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LOANS AND ALLOWANCE FOR CREDIT LOSSES | 9 Months Ended
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Sep. 30, 2023
Receivables [Abstract] |
LOANS AND ALLOWANCE FOR CREDIT LOSSES | LOANS AND ALLOWANCE FOR CREDIT LOSSES The following table presents the balances in our loan portfolio as of the dates indicated:
($ in thousands) |  |  |  |  |  | September 30, 2023 |  | December 31, 2022
Commercial: |  |  |  |  |  |  |  |
Commercial and industrial(1)(2) |  |  |  |  |  | $ | 1,942,964 |  |  | $ | 1,845,960 |
Commercial real estate(2) |  |  |  |  |  | 1,173,332 |  |  | 1,259,651 |
Multifamily |  |  |  |  |  | 1,654,272 |  |  | 1,689,943 |
SBA |  |  |  |  |  | 56,600 |  |  | 68,137 |
Construction |  |  |  |  |  | 262,715 |  |  | 243,553 |
Consumer: |  |  |  |  |  |  |  |
Single family residential mortgage |  |  |  |  |  | 1,782,655 |  |  | 1,920,806 |
Other consumer |  |  |  |  |  | 88,494 |  |  | 86,988 |
Total loans |  |  |  |  |  | $ | 6,961,032 |  |  | $ | 7,115,038 |
Allowance for loan losses |  |  |  |  |  | (74,390) |  |  | (85,960) |
Loans receivable, net |  |  |  |  |  | $ | 6,886,642 |  |  | $ | 7,029,078 |
(1)Includes warehouse lending balances of $647.7 million and $602.5 million at September 30, 2023 and December 31, 2022. (2)$102.3 million of owner-occupied CRE loans were moved to the C&I category from the CRE category during the third quarter of 2023. The following table presents the balances of total loans as of the dates indicated:
($ in thousands) |  | September 30, 2023 |  | December 31, 2022
Unpaid principal balance |  | $ | 6,953,895 |  |  | $ | 7,107,897 |
Unamortized net premiums |  | 16,571 |  |  | 18,319 |
Unamortized net deferred (fees) costs |  | (1,331) |  |  | (1,880) |
Fair value adjustment(1) |  | (8,103) |  |  | (9,298) |
Total loans |  | $ | 6,961,032 |  |  | $ | 7,115,038 |
(1)At September 30, 2023, balance includes $7.1 million related to the acquisition of Pacific Mercantile Bancorp (“PMB”), of which $3.6 million related to purchased credit deteriorated (“PCD”) loans. At December 31, 2022, includes $8.0 million related to the PMB acquisition, of which $4.1 million related to PCD loans. Credit Quality Indicators We categorize loans into risk categories based on relevant information about the ability of borrowers to repay their debt such as current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. We analyze the associated risks in the current loan portfolio and individually grade each loan for credit risk. This analysis includes all loans delinquent over 60 days and non-homogeneous loans such as commercial and commercial real estate (“CRE”) loans. We use the following definitions for risk ratings: Pass: Loans risk rated “Pass” are in compliance in all respects with the Bank’s credit policy and regulatory requirements, and do not exhibit any potential or defined weakness as defined under “Special Mention”, “Substandard” or “Doubtful.” Special Mention: Loans risk rated “Special Mention” have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loans or of our credit position at some future date. Substandard: Loans risk rated “Substandard” are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or a weakness that jeopardizes the liquidation of the debt. They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. Doubtful: Loans risk rated “Doubtful” have all the weaknesses inherent in those classified as substandard, 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. The following table presents the risk categories for total loans by class of loans and origination year as of September 30, 2023:
|  | Term Loans Amortized Cost Basis by Origination Year |  |  |  |  |  |
($ in thousands) |  | 2023 |  | 2022 |  | 2021 |  | 2020 |  | 2019 |  | Prior |  | Revolving Loans Amortized Cost Basis |  | Revolving Loans Amortized Cost Basis Converted to Term |  | Total
September 30, 2023 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 102,946 |  |  | $ | 269,069 |  |  | $ | 206,543 |  |  | $ | 65,557 |  |  | $ | 37,272 |  |  | $ | 229,611 |  |  | $ | 935,283 |  |  | $ | 34,257 |  |  | $ | 1,880,538 |
Special mention |  | — |  |  | 5,368 |  |  | 4,499 |  |  | — |  |  | 10,370 |  |  | 10,231 |  |  | 2,252 |  |  | 1,354 |  |  | 34,074 |
Substandard |  | — |  |  | 3,560 |  |  | 32 |  |  | 14 |  |  | 200 |  |  | 12,843 |  |  | 5,009 |  |  | 1,978 |  |  | 23,636 |
Doubtful (1) |  | 3,910 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 806 |  |  | — |  |  | 4,716 |
Commercial and industrial (1) |  | 106,856 |  |  | 277,997 |  |  | 211,074 |  |  | 65,571 |  |  | 47,842 |  |  | 252,685 |  |  | 943,350 |  |  | 37,589 |  |  | 1,942,964 |
Commercial real estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | 58,551 |  |  | 352,908 |  |  | 297,564 |  |  | 46,183 |  |  | 80,265 |  |  | 316,530 |  |  | 1,575 |  |  | 54 |  |  | 1,153,630 |
Special mention |  | — |  |  | 1,953 |  |  | 8,549 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 10,502 |
Substandard |  | — |  |  | 540 |  |  | — |  |  | — |  |  | 7,175 |  |  | 648 |  |  | — |  |  | 837 |  |  | 9,200 |
Doubtful |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Commercial real estate (1) |  | 58,551 |  |  | 355,401 |  |  | 306,113 |  |  | 46,183 |  |  | 87,440 |  |  | 317,178 |  |  | 1,575 |  |  | 891 |  |  | 1,173,332 |
Multifamily |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | 23,474 |  |  | 623,794 |  |  | 396,291 |  |  | 152,985 |  |  | 223,079 |  |  | 205,461 |  |  | 1,087 |  |  | 9,169 |  |  | 1,635,340 |
Special mention |  | — |  |  | — |  |  | — |  |  | 3,000 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 3,000 |
Substandard |  | — |  |  | — |  |  | — |  |  | — |  |  | 1,117 |  |  | 14,815 |  |  | — |  |  | — |  |  | 15,932 |
Doubtful |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Multifamily |  | 23,474 |  |  | 623,794 |  |  | 396,291 |  |  | 155,985 |  |  | 224,196 |  |  | 220,276 |  |  | 1,087 |  |  | 9,169 |  |  | 1,654,272 |
SBA |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | — |  |  | 9,231 |  |  | 10,456 |  |  | 3,472 |  |  | 5,197 |  |  | 17,814 |  |  | 63 |  |  | 420 |  |  | 46,653 |
Special mention |  | — |  |  | — |  |  | 672 |  |  | — |  |  | — |  |  | 555 |  |  | — |  |  | 1 |  |  | 1,228 |
Substandard |  | — |  |  | — |  |  | — |  |  | 295 |  |  | 860 |  |  | 6,422 |  |  | 351 |  |  | 489 |  |  | 8,417 |
Doubtful |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 302 |  |  | 302 |
SBA |  | — |  |  | 9,231 |  |  | 11,128 |  |  | 3,767 |  |  | 6,057 |  |  | 24,791 |  |  | 414 |  |  | 1,212 |  |  | 56,600 |
Construction |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | 3,303 |  |  | 104,244 |  |  | 102,157 |  |  | 27,825 |  |  | — |  |  | 24,971 |  |  | 215 |  |  | — |  |  | 262,715 |
Special mention |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Substandard |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Doubtful |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Construction |  | 3,303 |  |  | 104,244 |  |  | 102,157 |  |  | 27,825 |  |  | — |  |  | 24,971 |  |  | 215 |  |  | — |  |  | 262,715 |
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Single family residential mortgage |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | — |  |  | 582,049 |  |  | 757,366 |  |  | 69,361 |  |  | 41,601 |  |  | 277,965 |  |  | 2,029 |  |  | — |  |  | 1,730,371 |
Special mention |  | — |  |  | 6,128 |  |  | 1,741 |  |  | — |  |  | — |  |  | 3,910 |  |  | — |  |  | — |  |  | 11,779 |
Substandard |  | — |  |  | 10,745 |  |  | 10,152 |  |  | 2,162 |  |  | — |  |  | 15,582 |  |  | 1,864 |  |  | — |  |  | 40,505 |
Doubtful |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Single family residential mortgage |  | — |  |  | 598,922 |  |  | 769,259 |  |  | 71,523 |  |  | 41,601 |  |  | 297,457 |  |  | 3,893 |  |  | — |  |  | 1,782,655 |
Other consumer |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | 22,449 |  |  | 17,239 |  |  | 12,888 |  |  | 7,119 |  |  | 3,768 |  |  | 13,176 |  |  | 9,645 |  |  | 1,404 |  |  | 87,688 |
Special mention |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 1 |  |  | 349 |  |  | — |  |  | 350 |
Substandard |  | — |  |  | — |  |  | — |  |  | 167 |  |  | 117 |  |  | 41 |  |  | 81 |  |  | 50 |  |  | 456 |
Doubtful |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Other consumer |  | 22,449 |  |  | 17,239 |  |  | 12,888 |  |  | 7,286 |  |  | 3,885 |  |  | 13,218 |  |  | 10,075 |  |  | 1,454 |  |  | 88,494 |
Total loans |  | $ | 214,633 |  |  | $ | 1,986,828 |  |  | $ | 1,808,910 |  |  | $ | 378,140 |  |  | $ | 411,021 |  |  | $ | 1,150,576 |  |  | $ | 960,609 |  |  | $ | 50,315 |  |  | $ | 6,961,032 |
Total loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 210,723 |  |  | $ | 1,958,534 |  |  | $ | 1,783,265 |  |  | $ | 372,502 |  |  | $ | 391,182 |  |  | $ | 1,085,528 |  |  | $ | 949,897 |  |  | $ | 45,304 |  |  | $ | 6,796,935 |
Special mention |  | — |  |  | 13,449 |  |  | 15,461 |  |  | 3,000 |  |  | 10,370 |  |  | 14,697 |  |  | 2,601 |  |  | 1,355 |  |  | 60,933 |
Substandard |  | — |  |  | 14,845 |  |  | 10,184 |  |  | 2,638 |  |  | 9,469 |  |  | 50,351 |  |  | 7,305 |  |  | 3,354 |  |  | 98,146 |
Doubtful (2) |  | 3,910 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 806 |  |  | 302 |  |  | 5,018 |
Total loans |  | $ | 214,633 |  |  | $ | 1,986,828 |  |  | $ | 1,808,910 |  |  | $ | 378,140 |  |  | $ | 411,021 |  |  | $ | 1,150,576 |  |  | $ | 960,609 |  |  | $ | 50,315 |  |  | $ | 6,961,032 |
(1) $102.3 million of owner-occupied CRE loans were moved to the C&I category from the CRE category during the third quarter of 2023. (2) Doubtful loans in origination year 2023 included one commercial and industrial (“C&I”) loan that was modified and accounted for as a new loan. The following table presents the risk categories for total loans by class of loans and origination year as of December 31, 2022:
|  | Term Loans Amortized Cost Basis by Origination Year |  |  |  |  |  |
($ in thousands) |  | 2022 |  | 2021 |  | 2020 |  | 2019 |  | 2018 |  | Prior |  | Revolving Loans Amortized Cost Basis |  | Revolving Loans Amortized Cost Basis Converted to Term |  | Total
December 31, 2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 269,367 |  |  | $ | 170,513 |  |  | $ | 62,931 |  |  | $ | 53,001 |  |  | $ | 76,811 |  |  | $ | 164,394 |  |  | $ | 932,464 |  |  | $ | 19,803 |  |  | $ | 1,749,284 |
Special mention |  | — |  |  | 19,203 |  |  | 1,042 |  |  | — |  |  | 1 |  |  | 11,528 |  |  | 17,142 |  |  | 483 |  |  | 49,399 |
Substandard |  | 3,833 |  |  | 64 |  |  | 3,002 |  |  | 502 |  |  | 3,630 |  |  | 2,729 |  |  | 23,012 |  |  | 6,501 |  |  | 43,273 |
Doubtful |  | — |  |  | — |  |  | — |  |  | 4,004 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 4,004 |
Commercial and industrial |  | 273,200 |  |  | 189,780 |  |  | 66,975 |  |  | 57,507 |  |  | 80,442 |  |  | 178,651 |  |  | 972,618 |  |  | 26,787 |  |  | 1,845,960 |
Commercial real estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | 348,298 |  |  | 363,335 |  |  | 60,564 |  |  | 94,772 |  |  | 155,790 |  |  | 224,213 |  |  | 1,163 |  |  | 61 |  |  | 1,248,196 |
Special mention |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 1,745 |  |  | — |  |  | — |  |  | 1,745 |
Substandard |  | — |  |  | — |  |  | — |  |  | — |  |  | 1 |  |  | 8,799 |  |  | 910 |  |  | — |  |  | 9,710 |
Doubtful |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Commercial real estate |  | 348,298 |  |  | 363,335 |  |  | 60,564 |  |  | 94,772 |  |  | 155,791 |  |  | 234,757 |  |  | 2,073 |  |  | 61 |  |  | 1,259,651 |
Multifamily |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | 626,186 |  |  | 390,928 |  |  | 154,636 |  |  | 229,511 |  |  | 109,887 |  |  | 138,063 |  |  | 3 |  |  | 9,307 |  |  | 1,658,521 |
Special mention |  | — |  |  | — |  |  | 2,997 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 2,997 |
Substandard |  | — |  |  | — |  |  | — |  |  | — |  |  | 11,069 |  |  | 17,356 |  |  | — |  |  | — |  |  | 28,425 |
Doubtful |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Multifamily |  | 626,186 |  |  | 390,928 |  |  | 157,633 |  |  | 229,511 |  |  | 120,956 |  |  | 155,419 |  |  | 3 |  |  | 9,307 |  |  | 1,689,943 |
SBA |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | 9,421 |  |  | 15,468 |  |  | 4,009 |  |  | 5,899 |  |  | 1,176 |  |  | 19,090 |  |  | 603 |  |  | 123 |  |  | 55,789 |
Special mention |  | — |  |  | — |  |  | — |  |  | — |  |  | 201 |  |  | 598 |  |  | — |  |  | 1 |  |  | 800 |
Substandard |  | — |  |  | — |  |  | 320 |  |  | 339 |  |  | 385 |  |  | 9,097 |  |  | 628 |  |  | 779 |  |  | 11,548 |
Doubtful |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
SBA |  | 9,421 |  |  | 15,468 |  |  | 4,329 |  |  | 6,238 |  |  | 1,762 |  |  | 28,785 |  |  | 1,231 |  |  | 903 |  |  | 68,137 |
Construction |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | 85,430 |  |  | 98,572 |  |  | 27,704 |  |  | 6,495 |  |  | — |  |  | 25,352 |  |  | — |  |  | — |  |  | 243,553 |
Special mention |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Substandard |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Doubtful |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Construction |  | 85,430 |  |  | 98,572 |  |  | 27,704 |  |  | 6,495 |  |  | — |  |  | 25,352 |  |  | — |  |  | — |  |  | 243,553 |
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Single family residential mortgage |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | 627,213 |  |  | 797,744 |  |  | 72,658 |  |  | 47,284 |  |  | 89,492 |  |  | 255,520 |  |  | — |  |  | — |  |  | 1,889,911 |
Special mention |  | 1,716 |  |  | 218 |  |  | — |  |  | 1,537 |  |  | 3,378 |  |  | 2,252 |  |  | — |  |  | — |  |  | 9,101 |
Substandard |  | 3,571 |  |  | — |  |  | 2,171 |  |  | — |  |  | 8,573 |  |  | 7,479 |  |  | — |  |  | — |  |  | 21,794 |
Doubtful |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Single family residential mortgage |  | 632,500 |  |  | 797,962 |  |  | 74,829 |  |  | 48,821 |  |  | 101,443 |  |  | 265,251 |  |  | — |  |  | — |  |  | 1,920,806 |
Other consumer |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | 23,340 |  |  | 15,986 |  |  | 8,805 |  |  | 5,524 |  |  | 3,363 |  |  | 15,920 |  |  | 10,914 |  |  | 2,747 |  |  | 86,599 |
Special mention |  | — |  |  | — |  |  | — |  |  | 3 |  |  | — |  |  | 19 |  |  | 62 |  |  | 54 |  |  | 138 |
Substandard |  | — |  |  | — |  |  | 56 |  |  | — |  |  | 83 |  |  | 31 |  |  | 81 |  |  | — |  |  | 251 |
Doubtful |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Other consumer |  | 23,340 |  |  | 15,986 |  |  | 8,861 |  |  | 5,527 |  |  | 3,446 |  |  | 15,970 |  |  | 11,057 |  |  | 2,801 |  |  | 86,988 |
Total loans |  | $ | 1,998,375 |  |  | $ | 1,872,031 |  |  | $ | 400,895 |  |  | $ | 448,871 |  |  | $ | 463,840 |  |  | $ | 904,185 |  |  | $ | 986,982 |  |  | $ | 39,859 |  |  | $ | 7,115,038 |
Total loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pass |  | $ | 1,989,255 |  |  | $ | 1,852,546 |  |  | $ | 391,307 |  |  | $ | 442,486 |  |  | $ | 436,519 |  |  | $ | 842,552 |  |  | $ | 945,147 |  |  | $ | 32,041 |  |  | $ | 6,931,853 |
Special mention |  | 1,716 |  |  | 19,421 |  |  | 4,039 |  |  | 1,540 |  |  | 3,580 |  |  | 16,142 |  |  | 17,204 |  |  | 538 |  |  | 64,180 |
Substandard |  | 7,404 |  |  | 64 |  |  | 5,549 |  |  | 841 |  |  | 23,741 |  |  | 45,491 |  |  | 24,631 |  |  | 7,280 |  |  | 115,001 |
Doubtful |  | — |  |  | — |  |  | — |  |  | 4,004 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 4,004 |
Total loans |  | $ | 1,998,375 |  |  | $ | 1,872,031 |  |  | $ | 400,895 |  |  | $ | 448,871 |  |  | $ | 463,840 |  |  | $ | 904,185 |  |  | $ | 986,982 |  |  | $ | 39,859 |  |  | $ | 7,115,038 |
Past Due Loans The following table presents the aging of the recorded investment in past due loans, excluding accrued interest receivable (which is not considered to be material), by class of loans as of the dates indicated:
($ in thousands) |  | 30 - 59 Days Past Due |  | 60 - 89 Days Past Due |  | Greater than 89 Days Past due |  | Total Past Due |  | Current |  | Total
September 30, 2023 |  |  |  |  |  |  |  |  |  |  |  |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial |  | $ | 452 |  |  | $ | 2,452 |  |  | $ | 9,210 |  |  | $ | 12,114 |  |  | $ | 1,930,850 |  |  | $ | 1,942,964 |
Commercial real estate |  | 1,326 |  |  | 3,569 |  |  | 1,324 |  |  | 6,219 |  |  | 1,167,113 |  |  | 1,173,332 |
Multifamily |  | — |  |  | — |  |  | 1,118 |  |  | 1,118 |  |  | 1,653,154 |  |  | 1,654,272 |
SBA |  | 273 |  |  | 481 |  |  | 7,193 |  |  | 7,947 |  |  | 48,653 |  |  | 56,600 |
Construction |  | — |  |  | — |  |  | — |  |  | — |  |  | 262,715 |  |  | 262,715 |
Consumer: |  |  |  |  |  |  |  |  |  |  |  |
Single family residential mortgage |  | 25,437 |  |  | 16,064 |  |  | 20,702 |  |  | 62,203 |  |  | 1,720,452 |  |  | 1,782,655 |
Other consumer |  | 454 |  |  | 50 |  |  | 145 |  |  | 649 |  |  | 87,845 |  |  | 88,494 |
Total |  | $ | 27,942 |  |  | $ | 22,616 |  |  | $ | 39,692 |  |  | $ | 90,250 |  |  | $ | 6,870,782 |  |  | $ | 6,961,032 |
December 31, 2022 |  |  |  |  |  |  |  |  |  |  |  |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial |  | $ | 4,002 |  |  | $ | 481 |  |  | $ | 13,833 |  |  | $ | 18,316 |  |  | $ | 1,827,644 |  |  | $ | 1,845,960 |
Commercial real estate |  | 311 |  |  | — |  |  | 910 |  |  | 1,221 |  |  | 1,258,430 |  |  | 1,259,651 |
Multifamily |  | — |  |  | — |  |  | — |  |  | — |  |  | 1,689,943 |  |  | 1,689,943 |
SBA |  | 287 |  |  | — |  |  | 10,299 |  |  | 10,586 |  |  | 57,551 |  |  | 68,137 |
Construction |  | — |  |  | — |  |  | — |  |  | — |  |  | 243,553 |  |  | 243,553 |
Consumer: |  |  |  |  |  |  |  |  |  |  |  |
Single family residential mortgage |  | 36,338 |  |  | 5,068 |  |  | 19,431 |  |  | 60,837 |  |  | 1,859,969 |  |  | 1,920,806 |
Other consumer |  | 163 |  |  | 16 |  |  | 81 |  |  | 260 |  |  | 86,728 |  |  | 86,988 |
Total |  | $ | 41,101 |  |  | $ | 5,565 |  |  | $ | 44,554 |  |  | $ | 91,220 |  |  | $ | 7,023,818 |  |  | $ | 7,115,038 |
Nonaccrual Loans The following table presents nonaccrual loans as of the dates indicated:
|  |  |  |  | September 30, 2023 |  |  |  |  |  | December 31, 2022
($ in thousands) |  |  |  |  | Total Nonaccrual Loans |  | Nonaccrual Loans with no ACL |  |  |  |  |  | Total Nonaccrual Loans |  | Nonaccrual Loans with no ACL
Nonaccrual loans |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial |  |  |  |  | $ | 9,713 |  |  | $ | 4,218 |  |  |  |  |  |  | $ | 22,613 |  |  | $ | 10,959 |
Commercial real estate |  |  |  |  | 1,864 |  |  | 1,864 |  |  |  |  |  |  | 910 |  |  | 910 |
Multi-family |  |  |  |  | 1,118 |  |  | 1,118 |  |  |  |  |  |  | — |  |  | — |
SBA |  |  |  |  | 7,569 |  |  | 7,481 |  |  |  |  |  |  | 10,417 |  |  | 5,613 |
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Single family residential mortgage |  |  |  |  | 39,836 |  |  | 39,836 |  |  |  |  |  |  | 21,116 |  |  | 17,187 |
Other consumer |  |  |  |  | 456 |  |  | 457 |  |  |  |  |  |  | 195 |  |  | 195 |
Total nonaccrual loans |  |  |  |  | $ | 60,556 |  |  | $ | 54,974 |  |  |  |  |  |  | $ | 55,251 |  |  | $ | 34,864 |
At September 30, 2023 and December 31, 2022, there were no loans that were past due 90 days or more and still accruing. Allowance for Credit Losses - Loans The ACL methodology uses a nationally recognized, third-party model that includes many assumptions based on historical and peer loss data, current loan portfolio risk profile including risk ratings, and economic forecasts including macroeconomic variables released by the model provider during September 2023. The published forecasts consider the Federal Reserve’s monetary policy, labor market constraints, inflation levels, global oil prices and changes in real estate values, among other factors. The ACL also incorporates qualitative factors to account for certain loan portfolio characteristics that are not taken into consideration by the third-party model including underlying strengths and weaknesses in various segments of the loan portfolio. As is the case with all estimates, the ACL is expected to be impacted in future periods by economic volatility, changing economic forecasts, underlying model assumptions, and asset quality metrics, all of which may be better or worse than current estimates. The ACL process involves subjective and complex judgments as well as adjustments for numerous factors including those described in the federal banking agencies’ joint interagency policy statement on ALL, which include underwriting experience and collateral value changes, among others. The RUC is established to cover the current expected credit losses for the estimated level of funding of these loan commitments, except for unconditionally cancellable commitments for which no reserve is required under ASC 326. At September 30, 2023 and December 31, 2022, the reserve for unfunded loan commitments was $4.0 million and $5.3 million and was included in accrued expenses and other liabilities on the consolidated statements of financial condition. The following table presents a summary of activity in the ACL for the periods indicated:
|  | Three Months Ended September 30, |  |
($ in thousands) |  | 2023 |  | 2022 |  |  |  |
|  | Allowance for Loan Losses |  | Reserve for Unfunded Loan Commitments |  | Allowance for Credit Losses |  | Allowance for Loan Losses |  | Reserve for Unfunded Loan Commitments |  | Allowance for Credit Losses |  |  |  |
Balance at beginning of period |  | $ | 80,883 |  |  | $ | 4,005 |  |  | $ | 84,888 |  |  | $ | 93,793 |  |  | $ | 5,905 |  |  | $ | 99,698 |  |  |  |  |
Charge-offs |  | (11,644) |  |  | — |  |  | (11,644) |  |  | (912) |  |  | — |  |  | (912) |  |  |  |  |
Recoveries |  | 151 |  |  | — |  |  | 151 |  |  | 63 |  |  | — |  |  | 63 |  |  |  |  |
Net (charge-offs) recoveries |  | (11,493) |  |  | — |  |  | (11,493) |  |  | (849) |  |  | — |  |  | (849) |  |  |  |  |
Provision for (reversal of) credit losses |  | 5,000 |  |  | — |  |  | 5,000 |  |  | (500) |  |  | 500 |  |  | — |  |  |  |  |
Balance at end of period |  | $ | 74,390 |  |  | $ | 4,005 |  |  | $ | 78,395 |  |  | $ | 92,444 |  |  | $ | 6,405 |  |  | $ | 98,849 |  |  |  |  |
|  | Nine Months Ended September 30, |  |
($ in thousands) |  | 2023 |  | 2022 |  |  |  |
|  | Allowance for Loan Losses |  | Reserve for Unfunded Loan Commitments |  | Allowance for Credit Losses |  | Allowance for Loan Losses |  | Reserve for Unfunded Loan Commitments |  | Allowance for Credit Losses |  |  |  |
Balance at beginning of period |  | $ | 85,960 |  |  | $ | 5,305 |  |  | $ | 91,265 |  |  | $ | 92,584 |  |  | $ | 5,605 |  |  | $ | 98,189 |  |  |  |  |
Charge-offs |  | (21,260) |  |  | — |  |  | (21,260) |  |  | (1,637) |  |  | — |  |  | (1,637) |  |  |  |  |
Recoveries |  | 526 |  |  | — |  |  | 526 |  |  | 33,839 |  |  | — |  |  | 33,839 |  |  |  |  |
Net (charge-offs) recoveries |  | (20,734) |  |  | — |  |  | (20,734) |  |  | 32,202 |  |  | — |  |  | 32,202 |  |  |  |  |
Provision for (reversal of) credit losses |  | 9,164 |  |  | (1,300) |  |  | 7,864 |  |  | (32,342) |  |  | 800 |  |  | (31,542) |  |  |  |  |
Balance at end of period |  | $ | 74,390 |  |  | $ | 4,005 |  |  | $ | 78,395 |  |  | $ | 92,444 |  |  | $ | 6,405 |  |  | $ | 98,849 |  |  |  |  |
During the nine months ended September 30, 2022, total recoveries included $31.3 million related to a recovery from the settlement of a loan previously charged-off in 2019. This recovery resulted in a reversal of provision for credit losses during the same period. Accrued interest receivable on loans receivable, net totaled $26.6 million and $28.6 million at September 30, 2023 and December 31, 2022, and is included within other assets in the accompanying consolidated statements of financial condition. Accrued interest receivable is excluded from the allowance of credit losses. The following table presents the activity and balance in the ALL as of or for the three and nine months ended September 30, 2023:
($ in thousands) |  | Commercial and Industrial |  | Commercial Real Estate |  | Multifamily |  | SBA |  | Construction |  |  |  | Single Family Residential Mortgage |  | Other Consumer |  |  |  | Total
ALL: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Three Months Ended September 30, 2023: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at June 30, 2023 |  | $ | 32,823 |  |  | $ | 15,767 |  |  | $ | 14,697 |  |  | $ | 1,387 |  |  | $ | 6,053 |  |  |  |  | $ | 9,518 |  |  | $ | 638 |  |  |  |  | $ | 80,883 |
Charge-offs |  | (11,363) |  |  | — |  |  | — |  |  | (169) |  |  | — |  |  |  |  | — |  |  | (112) |  |  |  |  | (11,644) |
Recoveries |  | 22 |  |  | — |  |  | — |  |  | 6 |  |  | — |  |  |  |  | 1 |  |  | 122 |  |  |  |  | 151 |
Net (charge-offs) recoveries |  | (11,341) |  |  | — |  |  | — |  |  | (163) |  |  | — |  |  |  |  | 1 |  |  | 10 |  |  |  |  | (11,493) |
Provision for (reversal of) credit losses - loans |  | 8,160 |  |  | (2,594) |  |  | (734) |  |  | (142) |  |  | 116 |  |  |  |  | 267 |  |  | (73) |  |  |  |  | 5,000 |
Balance at September 30, 2023 |  | $ | 29,642 |  |  | $ | 13,173 |  |  | $ | 13,963 |  |  | $ | 1,082 |  |  | $ | 6,169 |  |  |  |  | $ | 9,786 |  |  | $ | 575 |  |  |  |  | $ | 74,390 |
Nine Months Ended September 30, 2023: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at December 31, 2022 |  | $ | 34,156 |  |  | $ | 15,977 |  |  | $ | 14,696 |  |  | $ | 2,648 |  |  | $ | 5,850 |  |  |  |  | $ | 12,050 |  |  | $ | 583 |  |  |  |  | $ | 85,960 |
Charge-offs |  | (19,074) |  |  | (300) |  |  | — |  |  | (1,250) |  |  | — |  |  |  |  | (372) |  |  | (264) |  |  |  |  | (21,260) |
Recoveries |  | 61 |  |  | — |  |  | — |  |  | 316 |  |  | — |  |  |  |  | 3 |  |  | 146 |  |  |  |  | 526 |
Net (charge-offs) recoveries |  | (19,013) |  |  | (300) |  |  | — |  |  | (934) |  |  | — |  |  |  |  | (369) |  |  | (118) |  |  |  |  | (20,734) |
Provision for (reversal of) credit losses - loans |  | 14,499 |  |  | (2,504) |  |  | (733) |  |  | (632) |  |  | 319 |  |  |  |  | (1,895) |  |  | 110 |  |  |  |  | 9,164 |
Balance at September 30, 2023 |  | $ | 29,642 |  |  | $ | 13,173 |  |  | $ | 13,963 |  |  | $ | 1,082 |  |  | $ | 6,169 |  |  |  |  | $ | 9,786 |  |  | $ | 575 |  |  |  |  | $ | 74,390 |
The following table presents the activity and balance in the ALL as of or for the three and nine months ended September 30, 2022:
($ in thousands) |  | Commercial and Industrial |  | Commercial Real Estate |  | Multifamily |  | SBA |  | Construction |  |  |  | Single Family Residential Mortgage |  | Other Consumer |  |  |  | Total
ALL: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Three Months Ended September 30, 2022: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at June 30, 2022 |  | $ | 41,413 |  |  | $ | 15,742 |  |  | $ | 15,678 |  |  | $ | 3,033 |  |  | $ | 4,255 |  |  |  |  | $ | 12,805 |  |  | $ | 867 |  |  |  |  | $ | 93,793 |
Charge-offs |  | (867) |  |  | — |  |  | — |  |  | (45) |  |  | — |  |  |  |  | — |  |  | — |  |  |  |  | (912) |
Recoveries |  | 48 |  |  | 3 |  |  | — |  |  | 1 |  |  | — |  |  |  |  | 1 |  |  | 10 |  |  |  |  | 63 |
Net recoveries (charge-offs) |  | (819) |  |  | 3 |  |  | — |  |  | (44) |  |  | — |  |  |  |  | 1 |  |  | 10 |  |  |  |  | (849) |
Provision for (reversal of) credit losses - loans |  | (1,769) |  |  | 1,091 |  |  | 275 |  |  | (29) |  |  | 1,168 |  |  |  |  | (959) |  |  | (277) |  |  |  |  | (500) |
Balance at September 30, 2022 |  | $ | 38,825 |  |  | $ | 16,836 |  |  | $ | 15,953 |  |  | $ | 2,960 |  |  | $ | 5,423 |  |  |  |  | $ | 11,847 |  |  | $ | 600 |  |  |  |  | $ | 92,444 |
Nine Months Ended September 30, 2022: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance at December 31, 2021 |  | $ | 33,557 |  |  | $ | 21,727 |  |  | $ | 17,893 |  |  | $ | 3,017 |  |  | $ | 5,622 |  |  |  |  | $ | 9,608 |  |  | $ | 1,160 |  |  |  |  | $ | 92,584 |
Charge-offs |  | (1,187) |  |  | — |  |  | — |  |  | (197) |  |  | — |  |  |  |  | (10) |  |  | (243) |  |  |  |  | (1,637) |
Recoveries |  | 32,865 |  |  | 3 |  |  | — |  |  | 762 |  |  | — |  |  |  |  | 193 |  |  | 16 |  |  |  |  | 33,839 |
Net recoveries (charge-offs) |  | 31,678 |  |  | 3 |  |  | — |  |  | 565 |  |  | — |  |  |  |  | 183 |  |  | (227) |  |  |  |  | 32,202 |
(Reversal of) provision for credit losses - loans |  | (26,410) |  |  | (4,894) |  |  | (1,940) |  |  | (622) |  |  | (199) |  |  |  |  | 2,056 |  |  | (333) |  |  |  |  | (32,342) |
Balance at September 30, 2022 |  | $ | 38,825 |  |  | $ | 16,836 |  |  | $ | 15,953 |  |  | $ | 2,960 |  |  | $ | 5,423 |  |  |  |  | $ | 11,847 |  |  | $ | 600 |  |  |  |  | $ | 92,444 |
The following table presents the gross charge-offs by class of loans and origination year as of September 30, 2023:
|  | Gross Charge-offs |  |  |  |  |  |
($ in thousands) |  | 2023 |  | 2022 |  | 2021 |  | 2020 |  | 2019 |  | Prior |  |  |  |  |  | Total
Three Months Ended September 30, 2023 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial |  | $ | — |  |  | $ | (1,828) |  |  | $ | (368) |  |  | $ | (5,997) |  |  | $ | — |  |  | $ | (3,170) |  |  |  |  |  |  | $ | (11,363) |
SBA |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (169) |  |  |  |  |  |  | (169) |
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other consumer |  | — |  |  | — |  |  | (112) |  |  | — |  |  | — |  |  | — |  |  |  |  |  |  | (112) |
Total loans |  | $ | — |  |  | $ | (1,828) |  |  | $ | (480) |  |  | $ | (5,997) |  |  | $ | — |  |  | $ | (3,339) |  |  |  |  |  |  | $ | (11,644) |
Nine Months Ended September 30, 2023 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial |  | $ | — |  |  | $ | (7,545) |  |  | $ | (1,453) |  |  | $ | (5,997) |  |  | $ | — |  |  | $ | (4,079) |  |  |  |  |  |  | $ | (19,074) |
Commercial real estate |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (300) |  |  |  |  |  |  | (300) |
SBA |  | — |  |  | — |  |  | (64) |  |  | — |  |  | — |  |  | (1,186) |  |  |  |  |  |  | (1,250) |
Consumer: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Single family residential mortgage |  | — |  |  | — |  |  | — |  |  | (372) |  |  | — |  |  | — |  |  |  |  |  |  | (372) |
Other consumer |  | — |  |  | (16) |  |  | (112) |  |  | (59) |  |  | — |  |  | (77) |  |  |  |  |  |  | (264) |
Total loans |  | $ | — |  |  | $ | (7,561) |  |  | $ | (1,629) |  |  | $ | (6,428) |  |  | $ | — |  |  | $ | (5,642) |  |  |  |  |  |  | $ | (21,260) |
Collateral Dependent Loans A loan is considered collateral dependent when the borrower is experiencing financial difficulty and repayment of the loan is expected to be provided substantially through the operation or sale of the collateral. Collateral dependent loans are evaluated individually and the ALL is determined based on the amount by which amortized costs exceed the estimated fair value of the collateral, adjusted for estimated selling costs. Collateral dependent loans consisted of the following as of the dates indicated:
|  | September 30, 2023
|  | Real Estate |  |  |  |  |  |
($ in thousands) |  | Commercial |  | Residential |  | Business Assets |  | Automobile |  | Total
Commercial: |  |  |  |  |  |  |  |  |  |
Commercial and industrial |  | $ | — |  |  | $ | — |  |  | $ | 6,661 |  |  | $ | — |  |  | $ | 6,661 |
Commercial real estate |  | 1,324 |  |  | 540 |  |  | — |  |  | — |  |  | 1,864 |
Multifamily |  | 1,118 |  |  | — |  |  | — |  |  | — |  |  | 1,118 |
SBA |  | 15 |  |  | 796 |  |  | 6,758 |  |  | — |  |  | 7,569 |
Consumer: |  |  |  |  |  |  |  |  |  |
Single family residential mortgage |  | — |  |  | 39,836 |  |  | — |  |  | — |  |  | 39,836 |
Other consumer |  | — |  |  | 130 |  |  | — |  |  | 326 |  |  | 456 |
Total loans |  | $ | 2,457 |  |  | $ | 41,302 |  |  | $ | 13,419 |  |  | $ | 326 |  |  | $ | 57,504 |
|  | December 31, 2022
|  | Real Estate |  |  |  |  |  |
($ in thousands) |  | Commercial |  | Residential |  | Business Assets |  | Automobile |  | Total
Commercial: |  |  |  |  |  |  |  |  |  |
Commercial and industrial |  | $ | — |  |  | $ | — |  |  | $ | 18,392 |  |  | $ | — |  |  | $ | 18,392 |
Commercial real estate |  | 910 |  |  | — |  |  | — |  |  | — |  |  | 910 |
SBA |  | 23 |  |  | 4,702 |  |  | 5,691 |  |  | — |  |  | 10,416 |
Consumer: |  |  |  |  |  |  |  |  |  |
Single family residential mortgage |  | — |  |  | 21,262 |  |  | — |  |  | — |  |  | 21,262 |
Other consumer |  | — |  |  | 81 |  |  | — |  |  | 113 |  |  | 194 |
Total loans |  | $ | 933 |  |  | $ | 26,045 |  |  | $ | 24,083 |  |  | $ | 113 |  |  | $ | 51,174 |
Loan Modifications to Borrowers Experiencing Financial Difficulty Loans modified for borrowers experiencing financial difficulty consisted of the following as of the dates indicated:
($ in thousands) | Commercial and industrial |  |  |  |  |  |  |  |  |  | Single family residential mortgage |  |  |  | Total
September 30, 2023 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate reduction: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Amortized cost basis | $ | — |  |  |  |  |  |  |  |  |  |  | $ | 2,492 |  |  |  |  | $ | 2,492 |
% of total class of loans | — | % |  |  |  |  |  |  |  |  |  | 0.1 | % |  |  |  | — | %
Term extension: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Amortized cost basis | $ | — |  |  |  |  |  |  |  |  |  |  | $ | 595 |  |  |  |  | $ | 595 |
% of total class of loans | — | % |  |  |  |  |  |  |  |  |  | — | % |  |  |  | — | %
Combination - principal reduction and payment delays: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Amortized cost basis | $ | 3,910 |  |  |  |  |  |  |  |  |  |  | $ | — |  |  |  |  | $ | 3,910 |
% of total class of loans | 0.2 | % |  |  |  |  |  |  |  |  |  | — | % |  |  |  | 0.1 | %
Combination - term extension and interest rate reduction |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Amortized cost basis | $ | 654 |  |  |  |  |  |  |  |  |  |  | $ | — |  |  |  |  | $ | 654 |
% of total class of loans | — | % |  |  |  |  |  |  |  |  |  | — | % |  |  |  | — | %
Total amortized cost basis | $ | 4,564 |  |  |  |  |  |  |  |  |  |  | $ | 3,087 |  |  |  |  | $ | 7,651 |
Percentage of total class of loans | 0.2 | % |  |  |  |  |  |  |  |  |  | 0.2 | % |  |  |  | 0.1 | %
The following table presents the aging of loans modified to borrowers experiencing financial difficulty at September 30, 2023:
($ in thousands) | 30-59 Days Past Due |  | 60-89 Days Past Due |  | Over 90 Days Past Due |  | Total Past Due |  | Current |  | Total
September 30, 2023 |  |  |  |  |  |  |  |  |  |  |
Commercial: |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial | $ | — |  |  | $ | — |  |  | $ | 3,910 |  |  | $ | 3,910 |  |  | $ | 654 |  |  | $ | 4,564 |
Consumer: |  |  |  |  |  |  |  |  |  |  |
Single family residential mortgage | 309 |  |  | — |  |  | — |  |  | 309 |  |  | 2,778 |  |  | 3,087 |
| $ | 309 |  |  | $ | — |  |  | $ | 3,910 |  |  | $ | 4,219 |  |  | $ | 3,432 |  |  | $ | 7,651 |
There were no loan modifications made to borrowers experiencing financial difficulty during the quarter ended September 30, 2023 that subsequently defaulted. Troubled Debt Restructurings (for modifications to borrowers experiencing financial difficulty prior to January 1, 2023) At September 30, 2023 and December 31, 2022, we had 7 and 15 loans classified as TDRs, with an aggregate balance of $3.5 million and $16.1 million. During the nine months ended September 30, 2023, a $3.9 million C&I loan that was restructured during 2022 was modified and accounted for as a new loan. Additionally, $7.8 million relating to three commercial relationships were paid down and $1.2 million was charged off during this same period. Accruing TDRs were $0.1 million and nonaccrual TDRs were $3.4 million at September 30, 2023, compared to accruing TDRs of $2.7 million and nonaccrual TDRs of $13.4 million at December 31, 2022. Purchases, Sales, and Transfers From time to time, we purchase and sell loans in the secondary market. There were no loans purchased during the three months ended September 30, 2023. During the nine months ended September 30, 2023, we purchased loans aggregating $61.4 million. During the three and nine months ended September 30, 2022, we purchased loans aggregating $172.7 million and $814.3 million. There were no loans transferred from held for investment to loans held-for-sale, and there were no sales of loans for the three and nine months ended September 30, 2023 and 2022. Non-Traditional Mortgage (“NTM”) Loans We no longer originate SFR loans, however we have purchased and may continue to purchase pools of loans that include NTM loans such as interest only loans with maturities of up to 40 years and flexible initial repricing dates, ranging from 1 to 10 years, and periodic repricing dates through the life of the loan. NTM loans are included in our SFR loan portfolio and are comprised primarily of interest only loans. As of September 30, 2023 and December 31, 2022, the NTM loans totaled $792.0 million, or 11.4% of total loans, and $862.3 million, or 12.1% of total loans. The total NTM portfolio decreased by $70.4 million, or 8.2% during the nine months ended September 30, 2023. The decrease was due to principal paydowns and payoffs. At September 30, 2023 and December 31, 2022, nonperforming NTM loans totaled $15.3 million and $3.0 million. NTM loans are considered to have an increased risk of delinquency and default than conforming loans. In the case of interest only loans, the borrower’s monthly payment may increase by a substantial amount as market interest rates increase and as loans are converted to fully-amortizing status. Non-Traditional Mortgage Performance Indicators Our risk management policy and credit monitoring include reviewing delinquency, FICO scores, and LTV ratios on the NTM loan portfolio. We also continually monitor market conditions for our geographic lending areas. We have determined that the most significant performance indicators for NTM loans are LTV ratios. At September 30, 2023, our NTM portfolio had a weighted average LTV of approximately 60%.

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