Loans Receivable and Allowance for Credit Losses

9 Months Ended

Sep. 30, 2024

Loans and Leases Receivable Disclosure [Abstract]

Loans Receivable and Allowance for Credit Losses

Loans Receivable and Allowance for Credit Losses

The following table presents the composition of the Company’s loans held-for-investment outstanding as of September 30, 2024 and December 31, 2023:

($ in thousands)	September 30, 2024		December 31, 2023
Commercial:
C&I	$	17,068,002	$	16,581,079
CRE:
CRE	14,568,209		14,777,081
Multifamily residential	5,141,481		5,023,163
Construction and land	693,775		663,868
Total CRE	20,403,465		20,464,112
Total commercial	37,471,467		37,045,191
Consumer:
Residential mortgage:
Single-family residential	13,963,097		13,383,060
HELOCs	1,760,716		1,722,204
Total residential mortgage	15,723,813		15,105,264
Other consumer	57,901		60,327
Total consumer	15,781,714		15,165,591
Total loans held-for-investment (1)	$	53,253,181	$	52,210,782
Allowance for loan losses	(696,485)		(668,743)
Loans held-for-investment, net (1)	$	52,556,696	$	51,542,039

(1)Includes $52 million and $71 million of net deferred loan fees and net unamortized premiums as of September 30, 2024 and December 31, 2023, respectively.

Accrued interest receivable on loans held-for-investment was $262 million and $267 million as of September 30, 2024 and December 31, 2023, respectively, and was included in Other assets on the Consolidated Balance Sheet. The interest income reversed was insignificant for both the three and nine months ended September 30, 2024 and 2023. For the Company’s accounting policy on accrued interest receivable related to loans held-for-investment, see Note 1 — Summary of Significant Accounting Policies — Significant Accounting Policies — Loans Held-for-Investment to the Consolidated Financial Statements of the Company’s 2023 Form 10-K. The Company also has loans held-for-sale. For the Company’s accounting policy on loans held-for-sale, refer to Note 1 — Summary of Significant Accounting Policies — Significant Accounting Policies — Loans Held-for-Sale to the Consolidated Financial Statements in the Company’s 2023 Form 10-K.

The Company’s FRB and FHLB borrowings are primarily secured by loans held-for-investment. Loans held-for-investment totaling $37.4 billion and $37.2 billion, respectively, were pledged to secure borrowings and provide additional borrowing capacity as of September 30, 2024 and December 31, 2023.

Credit Quality Indicators

All loans are subject to the Company’s credit review and monitoring process. For the commercial loan portfolio, loans are risk rated based on an analysis of the borrower’s current payment performance or delinquency, repayment sources, financial and liquidity factors, including industry and geographic considerations. For the consumer loan portfolio, payment performance or delinquency is typically the driving indicator for risk ratings.

The Company utilizes internal credit risk ratings to assign each individual loan a risk rating of 1 through 10:

•Pass — loans risk rated 1 through 5 are assigned an internal risk rating category of “Pass.” Loans risk rated 1 are typically loans fully secured by cash. Pass loans have sufficient sources of repayment to repay the loan in full, in accordance with all terms and conditions.

•Special mention — loans assigned a risk rating of 6 have potential weaknesses that warrant closer attention by management; these are assigned an internal risk rating category of “Special Mention.”

•Substandard — loans assigned a risk rating of 7 or 8 have well-defined weaknesses that may jeopardize the full and timely repayment of the loan; these are assigned an internal risk rating category of “Substandard.”

•Doubtful — loans assigned a risk rating of 9 have insufficient sources of repayment and a high probability of loss; these are assigned an internal risk rating category of “Doubtful.”

•Loss — loans assigned a risk rating of 10 are uncollectible and of such little value that they are no longer considered bankable assets; these are assigned an internal risk rating category of “Loss.”

Loan exposures categorized as criticized consist of special mention, substandard, doubtful and loss categories. The Company reviews the internal risk ratings of its loan portfolio on a regular basis, and adjusts the ratings based on changes in the borrowers’ financial status and the collectability of the loans.

The following tables summarize the Company’s loans held-for-investment and year-to-date gross write-offs by loan portfolio segments, internal risk ratings and vintage year as of the periods presented. The vintage year is the year of loan origination, renewal or major modification. Gross write-offs in the following tables are for the nine months ended September 30, 2024, and year ended December 31, 2023. Revolving loans that are converted to term loans presented in the tables below are excluded from the term loans by vintage year columns.

	September 30, 2024
	Term Loans by Origination Year
($ in thousands)	2024		2023		2022		2021		2020		Prior		Revolving Loans		Revolving Loans Converted to Term Loans (1)		Total
Commercial:
C&I:
Pass	$	1,946,732	$	1,801,612	$	1,114,871	$	769,040	$	273,186	$	325,092	$	10,315,519	$	23,293	$	16,569,345
Criticized (accrual)	21,119		28,030		77,472		102,837		10,538		46,264		137,125		—		423,385
Criticized (nonaccrual)	3,798		25,150		21,639		10,010		3,278		10,325		1,072		—		75,272
Total C&I	1,971,649		1,854,792		1,213,982		881,887		287,002		381,681		10,453,716		23,293		17,068,002
Gross write-offs (2)	—		13,852		16,197		13,671		1,212		3,012		9,812		—		57,756
CRE:
Pass	1,189,109		2,315,579		3,772,545		1,979,487		1,353,082		3,382,589		81,109		49,591		14,123,091
Criticized (accrual)	10,981		44,631		50,011		50,984		67,643		202,811		—		14,784		441,845
Criticized (nonaccrual)	—		—		—		—		1,773		1,500		—		—		3,273
Subtotal CRE	1,200,090		2,360,210		3,822,556		2,030,471		1,422,498		3,586,900		81,109		64,375		14,568,209
Gross write-offs (2)	—		—		—		—		—		2		—		—		2
Multifamily residential:
Pass	275,321		668,357		1,448,005		756,812		619,627		1,279,498		18,063		1,261		5,066,944
Criticized (accrual)	—		—		34,984		32,032		—		2,935		—		—		69,951
Criticized (nonaccrual)	—		—		—		—		—		4,586		—		—		4,586
Subtotal multifamily residential	275,321		668,357		1,482,989		788,844		619,627		1,287,019		18,063		1,261		5,141,481
Gross write-offs	—		—		—		—		—		6		—		—		6
Construction and land:
Pass	68,565		335,119		197,019		75,503		—		6,253		—		—		682,459
Criticized (nonaccrual)	—		—		11,316		—		—		—		—		—		11,316
Subtotal construction and land	68,565		335,119		208,335		75,503		—		6,253		—		—		693,775
Gross write-offs	—		—		2,289		—		—		—		—		—		2,289
Total CRE	1,543,976		3,363,686		5,513,880		2,894,818		2,042,125		4,880,172		99,172		65,636		20,403,465
Total CRE gross write-offs (2)	—		—		2,289		—		—		8		—		—		2,297
Total commercial	$	3,515,625	$	5,218,478	$	6,727,862	$	3,776,705	$	2,329,127	$	5,261,853	$	10,552,888	$	88,929	$	37,471,467
Total commercial gross write-offs (2)	$	—	$	13,852	$	18,486	$	13,671	$	1,212	$	3,020	$	9,812	$	—	$	60,053

	September 30, 2024
	Term Loans by Origination Year
($ in thousands)	2024		2023		2022		2021		2020		Prior		Revolving Loans		Revolving Loans Converted to Term Loans (1)		Total
Consumer:
Residential mortgage:
Single-family residential:
Pass (3)	$	1,754,930	$	2,864,585	$	3,149,135	$	2,128,715	$	1,457,386	$	2,554,887	$	—	$	—	$	13,909,638
Criticized (accrual)	1,158		4,416		5,476		520		692		6,220		—		—		18,482
Criticized (nonaccrual) (3)	2,375		10,968		1,721		3,011		3,236		13,666		—		—		34,977
Subtotal single-family residential mortgage	1,758,463		2,879,969		3,156,332		2,132,246		1,461,314		2,574,773		—		—		13,963,097
Gross write-offs (2)	9		—		—		—		—		—		—		—		9
HELOCs:
Pass	5,486		3,599		5,338		2,338		4,102		9,369		1,593,145		113,294		1,736,671
Criticized (accrual)	1,794		1,679		1,158		680		—		293		769		1,096		7,469
Criticized (nonaccrual)	517		1,905		3,444		—		476		5,839		—		4,395		16,576
Subtotal HELOCs	7,797		7,183		9,940		3,018		4,578		15,501		1,593,914		118,785		1,760,716
Gross write-offs	—		10		—		—		—		—		—		—		10
Total residential mortgage	1,766,260		2,887,152		3,166,272		2,135,264		1,465,892		2,590,274		1,593,914		118,785		15,723,813
Total residential mortgage gross write-offs (2)	9		10		—		—		—		—		—		—		19
Other consumer:
Pass	3,616		36		22,982		132		—		6,804		21,228		—		54,798
Criticized (accrual)	1		—		—		—		—		—		3,000		—		3,001
Criticized (nonaccrual)	—		—		—		—		—		—		102		—		102
Total other consumer	3,617		36		22,982		132		—		6,804		24,330		—		57,901
Gross write-offs (2)	—		—		—		—		—		—		25		—		25
Total consumer	$	1,769,877	$	2,887,188	$	3,189,254	$	2,135,396	$	1,465,892	$	2,597,078	$	1,618,244	$	118,785	$	15,781,714
Total consumer gross write-offs(2)	$	9	$	10	$	—	$	—	$	—	$	—	$	25	$	—	$	44
Total loans held-for-investment:
Pass	$	5,243,759	$	7,988,887	$	9,709,895	$	5,712,027	$	3,707,383	$	7,564,492	$	12,029,064	$	187,439	$	52,142,946
Criticized (accrual)	35,053		78,756		169,101		187,053		78,873		258,523		140,894		15,880		964,133
Criticized (nonaccrual)	6,690		38,023		38,120		13,021		8,763		35,916		1,174		4,395		146,102
Total	$	5,285,502	$	8,105,666	$	9,917,116	$	5,912,101	$	3,795,019	$	7,858,931	$	12,171,132	$	207,714	$	53,253,181
Total loans held-for-investment gross write-offs (2)	$	9	$	13,862	$	18,486	$	13,671	$	1,212	$	3,020	$	9,837	$	—	$	60,097

	December 31, 2023
	Term Loans by Origination Year
($ in thousands)	2023		2022		2021		2020		2019		Prior		Revolving Loans		Revolving Loans Converted to Term Loans (1)		Total
Commercial:
C&I:
Pass	$	2,314,463	$	1,628,560	$	1,296,936	$	331,982	$	245,173	$	164,159	$	10,053,757	$	20,143	$	16,055,173
Criticized (accrual)	105,119		67,899		120,574		15,064		40,920		22,098		117,196		—		488,870
Criticized (nonaccrual)	2,104		7,916		131		4,819		2,979		18,137		950		—		37,036
Total C&I	2,421,686		1,704,375		1,417,641		351,865		289,072		204,394		10,171,903		20,143		16,581,079
Gross write-offs (2)	350		10,454		424		3,758		9,748		2,648		1,593		—		28,975
CRE:
Pass	2,492,915		4,086,385		2,216,257		1,428,724		1,600,844		2,494,382		92,851		62,771		14,475,129
Criticized (accrual)	36,855		34,485		30,336		48,250		24,437		104,340		—		—		278,703
Criticized (nonaccrual)	—		—		—		—		444		22,805		—		—		23,249
Subtotal CRE	2,529,770		4,120,870		2,246,593		1,476,974		1,625,725		2,621,527		92,851		62,771		14,777,081
Gross write-offs (2)	—		—		—		—		—		1,329		—		—		1,329
Multifamily residential:
Pass	665,780		1,481,161		808,333		612,408		498,491		857,713		8,690		1,281		4,933,857
Criticized (accrual)	—		3,356		54,614		—		693		25,974		—		—		84,637
Criticized (nonaccrual)	—		—		—		—		—		4,669		—		—		4,669
Subtotal multifamily residential	665,780		1,484,517		862,947		612,408		499,184		888,356		8,690		1,281		5,023,163
Gross write-offs	—		—		—		—		—		3		—		—		3
Construction and land:
Pass	209,775		280,151		120,724		39,928		808		5,501		6,981		—		663,868
Subtotal construction and land	209,775		280,151		120,724		39,928		808		5,501		6,981		—		663,868
Total CRE	3,405,325		5,885,538		3,230,264		2,129,310		2,125,717		3,515,384		108,522		64,052		20,464,112
Total CRE gross write-offs (2)	—		—		—		—		—		1,332		—		—		1,332
Total commercial	$	5,827,011	$	7,589,913	$	4,647,905	$	2,481,175	$	2,414,789	$	3,719,778	$	10,280,425	$	84,195	$	37,045,191
Total commercial gross write-offs (2)	$	350	$	10,454	$	424	$	3,758	$	9,748	$	3,980	$	1,593	$	—	$	30,307

	December 31, 2023
	Term Loans by Origination Year
($ in thousands)	2023		2022		2021		2020		2019		Prior		Revolving Loans		Revolving Loans Converted to Term Loans (1)		Total
Consumer:
Residential mortgage:
Single-family residential:
Pass (4)	$	3,188,830	$	3,340,789	$	2,279,802	$	1,594,525	$	980,686	$	1,959,974	$	—	$	—	$	13,344,606
Criticized (accrual)	2,680		4,471		566		1,440		1,503		4,167		—		—		14,827
Criticized (nonaccrual) (3)	4,466		837		3,902		2,081		3,626		8,715		—		—		23,627
Subtotal single-family residential mortgage	3,195,976		3,346,097		2,284,270		1,598,046		985,815		1,972,856		—		—		13,383,060
HELOCs:
Pass	3,641		3,882		1,734		3,153		729		9,251		1,551,074		126,280		1,699,744
Criticized (accrual)	565		1,219		1,872		101		185		1,470		2,548		1,089		9,049
Criticized (nonaccrual)	815		856		413		72		584		6,863		279		3,529		13,411
Subtotal HELOCs	5,021		5,957		4,019		3,326		1,498		17,584		1,553,901		130,898		1,722,204
Gross write-offs (2)	—		—		—		—		—		41		—		6		47
Total residential mortgage	3,200,997		3,352,054		2,288,289		1,601,372		987,313		1,990,440		1,553,901		130,898		15,105,264
Total residential mortgage gross write-offs (2)	—		—		—		—		—		41		—		6		47
Other consumer:
Pass	2,286		18,098		135		—		—		13,244		26,432		—		60,195
Criticized (nonaccrual)	—		—		—		—		—		—		132		—		132
Total other consumer	2,286		18,098		135		—		—		13,244		26,564		—		60,327
Total consumer	$	3,203,283	$	3,370,152	$	2,288,424	$	1,601,372	$	987,313	$	2,003,684	$	1,580,465	$	130,898	$	15,165,591
Total consumer gross write-offs (2)	$	—	$	—	$	—	$	—	$	—	$	41	$	—	$	6	$	47
Total by Risk Rating:
Pass	$	8,877,690	$	10,839,026	$	6,723,921	$	4,010,720	$	3,326,731	$	5,504,224	$	11,739,785	$	210,475	$	51,232,572
Criticized (accrual)	145,219		111,430		207,962		64,855		67,738		158,049		119,744		1,089		876,086
Criticized (nonaccrual)	7,385		9,609		4,446		6,972		7,633		61,189		1,361		3,529		102,124
Total	$	9,030,294	$	10,960,065	$	6,936,329	$	4,082,547	$	3,402,102	$	5,723,462	$	11,860,890	$	215,093	$	52,210,782
Total loans held-for-investment gross write-offs (2)	$	350	$	10,454	$	424	$	3,758	$	9,748	$	4,021	$	1,593	$	6	$	30,354

(1)No revolving commercial loans were converted to term loans during the three months ended September 30, 2024. $8 million of total commercial loans, comprised of C&I and CRE revolving loans, were converted to term loans during the nine months ended September 30, 2024. In comparison, $11 million and $25 million of total commercial loans, primarily comprised of CRE revolving loans were converted to term loans during the three and nine months ended September 30, 2023, respectively. $2 million and $26 million of total consumer loans, comprised of HELOCs, were converted to term loans during the three and nine months ended September 30, 2024, respectively. In comparison, $21 million and $28 million of total consumer loans, comprised of HELOCs, were converted to term loans during the three and nine months ended September 30, 2023, respectively.

(2)Excludes gross write-offs associated with loans the Company sold or settled.

(3)As of both September 30, 2024 and December 31, 2023, $1 million of nonaccrual loans whose payments were guaranteed by the Federal Housing Administration were classified with a “Pass” rating.

Nonaccrual and Past Due Loans

Loans that are 90 or more days past due are generally placed on nonaccrual status unless the loan is well-collateralized and in the process of collection. Loans that are less than 90 days past due but have identified deficiencies, such as when the full collection of principal or interest becomes uncertain, are also placed on nonaccrual status. The following tables present the aging analysis of loans held-for-investment as of September 30, 2024 and December 31, 2023:

	September 30, 2024
($ in thousands)	Current Accruing Loans		Accruing Loans 30-59 Days Past Due		Accruing Loans 60-89 Days Past Due		Total Accruing Past Due Loans		Total Nonaccrual Loans		Total Loans
Commercial:
C&I	$	16,978,259	$	10,974	$	3,497	$	14,471	$	75,272	$	17,068,002
CRE:
CRE	14,562,360		1,751		825		2,576		3,273		14,568,209
Multifamily residential	5,133,784		2,620		491		3,111		4,586		5,141,481
Construction and land	682,459		—		—		—		11,316		693,775
Total CRE	20,378,603		4,371		1,316		5,687		19,175		20,403,465
Total commercial	37,356,862		15,345		4,813		20,158		94,447		37,471,467
Consumer:
Residential mortgage:
Single-family residential	13,883,243		24,890		19,229		44,119		35,735		13,963,097
HELOCs	1,717,377		19,309		7,454		26,763		16,576		1,760,716
Total residential mortgage	15,600,620		44,199		26,683		70,882		52,311		15,723,813
Other consumer	54,697		78		3,024		3,102		102		57,901
Total consumer	15,655,317		44,277		29,707		73,984		52,413		15,781,714
Total	$	53,012,179	$	59,622	$	34,520	$	94,142	$	146,860	$	53,253,181

	December 31, 2023
($ in thousands)	Current Accruing Loans		Accruing Loans 30-59 Days Past Due		Accruing Loans 60-89 Days Past Due		Total Accruing Past Due Loans		Total Nonaccrual Loans		Total Loans
Commercial:
C&I	$	16,508,394	$	28,550	$	7,099	$	35,649	$	37,036	$	16,581,079
CRE:
CRE	14,750,315		1,719		1,798		3,517		23,249		14,777,081
Multifamily residential	5,017,897		597		—		597		4,669		5,023,163
Construction and land	650,617		13,251		—		13,251		—		663,868
Total CRE	20,418,829		15,567		1,798		17,365		27,918		20,464,112
Total commercial	36,927,223		44,117		8,897		53,014		64,954		37,045,191
Consumer:
Residential mortgage:
Single-family residential	13,313,455		29,285		15,943		45,228		24,377		13,383,060
HELOCs	1,687,301		12,266		9,226		21,492		13,411		1,722,204
Total residential mortgage	15,000,756		41,551		25,169		66,720		37,788		15,105,264
Other consumer	56,930		3,123		142		3,265		132		60,327
Total consumer	15,057,686		44,674		25,311		69,985		37,920		15,165,591
Total	$	51,984,909	$	88,791	$	34,208	$	122,999	$	102,874	$	52,210,782

The following table presents the amortized cost of loans on nonaccrual status for which there was no related allowance for loan losses as of both September 30, 2024 and December 31, 2023. Nonaccrual loans may not have an allowance for credit losses if the loan balances are well secured by collateral values and there is no loss expectation.

($ in thousands)	September 30, 2024		December 31, 2023
Commercial:
C&I	$	67,821	$	33,089
CRE	2,591		22,653
Multifamily residential	—		4,235
Construction and land	11,316		—
Total commercial	81,728		59,977
Consumer:
Single-family residential	6,520		4,852
HELOCs	10,085		7,256
Total consumer	16,605		12,108
Total nonaccrual loans with no related allowance for loan losses	$	98,333	$	72,085

Foreclosed Assets

The Company acquires assets from borrowers through loan restructurings, workouts, or foreclosures. Assets acquired may include real properties (e.g., real estate, land, and buildings) and commercial and personal properties. The Company recognizes foreclosed assets upon receiving assets in satisfaction of a loan (e.g., taking legal title or physical possession).

Foreclosed assets, consisting of OREO and other nonperforming assets, are included in Other assets on the Consolidated Balance Sheet. The Company had $49 million of foreclosed assets as of September 30, 2024, compared with $11 million as of December 31, 2023. The Company commences the foreclosure process on consumer mortgage loans after a borrower becomes more than 120 days delinquent in accordance with the Consumer Financial Protection Bureau guidelines. The carrying value of the consumer real estate loans that were in an active or suspended foreclosure process was $14 million and $8 million as of September 30, 2024 and December 31, 2023, respectively.

Loan Modifications to Borrowers Experiencing Financial Difficulty

As part of the Company’s loss mitigation efforts, the Company may agree to modify the contractual terms of a loan to assist borrowers experiencing financial difficulty. The Company negotiates loan modifications on a case-by-case basis to achieve mutually agreeable terms that maximize loan collectability and meet the borrower’s financial needs. The Company considers various factors to identify borrowers experiencing financial difficulty. The primary factor for consumer borrowers is delinquency status. For commercial loan borrowers, these factors include credit risk ratings, the probability of loan risk rating downgrades, and overall risk profile changes. The modification may include, but is not limited to, payment deferrals, interest rate reductions, term extensions, principal forgiveness, or a combination of such modifications. Commercial loan borrowers that require immaterial modifications such as insignificant interest rate changes, short-term extensions (90 days or less) from the original maturity date, or temporary waivers or extensions of financial covenants which would not constitute material credit actions, are generally not considered to be experiencing financial difficulty and are not included in the disclosure. Insignificant payment deferrals (three months or less in the last 12 months) are also not included in the disclosure.

The following tables present the amortized cost of loans that were modified during the three and nine months ended September 30, 2024 and 2023 by loan class and modification type:

	Three Months Ended September 30, 2024
	Modification Type
($ in thousands)	Term Extension		Payment Delay		Combination: Term Extension/ Payment Delay		Combination: Rate Reduction/ Payment Delay		Total		Modification as a % of Loan Class
Commercial:
C&I	$	15,848	$	—	$	—	$	—	$	15,848	0.09	%
CRE	23,735		—		—		—		23,735		0.16	%
Total commercial	39,583		—		—		—		39,583
Consumer:
Single-family residential	—		4,718		219		141		5,078		0.04	%
HELOCs	—		3,763		—		—		3,763		0.21	%
Total consumer	—		8,481		219		141		8,841
Total	$	39,583	$	8,481	$	219	$	141	$	48,424

	Three Months Ended September 30, 2023
	Modification Type
($ in thousands)	Term Extension		Payment Delay		Combination: Term Extension/ Payment Delay		Combination: Rate Reduction/ Payment Delay		Total		Modification as a % of Loan Class
Commercial:
C&I	$	1,682	$	11,603	$	—	$	—	$	13,285	0.08	%
CRE	13,469		—		—		—		13,469		0.07	%
Total commercial	15,151		11,603		—		—		26,754
Consumer:
Single-family residential	—		2,944		1,260		—		4,204		0.03	%
HELOCs	—		—		334		183		517		0.03	%
Total consumer	—		2,944		1,594		183		4,721
Total	$	15,151	$	14,547	$	1,594	$	183	$	31,475

	Nine Months Ended September 30, 2024
	Modification Type
($ in thousands)	Term Extension		Payment Delay		Combination: Term Extension/ Payment Delay		Combination: Rate Reduction/ Payment Delay		Total		Modification as a % of Loan Class
Commercial:
C&I	$	26,191	$	24,768	$	—	$	—	$	50,959	0.30	%
CRE	47,969		—		—		—		47,969		0.33	%
Total commercial	74,160		24,768		—		—		98,928
Consumer:
Single-family residential	—		13,278		219		141		13,638		0.10	%
HELOCs	—		10,708		—		517		11,225		0.64	%
Other consumer	3,000		—		—		—		3,000		5.18	%
Total consumer	3,000		23,986		219		658		27,863
Total	$	77,160	$	48,754	$	219	$	658	$	126,791

	Nine Months Ended September 30, 2023
	Modification Type
($ in thousands)	Term Extension		Payment Delay		Combination: Term Extension/ Payment Delay		Combination: Rate Reduction/ Term Extension		Combination: Rate Reduction/ Payment Delay		Total		Modification as a % of Loan Class
Commercial:
C&I	$	44,120	$	20,793	$	—	$	—	$	—	$	64,913	0.41	%
CRE	13,979		—		—		32,724		—		46,703		0.23	%
Total commercial	58,099		20,793		—		32,724		—		111,616
Consumer:
Single-family residential	—		7,276		1,809		—		—		9,085		0.07	%
HELOCs	—		741		1,053		—		183		1,977		0.11	%
Total consumer	—		8,017		2,862		—		183		11,062
Total	$	58,099	$	28,810	$	2,862	$	32,724	$	183	$	122,678

The following tables present the financial effects of the loan modifications for the three and nine months ended September 30, 2024 and 2023 by loan class and modification type:

	Financial Effects of Loan Modifications for the Three Months Ended September 30,
	2024				2023
($ in thousands)	Weighted-Average Interest Rate Reduction		Weighted-Average Term Extension (in years)	Weighted-Average Payment Delay (in years)	Principal Forgiveness			Weighted-Average Interest Rate Reduction			Weighted-Average Term Extension (in years)	Weighted-Average Payment Delay (in years)
Commercial:
C&I	—	%	0.8	0.0	$	26	(1)	—	%	(1)	3.0	1.5
CRE	—	%	3.3	0.0	—			—	%		1.1	0.0
Consumer:
Single-family residential	1.63	%	10.0	2.6	—			—	%		10.0	1.0
HELOCs	—	%	0.0	0.6	—			0.50	%		16.7	0.7

	Financial Effects of Loan Modifications for the Nine Months Ended September 30,
	2024				2023
($ in thousands)	Weighted-Average Interest Rate Reduction		Weighted-Average Term Extension (in years)	Weighted-Average Payment Delay (in years)	Principal Forgiveness			Weighted-Average Interest Rate Reduction			Weighted-Average Term Extension (in years)	Weighted-Average Payment Delay (in years)
Commercial:
C&I	—	%	1.6	1.6	$	371	(1)	—	%	(1)	1.4	1.2
CRE	—	%	2.4	0.0	—			3.00	%		2.1	0.0
Consumer:
Single-family residential	1.63	%	10.0	1.4	—			—	%		9.9	1.0
HELOCs	0.25	%	0.0	2.0	—			0.50	%		15.4	0.5
Other consumer	—	%	0.8	0.0	—			—	%		0.0	0.0

(1)Comprised of a C&I loan modified during the three and nine months ended September 30, 2023 where the interest was waived in addition to principal forgiveness.

A modified loan may become delinquent and result in a payment default (generally 90 days past due) subsequent to modification. The following tables present information on loans that defaulted during the three and nine months ended September 30, 2024 that received modifications during the 12 months preceding payment default. There were no loans that received modifications and subsequently defaulted during both the three and nine months ended September 30, 2023.

	Loans Modified Subsequently Defaulted During the Three Months Ended September 30, 2024
($ in thousands)	Term Extension		Payment Delay		Combination: Rate Reduction/ Payment Delay		Combination: Term Extension/ Payment Delay		Total
Consumer:
Single-family residential	$	—	$	573	$	—	$	—	$	573
HELOCs	—		2,762		—		—		2,762
Total consumer	—		3,335		—		—		3,335
Total	$	—	$	3,335	$	—	$	—	$	3,335

	Loans Modified Subsequently Defaulted During the Nine Months Ended September 30, 2024
($ in thousands)	Term Extension		Payment Delay		Combination: Rate Reduction/ Payment Delay		Combination: Term Extension/ Payment Delay		Total
Commercial:
C&I	$	7,829	$	5,280	$	—	$	—	$	13,109
Total commercial	7,829		5,280		—		—		13,109
Consumer:
Single-family residential	—		7,995		141		2,828		10,964
HELOCs	—		3,240		1,149		—		4,389
Total consumer	—		11,235		1,290		2,828		15,353
Total	$	7,829	$	16,515	$	1,290	$	2,828	$	28,462

The Company monitors the performance of modified loans to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following tables present the performance of loans that were modified in the twelve months ended September 30, 2024. For the comparative period, the amounts represent the performance of loans that were modified in the first nine months ended September 30, 2023, subsequent to the adoption of ASU 2022-02 on January 1, 2023:

	Payment Performance as of September 30, 2024
($ in thousands)	Current		30 - 89 Days Past Due		90+ Days Past Due		Total
Commercial:
C&I	$	62,107	$	8,848	$	7,828	$	78,783
CRE	47,969		—		—		47,969
Total commercial	110,076		8,848		7,828		126,752
Consumer:
Single-family residential	9,610		3,237		6,686		19,533
HELOCs	8,922		3,736		1,270		13,928
Other consumer	—		3,000		—		3,000
Total consumer	18,532		9,973		7,956		36,461
Total	$	128,608	$	18,821	$	15,784	$	163,213

	Payment Performance as of September 30, 2023
($ in thousands)	Current		30 - 89 Days Past Due		90+ Days Past Due		Total
Commercial:
C&I	$	58,481	$	—	$	6,432	$	64,913
CRE	46,703		—		—		46,703
Total commercial	105,184		—		6,432		111,616
Consumer:
Single-family residential	7,430		1,190		465		9,085
HELOCs	1,236		741		—		1,977
Total consumer	8,666		1,931		465		11,062
Total	$	113,850	$	1,931	$	6,897	$	122,678

Commitments outstanding to lend additional funds to borrowers experiencing financial difficulty whose loans were modified were $4 million as of both September 30, 2024 and December 31, 2023.

Allowance for Credit Losses

The Company has a current expected credit losses framework for all financial assets measured at amortized cost and certain off-balance sheet credit exposures. The Company’s allowance for credit losses, which includes both the allowance for loan losses and the allowance for unfunded credit commitments, is calculated with the objective of maintaining a reserve sufficient to absorb losses inherent in our credit portfolios. The measurement of the allowance for credit losses is based on management’s best estimate of lifetime expected credit losses, periodic evaluation of the loan portfolio, lending-related commitments and other relevant factors.

The allowance for credit losses is deducted from the amortized cost basis of a financial asset or a group of financial assets so that the balance sheet reflects the net amount the Company expects to collect. Amortized cost is the principal balance outstanding, net of purchase premiums and discounts, deferred fees and costs, and escrow advances. Subsequent changes in expected credit losses are recognized in net income as a provision for, or a reversal of, credit loss expense.

The allowance for credit losses estimation involves procedures to consider the unique risk characteristics of the portfolio segments. The majority of the Company’s credit exposures that share risk characteristics with other similar exposures are collectively evaluated. The collectively evaluated loans include performing loans and unfunded credit commitments. If an exposure does not share risk characteristics with other exposures, the Company generally estimates expected credit losses on an individual basis.

Allowance for Collectively Evaluated Loans

The allowance for collectively evaluated loans consists of a quantitative component that assesses the different risk factors considered in our models and a qualitative component that considers risk factors external to the models. Each of these components are described below.

Quantitative Component — The Company applies quantitative methods to estimate loan losses by considering a variety of factors such as historical loss experience, the current credit quality of the portfolio, and an economic outlook over the life of the loan. The Company incorporates forward-looking information using macroeconomic scenarios which include variables that are considered key drivers of increases and decreases in credit losses. The Company utilizes a probability-weighted, multiple-scenario forecast approach. These scenarios may consist of a base forecast representing management's view of the most likely outcome, combined with downside or upside scenarios reflecting possible worsening or improving economic conditions. The quantitative models incorporate a probability-weighted calculation of these macroeconomic scenarios over a reasonable and supportable forecast period. If the life of the loans extends beyond the reasonable and supportable forecast period, the Company will consider historical experience or long-run macroeconomic trends over the remaining life of the loans to estimate the allowance for loan losses.

There were no changes to the reasonable and supportable forecast period and reversion to the historical loss experience method for the three and nine months ended September 30, 2024 and 2023.

The following table provides key credit risk characteristics and macroeconomic variables that the Company uses to estimate the expected credit losses by portfolio segment:

Portfolio Segment	Risk Characteristics	Macroeconomic Variables
C&I	Age percentage, size at origination, delinquency status, sector and risk rating	Unemployment rate, Gross Domestic Product (“GDP”), and U.S. Treasury rates
CRE, multifamily residential, and construction and land	Delinquency status, maturity date, collateral value, property type, and geographic location	Unemployment rate, GDP, and U.S. Treasury rates
Single-family residential and HELOCs	FICO score, delinquency status, maturity date, collateral value, and geographic location	Unemployment rate, GDP, and Home Price Indices
Other consumer	Loss rate approach	Immaterial - Macroeconomic variables are included in the qualitative estimate.

Quantitative Component — Allowance for Loan Losses for the Commercial Loan Portfolio

The Company’s C&I lifetime loss rate model estimates the loss rate expected over the life of a loan. This loss rate is applied to the amortized cost basis, excluding accrued interest receivable, to determine expected credit losses. The lifetime loss rate model’s reasonable and supportable period spans eight quarters, thereafter, immediately reverting to the historical average loss rate, expressed through the loan-level lifetime loss rate.

To generate estimates of expected loss at the loan level for CRE, multifamily residential, and construction and land loans, projected probabilities of default (“PDs”) and loss given defaults (“LGDs”) are applied to the estimated exposure at default, considering the term and payment structure of the loan. The forecast of future economic conditions returns to long-run historical economic trends within the reasonable and supportable period.

To estimate the life of a loan under both models, the contractual term of the loan is adjusted for estimated prepayments based on historical prepayment experience.

Quantitative Component — Allowance for Loan Losses for the Consumer Loan Portfolio

For single-family residential and HELOC loans, projected PDs and LGDs are applied to the estimated exposure at default, considering the term and payment structure of the loan, to generate estimates of expected loss at the loan level. The forecast of future economic conditions returns to long-run historical economic trends after the reasonable and supportable period. To estimate the life of a loan for the single-family residential and HELOC loan portfolios, the contractual term of the loan is adjusted for estimated prepayments based on historical prepayment experience. For other consumer loans, the Company uses a loss rate approach.

Qualitative Component — The Company considers the following qualitative factors in the determination of the collectively evaluated allowance if these factors have not already been captured by the quantitative model. Such qualitative factors may include, but are not limited to:

•loan growth trends;

•the volume and severity of past due financial assets, and criticized or adversely classified financial assets;

•the Company’s lending policies and procedures, including changes in lending strategies, underwriting standards, collection, write-off and recovery practices;

•knowledge of a borrower’s operations;

•the quality of the Company’s credit review system;

•the experience, ability and depth of the Company’s management and associates;

•the effect of other external factors such as the regulatory and legal environments, or changes in technology;

•actual and expected changes in international, national, regional, and local economic and business conditions in which the Company operates; and

•risk factors in certain industry sectors not captured by the quantitative models.

The magnitude of the impact of these factors on the Company’s qualitative assessment of the allowance for credit losses changes from period to period according to changes made by management in its assessment of these factors. The extent to which these factors change may be dependent on whether they are already reflected in quantitative loss estimates during the current period and the extent to which changes in these factors diverge from period to period.

While the Company’s allowance methodologies strive to reflect all relevant credit risk factors, there continues to be uncertainty associated with, but not limited to, potential imprecision in the estimation process due to the inherent time lag of obtaining information and normal variations between expected and actual outcomes. The Company may hold additional qualitative reserves that are designed to provide coverage for losses attributable to such risk.

Allowance for Individually Evaluated Loans

When a loan no longer shares similar risk characteristics with other loans, such as in the case of certain nonaccrual loans, the Company estimates the allowance for loan losses on an individual loan basis. The allowance for loan losses for individually evaluated loans is measured as the difference between the recorded value of the loans and their fair value. For loans evaluated individually, the Company uses one of three different asset valuation measurement methods: (1) the fair value of collateral less costs to sell; (2) the present value of expected future cash flows; or (3) the loan's observable market price. If an individually evaluated loan is determined to be collateral dependent, the Company applies the fair value of the collateral less costs to sell method. If an individually evaluated loan is determined not to be collateral dependent, the Company uses the present value of future cash flows or the observable market value of the loan.

•Collateral-Dependent Loans — The allowance of a collateral-dependent loan is limited to the difference between the recorded value and fair value of the collateral less cost of disposal or sale. As of September 30, 2024, collateral-dependent commercial and consumer loans totaled $45 million and $18 million, respectively. In comparison, collateral-dependent commercial and consumer loans totaled $30 million and $12 million, respectively, as of December 31, 2023. The Company's collateral-dependent loans were secured by real estate. As of both September 30, 2024 and December 31, 2023, the collateral value of the properties securing the collateral-dependent loans, net of selling costs, exceeded the recorded value of the majority of the loans.

The following tables summarize the activity in the allowance for loan losses by portfolio segments for the three and nine months ended September 30, 2024 and 2023:

		Three Months Ended September 30, 2024
		Commercial								Consumer
				CRE						Residential Mortgage
($ in thousands)		C&I		CRE		Multifamily Residential		Construction and Land		Single-Family Residential		HELOCs		Other Consumer		Total
Allowance for loan losses, beginning of period		$	379,984	$	194,794	$	40,254	$	14,322	$	49,523	$	3,340	$	1,577	$	683,794
Provision for (reversal of) credit losses on loans	(a)	26,416		27,123		(8,493)		(1,975)		(1,293)		(128)		67		41,717
Gross charge-offs		(29,260)		(734)		—		(145)		—		(10)		(149)		(30,298)
Gross recoveries		838		61		21		6		1		8		—		935
Total net (charge-offs) recoveries		(28,422)		(673)		21		(139)		1		(2)		(149)		(29,363)
Foreign currency translation adjustment		337		—		—		—		—		—		—		337
Allowance for loan losses, end of period		$	378,315	$	221,244	$	31,782	$	12,208	$	48,231	$	3,210	$	1,495	$	696,485

		Three Months Ended September 30, 2023
		Commercial								Consumer
				CRE						Residential Mortgage
($ in thousands)		C&I		CRE		Multifamily Residential		Construction and Land		Single-Family Residential		HELOCs		Other Consumer		Total
Allowance for loan losses, beginning of period		$	375,333	$	168,505	$	22,938	$	11,325	$	51,513	$	4,526	$	1,260	$	635,400
Provision for (reversal of) credit losses on loans	(a)	13,006		12,952		772		8,302		3,353		(705)		456		38,136
Gross charge-offs		(7,074)		(3,466)		—		(10,413)		—		(41)		(13)		(21,007)
Gross recoveries		2,279		49		452		2		64		15		—		2,861
Total net (charge-offs) recoveries		(4,795)		(3,417)		452		(10,411)		64		(26)		(13)		(18,146)
Foreign currency translation adjustment		133		—		—		—		—		—		—		133
Allowance for loan losses, end of period		$	383,677	$	178,040	$	24,162	$	9,216	$	54,930	$	3,795	$	1,703	$	655,523

		Nine Months Ended September 30, 2024
		Commercial								Consumer
				CRE						Residential Mortgage
($ in thousands)		C&I		CRE		Multifamily Residential		Construction and Land		Single-Family Residential		HELOCs		Other Consumer		Total
Allowance for loan losses, beginning of period		$	392,685	$	170,592	$	34,375	$	10,469	$	55,018	$	3,947	$	1,657	$	668,743
Provision for (reversal of) credit losses on loans	(a)	44,473		64,542		(2,833)		3,828		(6,760)		(792)		175		102,633
Gross charge-offs		(63,392)		(14,235)		(6)		(2,289)		(35)		(10)		(337)		(80,304)
Gross recoveries		4,365		345		246		200		8		65		—		5,229
Total net (charge-offs) recoveries		(59,027)		(13,890)		240		(2,089)		(27)		55		(337)		(75,075)
Foreign currency translation adjustment		184		—		—		—		—		—		—		184
Allowance for loan losses, end of period		$	378,315	$	221,244	$	31,782	$	12,208	$	48,231	$	3,210	$	1,495	$	696,485

		Nine Months Ended September 30, 2023
		Commercial								Consumer
				CRE						Residential Mortgage
($ in thousands)		C&I		CRE		Multifamily Residential		Construction and Land		Single-Family Residential		HELOCs		Other Consumer		Total
Allowance for loan losses, December 31, 2022		$	371,700	$	149,864	$	23,373	$	9,109	$	35,564	$	4,475	$	1,560	$	595,645
Impact of ASU 2022-02 adoption		5,683		337		6		—		1		1		—		6,028
Allowance for loan losses, beginning of period		377,383		150,201		23,379		9,109		35,565		4,476		1,560		601,673
Provision for (reversal of) credit losses on loans	(a)	17,587		33,313		303		10,507		19,296		(569)		244		80,681
Gross charge-offs		(16,309)		(5,838)		—		(10,413)		—		(138)		(101)		(32,799)
Gross recoveries		5,555		364		480		13		69		26		—		6,507
Total net (charge-offs) recoveries		(10,754)		(5,474)		480		(10,400)		69		(112)		(101)		(26,292)
Foreign currency translation adjustment		(539)		—		—		—		—		—		—		(539)
Allowance for loan losses, end of period		$	383,677	$	178,040	$	24,162	$	9,216	$	54,930	$	3,795	$	1,703	$	655,523

In addition to the allowance for loan losses, the Company maintains an allowance for unfunded credit commitments. The Company has three general areas for which it provides the allowance for unfunded credit commitments: (1) recourse obligations for loans sold, (2) letters of credit, and (3) unfunded lending commitments. The allowance for unfunded credit commitments is maintained at a level that management believes to be sufficient to absorb estimated expected credit losses related to unfunded credit facilities. See Note 11 — Commitments and Contingencies to the Consolidated Financial Statements in this Form 10-Q for additional information related to unfunded credit commitments. The following table summarizes the activity in the allowance for unfunded credit commitments for the three and nine months ended September 30, 2024 and 2023:

		Three Months Ended September 30,				Nine Months Ended September 30,
($ in thousands)		2024		2023		2024		2023
Unfunded credit facilities
Allowance for unfunded credit commitments, beginning of period		$	38,783	$	29,728	$	37,698	$	26,264
Provision for credit losses on unfunded credit commitments	(b)	283		3,864		1,367		7,319
Foreign currency translation adjustment		(4)		(3)		(3)		6
Allowance for unfunded credit commitments, end of period		$	39,062	$	33,589	$	39,062	$	33,589
Provision for credit losses	(a) + (b)	$	42,000	$	42,000	$	104,000	$	88,000

The allowance for credit losses was $736 million as of September 30, 2024, an increase of $30 million, compared with $706 million as of December 31, 2023. The increase in the allowance for credit losses was primarily driven by the Company’s net loan growth, qualitative risk assessment and economic outlook that reflected continued caution regarding inflation, the high-interest rate environment and certain CRE markets.

The Company considers multiple economic scenarios to develop the estimate of the allowance for loan losses. The scenarios may consist of a baseline forecast representing management's view of the most likely outcome, and downside or upside scenarios that reflect possible worsening or improving economic conditions. As of September 30, 2024, the Company assigned the same weightings to its baseline, upside and downside scenarios as compared with December 31, 2023. The current baseline economic forecast continues to reflect key risks such as still-elevated interest rates, inflation, concerns over global conflicts and oil prices. Compared to December 2023, the September 2024 baseline forecast for GDP growth showed improvement in the near term (full years 2024 and 2025) and a slight worsening for longer-term (2026 and beyond). The unemployment rate has remained low with the September 2024 forecast showing a small uptick for the remainder of 2024 and into 2025, compared to the December 2023 forecast for the same periods. The downside scenario assumed the economy falls into recession in the fourth quarter of 2024 as a result of still-elevated interest rates, global and domestic political tensions, and concerns about bank failures. The upside scenario assumed a more optimistic economic outlook, including stronger growth, stable financial market, and full employment starting in the first quarter of 2025.

Loan Transfers, Sales and Purchases

The Company’s primary business focus is on directly originated loans. The Company also purchases loans from and participates in loan financing with other banks. In the normal course of business, the Company also provides other financial institutions with the ability to participate in commercial loans that it originates, by selling loans to such institutions. Purchased loans may be transferred from held-for-investment to held-for-sale, and write-downs to allowance for loan losses are recorded, when appropriate. The following tables provide information on the carrying value of loans transferred, sold and purchased for the held-for-investment portfolio, during the three and nine months ended September 30, 2024 and 2023:

	Three Months Ended September 30, 2024
	Commercial							Consumer
				CRE				Residential Mortgage
($ in thousands)	C&I			CRE		Construction and Land		Single-Family Residential		Total
Loans transferred from held-for-investment to held-for-sale (1)	$	307,182		$	—	$	—	$	—	$	307,182
Sales (2) (3)	$	326,764		$	—	$	—	$	1,642	$	328,406
Purchases	$	247,880	(4)	$	—	$	—	$	102,666	$	350,546

	Three Months Ended September 30, 2023
	Commercial							Consumer
				CRE				Residential Mortgage
($ in thousands)	C&I			CRE		Construction and Land		Single-Family Residential		Total
Loans transferred from held-for-investment to held-for-sale (1)	$	201,299		$	25,890	$	—	$	—	$	227,189
Sales (2) (3)	$	199,511		$	29,357	$	—	$	—	$	228,868
Purchases	$	19,588	(4)	$	—	$	—	$	140,771	$	160,359

	Nine Months Ended September 30, 2024
	Commercial							Consumer
				CRE				Residential Mortgage
($ in thousands)	C&I			CRE		Construction and Land		Single-Family Residential		Total
Loans transferred from held-for-investment to held-for-sale (1)	$	646,079		$	—	$	718	$	—	$	646,797
Sales (2) (3)	$	647,873		$	—	$	718	$	2,607	$	651,198
Purchases	$	451,399	(4)	$	—	$	—	$	289,266	$	740,665

	Nine Months Ended September 30, 2023
	Commercial							Consumer
				CRE				Residential Mortgage
($ in thousands)	C&I			CRE		Construction and Land		Single-Family Residential		Total
Loans transferred from held-for-investment to held-for-sale (1)	$	469,571		$	29,490	$	8,154	$	—	$	507,215
Sales (2) (3)	$	491,178		$	32,957	$	8,154	$	—	$	532,289
Purchases	$	80,550	(4)	$	—	$	—	$	351,880	$	432,430

(1)Includes write-downs of $1 million and $2 million to the allowance for loan losses related to loans transferred from held-for-investment to held-for-sale for the three and nine months ended September 30, 2024, respectively, and $4 million for both the three and nine months ended September 30, 2023.

(2)Includes originated loans sold of $309 million and $496 million for the three and nine months ended September 30, 2024, respectively, and $204 million and $407 million for the three and nine months ended September 30, 2023, respectively. Originated loans sold consisted primarily of C&I loans for each of the three and nine months ended September 30, 2024 and 2023.

(3)Includes $20 million and $156 million of purchased loans sold in the secondary market for the three and nine months ended September 30, 2024, respectively, and $25 million and $125 million for the three and nine months ended September 30, 2023, respectively.

(4)C&I loan purchases were comprised of syndicated C&I term loans.