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Loans Held for Investment
 12 Months Ended
Dec. 31, 2024
Receivables [Abstract]  
Loans Held for Investment
Note 4 – Loans Held for Investment
 
The Company’s loan portfolio is segmented according to loans that share similar attributes and risk characteristics.
Investor loans secured by real estate include CRE non-owner-occupied, multifamily, construction, and land, as well as SBA loans secured by real estate, which are loans collateralized by hotel/motel real property.

Business loans secured by real estate are loans to businesses that are collateralized by real estate where the operating cash flow of the business is the primary source of repayment. This loan portfolio includes CRE owner-occupied, franchise loans secured by real estate, and SBA loans secured by real estate, which are collateralized by real property other than hotel/motel real property.

Commercial loans are loans to businesses where the operating cash flow of the business is the primary source of repayment. This loan portfolio includes commercial and industrial loans, franchise loans not secured by real estate, and SBA loans non-real estate secured.

Retail loans include single family residential and consumer loans. Single family residential loans include home equity lines of credit, as well as second trust deeds.    
The following table presents the composition of the loan portfolio as of the dates indicated:
 December 31,
(Dollars in thousands)20242023
Investor loans secured by real estate
CRE non-owner-occupied$2,131,112 $2,421,772 
Multifamily5,326,009 5,645,310 
Construction and land379,143 472,544 
SBA secured by real estate28,777 36,400 
Total investor loans secured by real estate7,865,041 8,576,026 
Business loans secured by real estate
CRE owner-occupied1,995,144 2,191,334 
Franchise real estate secured255,694 304,514 
SBA secured by real estate43,978 50,741 
Total business loans secured by real estate2,294,816 2,546,589 
Commercial loans
Commercial and industrial1,486,340 1,790,608 
Franchise non-real estate secured213,357 319,721 
SBA non-real estate secured8,086 10,926 
Total commercial loans1,707,783 2,121,255 
Retail loans
Single family residential186,739 72,752 
Consumer1,804 1,949 
Total retail loans188,543 74,701 
Loans held for investment before basis adjustment (1)
12,056,183 13,318,571 
Basis adjustment associated with fair value hedge (2)
(16,442)(29,551)
Loans held for investment12,039,741 13,289,020 
Allowance for credit losses for loans held for investment(178,186)(192,471)
Loans held for investment, net$11,861,555 $13,096,549 
Total unfunded loan commitments$1,532,623 $1,703,470 
Loans held for sale, at lower of cost or fair value$2,315 $— 
____________________________________________________
(1) Includes unamortized net purchase premiums of $9.1 million and $4.0 million, net deferred origination costs (fees) of $1.1 million and $(74,000), and unaccreted fair value net purchase discounts of $33.2 million and $43.3 million as of December 31, 2024 and 2023, respectively.
(2) Represents the basis adjustment associated with the application of hedge accounting on certain loans. The basis adjustment will be allocated to the amortized cost of associated loans within the closed portfolio if the hedge is discontinued. Refer to Note 19 – Derivative Instruments for additional information.

The Company originates SBA loans with the intent to sell the guaranteed portion of the loans prior to maturity and, therefore, designates them as held for sale. From time to time, the Company may purchase or sell other types of loans or participation interests in order to manage concentrations, maximize interest income, change risk profiles, improve returns, and generate liquidity.
Loans Serviced for Others and Loan Securitization

The Company generally retains the servicing rights of the guaranteed portion of SBA loans sold, for which the Company initially records servicing assets at fair value within its other assets category. Servicing assets are subsequently measured using the amortization method and amortized to noninterest income. At December 31, 2024 and 2023, the servicing assets totaled $1.0 million and $1.6 million, respectively, and were included in other assets on the Company’s consolidated statements of financial condition. Servicing assets are evaluated for impairment based upon the fair value of the servicing rights as compared to the carrying amount. Impairment is recognized through a valuation allowance, to the extent the fair value is less than the carrying amount. The fair value of retained servicing rights is generally evaluated at the loan level using a discounted cash flow analysis utilizing current market assumptions derived from the secondary market. Key modeling assumptions include interest rates, prepayment assumptions, discount rate, and servicing cost. At December 31, 2024, and 2023, the Company determined that no valuation allowance was necessary.

In connection with the acquisition of Opus Bank (“Opus”), the Company acquired Federal Home Loan Mortgage Corporation (“Freddie Mac”) guaranteed structured pass-through certificates, which were issued as a result of Opus’s securitization sale of $509.0 million in originated multifamily loans through a Freddie Mac-sponsored transaction in December 2016. The Company's continuing involvement includes sub-servicing responsibilities, general representations and warranties, and reimbursement obligations. Servicing responsibilities on loan sales generally include obligations to collect and remit payments of principal and interest, provide foreclosure services, manage payments of taxes and insurance premiums, and otherwise administer the underlying loans. In connection with the securitization transaction, Freddie Mac was designated as the master servicer and appointed the Company to perform sub-servicing responsibilities, which generally include the servicing responsibilities described above with the exception of the servicing of foreclosed or defaulted loans. The overall management, servicing, and resolution of defaulted loans and foreclosed loans are separately designated to the special servicer, a third-party institution that is independent of the master servicer and the Company. The master servicer has the right to terminate the Company in its role as sub-servicer and direct such responsibilities accordingly.

To the extent the ultimate resolution of defaulted loans results in contractual principal and interest payments that are deficient, the Company is obligated to reimburse Freddie Mac for such amounts, not to exceed 10% of the original principal amount of the loans comprising the securitization pool at the closing date of December 23, 2016. The liability recorded for the Company’s exposure to the reimbursement agreement with Freddie Mac was $274,000 and $345,000 as of December 31, 2024 and 2023, respectively.

Loans sold and serviced for others are not included in the accompanying consolidated statements of financial condition. The unpaid principal balances of loans and participations serviced for others were $307.3 million and $373.8 million at December 31, 2024 and 2023, respectively. Included in those totals are multifamily loans transferred through securitization with Freddie Mac of $37.4 million and $48.0 million at December 31, 2024 and 2023, respectively, and SBA participations serviced for others totaling $212.5 million and $258.1 million at December 31, 2024 and 2023, respectively.
 
Concentration of Credit Risk
 
As of December 31, 2024, the Company’s loan portfolio was primarily collateralized by various forms of real estate and business assets located principally in California. The Company’s loan portfolio contains concentrations of credit in multifamily, CRE non-owner-occupied, CRE owner-occupied, and C&I business loans. The Bank maintains policies approved by the Bank’s Board of Directors (the “Bank Board”) that address these concentrations, and diversifies its loan portfolio through loan originations, purchases, and sales to meet approved concentration levels.

During the fourth quarter of 2024, the Bank converted to a national banking association, and as such all loans and extensions of credit made by the Bank are subject to the legal lending limits for national banks. Under applicable laws and regulations, the Bank may not make loans to one borrower in excess of 15% of the Bank’s capital and surplus, plus an additional 10% of the Bank’s capital and surplus, if the amount that exceeds the Bank’s 15% general limit is fully secured by readily marketable collateral. At December 31, 2024, these loans-to-one-borrower limitations result in a dollar limitation of $375.5 million for the 15% general limit and a maximum dollar limitation of $625.8 million for the 25% combined limit. In order to manage concentration risk, the Bank maintains an internal lending limit well below these statutory maximums. At December 31, 2024, the Bank’s largest aggregate outstanding balance of loans to one borrower was $162.2 million, primarily comprised of multifamily loans.

Credit Quality and Credit Risk Management
 
The Company’s credit quality and credit risk is managed in two distinct areas. The first is the loan origination process, wherein the Bank underwrites credit and chooses which types and levels of risk it is willing to accept. The Company maintains a credit policy which addresses many related topics, sets forth maximum tolerances for key elements of loan risk, and indicates appropriate protocols for identifying and analyzing these risk elements. The policy sets forth specific guidelines for analyzing each of the loan products the Company offers from both an individual and portfolio-wide basis. The credit policy is reviewed at least annually by the Bank Board. The Bank’s underwriters ensure all key risk factors are analyzed, with most underwriting including a global cash flow analysis of the prospective borrowers. 
    
The second area is in the ongoing oversight of the loan portfolio, where existing credit risk is measured and monitored, and where performance issues are dealt with in a timely and appropriate fashion. Credit risk is monitored and managed within the loan portfolio by the Company’s portfolio managers based on both the credit policy and a credit and portfolio review policy. This latter policy requires a program of financial data collection and analysis, thorough loan reviews, property and/or business inspections, monitoring of portfolio concentrations and trends, and consideration of current business and economic conditions. The portfolio managers also monitor asset-based lines of credit, loan covenants, and other conditions associated with the Company’s business loans as a means to help identify potential credit risk. Most individual loans, excluding the homogeneous loan portfolio, are reviewed at least annually, including the assignment or confirmation of a risk grade.

Risk grades are based on a six-grade Pass scale, along with Special Mention, Substandard, Doubtful, and Loss classifications, as such classifications are defined by the federal banking regulatory agencies. The assignment of risk grades allows the Company to, among other things, identify the risk associated with each credit in the portfolio and to provide a basis for estimating credit losses inherent in the portfolio. Risk grades are reviewed regularly with the Company’s Credit and Portfolio Review Committee, and the portfolio management and risk grading process is reviewed on an ongoing basis by both an independent loan review function and periodic internal audits, as well as by regulatory agencies during scheduled examinations.
    
The following provides brief definitions for risk grades assigned to loans in the portfolio:
•Pass assets carry an acceptable level of credit quality that contains no well-defined deficiencies or weaknesses.
•Special Mention assets do not currently expose the Bank to a sufficient risk to warrant classification in one of the adverse categories, but possess correctable deficiencies or potential weaknesses deserving management’s close attention.
•Substandard assets are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. These assets are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. Other real estate owned (“OREO”) acquired through foreclosure are also classified as substandard assets.
•Doubtful credits have all the weaknesses inherent in substandard credits, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.
•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 Bank’s portfolio managers also manage loan performance risks, collections, workouts, bankruptcies, and foreclosures. A special assets department, whose portfolio managers have professional expertise in these areas, typically handles or advises on these types of matters. Loan performance risks are mitigated by our portfolio managers acting promptly and assertively to address problem credits when they are identified. Collection efforts commence immediately upon non-payment, and the portfolio managers seek to promptly determine the appropriate steps to minimize the Company’s risk of loss. When foreclosure will maximize the Company’s recovery for a non-performing loan, the portfolio managers will take appropriate action to initiate the foreclosure process.

When a loan is graded as special mention, substandard, or doubtful, the Company obtains an updated valuation of the underlying collateral. Collateral generally consists of accounts receivable, inventory, fixed assets, real estate properties, and cash. The Company typically continues to obtain or confirm updated valuations of underlying collateral for special mention and classified loans on an annual or biennial basis, in accordance with our credit policy, in order to have the most current indication of fair value of the underlying collateral securing the loan. If the loan no longer possesses risk characteristics similar to other loans of a similar type in the loan portfolio, then the loan is individually evaluated to determine an appropriate ACL for the loan. If, through the Company’s credit risk management process, it is determined the ultimate repayment of a loan will come from the foreclosure upon and ultimate sale of the underlying collateral, the loan is deemed collateral dependent. If an individually evaluated loan is not considered collateral dependent, the associated ACL is determined through the use of a discounted cash flow analysis.
The following table stratifies the loans held for investment portfolio by the Company’s internal risk grading, and by year of origination, as well as the gross charge-offs on a year-to-date basis by year of origination as of December 31, 2024:
Term Loans by Vintage
(Dollars in thousands)20242023202220212020PriorRevolvingRevolving Converted to Term During the PeriodTotal
December 31, 2024
Investor loans secured by real estate
CRE non-owner-occupied
Pass$61,326 $30,284 $448,638 $491,594 $160,984 $900,867 $— $— $2,093,693 
Special mention— — — 2,918 — 1,531 — — 4,449 
Substandard13,563 — 11,167 — 5,740 2,500 — — 32,970 
Multifamily
Pass120,793 168,040 1,136,648 1,931,238 669,154 1,272,416 — — 5,298,289 
Special mention— — — 2,053 14,052 11,615 — — 27,720 
Construction and land
Pass79,235 47,024 216,604 21,063 2,224 3,185 — — 369,335 
Special mention— — 9,398 410 — — — — 9,808 
SBA secured by real estate
Pass— — 6,366 — 493 17,189 — — 24,048 
Substandard— — — 131 — 4,598 — — 4,729 
Total investor loans secured by real estate274,917 245,348 1,828,821 2,449,407 852,647 2,213,901 — — 7,865,041 
Year-to-date gross charge-offs
2,304 — 28 29 11,539 1,651 — — 15,551 
Business loans secured by real estate
CRE owner-occupied
Pass54,983 20,800 505,611 578,642 209,526 546,759 — — 1,916,321 
Special mention— — 2,663 24,673 1,884 9,169 — — 38,389 
Substandard— — — 832 — 39,602 — — 40,434 
Franchise real estate secured
Pass2,501 9,622 36,991 98,416 15,397 78,083 — — 241,010 
Special mention— — — 5,027 8,102 1,555 — — 14,684 
SBA secured by real estate
Pass741 108 9,699 7,007 1,205 22,101 — — 40,861 
Substandard— — — — — 3,117 — — 3,117 
Total loans secured by business real estate58,225 30,530 554,964 714,597 236,114 700,386 — — 2,294,816 
Year-to-date gross charge-offs
— 93 3,345 581 1,152 1,024 — — 6,195 
Commercial loans
Commercial and industrial
Pass436,794 34,576 122,900 130,428 32,337 210,544 484,411 3,926 1,455,916 
Special mention533 407 — — 160 — 11,408 330 12,838 
Substandard— 842 9,192 2,439 3 540 1,685 — 14,701 
Doubtful and loss— — 2,885 — — — — — 2,885 
Franchise non-real estate secured
Pass1,325 6,770 56,825 77,541 8,907 54,069 — — 205,437 
Special mention— — — 190 — 512 — — 702 
Substandard1,142 — — — — 6,076 — — 7,218 
Term Loans by Vintage
(Dollars in thousands)20242023202220212020PriorRevolvingRevolving Converted to Term During the PeriodTotal
December 31, 2024
SBA non-real estate secured
Pass944 248 4,176 322 — 2,201 — — 7,891 
Substandard— — — — 125 70 — — 195 
Total commercial loans440,738 42,843 195,978 210,920 41,532 274,012 497,504 4,256 1,707,783 
Year-to-date gross charge-offs
— 470 370 290 41 234 2,539 — 3,944 
Retail loans
Single family residential
Pass116,317 10 — — 158 35,923 34,331 — 186,739 
Consumer loans
Pass104 — — — 1 374 1,325 — 1,804 
Total retail loans116,421 10 — — 159 36,297 35,656 — 188,543 
Current period gross charge-offs10 2 7 1 — 876 — — 896 
Loans held for investment before basis adjustment (1)
$890,301 $318,731 $2,579,763 $3,374,924 $1,130,452 $3,224,596 $533,160 $4,256 $12,056,183 
Total year-to-date gross charge-offs
$2,314 $565 $3,750 $901 $12,732 $3,785 $2,539 $— $26,586 
______________________________
(1) Excludes the basis adjustment of $16.4 million to the carrying amount of certain loans included in fair value hedging relationships. Refer to Note 19 – Derivative Instruments for additional information.

The following table stratifies the loans held for investment portfolio by the Company’s internal risk grading, and by year of origination, as of December 31, 2023:

Term Loans by Vintage
(Dollars in thousands)20232022202120202019PriorRevolvingRevolving Converted to Term During the PeriodTotal
December 31, 2023
Investor loans secured by real estate
CRE non-owner-occupied
Pass$71,452 $482,045 $549,828 $192,399 $315,139 $795,856 $— $— $2,406,719 
Special mention— 3,811 2,530 — — 625 — — 6,966 
Substandard— 412 — — — 7,675 — — 8,087 
Multifamily
Pass179,055 1,184,329 2,008,126 725,123 822,411 714,638 — — 5,633,682 
Special mention— — — — — 11,628 — — 11,628 
Construction and land
Pass59,993 309,677 94,845 2,223 2,368 3,438 — — 472,544 
SBA secured by real estate
Pass— 6,478 — 493 4,804 16,496 — — 28,271 
Substandard— — 131 — 536 7,462 — — 8,129 
Total investor loans secured by real estate$310,500 $1,986,752 $2,655,460 $920,238 $1,145,258 $1,557,818 $— $— $8,576,026 
Year-to-date gross charge-offs
— — 217 — 1,582 3,653 — — 5,452 
Term Loans by Vintage
(Dollars in thousands)20232022202120202019PriorRevolvingRevolving Converted to Term During the PeriodTotal
December 31, 2023
Business loans secured by real estate
CRE owner-occupied
Pass$19,014 $543,413 $660,967 $224,333 $211,283 $458,975 $— $— $2,117,985 
Special mention— 16,535 — 476 4,775 11,775 919 — 34,480 
Substandard— 15,539 2,162 5,505 3,873 11,790 — — 38,869 
Franchise real estate secured
Pass10,580 39,239 124,424 25,697 15,731 72,342 — — 288,013 
Special mention1,758 3,603 1,903 — 795 1,615 — — 9,674 
Substandard— 3,964 — — 2,571 292 — — 6,827 
SBA secured by real estate
Pass113 9,334 7,634 1,979 4,109 22,417 — — 45,586 
Special mention— 536 — — — 83 — — 619 
Substandard— — — — — 4,536 — — 4,536 
Total loans secured by business real estate31,465 632,163 797,090 257,990 243,137 583,825 919 — 2,546,589 
Year-to-date gross charge-offs
— — 318 191 — 1,861 — — 2,370 
Commercial loans
Commercial and industrial
Pass46,765 172,987 160,275 40,988 110,526 146,310 966,733 6,518 1,651,102 
Special mention239 23,242 12,270 367 16 2,139 42,570 407 81,250 
Substandard425 8,052 2,689 588 173 1,138 26,462 14,187 53,714 
Doubtful and loss— — — — — — — 4,542 4,542 
Franchise non-real estate secured
Pass6,801 74,441 112,112 16,355 34,770 53,957 — 753 299,189 
Special mention433 845 1,633 — 627 692 — — 4,230 
Substandard— 1,646 322 2,324 10,451 1,559 — — 16,302 
SBA non-real estate secured
Pass1,075 4,485 343 113 1,464 2,490 — — 9,970 
Substandard— 527 — 141 53 235 — — 956 
Total commercial loans55,738 286,225 289,644 60,876 158,080 208,520 1,035,765 26,407 2,121,255 
Year-to-date gross charge-offs
132 3,053 62 5 362 37 6,387 503 10,541 
Retail loans
Single family residential
Pass20 — — 167 — 44,104 28,461 — 72,752 
Consumer loans
Pass— — 3 9 5 788 1,144 — 1,949 
Total retail loans20 — 3 176 5 44,892 29,605 — 74,701 
Year-to-date gross charge-offs
— — — — — 983 3 — 986 
Loans held for investment before basis adjustment (1)
$397,723 $2,905,140 $3,742,197 $1,239,280 $1,546,480 $2,395,055 $1,066,289 $26,407 $13,318,571 
Total year-to-date gross charge-offs
$132 $3,053 $597 $196 $1,944 $6,534 $6,390 $503 $19,349 
______________________________
(1) Excludes the basis adjustment of $29.6 million to the carrying amount of certain loans included in fair value hedging relationships. Refer to Note 19 – Derivative Instruments for additional information.
The following tables stratify the loans held for investment portfolio by delinquency as of the periods indicated:
Days Past Due(2)
(Dollars in thousands)Current30-5960-8990+Total
December 31, 2024
Investor loans secured by real estate
CRE non-owner-occupied$2,131,112 $— $— $— $2,131,112 
Multifamily5,326,009 — — — 5,326,009 
Construction and land379,143 — — — 379,143 
SBA secured by real estate28,777 — — — 28,777 
Total investor loans secured by real estate7,865,041 — — — 7,865,041 
Business loans secured by real estate
CRE owner-occupied1,995,144 — — — 1,995,144 
Franchise real estate secured255,694 — — — 255,694 
SBA secured by real estate43,978 — — — 43,978 
Total business loans secured by real estate2,294,816 — — — 2,294,816 
Commercial loans
Commercial and industrial1,483,926 824 349 1,241 1,486,340 
Franchise non-real estate secured213,357 — — — 213,357 
SBA not secured by real estate8,017 49 — 20 8,086 
Total commercial loans1,705,300 873 349 1,261 1,707,783 
Retail loans
Single family residential186,603 136 — — 186,739 
Consumer loans1,804 — — — 1,804 
Total retail loans188,407 136 — — 188,543 
Loans held for investment before basis adjustment (1)
$12,053,564 $1,009 $349 $1,261 $12,056,183 
December 31, 2023
Investor loans secured by real estate
CRE non-owner-occupied$2,421,360 $— $— $412 $2,421,772 
Multifamily5,645,310 — — — 5,645,310 
Construction and land472,544 — — — 472,544 
SBA secured by real estate35,980 — — 420 36,400 
Total investor loans secured by real estate8,575,194 — — 832 8,576,026 
Business loans secured by real estate
CRE owner-occupied2,186,679 — — 4,655 2,191,334 
Franchise real estate secured304,222 292 — — 304,514 
SBA secured by real estate50,604 137 — — 50,741 
Total business loans secured by real estate2,541,505 429 — 4,655 2,546,589 
Commercial loans
Commercial and industrial1,788,855 228 1,294 231 1,790,608 
Franchise non-real estate secured318,162 1,559 — — 319,721 
SBA not secured by real estate10,119 249 — 558 10,926 
Total commercial loans2,117,136 2,036 1,294 789 2,121,255 
Retail loans
Single family residential72,733 19 — — 72,752 
Consumer loans1,949 — — — 1,949 
Total retail loans74,682 19 — — 74,701 
Loans held for investment before basis adjustment (1)
$13,308,517 $2,484 $1,294 $6,276 $13,318,571 
______________________________
(1) Excludes the basis adjustment of $16.4 million and $29.6 million to the carrying amount of certain loans included in fair value hedging relationships as of December 31, 2024 and 2023, respectively. Refer to Note 19 – Derivative Instruments for additional information.
(2) Nonaccrual loans are included in this aging analysis based on the loan’s past due status.
Individually Evaluated Loans

The Company evaluates loans collectively for purposes of determining the ACL in accordance with ASC 326. Collective evaluation is based on aggregating loans deemed to possess similar risk characteristics. In certain instances, the Company may identify loans that it believes no longer possess risk characteristics similar to other loans in the portfolio. These loans are typically identified from a substandard or worse internal risk grade, since the specific attributes and risks associated with such loans tend to become unique as the credit deteriorates. Such loans are typically nonperforming, can be modified loans made to borrowers experiencing financial difficulty, and/or are deemed collateral dependent, where the ultimate repayment of the loan is expected to come from the operation of or eventual sale of the collateral. Loans that are deemed by management to no longer possess risk characteristics similar to other loans in the portfolio are evaluated individually for purposes of determining an appropriate lifetime ACL. The Company uses a discounted cash flow approach, using the loan’s effective interest rate, for determining the ACL on individually evaluated loans, unless the loan is deemed collateral dependent, which requires evaluation based on the estimated fair value of the underlying collateral, less estimated costs to sell. The Company may increase or decrease the ACL for collateral dependent individually evaluated loans based on changes in the estimated expected fair value of the collateral. Changes in the ACL for all other individually evaluated loans is based substantially on the Company’s evaluation of cash flows expected to be received from such loans.

As of December 31, 2024, $28.0 million of loans were individually evaluated with no ACL attributed to such loans. At December 31, 2024, $17.1 million of individually evaluated loans were evaluated based on the underlying value of the collateral, and $10.9 million were evaluated using a discounted cash flow approach. All individually evaluated loans were on nonaccrual status at December 31, 2024.

As of December 31, 2023, $24.8 million of loans were individually evaluated with no ACL attributed to such loans. At December 31, 2023, $12.2 million of the individually evaluated loans were evaluated based on the underlying value of the collateral, and $12.6 million were evaluated using a discounted cash flow approach. All individually evaluated loans were on nonaccrual status at December 31, 2023.

Purchased Credit Deteriorated Loans
The Company analyzed acquired loans for more-than-insignificant deterioration in credit quality since their origination. Such loans are classified as purchased credit deteriorated loans. Please see Note 1 – Description of Business and Summary of Significant Accounting Policies for more information concerning the accounting for PCD loans. The Company had PCD loans of $275.4 million and $359.3 million at December 31, 2024 and 2023, respectively.

Acquired loans classified as PCD are recorded at an initial amortized cost, which is comprised of the purchase price of the loans (or initial fair value) and the initial ACL determined for the loans, which is added to the purchase price, as well as any resulting discount or premium related to factors other than credit. The Company accounts for interest income on PCD loans using the interest method, whereby any purchase discounts or premiums are accreted or amortized into interest income as an adjustment of the loan’s yield. Subsequent to acquisition, the ACL for PCD loans is measured in accordance with the Company’s ACL methodology. Please also see Note 5 – Allowance for Credit Losses for more information concerning the Company’s ACL methodology.
Nonaccrual Loans

When loans are placed on nonaccrual status, previously accrued but unpaid interest is reversed from current period earnings. Payments received on nonaccrual loans are generally applied as a reduction to the loan principal balance. If the likelihood of further loss is remote, the Company may recognize interest on a cash basis. Loans may be returned to accruing status if the Company believes that all remaining principal and interest is fully collectible and there has been at least three months of sustained repayment performance since the loan was placed on nonaccrual.
 
The Company typically does not accrue interest on loans 90 days or more past due or when, in the opinion of management, there is reasonable doubt as to the timely collection of principal or interest regardless of the length
of past due status. However, when such loans are well-secured and in the process of collection, the Company may continue with the accrual of interest. The Company had loans on nonaccrual status of $28.0 million and $24.8 million at December 31, 2024 and 2023, respectively.

The Company did not record income from the receipt of cash payments related to nonaccruing loans during the years ended December 31, 2024, 2023, and 2022. The Company had no loans 90 days or more past due and still accruing at December 31, 2024 and 2023.

The following tables provide a summary of nonaccrual loans as of the dates indicated:
Nonaccrual Loans (1)
Collateral Dependent LoansNon-Collateral Dependent LoansTotal Nonaccrual LoansNonaccrual Loans with No ACL
(Dollars in thousands)BalanceACLBalanceACL
December 31, 2024
Investor loans secured by real estate
CRE non-owner-occupied$15,423 $— $— $— $15,423 $15,423 
SBA secured by real estate409 — — — 409 409 
Total investor loans secured by real estate15,832 — — — 15,832 15,832 
Commercial loans
Commercial and industrial1,241 — 10,938 — 12,179 12,179 
SBA non-real estate secured20 — — — 20 20 
Total commercial loans1,261 — 10,938 — 12,199 12,199 
Total nonaccrual loans$17,093 $— $10,938 $— $28,031 $28,031 
December 31, 2023
Investor loans secured by real estate
CRE non-owner-occupied$412 $— $— $— $412 $412 
SBA secured by real estate1,205 — — — 1,205 1,205 
Total investor loans secured by real estate1,617 — — — 1,617 1,617 
Business loans secured by real estate
CRE owner-occupied8,666 — — — 8,666 8,666 
Total business loans secured by real estate8,666 — — — 8,666 8,666 
Commercial loans
Commercial and industrial1,381 — 12,595 — 13,976 13,976 
SBA non-real estate secured558 — — — 558 558 
Total commercial loans1,939 — 12,595 — 14,534 14,534 
Total nonaccrual loans$12,222 $— $12,595 $— $24,817 $24,817 
______________________________
(1) The ACL for nonaccrual loans is determined based on a discounted cash flow methodology unless the loan is considered collateral dependent; otherwise, the ACL for collateral dependent nonaccrual loans is determined based on the estimated fair value of the underlying collateral.


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 December 31, 2024 and 2023.
Modified Loans to Troubled Borrowers
    
On January 1, 2023, the Company adopted ASU 2022-02, Financial Instruments - Credit Losses (Topic 326) Troubled Debt Restructurings and Vintage Disclosures, which introduces new reporting requirements for modifications of loans to borrowers experiencing financial difficulty. The Company also refers to these loans as modified loans to troubled borrowers. An MLTB arises from a modification made to a loan in order to alleviate temporary difficulties 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. GAAP requires that certain types of modifications be reported, which consist of the following: (i) principal forgiveness, (ii) interest rate reduction, (iii) other-than-insignificant payment delay, (iv) term extension, or any combination of the foregoing. The ACL for an MLTB is measured on a collective basis, as with other loans in the loan portfolio, unless management determines that such loans no longer possess risk characteristics similar to others in the loan portfolio. In those instances, the ACL for an MLTB is determined through individual evaluation.

MLTBs were $13.6 million at December 31, 2024 and $12.6 million at December 31, 2023.

The following table shows the amortized cost of the MLTBs by class and type of modification, as well as the percentage of the loans modified to total loans in each class at and during the periods indicated:
Year Ended December 31, 2024
Combination of
Other-than-Insignificant Payment Delay and
Term Extension
(Dollars in thousands)Balance
Percent of Total Class of Loans
Investor loans secured by real estate
CRE non-owner occupied$13,563 0.64 %
Total investor loans secured by real estate$13,563 

Year Ended December 31, 2023
Other-than-Insignificant Payment Delay
(Dollars in thousands)Balance
Percent of Total Class of Loans
Commercial loans
Commercial and industrial$12,595 0.70 %
Total commercial loans$12,595 

The following table describes the financial effect of the loan modification made for the borrower experiencing financial difficulty during the year ended December 31, 2024:
Combination of
Other-than-Insignificant Payment Delay and
Term Extension
Investor loans secured by real estate
CRE non-owner-occupied
Consolidated 3 loans with varying maturities into a single loan that extended the weighted average maturity by 6 months, as well as 2 years of interest-only payments
The following table describes the financial effect of the loan modification made for the borrower experiencing financial difficulty during the year ended December 31, 2023:
Other-than-Insignificant Payment Delay
Commercial loans
Commercial and industrial
1 year of interest-only payments

During 2024 and 2023, there were no MLTBs that had a payment default and had been modified within the 12 months preceding the payment default (90 days or more past due).

The following table depicts the performance of the loans that were modified in the past 12 months as of the dates indicated:
Days Past Due
(Dollars in thousands)Current30-5960-8990+Total
December 31, 2024
Investor loans secured by real estate
CRE non-owner occupied$13,563 $— $— $— $13,563 
Total investor loans secured by real estate$13,563 $— $— $— $13,563 
December 31, 2023
Commercial loans
Commercial and industrial$12,595 $— $— $— $12,595 
Total commercial loans$12,595 $— $— $— $12,595 
Collateral Dependent Loans

Loans that have been classified as collateral dependent are loans where substantially all repayment of the loan is expected to come from the operation of or eventual liquidation of the collateral. Collateral dependent loans are evaluated individually for purposes of determining the ACL. The ACL for each loan is measured as the amount by which the fair value of the underlying collateral, less estimated costs to sell, is less than the amortized cost of the loan. Additionally, due to the likelihood of foreclosure and that repayment of the loan is expected to come from the eventual sale of the underlying collateral, management analyzes the underlying collateral at least quarterly, with changes in the estimated fair value of the collateral and/or estimated costs to sell reflected in the lifetime ACL for the loan and balances deemed uncollectible are promptly charged-off. In cases where the loan is well secured and the estimated value of the collateral exceeds the amortized cost of the loan, no ACL is recorded. The following tables summarize collateral dependent loans by collateral type as of the dates indicated:
December 31, 2024
(Dollars in thousands)Office PropertiesRetail PropertiesLand PropertiesHotel PropertiesOther CRE PropertiesBusiness AssetsTotal
December 31, 2024
Investor loan secured by real estate
CRE non-owner-occupied$13,563 $— $— $— $1,860 $— $15,423 
SBA secured by real estate— — — 409 — — 409 
Total investor loans secured by real estate13,563 — — 409 1,860 — 15,832 
Commercial loans
Commercial and industrial— — — — — 1,241 1,241 
SBA non-real estate secured— — — — — 20 20 
Total commercial loans— — — — — 1,261 1,261 
Total collateral dependent loans$13,563 $— $— $409 $1,860 $1,261 $17,093 
December 31, 2023
(Dollars in thousands)Office PropertiesRetail PropertiesLand PropertiesHotel Properties
Other CRE Properties
Business AssetsTotal
December 31, 2023
Investor loan secured by real estate
CRE non-owner-occupied$— $412 $— $— $— $— $412 
SBA secured by real estate— — — 1,205 — — 1,205 
Total investor loans secured by real estate— 412 — 1,205 — — 1,617 
Business loans secured by real estate
CRE owner-occupied4,011 — 4,655 — — — 8,666 
Total business loans secured by real estate4,011 — 4,655 — — — 8,666 
Commercial loans
Commercial and industrial— — 231 — — 1,150 1,381 
SBA non-real estate secured— — — — — 558 558 
Total commercial loans— — 231 — — 1,708 1,939 
Total collateral dependent loans$4,011 $412 $4,886 $1,205 $— $1,708 $12,222