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LOANS AND CREDIT QUALITY

12 Months Ended

Dec. 31, 2021

LOANS AND CREDIT QUALITY:

The Company's LHFI is divided into two portfolio segments, commercial loans and consumer loans. Within each portfolio segment, the Company monitors and assesses credit risk based on the risk characteristics of each of the following loan classes: single family and home equity and other loans within the consumer loan portfolio and non-owner occupied CRE, multifamily, construction and land development, owner occupied CRE and commercial business loans within the commercial loan portfolio. LHFI consists of the following:


	At December 31,
(in thousands)	2021		2020

CRE
Non-owner occupied CRE	$	705,359	$	829,538
Multifamily	2,415,359		1,428,092
Construction/land development	496,144		553,695
Total	3,616,862		2,811,325
Commercial and industrial loans
Owner occupied CRE	457,706		467,256
Commercial business	401,872		645,723
Total	859,578		1,112,979
Consumer loans
Single family (1)	763,331		915,123
Home equity and other	303,078		404,753
Total (1)	1,066,409		1,319,876
Total LHFI	5,542,849		5,244,180
ACL	(47,123)		(64,294)
Total LHFI less ACL	$	5,495,726	$	5,179,886

(1) Includes $7.3 million and $7.1 million at December 31, 2021 and 2020, respectively, of loans where a fair value option election was made at the time of origination and, therefore, are carried at fair value with changes recognized in the consolidated income statements.

Loans totaling $2.8 billion and $1.4 billion at December 31, 2021 and 2020, respectively, were pledged to secure borrowings from the FHLB and loans totaling $419 million and $569 million at December 31, 2021 and 2020, respectively, were pledged to secure borrowings from the FRBSF.

It is the Company's policy to make loans to officers, directors and their associates in the ordinary course of business on substantially the same terms as those prevailing at the time for comparable transactions with other persons. The following is a

summary of activity during the year ended December 2021 with respect to such aggregate loans to these related parties and their associates:


(in thousands)	Year Ended December 31, 2021

Beginning balance	$	73
New loans and advances, net of principal repayments	1,475
Ending balance	$	1,548

Credit Risk Concentrations

Concentrations of credit risk arise when a number of customers are engaged in similar business activities or activities in the same geographic region, or when they have similar economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic conditions.

LHFI are primarily secured by real estate located in the Pacific Northwest, California and Hawaii. At December 31, 2021 and 2020, multifamily loans in the state of California represented 33% and 19% of the total LHFI portfolio, respectively.

Credit Quality

Management considers the level of ACL to be appropriate to cover credit losses expected over the life of the loans for the LHFI portfolio as of December 31, 2021. The cumulative loss rate used as the basis for the estimate of credit losses is comprised of the Bank’s historical loss experience and eight qualitative factors for current and forecasted periods.

During 2021, the historical expected loss rates decreased from December 31, 2020 due to minimal losses, stable portfolio credit distribution and favorable product mix risk composition. During 2021, the Qualitative Factors decreased significantly due to the improvement in economic conditions, continued favorable performance and outlook of the impact of the COVID-19 pandemic of our loan portfolio. As of December 31, 2021, the Bank expects that the markets in which it operates will have stable collateral values and economic outlook over the two-year forecast period.

In addition to the ACL for LHFI, the Company maintains a separate allowance for unfunded loan commitments which is included in accounts payable and other liabilities on our consolidated balance sheets. The allowance for unfunded commitments was $2.4 million and $1.6 million at December 31, 2021 and 2020, respectively.

The Bank has elected to exclude accrued interest receivable from the evaluation of the ACL. Accrued interest on LHFI was $17.8 million and $21.2 million at December 31, 2021 and 2020, respectively and was reported in other assets in the consolidated balance sheets.

Activity in the ACL for LHFI and the allowance for unfunded commitments was as follows:


	Years Ended December 31,
(in thousands)		2021		2020		2019

ACL for LHFI
Beginning balance		$	64,294	$	41,772	$	41,470
Provision for credit losses		(15,816)		21,843		(122)
Net (charge-offs) recoveries		(1,355)		(1,164)		424
Impact of ASC 326 adoption		—		1,843		—
Ending balance		$	47,123	$	64,294	$	41,772

Allowance for unfunded commitments
Beginning balance		$	1,588	$	1,065	$	1,443
Provision for credit losses		816		(1,374)		(378)
Impact of ASC 326 adoption		—		1,897		—
Ending balance		$	2,404	$	1,588	$	1,065

Provision for credit losses:
Allowance for credit losses-loans		$	(15,816)	$	21,843	$	(122)
Allowance for unfunded commitments		816		(1,374)		(378)
Total		$	(15,000)	$	20,469	$	(500)

Activity in the ACL by loan portfolio and loan sub-class was as follows.


	Year Ended December 31, 2021
(in thousands)	Beginning balance		Charge-offs		Recoveries		Provision		Ending balance

CRE
Non-owner occupied CRE	$	8,845	$	—	$	—	$	(1,336)	$	7,509
Multifamily	6,072		—		—		(218)		5,854
Construction/land development									—
Multifamily construction	4,903		—		—		(4,396)		507
CRE construction	1,670		—		—		(1,520)		150
Single family construction	5,130		—		—		1,281		6,411
Single family construction to permanent	1,315		—		—		(260)		1,055
Total	27,935		—		—		(6,449)		21,486
Commercial and industrial loans
Owner occupied CRE	4,994				—		12		5,006
Commercial business	17,043		(1,739)		146		(3,177)		12,273
Total	22,037		(1,739)		146		(3,165)		17,279
Consumer loans
Single family	6,906		(127)		291		(2,676)		4,394
Home equity and other	7,416		(483)		557		(3,526)		3,964
Total	14,322		(610)		848		(6,202)		8,358
Total ACL	$	64,294	$	(2,349)	$	994	$	(15,816)	$	47,123


	Year Ended December 31, 2020
(in thousands)	Prior to adoption of ASC 326		Impact of ASC 326 adoption		Charge-offs		Recoveries		Provision		Ending balance

CRE
Non-owner occupied CRE	$	7,245	$	(3,392)	$	—	$	—	$	4,992	$	8,845
Multifamily	7,015		(2,977)		—		—		2,034		6,072
Construction/land development
Multifamily construction	2,848		693		—		—		1,362		4,903
CRE construction	624		(115)		—		—		1,161		1,670
Single family construction	3,800		4,280		—		163		(3,113)		5,130
Single family construction to permanent	1,003		200		—		—		112		1,315
Total	22,535		(1,311)		—		163		6,548		27,935
Commercial and industrial loans
Owner occupied CRE	3,639		(2,459)		(896)		—		4,710		4,994
Commercial business	2,915		510		(640)		110		14,148		17,043
Total	6,554		(1,949)		(1,536)		110		18,858		22,037
Consumer loans
Single family	6,450		468		(17)		187		(182)		6,906
Home equity and other	6,233		4,635		(456)		385		(3,381)		7,416
Total	12,683		5,103		(473)		572		(3,563)		14,322
Total ACL	$	41,772	$	1,843	$	(2,009)	$	845	$	21,843	$	64,294


	Year Ended December 31, 2019
(in thousands)	Beginning balance		Charge-offs		Recoveries		Provision		Ending balance

CRE
Non-owner occupied CRE	$	5,495	$	—	$	—	$	1,750	$	7,245
Multifamily	5,754		—		—		1,261		7,015
Construction/land development	9,001				215		(941)		8,275
Total	20,250		—		215		2,070		22,535
Commercial and industrial loans
Owner occupied CRE	3,278				—		361		3,639
Commercial business	2,875		(315)		147		208		2,915
Total	6,153		(315)		147		569		6,554
Consumer loans
Single family	8,217		—		145		(1,912)		6,450
Home equity and other	6,850		(272)		504		(849)		6,233
Total	15,067		(272)		649		(2,761)		12,683
Total ACL	$	41,470	$	(587)	$	1,011	$	(122)	$	41,772

Credit Quality Indicators

Management regularly reviews loans in the portfolio to assess credit quality indicators and to determine appropriate loan classification and grading in accordance with applicable bank regulations. The Company's risk rating methodology assigns risk ratings ranging from 1 to 10, where a higher rating represents higher risk. The risk rating of 9 is not used.

Per the Company's policies, most commercial loans pools are non-homogenous and are regularly assessed for credit quality. The rating categories can be generally described by the following groupings for non-homogeneous loans:

•1-6: These loans meet the definition of "Pass" assets. They are well protected by the current net worth and paying capacity of the obligor (or guarantors, if any) or by the fair value, less costs to acquire and sell in a timely manner, of any underlying collateral.

•7: These loans meet the regulatory definition of "Special Mention." They contain potential weaknesses, that if uncorrected may result in deterioration of the likelihood of repayment or in the Bank’s credit position.

•8: These loans meet the regulatory definition of "Substandard." They are inadequately protected by the current sound worth and paying capacity of the borrower or of the collateral pledged, if any. They have well-defined weaknesses and have unsatisfactory characteristics causing unacceptable levels of risk.

•10: A loan, or the portion of a loan determined to meet the regulatory definition of “Loss.” The amounts classified as loss have been charged-off.

The risk rating categories can be generally described by the following groupings for homogeneous loans:

•1-6: These loans meet the definition of "Pass" assets. A homogenous "Pass" loan is typically risk rated based on payment performance.

•7: These loans meet the regulatory definition of “Special Mention.” A homogeneous special mention loan, risk rated 7, is less than 90 days past due from the required payment date at month-end.

•8: These loans meet the regulatory definition of “Substandard.” A homogeneous substandard loan, risk rated 8, is 90 days or more past due from the required payment date at month-end.

•10: These loans meet the regulatory definition of "Loss." A closed-end homogeneous loan not secured by real estate is risk rated 10 when past due 120 cumulative days or more from the contractual due date. Closed-end homogenous loans secured by real estate and all open-end homogenous loans are risk rated 10 when past due 180 cumulative days or more from the contractual due date. These loans, or the portion of these loans classified as loss, are generally charged-off in the month in which the applicable past due period elapses.

Small balance commercial loans are generally considered homogenous unless 30 days or more past due or modified in a troubled debt restructuring that was an interest rate concession or payment modification with a significant balloon and the concession period has not been completed. The risk rating classification for such loans are based on the non-homogenous definitions noted above.

Residential, home equity and other loans modified in a troubled debt restructuring are considered homogeneous unless the modification was an interest rate concession or payment modification with a significant balloon and the concession modification period has not been completed. The risk rating classification for such loans are based on the non-homogeneous definitions noted above.

The following table presents a vintage analysis of the commercial portfolio segment by loan sub-class, risk rating and delinquency status.


	At December 31, 2021
(in thousands)	2021		2020		2019		2018		2017		2016 and prior		Revolving		Revolving-term		Total

COMMERCIAL PORTFOLIO
Non-owner occupied CRE
1-6 Pass	$	68,647	$	50,571	$	169,711	$	130,877	$	100,674	$	183,024	$	963	$	892	$	705,359
7- Special Mention	—		—		—		—		—		—		—		—		—
8 - Substandard	—		—		—		—		—		—		—		—		—
Total	68,647		50,571		169,711		130,877		100,674		183,024		963		892		705,359
Multifamily
1-6 Pass	1,315,204		561,666		286,826		60,372		26,065		165,225		1		—		2,415,359
7- Special Mention	—		—		—		—		—		—		—		—		—
8 - Substandard	—		—		—		—		—		—		—		—		—
Total	1,315,204		561,666		286,826		60,372		26,065		165,225		1		—		2,415,359
Multifamily construction
1-6 Pass	7,825		22,863		7,173		—		—		—		—		—		37,861
7- Special Mention	—		—		—		—		—		—		—		—		—
8 - Substandard	—		—		—		—		—		—		—		—		—
Total	7,825		22,863		7,173		—		—		—		—		—		37,861
CRE construction
1-6 Pass	7,694		3,960		—		1,962		—		556		—		—		14,172
7- Special Mention	—		—		—		—		—		—		—		—		—
8 - Substandard	—		—		—		—		—		—		—		—		—
Total	7,694		3,960		—		1,962		—		556		—		—		14,172
Single family construction
1-6 Pass	146,595		35,640		14,509		—		—		77		99,206		—		296,027
7- Special Mention	—		—		—		—		—		—		—		—		—
8 - Substandard	—		—		—		—		—		—		—		—		—
Total	146,595		35,640		14,509		—		—		77		99,206		—		296,027
Single family construction to permanent
Current	90,311		42,636		13,362		1,775		—		—		—		—		148,084
Past due:
30-59 days	—		—		—		—		—		—		—		—		—
60-89 days	—		—		—		—		—		—		—		—		—
90+ days	—		—		—		—		—		—		—		—		—
Total	90,311		42,636		13,362		1,775		—		—		—		—		148,084
Owner occupied CRE
1-6 Pass	70,902		47,536		57,423		47,716		67,042		106,659		798		2,839		400,915
7- Special Mention	—		—		—		2,196		6,019		145		—		60		8,420
8 - Substandard	—		—		18,665		1,111		10,151		18,444		—		—		48,371
Total	70,902		47,536		76,088		51,023		83,212		125,248		798		2,899		457,706
Commercial business
1-6 Pass	88,139		51,453		44,882		24,711		11,859		21,258		112,759		2,104		357,165
7- Special Mention	—		—		7,396		—		4,396		—		5,613		134		17,539
8 - Substandard	9,716		3,399		1,667		5,928		1,096		1,328		3,932		102		27,168
Total	97,855		54,852		53,945		30,639		17,351		22,586		122,304		2,340		401,872
Total commercial portfolio	$	1,805,033	$	819,724	$	621,614	$	276,648	$	227,302	$	496,716	$	223,272	$	6,131	$	4,476,440

The following table presents a vintage analysis of the consumer portfolio segment by loan sub-class and delinquency status:


	At December 31, 2021
(in thousands)	2021		2020		2019		2018		2017		2016 and prior		Revolving		Revolving-term		Total

CONSUMER PORTFOLIO
Single family
Current	$	176,110	$	156,360	$	62,369	$	66,063	$	95,988	$	204,229	$	—	$	—	$	761,119
Past due:
30-59 days	—		—		291		—		—		—		—		—		291
60-89 days	—		—		—		—		314		471		—		—		785
90+ days	—		—		561		452		—		123		—		—		1,136
Total (1)	176,110		156,360		63,221		66,515		96,302		204,823		—		—		763,331



Home equity and other
Current	2,005		474		393		532		516		2,609		290,512		5,273		302,314
Past due:
30-59 days	—		3		—		—		—		94		40		—		137
60-89 days	—		—		—		—		—		—		12		62		74
90+ days	3		—		—		—		—		6		544		—		553
Total	2,008		477		393		532		516		2,709		291,108		5,335		303,078



Total consumer portfolio	$	178,118	$	156,837	$	63,614	$	67,047	$	96,818	$	207,532	$	291,108	$	5,335	$	1,066,409
Total LHFI	$	1,983,151	$	976,561	$	685,228	$	343,695	$	324,120	$	704,248	$	514,380	$	11,466	$	5,542,849

(1) Includes $7.3 million of loans where a fair value option election was made at the time of origination and, therefore, are carried at fair value with changes recognized in the consolidated income statements.

The following table presents a vintage analysis of the commercial portfolio segment by loan sub-class, risk rating and delinquency status:


	At December 31, 2020
(in thousands)	2020		2019		2018		2017		2016		2015 and prior		Revolving		Revolving-term		Total

COMMERCIAL PORTFOLIO
Non-owner occupied CRE
1-6 Pass	$	53,782	$	176,556	$	165,268	$	147,719	$	150,221	$	131,935	$	796	$	1,031	$	827,308
7- Special Mention	—		—		—		—		—		2,230		—		—		2,230
8 - Substandard	—		—		—		—		—		—		—		—		—
Total	53,782		176,556		165,268		147,719		150,221		134,165		796		1,031		829,538
Multifamily
1-6 Pass	711,009		324,246		100,572		32,693		166,937		92,255		380		—		1,428,092
7- Special Mention	—		—		—		—		—		—		—		—		—
8 - Substandard	—		—		—		—		—		—		—		—		—
Total	711,009		324,246		100,572		32,693		166,937		92,255		380		—		1,428,092
Multifamily construction
1-6 Pass	12,182		21,366		45,256		11,823		—		—		—		—		90,627
7- Special Mention	—		—		—		—		24,702		—		—		—		24,702
8 - Substandard	—		—		—		—		—		—		—		—		—
Total	12,182		21,366		45,256		11,823		24,702		—		—		—		115,329
CRE construction
1-6 Pass	3,963		—		2,104		14,721		—		614		5,883		—		27,285
7- Special Mention	—		—		—		—		—		—		—		—		—
8 - Substandard	—		—		—		—		—		—		—		—		—
Total	3,963		—		2,104		14,721		—		614		5,883		—		27,285
Single family construction
1-6 Pass	121,233		47,539		14,055		—		—		600		75,743		—		259,170
7- Special Mention	—		—		—		—		—		—		—		—		—
8 - Substandard	—		—		—		—		—		—		—		—		—
Total	121,233		47,539		14,055		—		—		600		75,743		—		259,170
Single family construction to permanent
Current	62,955		72,825		15,443		688		—		—		—		—		151,911
Past due:
30-59 days	—		—		—		—		—		—		—		—		—
60-89 days	—		—		—		—		—		—		—		—		—
90+ days	—		—		—		—		—		—		—		—		—
Total	62,955		72,825		15,443		688		—		—		—		—		151,911
Owner occupied CRE
1-6 Pass	48,647		60,872		58,582		85,275		98,046		50,596		—		4,354		406,372
7- Special Mention	—		—		5,977		3,529		—		—		—		69		9,575
8 - Substandard	—		19,407		1,111		10,750		17,122		2,919		—		—		51,309
Total	48,647		80,279		65,670		99,554		115,168		53,515		—		4,423		467,256
Commercial business
1-6 Pass	345,540		63,020		47,710		22,556		18,411		14,972		76,218		2,577		591,004
7- Special Mention	—		10,837		2,058		6,653		—		—		3,975		166		23,689
8 - Substandard	—		5,923		11,327		2,338		1,891		1,001		8,438		112		31,030
Total	345,540		79,780		61,095		31,547		20,302		15,973		88,631		2,855		645,723
Total commercial portfolio	$	1,359,311	$	802,591	$	469,463	$	338,745	$	477,330	$	297,122	$	171,433	$	8,309	$	3,924,304

The following table presents a vintage analysis of the consumer portfolio segment by loan sub-class and delinquency status:


	At December 31, 2020
(in thousands)	2020		2019		2018		2017		2016		2015 and prior		Revolving		Revolving-term		Total

CONSUMER PORTFOLIO
Single family
Current	$	174,994	$	111,143	$	154,757	$	168,412	$	59,161	$	242,444	$	—	$	—	$	910,911
Past due:
30-59 days	—		570		—		318		—		390		—		—		1,278
60-89 days	—		—		—		—		—		—		—		—		—
90+ days	824		335		405		386		—		984		—		—		2,934
Total (1)	175,818		112,048		155,162		169,116		59,161		243,818		—		—		915,123



Home equity and other
Current	1,878		1,230		1,311		1,363		431		5,126		384,005		8,147		403,491
Past due:
30-59 days	98		22		—		—		—		11		66		31		228
60-89 days	—		13		—		—		—		—		129		—		142
90+ days	—		9		—		—		275		24		584		—		892
Total	1,976		1,274		1,311		1,363		706		5,161		384,784		8,178		404,753



Total consumer portfolio	$	177,794	$	113,322	$	156,473	$	170,479	$	59,867	$	248,979	$	384,784	$	8,178	$	1,319,876
Total LHFI	$	1,537,105	$	915,913	$	625,936	$	509,224	$	537,197	$	546,101	$	556,217	$	16,487	$	5,244,180

(1) Includes $7.1 million of loans where a fair value option election was made at the time of origination and, therefore, are carried at fair value with changes recognized in the consolidated income statements.

Collateral Dependent Loans

The following table presents the amortized cost basis of collateral-dependent loans by loan sub-class and collateral type:


	At December 31, 2021
(in thousands)	Land		1-4 Family		Non-residential real estate		Other non-real estate		Total










Commercial and industrial loans
Owner occupied CRE	$	1,111	$	—	$	2,456	$	—	$	3,567
Commercial business	362		27		562		286		1,237
Total	1,473		27		3,018		286		4,804
Consumer loans
Single family	—		1,598		—		—		1,598
Home equity loans and other	—		19		—		—		19
Total	—		1,617		—		—		1,617
Total collateral-dependent loans	$	1,473	$	1,644	$	3,018	$	286	$	6,421


	At December 31, 2020
(in thousands)	Land		1-4 Family		Non-residential real estate		Other non-real estate		Total










Commercial and industrial loans
Owner occupied CRE	$	1,789	$	—	$	3,133	$	—	$	4,922
Commercial business	1,787		545		—		2,882		5,214
Total	3,576		545		3,133		2,882		10,136
Consumer loans
Single family	—		2,457		—		—		2,457

Total	—		2,457		—		—		2,457
Total collateral-dependent loans	$	3,576	$	3,002	$	3,133	$	2,882	$	12,593

Nonaccrual and Past Due Loans

The following table presents nonaccrual status for loans:


	At December 31, 2021				At December 31, 2020
(in thousands)	Nonaccrual with no related ACL		Total Nonaccrual		Nonaccrual with no related ACL		Total Nonaccrual










Commercial and industrial loans
Owner occupied CRE	$	3,568	$	3,568	$	4,922	$	4,922
Commercial business	1,210		5,023		3,100		9,183
Total	4,778		8,591		8,022		14,105
Consumer loans
Single family	1,324		2,802		2,173		4,883
Home equity and other	23		808		2		1,734
Total	1,347		3,610		2,175		6,617
Total nonaccrual loans	$	6,125	$	12,201	$	10,197	$	20,722

The following tables present an aging analysis of past due loans by loan portfolio segment and loan sub-class:


	At December 31, 2021
	Past Due and Still Accruing
(in thousands)	30-59 days			60-89 days			90 days or more				Nonaccrual			Total past due and nonaccrual (3)			Current			Total loans

CRE
Non-owner occupied CRE	$	—		$	—		$	—			$	—		$	—		$	705,359		$	705,359
Multifamily	—			—			—				—			—			2,415,359			2,415,359
Construction/land development
Multifamily construction	—			—			—				—			—			37,861			37,861
CRE construction	—			—			—				—			—			14,172			14,172
Single family construction	—			—			—				—			—			296,027			296,027
Single family construction to permanent	—			—			—				—			—			148,084			148,084
Total	—			—			—				—			—			3,616,862			3,616,862
Commercial and industrial loans
Owner occupied CRE	—			—			—				3,568			3,568			454,138			457,706
Commercial business	198			—			—				5,023			5,221			396,651			401,872
Total	198			—			—				8,591			8,789			850,789			859,578
Consumer loans
Single family	892			820			6,717			(2)	2,802			11,231			752,100			763,331			(1)
Home equity and other	118			74			—				808			1,000			302,078			303,078
Total	1,010			894			6,717				3,610			12,231			1,054,178			1,066,409
Total loans	$	1,208		$	894		$	6,717			$	12,201		$	21,020		$	5,521,829		$	5,542,849
%	0.02		%	0.02		%	0.12		%		0.22		%	0.38		%	99.62		%	100.00		%


	At December 31, 2020
	Past Due and Still Accruing
(in thousands)	30-59 days			60-89 days			90 days or more				Nonaccrual			Total past due and nonaccrual (3)			Current			Total loans

CRE
Non-owner occupied CRE	$	—		$	—		$	—			$	—		$	—		$	829,538		$	829,538
Multifamily	—			—			—				—			—			1,428,092			1,428,092
Construction and land development
Multifamily construction	—			—			—				—			—			115,329			115,329
CRE construction	—			—			—				—			—			27,285			27,285
Single family construction	—			—			—				—			—			259,170			259,170
Single family construction to permanent	—			—			—				—			—			151,911			151,911
Total	—			—			—				—			—			2,811,325			2,811,325
Commercial and industrial loans
Owner occupied CRE	—			—			—				4,922			4,922			462,334			467,256
Commercial business	—						—				9,183			9,183			636,540			645,723
Total	—			—			—				14,105			14,105			1,098,874			1,112,979
Consumer loans
Single family	2,161			418			11,476			(2)	4,883			18,938			896,185			915,123			(1)
Home equity and other	228			135			—				1,734			2,097			402,656			404,753
Total	2,389			553			11,476				6,617			21,035			1,298,841			1,319,876
Total loans	$	2,389		$	553		$	11,476			$	20,722		$	35,140		$	5,209,040		$	5,244,180
%	0.05		%	0.01		%	0.22		%		0.40		%	0.67		%	99.33		%	100.00		%

(1)Includes $7.3 million and $7.1 million of loans at December 31, 2021 and 2020, respectively, where a fair value option election was made at the time of origination and, therefore, are carried at fair value with changes recognized in our consolidated income statements.

(2)FHA-insured and VA-guaranteed single family loans that are 90 days or more past due are maintained on accrual status if they are determined to have little to no risk of loss.

(3)Includes loans whose repayments are insured by the FHA or guaranteed by the VA or SBA of $8.4 million and $14.7 million at December 31, 2021 and 2020, respectively.

The following tables present information about troubled debt restructuring ("TDR") activity for the periods indicated:


	Year Ended December 31, 2021
(dollars in thousands)		Number of loan modifications	Recorded investment		Related charge- offs



























Consumer loans
Single family
Interest rate reduction		20	$	5,482	$	—
Payment restructure		7	2,815		—








Total		27	8,297		—
Total loans
Interest rate reduction		20	5,482		—
Payment restructure		7	2,815		—
Total		27	$	8,297	$	—


	Year Ended December 31, 2020
(dollars in thousands)		Number of loan modifications	Recorded investment		Related charge- offs














Commercial and industrial loans
Owner occupied CRE

Payment restructure		1	$	678	$	—
Commercial business

Payment restructure		1	1,125		—
Total commercial and industrial

Payment restructure		2	1,803		—
Total		2	1,803		—
Consumer loans
Single family
Interest rate reduction		27	5,979		—
Payment restructure		14	2,695		—






Total		41	8,674		—
Total loans
Interest rate reduction		27	5,979		—
Payment restructure		16	4,498		—
Total		43	$	10,477	$	—


	Year Ended December 31, 2019
(dollars in thousands)		Number of loan modifications	Recorded investment		Related charge- offs

CRE




Construction and land development

Payment restructure		1	$	4,675	$	—
Total		1	4,675		—





Commercial and industrial loans
Owner occupied CRE

Payment restructure		1	5,840		—
Commercial business

Payment restructure		1	259		—
Total commercial and industrial

Payment restructure		2	6,099		—
Total		2	6,099		—
Consumer loans
Single family
Interest rate reduction		21	3,925		—
Payment restructure		118	25,795		—
Home equity and other

Payment restructure		1	116		—
Total consumer
Interest rate reduction		21	3,925		—
Payment restructure		119	25,911		—
Total		140	29,836		—
Total loans
Interest rate reduction		21	3,925		—
Payment restructure		122	36,685		—
Total		143	$	40,610	$	—

A TDR loan is considered re-defaulted when it becomes doubtful that the objectives of the modifications will be met, generally when a consumer loan TDR becomes 60 days or more past due on principal or interest payments or when a commercial loan TDR becomes 90 days or more past due on principal or interest payments. The following table presents loans that were modified as TDRs within the previous 12 months and subsequently re-defaulted during 2021 and 2020, respectively:


	Years Ended December 31,
	2021			2020
(dollars in thousands)	Number of loan relationships that re-defaulted	Recorded investment		Number of loan relationships that re-defaulted	Recorded investment







Commercial and industrial loans-owner occupied CRE	1	$	678	—	$	—



Consumer loans-single family	11	3,040		20	3,809



Total	12	$	3,718	20	$	3,809

The Coronavirus Aid, Relief and Economic Security ("CARES") Act provided temporary relief from the accounting and disclosure requirements for TDRs for certain loan modifications that are the result of a hardship that is related, either directly or indirectly, to the COVID-19 pandemic. In addition, interagency guidance issued by federal banking regulators and endorsed by the FASB staff has indicated that borrowers who receive relief are not experiencing financial difficulty if they meet the following qualifying criteria:

•The modification is in response to the National Emergency related to the COVID pandemic;

•The borrower was current at the time the modification program was implemented; and

•The modification is short-term

We have elected to apply temporary relief under Section 4013 of the CARES Act to certain eligible short-term modifications and will not treat qualifying loan modifications as TDRs for accounting or disclosure purposes. Additionally, eligible short-term loan modifications subject to the practical expedient in the interagency guidance will not be treated as TDRs for accounting or disclosure purposes if they qualify.

As of December 31, 2021, excluding any SBA guaranteed loans for which the government was making payments as provided for under the CARES Act, or single family loans that are guaranteed by FHA or VA, the Company has outstanding balances of $28 million on 41 loans that were approved for forbearance under this program.

The Bank will exercise judgment in determining the risk rating for impacted borrowers and will not automatically adversely classify credits that are affected by COVID-19. The Bank also will not designate loans with deferrals granted due to COVID-19 as past due because of the deferral. Due to the short-term nature of the forbearance and other relief programs we are offering as a result of the COVID-19 pandemic, we expect that borrowers granted relief under these programs will generally not be reported as nonaccrual.