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Loans Receivable

6 Months Ended

Jun. 30, 2021

Loans and Leases Receivable Disclosure [Abstract]

(a) Loan Origination/Risk Management

The Bank originates loans in the ordinary course of business and has also acquired loans through mergers and acquisitions. Accrued interest receivable was excluded from disclosures presenting the Bank's amortized cost of loans receivable as it was deemed insignificant.

The Bank categorizes the individual loans in the total loan portfolio into four segments: commercial business; residential real estate; real estate construction and land development; and consumer. Within these segments are classes of loans for which management monitors and assesses credit risk in the loan portfolios. A detailed description of the portfolio segments and classes is contained in the 2020 Annual Form 10-K.

The amortized cost of loans receivable, net of ACL on loans at June 30, 2021 and December 31, 2020 consisted of the following portfolio segments and classes:


	June 30, 2021		December 31, 2020
	(In thousands)
Commercial business:
Commercial and industrial	$	651,915	$	733,098
SBA PPP	544,250		715,121
Owner-occupied CRE	865,662		856,684
Non-owner occupied CRE	1,425,238		1,410,303
Total commercial business	3,487,065		3,715,206
Residential real estate	120,148		122,756


	June 30, 2021		December 31, 2020
	(In thousands)
Real estate construction and land development:
Residential	88,601		78,259
Commercial and multifamily	239,979		227,454
Total real estate construction and land development	328,580		305,713
Consumer	271,737		324,972
Loans receivable	4,207,530		4,468,647
Allowance for credit losses on loans	(51,562)		(70,185)
Loans receivable, net	$	4,155,968	$	4,398,462

Balances included in the amortized cost of Loans receivable:
Unamortized net discount on acquired loans	$	(5,006)	$	(6,575)
Unamortized net deferred fee	$	(17,994)	$	(15,458)

(b) Concentrations of Credit

Most of the Bank’s lending activity occurs within its primary market areas which are concentrated along the I-5 corridor from Whatcom County to Clark County in Washington State and Multnomah County and Washington County in Oregon, as well as other contiguous markets and represents a geographic concentration. Additionally, our loan portfolio is concentrated in commercial-type loans, including commercial business loans and commercial and multifamily real estate construction and land development loans.

As part of the on-going monitoring of the credit quality of the Bank’s loan portfolio, management tracks certain credit quality indicators including trends related to (i) the risk grade of the loans, (ii) the level of classified loans, (iii) net charge-offs, (iv) nonperforming loans, (v) past due status, and (vi) the general economic conditions of the United States of America, and specifically the states of Washington and Oregon.

The Bank utilizes a risk grading matrix to assign a risk grade to each of its loans. Loans are graded on a scale of 1 to 10. Risk grades are aggregated to create the risk categories of Pass for grades 1 to 6, Special Mention or "SM" for grade 7, Substandard or "SS" for grade 8, Doubtful for grade 9 and Loss for grade 10. Descriptions of the general characteristics of the risk grades, including qualitative information on how the risk grades relate to the risk of loss, are contained in the 2020 Annual Form 10-K. Numerical loan grades for loans are established at the origination of the loan. Changes to loan grades are considered at the time new information about the performance of a loan becomes available, including the receipt of updated financial information from the borrower, results of annual term loan reviews and scheduled loan reviews. For consumer loans, the Bank follows the FDIC’s Uniform Retail Credit Classification and Account Management Policy for subsequent classification in the event of payment delinquencies or default. Typically, an individual loan grade will not be changed from the prior period unless there is a specific indication of credit deterioration or improvement. Credit deterioration is evidenced by delinquency, direct communications with the borrower, or other borrower information that becomes known to management. Credit improvements are evidenced by known facts regarding the borrower or the collateral property.

Loan grades relate to the likelihood of losses in that the higher the grade, the greater the loss potential. Loans with a pass grade may have some estimated inherent losses, but to a lesser extent than the other loan grades. The SM loan grade is transitory in that the Bank is waiting on additional information to determine the likelihood and extent of the potential loss. The likelihood of loss for SM graded loans, however, is greater than Watch graded loans because there has been measurable credit deterioration. Loans with a SS grade are generally loans with higher risk of loss if the deficiencies are not corrected. For Doubtful and Loss graded loans, the Bank is almost certain of the losses and the outstanding principal balances are generally charged off to the realizable value.

Regulatory agencies provided guidance regarding credit risk ratings, delinquency reporting and nonaccrual status for loans adversely impacted by COVID-19. The Bank has and will continue to 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 payment 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 the Bank is offering as a result of the COVID-19 pandemic, management expects that borrowers granted relief under these programs will generally not be reported as nonaccrual during the deferral period.

The following table presents the amortized cost of loans receivable by risk grade as of June 30, 2021 and December 31, 2020:


	June 30, 2021
	Term Loans Amortized Cost Basis by Origination Year												Revolving Loans		Revolving Loans Converted to Term Loans (1)		Loans Receivable
	2021		2020		2019		2018		2017		Prior
	(In thousands)
Commercial business:
Commercial and industrial
Pass	$	51,172	$	112,717	$	111,892	$	59,450	$	36,904	$	112,403	$	102,256	$	989	$	587,783
SM	1,003		904		6,618		6,553		3,036		5,787		5,446		—		29,347
SS	1,133		1,422		6,101		1,669		4,376		7,888		11,453		743		34,785

Total	53,308		115,043		124,611		67,672		44,316		126,078		119,155		1,732		651,915
SBA PPP
Pass	347,813		196,437		—		—		—		—		—		—		544,250




Owner-occupied CRE
Pass	57,984		89,380		162,488		93,738		70,985		298,991		—		75		773,641
SM	—		5,219		5,257		12,922		10,472		17,373		—		—		51,243
SS	—		694		—		3,818		7,083		29,183		—		—		40,778

Total	57,984		95,293		167,745		110,478		88,540		345,547		—		75		865,662
Non-owner occupied CRE
Pass	67,602		184,174		189,439		144,247		167,605		598,127		—		—		1,351,194
SM	—		5,094		1,971		353		2,293		10,016		—		—		19,727
SS	—		—		—		3,623		—		50,694		—		—		54,317

Total	67,602		189,268		191,410		148,223		169,898		658,837		—		—		1,425,238
Total commercial business
Pass	524,571		582,708		463,819		297,435		275,494		1,009,521		102,256		1,064		3,256,868
SM	1,003		11,217		13,846		19,828		15,801		33,176		5,446		—		100,317
SS	1,133		2,116		6,101		9,110		11,459		87,765		11,453		743		129,880

Total	526,707		596,041		483,766		326,373		302,754		1,130,462		119,155		1,807		3,487,065
Residential real estate
Pass	24,279		26,181		31,274		8,876		9,210		19,557		—		—		119,377

SS	—		—		—		—		57		714		—		—		771

Total	24,279		26,181		31,274		8,876		9,267		20,271		—		—		120,148
Real estate construction and land development:
Residential
Pass	23,444		38,628		21,658		2,674		401		1,796		—		—		88,601




Commercial and multifamily
Pass	16,787		42,010		152,906		22,387		1,941		2,436		—		—		238,467

SS	—		636		443		—		—		433		—		—		1,512

Total	16,787		42,646		153,349		22,387		1,941		2,869		—		—		239,979
Total real estate construction and land development
Pass	40,231		80,638		174,564		25,061		2,342		4,232		—		—		327,068

SS	—		636		443		—		—		433		—		—		1,512

Total	40,231		81,274		175,007		25,061		2,342		4,665		—		—		328,580
Consumer
Pass	11,396		20,456		60,434		40,325		21,866		19,613		94,243		193		268,526

SS	—		147		712		652		608		1,055		33		4		3,211

Total	11,396		20,603		61,146		40,977		22,474		20,668		94,276		197		271,737


	June 30, 2021
	Term Loans Amortized Cost Basis by Origination Year												Revolving Loans		Revolving Loans Converted to Term Loans (1)		Loans Receivable
	2021		2020		2019		2018		2017		Prior
Loans receivable
Pass	600,477		709,983		730,091		371,697		308,912		1,052,923		196,499		1,257		3,971,839
SM	1,003		11,217		13,846		19,828		15,801		33,176		5,446		—		100,317
SS	1,133		2,899		7,256		9,762		12,124		89,967		11,486		747		135,374

Total	$	602,613	$	724,099	$	751,193	$	401,287	$	336,837	$	1,176,066	$	213,431	$	2,004	$	4,207,530

(1) Represents loans receivable balance at June 30, 2021 which was converted from a revolving loan to an amortizing loan during the six months ended June 30, 2021.


	December 31, 2020
	Term Loans Amortized Cost Basis by Origination Year												Revolving Loans		Revolving Loans Converted to Term Loans (1)		Loans Receivable
	2020		2019		2018		2017		2016		Prior
	(In thousands)
Commercial business:
Commercial and industrial
Pass	$	118,971	$	127,919	$	70,766	$	44,231	$	37,658	$	95,958	$	121,440	$	819	$	617,762
SM	14,430		9,162		10,878		4,171		5,700		3,579		11,790		814		60,524
SS	2,199		11,835		3,416		9,348		1,052		7,651		15,484		3,827		54,812

Total	135,600		148,916		85,060		57,750		44,410		107,188		148,714		5,460		733,098
SBA PPP
Pass	715,121		—		—		—		—		—		—		—		715,121




Owner-occupied CRE
Pass	89,224		167,095		94,830		80,138		74,902		254,864		—		—		761,053
SM	6,146		4,540		16,386		11,231		5,464		12,105		—		—		55,872
SS	—		—		114		7,320		3,313		29,012		—		—		39,759

Total	95,370		171,635		111,330		98,689		83,679		295,981		—		—		856,684
Non-owner-occupied CRE
Pass	197,548		173,153		148,830		172,438		240,614		406,817		—		—		1,339,400
SM	—		1,979		357		2,448		6,210		3,539		—		—		14,533
SS	—		—		3,623		—		35,455		17,292		—		—		56,370

Total	197,548		175,132		152,810		174,886		282,279		427,648		—		—		1,410,303
Total commercial business
Pass	1,120,864		468,167		314,426		296,807		353,174		757,639		121,440		819		3,433,336
SM	20,576		15,681		27,621		17,850		17,374		19,223		11,790		814		130,929
SS	2,199		11,835		7,153		16,668		39,820		53,955		15,484		3,827		150,941

Total	1,143,639		495,683		349,200		331,325		410,368		830,817		148,714		5,460		3,715,206
Residential real estate
Pass	30,141		41,829		15,730		10,362		7,322		16,825		—		—		122,209

SS	—		—		—		59		—		488		—		—		547

Total	30,141		41,829		15,730		10,421		7,322		17,313		—		—		122,756
Real estate construction and land development:
Residential
Pass	33,801		36,697		2,725		1,097		971		1,042		—		—		76,333

SS	—		—		—		1,926		—		—		—		—		1,926

Total	33,801		36,697		2,725		3,023		971		1,042		—		—		78,259


Commercial and multifamily
Pass	27,423		151,020		38,682		5,660		689		1,407		—		—		224,881
SM	67		1,011		—		—		—		29		—		—		1,107
SS	572		450		—		—		—		444		—		—		1,466

Total	28,062		152,481		38,682		5,660		689		1,880		—		—		227,454
Total real estate construction and land development
Pass	61,224		187,717		41,407		6,757		1,660		2,449		—		—		301,214
SM	67		1,011		—		—		—		29		—		—		1,107
SS	572		450		—		1,926		—		444		—		—		3,392

Total	61,863		189,178		41,407		8,683		1,660		2,922		—		—		305,713
Consumer
Pass	43,742		77,083		53,195		30,559		13,443		15,453		87,547		315		321,337

SS	34		404		684		648		420		1,319		78		48		3,635

Total	43,776		77,487		53,879		31,207		13,863		16,772		87,625		363		324,972
Loans receivable
Pass	1,255,971		774,796		424,758		344,485		375,599		792,366		208,987		1,134		4,178,096
SM	20,643		16,692		27,621		17,850		17,374		19,252		11,790		814		132,036
SS	2,805		12,689		7,837		19,301		40,240		56,206		15,562		3,875		158,515

Total	$	1,279,419	$	804,177	$	460,216	$	381,636	$	433,213	$	867,824	$	236,339	$	5,823	$	4,468,647

(1) Represents loans receivable balance at December 31, 2020 which was converted from a revolving loan to an amortizing loan during the year ended December 31, 2020.

(d) Nonaccrual Loans

The following table presents the amortized cost of nonaccrual loans for the dates indicated:


	June 30, 2021
	Nonaccrual without ACL		Nonaccrual with ACL		Total Nonaccrual
	(In thousands)
Commercial business:
Commercial and industrial	$	7,491	$	5,548	$	13,039
Owner-occupied CRE	3,784		12,400		16,184
Non-owner occupied CRE	1,363		3,623		4,986
Total commercial business	12,638		21,571		34,209
Residential real estate	—		60		60
Real estate construction and land development:

Commercial and multifamily	—		1,014		1,014

Consumer	—		58		58
Total	$	12,638	$	22,703	$	35,341


	December 31, 2020
	Nonaccrual without ACL		Nonaccrual with ACL		Total Nonaccrual
	(In thousands)
Commercial business:
Commercial and industrial	$	22,039	$	9,208	$	31,247
Owner-occupied CRE	4,693		13,700		18,393
Non-owner occupied CRE	3,424		3,722		7,146
Total commercial business	30,156		26,630		56,786
Residential real estate	67		117		184
Real estate construction and land development:

Commercial and multifamily	572		450		1,022

Consumer	31		69		100
Total	$	30,826	$	27,266	$	58,092

The following table presents the reversal of interest income on loans due to the write-off of accrued interest receivable upon the initial classification of loans as nonaccrual loans and the interest income recognized due to payment in full of previously classified nonaccrual loans during the following periods:


	Three Months Ended June 30, 2021				Three Months Ended June 30, 2020
	Interest Income Reversed		Interest Income Recognized		Interest Income Reversed		Interest Income Recognized
	(In thousands)
Commercial business:
Commercial and industrial	$	(5)	$	1,981	$	—	$	89
Owner-occupied CRE	—		3		—		14
Non-owner occupied CRE	—		—		—		22
Total commercial business	(5)		1,984		—		125





Consumer	—		—		—		37
Total	$	(5)	$	1,984	$	—	$	162


	Six Months Ended June 30, 2021				Six months ended June 30, 2020
	Interest Income Reversed		Interest Income Recognized		Interest Income Reversed		Interest Income Recognized
	(in thousands)
Commercial business:
Commercial and industrial	$	(10)	$	2,044	$	(16)	$	308
Owner-occupied CRE	—		117		—		60
Non-owner occupied CRE	—		313		—		67
Total commercial business	(10)		2,474		(16)		435

Real estate construction and land development:
Residential	—		73		—		—


Consumer	—		—		—		47
Total	$	(10)	$	2,547	$	(16)	$	482

For the three and six months ended June 30, 2021 and 2020, no interest income was recognized subsequent to a loan’s classification as nonaccrual, except as indicated in the tables above due to payment in full.

(e) Past due loans

The Bank performs an aging analysis of past due loans using policies consistent with regulatory reporting requirements with categories of 30-89 days past due and 90 or more days past due. The amortized cost of past due loans as of June 30, 2021

and December 31, 2020 were as follows:


	June 30, 2021
	30-89 Days		90 Days or Greater		Total Past Due		Current		Loans Receivable
	(In thousands)
Commercial business:
Commercial and industrial	$	489	$	7,525	$	8,014	$	643,901	$	651,915
SBA PPP	—		—		—		544,250		544,250
Owner-occupied CRE	—		—		—		865,662		865,662
Non-owner occupied CRE	4,038		—		4,038		1,421,200		1,425,238
Total commercial business	4,527		7,525		12,052		3,475,013		3,487,065
Residential real estate	—		30		30		120,118		120,148
Real estate construction and land development:
Residential	—		—		—		88,601		88,601
Commercial and multifamily	—		571		571		239,408		239,979
Total real estate construction and land development	—		571		571		328,009		328,580
Consumer	788		—		788		270,949		271,737
Total	$	5,315	$	8,126	$	13,441	$	4,194,089	$	4,207,530


	December 31, 2020
	30-89 Days		90 Days or Greater		Total Past Due		Current		Loans Receivable
	(In thousands)
Commercial business:
Commercial and industrial	$	4,621	$	8,082	$	12,703	$	720,395	$	733,098
SBA PPP	—		—		—		715,121		715,121
Owner-occupied CRE	991		403		1,394		855,290		856,684
Non-owner occupied CRE	412		1,970		2,382		1,407,921		1,410,303
Total commercial business	6,024		10,455		16,479		3,698,727		3,715,206
Residential real estate	765		16		781		121,975		122,756
Real estate construction and land development:
Residential	—		—		—		78,259		78,259
Commercial and multifamily	2,225		—		2,225		225,229		227,454
Total real estate construction and land development	2,225		—		2,225		303,488		305,713
Consumer	1,407		30		1,437		323,535		324,972
Total	$	10,421	$	10,501	$	20,922	$	4,447,725	$	4,468,647

There was one commercial and industrial loan 90 days or more past due that was still accruing interest as of June 30, 2021 with an amortized cost of $286,000. There were no loans 90 days or more past due that were still accruing interest as of December 31, 2020.

(f) Collateral-dependent Loans

The type of collateral securing loans individually evaluated for credit losses and for which the repayment was expected to be provided substantially through the operation or sale of the collateral as of June 30, 2021 and December 31, 2020 were as

follows:


	June 30, 2021
	CRE(1)		Farmland(1)		Residential Real Estate(1)		Other(1)		Total(1)
	(In thousands)
Commercial business:
Commercial and industrial	$	1,767	$	5,152	$	751	$	331	$	8,001
Owner-occupied CRE	4,346		—		—		—		4,346
Non-owner occupied CRE	1,363		—		—		—		1,363
Total commercial business	7,476		5,152		751		331		13,710

Real estate construction and land development:

Commercial and multifamily	571		—		—		—		571


Total	$	8,047	$	5,152	$	751	$	331	$	14,281

(1) Balances represent the amortized cost of the loan. If multiple collateral sources secure the loan, the entire balance is presented in the primary collateral category.


	December 31, 2020
	CRE(1)		Farmland(1)		Residential Real Estate(1)		Other(1)		Total(1)
	(In thousands)
Commercial business:
Commercial and industrial	$	1,893	$	18,738	$	584	$	1,405	$	22,620
Owner-occupied CRE	4,693		—		—		—		4,693
Non-owner occupied CRE	3,424		—		—		—		3,424
Total commercial business	10,010		18,738		584		1,405		30,737
Residential real estate	—		—		67		—		67
Real estate construction and land development:

Commercial and multifamily	572		—		—		—		572

Consumer	—		—		30		—		30
Total	$	10,582	$	18,738	$	681	$	1,405	$	31,406

(1) Balances represent the amortized cost of the loan. If multiple collateral sources secure the loan, the entire balance is presented in the primary collateral category.

There have been no significant changes to the collateral securing individually evaluated loans for credit losses and for which repayment was expected to be provided substantially through the operation or sale of the collateral during the six months ended June 30, 2021, except changes due to additions or deletions of loans into this classification.

(g) Troubled Debt Restructured Loans

A TDR is a restructuring in which the Bank, for economic or legal reasons related to a borrower’s financial difficulties, grants a concession to a borrower that it would not otherwise consider. The TDR modifications or concessions are made to increase the likelihood that these borrowers with financial difficulties will be able to satisfy their debt obligations as amended.

The concessions granted in the restructurings largely consisted of maturity extensions. The Bank typically grants shorter extension periods to continually monitor these TDR loans despite the fact that the extended date might not be the date the Bank expects the scheduled cash flow from these borrowers. The Bank does not consider these modifications a subsequent default of a TDR as new loan terms, specifically new maturity dates, were granted.

The CARES Act, CA Act and regulatory agencies provided guidance around the modification of loans as a result of the COVID-19 pandemic, and outlined, among other criteria, that short-term modifications made on a good faith basis to borrowers who were current as defined by the guidance are not TDRs. This includes short-term (e.g. six months) modifications such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant. Borrowers were considered current if they were less than 30 days past due on the contractual payments as of December 31, 2019 under the CARES Act and at the time a modification program is implemented under related regulatory guidance. The CA Act extended relief offered under the CARES Act through January 1, 2022 or 60 days after the end of the national emergency declared by the President, whichever is earlier. The Bank elected to apply the temporary relief under the applicable guidance to certain eligible short-term modifications and did not classify the modifications as TDRs for accounting or disclosure purposes. However, COVID

Modifications whose payment deferral exceeded 180 days following the loans' initial modification were classified as TDRs based on the Bank's internal policy.

Loans that were modified as TDR loans are set forth in the following tables for the periods indicated:


	Three Months Ended June 30,
	2021			2020
	Number of Contracts	Amortized Cost (1) (2)		Number of Contracts	Amortized Cost (1) (2)
	(Dollars in thousands)
Commercial business:
Commercial and industrial	18	$	5,673	31	$	11,849
Owner-occupied CRE	1	2,200		4	1,657
Non-owner occupied CRE	1	251		2	398
Total commercial business	20	8,124		37	13,904

Real estate construction and land development:
Residential	—	—		4	1,751
Commercial and multifamily	1	443		—	—
Total real estate construction and land development	1	443		4	1,751
Consumer	6	146		9	82
Total	27	$	8,713	50	$	15,737


	Six Months Ended June 30,
	2021			2020
	Number of Contracts	Amortized Cost (1) (2)		Number of Contracts	Amortized Cost (1) (2)
	(Dollars in thousands)
Commercial business:
Commercial and industrial	31	$	8,713	35	$	12,652
Owner-occupied CRE	2	5,857		6	3,067
Non-owner occupied CRE	2	2,222		3	2,143
Total commercial business	35	16,792		44	17,862
Residential real estate	1	181		—	—
Real estate construction and land development:
Residential	—	—		4	1,751
Commercial and multifamily	1	443		—	—
Total real estate construction and land development	1	443		4	1,751
Consumer	21	511		14	173
Total TDR loans	58	$	17,927	62	$	19,786

(1) Number of contracts and amortized cost represent loans which have balances as of period end, net of subsequent payments after modifications. Certain modified loans may have been paid-down or charged-off during the three or six months ended June 30, 2021 and June 30, 2020.

(2) As the Bank did not forgive any principal or interest balance as part of the loan modifications, the Bank’s amortized cost in each loan at the date of modification (pre-modification) did not change as a result of the modification (post-modification).

The Bank had an ACL on loans of $1.7 million and $1.5 million at June 30, 2021 and June 30, 2020, respectively, related to these TDR loans which were restructured during the six months ended June 30, 2021 and June 30, 2020, respectively.

The unfunded commitment to borrowers related to TDR loans was $4.9 million and $2.6 million at June 30, 2021 and December 31, 2020, respectively.

The following tables present loans that were modified in a troubled debt restructure and subsequently defaulted within twelve months from the modification date during the periods indicated:


	Three Months Ended June 30,
	2021			2020
	Number of Contracts (1)	Amortized Cost (1)		Number of Contracts (1)	Amortized Cost (1)
	(Dollars in thousands)
Commercial business:
Commercial and industrial	1	$	46	2	$	302
Owner-occupied CRE	—	—		1	445
Non-owner occupied CRE	—	—		1	280






Total	1	$	46	4	$	1,027


	Six Months Ended June 30,
	2021			2020
	Number of Contracts (1)	Amortized Cost (1)		Number of Contracts (1)	Amortized Cost (1)
	(Dollars in thousands)
Commercial business:
Commercial and industrial	2	$	789	4	$	2,155
Owner-occupied CRE	—	—		1	445
Non-owner occupied CRE	—	—		2	398






Total	2	$	789	7	$	2,998

During the three and six months ended June 30, 2021 and 2020 all of the TDR loans in the tables above defaulted because each was past its modified maturity date and the borrower had not subsequently repaid the credits. The Bank chose not to extend further the maturity date on these loans. The Bank had an ACL on loans of $7,000 and $494,000 at June 30, 2021 and June 30, 2020, respectively, related to these TDR loans which defaulted during the six months ended June 30, 2021 and 2020.

(h) Accrued interest receivable on loans receivable

Accrued interest receivable on loans receivable totaled $12.8 million and $15.8 million at June 30, 2021 and December 31, 2020, respectively. It is excluded from the calculation of the ACL on loans as interest accrued, but not received, is reversed timely.

(i) Foreclose proceedings in process

At June 30, 2021, there was one consumer mortgage loan secured by a residential real estate property (included in loans receivable on the Condensed Consolidated Statements of Financial Position) of $79,000 for which formal foreclosure proceedings were in process.