| Loans Receivable | Loans Receivable The Company originates loans in the ordinary course of business and has also acquired loans through mergers and acquisitions. In addition to originating loans, the Company may also purchase loans through pool purchases, participation purchases and syndicated loan purchases. Accrued interest receivable was excluded from disclosures presenting the Company's amortized cost of loans receivable as it was deemed insignificant. (a) Loan Origination/Risk Management The Company categorizes the individual loans in the total loan portfolio into four segments: commercial business; residential real estate; real estate construction and land development; and consumer. Within these segments are classes of loans for which management monitors and assesses credit risk in the loan portfolios. The Company has certain lending policies and guidelines in place that are designed to maximize loan income within an acceptable level of risk. Management reviews and approves these policies and guidelines on a regular basis. A reporting system supplements the review process by providing management with frequent reports related to loan production, loan quality, concentrations of credit, loan delinquencies and nonperforming and criticized loans. The Company also conducts internal loan reviews and validates the credit risk assessment on a periodic basis and presents the results of these reviews to management. The loan review process complements and reinforces the risk identification and assessment decisions made by loan officers and credit personnel. The amortized cost of loans receivable, net of ACL on loans consisted of the following portfolio segments and classes at the dates indicated: December 31, 2024 December 31, 2023 (Dollars in thousands) Commercial business: Commercial and industrial $ 842,672 $ 718,291 Owner-occupied CRE 1,003,243 958,620 Non-owner occupied CRE 1,909,107 1,697,574 Total commercial business 3,755,022 3,374,485 Residential real estate 402,954 375,342 Real estate construction and land development: Residential 83,890 78,610 Commercial and multifamily 395,553 335,819 Total real estate construction and land development 479,443 414,429 Consumer 164,704 171,371 Loans receivable 4,802,123 4,335,627 ACL on loans (52,468) (47,999) Loans receivable, net $ 4,749,655 $ 4,287,628 Balances included in the amortized cost of loans receivable: Unamortized net discount on acquired loans $ (1,095) $ (1,923) Unamortized net deferred fee $ (10,110) $ (11,063) A discussion of the risk characteristics of each loan portfolio segment is as follows: Commercial Business : Commercial and industrial. Commercial and industrial loans are primarily made based on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. The cash flows of borrowers, however, may not be as expected and the collateral securing these loans may fluctuate in value. Most commercial and industrial loans are secured by the assets being financed or other business assets such as accounts receivable or inventory and may include a personal guarantee; however, some short-term loans may be made on an unsecured basis. In the case of loans secured by accounts receivable, the availability of funds for the repayment of these loans may be substantially dependent on the ability of the borrower to collect amounts due from its customers. Commercial and industrial loans carry more risk than other loans because the borrowers’ cash flow is less predictable and in the event of a default the amount of loss is potentially greater and more difficult to quantify because the value of the collateral securing these loans may fluctuate, may be uncollectible or may be obsolete or of limited use, among other things. Owner-occupied and non-owner occupied CRE. The Company originates CRE loans primarily within its primary market areas. These loans are subject to underwriting standards and processes similar to commercial and industrial loans in that these loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate properties. CRE lending typically involves higher loan principal amounts and payments on loans and repayment is dependent on successful operation and management of the properties. The value of the real estate securing these loans can be adversely affected by conditions in the real estate market or the economy. There is some common risk characteristics with owner-occupied CRE loans and non-owner occupied CRE loans. However, owner-occupied CRE loans are generally considered to have a slightly lower risk profile as we typically have the guarantee of the owner-occupant and can underwrite risk using the complete financial information on the entity that occupies the property. Residential Real Estate : The majority of the Company’s residential real estate loans are secured by one-to-four family residences located in its primary market areas. The Company’s underwriting standards require that residential real estate loans maintained in the portfolio generally are owner-occupied and do not exceed 80% of the lower of appraised value at origination or cost of the underlying collateral. Terms of maturity typically range from 15 to 30 years. In 2024, the Bank ceased the origination of residential real estate loans; however, the Company may purchase pools of residential real estate loans. All purchased loans adhere to the Company's underwriting standards. Real Estate Construction and Land Development : The Company originates construction loans for residential and for commercial and multifamily properties. The residential construction loans generally include construction of custom single-family homes whereby the homeowner is the borrower. The Company also provides financing to builders for the construction of pre-sold residential homes and, in selected cases, to builders for the construction of speculative single-family residential property. Construction loans are typically short-term in nature and priced with variable rates of interest. Construction loans may also be originated as a construction-to-permanent financing loan whereby upon completion of the construction phase, the loan is automatically converted to a permanent term loan. Construction lending can involve a higher level of risk than other types of lending because funds are advanced partially based upon the value of the project, which is uncertain prior to the project’s completion. Because of the uncertainties inherent in estimating construction costs as well as the market value of a completed project and the effects of governmental regulation of real property, the Company’s estimates with regard to the total funds required to complete a project and the related loan-to-value ratio may vary from actual results. As a result, construction loans often involve the disbursement of substantial funds with repayment dependent, in part, on the success of the ultimate project and the ability of the borrower to sell or lease the property or refinance the indebtedness. If the Company’s estimate of the value of a project at completion proves to be overstated, it may have inadequate security for repayment of the loan and may incur a loss if the borrower does not repay the loan. Sources of repayment for these types of loans may be pre-committed permanent loans from approved long-term lenders, sales of developed property or an interim loan commitment from the Company until permanent financing is obtained. These loans are closely monitored by on-site inspections and are considered to have higher risks than other real estate loans due to their ultimate repayment being dependent upon successful completion of the construction project, market interest rate changes, government regulation of real property, general economic conditions and the availability of long-term financing. Consumer : The Company originates consumer loans and lines of credit that are both secured and unsecured. The underwriting process for these loans ensures a qualifying primary and secondary source of repayment. Underwriting standards for home equity loans are significantly influenced by statutory requirements, which include, but are not limited to, a maximum loan-to-value percentage of 80%, collection remedies, the number of such loans a borrower can have at one time and documentation requirements. To monitor and manage consumer loan risk, policies and procedures are developed and modified, as needed. The majority of consumer loans are for relatively small amounts disbursed among many individual borrowers which reduces the overall credit risk for this segment. To further reduce the risk, trend reports are reviewed by management on a regular basis. (b) Concentrations of Credit Most of the Company’s lending activity occurs within its primary market areas which are concentrated along the I-5 corridor from Whatcom County, Washington to Lane County, Oregon, as well as Yakima County, Washington and Ada County, Idaho. Additionally, the Company's loan portfolio is concentrated in commercial business loans, which include commercial and industrial, owner-occupied and nonowner-occupied CRE, and commercial and multifamily real estate construction and land development loans. Commercial business loans and commercial and multifamily real estate construction and land development loans are generally considered as having a more inherent risk of default than residential real estate loans or other consumer loans. Also, the loan balance per borrower is typically larger than that for residential real estate loans and consumer loans, implying higher potential losses on an individual loan basis. (c) Credit Quality Indicators As part of the on-going monitoring of the credit quality of the Company’s loan portfolio, management tracks certain credit quality indicators including trends related to (i) the risk grade of the loans, (ii) the level of classified loans, (iii) net charge-offs, (iv) nonperforming loans, (v) past due status, and (vi) the general economic conditions of the United States of America, and specifically the states of Washington, Oregon and Idaho. The Company utilizes a risk grading matrix to assign a risk grade to each of its loans. Loans are graded on a scale of 1 to 10. A description of the general characteristics of the risk grades is as follows: • Grades 1 to 5: These grades are considered “Pass” and include loans with negligible to above average, but acceptable, risk. These borrowers generally have strong to acceptable capital levels and consistent earnings and debt service capacity. Loans with the higher grades within the “Pass” category may include borrowers who are experiencing unusual operating difficulties, but have acceptable payment performance to date. Increased monitoring of financial information and/or collateral may be appropriate. Loans with this grade show no immediate loss exposure. • Grade 6: This grade includes "Watch" loans. The grade is intended to be utilized on a temporary basis for pass grade borrowers where a potentially significant risk-modifying action is anticipated in the near term and are considered Pass grade for reporting purposes. • Grade 7: This grade includes "Special Mention" ("SM") loans and is intended to highlight loans deemed by management to have some elevated risks that deserve management's close attention. Loans with this grade show signs of deteriorating profits and capital and the borrower might not be strong enough to sustain a major setback. The borrower is typically higher than normally leveraged and outside support might be modest and likely illiquid. The loan is at risk of further credit decline unless active measures are taken to correct the situation. • Grade 8: This grade includes “Substandard” ("SS") loans in accordance with regulatory guidelines, which the Company has determined have a high credit risk. These loans also have well-defined weaknesses and are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. The borrower may have shown serious negative trends in financial ratios and performance. Such loans may be dependent upon collateral liquidation, a secondary source of repayment or an event outside of the normal course of business. • Grade 9: This grade includes “Doubtful” loans in accordance with regulatory guidelines and the Company has determined these loans to have excessive credit risk. Such loans are placed on nonaccrual status and may be dependent upon collateral having a value that is difficult to determine or upon some near-term event which lacks certainty. Additionally, these loans generally have been partially charged off for the amount considered uncollectible. • Grade 10: This grade includes “Loss” loans in accordance with regulatory guidelines and the Company has determined these loans have the highest risk of loss. Such loans are charged off or charged down when payment is acknowledged to be uncertain or when the timing or value of payments cannot be determined. Numerical loan grades for loans are established at the origination of the loan. Changes to loan grades are considered at the time new information about the performance of a loan becomes available, including the receipt of updated financial information from the borrower, results of annual term loan reviews and scheduled loan reviews. For consumer loans, the Company follows the FDIC’s Uniform Retail Credit Classification and Account Management Policy for subsequent classification in the event of payment delinquencies or default. Typically, an individual loan grade will not be changed from the prior period unless there is a specific indication of credit deterioration or improvement. Credit deterioration is evidenced by delinquency, direct communications with the borrower or other borrower information that becomes known to management. Credit improvements are evidenced by known facts regarding the borrower or the collateral property. Loan grades relate to the likelihood of losses in that the higher the grade, the greater the loss potential. Loans with a Pass grade may have some estimated inherent losses, but to a lesser extent than the other loan grades. The SM loan grade is transitory in that the Company is waiting on additional information to determine the likelihood and extent of any potential loss. The likelihood of loss for SM graded loans, however, is greater than Watch graded loans because there has been measurable credit deterioration. Loans with a SS grade have further credit deterioration and include both accrual loans and nonaccrual loans. For Doubtful and Loss graded loans, the Company is almost certain of the losses and the outstanding principal balances are generally charged off to the realizable value. There were no loans graded Doubtful or Loss as of December 31, 2024 and 2023. The following tables present the amortized cost of loans receivable by risk grade and origination year, and the gross charge-offs by loan class and origination year, at the dates indicated. December 31, 2024 Revolving Loans Revolving Loans Converted (1) Loans Receivable Term Loans 2024 2023 2022 2021 2020 Prior (Dollars in thousands) Commercial business: Commercial and industrial Pass $ 204,107 $ 127,603 $ 125,220 $ 51,126 $ 53,115 $ 78,039 $ 147,861 $ 491 $ 787,562 SM 161 4,482 6,495 502 1,117 4,490 13,555 2,352 33,154 SS — 235 857 315 2,516 4,337 12,331 1,365 21,956 Total 204,268 132,320 132,572 51,943 56,748 86,866 173,747 4,208 842,672 Owner-occupied CRE Pass 116,031 93,567 136,496 147,540 81,161 389,801 534 — 965,130 SM — 2,719 1,215 4,121 871 15,298 — — 24,224 SS — — — 1,182 637 12,070 — — 13,889 Total 116,031 96,286 137,711 152,843 82,669 417,169 534 — 1,003,243 Non-owner occupied CRE Pass 168,040 174,993 338,983 238,933 149,804 790,691 — 24 1,861,468 SM — — — 7,988 — 32,925 — — 40,913 SS — — 584 — — 6,142 — — 6,726 Total 168,040 174,993 339,567 246,921 149,804 829,758 — 24 1,909,107 Total commercial business Pass 488,178 396,163 600,699 437,599 284,080 1,258,531 148,395 515 3,614,160 SM 161 7,201 7,710 12,611 1,988 52,713 13,555 2,352 98,291 SS — 235 1,441 1,497 3,153 22,549 12,331 1,365 42,571 Total 488,339 403,599 609,850 451,707 289,221 1,333,793 174,281 4,232 3,755,022 Residential real estate Pass 32,857 52,317 135,115 132,150 21,909 26,838 — — 401,186 SS — — 832 786 — 150 — — 1,768 Total 32,857 52,317 135,947 132,936 21,909 26,988 — — 402,954 December 31, 2024 Revolving Loans Revolving Loans Converted (1) Loans Receivable Term Loans 2024 2023 2022 2021 2020 Prior Real estate construction and land development: Residential Pass 34,078 34,436 6,415 — 1,000 955 256 — 77,140 SS — 1,000 — 5,750 — — — — 6,750 Total 34,078 35,436 6,415 5,750 1,000 955 256 — 83,890 Commercial and multifamily Pass 37,022 169,816 147,789 9,865 — 3,002 — — 367,494 SM — — 893 — 5,655 5,886 — — 12,434 SS — — — 15,625 — — — — 15,625 Total 37,022 169,816 148,682 25,490 5,655 8,888 — — 395,553 Total real estate construction and land development Pass 71,100 204,252 154,204 9,865 1,000 3,957 256 — 444,634 SM — — 893 — 5,655 5,886 — — 12,434 SS — 1,000 — 21,375 — — — — 22,375 Total 71,100 205,252 155,097 31,240 6,655 9,843 256 — 479,443 Consumer Pass 1,882 1,513 1,477 339 3,196 20,518 133,355 820 163,100 SS — — 25 — 115 609 60 795 1,604 Total 1,882 1,513 1,502 339 3,311 21,127 133,415 1,615 164,704 Loans receivable Pass 594,017 654,245 891,495 579,953 310,185 1,309,844 282,006 1,335 4,623,080 SM 161 7,201 8,603 12,611 7,643 58,599 13,555 2,352 110,725 SS — 1,235 2,298 23,658 3,268 23,308 12,391 2,160 68,318 Total $ 594,178 $ 662,681 $ 902,396 $ 616,222 $ 321,096 $ 1,391,751 $ 307,952 $ 5,847 $ 4,802,123 (1) Represents the loans receivable balance at December 31, 2024 which was converted from a revolving loan to a non-revolving amortizing loan during the year ended December 31, 2024. December 31, 2023 Revolving Loans Revolving Loans Converted (1) Loans Receivable Term Loans 2023 2022 2021 2020 2019 Prior (Dollars in thousands) Commercial business: Commercial and industrial Pass $ 120,973 $ 150,854 $ 74,231 $ 66,364 $ 40,307 $ 76,924 $ 141,740 $ 188 $ 671,581 SM — 2,495 104 292 4,556 1,458 9,124 — 18,029 SS — 1,215 2,734 3,548 1,076 7,875 12,168 65 28,681 Total 120,973 154,564 77,069 70,204 45,939 86,257 163,032 253 718,291 Owner-occupied CRE Pass 90,775 138,505 159,490 82,296 146,869 299,609 — — 917,544 SM — — 2,219 2,775 705 16,266 — — 21,965 SS — — 4,908 654 — 13,549 — — 19,111 Total 90,775 138,505 166,617 85,725 147,574 329,424 — — 958,620 December 31, 2023 Revolving Loans Revolving Loans Converted (1) Loans Receivable Term Loans 2023 2022 2021 2020 2019 Prior Non-owner-occupied CRE Pass 153,239 260,431 216,811 157,424 239,928 628,489 — — 1,656,322 SM — — 8,172 — 570 19,300 — — 28,042 SS — 598 — — — 12,612 — — 13,210 Total 153,239 261,029 224,983 157,424 240,498 660,401 — — 1,697,574 Total commercial business Pass 364,987 549,790 450,532 306,084 427,104 1,005,022 141,740 188 3,245,447 SM — 2,495 10,495 3,067 5,831 37,024 9,124 — 68,036 SS — 1,813 7,642 4,202 1,076 34,036 12,168 65 61,002 Total 364,987 554,098 468,669 313,353 434,011 1,076,082 163,032 253 3,374,485 Residential real estate Pass 36,321 141,201 141,430 24,108 15,022 16,297 — — 374,379 SS — — 801 — — 162 — — 963 Total 36,321 141,201 142,231 24,108 15,022 16,459 — — 375,342 Real estate construction and land development: Residential Pass 41,663 24,760 1,050 1,289 804 719 1 — 70,286 SM — — 2,139 — — — — — 2,139 SS 1,000 319 4,866 — — — — — 6,185 Total 42,663 25,079 8,055 1,289 804 719 1 — 78,610 Commercial and multifamily Pass 42,499 187,827 91,460 337 749 3,145 — — 326,017 SM — — — 3,777 5,660 365 — — 9,802 Total 42,499 187,827 91,460 4,114 6,409 3,510 — — 335,819 Total real estate construction and land development Pass 84,162 212,587 92,510 1,626 1,553 3,864 1 — 396,303 SM — — 2,139 3,777 5,660 365 — — 11,941 SS 1,000 319 4,866 — — — — — 6,185 Total 85,162 212,906 99,515 5,403 7,213 4,229 1 — 414,429 Consumer Pass 1,897 1,980 293 6,221 15,841 20,402 122,007 1,123 169,764 SS — — — 134 207 893 333 40 1,607 Total 1,897 1,980 293 6,355 16,048 21,295 122,340 1,163 171,371 Loans receivable Pass 487,367 905,558 684,765 338,039 459,520 1,045,585 263,748 1,311 4,185,893 SM — 2,495 12,634 6,844 11,491 37,389 9,124 — 79,977 SS 1,000 2,132 13,309 4,336 1,283 35,091 12,501 105 69,757 Total $ 488,367 $ 910,185 $ 710,708 $ 349,219 $ 472,294 $ 1,118,065 $ 285,373 $ 1,416 $ 4,335,627 (1) Represents the loans receivable balance at December 31, 2023 which was converted from a revolving loan to a non-revolving amortizing loan during the year ended December 31, 2023 The following tables present the gross charge-offs by loan class and origination year, for the periods indicated: Year Ended December 31, 2024 Current Period Gross Charge-offs by Origination Year Revolving Loans Total Gross Charge-Offs 2024 2023 2022 2021 2020 Prior (Dollars in thousands) Commercial business $ — $ 313 $ — $ — $ 4 $ 2,636 $ — $ 2,953 Consumer — 6 22 — 11 168 331 538 Total $ — $ 319 $ 22 $ — $ 15 $ 2,804 $ 331 $ 3,491 Year Ended December 31, 2023 Current Period Gross Charge-offs by Origination Year Revolving Loans Total Gross Charge-Offs 2023 2022 2021 2020 2019 Prior (Dollars in thousands) Commercial business $ — $ — $ 254 $ 323 $ 27 $ 115 $ — $ 719 Consumer 7 10 30 29 106 152 252 586 Total $ 7 $ 10 $ 284 $ 352 $ 133 $ 267 $ 252 $ 1,305 (d) Nonaccrual Loans The following tables present the amortized cost of nonaccrual loans at the dates indicated: December 31, 2024 Nonaccrual without ACL Nonaccrual with ACL Total Nonaccrual (Dollars in thousands) Commercial business: Commercial and industrial $ 1,002 $ 667 $ 1,669 Owner-occupied CRE 2,250 — 2,250 Total commercial business 3,252 667 3,919 Consumer 160 — 160 Total $ 3,412 $ 667 $ 4,079 December 31, 2023 Nonaccrual without ACL Nonaccrual with ACL Total Nonaccrual (Dollars in thousands) Commercial business: Commercial and industrial $ 1,706 $ 2,557 $ 4,263 Owner-occupied CRE — 205 205 Total $ 1,706 $ 2,762 $ 4,468 The following table presents the reversal of interest income on loans due to the write-off of accrued interest receivable upon the initial classification of loans as nonaccrual loans and the interest income recognized due to payment in full or sale of previously classified nonaccrual loans during the following periods: Year Ended December 31, 2024 Year Ended December 31, 2023 Interest Income Reversed Interest Income Recognized Interest Income Reversed Interest Income Recognized (Dollars in thousands) Commercial business: Commercial and industrial $ (27) $ 461 $ (61) $ 347 Owner-occupied CRE (28) 144 — — Total commercial business (55) 605 (61) 347 Consumer (5) — — — Total $ (60) $ 605 $ (61) $ 347 For the year ended December 31, 2024 and 2023, no interest income was recognized subsequent to a loan’s classification as nonaccrual, except as indicated in the tables above due to payment in full or sale. (e) Past due loans The Company performs an aging analysis of past due loans using policies consistent with regulatory reporting requirements with categories of 30-89 days past due and 90 or more days past due. The following tables present the amortized cost of past due loans at the dates indicated: December 31, 2024 30-89 Days 90 Days Total Past Current Loans Receivable (Dollars in thousands) Commercial business: Commercial and industrial $ 659 $ 2,471 $ 3,130 $ 839,542 $ 842,672 Owner-occupied CRE 1,426 — 1,426 1,001,817 1,003,243 Non-owner occupied CRE — — — 1,909,107 1,909,107 Total commercial business 2,085 2,471 4,556 3,750,466 3,755,022 Residential real estate 832 — 832 402,122 402,954 Real estate construction and land development: Residential — — — 83,890 83,890 Commercial and multifamily — — — 395,553 395,553 Total real estate construction and land development — — — 479,443 479,443 Consumer 339 160 499 164,205 164,704 Total $ 3,256 $ 2,631 $ 5,887 $ 4,796,236 $ 4,802,123 December 31, 2023 30-89 Days 90 Days or Total Past Current Loans Receivable (Dollars in thousands) Commercial business: Commercial and industrial $ 2,289 $ 3,857 $ 6,146 $ 712,145 $ 718,291 Owner-occupied CRE — 189 189 958,431 958,620 Non-owner occupied CRE 1,489 — 1,489 1,696,085 1,697,574 Total commercial business 3,778 4,046 7,824 3,366,661 3,374,485 Residential real estate 162 — 162 375,180 375,342 December 31, 2023 30-89 Days 90 Days or Total Past Current Loans Receivable (Dollars in thousands) Real estate construction and land development: Residential — 319 319 78,291 78,610 Commercial and multifamily — — — 335,819 335,819 Total real estate construction and land development — 319 319 414,110 414,429 Consumer 615 87 702 170,669 171,371 Total $ 4,555 $ 4,452 $ 9,007 $ 4,326,620 $ 4,335,627 The following table present loans 90 days or more past due and still accruing interest: December 31, 2024 December 31, 2023 (Dollars in thousands) Commercial business: Commercial and industrial $ 1,195 $ 887 Total commercial business 1,195 887 Real estate construction and land development: Residential — 319 Total real estate construction and land development — 319 Consumer — 87 Total $ 1,195 $ 1,293 (f) Collateral-dependent Loans The following tables present the type of collateral securing loans individually evaluated for credit losses and for which the repayment was expected to be provided substantially through the operation or sale of the collateral at the dates indicated, with b alances representing the amortized cost of the loan classified by the primary collateral category of each loan if multiple collateral sources secure the loan : December 31, 2024 CRE Farmland Residential Real Estate Equipment Total (Dollars in thousands) Commercial business: Commercial and industrial $ — $ 389 $ 613 $ — $ 1,002 Owner-occupied CRE 2,250 — — — 2,250 Total commercial business 2,250 389 613 — 3,252 Consumer — — 160 — 160 Total $ 2,250 $ 389 $ 773 $ — $ 3,412 December 31, 2023 CRE Farmland Residential Real Estate Equipment Total (Dollars in thousands) Commercial business: Commercial and industrial $ 260 $ 389 $ 621 $ 304 $ 1,574 Owner-occupied CRE 189 — — — 189 Total commercial business 449 389 621 304 1,763 Total $ 449 $ 389 $ 621 $ 304 $ 1,763 There have been no significant changes to the collateral securing loans individually evaluated for credit losses and for which repayment was expected to be provided substantially through the operation or sale of the collateral during the year ended December 31, 2024, except changes due to additions or removals of loans in this classification. (g) Modification of Loans Occasionally, the Company modifies loans to borrowers in financial distress by providing modifications of loans which may include interest rate reductions, principal or interest forgiveness, term extensions, and other actions intended to minimize economic loss and to avoid foreclosure or repossession of collateral. In some cases, the Company provides multiple types of concessions on one loan. When principal forgiveness is provided, the amount of forgiveness is charged-off against the ACL. The following tables present amortized cost of loans that were experiencing both financial difficulty and modified during the periods indicated: Year Ended December 31, 2024 Term Extension Term Extension & Int. Rate Reduction Total Modified Loans % of Modified Loans to Loans Receivable, net (Dollars in thousands) Commercial business: Commercial and industrial $ 20,962 $ 200 $ 21,162 2.51 % Total commercial business 20,962 200 21,162 0.56 Real estate construction and land development: Residential 6,750 — 6,750 8.05 Commercial and multifamily 5,655 15,625 21,280 5.38 Total real estate construction and land development 12,405 15,625 28,030 5.85 Consumer 44 — 44 0.03 Total $ 33,411 $ 15,825 $ 49,236 1.03 % Year Ended December 31, 2023 Term Extension Term Extension & Int. Rate Reduction Total Modified Loans % of Modified Loans to Loans Receivable, net (Dollars in thousands) Commercial business: Commercial and industrial $ 16,822 $ — $ 16,822 2.34 % Owner-occupied CRE 209 — 209 0.02 Non-owner occupied CRE 2,701 237 2,938 0.17 Total commercial business 19,732 237 19,969 0.59 Real estate construction and land development: Residential 5,866 — 5,866 7.46 Commercial and multifamily 3,777 — 3,777 1.12 Total real estate construction and land development 9,643 — 9,643 2.33 Consumer 26 15 41 0.02 Total $ 29,401 $ 252 $ 29,653 0.68 % The following tables present the financial effect of the loan modifications presented in the preceding table during the periods indicated: Year Ended December 31, 2024 Weighted Average % of Interest Rate Reductions Weighted Average Years of Term Extensions Commercial business: Commercial and industrial 1.10 % 0.85 Total commercial business 1.10 0.85 Real estate construction and land development: Residential — 0.17 Commercial and multifamily 1.50 1.25 Total real estate construction and land development 1.50 0.99 Consumer — 1.78 Total 1.50 % 0.93 Year Ended December 31, 2023 Weighted Average % of Interest Rate Reductions Weighted Average Years of Term Extensions Commercial business: Commercial and industrial — % 0.48 Owner-occupied CRE — 0.75 Non-owner occupied CRE 3.00 1.09 Total commercial business 3.00 0.57 Real estate construction and land development: Residential — 0.57 Commercial and multifamily — 0.83 Total real estate construction and land development — 0.67 Consumer 1.00 2.64 Total 3.00 % 0.61 There were no modified loans included in the tables above that were past due or on nonaccrual as of December 31, 2024. There were no loans to borrowers experiencing financial difficulty that had a payment default during the year ended December 31, 2024 that were modified in the twelve months prior to that default. At December 31, 2024, there were $4.3 million in commitments to lend additional funds to borrowers experiencing financial difficulty whose terms had been modified during the year ended December 31, 2024. At December 31, 2023, there were $6.6 million in commitments to lend additional funds to borrowers experiencing financial difficulty whose terms had been modified during the year ended December 31, 2023. The Company closely monitors the performance of loans that are modified for borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The Company considers a modified loan as a payment default if the borrower is 90 or more days past due. At December 31, 2024, there were no loans 90 days past due or in default that have been modified in the past 12 months. (h) Related Party Loans In the ordinary course of business, the Company has granted loans to certain directors, executive officers and their affiliates. The following table presents the activity in related party loans during the periods indicated: Year Ended December 31, 2024 2023 2022 (Dollars in thousands) Balance outstanding at the beginning of year $ 6,749 $ 6,879 $ 7,122 Principal additions — 122 — Principal reductions (289) (252) (243) Balance outstanding at the end of year $ 6,460 $ 6,749 $ 6,879 All related party loans were performing in accordance with the underlying loan agreements as of December 31, 2024 and December 31, 2023. The Company had $143,000 and $113,000 of unfunded commitments to related parties as of December 31, 2024 and December 31, 2023. (i) Commercial Loan Sales and Servicing The following table presents the details of loans serviced for others at the dates indicated: December 31, 2024 December 31, 2023 (Dollars in thousands) Loans serviced for others with participating interest, gross loan balance $ 5,663 $ 11,715 Loans serviced for others with participating interest, participation balance owned by Company (1) 1,110 2,466 (1) Included in the balance of "Loans receivable " in the Consolidated Statements of Financial Condition. The Company recognized $94,000, $135,000 and $217,000 of servicing income for the years ended December 31, 2024, 2023 and 2022, respectively. (j) Accrued interest receivable on loans receivable Accrued interest receivable on loans receivable totaled $14.5 million and $13.3 million at December 31, 2024 and December 31, 2023, respectively, and is excluded from the calculation of the ACL on loans as interest accrued, but not received, is reversed timely. (k) Foreclosure proceedings in process At December 31, 2024, there was one home equity loan valued at $160,000, secured by residential real estate, for which formal foreclosure proceedings were in process. At December 31, 2023, there were no loans secured by residential real estate for which formal foreclosure proceedings were in process. |
