
(in thousands)	March 31, 2024		December 31, 2023
Commercial and industrial	$	150,896	$	153,750
Real estate:
Commercial owner-occupied	328,560		333,181
Commercial non-owner occupied	1,236,633		1,219,385
Construction	71,494		99,164
Home equity	86,794		82,087
Other residential	113,479		118,508
Installment and other consumer loans	67,107		67,645
Total loans, at amortized cost 1	2,054,963		2,073,720
Allowance for credit losses on loans	(25,501)		(25,172)
Total loans, net of allowance for credit losses on loans	$	2,029,462	$	2,048,548

1 Amortized cost includes net deferred loan origination costs of $2.6 million and $2.7 million at March 31, 2024 and December 31, 2023, respectively. Amounts are also net of unrecognized purchase discounts of $1.9 million and $2.0 million at March 31, 2024 and December 31, 2023, respectively. Amortized cost excludes accrued interest, which totaled $6.3 million and $6.6 million at March 31, 2024 and December 31, 2023, respectively, and is included in interest receivable and other assets in the consolidated statements of condition.

borrower to repay obligations as agreed. Commercial loans are made based primarily on the identified cash flows of the borrower and secondarily on the underlying collateral and guarantor support. The cash flows of borrowers, however, may not occur as expected, and the collateral securing these loans may fluctuate in value. Most commercial and industrial loans are secured by the assets being financed, such as accounts receivable and inventory, and typically include personal guarantees. We target stable businesses with guarantors who provide additional sources of repayment and have proven to be resilient in periods of economic stress. A weakened economy, and resultant decreased consumer and/or business spending, may have an effect on the credit quality of commercial loans.

Commercial Real Estate Loans - Commercial real estate loans, which include income producing investment properties and owner-occupied real estate used for business purposes, are subject to underwriting standards and processes similar to commercial loans discussed above. We underwrite these loans to be repaid from cash flow from either the business or investment property and supported by real property collateral. Underwriting standards for commercial real estate loans include, but are not limited to, debt coverage and loan-to-value ratios. Furthermore, a large majority of our loans are guaranteed by the owners of the properties. Conditions in the real estate markets or downturn in the general economy may adversely affect our commercial real estate loans. In the event of a vacancy, we expect guarantors to carry the loans until they find a replacement tenant. The owner's substantial equity investment provides a strong economic incentive to continue to support the commercial real estate projects. As such, we have generally experienced a relatively low level of loss and delinquencies in this portfolio.

Construction Loans - Construction loans are generally made to developers and builders to finance construction, renovation and occasionally land acquisitions in anticipation of near-term development. Construction loans include interest reserves that are used for the payment of interest during the development and marketing periods and are capitalized as part of the loan balance. When a construction loan is placed on nonaccrual status before the depletion of the interest reserve, we apply the interest funded by the interest reserve against the loan's principal balance. These loans are underwritten after evaluation of the borrower's financial strength, reputation, prior track record, and independent appraisals. We monitor all construction projects to determine whether they are on schedule, completed as planned and in accordance with the approved construction budgets. Significant events can affect the construction industry, including: the inherent volatility of real estate markets and vulnerability to delays due to weather, change orders, inability to obtain construction permits, labor or material shortages, and price changes. Estimates of construction costs and value associated with the completed project may be inaccurate. Repayment of construction loans is largely dependent on the ultimate success of the project.

Consumer Loans - Consumer loans primarily consist of home equity lines of credit, other residential loans, floating homes, and indirect luxury auto loans, along with a small number of installment loans. Our other residential loans include tenancy-in-common fractional interest loans ("TIC") located almost entirely in San Francisco County. We originate consumer loans utilizing credit score information, debt-to-income ratio and loan-to-value ratio analysis. Diversification among consumer loan types, coupled with relatively small loan amounts that are spread across many individual borrowers, mitigates risk. We do not originate sub-prime residential mortgage loans, nor is it our practice to underwrite loans commonly referred to as "Alt-A mortgages," the characteristics of which are reduced documentation, borrowers with low FICO scores or collateral with high loan-to-value ratios.

Pass and Watch - Loans to borrowers of acceptable or better credit quality. Borrowers in this category demonstrate fundamentally sound financial positions, repayment capacity, credit history and management expertise. Loans in this category must have an identifiable and stable source of repayment and meet the Bank’s policy regarding debt-service-coverage ratios. These borrowers are capable of sustaining normal economic, market or operational setbacks without significant financial consequences. Negative external industry factors are generally not present. The loan may be secured, unsecured or supported by non-real estate collateral for which the value is more difficult to determine and/or marketability is more uncertain. This category also includes “Watch” loans, where the primary source of repayment has been delayed. “Watch” is intended to be a transitional grade, with either an upgrade or downgrade within a reasonable period.

Substandard - Inadequately protected by either the current sound worth and paying capacity of the obligor or the collateral pledged, if any. A Substandard asset has well-defined weaknesses that jeopardize the liquidation of the debt. Substandard assets are characterized by the distinct possibility that we will sustain some loss if such weaknesses or deficiencies are not corrected. Well-defined weaknesses include adverse trends or developments of the borrower’s financial condition, managerial weaknesses and/or significant collateral deficiencies.

Doubtful - Critical weaknesses that make collection or liquidation in full improbable. There may be specific pending events that work to strengthen the asset; however, the amount or timing of the loss may not be determinable. Pending events generally occur within one year of the asset being classified as Doubtful. Examples include: merger, acquisition, or liquidation; capital injection; guarantee; perfecting liens on additional collateral; and refinancing. Such loans are placed on non-accrual status and usually are collateral-dependent.

We regularly review our credits for accuracy of risk grades whenever we receive new information and at each quarterly and year-end reporting period. Borrowers are generally required to submit financial information at regular intervals. Typically, commercial borrowers with lines of credit are required to submit financial information with reporting intervals ranging from monthly to annually depending on credit size, risk and complexity. In addition, investor commercial real estate borrowers with loans exceeding a certain dollar threshold are usually required to submit rent rolls or property income statements annually. We monitor construction loans monthly. We review home equity and other consumer loans based on delinquency. We also review loans graded “Watch” or worse, regardless of loan type, no less than quarterly.

The following tables present the loan portfolio by loan portfolio class, origination/renewal year and internal risk rating as of March 31, 2024 and December 31, 2023. The current year vintage table reflects gross charge-offs by loan portfolio class and year of origination. Generally, existing term loans that were re-underwritten are reflected in the table in the year of renewal. Lines of credit that have a conversion feature at the time of origination, such as construction to perm loans, are presented by year of origination.


(in thousands)	Term Loans - Amortized Cost by Origination Year												Revolving Loans Amortized Cost
March 31, 2024	2024		2023		2022		2021		2020		Prior				Total
Commercial and industrial:
Pass and Watch	$	2,650	$	23,105	$	9,107	$	2,726	$	3,474	$	33,698	$	64,683	$	139,443
Special Mention	—		—		—		—		—		306		1,443		1,749
Substandard	—		—		—		—		—		2,191		7,513		9,704
Total commercial and industrial	$	2,650	$	23,105	$	9,107	$	2,726	$	3,474	$	36,195	$	73,639	$	150,896
Gross current period charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	(4)	$	(4)

Commercial real estate, owner-occupied:
Pass and Watch	$	3,187	$	14,053	$	45,948	$	49,506	$	36,162	$	148,036	$	5	$	296,897
Special Mention	—		386		—		15,491		816		10,113		—		26,806
Substandard	—		—		2,201		—		—		2,656		—		4,857

Total commercial real estate, owner-occupied	$	3,187	$	14,439	$	48,149	$	64,997	$	36,978	$	160,805	$	5	$	328,560

Commercial real estate, non-owner occupied:
Pass and Watch	$	20,233	$	76,466	$	171,120	$	196,087	$	161,259	$	502,571	$	10,102	$	1,137,838
Special Mention	—		—		2,776		8,309		11,696		36,797		—		59,578
Substandard	278		872		—		2,174		—		35,893		—		39,217

Total commercial real estate, non-owner occupied	$	20,511	$	77,338	$	173,896	$	206,570	$	172,955	$	575,261	$	10,102	$	1,236,633


(in thousands)	Term Loans - Amortized Cost by Origination Year												Revolving Loans Amortized Cost
March 31, 2024	2024		2023		2022		2021		2020		Prior				Total
Construction:
Pass and Watch	$	13,915	$	7,661	$	17,794	$	—	$	19,310	$	—	$	—	$	58,680
Special Mention	—		12,814		—		—		—		—		—		12,814

Total construction	$	13,915	$	20,475	$	17,794	$	—	$	19,310	$	—	$	—	$	71,494

Home equity:
Pass and Watch	$	—	$	—	$	—	$	—	$	—	$	764	$	85,149	$	85,913

Substandard	82		—		—		—		—		177		622		881
Total home equity	$	82	$	—	$	—	$	—	$	—	$	941	$	85,771	$	86,794

Other residential:
Pass and Watch	$	—	$	17,765	$	20,010	$	13,295	$	25,462	$	36,947	$	—	$	113,479


Total other residential	$	—	$	17,765	$	20,010	$	13,295	$	25,462	$	36,947	$	—	$	113,479

Installment and other consumer:
Pass and Watch	$	3,379	$	20,119	$	13,769	$	10,129	$	4,489	$	14,078	$	1,003	$	66,966

Substandard	—		—		—		141		—		—		—		141
Total installment and other consumer	$	3,379	$	20,119	$	13,769	$	10,270	$	4,489	$	14,078	$	1,003	$	67,107
Gross current period charge-offs	$	—	$	(14)	$	—	$	(3)	$	—	$	—	$	—	$	(17)
Total loans:
Pass and Watch	$	43,364	$	159,169	$	277,748	$	271,743	$	250,156	$	736,094	$	160,942	$	1,899,216
Total Special Mention	$	—	$	13,200	$	2,776	$	23,800	$	12,512	$	47,216	$	1,443	$	100,947
Total Substandard	$	360	$	872	$	2,201	$	2,315	$	—	$	40,917	$	8,135	$	54,800

Totals	$	43,724	$	173,241	$	282,725	$	297,858	$	262,668	$	824,227	$	170,520	$	2,054,963
Total gross current period charge-offs	$	—	$	(14)	$	—	$	(3)	$	—	$	—	$	(4)	$	(21)


(in thousands)	Term Loans - Amortized Cost by Origination Year												Revolving Loans Amortized Cost
December 31, 2023	2023		2022		2021		2020		2019		Prior				Total
Commercial and industrial:
Pass and Watch	$	25,615	$	9,187	$	2,970	$	3,718	$	15,128	$	21,004	$	62,486	$	140,108
Special Mention	—		—		—		—		334		—		9,300		9,634
Substandard	—		—		—		—		1,311		2,697		—		4,008
Total commercial and industrial	$	25,615	$	9,187	$	2,970	$	3,718	$	16,773	$	23,701	$	71,786	$	153,750

Commercial real estate, owner-occupied:
Pass and Watch	$	13,128	$	41,808	$	49,887	$	37,708	$	40,994	$	114,018	$	56	$	297,599
Special Mention	1,431		4,498		15,636		820		286		8,902		—		31,573
Substandard	—		2,231		—		—		—		1,778		—		4,009

Total commercial real estate, owner-occupied	$	14,559	$	48,537	$	65,523	$	38,528	$	41,280	$	124,698	$	56	$	333,181
Commercial real estate, non-owner occupied:
Pass and Watch	$	76,718	$	172,028	$	196,340	$	150,831	$	139,860	$	368,675	$	9,832	$	1,114,284
Special Mention	—		2,790		9,498		11,776		15,708		41,602		—		81,374
Substandard	878		272		2,204		—		—		20,373		—		23,727
Total commercial real estate, non-owner occupied	$	77,596	$	175,090	$	208,042	$	162,607	$	155,568	$	430,650	$	9,832	$	1,219,385
Construction:
Pass and Watch	$	13,138	$	24,403	$	19,521	$	29,512	$	—	$	—	$	—	$	86,574
Special Mention	12,590		—		—		—		—		—		—		12,590

Total construction	$	25,728	$	24,403	$	19,521	$	29,512	$	—	$	—	$	—	$	99,164
Home equity:
Pass and Watch	$	—	$	—	$	—	$	—	$	—	$	734	$	80,773	$	81,507

Substandard	—		—		—		—		—		369		211		580
Total home equity	$	—	$	—	$	—	$	—	$	—	$	1,103	$	80,984	$	82,087
Other residential:
Pass and Watch	$	17,861	$	20,114	$	13,390	$	25,637	$	20,935	$	20,571	$	—	$	118,508


Total other residential	$	17,861	$	20,114	$	13,390	$	25,637	$	20,935	$	20,571	$	—	$	118,508
Installment and other consumer:
Pass and Watch	$	22,038	$	14,528	$	10,632	$	4,687	$	5,300	$	9,399	$	1,061	$	67,645


Total installment and other consumer	$	22,038	$	14,528	$	10,632	$	4,687	$	5,300	$	9,399	$	1,061	$	67,645

Total loans:
Pass and Watch	$	168,498	$	282,068	$	292,740	$	252,093	$	222,217	$	534,401	$	154,208	$	1,906,225
Total Special Mention	$	14,021	$	7,288	$	25,134	$	12,596	$	16,328	$	50,504	$	9,300	$	135,171
Total Substandard	$	878	$	2,503	$	2,204	$	—	$	1,311	$	25,217	$	211	$	32,324

Totals	$	183,397	$	291,859	$	320,078	$	264,689	$	239,856	$	610,122	$	163,719	$	2,073,720


Loan Aging Analysis by Class
(in thousands)	Commercial and industrial		Commercial real estate, owner-occupied		Commercial real estate, non-owner occupied		Construction		Home equity		Other residential		Installment and other consumer		Total
March 31, 2024
30-59 days past due	$	13	$	101	$	872	$	1,057	$	360	$	—	$	3	$	2,406
60-89 days past due	390		—		—		—		—		—		—		390
90 days or more past due 1	29		140		10,292		—		—		—		—		10,461
Total past due	432		241		11,164		1,057		360		—		3		13,257
Current	150,464		328,319		1,225,469		70,437		86,434		113,479		67,104		2,041,706
Total loans 1	$	150,896	$	328,560	$	1,236,633	$	71,494	$	86,794	$	113,479	$	67,107	$	2,054,963
Non-accrual loans 2	$	2,220	$	416	$	3,045	$	—	$	473	$	—	$	141	$	6,295
Non-accrual loans with no allowance	$	—	$	416	$	872	$	—	$	473	$	—	$	141	$	1,902
December 31, 2023
30-59 days past due	$	2,991	$	618	$	—	$	—	$	43	$	83	$	195	$	3,930
60-89 days past due	69		—		2,204		—		—		—		1		2,274
90 days or more past due 1	1,311		149		—		—		—		—		—		1,460
Total past due	4,371		767		2,204		—		43		83		196		7,664
Current	149,379		332,414		1,217,181		99,164		82,044		118,425		67,449		2,066,056
Total loans 1	$	153,750	$	333,181	$	1,219,385	$	99,164	$	82,087	$	118,508	$	67,645	$	2,073,720
Non-accrual loans 2	$	4,008	$	434	$	3,081	$	—	$	469	$	—	$	—	$	7,992
Non-accrual loans with no allowance	$	1,311	$	434	$	877	$	—	$	469	$	—	$	—	$	3,091

1 There was one non-owner occupied commercial real estate loan 90 days past due and accruing interest as of March 31, 2024 that has been in extended renewal negotiations, but it is well-secured and expected to be restored to a current payment status in the near future. There were no non-performing loans over 90 days past due and accruing interest as of December 31, 2023.


	Amortized Cost by Collateral Type
(in thousands)	Commercial Real Estate		Residential Real Estate		Blanket Lien		Other		Total 1		Allowance for Credit Losses

March 31, 2024

Commercial real estate, owner-occupied	$	416	$	—	$	—	$	—	$	416	$	—
Commercial real estate, non-owner occupied	3,046		—		—		—		3,046		496

Home equity	—		473		—		—		473		—

Installment and other consumer	—		—		—		141		141		—
Total	$	3,462	$	473	$	—	$	141	$	4,076	$	496
December 31, 2023
Commercial and industrial	$	1,311	$	—	$	—	$	—	$	1,311	$	—
Commercial real estate, owner-occupied	434		—		—		—		434		—
Commercial real estate, non-owner occupied	3,081		—				—		3,081		408
Home equity	—		469		—		—		469		—




Total	$	4,826	$	469	$	—	$	—	$	5,295	$	408


Allocation of the Allowance for Credit Losses on Loans
(in thousands)	Commercial and industrial		Commercial real estate, owner-occupied		Commercial real estate, non-owner occupied		Construction		Home equity		Other residential		Installment and other consumer		Unallocated		Total
March 31, 2024
Modeled expected credit losses	$	940	$	1,326	$	7,744	$	119	$	559	$	670	$	655	$	—	$	12,013
Qualitative adjustments	628		1,174		6,767		1,163		68		22		265		2,049		12,136
Specific allocations	159		—		1,193		—		—		—		—		—		1,352
Total	$	1,727	$	2,500	$	15,704	$	1,282	$	627	$	692	$	920	$	2,049	$	25,501
December 31, 2023
Modeled expected credit losses	$	897	$	1,270	$	7,380	$	185	$	482	$	619	$	634	$	—	$	11,467
Qualitative adjustments	622		1,205		6,327		1,647		70		33		342		2,038		12,284
Specific allocations	193		1		1,226		—		—		1		—		—		1,421
Total	$	1,712	$	2,476	$	14,933	$	1,832	$	552	$	653	$	976	$	2,038	$	25,172


Allowance for Credit Losses on Loans Rollforward
(in thousands)	Commercial and industrial		Commercial real estate, owner-occupied		Commercial real estate, non-owner occupied		Construction		Home equity		Other residential		Installment and other consumer		Unallocated		Total
Three months ended March 31, 2024
Beginning balance	$	1,712	$	2,476	$	14,933	$	1,832	$	552	$	653	$	976	$	2,038	$	25,172
(Reversal) Provision	19		24		771		(550)		75		39		(39)		11		350
(Charge-offs)	(4)		—		—		—		—		—		(17)		—		(21)
Recoveries	—		—		—		—		—		—		—		—		—
Ending balance	$	1,727	$	2,500	$	15,704	$	1,282	$	627	$	692	$	920	$	2,049	$	25,501
Three months ended March 31, 2023
Beginning balance	$	1,794	$	2,487	$	12,676	$	1,937	$	558	$	595	$	868	$	2,068	$	22,983
Provision (Reversal)	147		153		25		74		(20)		(18)		25		(36)		350

(Charge-offs)	(3)		—		—		—		—		—		(11)		—		(14)
Recoveries	3		—		—		8		—		—		—		—		11
Ending balance	$	1,941	$	2,640	$	12,701	$	2,019	$	538	$	577	$	882	$	2,032	$	23,330

Our FHLB line of credit is secured under terms of a blanket collateral agreement by a pledge of certain qualifying loans with unpaid principal balances of $1.299 billion and $1.288 billion at March 31, 2024 and December 31, 2023, respectively. In addition, we pledge eligible TIC loans, which totaled $108.5 million and $110.4 million at March 31, 2024 and December 31, 2023, respectively, to secure our borrowing capacity with the Federal Reserve Bank ("FRB"). For additional information, see Note 6, Borrowings.

The Bank has, and expects to have in the future, banking transactions in the ordinary course of its business with directors, officers, principal shareholders and their businesses or associates. These transactions, including loans, are granted on substantially the same terms, including interest rates and collateral on loans, as those prevailing at the same time for comparable transactions with persons not related to us. Likewise, these transactions do not involve more than the normal risk of collectability or present other unfavorable features.