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Segment Reporting
 9 Months Ended
Sep. 30, 2024
Segment Reporting [Abstract]  
Segment Reporting Segment Reporting
As defined in ASC 280, Segment Reporting, an operating segment is a component of an enterprise that engages in business activities from which it may earn revenues and incur expenses, whose operating results are regularly reviewed by the enterprise’s chief operating decision makers to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. We evaluate performance based on an internal performance measurement accounting system, which provides line of business results. This system uses various techniques to assign balance sheet and income statement amounts to the business segments, including allocations of income and expense. A primary objective of this measurement system and related internal financial reporting practices are to produce consistent results that reflect the underlying financial impact of the segments on the Company and to provide a basis of support for strategic decision making. The accounting policies applicable to our segments are those that apply to our preparation of the accompanying Consolidated Financial Statements. Based on these criteria, we have identified three segments: the community bank, CCBX, and treasury & administration. The community bank segment includes all community banking activities, with a primary focus of the community bank is on providing a wide range of banking products and services to consumers and small to medium sized businesses in the broader Puget Sound region in the state of Washington and through the Internet and our mobile banking application. We currently operate 14 full-service banking locations, 12 of which are located in Snohomish County, where we are the largest community bank by deposit market share, and two of which are located in neighboring counties (one in King County and one in Island County). The CCBX segment provides BaaS that allows our broker-dealer and digital financial service partners to offer their customers banking services. The CCBX segment has 22 partners as of September 30, 2024. The treasury & administration segment includes investments, debt and other reporting items that are not specific to the community bank or CCBX segments.
The management accounting policies and processes utilized in compiling segment financial information are highly subjective and, unlike financial accounting, are not based on authoritative guidance similar to GAAP. As a result, reported segments and the financial information of the reported segments are not necessarily comparable with similar information reported by other financial institutions. Additionally, because of the interrelationships of the various segments, the information presented is not indicative of how the segments would perform if they operated as independent entities. Changes in management structure or allocation methodologies and procedures may result in future changes to previously reported segment financial data. Furthermore, changes in management structure or allocation methodologies and procedures may result in changes in reported segment financial data. The Company continues to evaluate its methodology on allocating items to the Company’s various segments to support strategic business decisions by the Company’s executive leadership. Income and expenses that are specific to a segment are directly posted to each segment. Additionally, certain indirect expenses are allocated to each segment utilizing various metrics, such as number of employees, utilization of space, and allocations based on loan and deposit balances. We have implemented a transfer pricing process that credits or charges the community bank and CCBX segments with intrabank interest income or expense for the difference in average loans and average deposits, with the treasury & administration segment as the offset for those entries.
Summarized financial information concerning the Company's reportable segments and the reconciliation to the consolidated financial results is shown in the following tables for the periods indicated:
September 30, 2024December 31, 2023
Community BankCCBXTreasury & AdministrationConsolidatedCommunity BankCCBXTreasury & AdministrationConsolidated
Assets(dollars in thousands; unaudited)
Cash and Due from Banks$5,052 $11,481 $467,493 $484,026 $4,702 $9,601 $468,825 $483,128 
Intrabank assets— 557,119 (557,119)— — 653,178 (653,178)— 
Securities— — 48,620 48,620 — — 150,364 150,364 
Loans held for sale— 7,565 — 7,565 — — — — 
Total loans receivable1,897,540 1,521,292 — 3,418,832 1,830,154 1,195,938 — 3,026,092 
Allowance for credit losses
(20,132)(150,131)— (170,263)(21,595)(95,363)— (116,958)
All other assets29,176 200,430 47,435 277,041 30,169 136,931 43,640 210,740 
Total assets$1,911,636 $2,147,756 $6,429 $4,065,821 $1,843,430 $1,900,285 $9,651 $3,753,366 
Liabilities
Total deposits$1,522,525 $2,104,763 $— $3,627,288 $1,497,601 $1,862,762 $— $3,360,363 
Total borrowings— — 47,847 47,847 — — 47,734 47,734 
Intrabank liabilities380,647 — (380,647)— 338,614 — (338,614)— 
All other liabilities8,464 42,993 7,299 58,756 7,215 37,523 5,553 50,291 
Total liabilities$1,911,636 $2,147,756 $(325,501)$3,733,891 $1,843,430 $1,900,285 $(285,327)$3,458,388 
Three months ended September 30, 2024Three months ended September 30, 2023
Community BankCCBXTreasury & AdministrationConsolidatedCommunity Bank CCBX Treasury & AdministrationConsolidated
(dollars in thousands; unaudited)
INTEREST INCOME AND EXPENSE
Interest income$31,898 $67,692 $5,489 $— $105,079 $27,373  $56,279 $4,679 $88,331 
Interest (expense) income intrabank transfer(5,540)6,764 (1,224)— — (3,036) 5,095 (2,059)— 
Interest expense7,264 24,819 809 32,892 5,067 20,384 651 26,102 
Net interest income19,094 49,637 3,456 72,187 19,270 40,990 1,969 62,229 
Provision/(Recapture) for credit losses - loans(519)72,104 — 71,585 664  26,493 — 27,157 
Provision for unfunded commitments(1,248)(80)— (1,328)— 96 — 96 
Net interest income/(expense) after provision for credit losses - loans and unfunded commitments20,861 (22,387)3,456 1,930 18,606 14,401 1,969 34,976 
NONINTEREST INCOME
Deposit service charges and fees939 13 — 952 986 12 — 998 
Other income156 1 331 488 176 107 121 404 
BaaS program income— 6,436 — 6,436 — 4,401 — 4,401 
BaaS indemnification income— 72,192 — 72,192 — 28,776 — 28,776 
Noninterest income (1)
1,095 78,642 331 80,068 1,162  33,296 121 34,579 
NONINTEREST EXPENSE
Salaries and employee benefits6,130 6,990 3,981 17,101 6,241 6,859 4,987 18,087 
Occupancy873 87 790 1,750 927 96 201 1,224 
Data processing and software licenses1,348 1,160 1,003 3,511 1,329 543 494 2,366 
Legal and professional expenses28 2,039 1,530 3,597 495 3,030 922 4,447 
Other expense960 2,599 1,402 4,961 1,073 2,174 1,277 4,524 
BaaS loan expense— 32,612 — 32,612 — 23,003 — 23,003 
BaaS fraud expense— 2,084 — 2,084 — 2,850 — 2,850 
Total noninterest expense9,339 47,571 8,706 65,616 10,065 38,555 7,881 56,501 
Net income/(loss) before income taxes12,617 8,684 (4,919)16,382 9,703 9,142 (5,791)13,054 
Income taxes2,042 1,798 (914)2,926 2,068 1,951 (1,235)2,784 
Net income/(loss)$10,575 $6,886 $(4,005)$13,456 $7,635 $7,191 $(4,556)$10,270 
Nine Months Ended September 30, 2024Nine Months Ended September 30, 2023
Community BankCCBXTreasury & AdministrationConsolidatedCommunity Bank CCBX Treasury & AdministrationConsolidated
(dollars in thousands; unaudited)
INTEREST INCOME AND EXPENSE
Interest income$92,692 $182,463 $17,883 $293,038 $78,151 $152,131 $11,846 $242,128 
Interest income (expense) intrabank transfer(16,975)23,214 (6,239)— (6,605)11,234 (4,629)— 
Interest expense19,736 71,792 2,150 93,678 11,264 49,820 1,974 63,058 
Net interest income55,981 133,885 9,494 199,360 60,282 113,545 5,243 179,070 
Provision/(Recapture) for credit losses - loans(1,059)214,052 — 212,993 1,045 122,254 — 123,299 
Provision for unfunded commitments1,224 1,523 — 2,747 (203)107 — (96)
Net interest income after provision for
credit losses - loans and unfunded
commitments		55,816 (81,690)9,494 (16,380)59,440 (8,816)5,243 55,867 
NONINTEREST INCOME
Deposit service charges and fees2,770 36 — 2,806 2,862 35 — 2,897 
Other income570 72 603 1,245 1,004 434 521 1,959 
BaaS program income— 17,357 — 17,357 — 11,924 — 11,924 
BaaS indemnification income— 215,533 — 215,533 — 125,701 — 125,701 
Noninterest income (1)
3,340 232,998 603 236,941 3,866  138,094 521 142,481 
NONINTEREST EXPENSE
Salaries and employee benefits18,171 21,388 12,531 52,090 18,034 18,412 13,525 49,971 
Occupancy2,653 281 2,020 4,954 2,918 257 411 3,586 
Data processing and software licenses3,441 2,983 2,903 9,327 3,202 1,667 1,309 6,178 
Legal and professional expenses78 6,458 4,364 10,900 1,563 7,630 2,961 12,154 
Other expense2,894 5,990 2,972 11,856 3,031 5,250 3,928 12,209 
BaaS loan expense— 86,525 — 86,525 — 62,590 — 62,590 
BaaS fraud expense— 4,791 — 4,791 — 6,386 — 6,386 
Total noninterest expense27,237 128,416 24,790 180,443 28,748 102,192 22,134 153,074 
Net income before income taxes31,919 22,892 (14,693)40,118 34,558 27,086 (16,370)45,274 
Income taxes6,176 5,452 (3,362)8,266 7,409 5,807 (3,509)9,707 
Net Income$25,743 $17,440 $(11,330)$31,852 27,149 21,279 (12,861)35,567