152)		10	12,209		(347)		45	248,441		(2,499)


	December 31, 2019
	Less than 12 Months								12 Months or Longer							Total
	Number	Fair Value		Gross Unrealized Losses		Number	Fair Value		Gross Unrealized Losses		Number	Fair Value		Gross Unrealized Losses
	(Dollars in thousands)
Investment securities available-for-sale:
U.S. Treasury	1	$	10,194	$	(39)	—	$	—	$	—	1	$	10,194	$	(39)
Agency	13	102,874		(1,340)		9	13,514		(336)		22	116,388		(1,676)
Corporate	1	1,017		(14)		—	—		—		1	1,017		(14)
Municipal bonds	12	30,541		(184)		—	—		—		12	30,541		(184)
Collateralized mortgage obligations	—	—		—		1	603		(8)		1	603		(8)
Mortgage-backed securities	18	130,014		(1,681)		11	26,886		(490)		29	156,900		(2,171)
Total investment securities available-for-sale	45	274,640		(3,258)		21	41,003		(834)		66	315,643		(4,092)

The amortized cost and estimated fair value of investment securities at June 30, 2020, by contractual maturity are shown in the table below.


	Due in One Year or Less						Due after One Year through Five Years						Due after Five Years through Ten Years						Due after Ten Years		Total
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(Dollars in thousands)
Investment securities available-for-sale:
U.S. Treasury	$	—	$	—	$	20,147	$	21,577	$	10,023	$	11,293	$	—	$	—	$	30,170	$	32,870
Agency	1,000		1,013		40,577		43,830		203,033		218,452		71,317		76,695		315,927		339,990
Corporate	76,883		76,988		73,958		74,303		123,235		122,708		—		—		274,076		273,999
Municipal bonds	—		—		1,452		1,574		29,653		31,980		408,667		427,781		439,772		461,335
Collateralized mortgage obligations	—		—		—		—		52,686		53,250		327,841		331,489		380,527		384,739
Mortgage-backed securities	—		—		2,213		2,419		191,695		206,540		620,104		634,174		814,012		843,133
Total investment securities available-for-sale	77,883		78,001		138,347		143,703		610,325		644,223		1,427,929		1,470,139		2,254,484		2,336,066
Investment securities held-to-maturity:
Mortgage-backed securities	—		—		—		—		—		—		30,892		32,514		30,892		32,514
Other	—		—		—		—		—		—		1,665		1,665		1,665		1,665
Total investment securities held-to-maturity	—		—		—		—		—		—		32,557		34,179		32,557		34,179
Total investment securities	$	77,883	$	78,001	$	138,347	$	143,703	$	610,325	$	644,223	$	1,460,486	$	1,504,318	$	2,287,041	$	2,370,245

During the six months ended June 30, 2020 and 2019, the Company recognized gross gains on

FHLB, FRB and Other Stock

Allowance for Credit Losses on Investment Securities

The following table summarizes the Company’s investment securities portfolio by Moody’s external rating equivalent and by vintage as of June 30, 2020:


	Vintage
	2020		2019		2018		2017		2016		Prior		Total
	(Dollars in thousands)
Investment securities available-for-sale:
U.S. Treasury
Aaa - Aa3	$	—	$	—	$	22,103	$	10,767	$	—	$	—	$	32,870


Agency
Aaa - Aa3	28,924		44,590		159,345		9,759		21,556		75,816		339,990


Corporate debt

A1 - A3	—		19,856		—		—		119,687		9,344		148,887
Baa1 - Baa3	19,652		41,571		5,100		18,131		8,857		31,801		125,112
Municipal bonds
Aaa - Aa3	67,718		264,432		32,497		50,889		15,176		30,623		461,335


Collateralized mortgage obligations
Aaa - Aa3	37,610		44,082		162,056		4,208		119,932		16,851		384,739


Mortgage-backed securities
Aaa - Aa3	164,071		217,705		49,247		220,385		94,794		96,931		843,133


Total investment securities available-for-sale	317,975		632,236		430,348		314,139		380,002		261,366		2,336,066
Investment securities held-to-maturity:
Mortgage-backed securities
Aaa - Aa3	—		—		9,538		7,487		5,356		8,511		30,892


Other


Baa1 - Baa3	—		—		663		—		—		1,002		1,665
Total investment securities held-to-maturity	—		—		10,201		7,487		5,356		9,513		32,557
Total investment securities	$	317,975	$	632,236	$	440,549	$	321,626	$	385,358	$	270,879	$	2,368,623

Loans Held for Investment

6 Months Ended

Jun. 30, 2020

Receivables [Abstract]

Loans Held for Investment

The company’s loan portfolio are segmented according to loans that share similar attributes and risk characteristics.

Retail loans portfolio includes single family residential and consumer loans. Single family residential includes home equity lines of credit, as well as second trust deeds.

The following table presents the composition of the loan portfolio for the period indicated:


	June 30,		December 31,
	2020		2019
	(Dollars in thousands)
Investor loans secured by real estate
CRE non-owner-occupied	$	2,783,692	$	2,070,141
Multifamily	5,225,557		1,575,726
Construction and land	357,426		438,786
SBA secured by real estate	59,482		68,431
Total investor loans secured by real estate	8,426,157		4,153,084
Business loans secured by real estate
CRE owner-occupied	2,170,154		1,846,554
Franchise real estate secured	364,647		353,240
SBA secured by real estate	85,542		88,381
Total business loans secured by real estate	2,620,343		2,288,175
Commercial loans
Commercial and industrial	2,051,313		1,393,270
Franchise non-real estate secured	523,755		564,357
SBA non-real estate secured	21,057		17,426
SBA PPP	1,128,780		—
Total commercial loans	3,724,905		1,975,053
Retail loans
Single family residential	265,170		255,024
Consumer	46,309		50,975
Total retail loans	311,479		305,999
Gross loans held for investment ⁽¹⁾	15,082,884		8,722,311
Allowance for credit losses for loans held for investment ⁽²⁾	(282,271)		(35,698)
Loans held for investment, net	$	14,800,613	$	8,686,613

Loans held for sale, at lower of cost or fair value	$	1,007	$	1,672

______________________________

⁽¹⁾ Includes unaccreted fair value net purchase discounts of $144.5 million and $40.7 million as of June 30, 2020 and December 31, 2019, respectively.

Loans Serviced for Others and Loan Securitization

loan(s).

Concentration of Credit Risk

Credit Quality and Credit Risk Management

reviewed on an ongoing basis by an independent loan review function, as well as by regulatory agencies during scheduled examinations.

The following provides brief definitions for risk grades assigned to loans in the portfolio:

•Pass classifications represent assets with a level of credit quality, in which no well-defined deficiency or weakness exists.

•Loss assets are those that are considered uncollectible and of such little value that their continuance as assets is not warranted. Amounts classified as loss are promptly charged off.

The following table stratifies the loans held for investment portfolio by the Company’s internal risk grading, and by year of origination, as of June 30, 2020:


	Term Loans by Vintage
	2020		2019		2018		2017		2016		Prior		Revolving		Revolving Converted to Term During the Period		Total
June 30, 2020	(Dollars in thousands)
Investor loans secured by real estate
CRE non-owner-occupied
Pass	$	155,429	$	567,989	$	482,567	$	359,173	$	319,468	$	876,776	$	10,924	$	—	$	2,772,326
Special mention	—		—		—		—		—		4,872		—		—		4,872
Substandard	—		—		322		528		518		4,567		559		—		6,494

Multifamily
Pass	522,381		1,753,769		1,010,047		761,576		474,835		701,092		1,031		—		5,224,731

Substandard	—		—		—		—		—		826		—		—		826

Construction and land
Pass	13,838		140,848		135,797		36,569		—		8,468		461		—		335,981
Special mention	—		—		19,643		—		—		—		—		—		19,643
Substandard	—		—		—		1,802		—		—		—		—		1,802

SBA secured by real estate
Pass	495		10,436		12,284		15,483		6,734		9,392		—		—		54,824
Special mention	—		—		—		698		—		269		—		—		967
Substandard	—		268		937		—		795		1,691		—		—		3,691

Total investor loans secured by real estate	$	692,143	$	2,473,310	$	1,661,597	$	1,175,829	$	802,350	$	1,607,953	$	12,975	$	—	$	8,426,157
Business loans secured by real estate
CRE owner-occupied
Pass	$	212,046	$	435,924	$	345,829	$	324,096	$	261,057	$	525,237	$	4,875	$	—	$	2,109,064
Special mention	5,979		15,734		—		3,886		—		8,476		—		—		34,075
Substandard	—		—		7,086		2,525		6,797		10,357		250		—		27,015

Franchise real estate secured
Pass	20,406		88,808		76,192		103,848		31,578		42,932		—		—		363,764

Substandard	—		—		—		—		—		883		—		—		883

SBA secured by real estate
Pass	1,905		7,693		14,159		17,302		10,510		28,021		365		—		79,955
Special mention	—		—		—		1,008		343		—		—		—		1,351
Substandard	—		—		—		914		148		3,174		—		—		4,236

Total loans secured by business real estate	$	240,336	$	548,159	$	443,266	$	453,579	$	310,433	$	619,080	$	5,490	$	—	$	2,620,343


	Term Loans by Vintage
	2020		2019		2018		2017		2016		Prior		Revolving		Revolving Converted to Term During the Period		Total
June 30, 2020	(Dollars in thousands)
Commercial Loans
Commercial and industrial
Pass	$	106,699	$	388,548	$	290,535	$	221,262	$	71,937	$	105,707	$	803,473	$	2,470	$	1,990,631
Special mention	—		73		2,928		1,994		1,562		2,671		20,969		500		30,697
Substandard	70		309		2,621		1,000		6,567		4,883		14,342		193		29,985

Franchise non-real estate secured
Pass	10,347		206,422		121,616		74,743		49,307		45,116		2,205		—		509,756
Special mention	—		—		—		3,834		—		—		—		—		3,834
Substandard	—		—		—		7,737		—		2,428		—		—		10,165

SBA non-real estate secured
Pass	646		2,341		1,428		2,517		654		4,276		—		3,537		15,399
Special mention	—		—		—		1,745		284		150		—		—		2,179
Substandard	—		86		399		856		—		1,374		764		—		3,479

SBA PPP
Pass	1,128,780		—		—		—		—		—		—		—		1,128,780



Total commercial loans	$	1,246,542	$	597,779	$	419,527	$	315,688	$	130,311	$	166,605	$	841,753	$	6,700	$	3,724,905
Retail Loans
Single family residential
Pass	$	4,863	$	9,426	$	15,553	$	14,991	$	38,123	$	143,690	$	37,140	—		$	263,786
Special mention	—		—		—		—		—		58		—		—		58
Substandard	—		—		—		—		251		1,075		—		—		1,326

Consumer loans
Pass	72		174		870		38,039		23		3,273		3,812		—		46,263

Substandard	—		—		—		—		—		46		—		—		46

Total retail loans	$	4,935	$	9,600	$	16,423	$	53,030	$	38,397	$	148,142	$	40,952	$	—	$	311,479
Totals gross loans	$	2,183,956	$	3,628,848	$	2,540,813	$	1,998,126	$	1,281,491	$	2,541,780	$	901,170	$	6,700	$	15,082,884

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	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
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	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
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	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

The following tables stratify loans held by investment by delinquencies in the Company’s loan portfolio at the dates indicated:


			Days Past Due
	Current		30-59		60-89		90+		Total
June 30, 2020	(Dollars in thousands)
Investor loans secured by real estate
CRE non-owner-occupied	$	2,780,620	$	—	$	—	$	3,072	$	2,783,692
Multifamily	5,222,439		3,118		—		—		5,225,557
Construction and land	354,729		895		—		1,802		357,426
SBA secured by real estate	58,494		—		—		988		59,482
Total investor loans secured by real estate	8,416,282		4,013		—		5,862		8,426,157
Business loans secured by real estate
CRE owner-occupied	2,162,842		1,062		319		5,931		2,170,154
Franchise real estate secured	364,647		—		—		—		364,647
SBA secured by real estate	84,536		—		—		1,006		85,542
Total business loans secured by real estate	2,612,025		1,062		319		6,937		2,620,343
Commercial loans
Commercial and industrial	2,041,675		796		3,116		5,726		2,051,313
Franchise non-real estate secured	515,313		—		—		8,442		523,755
SBA not secured by real estate	19,889		—		328		840		21,057
SBA PPP	1,128,780		—		—		—		1,128,780
Total commercial loans	3,705,657		796		3,444		15,008		3,724,905
Retail loans
Single family residential	264,549		257		364		—		265,170
Consumer loans	46,183		120		6		—		46,309
Total retail loans	310,732		377		370		—		311,479
Totals	$	15,044,696	$	6,248	$	4,133	$	27,807	$	15,082,884


			Days Past Due
	Current		30-59		60-89		90+		Total Gross Loans
December 31, 2019	(Dollars in thousands)
Investor loans secured by real estate
CRE non-owner-occupied	$	2,067,874	$	1,179	$	—	$	1,088	$	2,070,141
Multifamily	1,575,726		—		—		—		1,575,726
Construction and land	438,786		—		—		—		438,786
SBA secured by real estate	68,041		—		—		390		68,431
Total investor loans secured by real estate	4,150,427		1,179		—		1,478		4,153,084
Business loans secured by real estate
CRE owner-occupied	1,846,223		331		—		—		1,846,554
Franchise real estate secured	353,240		—		—		—		353,240
SBA secured by real estate	86,946		—		589		846		88,381
Total business loans secured by real estate	2,286,409		331		589		846		2,288,175
Commercial loans
Commercial and industrial	1,389,026		422		826		2,996		1,393,270
Franchise non-real estate secured	555,215		—		9,142		—		564,357
SBA not secured by real estate	16,141		167		—		1,118		17,426
Total commercial loans	1,960,382		589		9,968		4,114		1,975,053
Retail loans
Single family residential	255,024		—		—		—		255,024
Consumer loans	50,967		5		2		1		50,975
Total retail loans	305,991		5		2		1		305,999
Totals loans	$	8,703,209	$	2,104	$	10,559	$	6,439	$	8,722,311

Individually Evaluated Loans

The Company had individually evaluated loans on nonaccrual status of $33.7 million at June 30, 2020.

Impaired Loans

The following tables provide a summary of the Company’s investment in impaired loans as of the period indicated:


	Impaired Loans
	Unpaid Principal Balance		Recorded Investment		With Specific Allowance		Without Specific Allowance		Specific Allowance for Impaired Loans
	(Dollars in thousands)
December 31, 2019
Investor loans secured by real estate
CRE non-owner-occupied	$	1,184	$	1,088	$	—	$	1,088	$	—


SBA secured by real estate	772		390		—		390		—
Business loans secured by real estate


SBA secured by real estate	1,743		1,517		—		1,517		—
Commercial loans
Commercial and industrial	7,755		7,529		—		7,529		—
Franchise non-real estate secured	10,835		10,834		—		10,834		—
SBA non-real estate secured	1,555		1,118		—		1,118		—
Retail loans
Single family residential	412		366		—		366		—

Totals	$	24,256	$	22,842	$	—	$	22,842	$	—

The following table presents information on impaired loans and leases, disaggregated by loan segment, for the periods indicated:


	Impaired Loans
	June 30, 2019
	Three Months Ended						Six Months Ended
	Average Recorded Investment		Interest Income Recognized ⁽⁶⁾		Average Recorded Investment		Interest Income Recognized ⁽⁶⁾
	(Dollars in thousands)
Investor loans secured by real estate
CRE non-owner-occupied	$	162	$	—	$	81	$	—

Construction and land	160		—		80		—
SBA secured by real estate	1,292		—		1,591		—
Business loans secured by real estate
CRE owner-occupied	564		—		570		—
Franchise real estate secured	3,762		—		3,774		—
SBA secured by real estate	828		—		554		—
Commercial loans
Commercial and industrial	10,103		109		9,803		199
Franchise non-real estate secured	285		—		238		—
SBA non-real estate secured	1,019		—		1,064		—
Retail loans
Single family residential	383		—		389		—
Consumer loans	17		—		37		—
Totals	$	18,575	$	109	$	18,181	$	199

The Company had impaired loans on nonaccrual status of $8.5 million at December 31, 2019. The Company had no loans 90 days or more past due and still accruing at December 31, 2019.

Troubled Debt Restructurings

The following table presents the combination of types of loan and payment relief that have been granted for the period indicated as of that date.


	June 30, 2020
	Full payment Deferral		Interest-only Deferral		Total
	(Dollars in thousands)
Investor loans secured by real estate
CRE non-owner-occupied	$	545,928	$	250,586	$	796,514
Multifamily	424,540		67,720		492,260


Total investor loans secured by real estate	970,468		318,306		1,288,774
Business loans secured by real estate
CRE owner-occupied	297,662		65,442		363,104
Franchise real estate secured	115,674		59,060		174,734
SBA secured by real estate	26		—		26
Total business loans secured by real estate	413,362		124,502		537,864
Commercial loans
Commercial and industrial	61,497		30,061		91,558
Franchise non-real estate secured	188,548		126,566		315,114


Total commercial loans	250,045		156,627		406,672
Retail loans
Single family residential	11,391		265		11,656
Consumer	8		—		8
Total retail loans	11,399		265		11,664
Total loans	$	1,645,274	$	599,700	$	2,244,974

Purchased Credit Deteriorated and Purchased Credit Impaired Loans


	June 1, 2020
	Investor Loans Secured by Real Estate		Business Loans Secured by Real Estate		Commercial Loans		Retail Loans		Total
	(Dollars in thousands)
Par value (unpaid principal balance)	$	704,441	$	105,578	$	80,184	$	6,280	$	896,483
Allowance for credit losses ⁽¹⁾	(13,786)		(4,083)		(25,635)		(381)		(43,885)
(Discount) premium related to factors other than credit	(8,696)		(2,512)		138		(294)		(11,364)
Purchase price (initial fair value)	$	681,959	$	98,983	$	54,687	$	5,605	$	841,234

______________________________

Nonaccrual Loans

The following tables provide a summary of nonaccrual loans as of the date indicated:


	Nonaccrual Loans ⁽¹⁾
	Collateral Dependent Loans		ACL		Non-Collateral Dependent Loans		ACL		Total Nonaccrual Loans ⁽²⁾		Nonaccrual Loans with No ACL
June 30, 2020	(Dollars in thousands)
Investor loans secured by real estate
CRE non-owner-occupied	$	5,322	$	—	$	—	$	—	$	5,322	$	5,322

Construction and land	1,802		—		—		—		1,802		1,802
SBA secured by real estate	988		—		—		—		988		988
Total investor loans secured by real estate	8,112		—		—		—		8,112		8,112
Business loans secured by real estate
CRE owner-occupied	5,563		—		1,196		393		6,759		5,563

SBA secured by real estate	1,006		—		77		17		1,083		1,006
Total business loans secured by real estate	6,569		—		1,273		410		7,842		6,569
Commercial loans
Commercial and industrial	1,606		—		4,464		646		6,070		1,606
Franchise non-real estate secured	2,428		—		7,742		1,493		10,170		2,428
SBA non-real estate secured	840		—		—		—		840		840
Total commercial loans	4,874		—		12,206		2,139		17,080		4,874
Retail loans
Single family residential	662		—		129		—		791		662

Total retail loans	662		—		129		—		791		662
Totals nonaccrual loans	$	20,217	$	—	$	13,608	$	2,549	$	33,825	$	20,217

______________________________

⁽²⁾ No interest income was recognized on nonaccrual loans during the three and six months ended June 30, 2020.

Residential Real Estate Loans In Process of Foreclosure

The Company had no consumer mortgage loans collateralized by residential real estate property for which formal foreclosure proceedings were in process as of June 30, 2020 or December 31, 2019.

Collateral Dependent Loans

The following table summarizes collateral dependent loans by collateral type as of June 30, 2020:


	June 30, 2020
	Office Properties		Industrial Properties		Retail Properties		Land Properties		Hotel Properties		Residential Properties		Business Assets		Total
	(Dollars in thousands)
Investor loan secured by real estate
CRE non-owner-occupied	$	—	$	2,250	$	2,750	$	—	$	322	$	—	$	—	$	5,322

Construction and land	—		—		—		—		—		1,802		—		1,802
SBA secured by real estate	—		—		—		—		988		—		—		988
Total investor loans secured by real estate	—		2,250		2,750		—		1,310		1,802		—		8,112
Business loans secured by real estate
CRE owner-occupied	—		509		—		5,054		—		—		—		5,563
Franchise real estate secured	—		—		883		—		—		—		—		883
SBA secured by real estate	247		758		—		—		—		—		—		1,005
Total business loans secured by real estate	247		1,267		883		5,054		—		—		—		7,451
Commercial loans
Commercial and industrial	—		—		—		312		—		—		1,295		1,607
Franchise non-real estate secured	—		—		—		—		—		—		2,428		2,428
SBA non-real estate secured	—		—		—		—		—		—		840		840
Total commercial loans	—		—		—		312		—		—		4,563		4,875
Retail loans
Single family residential	—		—		—		—		—		662		—		662

Total retail loans	—		—		—		—		—		662		—		662
Totals collateral dependent loans	$	247	$	3,517	$	3,633	$	5,366	$	1,310	$	2,464	$	4,563	$	21,100

Allowance for Credit Losses

6 Months Ended

Jun. 30, 2020

Provision for Loan and Lease Losses [Abstract]

Allowance for Credit Losses

Probability of Default

The Company considers loans to be in default when they are 90 days or more past due and still accruing or placed on nonaccrual status.

Loss Given Default

Historical Loss Rates for Retail Loans

Forecasts

Base-case Scenario:

•Elevated levels of U.S. unemployment reaching approximately 14% in Q2 2020 and then declining to levels of 9% to 10% through the end of 2021.

Upside Scenario:

•CRE Price Index decreases by an approximate annualized rate of 15% and 6% during the third and fourth quarters of 2020, respectively, before returning to growth by the first quarter of 2021.

Downside Scenario:

Qualitative Adjustments


	Three Months Ended June 30, 2020

	Beginning ACL Balance ⁽¹⁾		Initial ACL Recorded for PCD Loans		Charge-offs		Recoveries		Provision for Credit Losses		Ending ACL Balance
	(Dollars in thousands)
Investor loans secured by real estate
CRE non-owner occupied	$	15,896	$	3,025	$	—	$	—	$	44,086	$	63,007
Multifamily	14,722		8,710		—		—		40,079		63,511
Construction and land	9,222		2,051		—		—		7,531		18,804
SBA secured by real estate	935		—		(554)		—		1,629		2,010
Business loans secured by real estate
CRE owner-occupied	26,793		3,766		—		11		17,643		48,213
Franchise real estate secured	7,503		—		—		—		5,557		13,060
SBA secured by real estate	4,044		235		—		3		86		4,368
Commercial loans
Commercial and industrial	15,742		2,325		(2,286)		21		26,165		41,967
Franchise non-real estate secured	16,616		—		(1,227)		—		6,287		21,676
SBA non-real estate secured	516		924		(556)		(2)		(282)		600

Retail loans
Single family residential	1,137		—		(62)		1		403		1,479
Consumer loans	2,296		206		—		1		1,073		3,576
Totals	$	115,422	$	21,242	$	(4,685)	$	35	$	150,257	$	282,271


	Six Months Ended June 30, 2020

	Beginning ACL Balance ⁽¹⁾		Adoption of ASC 326		Initial ACL Recorded for PCD Loans		Charge-offs		Recoveries		Provision for Credit Losses		Ending ACL Balance
	(Dollars in thousands)
Investor loans secured by real estate
CRE non-owner occupied	$	1,899	$	8,423	$	3,025	$	(387)	$	—	$	50,047	$	63,007
Multifamily	729		9,174		8,710		—		—		44,898		63,511
Construction and land	4,484		(124)		2,051		—		—		12,393		18,804
SBA secured by real estate	1,915		(1,401)		—		(554)		—		2,050		2,010
Business loans secured by real estate
CRE owner-occupied	2,781		20,166		3,766		—		23		21,477		48,213
Franchise real estate secured	592		5,199		—		—		—		7,269		13,060
SBA secured by real estate	2,119		2,207		235		(315)		74		48		4,368
Commercial loans
Commercial and industrial	13,857		87		2,325		(2,776)		26		28,448		41,967
Franchise non-real estate secured	5,816		9,214		—		(1,227)		—		7,873		21,676
SBA non-real estate secured	445		218		924		(792)		2		(197)		600

Retail loans
Single family residential	655		541		206		(62)		1		138		1,479
Consumer loans	406		1,982		—		(8)		1		1,195		3,576
Totals	$	35,698	$	55,686	$	21,242	$	(6,121)	$	127	$	175,639	$	282,271

______________________________

⁽¹⁾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.


	For the Three Months Ended June 30, 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	$	1,668	$	(488)	$	—	$	585	$	1,765
Multifamily	669		—		—		36		705
Construction and land	5,960		—		—		(552)		5,408
SBA secured by real estate	2,704		(721)		—		(661)		1,322
Business loans secured by real estate
CRE owner-occupied	1,969		—		15		315		2,299
Franchise real estate secured	2,173		(1,376)		—		(218)		579
SBA secured by real estate	1,966		(254)		—		(101)		1,611
Commercial loans
Commercial and industrial	13,587		(393)		47		555		13,796
Franchise non-real estate secured	5,698		(160)		—		648		6,186
SBA non-real estate secured	503		(244)		1		170		430
Retail loans
Single family residential	758		—		1		(55)		704
Consumer loans	201		—		—		20		221
Totals	$	37,856	$	(3,636)	$	64	$	742	$	35,026


	For the Six Months Ended June 30, 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	$	(488)	$	—	$	629	$	1,765
Multifamily	740		—		—		(35)		705
Construction and land	5,964		—		—		(556)		5,408
SBA secured by real estate	1,827		(721)		—		216		1,322
Business loans secured by real estate
CRE owner-occupied	1,908		—		23		368		2,299
Franchise real estate secured	743		(1,376)		—		1,212		579
SBA secured by real estate	1,824		(254)		—		41		1,611
Commercial loans
Commercial and industrial	13,695		(695)		114		682		13,796
Franchise non-real estate secured	6,066		(160)		—		280		6,186
SBA non-real estate secured	654		(244)		4		16		430
Retail loans
Single family residential	808		—		1		(105)		704
Consumer loans	219		(5)		1		6		221
Totals	$	36,072	$	(3,943)	$	143	$	2,754	$	35,026

Allowance for Credit Losses for Off-Balance Sheet Commitments


	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	390		—		68,041		1,915
Business loans secured by real estate
CRE owner-occupied	—		—		1,846,554		2,781
Franchise real estate secured	—		—		353,240		592
SBA secured by real estate	1,517		—		86,864		2,119
Commercial loans
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	366		—		254,658		655
Consumer loans	—		—		50,975		406
Totals	$	22,842	$	—	$	8,699,469	$	35,698


	Commercial Real Estate Term Loans by Vintage
	2020		2019		2018		2017		2016		Prior		Revolving		Revolving Converted to Term During the Period		Total
June 30, 2020	(Dollars in thousands)
Investor loans secured by real estate
CRE non-owner-occupied
0% - 5.00%	$	153,133	$	561,104	$	474,139	$	258,886	$	279,780	$	793,398	$	10,924	$	—	$	2,531,364
>5.00% - 10.00%	—		2,897		8,428		86,660		37,621		39,947		—		—		175,553
Greater than 10%	2,296		3,988		322		14,155		2,585		52,870		559		—		76,775
Multifamily
0% - 5.00%	520,782		1,723,731		991,561		746,855		460,328		678,741		1,031		—		5,123,029
>5.00% - 10.00%	1,599		17,431		8,692		2,176		4,098		8,906		—		—		42,902
Greater than 10%	—		12,607		9,794		12,545		10,409		14,271		—		—		59,626
Construction and Land
0% - 5.00%	13,838		32,921		4,296		20,357		—		6,919		66		—		78,397
>5.00% - 10.00%	—		40,785		21,154		3,275		—		—		395		—		65,609
Greater than 10%	—		67,142		129,990		14,739		—		1,549		—		—		213,420
SBA secured by real estate
0% - 5.00%	495		10,704		12,115		16,181		7,135		11,352		—		—		57,982
>5.00% - 10.00%	—		—		512		—		—		—		—		—		512
Greater than 10%	—		—		594		—		394		—		—		—		988
Total investor loans secured by real estate	$	692,143	$	2,473,310	$	1,661,597	$	1,175,829	$	802,350	$	1,607,953	$	12,975	$	—	$	8,426,157
Business loans secured by real estate
CRE owner-occupied
0% - 5.00%	$	211,860	$	402,474	$	309,907	$	304,611	$	234,139	$	488,345	$	3,124	$	—	$	1,954,460
>5.00% - 10.00%	186		33,118		35,922		22,510		26,918		42,552		1,504		—		162,710
Greater than 10%	5,979		16,066		7,086		3,386		6,797		13,173		497		—		52,984
Franchise real estate secured
0% - 5.00%	18,724		86,263		74,832		95,221		28,550		42,831		—		—		346,421
>5.00% - 10.00%	754		—		632		8,627		3,028		101		—		—		13,142
Greater than 10%	928		2,545		728		—		—		883		—		—		5,084
SBA secured by real estate
0% - 5.00%	1,905		7,693		13,476		16,611		8,547		24,605		365		—		73,202
>5.00% - 10.00%	—		—		683		1,699		2,306		3,416		—		—		8,104
Greater than 10%	—		—		—		914		148		3,174		—		—		4,236
Total business loans secured by real estate	$	240,336	$	548,159	$	443,266	$	453,579	$	310,433	$	619,080	$	5,490	$	—	$	2,620,343


	Commercial Real Estate Term Loans by Vintage
	2020		2019		2018		2017		2016		Prior		Revolving		Revolving Converted to Term During the Period		Total
June 30, 2020	(Dollars in thousands)
Commercial Loans
Commercial and industrial
0% - 5.00%	$	91,538	$	376,850	$	268,429	$	211,610	$	58,496	$	94,984	$	508,985	$	1,593	$	1,612,485
>5.00% - 10.00%	9,735		11,741		24,030		11,639		14,449		8,862		271,951		547		352,954
Greater than 10%	5,496		339		3,625		1,007		7,121		9,415		57,848		1,023		85,874
Franchise non-real estate secured
0% - 5.00%	9,535		197,360		117,509		69,287		46,925		40,305		1,476		—		482,397
>5.00% - 10.00%	812		6,619		3,593		9,290		2,382		4,704		729		—		28,129
Greater than 10%	—		2,443		514		7,737		—		2,535		—		—		13,229
SBA not secured by real estate
0% - 5.00%	646		2,341		1,301		2,517		571		3,842		—		3,537		14,755
>5.00% - 10.00%	—		—		132		1,745		367		439		—		—		2,683
Greater than 10%	—		86		394		856		—		1,519		764		—		3,619
Total commercial loans	$	117,762	$	597,779	$	419,527	$	315,688	$	130,311	$	166,605	$	841,753	$	6,700	$	2,596,125


	Term Loans by Vintage
	2020		2019		2018		2017		2016		Prior		Revolving		Revolving Converted to Term During the Period		Total
June 30, 2020	(Dollars in thousands)
Investor loans secured by real estate
CRE non-owner-occupied
55% and below	$	73,769	$	241,867	$	191,322	$	156,622	$	189,946	$	618,498	$	10,924	—		$	1,482,948
>55-65%	54,874		214,909		119,539		177,366		104,448		231,545		559		—		903,240
>65-75%	22,526		108,464		169,089		23,368		25,379		31,566		—		—		380,392
Greater than 75%	4,260		2,749		2,939		2,345		213		4,606		—		—		17,112
Multifamily
55% and below	123,726		387,468		341,633		223,446		95,645		290,333		599		—		1,462,850
>55-65%	164,019		734,321		386,341		266,322		167,271		283,527		432		—		2,002,233
>65-75%	234,636		609,946		270,888		269,910		211,919		122,199		—		—		1,719,498
Greater than 75%	—		22,034		11,185		1,898		—		5,859		—		—		40,976
Construction and land
55% and below	13,838		136,216		107,812		30,148		—		8,468		461		—		296,943
>55-65%	—		4,632		42,778		8,223		—		—		—		—		55,633
>65-75%	—		—		3,697		—		—		—		—		—		3,697
Greater than 75%	—		—		1,153		—		—		—		—		—		1,153
SBA secured by real estate
55% and below	—		1,148		655		841		332		436		—		—		3,412
>55-65%	—		3,187		1,647		3,860		623		4,791		—		—		14,108
>65-75%	495		3,724		7,802		5,364		4,358		2,829		—		—		24,572
Greater than 75%	—		2,645		3,117		6,116		2,216		3,296		—		—		17,390
Total investor loans secured by real estate	$	692,143	$	2,473,310	$	1,661,597	$	1,175,829	$	802,350	$	1,607,953	$	12,975	$	—	$	8,426,157
Business loan secured by real estate
CRE owner-occupied
55% and below	$	55,579	$	153,995	$	171,876	$	196,583	$	150,233	$	377,115	$	5,125	—		$	1,110,506
>55-65%	63,067		100,226		89,960		64,803		73,724		81,403		—		—		473,183
>65-75%	56,327		175,639		63,734		54,957		39,714		58,581		—		—		448,952
Greater than 75%	43,052		21,798		27,345		14,164		4,183		26,971		—		—		137,513
Franchise real estate secured
55% and below	7,461		18,360		14,615		16,057		11,567		20,926		—		—		88,986
>55-65%	928		8,900		13,096		29,110		7,823		5,919		—		—		65,776
>65-75%	2,911		49,851		25,927		9,859		11,062		14,848		—		—		114,458
Greater than 75%	9,106		11,697		22,554		48,822		1,126		2,122		—		—		95,427
SBA secured by real estate
55% and below	736		1,735		6,537		4,784		2,348		10,568		365		—		27,073
>55-65%	104		514		2,337		2,643		2,252		4,121		—		—		11,971
>65-75%	264		2,687		754		4,602		3,167		5,871		—		—		17,345
Greater than 75%	801		2,757		4,531		7,195		3,234		10,635		—		—		29,153

Total business loans secured by real estate	$	240,336	$	548,159	$	443,266	$	453,579	$	310,433	$	619,080	$	5,490	$	—	$	2,620,343

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
June 30, 2020	(Dollars in thousands)
Retail Loans
Single family residential
Greater than 740	$	4,863	$	8,236	$	13,274	$	9,719	$	31,203	$	96,475	$	27,050	—		$	190,820
>680 - 740	—		1,190		2,268		4,794		2,660		18,190		9,095		—		38,197
>580 - 680	—		—		—		466		3,178		9,030		959		—		13,633
Less than 580	—		—		11		12		1,333		21,128		36		—		22,520
Consumer loans
Greater than 740	72		95		863		51		20		2,661		1,993		—		5,755
>680 - 740	—		59		7		37,988		—		488		1,737		—		40,279
>580 - 680	—		20		—		—		3		150		51		—		224
Less than 580	—		—		—		—		—		20		31		—		51
Total retail loans	$	4,935	$	9,600	$	16,423	$	53,030	$	38,397	$	148,142	$	40,952	$	—	$	311,479

Goodwill and Other Intangible Assets

6 Months Ended

Jun. 30, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets


	June 30,		June 30,
	2020		2019
	(Dollars in thousands)
Balance, beginning of year	$	808,322	$	808,726
Goodwill acquired during the year	92,844		—
Purchase accounting adjustments	—		(404)
Impairment losses	—		—
Balance, end of year	$	901,166	$	808,322
Accumulated impairment losses at end of year	$	—	$	—


	Three Months Ended										Six Months Ended
	June 30,		March 31,		June 30,		June 30,		June 30,
	2020		2020		2019		2020		2019
	(Dollars in thousands)
Gross amount of intangible assets:
Beginning balance	$	125,945	$	125,945	$	125,945	$	125,945	$	125,945
Additions due to acquisitions	19,267		—		—		19,267		—
Ending balance	145,212		125,945		125,945		145,212		125,945
Accumulated amortization:
Beginning balance	(46,596)		(42,633)		(29,824)		(42,633)		(25,388)
Amortization	(4,066)		(3,963)		(4,281)		(8,029)		(8,717)
Ending balance	(50,662)		(46,596)		(34,105)		(50,662)		(34,105)
Net intangible assets	$	94,550	$	79,349	$	91,840	$	94,550	$	91,840

Subordinated Debentures

6 Months Ended

Jun. 30, 2020

Debt Disclosure [Abstract]

Subordinated Debentures

The following table summarizes our outstanding subordinated debentures as of the dates indicated:


						June 30, 2020		December 31, 2019
	Stated Maturity	Current Interest Rate		Current Principal Balance		Carrying Value
				(Dollars in thousands)
Subordinated notes
Subordinated notes due 2024, 5.75% per annum	September 3, 2024	5.75	%	$	60,000	$	59,492	$	59,432
Subordinated notes due 2029, 4.875% per annum until May 15, 2024, 3-month LIBOR +2.5% thereafter	May 15, 2029	4.875	%	125,000		122,749		122,622
Subordinated notes due 2030, 5.375% per annum until June 15, 2025, 3-month SOFR +5.17% thereafter	June 15, 2030	5.375	%	150,000		147,370		—
Subordinated notes due 2025, 7.125% per annum	June 26, 2025	7.125	%	25,000		25,121		25,133
Subordinated notes due 2026, 5.5% per annum until June 30 2021, 3-month LIBOR +4.285% thereafter	July 1, 2026	5.50	%	135,000		138,613		—
Total subordinated notes				495,000		493,345		207,187
Subordinated debt
Heritage Oaks Capital Trust II (junior subordinated debt), 3-month LIBOR+1.72%	January 1, 2037	3.15	%	5,248		4,088		4,054
Santa Lucia Bancorp (CA) Capital Trust (junior subordinated debt), 3-month LIBOR+1.48%	July 7, 2036	2.70	%	5,155		3,942		3,904
Total subordinated debt				10,403		8,030		7,958
Total subordinated debentures				$	505,403	$	501,375	$	215,145

BBB+ for the Bank. The Corporation’s and Bank’s ratings were reaffirmed in June 2020 by KBRA following the announcement of the consummated acquisition of Opus.

For additional information on the Company’s subordinated debentures, see “Note 13 — Subordinated Debentures” to the Consolidated Financial Statements of the Company’s 2019 Form 10-K.

Earnings per Share

6 Months Ended

Jun. 30, 2020

Earnings Per Share [Abstract]

Earnings per Share

The following tables set forth the Corporations’s earnings per share calculations for the periods indicated:


	Three Months Ended
	June 30, 2020		March 31, 2020		June 30, 2019
	(Dollars in thousands, except per share data)
Basic
Net (loss) income	$	(99,091)	$	25,740	$	38,527

Less: Dividends and undistributed earnings allocated to participating securities	(222)		(232)		(444)
Net (loss) income allocated to common stockholders	$	(99,313)	$	25,508	$	38,083

Weighted average common shares outstanding	70,425,027		59,007,191		61,308,046
Basic (loss) earnings per common share	$	(1.41)	$	0.43	$	0.62

Diluted
Net (loss) income allocated to common stockholders	$	(99,313)	$	25,508	$	38,083

Weighted average common shares outstanding	70,425,027		59,007,191		61,308,046
Diluted effect of share-based compensation	—		182,526		353,727
Diluted effect of stock warrants	—		—		—
Weighted average diluted common shares	70,425,027		59,189,717		61,661,773
Diluted (loss) earnings per common share	$	(1.41)	$	0.43	$	0.62


	Six Months Ended
	June 30, 2020		June 30, 2019
	(Dollars in thousands, except per share data)
Basic
Net (loss) income	$	(73,351)	$	77,245

Less: Dividends and undistributed earnings allocated to participating securities	(356)		(791)
Net (loss) income allocated to common stockholders	$	(73,707)	$	76,454

Weighted average common shares outstanding	64,716,109		61,645,940
Basic (loss) earnings per common share	$	(1.14)	$	1.24

Diluted
Net (loss) income allocated to common stockholders	$	(73,707)	$	76,454

Weighted average common shares outstanding	64,716,109		61,645,940
Diluted effect of share-based compensation	—		334,193
Diluted effect of stock warrants	—		—
Weighted average diluted common shares	64,716,109		61,980,133
Diluted (loss) earnings per common share	$	(1.14)	$	1.23

Fair Value of Financial Instruments

6 Months Ended

Jun. 30, 2020

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following fair value hierarchy table presents information about the Company’s financial assets and liabilities measured at fair value on a recurring basis at the dates indicated:


	June 30, 2020
	Fair Value Measurement Using
	Level 1		Level 2		Level 3		Total Fair Value
	(Dollars in thousands)
Financial assets
Investment securities available-for-sale:
U.S. Treasury	$	—	$	32,870	$	—	$	32,870
Agency	—		339,990		—		339,990
Corporate	—		273,999		—		273,999
Municipal bonds	—		461,335		—		461,335
Collateralized mortgage obligations	—		384,739		—		384,739
Mortgage-backed securities	—		843,133		—		843,133
Total securities available-for-sale	$	—	$	2,336,066	$	—	$	2,336,066

Derivative assets:
Interest rate swaps	$	—	$	15,707	$	—	$	15,707
Equity warrants	—		—		1,952		1,952
Total derivative assets	$	—	$	15,707	$	1,952	$	17,659

Financial liabilities
Derivative liabilities	$	—	$	16,017	$	—	$	16,017


	December 31, 2019
	Fair Value Measurement Using
	Level 1		Level 2		Level 3		Total Fair Value
	(Dollars in thousands)
Financial assets
Investment securities available-for-sale:
U.S. Treasury	$	—	$	63,555	$	—	$	63,555
Agency	—		246,358		—		246,358
Corporate	—		151,353		—		151,353
Municipal bonds	—		397,298		—		397,298
Collateralized mortgage obligations	—		9,984		—		9,984
Mortgage-backed securities	—		499,836		—		499,836
Total securities available-for-sale	$	—	$	1,368,384	$	—	$	1,368,384

Derivative assets	$	—	$	2,103	$	—	$	2,103

Financial liabilities
Derivative liabilities	$	—	$	2,103	$	—	$	2,103

The following table is a reconciliation of the fair value of the equity warrants that are classified as Level 3 and measured on a recurring basis:


	June 30, 2020
	(Dollars in thousands)
Beginning Balance	$	5,162
Change in fair value ⁽¹⁾	(3)
Sales	(3,207)
Ending balance	$	1,952

______________________________

⁽¹⁾ The changes in fair value are included in other income on the consolidated statement of income.

The following table presents quantitative information about level 3 of fair value measurements for assets measured at fair value on a recurring basis at June 30, 2020.

June 30, 2020

Range

Fair Value

Valuation Technique(s)

Unobservable Input(s)

Min

Max

Weighted Average

(Dollars in thousands)

Equity warrants

1,952

Black-Scholes
option pricing
model

Volatility
Risk free interest rate
Marketability discount

30.00% 0.16% 6.00%

41.25%

0.28%

33.00%

31.33%

20.00%

13.67%

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

The following table presents our assets measured at fair value on a nonrecurring basis at June 30, 2020 and December 31, 2019.


	June 30, 2020
	Level 1		Level 2		Level 3		Total Fair Value
	(Dollars in thousands)
Financial assets
Collateral dependent loans	$	—	$	—	$	3,904	$	3,904
Other real estate owned	—		—		260		260
Total assets	$	—	$	—	$	4,164	$	4,164


	December 31, 2019
	Level 1		Level 2		Level 3		Total Fair Value
	(Dollars in thousands)
Financial assets
Impaired loans	$	—	$	—	$	2,257	$	2,257

The following table presents quantitative information about level 3 of fair value measurements for assets measured at fair value on a nonrecurring basis at June 30, 2020 and December 31, 2019.


	June 30, 2020
					Range
	Fair Value		Valuation Technique(s)	Unobservable Input(s)	Min		Max	Weighted Average
	(Dollars in thousands)
Investor loans secured by real estate
CRE non-owner-occupied	$	322	Fair value of collateral	Collateral discount and cost to sell	10.00%		10.00%	10.00%


SBA secured by real estate ⁽¹⁾	593		Fair value of collateral	Collateral discount and cost to sell	10.00%		10.00%	10.00%

Business loans secured by real estate


SBA secured by real estate ⁽²⁾	247		Fair value of collateral	Collateral discount and cost to sell	10.00%		10.00%	10.00%

Commercial loans
Commercial and industrial	312		Fair value of collateral	Collateral discount and cost to sell	5.00%	5.00%	5.00%	5.00%
Franchise non-real estate secured	2,428		Fair value of collateral	Collateral discount and cost to sell	—%		10.00%	10.00%
SBA non-real estate secured	2		Fair value of collateral	Collateral discount and cost to sell	7.00%		7.00%	7.00%





Total individually evaluated loans	3,904
Other real estate owned	260		Fair value of property	Cost to sell	10.00%		10.00%	10.00%
Total assets	$	4,164


	December 31, 2019
					Range
	Fair Value		Valuation Technique(s)	Unobservable Input(s)	Min	Max	Weighted Average
	(Dollars in thousands)
Investor loans secured by real estate
CRE non-owner-occupied	$	569	Fair value of collateral	Collateral discount and cost to sell	10.00%	10.00%	10.00%


SBA secured by real estate ⁽¹⁾	408		Fair value of collateral	Collateral discount and cost to sell	10.00%	10.00%	10.00%

Business loans secured by real estate


SBA secured by real estate ⁽²⁾	140		Fair value of collateral	Collateral discount and cost to sell	7.00%	10.00%	7.81%

Commercial loans


SBA non-real estate secured	1,140		Fair value of collateral	Collateral discount and cost to sell	7.00%	63.00%	15.33%





Total individually evaluated loans	$	2,257

______________________________

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

⁽²⁾ SBA loans that are collateralized by real property other than hotel/motel real property.

Fair Values of Financial Instruments

The fair value estimates presented herein are based on pertinent information available to management as of the dates indicated, representing an exit price.


	At June 30, 2020
	Carrying Amount		Level 1		Level 2		Level 3		Estimated Fair Value
	(Dollars in thousands)
Assets
Cash and cash equivalents	$	1,341,730	$	1,341,730	$	—	$	—	$	1,341,730
Interest-bearing time deposits with financial institutions	2,845		2,845		—		—		2,845
Investments held-to-maturity	32,557		—		34,179		—		34,179
Investment securities available-for-sale	2,336,066		—		2,336,066		—		2,336,066
Loans held for sale	1,007		—		1,081		—		1,081
Loans held for investment, net	15,082,884		—		—		15,308,998		15,308,998

Derivative assets	17,659		—		15,707		1,952		17,659
Accrued interest receivable	78,408		78,408		—		—		78,408

Liabilities
Deposit accounts	$	16,976,693	$	15,057,613	$	1,926,624	$	—	$	16,984,237
FHLB advances	41,006		—		41,700		—		41,700

Subordinated debentures	501,375		—		565,772		—		565,772
Derivative liabilities	16,017		—		16,017		—		16,017
Accrued interest payable	6,991		6,991		—		—		6,991


	At December 31, 2019
	Carrying Amount		Level 1		Level 2		Level 3		Estimated Fair Value
	(Dollars in thousands)
Assets
Cash and cash equivalents	$	326,850	$	326,850	$	—	$	—	$	326,850
Interest-bearing time deposits with financial institutions	2,708		2,708		—		—		2,708
Investments held-to-maturity	37,838		—		38,760		—		38,760
Investment securities available-for-sale	1,368,384		—		1,368,384		—		1,368,384
Loans held for sale	1,672		—		1,821		—		1,821
Loans held for investment, net	8,722,311		—		—		8,691,019		8,691,019
Derivative assets	2,103		—		2,103		—		2,103
Accrued interest receivable	39,442		39,442		—		—		39,442

Liabilities
Deposit accounts	$	8,898,509	$	7,850,667	$	1,048,583	$	—	$	8,899,250
FHLB advances	517,026		—		517,291		—		517,291
Other borrowings	—		—		—		—		—
Subordinated debentures	215,145		—		237,001		—		237,001
Derivative liabilities	2,103		—		2,103		—		2,103
Accrued interest payable	2,686		2,686		—		—		2,686

Derivative Instruments

6 Months Ended

Jun. 30, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

The following tables summarize the Company's derivative instruments, included in other assets and other liabilities in the consolidated statements of financial condition:


	June 30, 2020
	Derivative Assets						Derivative Liabilities
	Notional		Fair Value		Notional		Fair Value
	(Dollars in thousands)
Derivative instruments not designated as hedging instruments:
Interest rate swaps	$	148,443	$	15,707	$	148,443	$	16,017
Equity warrants	—		1,952		—		—
Total derivative instruments	$	148,443	$	17,659	$	148,443	$	16,017


	December 31, 2019
	Derivative Assets						Derivative Liabilities
	Notional		Fair Value		Notional		Fair Value
	(Dollars in thousands)
Derivative instruments not designated as hedging instruments:
Interest rate swaps	$	76,314	$	2,103	$	76,314	$	2,103
Total derivative instruments	$	76,314	$	2,103	$	76,314	$	2,103

The following table summarizes the effect of the derivative financial instruments in the consolidated statements of income.



		Three Months Ended						Six Months Ended
Derivative Not Designated as Hedging Instruments:	Location of Gain Recognized in Income on Derivative Instruments	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
		(Dollars in thousands)
Other contracts	Other income	$	(1)	$	—	$	197	$	—
Equity warrants	Other income	(4)		—		(4)		—
Total		$	(5)	$	—	$	193	$	—

Balance Sheet Offsetting

6 Months Ended

Jun. 30, 2020

Offsetting [Abstract]

Balance Sheet Offsetting

Financial instruments that are eligible for offset in the consolidated statements of financial condition as of the periods indicated are presented below:


							Gross Amounts Not Offset in the Consolidated Statements of Financial Condition
	Gross Amounts Recognized		Gross Amounts Offset in the Consolidated Statements of Financial Condition		Net Amounts Presented in the Consolidated Statements of Financial Condition		Financial Instruments ⁽¹⁾		Cash Collateral ⁽²⁾		Net Amount
	(Dollars in thousands)
June 30, 2020
Derivative assets:
Interest rate swaps	$	15,707	$	—	$	15,707	$	—	$	—	$	15,707
Total	$	15,707	$	—	$	15,707	$	—	$	—	$	15,707

Derivative liabilities:
Interest rate swaps	$	16,017	$	—	$	16,017	$	(5,500)	$	(8,963)	$	1,554
Total	$	16,017	$	—	$	16,017	$	(5,500)	$	(8,963)	$	1,554





December 31, 2019
Derivative assets:
Interest rate swaps	$	2,103	$	—	$	2,103	$	—	$	—	$	2,103
Total	$	2,103	$	—	$	2,103	$	—	$	—	$	2,103

Derivative liabilities:
Interest rate swaps	$	2,107	$	(4)	$	2,103	$	—	$	(1,678)	$	425
Total	$	2,107	$	(4)	$	2,103	$	—	$	(1,678)	$	425

⁽¹⁾ Represents the fair value of securities pledged with counterparty bank.
⁽²⁾ Represents cash collateral pledged with counterparty bank.

Leases

6 Months Ended

Jun. 30, 2020

Leases [Abstract]

Leases


	Three Months Ended						Six Months Ended
	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
	(Dollars in thousands)
Operating lease	$	3,908	$	2,785	$	7,072	$	5,524
Short-term lease	403		627		930		1,318
Total lease expense	$	4,311	$	3,412	$	8,002	$	6,842

The following table presents supplemental information related to operating leases as of and for six months ended:


	June 30, 2020		December 31, 2019
	(Dollars in thousands)
Balance Sheet:
Operating lease right of use assets	$	86,188	$	43,177
Operating lease liabilities	96,057		46,498

	Six Months Ended
	June 30, 2020		June 30, 2019
	(Dollars in thousands)
Cash Flows:
Operating cash flows from operating leases	$	5,524	$	5,957

The following table provides information related to minimum contractual lease payments and other information associated with the Company’s leases as of the dates indicated:


	2020		2021		2022		2023		2024		Thereafter		Total
	(Dollars in thousands)
As of June 30, 2020

Operating leases	$	11,227	$	22,510	$	20,550	$	18,902	$	16,223	$	22,489	$	111,901
Short-term leases	99		17		—		—		—		—		116
Total contractual base rents ⁽¹⁾	$	11,326	$	22,527	$	20,550	$	18,902	$	16,223	$	22,489	$	112,017

Total liability to make lease payments															$	96,057
Difference in undiscounted and discounted future lease payments															$	15,960
Weighted average discount rate															5.30		%
Weighted average remaining lease term (years)															5.8


	2020		2021		2022		2023		2024		Thereafter		Total
	(Dollars in thousands)

As of December 31, 2019
Operating leases	$	10,138	$	10,602	$	10,137	$	9,055	$	7,318	$	7,265	$	54,515
Short-term leases	143		7		—		—		—		—		150
Total contractual base rents ⁽¹⁾	$	10,281	$	10,609	$	10,137	$	9,055	$	7,318	$	7,265	$	54,665

Total liability to make lease payments															$	46,498
Difference in undiscounted and discounted future lease payments															$	8,167
Weighted average discount rate															6.13		%
Weighted average remaining lease term (years)															5.4

______________________________

⁽¹⁾ Contractual base rents reflect options to extend and renewals, and do not include property taxes and other operating expenses due under respective lease agreements.

Revenue Recognition

6 Months Ended

Jun. 30, 2020

Revenue from Contract with Customer [Abstract]

Revenue Recognition

The following tables provide a summary of the Company’s revenue streams, including those that are within the scope of ASC 606 and those that are accounted for under other applicable U.S. GAAP:


	Three Months Ended
	June 30, 2020						March 31, 2020						June 30, 2019
	Within Scope⁽¹⁾		Out of Scope⁽²⁾		Within Scope⁽¹⁾		Out of Scope⁽²⁾		Within Scope⁽¹⁾		Out of Scope⁽²⁾
	(Dollars in thousands)
Noninterest income:
Loan servicing fees	$	—	$	434	$	—	$	480	$	—	$	409
Service charges on deposit accounts	1,399		—		1,715		—		1,441		—
Other service fee income	297		—		311		—		363		—
Debit card interchange income	457		—		348		—		1,145		—
Earnings on bank-owned life insurance	—		1,314		—		1,336		—		851
Net gain from sales of loans	—		(2,032)		—		771		—		902
Net gain from sales of investment securities	—		(21)		—		7,760		—		212
Trust administrative fees	2,397		—		—		—		—		—
Other income	184		2,469		217		1,537		544		457
Total noninterest income	$	4,734	$	2,164	$	2,591	$	11,884	$	3,493	$	2,831

______________________________

⁽¹⁾ Revenues from contracts with customers accounted for under ASC 606.

⁽²⁾ Revenues not within the scope of ASC 606 and accounted for under other applicable U.S. GAAP requirements.



	Six Months Ended
	June 30, 2020						June 30, 2019
	Within Scope⁽¹⁾		Out of Scope⁽²⁾		Within Scope⁽¹⁾		Out of Scope⁽²⁾
	(Dollars in thousands)
Noninterest income:
Loan servicing fees	$	—	$	914	$	—	$	807
Service charges on deposit accounts	3,114		—		2,771		—
Other service fee income	608		—		719		—
Debit card interchange income	805		—		2,216		—
Earnings on bank-owned life insurance	—		2,650		—		1,761
Net gain from sales of loans	—		(1,261)		—		2,631
Net gain from sales of investment securities	—		7,739		—		639
Trust administrative fees	2,397		—		—		—
Other income	401		4,006		736		1,725
Total noninterest income	$	7,325	$	14,048	$	6,442	$	7,563

______________________________

⁽¹⁾ Revenues from contracts with customers accounted for under ASC 606.

⁽²⁾ Revenues not within the scope of ASC 606 and accounted for under other applicable U.S. GAAP requirements.

The major revenue streams by fee type that are within the scope of ASC 606 presented in the above tables are described in additional detail below:

Service Charges on Deposit Accounts and Other Service Fee Income

Debit Card Interchange Income

Trust Administrative Fees

Other Income

Practical Expedient

Variable Interest Entities

6 Months Ended

Jun. 30, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Variable Interest Entities


	June 30, 2020										December 31, 2019
	Maximum Loss		Assets		Liabilities		Maximum Loss		Assets		Liabilities
	(Dollars in thousands)
Multifamily loan securitization:
Investment securities ⁽¹⁾	$	119,932	$	119,932	$	—	$	—	$	—	$	—
Reimbursement obligation ⁽²⁾	50,901		—		463		—		—		—
Affordable housing partnership:
Other investments ⁽³⁾	76,072		95,562		—		32,466		53,880		—
Unfunded equity commitments ⁽²⁾	—		—		19,490		—		—		21,414

Total	$	246,905	$	215,494	$	19,953	$	32,466	$	53,880	$	21,414

______________________________

⁽¹⁾ Included in investment securities available-for-sale on the consolidated statement of financial condition.

⁽²⁾ Included in accrued expenses and other liabilities on the consolidated statement of financial condition.

⁽³⁾ Included in other assets on the consolidated statement of financial condition.

Multifamily loan securitization

Qualified affordable housing project investments

Trust preferred securities

Subsequent Events	6 Months Ended
Subsequent Events	Jun. 30, 2020
Subsequent Events [Abstract]
Subsequent Events	Subsequent Events Quarterly Cash Dividend On July 24, 2020, the Corporation’s Board of Directors declared a cash dividend of $0.25 per share, payable on August 14, 2020 to shareholders of record on August 7, 2020. Sale of SBA PPP loan portfolio On July 21, 2020, the Company entered into an agreement to sell its entire $1.13 billion SBA PPP loan portfolio to a seasoned and experienced non-bank lender and servicer of SBA loans. The sale closed on July 28, 2020, resulting in improved balance sheet liquidity and a gain on sale of approximately of $18.9 million, net of net deferred origination fees and purchase discounts. Branch Consolidations Following the Opus acquisition, the Company notified the Federal Reserve Bank of San Francisco that it intends to consolidate and close twenty (20) Bank branch offices located throughout California, Arizona and Washington (the “Branch Consolidations”). The Branch Consolidations reflect the Company’s ongoing cost reduction initiatives and undertakings to further improve the overall efficiency of its operations, and are expected to be consummated in October 2020.

Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2020

Accounting Policies [Abstract]

Recently Issued Accounting Pronouncements

Accounting Standards Adopted in 2020

Additionally, there were no investment securities with previously recorded other-than-temporary impairment as of January 1, 2020.

The following table illustrates the impact of the adoption of the CECL model under ASC 326 on the Company’s consolidated statements of financial position as of January 1, 2020:


	January 1, 2020
	Pre-CECL Adoption		Impact of CECL Adoption		As Reported Under CECL
	(Dollars in thousands)
Assets:
Allowance for credit losses on debt securities:
Held-to-maturity	$	—	$	—	$	—
Available-for-sale	—		—		—
Allowance for credit losses on loans:
Investor loans secured by real estate	9,027		16,072		25,099
Business loans secured by real estate	5,492		27,572		33,064
Commercial loans	20,118		9,519		29,637
Retail loans	1,061		2,523		3,584
Deferred tax (liabilities) assets	(1,371)		18,346		16,975
Liabilities:
Allowance for credit losses on off-balance sheet credit exposures	$	3,279	$	8,285	$	11,564
Stockholders' equity:
Retained earnings	$	396,051	$	(45,625)	$	350,426

The following disclosure requirements for public companies were removed from Topic 820:

•The amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy

•The policy for timing of transfers between levels

•The valuation processes for Level 3 fair value measurements

The following disclosure requirements for public companies were modified in Topic 820:

•The amendments clarify that the measurement uncertainty disclosure is to communicate information about the uncertainty in measurement as of the reporting date

The following disclosure requirements for public companies were added to Topic 820:

•The changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period.

The amendments in this Update became effective for the Company beginning on January 1, 2020. This ASU did not have a material effect on the Company’s financial statements.

Recent Accounting Guidance Not Yet Effective

Revenue Recognition

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets. Goodwill is generally determined as the excess of the fair value of the consideration transferred, plus the fair value of any noncontrolling interests in the acquiree, over the fair value of the net assets acquired and liabilities assumed as of the acquisition date. Goodwill and intangible assets acquired in a purchase business combination and determined to have an indefinite useful life are not amortized, but tested for impairment at least annually or more frequently if events and circumstances exist that indicate the necessity for such impairment tests to be performed. The Company has a policy to test goodwill for impairment annually in the fourth quarter of each year, or more frequently if events or circumstances lead management to believe the value of goodwill may be impaired. Impairment testing is performed at the reporting unit level, which is considered the Company level as management has identified the Company is its sole reporting unit as of the date of the consolidated balance sheets. Management’s assessment of goodwill first consists of a qualitative assessment to determine if it is more likely than not the fair value of the Company’s equity is below its carrying value. Should the results of this analysis indicate it is likely the fair value of the Company’s equity is below its carrying value, the Company performs a quantitative assessment of goodwill to determine the fair value of the reporting unit and compares it to its carrying value. If the fair value of the reporting unit is below its carrying value, the Company would then compare the implied fair value of the reporting unit goodwill to its carrying value to determine the amount of impairment to recognize. Impairment losses are recorded as a charge to noninterest expense. Intangible assets with definite useful lives are amortized over their estimated useful lives to their estimated residual values. Goodwill is the only intangible asset with an indefinite life on our balance sheet. In light of the COVID-19 pandemic and the deterioration of economic conditions as a result, the Company performed a goodwill impairment assessment as of June 30, 2020. The Company’s goodwill impairment assessment consisted of a qualitative analysis to first determine if it is more likely than not the estimated fair value of the Company exceeds its carrying value. The results of this analysis indicated no impairment of goodwill. Additionally, as part of the Company’s qualitative analysis, the Company looked at market related data as additional corroborating evidence in its assessment of whether it was more likely than not the carrying value of the Company exceeds its estimated fair value. This assessment of market related data included an initial assessment of the fair value of the Company’s equity as compared to its carrying value with the assistance from an independent third party. The assessment of market related data included factors such as: the Company’s stock price on an actual, 15-day and 30-day average basis as of June 30, 2020, and an implied 40% market participant acquisition premium, which was based upon control premiums for regional banks during the 2008 and 2009 financial crisis. This initial assessment of the fair value of the Company’s equity through observations of market related data provided additional supporting evidence as of June 30, 2020 that the carrying value of goodwill was not impaired.Other intangible assets consist of core deposit intangible (“CDI”) and customer relationship intangible assets associated with PENSCO arising from whole bank acquisitions, and are amortized on either an accelerated basis, reflecting the pattern in which the economic benefits of the intangible assets are consumed or otherwise used up, or on a straight-line amortization method over their estimated useful lives, which range from 6 to 11 years.

Leases

Securities/Securities Held-to-Maturity/Securities Available-for-Sale

Allowance for Credit Losses on Investment Securities

Loans Held for Investment/Investor Loans Secured by Real Estate/Acquired Loans

Investor Loans Secured by Real Estate:

Business Loans Secured by Real Estate:

Commercial Loans:

Retail Loans:

Subsequent to acquisition, the ACL for both non-PCD and PCD loans are determined with the use of the Company’s ACL methodology in the same manner as all other loans.

Allowance for Credit Losses on Loans

Troubled Debt Restructurings

Other Real Estate Owned (“OREO”)

Use of Estimates

Fair Value Measurement

Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Variable Interest Entities

Recently Issued Accounting Pronouncements (Tables)

6 Months Ended

Jun. 30, 2020

Accounting Standards Update and Change in Accounting Principle [Abstract]

Schedule of Impact of Adoption

The following table illustrates the impact of the adoption of the CECL model under ASC 326 on the Company’s consolidated statements of financial position as of January 1, 2020:


	January 1, 2020
	Pre-CECL Adoption		Impact of CECL Adoption		As Reported Under CECL
	(Dollars in thousands)
Assets:
Allowance for credit losses on debt securities:
Held-to-maturity	$	—	$	—	$	—
Available-for-sale	—		—		—
Allowance for credit losses on loans:
Investor loans secured by real estate	9,027		16,072		25,099
Business loans secured by real estate	5,492		27,572		33,064
Commercial loans	20,118		9,519		29,637
Retail loans	1,061		2,523		3,584
Deferred tax (liabilities) assets	(1,371)		18,346		16,975
Liabilities:
Allowance for credit losses on off-balance sheet credit exposures	$	3,279	$	8,285	$	11,564
Stockholders' equity:
Retained earnings	$	396,051	$	(45,625)	$	350,426

Acquisitions (Tables)

6 Months Ended

Jun. 30, 2020

Business Combinations [Abstract]

Summary of total transaction consideration value

The value of the total transaction consideration paid amounted to approximately $749.6 million.


	May 29, 2020
Merger consideration	(Dollars in thousands)


Value of stock consideration paid to shareholders	$	747,458
Cash paid in lieu of fractional shares	2
Value of restricted stock awards	328
Value of options and warrants	1,817
Total merger consideration	$	749,605

Schedule of assets acquired and liabilities assumed

The following table summarizes the estimated fair value of assets acquired and liabilities assumed of Opus as of June 1, 2020 under the acquisition method of accounting:


Identifiable net assets acquired, at fair value		June 1, 2020
	(Dollars in thousands)
Assets acquired
Cash and cash equivalents		$	937,102
Interest bearing time deposits with financial institutions		137
Investment securities		829,891
Loans		5,805,655
Allowance for credit losses		(21,242)
Premises and equipment		22,121
Intangible assets		19,267
Deferred tax assets		44,335
Other assets		367,115
Total assets acquired		$	8,004,381
Liabilities assumed
Deposits		$	6,915,990
FHLB advances and other borrowings		213,491
Subordinated debt		138,653
Other liabilities		79,486
Total liabilities assumed		7,347,620
Total fair value of identifiable net assets		656,761
Total merger consideration		749,605
Goodwill recognized		$	92,844

Summary of pro forma financial information


	Three Months Ended						Six Months Ended
	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
	(Dollar in thousands, except per share data)
Net interest and other income	$	203,240	$	190,946	$	375,984	$	383,408
Net (loss) income	(62,479)		54,711		(119,391)		111,644
Basic (loss) earnings per share	(0.67)		0.59		(1.29)		1.20
Diluted (loss) earnings per share	(0.67)		0.58		(1.29)		1.18

Investment Securities (Tables)

6 Months Ended

Jun. 30, 2020

Investments, Debt and Equity Securities [Abstract]

Schedule of amortized cost and estimated fair value of securities

The amortized cost and estimated fair value of securities were as follows:


	June 30, 2020
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Estimated Fair Value
	(Dollars in thousands)
Investment securities available-for-sale:
U.S. Treasury	$	30,170	$	2,700	$	—	$	32,870
Agency	315,927		24,419		(356)		339,990
Corporate	274,076		1,698		(1,775)		273,999
Municipal bonds	439,772		21,629		(66)		461,335
Collateralized mortgage obligations	380,527		4,260		(48)		384,739
Mortgage-backed securities	814,012		29,375		(254)		843,133
Total investment securities available-for-sale	2,254,484		84,081		(2,499)		2,336,066
Investment securities held-to-maturity:
Mortgage-backed securities	30,892		1,622		—		32,514
Other	1,665		—		—		1,665
Total investment securities held-to-maturity	32,557		1,622		—		34,179
Total investment securities	$	2,287,041	$	85,703	$	(2,499)	$	2,370,245


	December 31, 2019
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Estimated Fair Value
	(Dollars in thousands)
Investment securities available-for-sale:
U.S. Treasury	$	60,457	$	3,137	$	(39)	$	63,555
Agency	240,348		7,686		(1,676)		246,358
Corporate	149,150		2,217		(14)		151,353
Municipal bonds	384,032		13,450		(184)		397,298
Collateralized mortgage obligations	9,869		123		(8)		9,984
Mortgage-backed securities	494,404		7,603		(2,171)		499,836
Total investment securities available-for-sale	1,338,260		34,216		(4,092)		1,368,384
Investment securities held-to-maturity:
Mortgage-backed securities	36,114		922		—		37,036
Other	1,724		—		—		1,724
Total investment securities held-to-maturity	37,838		922		—		38,760
Total investment securities	$	1,376,098	$	35,138	$	(4,092)	$	1,407,144

Schedule of number, fair value and gross unrealized holding losses of the Company's investment securities by investment category and length of time that the securities have been in a continuous loss position


	June 30, 2020
	Less than 12 Months								12 Months or Longer							Total
	Number	Fair Value		Gross Unrealized Losses		Number	Fair Value		Gross Unrealized Losses		Number	Fair Value		Gross Unrealized Losses
	(Dollars in thousands)
Investment securities available-for-sale:
U.S. Treasury	—	$	—	$	—	—	$	—	$	—	—	$	—	$	—
Agency	1	12,361		(10)		9	11,687		(346)		10	24,048		(356)
Corporate	13	84,559		(1,775)		—	—		—		13	84,559		(1,775)
Municipal bonds	7	19,326		(66)		—	—		—		7	19,326		(66)
Collateralized mortgage obligations	3	26,593		(47)		1	522		(1)		4	27,115		(48)
Mortgage-backed securities.	11	93,393		(254)		—	—		—		11	93,393		(254)
Total investment securities available-for-sale	35	236,232		(2,152)		10	12,209		(347)		45	248,441		(2,499)


	December 31, 2019
	Less than 12 Months								12 Months or Longer							Total
	Number	Fair Value		Gross Unrealized Losses		Number	Fair Value		Gross Unrealized Losses		Number	Fair Value		Gross Unrealized Losses
	(Dollars in thousands)
Investment securities available-for-sale:
U.S. Treasury	1	$	10,194	$	(39)	—	$	—	$	—	1	$	10,194	$	(39)
Agency	13	102,874		(1,340)		9	13,514		(336)		22	116,388		(1,676)
Corporate	1	1,017		(14)		—	—		—		1	1,017		(14)
Municipal bonds	12	30,541		(184)		—	—		—		12	30,541		(184)
Collateralized mortgage obligations	—	—		—		1	603		(8)		1	603		(8)
Mortgage-backed securities	18	130,014		(1,681)		11	26,886		(490)		29	156,900		(2,171)
Total investment securities available-for-sale	45	274,640		(3,258)		21	41,003		(834)		66	315,643		(4,092)

Schedule of amortized cost and estimated fair value of investment securities available for sale by contractual maturity

The amortized cost and estimated fair value of investment securities at June 30, 2020, by contractual maturity are shown in the table below.


	Due in One Year or Less						Due after One Year through Five Years						Due after Five Years through Ten Years						Due after Ten Years		Total
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(Dollars in thousands)
Investment securities available-for-sale:
U.S. Treasury	$	—	$	—	$	20,147	$	21,577	$	10,023	$	11,293	$	—	$	—	$	30,170	$	32,870
Agency	1,000		1,013		40,577		43,830		203,033		218,452		71,317		76,695		315,927		339,990
Corporate	76,883		76,988		73,958		74,303		123,235		122,708		—		—		274,076		273,999
Municipal bonds	—		—		1,452		1,574		29,653		31,980		408,667		427,781		439,772		461,335
Collateralized mortgage obligations	—		—		—		—		52,686		53,250		327,841		331,489		380,527		384,739
Mortgage-backed securities	—		—		2,213		2,419		191,695		206,540		620,104		634,174		814,012		843,133
Total investment securities available-for-sale	77,883		78,001		138,347		143,703		610,325		644,223		1,427,929		1,470,139		2,254,484		2,336,066
Investment securities held-to-maturity:
Mortgage-backed securities	—		—		—		—		—		—		30,892		32,514		30,892		32,514
Other	—		—		—		—		—		—		1,665		1,665		1,665		1,665
Total investment securities held-to-maturity	—		—		—		—		—		—		32,557		34,179		32,557		34,179
Total investment securities	$	77,883	$	78,001	$	138,347	$	143,703	$	610,325	$	644,223	$	1,460,486	$	1,504,318	$	2,287,041	$	2,370,245

Schedule of Investment Securities by External Credit Rating

The following table summarizes the Company’s investment securities portfolio by Moody’s external rating equivalent and by vintage as of June 30, 2020:


	Vintage
	2020		2019		2018		2017		2016		Prior		Total
	(Dollars in thousands)
Investment securities available-for-sale:
U.S. Treasury
Aaa - Aa3	$	—	$	—	$	22,103	$	10,767	$	—	$	—	$	32,870


Agency
Aaa - Aa3	28,924		44,590		159,345		9,759		21,556		75,816		339,990


Corporate debt

A1 - A3	—		19,856		—		—		119,687		9,344		148,887
Baa1 - Baa3	19,652		41,571		5,100		18,131		8,857		31,801		125,112
Municipal bonds
Aaa - Aa3	67,718		264,432		32,497		50,889		15,176		30,623		461,335


Collateralized mortgage obligations
Aaa - Aa3	37,610		44,082		162,056		4,208		119,932		16,851		384,739


Mortgage-backed securities
Aaa - Aa3	164,071		217,705		49,247		220,385		94,794		96,931		843,133


Total investment securities available-for-sale	317,975		632,236		430,348		314,139		380,002		261,366		2,336,066
Investment securities held-to-maturity:
Mortgage-backed securities
Aaa - Aa3	—		—		9,538		7,487		5,356		8,511		30,892


Other


Baa1 - Baa3	—		—		663		—		—		1,002		1,665
Total investment securities held-to-maturity	—		—		10,201		7,487		5,356		9,513		32,557
Total investment securities	$	317,975	$	632,236	$	440,549	$	321,626	$	385,358	$	270,879	$	2,368,623

Loans Held for Investment (Tables)

6 Months Ended

Jun. 30, 2020

Receivables [Abstract]

Schedule of components of loans held for investment

The following table presents the composition of the loan portfolio for the period indicated:


	June 30,		December 31,
	2020		2019
	(Dollars in thousands)
Investor loans secured by real estate
CRE non-owner-occupied	$	2,783,692	$	2,070,141
Multifamily	5,225,557		1,575,726
Construction and land	357,426		438,786
SBA secured by real estate	59,482		68,431
Total investor loans secured by real estate	8,426,157		4,153,084
Business loans secured by real estate
CRE owner-occupied	2,170,154		1,846,554
Franchise real estate secured	364,647		353,240
SBA secured by real estate	85,542		88,381
Total business loans secured by real estate	2,620,343		2,288,175
Commercial loans
Commercial and industrial	2,051,313		1,393,270
Franchise non-real estate secured	523,755		564,357
SBA non-real estate secured	21,057		17,426
SBA PPP	1,128,780		—
Total commercial loans	3,724,905		1,975,053
Retail loans
Single family residential	265,170		255,024
Consumer	46,309		50,975
Total retail loans	311,479		305,999
Gross loans held for investment ⁽¹⁾	15,082,884		8,722,311
Allowance for credit losses for loans held for investment ⁽²⁾	(282,271)		(35,698)
Loans held for investment, net	$	14,800,613	$	8,686,613

Loans held for sale, at lower of cost or fair value	$	1,007	$	1,672

______________________________

⁽¹⁾ Includes unaccreted fair value net purchase discounts of $144.5 million and $40.7 million as of June 30, 2020 and December 31, 2019, respectively.

Summary of loan portfolio by the Company's internal risk grading system

The following table stratifies the loans held for investment portfolio by the Company’s internal risk grading, and by year of origination, as of June 30, 2020:


	Term Loans by Vintage
	2020		2019		2018		2017		2016		Prior		Revolving		Revolving Converted to Term During the Period		Total
June 30, 2020	(Dollars in thousands)
Investor loans secured by real estate
CRE non-owner-occupied
Pass	$	155,429	$	567,989	$	482,567	$	359,173	$	319,468	$	876,776	$	10,924	$	—	$	2,772,326
Special mention	—		—		—		—		—		4,872		—		—		4,872
Substandard	—		—		322		528		518		4,567		559		—		6,494

Multifamily
Pass	522,381		1,753,769		1,010,047		761,576		474,835		701,092		1,031		—		5,224,731

Substandard	—		—		—		—		—		826		—		—		826

Construction and land
Pass	13,838		140,848		135,797		36,569		—		8,468		461		—		335,981
Special mention	—		—		19,643		—		—		—		—		—		19,643
Substandard	—		—		—		1,802		—		—		—		—		1,802

SBA secured by real estate
Pass	495		10,436		12,284		15,483		6,734		9,392		—		—		54,824
Special mention	—		—		—		698		—		269		—		—		967
Substandard	—		268		937		—		795		1,691		—		—		3,691

Total investor loans secured by real estate	$	692,143	$	2,473,310	$	1,661,597	$	1,175,829	$	802,350	$	1,607,953	$	12,975	$	—	$	8,426,157
Business loans secured by real estate
CRE owner-occupied
Pass	$	212,046	$	435,924	$	345,829	$	324,096	$	261,057	$	525,237	$	4,875	$	—	$	2,109,064
Special mention	5,979		15,734		—		3,886		—		8,476		—		—		34,075
Substandard	—		—		7,086		2,525		6,797		10,357		250		—		27,015

Franchise real estate secured
Pass	20,406		88,808		76,192		103,848		31,578		42,932		—		—		363,764

Substandard	—		—		—		—		—		883		—		—		883

SBA secured by real estate
Pass	1,905		7,693		14,159		17,302		10,510		28,021		365		—		79,955
Special mention	—		—		—		1,008		343		—		—		—		1,351
Substandard	—		—		—		914		148		3,174		—		—		4,236

Total loans secured by business real estate	$	240,336	$	548,159	$	443,266	$	453,579	$	310,433	$	619,080	$	5,490	$	—	$	2,620,343


	Term Loans by Vintage
	2020		2019		2018		2017		2016		Prior		Revolving		Revolving Converted to Term During the Period		Total
June 30, 2020	(Dollars in thousands)
Commercial Loans
Commercial and industrial
Pass	$	106,699	$	388,548	$	290,535	$	221,262	$	71,937	$	105,707	$	803,473	$	2,470	$	1,990,631
Special mention	—		73		2,928		1,994		1,562		2,671		20,969		500		30,697
Substandard	70		309		2,621		1,000		6,567		4,883		14,342		193		29,985

Franchise non-real estate secured
Pass	10,347		206,422		121,616		74,743		49,307		45,116		2,205		—		509,756
Special mention	—		—		—		3,834		—		—		—		—		3,834
Substandard	—		—		—		7,737		—		2,428		—		—		10,165

SBA non-real estate secured
Pass	646		2,341		1,428		2,517		654		4,276		—		3,537		15,399
Special mention	—		—		—		1,745		284		150		—		—		2,179
Substandard	—		86		399		856		—		1,374		764		—		3,479

SBA PPP
Pass	1,128,780		—		—		—		—		—		—		—		1,128,780



Total commercial loans	$	1,246,542	$	597,779	$	419,527	$	315,688	$	130,311	$	166,605	$	841,753	$	6,700	$	3,724,905
Retail Loans
Single family residential
Pass	$	4,863	$	9,426	$	15,553	$	14,991	$	38,123	$	143,690	$	37,140	—		$	263,786
Special mention	—		—		—		—		—		58		—		—		58
Substandard	—		—		—		—		251		1,075		—		—		1,326

Consumer loans
Pass	72		174		870		38,039		23		3,273		3,812		—		46,263

Substandard	—		—		—		—		—		46		—		—		46

Total retail loans	$	4,935	$	9,600	$	16,423	$	53,030	$	38,397	$	148,142	$	40,952	$	—	$	311,479
Totals gross loans	$	2,183,956	$	3,628,848	$	2,540,813	$	1,998,126	$	1,281,491	$	2,541,780	$	901,170	$	6,700	$	15,082,884

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	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
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	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
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	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


	Commercial Real Estate Term Loans by Vintage
	2020		2019		2018		2017		2016		Prior		Revolving		Revolving Converted to Term During the Period		Total
June 30, 2020	(Dollars in thousands)
Investor loans secured by real estate
CRE non-owner-occupied
0% - 5.00%	$	153,133	$	561,104	$	474,139	$	258,886	$	279,780	$	793,398	$	10,924	$	—	$	2,531,364
>5.00% - 10.00%	—		2,897		8,428		86,660		37,621		39,947		—		—		175,553
Greater than 10%	2,296		3,988		322		14,155		2,585		52,870		559		—		76,775
Multifamily
0% - 5.00%	520,782		1,723,731		991,561		746,855		460,328		678,741		1,031		—		5,123,029
>5.00% - 10.00%	1,599		17,431		8,692		2,176		4,098		8,906		—		—		42,902
Greater than 10%	—		12,607		9,794		12,545		10,409		14,271		—		—		59,626
Construction and Land
0% - 5.00%	13,838		32,921		4,296		20,357		—		6,919		66		—		78,397
>5.00% - 10.00%	—		40,785		21,154		3,275		—		—		395		—		65,609
Greater than 10%	—		67,142		129,990		14,739		—		1,549		—		—		213,420
SBA secured by real estate
0% - 5.00%	495		10,704		12,115		16,181		7,135		11,352		—		—		57,982
>5.00% - 10.00%	—		—		512		—		—		—		—		—		512
Greater than 10%	—		—		594		—		394		—		—		—		988
Total investor loans secured by real estate	$	692,143	$	2,473,310	$	1,661,597	$	1,175,829	$	802,350	$	1,607,953	$	12,975	$	—	$	8,426,157
Business loans secured by real estate
CRE owner-occupied
0% - 5.00%	$	211,860	$	402,474	$	309,907	$	304,611	$	234,139	$	488,345	$	3,124	$	—	$	1,954,460
>5.00% - 10.00%	186		33,118		35,922		22,510		26,918		42,552		1,504		—		162,710
Greater than 10%	5,979		16,066		7,086		3,386		6,797		13,173		497		—		52,984
Franchise real estate secured
0% - 5.00%	18,724		86,263		74,832		95,221		28,550		42,831		—		—		346,421
>5.00% - 10.00%	754		—		632		8,627		3,028		101		—		—		13,142
Greater than 10%	928		2,545		728		—		—		883		—		—		5,084
SBA secured by real estate
0% - 5.00%	1,905		7,693		13,476		16,611		8,547		24,605		365		—		73,202
>5.00% - 10.00%	—		—		683		1,699		2,306		3,416		—		—		8,104
Greater than 10%	—		—		—		914		148		3,174		—		—		4,236
Total business loans secured by real estate	$	240,336	$	548,159	$	443,266	$	453,579	$	310,433	$	619,080	$	5,490	$	—	$	2,620,343


	Commercial Real Estate Term Loans by Vintage
	2020		2019		2018		2017		2016		Prior		Revolving		Revolving Converted to Term During the Period		Total
June 30, 2020	(Dollars in thousands)
Commercial Loans
Commercial and industrial
0% - 5.00%	$	91,538	$	376,850	$	268,429	$	211,610	$	58,496	$	94,984	$	508,985	$	1,593	$	1,612,485
>5.00% - 10.00%	9,735		11,741		24,030		11,639		14,449		8,862		271,951		547		352,954
Greater than 10%	5,496		339		3,625		1,007		7,121		9,415		57,848		1,023		85,874
Franchise non-real estate secured
0% - 5.00%	9,535		197,360		117,509		69,287		46,925		40,305		1,476		—		482,397
>5.00% - 10.00%	812		6,619		3,593		9,290		2,382		4,704		729		—		28,129
Greater than 10%	—		2,443		514		7,737		—		2,535		—		—		13,229
SBA not secured by real estate
0% - 5.00%	646		2,341		1,301		2,517		571		3,842		—		3,537		14,755
>5.00% - 10.00%	—		—		132		1,745		367		439		—		—		2,683
Greater than 10%	—		86		394		856		—		1,519		764		—		3,619
Total commercial loans	$	117,762	$	597,779	$	419,527	$	315,688	$	130,311	$	166,605	$	841,753	$	6,700	$	2,596,125

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
June 30, 2020	(Dollars in thousands)
Investor loans secured by real estate
CRE non-owner-occupied
55% and below	$	73,769	$	241,867	$	191,322	$	156,622	$	189,946	$	618,498	$	10,924	—		$	1,482,948
>55-65%	54,874		214,909		119,539		177,366		104,448		231,545		559		—		903,240
>65-75%	22,526		108,464		169,089		23,368		25,379		31,566		—		—		380,392
Greater than 75%	4,260		2,749		2,939		2,345		213		4,606		—		—		17,112
Multifamily
55% and below	123,726		387,468		341,633		223,446		95,645		290,333		599		—		1,462,850
>55-65%	164,019		734,321		386,341		266,322		167,271		283,527		432		—		2,002,233
>65-75%	234,636		609,946		270,888		269,910		211,919		122,199		—		—		1,719,498
Greater than 75%	—		22,034		11,185		1,898		—		5,859		—		—		40,976
Construction and land
55% and below	13,838		136,216		107,812		30,148		—		8,468		461		—		296,943
>55-65%	—		4,632		42,778		8,223		—		—		—		—		55,633
>65-75%	—		—		3,697		—		—		—		—		—		3,697
Greater than 75%	—		—		1,153		—		—		—		—		—		1,153
SBA secured by real estate
55% and below	—		1,148		655		841		332		436		—		—		3,412
>55-65%	—		3,187		1,647		3,860		623		4,791		—		—		14,108
>65-75%	495		3,724		7,802		5,364		4,358		2,829		—		—		24,572
Greater than 75%	—		2,645		3,117		6,116		2,216		3,296		—		—		17,390
Total investor loans secured by real estate	$	692,143	$	2,473,310	$	1,661,597	$	1,175,829	$	802,350	$	1,607,953	$	12,975	$	—	$	8,426,157
Business loan secured by real estate
CRE owner-occupied
55% and below	$	55,579	$	153,995	$	171,876	$	196,583	$	150,233	$	377,115	$	5,125	—		$	1,110,506
>55-65%	63,067		100,226		89,960		64,803		73,724		81,403		—		—		473,183
>65-75%	56,327		175,639		63,734		54,957		39,714		58,581		—		—		448,952
Greater than 75%	43,052		21,798		27,345		14,164		4,183		26,971		—		—		137,513
Franchise real estate secured
55% and below	7,461		18,360		14,615		16,057		11,567		20,926		—		—		88,986
>55-65%	928		8,900		13,096		29,110		7,823		5,919		—		—		65,776
>65-75%	2,911		49,851		25,927		9,859		11,062		14,848		—		—		114,458
Greater than 75%	9,106		11,697		22,554		48,822		1,126		2,122		—		—		95,427
SBA secured by real estate
55% and below	736		1,735		6,537		4,784		2,348		10,568		365		—		27,073
>55-65%	104		514		2,337		2,643		2,252		4,121		—		—		11,971
>65-75%	264		2,687		754		4,602		3,167		5,871		—		—		17,345
Greater than 75%	801		2,757		4,531		7,195		3,234		10,635		—		—		29,153

Total business loans secured by real estate	$	240,336	$	548,159	$	443,266	$	453,579	$	310,433	$	619,080	$	5,490	$	—	$	2,620,343

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
June 30, 2020	(Dollars in thousands)
Retail Loans
Single family residential
Greater than 740	$	4,863	$	8,236	$	13,274	$	9,719	$	31,203	$	96,475	$	27,050	—		$	190,820
>680 - 740	—		1,190		2,268		4,794		2,660		18,190		9,095		—		38,197
>580 - 680	—		—		—		466		3,178		9,030		959		—		13,633
Less than 580	—		—		11		12		1,333		21,128		36		—		22,520
Consumer loans
Greater than 740	72		95		863		51		20		2,661		1,993		—		5,755
>680 - 740	—		59		7		37,988		—		488		1,737		—		40,279
>580 - 680	—		20		—		—		3		150		51		—		224
Less than 580	—		—		—		—		—		20		31		—		51
Total retail loans	$	4,935	$	9,600	$	16,423	$	53,030	$	38,397	$	148,142	$	40,952	$	—	$	311,479

Schedule of delinquencies in the Company's loan portfolio

The following tables stratify loans held by investment by delinquencies in the Company’s loan portfolio at the dates indicated:


			Days Past Due
	Current		30-59		60-89		90+		Total
June 30, 2020	(Dollars in thousands)
Investor loans secured by real estate
CRE non-owner-occupied	$	2,780,620	$	—	$	—	$	3,072	$	2,783,692
Multifamily	5,222,439		3,118		—		—		5,225,557
Construction and land	354,729		895		—		1,802		357,426
SBA secured by real estate	58,494		—		—		988		59,482
Total investor loans secured by real estate	8,416,282		4,013		—		5,862		8,426,157
Business loans secured by real estate
CRE owner-occupied	2,162,842		1,062		319		5,931		2,170,154
Franchise real estate secured	364,647		—		—		—		364,647
SBA secured by real estate	84,536		—		—		1,006		85,542
Total business loans secured by real estate	2,612,025		1,062		319		6,937		2,620,343
Commercial loans
Commercial and industrial	2,041,675		796		3,116		5,726		2,051,313
Franchise non-real estate secured	515,313		—		—		8,442		523,755
SBA not secured by real estate	19,889		—		328		840		21,057
SBA PPP	1,128,780		—		—		—		1,128,780
Total commercial loans	3,705,657		796		3,444		15,008		3,724,905
Retail loans
Single family residential	264,549		257		364		—		265,170
Consumer loans	46,183		120		6		—		46,309
Total retail loans	310,732		377		370		—		311,479
Totals	$	15,044,696	$	6,248	$	4,133	$	27,807	$	15,082,884


			Days Past Due
	Current		30-59		60-89		90+		Total Gross Loans
December 31, 2019	(Dollars in thousands)
Investor loans secured by real estate
CRE non-owner-occupied	$	2,067,874	$	1,179	$	—	$	1,088	$	2,070,141
Multifamily	1,575,726		—		—		—		1,575,726
Construction and land	438,786		—		—		—		438,786
SBA secured by real estate	68,041		—		—		390		68,431
Total investor loans secured by real estate	4,150,427		1,179		—		1,478		4,153,084
Business loans secured by real estate
CRE owner-occupied	1,846,223		331		—		—		1,846,554
Franchise real estate secured	353,240		—		—		—		353,240
SBA secured by real estate	86,946		—		589		846		88,381
Total business loans secured by real estate	2,286,409		331		589		846		2,288,175
Commercial loans
Commercial and industrial	1,389,026		422		826		2,996		1,393,270
Franchise non-real estate secured	555,215		—		9,142		—		564,357
SBA not secured by real estate	16,141		167		—		1,118		17,426
Total commercial loans	1,960,382		589		9,968		4,114		1,975,053
Retail loans
Single family residential	255,024		—		—		—		255,024
Consumer loans	50,967		5		2		1		50,975
Total retail loans	305,991		5		2		1		305,999
Totals loans	$	8,703,209	$	2,104	$	10,559	$	6,439	$	8,722,311

Summary of Investment in impaired loans

The following tables provide a summary of the Company’s investment in impaired loans as of the period indicated:


	Impaired Loans
	Unpaid Principal Balance		Recorded Investment		With Specific Allowance		Without Specific Allowance		Specific Allowance for Impaired Loans
	(Dollars in thousands)
December 31, 2019
Investor loans secured by real estate
CRE non-owner-occupied	$	1,184	$	1,088	$	—	$	1,088	$	—


SBA secured by real estate	772		390		—		390		—
Business loans secured by real estate


SBA secured by real estate	1,743		1,517		—		1,517		—
Commercial loans
Commercial and industrial	7,755		7,529		—		7,529		—
Franchise non-real estate secured	10,835		10,834		—		10,834		—
SBA non-real estate secured	1,555		1,118		—		1,118		—
Retail loans
Single family residential	412		366		—		366		—

Totals	$	24,256	$	22,842	$	—	$	22,842	$	—

The following table presents information on impaired loans and leases, disaggregated by loan segment, for the periods indicated:


	Impaired Loans
	June 30, 2019
	Three Months Ended						Six Months Ended
	Average Recorded Investment		Interest Income Recognized ⁽⁶⁾		Average Recorded Investment		Interest Income Recognized ⁽⁶⁾
	(Dollars in thousands)
Investor loans secured by real estate
CRE non-owner-occupied	$	162	$	—	$	81	$	—

Construction and land	160		—		80		—
SBA secured by real estate	1,292		—		1,591		—
Business loans secured by real estate
CRE owner-occupied	564		—		570		—
Franchise real estate secured	3,762		—		3,774		—
SBA secured by real estate	828		—		554		—
Commercial loans
Commercial and industrial	10,103		109		9,803		199
Franchise non-real estate secured	285		—		238		—
SBA non-real estate secured	1,019		—		1,064		—
Retail loans
Single family residential	383		—		389		—
Consumer loans	17		—		37		—
Totals	$	18,575	$	109	$	18,181	$	199

Schedule of combination of loans modified without TDR Classification

The following table presents the combination of types of loan and payment relief that have been granted for the period indicated as of that date.


	June 30, 2020
	Full payment Deferral		Interest-only Deferral		Total
	(Dollars in thousands)
Investor loans secured by real estate
CRE non-owner-occupied	$	545,928	$	250,586	$	796,514
Multifamily	424,540		67,720		492,260


Total investor loans secured by real estate	970,468		318,306		1,288,774
Business loans secured by real estate
CRE owner-occupied	297,662		65,442		363,104
Franchise real estate secured	115,674		59,060		174,734
SBA secured by real estate	26		—		26
Total business loans secured by real estate	413,362		124,502		537,864
Commercial loans
Commercial and industrial	61,497		30,061		91,558
Franchise non-real estate secured	188,548		126,566		315,114


Total commercial loans	250,045		156,627		406,672
Retail loans
Single family residential	11,391		265		11,656
Consumer	8		—		8
Total retail loans	11,399		265		11,664
Total loans	$	1,645,274	$	599,700	$	2,244,974

Schedule of acquired loans classified as PCD


	June 1, 2020
	Investor Loans Secured by Real Estate		Business Loans Secured by Real Estate		Commercial Loans		Retail Loans		Total
	(Dollars in thousands)
Par value (unpaid principal balance)	$	704,441	$	105,578	$	80,184	$	6,280	$	896,483
Allowance for credit losses ⁽¹⁾	(13,786)		(4,083)		(25,635)		(381)		(43,885)
(Discount) premium related to factors other than credit	(8,696)		(2,512)		138		(294)		(11,364)
Purchase price (initial fair value)	$	681,959	$	98,983	$	54,687	$	5,605	$	841,234

______________________________

Summary of nonaccrual loans

The following tables provide a summary of nonaccrual loans as of the date indicated:


	Nonaccrual Loans ⁽¹⁾
	Collateral Dependent Loans		ACL		Non-Collateral Dependent Loans		ACL		Total Nonaccrual Loans ⁽²⁾		Nonaccrual Loans with No ACL
June 30, 2020	(Dollars in thousands)
Investor loans secured by real estate
CRE non-owner-occupied	$	5,322	$	—	$	—	$	—	$	5,322	$	5,322

Construction and land	1,802		—		—		—		1,802		1,802
SBA secured by real estate	988		—		—		—		988		988
Total investor loans secured by real estate	8,112		—		—		—		8,112		8,112
Business loans secured by real estate
CRE owner-occupied	5,563		—		1,196		393		6,759		5,563

SBA secured by real estate	1,006		—		77		17		1,083		1,006
Total business loans secured by real estate	6,569		—		1,273		410		7,842		6,569
Commercial loans
Commercial and industrial	1,606		—		4,464		646		6,070		1,606
Franchise non-real estate secured	2,428		—		7,742		1,493		10,170		2,428
SBA non-real estate secured	840		—		—		—		840		840
Total commercial loans	4,874		—		12,206		2,139		17,080		4,874
Retail loans
Single family residential	662		—		129		—		791		662

Total retail loans	662		—		129		—		791		662
Totals nonaccrual loans	$	20,217	$	—	$	13,608	$	2,549	$	33,825	$	20,217

______________________________

⁽²⁾ No interest income was recognized on nonaccrual loans during the three and six months ended June 30, 2020.

Schedule of collateral dependent loans by collateral type

The following table summarizes collateral dependent loans by collateral type as of June 30, 2020:


	June 30, 2020
	Office Properties		Industrial Properties		Retail Properties		Land Properties		Hotel Properties		Residential Properties		Business Assets		Total
	(Dollars in thousands)
Investor loan secured by real estate
CRE non-owner-occupied	$	—	$	2,250	$	2,750	$	—	$	322	$	—	$	—	$	5,322

Construction and land	—		—		—		—		—		1,802		—		1,802
SBA secured by real estate	—		—		—		—		988		—		—		988
Total investor loans secured by real estate	—		2,250		2,750		—		1,310		1,802		—		8,112
Business loans secured by real estate
CRE owner-occupied	—		509		—		5,054		—		—		—		5,563
Franchise real estate secured	—		—		883		—		—		—		—		883
SBA secured by real estate	247		758		—		—		—		—		—		1,005
Total business loans secured by real estate	247		1,267		883		5,054		—		—		—		7,451
Commercial loans
Commercial and industrial	—		—		—		312		—		—		1,295		1,607
Franchise non-real estate secured	—		—		—		—		—		—		2,428		2,428
SBA non-real estate secured	—		—		—		—		—		—		840		840
Total commercial loans	—		—		—		312		—		—		4,563		4,875
Retail loans
Single family residential	—		—		—		—		—		662		—		662

Total retail loans	—		—		—		—		—		662		—		662
Totals collateral dependent loans	$	247	$	3,517	$	3,633	$	5,366	$	1,310	$	2,464	$	4,563	$	21,100

Allowance for Credit Losses (Tables)

6 Months Ended

Jun. 30, 2020

Provision for Loan and Lease Losses [Abstract]

Summary of allocation of the allowance for loan losses


	Three Months Ended June 30, 2020

	Beginning ACL Balance ⁽¹⁾		Initial ACL Recorded for PCD Loans		Charge-offs		Recoveries		Provision for Credit Losses		Ending ACL Balance
	(Dollars in thousands)
Investor loans secured by real estate
CRE non-owner occupied	$	15,896	$	3,025	$	—	$	—	$	44,086	$	63,007
Multifamily	14,722		8,710		—		—		40,079		63,511
Construction and land	9,222		2,051		—		—		7,531		18,804
SBA secured by real estate	935		—		(554)		—		1,629		2,010
Business loans secured by real estate
CRE owner-occupied	26,793		3,766		—		11		17,643		48,213
Franchise real estate secured	7,503		—		—		—		5,557		13,060
SBA secured by real estate	4,044		235		—		3		86		4,368
Commercial loans
Commercial and industrial	15,742		2,325		(2,286)		21		26,165		41,967
Franchise non-real estate secured	16,616		—		(1,227)		—		6,287		21,676
SBA non-real estate secured	516		924		(556)		(2)		(282)		600

Retail loans
Single family residential	1,137		—		(62)		1		403		1,479
Consumer loans	2,296		206		—		1		1,073		3,576
Totals	$	115,422	$	21,242	$	(4,685)	$	35	$	150,257	$	282,271


	Six Months Ended June 30, 2020

	Beginning ACL Balance ⁽¹⁾		Adoption of ASC 326		Initial ACL Recorded for PCD Loans		Charge-offs		Recoveries		Provision for Credit Losses		Ending ACL Balance
	(Dollars in thousands)
Investor loans secured by real estate
CRE non-owner occupied	$	1,899	$	8,423	$	3,025	$	(387)	$	—	$	50,047	$	63,007
Multifamily	729		9,174		8,710		—		—		44,898		63,511
Construction and land	4,484		(124)		2,051		—		—		12,393		18,804
SBA secured by real estate	1,915		(1,401)		—		(554)		—		2,050		2,010
Business loans secured by real estate
CRE owner-occupied	2,781		20,166		3,766		—		23		21,477		48,213
Franchise real estate secured	592		5,199		—		—		—		7,269		13,060
SBA secured by real estate	2,119		2,207		235		(315)		74		48		4,368
Commercial loans
Commercial and industrial	13,857		87		2,325		(2,776)		26		28,448		41,967
Franchise non-real estate secured	5,816		9,214		—		(1,227)		—		7,873		21,676
SBA non-real estate secured	445		218		924		(792)		2		(197)		600

Retail loans
Single family residential	655		541		206		(62)		1		138		1,479
Consumer loans	406		1,982		—		(8)		1		1,195		3,576
Totals	$	35,698	$	55,686	$	21,242	$	(6,121)	$	127	$	175,639	$	282,271

______________________________

⁽¹⁾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.


	For the Three Months Ended June 30, 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	$	1,668	$	(488)	$	—	$	585	$	1,765
Multifamily	669		—		—		36		705
Construction and land	5,960		—		—		(552)		5,408
SBA secured by real estate	2,704		(721)		—		(661)		1,322
Business loans secured by real estate
CRE owner-occupied	1,969		—		15		315		2,299
Franchise real estate secured	2,173		(1,376)		—		(218)		579
SBA secured by real estate	1,966		(254)		—		(101)		1,611
Commercial loans
Commercial and industrial	13,587		(393)		47		555		13,796
Franchise non-real estate secured	5,698		(160)		—		648		6,186
SBA non-real estate secured	503		(244)		1		170		430
Retail loans
Single family residential	758		—		1		(55)		704
Consumer loans	201		—		—		20		221
Totals	$	37,856	$	(3,636)	$	64	$	742	$	35,026


	For the Six Months Ended June 30, 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	$	(488)	$	—	$	629	$	1,765
Multifamily	740		—		—		(35)		705
Construction and land	5,964		—		—		(556)		5,408
SBA secured by real estate	1,827		(721)		—		216		1,322
Business loans secured by real estate
CRE owner-occupied	1,908		—		23		368		2,299
Franchise real estate secured	743		(1,376)		—		1,212		579
SBA secured by real estate	1,824		(254)		—		41		1,611
Commercial loans
Commercial and industrial	13,695		(695)		114		682		13,796
Franchise non-real estate secured	6,066		(160)		—		280		6,186
SBA non-real estate secured	654		(244)		4		16		430
Retail loans
Single family residential	808		—		1		(105)		704
Consumer loans	219		(5)		1		6		221
Totals	$	36,072	$	(3,943)	$	143	$	2,754	$	35,026


	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	390		—		68,041		1,915
Business loans secured by real estate
CRE owner-occupied	—		—		1,846,554		2,781
Franchise real estate secured	—		—		353,240		592
SBA secured by real estate	1,517		—		86,864		2,119
Commercial loans
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	366		—		254,658		655
Consumer loans	—		—		50,975		406
Totals	$	22,842	$	—	$	8,699,469	$	35,698

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 June 30, 2020:


	Term Loans by Vintage
	2020		2019		2018		2017		2016		Prior		Revolving		Revolving Converted to Term During the Period		Total
June 30, 2020	(Dollars in thousands)
Investor loans secured by real estate
CRE non-owner-occupied
Pass	$	155,429	$	567,989	$	482,567	$	359,173	$	319,468	$	876,776	$	10,924	$	—	$	2,772,326
Special mention	—		—		—		—		—		4,872		—		—		4,872
Substandard	—		—		322		528		518		4,567		559		—		6,494

Multifamily
Pass	522,381		1,753,769		1,010,047		761,576		474,835		701,092		1,031		—		5,224,731

Substandard	—		—		—		—		—		826		—		—		826

Construction and land
Pass	13,838		140,848		135,797		36,569		—		8,468		461		—		335,981
Special mention	—		—		19,643		—		—		—		—		—		19,643
Substandard	—		—		—		1,802		—		—		—		—		1,802

SBA secured by real estate
Pass	495		10,436		12,284		15,483		6,734		9,392		—		—		54,824
Special mention	—		—		—		698		—		269		—		—		967
Substandard	—		268		937		—		795		1,691		—		—		3,691

Total investor loans secured by real estate	$	692,143	$	2,473,310	$	1,661,597	$	1,175,829	$	802,350	$	1,607,953	$	12,975	$	—	$	8,426,157
Business loans secured by real estate
CRE owner-occupied
Pass	$	212,046	$	435,924	$	345,829	$	324,096	$	261,057	$	525,237	$	4,875	$	—	$	2,109,064
Special mention	5,979		15,734		—		3,886		—		8,476		—		—		34,075
Substandard	—		—		7,086		2,525		6,797		10,357		250		—		27,015

Franchise real estate secured
Pass	20,406		88,808		76,192		103,848		31,578		42,932		—		—		363,764

Substandard	—		—		—		—		—		883		—		—		883

SBA secured by real estate
Pass	1,905		7,693		14,159		17,302		10,510		28,021		365		—		79,955
Special mention	—		—		—		1,008		343		—		—		—		1,351
Substandard	—		—		—		914		148		3,174		—		—		4,236

Total loans secured by business real estate	$	240,336	$	548,159	$	443,266	$	453,579	$	310,433	$	619,080	$	5,490	$	—	$	2,620,343


	Term Loans by Vintage
	2020		2019		2018		2017		2016		Prior		Revolving		Revolving Converted to Term During the Period		Total
June 30, 2020	(Dollars in thousands)
Commercial Loans
Commercial and industrial
Pass	$	106,699	$	388,548	$	290,535	$	221,262	$	71,937	$	105,707	$	803,473	$	2,470	$	1,990,631
Special mention	—		73		2,928		1,994		1,562		2,671		20,969		500		30,697
Substandard	70		309		2,621		1,000		6,567		4,883		14,342		193		29,985

Franchise non-real estate secured
Pass	10,347		206,422		121,616		74,743		49,307		45,116		2,205		—		509,756
Special mention	—		—		—		3,834		—		—		—		—		3,834
Substandard	—		—		—		7,737		—		2,428		—		—		10,165

SBA non-real estate secured
Pass	646		2,341		1,428		2,517		654		4,276		—		3,537		15,399
Special mention	—		—		—		1,745		284		150		—		—		2,179
Substandard	—		86		399		856		—		1,374		764		—		3,479

SBA PPP
Pass	1,128,780		—		—		—		—		—		—		—		1,128,780



Total commercial loans	$	1,246,542	$	597,779	$	419,527	$	315,688	$	130,311	$	166,605	$	841,753	$	6,700	$	3,724,905
Retail Loans
Single family residential
Pass	$	4,863	$	9,426	$	15,553	$	14,991	$	38,123	$	143,690	$	37,140	—		$	263,786
Special mention	—		—		—		—		—		58		—		—		58
Substandard	—		—		—		—		251		1,075		—		—		1,326

Consumer loans
Pass	72		174		870		38,039		23		3,273		3,812		—		46,263

Substandard	—		—		—		—		—		46		—		—		46

Total retail loans	$	4,935	$	9,600	$	16,423	$	53,030	$	38,397	$	148,142	$	40,952	$	—	$	311,479
Totals gross loans	$	2,183,956	$	3,628,848	$	2,540,813	$	1,998,126	$	1,281,491	$	2,541,780	$	901,170	$	6,700	$	15,082,884

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	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
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	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
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	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


	Commercial Real Estate Term Loans by Vintage
	2020		2019		2018		2017		2016		Prior		Revolving		Revolving Converted to Term During the Period		Total
June 30, 2020	(Dollars in thousands)
Investor loans secured by real estate
CRE non-owner-occupied
0% - 5.00%	$	153,133	$	561,104	$	474,139	$	258,886	$	279,780	$	793,398	$	10,924	$	—	$	2,531,364
>5.00% - 10.00%	—		2,897		8,428		86,660		37,621		39,947		—		—		175,553
Greater than 10%	2,296		3,988		322		14,155		2,585		52,870		559		—		76,775
Multifamily
0% - 5.00%	520,782		1,723,731		991,561		746,855		460,328		678,741		1,031		—		5,123,029
>5.00% - 10.00%	1,599		17,431		8,692		2,176		4,098		8,906		—		—		42,902
Greater than 10%	—		12,607		9,794		12,545		10,409		14,271		—		—		59,626
Construction and Land
0% - 5.00%	13,838		32,921		4,296		20,357		—		6,919		66		—		78,397
>5.00% - 10.00%	—		40,785		21,154		3,275		—		—		395		—		65,609
Greater than 10%	—		67,142		129,990		14,739		—		1,549		—		—		213,420
SBA secured by real estate
0% - 5.00%	495		10,704		12,115		16,181		7,135		11,352		—		—		57,982
>5.00% - 10.00%	—		—		512		—		—		—		—		—		512
Greater than 10%	—		—		594		—		394		—		—		—		988
Total investor loans secured by real estate	$	692,143	$	2,473,310	$	1,661,597	$	1,175,829	$	802,350	$	1,607,953	$	12,975	$	—	$	8,426,157
Business loans secured by real estate
CRE owner-occupied
0% - 5.00%	$	211,860	$	402,474	$	309,907	$	304,611	$	234,139	$	488,345	$	3,124	$	—	$	1,954,460
>5.00% - 10.00%	186		33,118		35,922		22,510		26,918		42,552		1,504		—		162,710
Greater than 10%	5,979		16,066		7,086		3,386		6,797		13,173		497		—		52,984
Franchise real estate secured
0% - 5.00%	18,724		86,263		74,832		95,221		28,550		42,831		—		—		346,421
>5.00% - 10.00%	754		—		632		8,627		3,028		101		—		—		13,142
Greater than 10%	928		2,545		728		—		—		883		—		—		5,084
SBA secured by real estate
0% - 5.00%	1,905		7,693		13,476		16,611		8,547		24,605		365		—		73,202
>5.00% - 10.00%	—		—		683		1,699		2,306		3,416		—		—		8,104
Greater than 10%	—		—		—		914		148		3,174		—		—		4,236
Total business loans secured by real estate	$	240,336	$	548,159	$	443,266	$	453,579	$	310,433	$	619,080	$	5,490	$	—	$	2,620,343


	Commercial Real Estate Term Loans by Vintage
	2020		2019		2018		2017		2016		Prior		Revolving		Revolving Converted to Term During the Period		Total
June 30, 2020	(Dollars in thousands)
Commercial Loans
Commercial and industrial
0% - 5.00%	$	91,538	$	376,850	$	268,429	$	211,610	$	58,496	$	94,984	$	508,985	$	1,593	$	1,612,485
>5.00% - 10.00%	9,735		11,741		24,030		11,639		14,449		8,862		271,951		547		352,954
Greater than 10%	5,496		339		3,625		1,007		7,121		9,415		57,848		1,023		85,874
Franchise non-real estate secured
0% - 5.00%	9,535		197,360		117,509		69,287		46,925		40,305		1,476		—		482,397
>5.00% - 10.00%	812		6,619		3,593		9,290		2,382		4,704		729		—		28,129
Greater than 10%	—		2,443		514		7,737		—		2,535		—		—		13,229
SBA not secured by real estate
0% - 5.00%	646		2,341		1,301		2,517		571		3,842		—		3,537		14,755
>5.00% - 10.00%	—		—		132		1,745		367		439		—		—		2,683
Greater than 10%	—		86		394		856		—		1,519		764		—		3,619
Total commercial loans	$	117,762	$	597,779	$	419,527	$	315,688	$	130,311	$	166,605	$	841,753	$	6,700	$	2,596,125

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
June 30, 2020	(Dollars in thousands)
Investor loans secured by real estate
CRE non-owner-occupied
55% and below	$	73,769	$	241,867	$	191,322	$	156,622	$	189,946	$	618,498	$	10,924	—		$	1,482,948
>55-65%	54,874		214,909		119,539		177,366		104,448		231,545		559		—		903,240
>65-75%	22,526		108,464		169,089		23,368		25,379		31,566		—		—		380,392
Greater than 75%	4,260		2,749		2,939		2,345		213		4,606		—		—		17,112
Multifamily
55% and below	123,726		387,468		341,633		223,446		95,645		290,333		599		—		1,462,850
>55-65%	164,019		734,321		386,341		266,322		167,271		283,527		432		—		2,002,233
>65-75%	234,636		609,946		270,888		269,910		211,919		122,199		—		—		1,719,498
Greater than 75%	—		22,034		11,185		1,898		—		5,859		—		—		40,976
Construction and land
55% and below	13,838		136,216		107,812		30,148		—		8,468		461		—		296,943
>55-65%	—		4,632		42,778		8,223		—		—		—		—		55,633
>65-75%	—		—		3,697		—		—		—		—		—		3,697
Greater than 75%	—		—		1,153		—		—		—		—		—		1,153
SBA secured by real estate
55% and below	—		1,148		655		841		332		436		—		—		3,412
>55-65%	—		3,187		1,647		3,860		623		4,791		—		—		14,108
>65-75%	495		3,724		7,802		5,364		4,358		2,829		—		—		24,572
Greater than 75%	—		2,645		3,117		6,116		2,216		3,296		—		—		17,390
Total investor loans secured by real estate	$	692,143	$	2,473,310	$	1,661,597	$	1,175,829	$	802,350	$	1,607,953	$	12,975	$	—	$	8,426,157
Business loan secured by real estate
CRE owner-occupied
55% and below	$	55,579	$	153,995	$	171,876	$	196,583	$	150,233	$	377,115	$	5,125	—		$	1,110,506
>55-65%	63,067		100,226		89,960		64,803		73,724		81,403		—		—		473,183
>65-75%	56,327		175,639		63,734		54,957		39,714		58,581		—		—		448,952
Greater than 75%	43,052		21,798		27,345		14,164		4,183		26,971		—		—		137,513
Franchise real estate secured
55% and below	7,461		18,360		14,615		16,057		11,567		20,926		—		—		88,986
>55-65%	928		8,900		13,096		29,110		7,823		5,919		—		—		65,776
>65-75%	2,911		49,851		25,927		9,859		11,062		14,848		—		—		114,458
Greater than 75%	9,106		11,697		22,554		48,822		1,126		2,122		—		—		95,427
SBA secured by real estate
55% and below	736		1,735		6,537		4,784		2,348		10,568		365		—		27,073
>55-65%	104		514		2,337		2,643		2,252		4,121		—		—		11,971
>65-75%	264		2,687		754		4,602		3,167		5,871		—		—		17,345
Greater than 75%	801		2,757		4,531		7,195		3,234		10,635		—		—		29,153

Total business loans secured by real estate	$	240,336	$	548,159	$	443,266	$	453,579	$	310,433	$	619,080	$	5,490	$	—	$	2,620,343

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
June 30, 2020	(Dollars in thousands)
Retail Loans
Single family residential
Greater than 740	$	4,863	$	8,236	$	13,274	$	9,719	$	31,203	$	96,475	$	27,050	—		$	190,820
>680 - 740	—		1,190		2,268		4,794		2,660		18,190		9,095		—		38,197
>580 - 680	—		—		—		466		3,178		9,030		959		—		13,633
Less than 580	—		—		11		12		1,333		21,128		36		—		22,520
Consumer loans
Greater than 740	72		95		863		51		20		2,661		1,993		—		5,755
>680 - 740	—		59		7		37,988		—		488		1,737		—		40,279
>580 - 680	—		20		—		—		3		150		51		—		224
Less than 580	—		—		—		—		—		20		31		—		51
Total retail loans	$	4,935	$	9,600	$	16,423	$	53,030	$	38,397	$	148,142	$	40,952	$	—	$	311,479

Goodwill and Other Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of goodwill


	June 30,		June 30,
	2020		2019
	(Dollars in thousands)
Balance, beginning of year	$	808,322	$	808,726
Goodwill acquired during the year	92,844		—
Purchase accounting adjustments	—		(404)
Impairment losses	—		—
Balance, end of year	$	901,166	$	808,322
Accumulated impairment losses at end of year	$	—	$	—

Schedule of finite-lived intangible assets

The change in the gross balance of core deposit intangibles and customer relationship intangibles, and the related accumulated amortization consisted of the following for the periods indicated:


	Three Months Ended										Six Months Ended
	June 30,		March 31,		June 30,		June 30,		June 30,
	2020		2020		2019		2020		2019
	(Dollars in thousands)
Gross amount of intangible assets:
Beginning balance	$	125,945	$	125,945	$	125,945	$	125,945	$	125,945
Additions due to acquisitions	19,267		—		—		19,267		—
Ending balance	145,212		125,945		125,945		145,212		125,945
Accumulated amortization:
Beginning balance	(46,596)		(42,633)		(29,824)		(42,633)		(25,388)
Amortization	(4,066)		(3,963)		(4,281)		(8,029)		(8,717)
Ending balance	(50,662)		(46,596)		(34,105)		(50,662)		(34,105)
Net intangible assets	$	94,550	$	79,349	$	91,840	$	94,550	$	91,840

Subordinated Debentures (Tables)

6 Months Ended

Jun. 30, 2020

Debt Disclosure [Abstract]

Schedule of outstanding subordinated debentures

The following table summarizes our outstanding subordinated debentures as of the dates indicated:


						June 30, 2020		December 31, 2019
	Stated Maturity	Current Interest Rate		Current Principal Balance		Carrying Value
				(Dollars in thousands)
Subordinated notes
Subordinated notes due 2024, 5.75% per annum	September 3, 2024	5.75	%	$	60,000	$	59,492	$	59,432
Subordinated notes due 2029, 4.875% per annum until May 15, 2024, 3-month LIBOR +2.5% thereafter	May 15, 2029	4.875	%	125,000		122,749		122,622
Subordinated notes due 2030, 5.375% per annum until June 15, 2025, 3-month SOFR +5.17% thereafter	June 15, 2030	5.375	%	150,000		147,370		—
Subordinated notes due 2025, 7.125% per annum	June 26, 2025	7.125	%	25,000		25,121		25,133
Subordinated notes due 2026, 5.5% per annum until June 30 2021, 3-month LIBOR +4.285% thereafter	July 1, 2026	5.50	%	135,000		138,613		—
Total subordinated notes				495,000		493,345		207,187
Subordinated debt
Heritage Oaks Capital Trust II (junior subordinated debt), 3-month LIBOR+1.72%	January 1, 2037	3.15	%	5,248		4,088		4,054
Santa Lucia Bancorp (CA) Capital Trust (junior subordinated debt), 3-month LIBOR+1.48%	July 7, 2036	2.70	%	5,155		3,942		3,904
Total subordinated debt				10,403		8,030		7,958
Total subordinated debentures				$	505,403	$	501,375	$	215,145

Earnings per Share (Tables)

6 Months Ended

Jun. 30, 2020

Earnings Per Share [Abstract]

Schedule of Company's unaudited earnings per share calculations

The following tables set forth the Corporations’s earnings per share calculations for the periods indicated:


	Three Months Ended
	June 30, 2020		March 31, 2020		June 30, 2019
	(Dollars in thousands, except per share data)
Basic
Net (loss) income	$	(99,091)	$	25,740	$	38,527

Less: Dividends and undistributed earnings allocated to participating securities	(222)		(232)		(444)
Net (loss) income allocated to common stockholders	$	(99,313)	$	25,508	$	38,083

Weighted average common shares outstanding	70,425,027		59,007,191		61,308,046
Basic (loss) earnings per common share	$	(1.41)	$	0.43	$	0.62

Diluted
Net (loss) income allocated to common stockholders	$	(99,313)	$	25,508	$	38,083

Weighted average common shares outstanding	70,425,027		59,007,191		61,308,046
Diluted effect of share-based compensation	—		182,526		353,727
Diluted effect of stock warrants	—		—		—
Weighted average diluted common shares	70,425,027		59,189,717		61,661,773
Diluted (loss) earnings per common share	$	(1.41)	$	0.43	$	0.62


	Six Months Ended
	June 30, 2020		June 30, 2019
	(Dollars in thousands, except per share data)
Basic
Net (loss) income	$	(73,351)	$	77,245

Less: Dividends and undistributed earnings allocated to participating securities	(356)		(791)
Net (loss) income allocated to common stockholders	$	(73,707)	$	76,454

Weighted average common shares outstanding	64,716,109		61,645,940
Basic (loss) earnings per common share	$	(1.14)	$	1.24

Diluted
Net (loss) income allocated to common stockholders	$	(73,707)	$	76,454

Weighted average common shares outstanding	64,716,109		61,645,940
Diluted effect of share-based compensation	—		334,193
Diluted effect of stock warrants	—		—
Weighted average diluted common shares	64,716,109		61,980,133
Diluted (loss) earnings per common share	$	(1.14)	$	1.23

Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2020

Fair Value Disclosures [Abstract]

Schedule of Company's financial instruments measured at fair value on a recurring basis

The following fair value hierarchy table presents information about the Company’s financial assets and liabilities measured at fair value on a recurring basis at the dates indicated:


	June 30, 2020
	Fair Value Measurement Using
	Level 1		Level 2		Level 3		Total Fair Value
	(Dollars in thousands)
Financial assets
Investment securities available-for-sale:
U.S. Treasury	$	—	$	32,870	$	—	$	32,870
Agency	—		339,990		—		339,990
Corporate	—		273,999		—		273,999
Municipal bonds	—		461,335		—		461,335
Collateralized mortgage obligations	—		384,739		—		384,739
Mortgage-backed securities	—		843,133		—		843,133
Total securities available-for-sale	$	—	$	2,336,066	$	—	$	2,336,066

Derivative assets:
Interest rate swaps	$	—	$	15,707	$	—	$	15,707
Equity warrants	—		—		1,952		1,952
Total derivative assets	$	—	$	15,707	$	1,952	$	17,659

Financial liabilities
Derivative liabilities	$	—	$	16,017	$	—	$	16,017


	December 31, 2019
	Fair Value Measurement Using
	Level 1		Level 2		Level 3		Total Fair Value
	(Dollars in thousands)
Financial assets
Investment securities available-for-sale:
U.S. Treasury	$	—	$	63,555	$	—	$	63,555
Agency	—		246,358		—		246,358
Corporate	—		151,353		—		151,353
Municipal bonds	—		397,298		—		397,298
Collateralized mortgage obligations	—		9,984		—		9,984
Mortgage-backed securities	—		499,836		—		499,836
Total securities available-for-sale	$	—	$	1,368,384	$	—	$	1,368,384

Derivative assets	$	—	$	2,103	$	—	$	2,103

Financial liabilities
Derivative liabilities	$	—	$	2,103	$	—	$	2,103

Schedule of reconciliation of fair value of equity warrants

The following table is a reconciliation of the fair value of the equity warrants that are classified as Level 3 and measured on a recurring basis:


	June 30, 2020
	(Dollars in thousands)
Beginning Balance	$	5,162
Change in fair value ⁽¹⁾	(3)
Sales	(3,207)
Ending balance	$	1,952

______________________________

⁽¹⁾ The changes in fair value are included in other income on the consolidated statement of income.

Schedule of quantitative information for level 3 fair value measurements

The following table presents quantitative information about level 3 of fair value measurements for assets measured at fair value on a recurring basis at June 30, 2020.

June 30, 2020

Range

Fair Value

Valuation Technique(s)

Unobservable Input(s)

Min

Max

Weighted Average

(Dollars in thousands)

Equity warrants

1,952

Black-Scholes
option pricing
model

Volatility
Risk free interest rate
Marketability discount

30.00% 0.16% 6.00%

41.25%

0.28%

33.00%

31.33%

20.00%

13.67%

The following table presents quantitative information about level 3 of fair value measurements for assets measured at fair value on a nonrecurring basis at June 30, 2020 and December 31, 2019.


	June 30, 2020
					Range
	Fair Value		Valuation Technique(s)	Unobservable Input(s)	Min		Max	Weighted Average
	(Dollars in thousands)
Investor loans secured by real estate
CRE non-owner-occupied	$	322	Fair value of collateral	Collateral discount and cost to sell	10.00%		10.00%	10.00%


SBA secured by real estate ⁽¹⁾	593		Fair value of collateral	Collateral discount and cost to sell	10.00%		10.00%	10.00%

Business loans secured by real estate


SBA secured by real estate ⁽²⁾	247		Fair value of collateral	Collateral discount and cost to sell	10.00%		10.00%	10.00%

Commercial loans
Commercial and industrial	312		Fair value of collateral	Collateral discount and cost to sell	5.00%	5.00%	5.00%	5.00%
Franchise non-real estate secured	2,428		Fair value of collateral	Collateral discount and cost to sell	—%		10.00%	10.00%
SBA non-real estate secured	2		Fair value of collateral	Collateral discount and cost to sell	7.00%		7.00%	7.00%





Total individually evaluated loans	3,904
Other real estate owned	260		Fair value of property	Cost to sell	10.00%		10.00%	10.00%
Total assets	$	4,164


	December 31, 2019
					Range
	Fair Value		Valuation Technique(s)	Unobservable Input(s)	Min	Max	Weighted Average
	(Dollars in thousands)
Investor loans secured by real estate
CRE non-owner-occupied	$	569	Fair value of collateral	Collateral discount and cost to sell	10.00%	10.00%	10.00%


SBA secured by real estate ⁽¹⁾	408		Fair value of collateral	Collateral discount and cost to sell	10.00%	10.00%	10.00%

Business loans secured by real estate


SBA secured by real estate ⁽²⁾	140		Fair value of collateral	Collateral discount and cost to sell	7.00%	10.00%	7.81%

Commercial loans


SBA non-real estate secured	1,140		Fair value of collateral	Collateral discount and cost to sell	7.00%	63.00%	15.33%





Total individually evaluated loans	$	2,257

______________________________

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

⁽²⁾ SBA loans that are collateralized by real property other than hotel/motel real property.

Schedule of Company's financial instruments measured at fair value on a nonrecuring basis

The following table presents our assets measured at fair value on a nonrecurring basis at June 30, 2020 and December 31, 2019.


	June 30, 2020
	Level 1		Level 2		Level 3		Total Fair Value
	(Dollars in thousands)
Financial assets
Collateral dependent loans	$	—	$	—	$	3,904	$	3,904
Other real estate owned	—		—		260		260
Total assets	$	—	$	—	$	4,164	$	4,164


	December 31, 2019
	Level 1		Level 2		Level 3		Total Fair Value
	(Dollars in thousands)
Financial assets
Impaired loans	$	—	$	—	$	2,257	$	2,257

Schedule of carrying amount and estimated fair value of financial instruments

The fair value estimates presented herein are based on pertinent information available to management as of the dates indicated, representing an exit price.


	At June 30, 2020
	Carrying Amount		Level 1		Level 2		Level 3		Estimated Fair Value
	(Dollars in thousands)
Assets
Cash and cash equivalents	$	1,341,730	$	1,341,730	$	—	$	—	$	1,341,730
Interest-bearing time deposits with financial institutions	2,845		2,845		—		—		2,845
Investments held-to-maturity	32,557		—		34,179		—		34,179
Investment securities available-for-sale	2,336,066		—		2,336,066		—		2,336,066
Loans held for sale	1,007		—		1,081		—		1,081
Loans held for investment, net	15,082,884		—		—		15,308,998		15,308,998

Derivative assets	17,659		—		15,707		1,952		17,659
Accrued interest receivable	78,408		78,408		—		—		78,408

Liabilities
Deposit accounts	$	16,976,693	$	15,057,613	$	1,926,624	$	—	$	16,984,237
FHLB advances	41,006		—		41,700		—		41,700

Subordinated debentures	501,375		—		565,772		—		565,772
Derivative liabilities	16,017		—		16,017		—		16,017
Accrued interest payable	6,991		6,991		—		—		6,991


	At December 31, 2019
	Carrying Amount		Level 1		Level 2		Level 3		Estimated Fair Value
	(Dollars in thousands)
Assets
Cash and cash equivalents	$	326,850	$	326,850	$	—	$	—	$	326,850
Interest-bearing time deposits with financial institutions	2,708		2,708		—		—		2,708
Investments held-to-maturity	37,838		—		38,760		—		38,760
Investment securities available-for-sale	1,368,384		—		1,368,384		—		1,368,384
Loans held for sale	1,672		—		1,821		—		1,821
Loans held for investment, net	8,722,311		—		—		8,691,019		8,691,019
Derivative assets	2,103		—		2,103		—		2,103
Accrued interest receivable	39,442		39,442		—		—		39,442

Liabilities
Deposit accounts	$	8,898,509	$	7,850,667	$	1,048,583	$	—	$	8,899,250
FHLB advances	517,026		—		517,291		—		517,291
Other borrowings	—		—		—		—		—
Subordinated debentures	215,145		—		237,001		—		237,001
Derivative liabilities	2,103		—		2,103		—		2,103
Accrued interest payable	2,686		2,686		—		—		2,686

Derivative Instruments (Tables)

6 Months Ended

Jun. 30, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of derivative instruments

The following tables summarize the Company's derivative instruments, included in other assets and other liabilities in the consolidated statements of financial condition:


	June 30, 2020
	Derivative Assets						Derivative Liabilities
	Notional		Fair Value		Notional		Fair Value
	(Dollars in thousands)
Derivative instruments not designated as hedging instruments:
Interest rate swaps	$	148,443	$	15,707	$	148,443	$	16,017
Equity warrants	—		1,952		—		—
Total derivative instruments	$	148,443	$	17,659	$	148,443	$	16,017


	December 31, 2019
	Derivative Assets						Derivative Liabilities
	Notional		Fair Value		Notional		Fair Value
	(Dollars in thousands)
Derivative instruments not designated as hedging instruments:
Interest rate swaps	$	76,314	$	2,103	$	76,314	$	2,103
Total derivative instruments	$	76,314	$	2,103	$	76,314	$	2,103

The following table summarizes the effect of the derivative financial instruments in the consolidated statements of income.



		Three Months Ended						Six Months Ended
Derivative Not Designated as Hedging Instruments:	Location of Gain Recognized in Income on Derivative Instruments	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
		(Dollars in thousands)
Other contracts	Other income	$	(1)	$	—	$	197	$	—
Equity warrants	Other income	(4)		—		(4)		—
Total		$	(5)	$	—	$	193	$	—

Balance Sheet Offsetting (Tables)

6 Months Ended

Jun. 30, 2020

Offsetting [Abstract]

Schedule of financial instruments eligible for offset in consolidated statements of financial condition

Financial instruments that are eligible for offset in the consolidated statements of financial condition as of the periods indicated are presented below:


							Gross Amounts Not Offset in the Consolidated Statements of Financial Condition
	Gross Amounts Recognized		Gross Amounts Offset in the Consolidated Statements of Financial Condition		Net Amounts Presented in the Consolidated Statements of Financial Condition		Financial Instruments ⁽¹⁾		Cash Collateral ⁽²⁾		Net Amount
	(Dollars in thousands)
June 30, 2020
Derivative assets:
Interest rate swaps	$	15,707	$	—	$	15,707	$	—	$	—	$	15,707
Total	$	15,707	$	—	$	15,707	$	—	$	—	$	15,707

Derivative liabilities:
Interest rate swaps	$	16,017	$	—	$	16,017	$	(5,500)	$	(8,963)	$	1,554
Total	$	16,017	$	—	$	16,017	$	(5,500)	$	(8,963)	$	1,554





December 31, 2019
Derivative assets:
Interest rate swaps	$	2,103	$	—	$	2,103	$	—	$	—	$	2,103
Total	$	2,103	$	—	$	2,103	$	—	$	—	$	2,103

Derivative liabilities:
Interest rate swaps	$	2,107	$	(4)	$	2,103	$	—	$	(1,678)	$	425
Total	$	2,107	$	(4)	$	2,103	$	—	$	(1,678)	$	425

⁽¹⁾ Represents the fair value of securities pledged with counterparty bank.
⁽²⁾ Represents cash collateral pledged with counterparty bank.

Leases (Tables)

6 Months Ended

Jun. 30, 2020

Leases [Abstract]

Components of lease expense


	Three Months Ended						Six Months Ended
	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
	(Dollars in thousands)
Operating lease	$	3,908	$	2,785	$	7,072	$	5,524
Short-term lease	403		627		930		1,318
Total lease expense	$	4,311	$	3,412	$	8,002	$	6,842

Schedule of supplemental information

The following table presents supplemental information related to operating leases as of and for six months ended:


	June 30, 2020		December 31, 2019
	(Dollars in thousands)
Balance Sheet:
Operating lease right of use assets	$	86,188	$	43,177
Operating lease liabilities	96,057		46,498

	Six Months Ended
	June 30, 2020		June 30, 2019
	(Dollars in thousands)
Cash Flows:
Operating cash flows from operating leases	$	5,524	$	5,957

Schedule of minimum contractual lease payments and other information

The following table provides information related to minimum contractual lease payments and other information associated with the Company’s leases as of the dates indicated:


	2020		2021		2022		2023		2024		Thereafter		Total
	(Dollars in thousands)
As of June 30, 2020

Operating leases	$	11,227	$	22,510	$	20,550	$	18,902	$	16,223	$	22,489	$	111,901
Short-term leases	99		17		—		—		—		—		116
Total contractual base rents ⁽¹⁾	$	11,326	$	22,527	$	20,550	$	18,902	$	16,223	$	22,489	$	112,017

Total liability to make lease payments															$	96,057
Difference in undiscounted and discounted future lease payments															$	15,960
Weighted average discount rate															5.30		%
Weighted average remaining lease term (years)															5.8


	2020		2021		2022		2023		2024		Thereafter		Total
	(Dollars in thousands)

As of December 31, 2019
Operating leases	$	10,138	$	10,602	$	10,137	$	9,055	$	7,318	$	7,265	$	54,515
Short-term leases	143		7		—		—		—		—		150
Total contractual base rents ⁽¹⁾	$	10,281	$	10,609	$	10,137	$	9,055	$	7,318	$	7,265	$	54,665

Total liability to make lease payments															$	46,498
Difference in undiscounted and discounted future lease payments															$	8,167
Weighted average discount rate															6.13		%
Weighted average remaining lease term (years)															5.4

______________________________

⁽¹⁾ Contractual base rents reflect options to extend and renewals, and do not include property taxes and other operating expenses due under respective lease agreements.

Revenue Recognition (Tables)

6 Months Ended

Jun. 30, 2020

Revenue from Contract with Customer [Abstract]

Summary of Company's revenue streams

The following tables provide a summary of the Company’s revenue streams, including those that are within the scope of ASC 606 and those that are accounted for under other applicable U.S. GAAP:


	Three Months Ended
	June 30, 2020						March 31, 2020						June 30, 2019
	Within Scope⁽¹⁾		Out of Scope⁽²⁾		Within Scope⁽¹⁾		Out of Scope⁽²⁾		Within Scope⁽¹⁾		Out of Scope⁽²⁾
	(Dollars in thousands)
Noninterest income:
Loan servicing fees	$	—	$	434	$	—	$	480	$	—	$	409
Service charges on deposit accounts	1,399		—		1,715		—		1,441		—
Other service fee income	297		—		311		—		363		—
Debit card interchange income	457		—		348		—		1,145		—
Earnings on bank-owned life insurance	—		1,314		—		1,336		—		851
Net gain from sales of loans	—		(2,032)		—		771		—		902
Net gain from sales of investment securities	—		(21)		—		7,760		—		212
Trust administrative fees	2,397		—		—		—		—		—
Other income	184		2,469		217		1,537		544		457
Total noninterest income	$	4,734	$	2,164	$	2,591	$	11,884	$	3,493	$	2,831

______________________________

⁽¹⁾ Revenues from contracts with customers accounted for under ASC 606.

⁽²⁾ Revenues not within the scope of ASC 606 and accounted for under other applicable U.S. GAAP requirements.



	Six Months Ended
	June 30, 2020						June 30, 2019
	Within Scope⁽¹⁾		Out of Scope⁽²⁾		Within Scope⁽¹⁾		Out of Scope⁽²⁾
	(Dollars in thousands)
Noninterest income:
Loan servicing fees	$	—	$	914	$	—	$	807
Service charges on deposit accounts	3,114		—		2,771		—
Other service fee income	608		—		719		—
Debit card interchange income	805		—		2,216		—
Earnings on bank-owned life insurance	—		2,650		—		1,761
Net gain from sales of loans	—		(1,261)		—		2,631
Net gain from sales of investment securities	—		7,739		—		639
Trust administrative fees	2,397		—		—		—
Other income	401		4,006		736		1,725
Total noninterest income	$	7,325	$	14,048	$	6,442	$	7,563

______________________________

⁽¹⁾ Revenues from contracts with customers accounted for under ASC 606.

⁽²⁾ Revenues not within the scope of ASC 606 and accounted for under other applicable U.S. GAAP requirements.

Variable Interest Entities (Tables)

6 Months Ended

Jun. 30, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Summary of variable interest entities

The following table provides a summary of the carrying amount of assets and liabilities in the Company’s consolidated balance sheet and maximum loss exposures as of June 30, 2020 and December 31, 2019 that relate to variable interests in non-consolidated VIEs.


	June 30, 2020										December 31, 2019
	Maximum Loss		Assets		Liabilities		Maximum Loss		Assets		Liabilities
	(Dollars in thousands)
Multifamily loan securitization:
Investment securities ⁽¹⁾	$	119,932	$	119,932	$	—	$	—	$	—	$	—
Reimbursement obligation ⁽²⁾	50,901		—		463		—		—		—
Affordable housing partnership:
Other investments ⁽³⁾	76,072		95,562		—		32,466		53,880		—
Unfunded equity commitments ⁽²⁾	—		—		19,490		—		—		21,414

Total	$	246,905	$	215,494	$	19,953	$	32,466	$	53,880	$	21,414

______________________________

⁽¹⁾ Included in investment securities available-for-sale on the consolidated statement of financial condition.

⁽²⁾ Included in accrued expenses and other liabilities on the consolidated statement of financial condition.

⁽³⁾ Included in other assets on the consolidated statement of financial condition.

Recently Issued Accounting Pronouncements - Narrative (Details) - USD ($)

12 Months Ended

Dec. 31, 2019

Jun. 30, 2020

Mar. 31, 2020

Jan. 01, 2020

Jun. 30, 2019

Mar. 31, 2019

Dec. 31, 2018

New Accounting Pronouncements or Change in Accounting Principle [Line Items]

Accounting Standards Update [Extensible List]

us-gaap:AccountingStandardsUpdate201613Member

$ 2,012,594,000

$ 2,654,647,000

$ 2,002,917,000

$ 1,984,456,000

$ 2,007,064,000

$ 1,969,697,000

Deferred income taxes, net

35,698,000

282,271,000

115,422,000

35,026,000

37,856,000

36,072,000

105,859,000

Loans held for investment

8,722,311,000

15,082,884,000

Allowance for credit losses on off-balance sheet credit exposures

3,300,000

22,000,000.0

$ 3,279,000

Allowance for credit losses on debt securities, Held-to-maturity

Allowance for credit losses on debt securities, Available-for-sale

Operating lease liabilities

46,498,000

96,057,000

Operating lease right of use assets

43,177,000

86,188,000

Commercial loans

New Accounting Pronouncements or Change in Accounting Principle [Line Items]

Loans held for investment

20,118,000

1,975,053,000

3,724,905,000

Accumulated Retained Earnings

New Accounting Pronouncements or Change in Accounting Principle [Line Items]

New Accounting Pronouncements or Change in Accounting Principle [Line Items]

396,051,000

$ 247,078,000

$ 361,242,000

$ 343,366,000

$ 325,363,000

$ 300,407,000

Impact of CECL Adoption

^[1]

(45,625,000)

Deferred income taxes, net

55,686,000

64,000,000.0

18,300,000

Loans held for investment

55,700,000

Allowance for credit losses on off-balance sheet credit exposures

8,285,000

Allowance for credit losses on debt securities, Held-to-maturity

Allowance for credit losses on debt securities, Available-for-sale

Impact of CECL Adoption | Commercial loans

New Accounting Pronouncements or Change in Accounting Principle [Line Items]

Impact of CECL Adoption | Commercial loans | Investor loans secured by real estate

9,519,000

New Accounting Pronouncements or Change in Accounting Principle [Line Items]

Impact of CECL Adoption | Commercial loans | Business loans secured by real estate

16,100,000

New Accounting Pronouncements or Change in Accounting Principle [Line Items]

Impact of CECL Adoption | Commercial loans | Commercial loans

27,600,000

New Accounting Pronouncements or Change in Accounting Principle [Line Items]

Impact of CECL Adoption | Consumer loans | Retail loans

9,500,000

New Accounting Pronouncements or Change in Accounting Principle [Line Items]

Impact of CECL Adoption | Accumulated Retained Earnings

2,500,000

New Accounting Pronouncements or Change in Accounting Principle [Line Items]