UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, ~~2022~~2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 001-38317

Luther Burbank Corporation

(Exact name of registrant as specified in its charter)


California (State or other jurisdiction of incorporation or organization)						68-0270948 (I.R.S. employer identification number)

520 Third St, Fourth Floor, Santa Rosa, California (Address of principal executive offices)						95401 (Zip Code)

Registrant's telephone number, including area code: (844) 446-8201

Securities Registered Pursuant to Section 12(b) of the Act

Title of Each Class

Trading Symbol

Name of Each Exchange on Which Registered

Common stock, no par value

LBC

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by checkmark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer", "accelerated filer", "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

☒

Non-accelerated filer

Smaller Reporting Company

☒

Emerging Growth Company

☒☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act): Yes ☐ No x

As of May ~~2, 2022,~~1, 2023, there were ~~51,125,410~~51,027,878 shares of the registrant’s common stock, no par value, outstanding.

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		Page
	PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements	34
	Consolidated Statements of Financial Condition	34
	Unaudited Consolidated Statements of Income	45
	Unaudited Consolidated Statements of Comprehensive Income	56
	Unaudited Consolidated Statements of Changes in Stockholders' Equity	67
	Unaudited Consolidated Statements of Cash Flows	78
	Notes to Unaudited Consolidated Financial Statements	89
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	3137
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5661
Item 4.	Controls and Procedures	5964
	PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	6066
Item 1A.	Risk Factors	6066
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6066
Item 3.	Defaults Upon Senior Securities	6067
Item 4.	Mine Safety Disclosures	6067
Item 5.	Other Information	6067
Item 6.	Exhibits	6167
	Signatures	6268

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~~Safe Harbor Statement under~~ Cautionary Statements Regarding Forward-Looking Information

All references to ‘‘we,’’ ‘‘our,’’ ‘‘us,’’ ‘‘Luther Burbank Corporation’’ or ‘‘the ~~Private Securities Litigation Reform Act of 1995~~

Company’’ refers to Luther Burbank Corporation, a California corporation, and our consolidated subsidiaries, including Luther Burbank Savings, a California banking corporation, unless the context indicates that we refer only to the parent company, Luther Burbank Corporation. ‘‘Bank’’ or ‘‘LBS’’ refers to Luther Burbank Savings, our banking subsidiary.

This ~~Quarterly Report on Form 10-Q may contain~~document contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as ~~amended. You~~amended, including our current views with respect to, among other things, future events and our results of operations, financial condition, financial performance, plans and/or strategies. These forward-looking statements can ~~find many (but~~be identified by the fact that they do not ~~all)~~relate strictly to historical or current facts and may be identified by use of ~~these statements by looking for~~ words such as ~~“approximates,~~"anticipate," "believe," “continue,” ~~“believes,~~"could," "estimate," "expect," “impact,” ~~“expects,” “anticipates,” “estimates,” “intends,” “plans,” “would,” “may”~~"intend," "seek," "may," "outlook," "plan," "potential," "predict," "project," "should," "will," "would" and ~~other~~ similar ~~expressions in this Quarterly Report~~terms and phrases, including references to assumptions. These forward-looking statements are based on ~~Form 10-Q. With respect to~~current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control and involve a number of risks and uncertainties. Accordingly, we caution you that any such forward-looking statements, Luther Burbank Corporation (the "Company") claims the protection of the safe harbor provided for in the Private Securities Litigation Reform Act of 1995, as amended. The Company cautions investors that any forward-looking statements presented in this Quarterly Report on Form 10-Q, or those that the Company may make orally or in writing from time to time, are based on the beliefs of, assumptions made by, and information available to, management at the time such statements are first made. Actual outcomes will be affected by known and unknown risks, trends, uncertainties and factors that are beyond the Company’s control or ability to predict. Although the Company believes that management’s beliefs and assumptions are reasonable, they arestatement is not ~~guarantees~~a guarantee of future performance and ~~some will inevitably~~that actual results may prove to be ~~incorrect. As a result,~~materially different from the ~~Company’s actual future~~ results ~~can be expected to differ from management’s expectations, and those differences may be material and adverse to~~expressed or implied by the ~~Company’s business, results of operations and financial condition. Accordingly, investors should use caution in placing any reliance on~~ forward-looking statements due to ~~anticipate future results or trends.~~a number of factors, including without limitation:

•

~~Given the ongoing~~interest rate, liquidity, economic, market, credit, operational and ~~dynamic nature of the coronavirus disease 2019 ("COVID-19") pandemic, the ultimate extent of the impacts on~~inflation risks associated with our business ~~financial position, results~~or industry, including the speed and predictability of ~~operations, liquidity,~~changes in these risks;

•our ability to retain deposits and ~~prospects remain uncertain. Deterioration in general~~ attract new deposits and loans and the composition and terms of such deposits and loans;

•our access to adequate sources of liquidity;

•business and economic conditions ~~resulting from~~generally and in the ~~continuing pandemic,~~financial services industry, nationally and within our current and future geographic markets, including the tight labor market, ~~supply chain disruptions, inflationary pressures,~~ineffective management of the U.S. Federal budget, debt or debt ceiling, bank failures, or turbulence or uncertainty in domestic or ~~global~~foreign financial ~~markets could adversely affect~~markets;

•any failure to adequately manage the transition from LIBOR as a reference rate;

•changes in the level of our ~~revenues~~nonperforming assets and charge-offs;

•the adequacy of our allowance for credit losses;

•our management of risks inherent in our real estate loan portfolio, including the seasoning of the portfolio, the level of non-conforming loans, the number of large borrowers, and the ~~values~~risk of ~~our assets~~a prolonged downturn in the real estate market;

•significant market concentrations in California and ~~liabilities, reduce~~ Washington;

•the ~~availability~~occurrence of ~~funding, lead to a tightening of~~significant natural or man-made disasters (including fires, earthquakes and terrorist acts), severe weather events, health crises and other catastrophic events;

•climate change, including any enhanced regulatory, compliance, credit and further increase stock price volatility. In addition, changes to statutes, regulations, or regulatory policies or practices as a result of, or in response to COVID-19, could affect us in substantial and unpredictable ways. Some of the otherreputational risks and ~~uncertainties that may cause the Company’s actual results, performance~~costs;

•political instability or ~~achievements to differ materially from those expressed include, but are not limited to, the following: the impact of changes in interest rates; political instability;~~ the effects of war or other conflicts, including, but not limited to, the current conflict between Russia and ~~Ukraine;~~Ukraine, as well as the civil unrest in Sudan;

•the announced merger with Washington Federal, Inc., including delays in the consummation of the merger or litigation or other conditions that may cause the parties to abandon the merger or make the merger more expensive or less beneficial;

•the impact that the announced merger may have on our ability to attract and retain customers and key personnel, the value of our shares, our expenses, and/or our ability to conduct our business in the ordinary course and execute on our strategies;

•the performance of our third-party vendors;

•fraud, financial crimes and fund transfer errors;

•failures, interruptions, cybersecurity incidents and data breaches involving our data, technology and systems and those of our customers and third-party providers;

•rapid technological changes in the ~~monetary~~financial services industry;

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•any inadequacy in our risk management framework or use of data and/or models;

•the laws and regulations applicable to our business, and the impact of recent and future legislative and regulatory changes;

•changing bank regulatory conditions, policies or programs, whether arising as new legislation or regulatory initiatives, that could lead to restrictions on activities of ~~the U.S. Government; a decline~~banks generally, or our subsidiary bank in ~~economic conditions; deterioration~~particular, more restrictive regulatory capital requirements, increased costs, including deposit insurance premiums, regulation or prohibition of certain income producing activities or changes in the ~~value of West Coast real estate, both residential~~secondary market for loans and ~~commercial; an increase~~other products;

•our involvement from time to time in legal proceedings and examinations and remedial actions by regulators;

•increased competition in the ~~level of non-performing assets~~financial services industry; and ~~charge-offs; further increased competition among financial institutions; the Company’s ability to continue to attract deposits~~

•changes in our reputation.

The foregoing factors should not be construed as exhaustive and ~~quality loan customers; further government regulation, including regulations regarding capital requirements, and the implementation and costs associated~~should be read together with the ~~same; internal and external fraud and cyber-security threats~~other cautionary statements included in our annual report on Form 10-K for the year ended December 31, 2022, including under the loss of bank or customer funds, loss of system functionality or the theft or loss of data; management’s ability to successfully manage the Company’s operations; and the other risks set forth in the Company’s reports filed with the U.S. Securities and Exchange Commission. For further discussion of these and other factors, see “Item 1A. Riskcaption “Risk Factors” in Item 1A of Part ~~II of this~~I, subsequent Quarterly ~~Report~~Reports on Form 10-Q, and other reports or filings with the ~~Company’s 2021 Annual Report~~Securities and Exchange Commission ("SEC"). You should not place undue reliance on ~~Form 10-K.~~

any of these forward-looking statements. Any forward-looking ~~statements in this Quarterly Report on Form 10-Q and all subsequent written and oral forward-looking statements attributable to the Company or any person acting on behalf~~statement speaks only as of the ~~Company are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. The Company does~~date on which it is made, and we do not undertake any obligation to ~~release publicly~~update or review any ~~revisions to~~ forward-looking ~~statements to reflect events~~statement, whether as a result of new information, future developments or ~~circumstances after the date such forward-looking statements are made, and hereby specifically disclaims any intention to do so, unless~~otherwise, except as required by law.

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PART I.

Item 1. Financial Statements

LUTHER BURBANK CORPORATION

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Dollar amounts in thousands)

March 31,
2022 (unaudited) December 31,
2021
ASSETS
Cash and cash equivalents $ 147,963 $ 138,413
Available for sale debt securities, at fair value 624,859 647,317
Held to maturity debt securities, at amortized cost (fair value of $3,802 and $4,018 at March 31, 2022 and December 31, 2021, respectively) 3,798 3,829
Equity securities, at fair value 11,116 11,693
Loans receivable, net of allowance for loan losses of $33,035 and $35,535 at March 31, 2022 and December 31, 2021, respectively 6,333,283 6,261,885
Accrued interest receivable 18,014 17,761
Federal Home Loan Bank ("FHLB") stock, at cost 22,563 23,411
Premises and equipment, net 15,590 16,090
Goodwill 3,297 3,297
Prepaid expenses and other assets 80,343 56,261
Total assets $ 7,260,826 $ 7,179,957
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits $ 5,601,247 $ 5,538,243
FHLB advances 751,647 751,647
Junior subordinated deferrable interest debentures 61,857 61,857
Senior debt
$95,000 face amount, 6.5% interest rate, due September 30, 2024 (less debt issuance costs of $307 and $338 at March 31, 2022 and December 31, 2021, respectively) 94,693 94,662
Accrued interest payable 153 118
Other liabilities and accrued expenses 83,229 64,297
Total liabilities 6,592,826 6,510,824
Commitments and contingencies (Note 16) 0 0
Stockholders' equity:
Preferred stock, no par value; 5,000,000 shares authorized; none issued and outstanding at March 31, 2022 and December 31, 2021, respectively — —
Common stock, no par value; 100,000,000 shares authorized; 51,403,914 and 51,682,398 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively 401,102 406,904
Retained earnings 278,856 262,141
Accumulated other comprehensive income (loss), net of taxes (11,958) 88
Total stockholders' equity 668,000 669,133
Total liabilities and stockholders' equity $ 7,260,826 $ 7,179,957

~~See accompanying notes to unaudited consolidated financial statements~~

~~Table of Contents~~

~~LUTHER BURBANK CORPORATION~~

~~CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)~~

~~(Dollar amounts in thousands, except per share data)~~

Three Months Ended March 31,
2022 2021
Interest and fee income:
Loans $ 53,633 $ 54,058
Investment securities 2,301 1,982
Cash, cash equivalents and restricted cash 66 51
Total interest and fee income 56,000 56,091
Interest expense:
Deposits 6,020 11,606
FHLB advances 3,097 3,933
Junior subordinated deferrable interest debentures 275 258
Senior debt 1,574 1,575
Total interest expense 10,966 17,372
Net interest income before provision for loan losses 45,034 38,719
Reversal of provision for loan losses (2,500) (2,500)
Net interest income after provision for loan losses 47,534 41,219
Noninterest income:
FHLB dividends 354 367
Other income (296) (58)
Total noninterest income 58 309
Noninterest expense:
Compensation and related benefits 10,219 10,380
Deposit insurance premium 481 472
Professional and regulatory fees 539 484
Occupancy 1,194 1,215
Depreciation and amortization 603 655
Data processing 988 973
Marketing 458 292
Other expenses 1,030 933
Total noninterest expense 15,512 15,404
Income before provision for income taxes 32,080 26,124
Provision for income taxes 9,140 7,713
Net income $ 22,940 $ 18,411
Basic earnings per common share $ 0.45 $ 0.35
Diluted earnings per common share $ 0.45 $ 0.35
Dividends per common share $ 0.12 $ 0.06


	March 31, 2023 (unaudited)		December 31, 2022
ASSETS
Cash and cash equivalents	$	516,913	$	185,895

Available for sale debt securities, at fair value	593,427		607,348
Held to maturity debt securities, at amortized cost (fair value of $2,891 and $2,874 at March 31, 2023 and December 31, 2022, respectively)	3,080		3,108
Equity securities, at fair value	10,506		10,340

Loans receivable, net of allowance for credit losses ("ACL") on loans of $35,914 and $36,685 at March 31, 2023 and December 31, 2022, respectively	6,987,565		6,973,760
Accrued interest receivable	23,873		24,306
Federal Home Loan Bank ("FHLB") stock, at cost	46,007		32,694
Premises and equipment, net	13,333		13,661
Goodwill	3,297		3,297
Prepaid expenses and other assets	104,456		120,223
Total assets	$	8,302,457	$	7,974,632

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits	$	5,649,494	$	5,839,340
FHLB advances	1,701,647		1,208,147
Junior subordinated deferrable interest debentures	61,857		61,857
Senior debt
$95,000 face amount, 6.5% interest rate, due September 30, 2024 (less debt issuance costs of $184 and $215 at March 31, 2023 and December 31, 2022, respectively)	94,816		94,785
Accrued interest payable	7,430		3,964
Other liabilities and accrued expenses	91,052		84,003
Total liabilities	7,606,296		7,292,096

Commitments and contingencies (Note 17)

Stockholders' equity:
Preferred stock, no par value; 5,000,000 shares authorized; none issued and outstanding at March 31, 2023 and December 31, 2022, respectively	—		—
Common stock, no par value; 100,000,000 shares authorized; 51,030,877 and 51,073,272 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively	398,363		398,988
Retained earnings	331,069		317,711
Accumulated other comprehensive loss, net of taxes	(33,271)		(34,163)
Total stockholders' equity	696,161		682,536
Total liabilities and stockholders' equity	$	8,302,457	$	7,974,632

See accompanying notes to unaudited consolidated financial statements

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LUTHER BURBANK CORPORATION

CONSOLIDATED STATEMENTS OF ~~COMPREHENSIVE~~ INCOME (UNAUDITED)

(Dollar amounts in ~~thousands)~~thousands, except per share data)

Three Months Ended March 31,
2022 2021
Net income $ 22,940 $ 18,411
Other comprehensive loss:
Unrealized loss on available for sale debt securities:
Unrealized holding loss arising during the period (16,965) (3,815)
Tax effect 4,919 1,109
Total other comprehensive loss, net of tax (12,046) (2,706)
Comprehensive income $ 10,894 $ 15,705


	Three Months Ended March 31,
	2023		2022
Interest and fee income:
Loans	$	74,604	$	53,633
Investment securities	5,488		2,301
Cash and cash equivalents	3,303		66
Total interest and fee income	83,395		56,000
Interest expense:
Deposits	37,607		6,020
FHLB advances	9,262		3,097
Junior subordinated deferrable interest debentures	966		275
Senior debt	1,574		1,574
Total interest expense	49,409		10,966
Net interest income before provision for credit losses	33,986		45,034
Reversal of provision for credit losses	(795)		(2,500)
Net interest income after provision for credit losses	34,781		47,534
Noninterest income:

FHLB dividends	577		354
Other income	658		(296)
Total noninterest income	1,235		58
Noninterest expense:
Compensation and related benefits	10,671		10,219
Deposit insurance premium	884		481
Professional and regulatory fees	436		539
Occupancy	1,184		1,194
Depreciation and amortization	649		603
Data processing	862		988
Marketing	739		458
Other expenses	1,509		1,030
Total noninterest expense	16,934		15,512
Income before provision for income taxes	19,082		32,080
Provision for income taxes	5,640		9,140
Net income	$	13,442	$	22,940

Basic earnings per common share	$	0.26	$	0.45
Diluted earnings per common share	$	0.26	$	0.45
Dividends per common share	$	—	$	0.12

See accompanying notes to unaudited consolidated financial statements

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LUTHER BURBANK CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(Dollar amounts in thousands)


	Three Months Ended March 31,
	2023		2022
Net income	$	13,442	$	22,940
Other comprehensive income (loss):
Unrealized gain (loss) on available for sale debt securities:
Unrealized holding gain (loss) arising during the period	1,257		(16,965)

Tax effect	(365)		4,919
Total other comprehensive income (loss), net of tax	892		(12,046)





Comprehensive income	$	14,334	$	10,894

See accompanying notes to unaudited consolidated financial statements

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LUTHER BURBANK CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022 (UNAUDITED)

(Dollar amounts in thousands, except per share data)



						Accumulated Other Comprehensive Income (Loss) (Net of Taxes)		Total Stockholders' Equity
	Common Stock			Retained Earnings		Available for Sale Securities
	Shares	Amount
Balance, December 31, 2021	51,682,398	$	406,904	$	262,141	$	88		$	669,133

Net income	—	—		22,940		—			22,940
Other comprehensive loss	—	—		—		(12,046)			(12,046)

Restricted stock award grants	206,675	—		—		—			—
Settled restricted stock units	6,759	—		—		—			—
Shares withheld to pay taxes on stock based compensation	(62,422)	(875)		—		—			(875)
Restricted stock forfeitures	(4,100)	(4)		2		—			(2)
Stock based compensation expense	—	714		—		—			714
Shares repurchased	(425,396)	(5,637)		—		—			(5,637)
Cash dividends ($0.12 per share)	—	—		(6,227)		—			(6,227)
Balance, March 31, 2022	51,403,914	$	401,102	$	278,856	$	(11,958)		$	668,000

Balance, December 31, 2022	51,073,272	$	398,988	$	317,711	$	(34,163)		$	682,536
Cumulative effect of change in accounting principal (1)	—	—		(84)		—			(84)
Net income	—	—		13,442		—			13,442
Other comprehensive income	—	—		—		892			892
Restricted stock award grants	42,034	—		—		—			—
Settled restricted stock units	15,426	—		—		—			—
Shares withheld to pay taxes on stock based compensation	(99,855)	(1,098)		—		—			(1,098)

Stock based compensation expense	—	473		—		—			473


Balance, March 31, 2023	51,030,877	$	398,363	$	331,069	$	(33,271)		$	696,161

(1) Represents the impact of the adoption of Accounting Standards Update ("ASU") 2016-13, Financial Instruments – Credit Losses (ASC 326): Measurement of Credit Losses on Financial Instruments, and the related amendments which replaces the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss ("CECL") methodology.

Accumulated Other Comprehensive Income (Loss) (Net of Taxes) Total Stockholders' Equity
Common Stock Retained Earnings Available for Sale Securities
Shares Amount
Balance, December 31, 2020 52,220,266 $ 414,120 $ 192,834 $ 6,737 $ 613,691
Net income — — 18,411 — 18,411
Other comprehensive loss — — — (2,706) (2,706)
Restricted stock award grants 283,078 — — — —
Settled restricted stock units 68,873 — — — —
Shares withheld to pay taxes on stock based compensation (85,825) (901) — — (901)
Restricted stock forfeitures (52,798) (67) 13 — (54)
Stock based compensation expense — 651 — — 651
Shares repurchased (201,682) (2,101) — — (2,101)
Cash dividends ($0.06 per share) — — (3,022) — (3,022)
Balance, March 31, 2021 52,231,912 $ 411,702 $ 208,236 $ 4,031 $ 623,969
Balance, December 31, 2021 51,682,398 $ 406,904 $ 262,141 $ 88 $ 669,133
Net income — — 22,940 — 22,940
Other comprehensive loss — — — (12,046) (12,046)
Restricted stock award grants 206,675 — — — —
Settled restricted stock units 6,759 — — — —
Shares withheld to pay taxes on stock based compensation (62,422) (875) — — (875)
Restricted stock forfeitures (4,100) (4) 2 — (2)
Stock based compensation expense — 714 — — 714
Shares repurchased (425,396) (5,637) — — (5,637)
Cash dividends ($0.12 per share) — — (6,227) — (6,227)
Balance, March 31, 2022 51,403,914 $ 401,102 $ 278,856 $ (11,958) $ 668,000

See accompanying notes to unaudited consolidated financial statements

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LUTHER BURBANK CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(Dollar amounts in thousands)


		Three Months Ended March 31,					Three Months Ended March 31,
		2022		2021			2023		2022
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income	Net income	$	22,940	$	18,411	Net income	$	13,442	$	22,940
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	603		655		Depreciation and amortization	649		603
Reversal of provision for loan losses		(2,500)		(2,500)
Reversal of provision for credit losses						Reversal of provision for credit losses	(795)		(2,500)
Amortization of deferred loan costs, net	Amortization of deferred loan costs, net	4,792		4,626		Amortization of deferred loan costs, net	1,373		4,792
Amortization of premiums on investment securities, net	Amortization of premiums on investment securities, net	337		657		Amortization of premiums on investment securities, net	1		337

Stock based compensation expense, net of forfeitures	Stock based compensation expense, net of forfeitures	710		584		Stock based compensation expense, net of forfeitures	473		710

Change in fair value of mortgage servicing rights	Change in fair value of mortgage servicing rights	104		171		Change in fair value of mortgage servicing rights	19		104
Change in fair value of equity securities	Change in fair value of equity securities	577		211		Change in fair value of equity securities	(166)		577

Other items, net	Other items, net	44		55		Other items, net	(31)		44
Effect of changes in:	Effect of changes in:					Effect of changes in:
Accrued interest receivable	Accrued interest receivable	(253)		(386)		Accrued interest receivable	433		(253)
Accrued interest payable	Accrued interest payable	35		(654)		Accrued interest payable	3,466		35
Prepaid expenses and other assets	Prepaid expenses and other assets	4,293		1,773		Prepaid expenses and other assets	5,652		4,293
Other liabilities and accrued expenses	Other liabilities and accrued expenses	3,140		1,800		Other liabilities and accrued expenses	(8,757)		3,140
Net cash provided by operating activities	Net cash provided by operating activities	34,822		25,403		Net cash provided by operating activities	15,759		34,822
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Proceeds from maturities, paydowns and calls of available for sale debt securities	Proceeds from maturities, paydowns and calls of available for sale debt securities	38,296		39,735		Proceeds from maturities, paydowns and calls of available for sale debt securities	15,178		38,296
Proceeds from maturities and paydowns of held to maturity debt securities	Proceeds from maturities and paydowns of held to maturity debt securities	29		1,741		Proceeds from maturities and paydowns of held to maturity debt securities	27		29

Purchases of available for sale debt securities	Purchases of available for sale debt securities	(33,140)		(90,113)		Purchases of available for sale debt securities	—		(33,140)

Net (increase) decrease in loans receivable		(81,469)		57,275
Net decrease (increase) in loans receivable						Net decrease (increase) in loans receivable	11,132		(81,469)

Purchase of loans, including discounts/premiums		—		(286,917)
Redemption of FHLB stock, net		848		—

(Purchase) redemption of FHLB stock, net						(Purchase) redemption of FHLB stock, net	(13,313)		848
Purchase of premises and equipment	Purchase of premises and equipment	(103)		(112)		Purchase of premises and equipment	(321)		(103)

Net cash used in investing activities		(75,539)		(278,391)
Net cash provided by (used in) investing activities						Net cash provided by (used in) investing activities	12,703		(75,539)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Net increase in deposits		63,004		127,579
Net (decrease) increase in deposits						Net (decrease) increase in deposits	(189,846)		63,004
Proceeds from long-term FHLB advances	Proceeds from long-term FHLB advances	100,000		—		Proceeds from long-term FHLB advances	450,000		100,000
Repayment of long-term FHLB advances	Repayment of long-term FHLB advances	(100,000)		(100,000)		Repayment of long-term FHLB advances	(50,000)		(100,000)
Net change in short-term FHLB advances	Net change in short-term FHLB advances	—		134,200		Net change in short-term FHLB advances	93,500		—
Shares withheld for taxes on vested restricted stock	Shares withheld for taxes on vested restricted stock	(875)		(901)		Shares withheld for taxes on vested restricted stock	(1,098)		(875)
Shares repurchased	Shares repurchased	(5,637)		(2,101)		Shares repurchased	—		(5,637)
Cash paid for dividends	Cash paid for dividends	(6,225)		(3,009)		Cash paid for dividends	—		(6,225)
Net cash provided by financing activities	Net cash provided by financing activities	50,267		155,768		Net cash provided by financing activities	302,556		50,267
Increase (decrease) in cash, cash equivalents and restricted cash		9,550		(97,220)
Cash, cash equivalents and restricted cash, beginning of period		138,413		178,861
Cash, cash equivalents and restricted cash, end of period		$	147,963	$	81,641
Increase in cash and cash equivalents						Increase in cash and cash equivalents	331,018		9,550
Cash and cash equivalents, beginning of period						Cash and cash equivalents, beginning of period	185,895		138,413
Cash and cash equivalents, end of period						Cash and cash equivalents, end of period	$	516,913	$	147,963
Supplemental disclosure of cash flow information:	Supplemental disclosure of cash flow information:					Supplemental disclosure of cash flow information:
Cash paid during the period for:	Cash paid during the period for:					Cash paid during the period for:
Interest	Interest	$	10,931	$	18,026	Interest	$	45,943	$	10,931
Income taxes	Income taxes	$	6	$	8	Income taxes	$	11	$	6
Supplemental non-cash disclosures:	Supplemental non-cash disclosures:					Supplemental non-cash disclosures:
Lease liabilities arising from obtaining right-of-use assets	Lease liabilities arising from obtaining right-of-use assets	$	16,255	$	—	Lease liabilities arising from obtaining right-of-use assets	$	—	$	16,255

See accompanying notes to unaudited consolidated financial statements

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LUTHER BURBANK CORPORATION

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.NATURE OF OPERATIONS

Organization

Luther Burbank Corporation (the ‘‘Company’’), a California corporation headquartered in Santa Rosa, is the bank holding company for its wholly-owned subsidiary, Luther Burbank Savings (the "Bank"), and ~~its~~the Bank's wholly-owned subsidiary, Burbank Investor Services. The Company also owns Burbank Financial Inc., a real estate investment company that provides limited loan administrative support to the Bank, and all the common interests in Luther Burbank Statutory Trusts I and II, entities created to issue trust preferred securities.

The Bank conducts its business from its ~~headquarters~~executive offices in Santa Rosa and Gardena, California, and an administrative office in Irvine, California. It has 10ten full service branches in California located in Sonoma, Marin, Santa Clara, and Los Angeles Counties and 1one full service branch in Washington located in King County. Additionally, there are several loan production offices located throughout ~~California,~~California.

On November 13, 2022, the Company entered into an Agreement and Plan of Reorganization (the “Merger Agreement”) with Washington Federal, Inc. (“WAFD”), pursuant to which the Company will merge with and into WAFD (the “Corporate Merger”), with WAFD surviving the Corporate Merger. Promptly following the Corporate Merger, the Company’s wholly-owned bank subsidiary, Luther Burbank Savings, will be merged with and into Washington Federal Bank, dba WaFd Bank, the wholly-owned bank subsidiary of WAFD (“WAFD Bank”), with WAFD Bank as ~~well as a loan production office~~the surviving institution. Closing of the transaction, which is expected to occur in ~~Clackamas County, Oregon.~~

2023, is contingent upon shareholder approval and receipt of all necessary regulatory approvals, along with the satisfaction of other customary closing conditions.

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not include all footnotes as would be necessary for a fair presentation of financial position, results of operations and comprehensive income, changes in stockholders’ equity and cash flows in conformity with accounting principles generally accepted in the United States of America (“GAAP”). However, these interim unaudited consolidated financial statements reflect all adjustments (consisting solely of normal recurring adjustments and accruals) which, in the opinion of management, are necessary for a fair presentation of financial position, results of operations and comprehensive income, changes in stockholders’ equity and cash flows for the interim periods presented. These unaudited consolidated financial statements have been prepared on a basis consistent with, and should be read in conjunction with, the audited consolidated financial statements as of and for the year ended December 31, ~~2021,~~2022, and the notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 filed with the Securities and Exchange Commission (the “SEC”), under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”). The unaudited consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany accounts and transactions have been eliminated.

The results of operations for the three months ended March 31, ~~2022~~2023 are not necessarily indicative of the results of operations that may be expected for any other interim period or for the year ending December 31, ~~2022.~~2023.

The Company’s accounting and reporting policies conform to GAAP and to general practices within the banking industry.

Use of Estimates

Management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited consolidated

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financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates and assumptions affect the amounts reported in the unaudited consolidated financial statements and the disclosures provided, and actual results could differ.

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Earnings Per Share ("EPS")

Basic earnings per common share represents the amount of earnings for the period available to each share of common stock outstanding during the reporting period. Basic EPS is computed based upon net income divided by the weighted average number of common shares outstanding during the period. In determining the weighted average number of shares outstanding, vested restricted stock units are included. Diluted EPS represents the amount of earnings for the period available to each share of common stock outstanding including common stock that would have been outstanding assuming the issuance of common shares for all dilutive potential common shares outstanding during each reporting period. Diluted EPS is computed based upon net income divided by the weighted average number of common shares outstanding during each period, adjusted for the effect of dilutive potential common shares, such as restricted stock awards and units, calculated using the treasury stock method.


(Dollars in thousands, except share amounts)	(Dollars in thousands, except share amounts)	Three Months Ended March 31,				(Dollars in thousands, except share amounts)		Three Months Ended March 31,
		2022		2021			(Dollars in thousands, except share amounts)			2023				2022
Net income	Net income	$	22,940	$	18,411					$	13,442			$	22,940

Weighted average basic common shares outstanding	Weighted average basic common shares outstanding	51,337,488		51,982,731					Weighted average basic common shares outstanding			50,871,173				51,337,488
Add: Dilutive effects of assumed vesting of restricted stock	Add: Dilutive effects of assumed vesting of restricted stock	76,931		115,507					Add: Dilutive effects of assumed vesting of restricted stock			32,272				76,931
Weighted average diluted common shares outstanding	Weighted average diluted common shares outstanding	51,414,419		52,098,238					Weighted average diluted common shares outstanding			50,903,445				51,414,419

Income per common share:	Income per common share:								Income per common share:
Basic EPS	Basic EPS	$	0.45	$	0.35				Basic EPS			$	0.26			$	0.45
Diluted EPS	Diluted EPS	$	0.45	$	0.35				Diluted EPS			$	0.26			$	0.45
Anti-dilutive shares not included in calculation of diluted earnings per share	Anti-dilutive shares not included in calculation of diluted earnings per share	20		3,695					Anti-dilutive shares not included in calculation of diluted earnings per share			19,913				20

~~Adoption of New~~Recently Adopted Financial Accounting Standards

FASB ASU ~~2016-02~~2016-13

On January 1, ~~2022,~~2023, the Company adopted ASU ~~No. 2016-02 “Leases (Topic 842)”~~2016-13, Financial Instruments – Credit Losses (ASC 326): Measurement of Credit Losses on Financial Instruments, which replaces the incurred loss methodology with an expected loss methodology that is referred to as the CECL methodology. The measurement of expected losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loans, held to maturity (“HTM”) debt securities and ~~subsequent amendments thereto,~~off-balance sheet exposures (loan commitments, financial guarantees, standby letters of credit and other similar instruments). In addition, CECL modifies the other-than-temporary impairment ("OTTI") model for available for sale (“AFS”) debt securities to require an allowance for credit losses instead of a direct write down, which ~~requires~~allows for reversal of credit losses in future periods based on improvements in credit quality. As permitted under ASC 326, the Company elected to ~~recognize most leases on~~maintain the ~~balance sheet.~~ same loan segments that it previously identified prior to adoption of CECL.

The Company adopted CECL using the ~~standard under a~~ modified retrospective ~~approach as of the date of adoption~~method for all financial assets measured at cost, including loans, HTM debt securities and ~~elected to apply several of the available practical expedients, including carryover of historical lease determination and lease classification conclusions and accounting~~off-balance sheet credit exposures. Results for ~~lease and non-lease components in contracts in which the Company is a lessee as a single lease component.~~

~~Adoption of the leasing standard resulted in the recognition of operating right-of-use assets of $15.8 million, and operating lease liabilities of $16.3 million as of~~reporting periods beginning January 1, 2022. These amounts were determined based on the present value of remaining minimum lease payments, discounted using the Company’s incremental borrowing rate as of the date of adoption. There was no material impact to the timing of expense or income recognition in the Company’s unaudited consolidated statements of income. Prior periods were not restated and2023 are reported under ASU 2016-13, while prior period results continue to be ~~presented under legacy GAAP. Disclosures about the Company’s leasing activities are presented in Note 6.~~

~~FASB ASU 2022-01~~

~~In March 2022, the Financial Accounting Standards Board (“FASB”) issued guidance~~reported under the incurred loss model which was the previously applicable GAAP. The Company recorded an increase to its ACL of $119 thousand as a cumulative effect adjustment of adopting ASU 2016-13, with a corresponding decrease in retained earnings, net of $35 thousand in taxes, of $84 thousand. The transition adjustment reflects the ~~last-of-layer hedging method~~results of our model in Accounting Standards Codification ("ASC") 815 to expand the current single-layer method to allow multiple layers of a single closed portfolio to be hedged. To reflect the expansion, the last-of-layer method will be renamed the portfolio layer method. The amendments also expand the scope ofestimating lifetime expected credit losses on loans, unfunded commitments and provide additional guidance specific to the portfolio layer method for hedge accounting. ASU 2022-01 will become effective for public business entities for fiscal years beginning after December 15, 2022, with early adoption permitted. The adoption of this standard is not expected to have a material effect on the Company’s operating results or financial condition.other off-balance sheet credit exposures.

910

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The following table illustrates the impact on the ACL due to the Company’s transition from the incurred loss methodology to the CECL methodology as of January 1, 2023:


(Dollars in thousands)	Pre-CECL Adoption		Impact of CECL Adoption		As Reported Under CECL
Assets:
ACL - Loans
Multifamily residential	$	26,417	$	2,882	$	29,299
Single family residential	8,564		(2,472)		6,092
Commercial real estate	1,539		(784)		755
Construction and land	165		282		447
Total	$	36,685	$	(92)	$	36,593
Liabilities:
ACL - Off-Balance Sheet Credit Exposures	$	563	$	211	$	774

At adoption of CECL and continuing through March 31, 2023, the Company has not recorded an ACL on AFS or HTM investment securities as these investment portfolios consisted primarily of debt securities explicitly or implicitly backed by the U.S. government. Refer to Note 2, Investment Securities, for more information. The Company elected to account for accrued interest receivable separately from the amortized cost of loans and investment securities.

The following accounting policies have been updated in connection with the adoption of the CECL methodology:

Allowance for Credit Losses on Loans

The ACL on loans represents the Company’s estimate of expected lifetime credit losses for its loans at the time of origination or acquisition and is maintained at a level deemed appropriate by management to provide for expected lifetime credit losses in the portfolio as of the date of the consolidated statements of financial condition. The ACL on loans is a valuation account that is deducted from the amortized cost basis of loans to present the net amount expected to be collected. Amortized cost does not include accrued interest, which management elected to exclude from the estimate of expected credit losses. The ACL on loans is increased by the provision for credit losses on loans, which is charged against current period operating results, and decreased by reversals of loan loss provisions as well as loan charge-offs, net of recoveries.

Management estimates the allowance balance using relevant available information, from internal and external sources, relating to past events, current conditions and reasonable and supportable forecasts. The Company’s ACL model utilizes an expected cash flow model to measure credit losses on an individual loan basis, which are then aggregated at the portfolio segment level and supplemented by a qualitative reserve that is applied to each portfolio segment level. Loans are segmented based on collateral type and consist of the following segments:

Multifamily residential and commercial real estate loans - These loans typically involve greater principal amounts than other types of loans, and repayment depends upon income generated, or expected to be generated, by the property securing the loan in amounts sufficient to cover operating expenses and debt service, which may be adversely affected by changes in the economy or local market conditions. Multifamily residential and commercial real estate loans also expose a lender to significant credit risk because the collateral securing these loans typically cannot be sold as easily as single family residential real estate. In addition, some commercial real estate loans are not fully amortizing and contain large balloon payments upon maturity. Such balloon payments may require the borrower to either sell or refinance the underlying property in order to comply with the terms of the loan agreement, which may increase the risk of default or non-payment.

Single family residential real estate loans - The degree of risk in single family residential real estate lending depends primarily on the loan amount in relation to collateral value, the interest rate, and the borrower’s ability to repay in an orderly fashion. These loans generally possess a lower inherent risk of

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loss than other real estate portfolio segments. Economic trends determined by unemployment rates and other key economic indicators are closely correlated to the credit quality of these loans. Weak economic trends indicate that the borrowers’ capacity to repay their obligations may be deteriorating.

Construction and land loans - This type of lending generally possess a higher inherent risk of loss than other real estate portfolio segments. A major risk arises from the necessity to complete projects within specified costs and time lines. Trends in the construction industry significantly impact the credit quality of these loans, as demand drives construction activity. In addition, trends in real estate values significantly impact the credit quality of these loans, as property values determine the economic viability of construction projects.

The Company’s ACL model methodology incorporates assumptions for the probability of default ("PD"), loss given default ("LGD"), and prepayments and curtailments over the contractual terms of the loans. Under the methodology, the ACL reflects the difference between the amortized cost basis and the net expected cash flows of a loan. In determining the PD, the model utilizes both macroeconomic and individual loan characteristics, such as loan-to-value, debt service coverage, seasoning, performance, collateral type, geography and credit score. For each period in a loan’s expected life, the model combines loan characteristics with forecasted economic conditions to determine the likely performance of a loan. With respect to LGD, the model estimates loss severity for secured loans primarily based on the loan type and value of collateral. Collateral values are estimated based on a third-party proprietary database that considers actual historical loan sales. The use of reasonable and supportable forecasts requires significant judgment. The ACL model leverages projections provided by reputable, well-recognized independent economic advisory companies and incorporates a forecast of macroeconomic factors which is updated quarterly. In addition, the ACL model incorporates two years of projected property type performance, such as property value growth and net operating income growth, also updated quarterly. For periods beyond the initial two years for property type performance, forecasts revert to a historical mean over the following three years and subsequently, to the U.S. historical average beyond that.

In calculating its ACL, management considers whether qualitative adjustments to the quantitative model, previously described, are needed. Qualitative adjustments may be related to and include, but are not limited to factors such as: differences in segment-specific risk characteristics, periods wherein current conditions and reasonable and supportable forecasts of economic conditions differ from the conditions that existed at the time of the estimated loss calculation, model limitations identified through back-testing and management’s overall assessment of the adequacy of the ACL. Qualitative internal and external risk factors that are periodically evaluated by management include, but are not limited to, the following:

•Changes in the nature and volume of loans;

•Changes in economic conditions and forecasts;

•Changes in the volume and severity of past due loans, the volume of non-accrual loans, and the volume and severity of criticized and classified loans;

•The existence and effect of loan concentrations;

•Changes in lending policies and procedures;

•Changes in the experience, ability and depth of lending management and other relevant staff;

•Changes in the quality of our systematic loan review processes; and

•The effect of other external factors, such as legal and regulatory requirements on the level of estimated credit losses in the portfolio.

Generally, the measurement of the ACL is performed by collectively evaluating loans with similar risk characteristics. Loans that do not share similar risk characteristics are evaluated individually for credit loss and are not included in the evaluation process discussed above. Individually evaluated loans may consist of loans that are classified as collateral dependent, or of loans that management has determined to not share risk characteristics with collectively evaluated loans. Collateral dependent loans represent loans where management has determined that foreclosure is probable, or where a borrower is experiencing financial difficulty at the reporting date and loan repayment is expected to be provided generally through the operation or sale of the collateral. Expected credit losses for collateral dependent loans are based on the fair value of the collateral at the reporting date, adjusted for selling costs, as appropriate.

Loans with terms that have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties, are evaluated for an ACL utilizing one of the methodologies above.

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Allowance for Credit Losses on Off-Balance Sheet Credit Exposures

The Company makes commitments to extend credit to meet the financing needs of customers in the form of loans or lines of credit. The Company maintains an ACL on unfunded commitments and other off-balance sheet credit exposures in other liabilities and accrued expenses in the consolidated statements of financial condition. This ACL is estimated over a commitment's contractual period and is determined in a manner consistent with the ACL for loans, which includes consideration of the likelihood that funding will occur. Adjustments to the ACL for off-balance sheet credit exposures are included in the provision for credit losses in the unaudited consolidated statements of income.

Allowance for Credit Losses on Held to Maturity Securities

The Company measures expected credit losses on HTM investment securities on a collective basis by major security type. Accrued interest receivable on HTM investment securities is excluded from the estimate of credit losses. The estimate of expected credit losses considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. Because substantially all of the Company’s HTM investment securities are either explicitly or implicitly guaranteed by U.S. Government entities or its agencies, the Company does not anticipate any credit related losses in this investment portfolio. Changes in the ACL on HTM securities, if any, are recorded in the provision for credit losses in the unaudited consolidated statements of income. Losses are charged against the ACL when management believes the uncollectibility of a HTM security is confirmed.

Allowance for Credit Losses on Available for Sale Securities

For AFS investment securities in an unrealized loss position, the Company initially assesses whether it intends to sell, or it is more likely than not that it will be required to sell, the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost is written down to fair value through income. For AFS investment securities that do not meet this criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. If a credit loss exists, an allowance for credit loss is recorded to the extent that the fair value is less than the amortized cost basis. Because substantially all of the Company’s AFS investment securities are either explicitly or implicitly guaranteed by U.S. Government entities or its agencies, the Company does not anticipate any credit related losses in this investment portfolio. Any impairment that has not been recorded through an ACL on AFS securities is recognized in other comprehensive income. Changes in the ACL on AFS securities, if any, are recorded in the provision for credit losses in the unaudited consolidated statements of income. Losses are charged against the ACL when management believes the uncollectibility of an AFS security is confirmed or when either of the criteria regarding intent or requirement to sell is met. Accrued interest receivable on AFS securities is excluded from the estimate of credit losses.

FASB ASU 2022-02

In March 2022, the FASB issued guidance to improve the usefulness of disclosures regarding certain loan refinancings, restructurings and write-offs under ASC 326. The amendments eliminate the accounting guidance for troubled debt restructurings by creditors that have adopted the ~~current expected credit loss (“CECL”)~~CECL methodology and enhance the disclosure requirements for certain loan refinancings and restructurings made to borrowers experiencing financial difficulty. In addition, the amendments require disclosure of current period gross write-offs for financing receivables and net investments in leases by year of origination. ~~ASU 2022-02 will become effective for fiscal years beginning after December 15, 2022 for public business entities that have adopted the CECL accounting standard.~~ The Company ~~expects to adopt~~adopted this guidance on January 1, 2023, concurrent with ~~the~~its adoption of the CECL standard. The adoption of this standard isdid not ~~expected to~~ have a material effect on the Company’s operating results or financial condition.

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2. INVESTMENT SECURITIES

Available for Sale

The following table summarizes the amortized cost and the estimated fair value of available for sale debt securities as of the dates indicated:


(Dollars in thousands)	(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
At March 31, 2022:
At March 31, 2023:										At March 31, 2023:
Government and Government Sponsored Entities:	Government and Government Sponsored Entities:									Government and Government Sponsored Entities:
Commercial mortgage backed securities ("MBS") and collateralized mortgage obligations ("CMOs")	Commercial mortgage backed securities ("MBS") and collateralized mortgage obligations ("CMOs")	$	414,904	$	1,895	$	(10,196)	$	406,603	Commercial mortgage backed securities ("MBS") and collateralized mortgage obligations ("CMOs")	$	358,558	$	217	$	(25,050)	$	333,725
Residential MBS and CMOs	Residential MBS and CMOs	188,493		477		(8,624)		180,346		Residential MBS and CMOs	216,656		12		(21,125)		195,543
Agency bonds	Agency bonds	10,275		225		—		10,500		Agency bonds	41,196		88		(124)		41,160
Other asset backed securities ("ABS")	Other asset backed securities ("ABS")	28,028		—		(618)		27,410		Other asset backed securities ("ABS")	23,916		—		(917)		22,999
Total available for sale debt securities	Total available for sale debt securities	$	641,700	$	2,597	$	(19,438)	$	624,859	Total available for sale debt securities	$	640,326	$	317	$	(47,216)	$	593,427
At December 31, 2021:
At December 31, 2022:										At December 31, 2022:
Government and Government Sponsored Entities:	Government and Government Sponsored Entities:									Government and Government Sponsored Entities:
Commercial MBS and CMOs	Commercial MBS and CMOs	$	407,111	$	3,281	$	(2,646)	$	407,746	Commercial MBS and CMOs	$	365,207	$	265	$	(24,736)	$	340,736
Residential MBS and CMOs	Residential MBS and CMOs	200,775		1,225		(1,867)		200,133		Residential MBS and CMOs	221,994		22		(22,632)		199,384
Agency bonds	Agency bonds	10,587		244		—		10,831		Agency bonds	42,540		189		(99)		42,630
Other ABS	Other ABS	28,720		37		(150)		28,607		Other ABS	25,763		—		(1,165)		24,598
Total available for sale debt securities	Total available for sale debt securities	$	647,193	$	4,787	$	(4,663)	$	647,317	Total available for sale debt securities	$	655,504	$	476	$	(48,632)	$	607,348

Net unrealized ~~gains (losses)~~losses on available for sale investment securities are recorded as accumulated other comprehensive ~~income (loss)~~loss within stockholders’ equity and totaled ~~$(12.0)~~$33.3 million and ~~$88 thousand,~~$34.2 million, net of ~~$4.9~~$13.6 million and ~~$(36) thousand~~$14.0 million in tax assets, ~~(liabilities),~~ at March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. There were no sales or transfers of available for sale investment securities and no realized gains or losses on these securities during the three months ended March 31, ~~2022~~2023 or ~~2021.~~2022.

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The following tables summarize the gross unrealized losses and fair value of available for sale debt securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position:


		March 31, 2022													March 31, 2023
		Less than 12 Months				12 Months or More				Total					Less than 12 Months				12 Months or More				Total
(Dollars in thousands)	(Dollars in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		(Dollars in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Government and Government Sponsored Entities:	Government and Government Sponsored Entities:													Government and Government Sponsored Entities:
Commercial MBS and CMOs	Commercial MBS and CMOs	$	152,363	$	(6,982)	$	46,724	$	(3,214)	$	199,087	$	(10,196)	Commercial MBS and CMOs	$	146,394	$	(2,205)	$	150,521	$	(22,845)	$	296,915	$	(25,050)
Residential MBS and CMOs	Residential MBS and CMOs	115,227		(6,427)		19,497		(2,197)		134,724		(8,624)		Residential MBS and CMOs	69,012		(2,781)		121,213		(18,344)		190,225		(21,125)
Agency bonds	Agency bonds	—		—		—		—		—		—		Agency bonds	31,218		(124)		—		—		31,218		(124)
Other ABS	Other ABS	27,411		(618)		—		—		27,411		(618)		Other ABS	—		—		22,999		(917)		22,999		(917)
Total available for sale debt securities	Total available for sale debt securities	$	295,001	$	(14,027)	$	66,221	$	(5,411)	$	361,222	$	(19,438)	Total available for sale debt securities	$	246,624	$	(5,110)	$	294,733	$	(42,106)	$	541,357	$	(47,216)

At March 31, ~~2022,~~2023, the Company held ~~86 residential~~58 commercial MBS and CMOs of which 2751 were in a loss position and 526 had been in a loss position for twelve months or more. The Company held ~~57 commercial~~89 residential MBS and CMOs of which 2986 were in a loss position and 527 had been in a loss position for twelve months or more. The Company held ~~3 other ABS~~six agency bonds of which 3three were in a loss position ~~and none had been~~for less than twelve months. The Company held three other ABS of which all three were in a loss position for twelve months or more.

December 31, 2021
Less than 12 Months 12 Months or More Total
(Dollars in thousands) Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses
Government and Government Sponsored Entities:
Commercial MBS and CMOs $ 157,031 $ (2,632) $ 10,608 $ (14) $ 167,639 $ (2,646)
Residential MBS and CMOs 118,803 (1,864) 247 (3) 119,050 (1,867)
Other ABS $ 15,253 $ (150) $ — $ — $ 15,253 $ (150)
Total available for sale debt securities $ 291,087 $ (4,646) $ 10,855 $ (17) $ 301,942 $ (4,663)

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	December 31, 2022
	Less than 12 Months				12 Months or More				Total
(Dollars in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Government and Government Sponsored Entities:
Commercial MBS and CMOs	$	188,155	$	(6,165)	$	109,255	$	(18,571)	$	297,410	$	(24,736)
Residential MBS and CMOs	94,137		(5,912)		99,831		(16,720)		193,968		(22,632)
Agency bonds	14,345		(99)		—		—		14,345		(99)
Other ABS	10,804		(580)		13,794		(585)		24,598		(1,165)
Total available for sale debt securities	$	307,441	$	(12,756)	$	222,880	$	(35,876)	$	530,321	$	(48,632)

At December 31, ~~2021,~~2022, the Company held ~~88 residential~~58 commercial MBS and CMOs of which 1450 were in a loss position and 415 had been in a loss position for twelve months or more. The Company held ~~54 commercial~~90 residential MBS and CMOs of which 2086 were in a loss position and 214 had been in a loss position for twelve months or more. The Company held 3six agency bonds of which one was in a loss position for less than twelve months. The Company held three other ABS of which 2three were in a loss position and ~~none~~two had been in a loss position for twelve months or more.

The unrealized losses on the Company’s investments were caused by interest rate changes. In addition, the contractual cash flows of these investments are guaranteed by the U.S. government or agencies sponsored by the U.S. government. Accordingly, it is expected that the securities will not be settled at a price less than amortized cost. Because the decline in market value is attributable to changes in interest rates but not credit quality, and because the Company has the ability and intent to hold those investments until a recovery of fair value, which may be maturity, the Company does not consider these ~~investments~~securities to be other-than-temporarily impaired at March 31, ~~2022~~2023 or December 31, ~~2021.~~2022. Additionally, the Company had no ACL recorded for available for sale investment securities at March 31, 2023.

As of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, there were no holdings of securities of any one issuer in an amount greater than 10% of stockholders' equity, other than the U.S. government and its agencies.

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Held to Maturity

The following table summarizes the amortized cost and estimated fair value of held to maturity investment securities as of the dates indicated:


(Dollars in thousands)	(Dollars in thousands)	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses		Estimated Fair Value		(Dollars in thousands)	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses		Estimated Fair Value
As of March 31, 2022:
As of March 31, 2023:										As of March 31, 2023:
Government Sponsored Entities:	Government Sponsored Entities:									Government Sponsored Entities:
Residential MBS	Residential MBS	$	3,731	$	18	$	(14)	$	3,735	Residential MBS	$	3,022	$	—	$	(189)	$	2,833
Other investments	Other investments	67		—		—		67		Other investments	58		—		—		58
Total held to maturity investment securities	Total held to maturity investment securities	$	3,798	$	18	$	(14)	$	3,802	Total held to maturity investment securities	$	3,080	$	—	$	(189)	$	2,891
As of December 31, 2021:
As of December 31, 2022:										As of December 31, 2022:
Government Sponsored Entities:	Government Sponsored Entities:									Government Sponsored Entities:
Residential MBS	Residential MBS	$	3,761	$	189	$	—	$	3,950	Residential MBS	$	3,047	$	—	$	(234)	$	2,813
Other investments	Other investments	68		—		—		68		Other investments	61		—		—		61
Total held to maturity investment securities	Total held to maturity investment securities	$	3,829	$	189	$	—	$	4,018	Total held to maturity investment securities	$	3,108	$	—	$	(234)	$	2,874

The following table summarizes the gross unrecognized losses and fair value of held to maturity investment securities, aggregated by investment category and length of time that individual securities have

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been in a continuous unrecognized loss position:


		Less than 12 Months				12 Months or More				Total					Less than 12 Months				12 Months or More				Total
(Dollars in thousands)	(Dollars in thousands)	Fair Value		Unrecognized Losses		Fair Value		Unrecognized Losses		Fair Value		Unrecognized Losses		(Dollars in thousands)	Fair Value		Unrecognized Losses		Fair Value		Unrecognized Losses		Fair Value		Unrecognized Losses
As of March 31, 2022:
As of March 31, 2023:														As of March 31, 2023:
Government Sponsored Entities:	Government Sponsored Entities:													Government Sponsored Entities:
Residential MBS	Residential MBS	$	1,992	$	(14)	$	—	$	—	$	1,992	$	(14)	Residential MBS	$	1,652	$	(100)	$	1,181	$	(89)	$	2,833	$	(189)

As of December 31, 2022:														As of December 31, 2022:
Government Sponsored Entities:														Government Sponsored Entities:
Residential MBS														Residential MBS	$	2,813	$	(234)	$	—	$	—	$	2,813	$	(234)

At March 31, ~~2022,~~2023, the Company had 7seven held to maturity residential MBS of which 5all seven were in a loss position and ~~none~~three had been in a loss position for twelve months or more. At December 31, 2022, the Company had seven held to maturity residential MBS of which all seven were in a loss position for less than twelve months.

The unrecognized losses on the Company’s held to maturity investments at March 31, ~~2022~~2023 were caused by interest rate changes. In addition, the contractual cash flows of these investments are guaranteed by agencies sponsored by the U.S. government. Accordingly, it is expected that the securities will not be settled at a price less than amortized cost. Because the decline in market value is attributable to changes in interest rates but not credit quality, and because the Company has the ability and intent to hold those investments until maturity, the Company does not consider these ~~investments~~securities to be other-than-temporarily impaired at March 31, 2023 or December 31, 2022. Additionally, the Company had no ACL recorded for held to maturity investment securities at March 31, 2023.

The following table summarizes the scheduled maturities of available for sale and held to maturity investment securities as of March 31, ~~2022:~~2023:

March 31, 2022
(Dollars in thousands) Amortized Cost Fair Value
Available for sale debt securities
Five to ten years $ 10,275 $ 10,500
MBS, CMOs and other ABS 631,425 614,359
Total available for sale debt securities $ 641,700 $ 624,859
Held to maturity investments securities
Five to ten years $ 67 $ 67
MBS 3,731 3,735
Total held to maturity debt securities $ 3,798 $ 3,802

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	March 31, 2023
(Dollars in thousands)	Amortized Cost		Fair Value
Available for sale debt securities


Five to ten years	$	37,479	$	37,421
Beyond ten years	3,717		3,739
MBS, CMOs and other ABS	599,130		552,267
Total available for sale debt securities	$	640,326	$	593,427
Held to maturity investments securities
Five to ten years	$	58	$	58
MBS	3,022		2,833
Total held to maturity debt securities	$	3,080	$	2,891

The amortized cost and fair value of debt securities are shown by contractual maturity. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. As such, mortgage backed securities, collateralized mortgage obligations and other asset backed securities are not included in the maturity categories above and instead are shown separately. As of March 31, 2023, securities with an amortized cost totaling $612.3 million were pledged to the FHLB and Federal Reserve Bank of San Francisco ("FRB") to secure borrowing arrangements. See Note 9 for additional information. No securities were pledged as of ~~March 31, 2022 or~~ December 31, ~~2021.~~

2022.

Equity Securities

Equity securities consist of investments in a qualified community reinvestment fund. At March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, the fair value of equity securities totaled ~~$11.1~~$10.5 million and ~~$11.7~~$10.3 million, respectively. Changes in fair value are recognized in other noninterest income and totaled ~~$(577)~~$166 thousand and ~~$(211)~~$(577) thousand during the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively. There were no sales of

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equity securities during the three months ended March 31, ~~2022~~2023 or ~~2021.~~2022.

3. LOANS

Loans consist of the following:


(Dollars in thousands)	(Dollars in thousands)	March 31, 2022		December 31, 2021		(Dollars in thousands)	March 31, 2023		December 31, 2022
Permanent mortgages on:
Mortgages on:						Mortgages on:
Multifamily residential	Multifamily residential	$	4,232,227	$	4,210,735	Multifamily residential	$	4,522,072	$	4,532,312
Single family residential	Single family residential	1,916,220		1,881,676		Single family residential	2,308,485		2,283,628
Commercial real estate	Commercial real estate	194,354		187,097		Commercial real estate	168,049		172,258
Construction and land loans		23,517		17,912
Construction and land						Construction and land	24,873		22,247

Total	Total	6,366,318		6,297,420		Total	7,023,479		7,010,445
Allowance for loan losses		(33,035)		(35,535)
Loans held for investment, net		$	6,333,283	$	6,261,885
Allowance for credit losses on loans						Allowance for credit losses on loans	(35,914)		(36,685)
Loans, net						Loans, net	$	6,987,565	$	6,973,760

Certain loans have been pledged to secure borrowing arrangements (see Note 8)9).

Prior to the Company’s adoption of CECL on January 1, 2023, the Company maintained an allowance for loan losses ("ALLL") in accordance with the probable incurred loss model. The probable incurred loss model was reflective of estimates for loan losses incurred and inherent in the loan portfolio as of the balance sheet date, and did not reflect current estimates of future expected credit losses over the lives of the Company’s loans, as now required by CECL.

The following table summarizes activity in and the allocation of the allowance for credit losses by portfolio segment during the three months ended March 31, 2023:


	Allowance for Credit Losses
(Dollars in thousands)	Beginning Balance		Impact of CECL Adoption		Charge-Offs		Recoveries		Provision		Ending Balance
Multifamily residential	$	26,417	$	2,882	$	—	$	—	$	(2,007)	$	27,292
Single family residential	8,564		(2,472)		—		—		1,339		7,431
Commercial real estate	1,539		(784)		—		—		22		777
Construction and land	165		282		—		—		(33)		414
Allowance for credit losses on loans	36,685		(92)		—		—		(679)		35,914
Allowance for credit losses on off-balance sheet credit exposures	563		211		—		—		(116)		658
Total	$	37,248	$	119	$	—	$	—	$	(795)	$	36,572

The following table summarizes activity in and the allocation of the allowance for loan losses by portfolio ~~segment:~~segment during the three months ended March 31, 2022:

(Dollars in thousands) Multifamily Residential Single Family Residential Commercial Real Estate Land and Construction Total
Three months ended March 31, 2022
Allowance for loan losses:
Beginning balance allocated to portfolio segments $ 26,043 $ 7,224 $ 2,094 $ 174 $ 35,535
(Reversal of) provision for loan losses (1,892) (427) (212) 31 (2,500)
Charge-offs — — — — —
Recoveries — — — — —
Ending balance allocated to portfolio segments $ 24,151 $ 6,797 $ 1,882 $ 205 $ 33,035
Three months ended March 31, 2021
Allowance for loan losses:
Beginning balance allocated to portfolio segments $ 33,259 $ 9,372 $ 3,347 $ 236 $ 46,214
(Reversal of) provision for loan losses (2,421) 442 (476) (45) (2,500)
Charge-offs — — — — —
Recoveries — 2 — 50 52
Ending balance allocated to portfolio segments $ 30,838 $ 9,816 $ 2,871 $ 241 $ 43,766

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~~The following table summarizes the allocation of the allowance for loan losses by impairment methodology:~~

(Dollars in thousands) Multifamily Residential Single Family Residential Commercial Real Estate Land and Construction Total
As of March 31, 2022:
Ending allowance balance allocated to:
Loans individually evaluated for impairment $ — $ 25 $ — $ — $ 25
Loans collectively evaluated for impairment 24,151 6,772 1,882 205 33,010
Ending balance $ 24,151 $ 6,797 $ 1,882 $ 205 $ 33,035
Loans:
Ending balance: individually evaluated for impairment $ 500 $ 5,643 $ — $ — $ 6,143
Ending balance: collectively evaluated for impairment 4,231,727 1,910,577 194,354 23,517 6,360,175
Ending balance $ 4,232,227 $ 1,916,220 $ 194,354 $ 23,517 $ 6,366,318
As of December 31, 2021:
Ending allowance balance allocated to:
Loans individually evaluated for impairment $ — $ 25 $ — $ — $ 25
Loans collectively evaluated for impairment 26,043 7,199 2,094 174 35,510
Ending balance $ 26,043 $ 7,224 $ 2,094 $ 174 $ 35,535
Loans:
Ending balance: individually evaluated for impairment $ 505 $ 5,687 $ — $ — $ 6,192
Ending balance: collectively evaluated for impairment 4,210,230 1,875,989 187,097 17,912 6,291,228
Ending balance $ 4,210,735 $ 1,881,676 $ 187,097 $ 17,912 $ 6,297,420


	Allowance for Loan Losses
(Dollars in thousands)	Beginning Balance		Charge-Offs		Recoveries		Provision		Ending Balance

Multifamily residential	$	26,043	$	—	$	—	$	(1,892)	$	24,151
Single family residential	7,224		—		—		(427)		6,797
Commercial real estate	2,094		—		—		(212)		1,882
Construction and land	174		—		—		31		205
Allowance for loan losses	$	35,535	$	—	$	—	$	(2,500)	$	33,035

The Company assigns a risk rating to all loans and periodically performs detailed reviews of ~~all~~ loans to identify credit risks and to assess the overall collectability of the portfolio. During these internal reviews,

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management monitors and analyzes the financial condition of borrowers and guarantors, as well as the financial performance and/or other characteristics of loan collateral. These credit quality indicators are used to assign a risk rating to each individual loan. The risk ratings can be grouped into six major categories, defined as follows:

Pass assets are those which are performing according to contract and have no existing or known weaknesses deserving of management’s close attention. The basic underwriting criteria used to approve the loans are still valid, and all payments have essentially been made as planned.

Watch assets are expected to have an event occurring in the near future that will lead to a change in risk rating with the change being either favorable or unfavorable. These assets require heightened monitoring of the event by management.

Special mention assets have potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the Company’s credit position at some future date. Special mention assets are not adversely classified and do not expose the Company to sufficient risk to warrant adverse classification.

Substandard assets are inadequately protected by the current net worth and/or paying capacity of the obligor or by the collateral pledged. These assets have well-defined weaknesses: the primary source of repayment is gone or severely impaired (i.e., bankruptcy or loss of employment) and/or there has been a deterioration in collateral value. In addition, there is the distinct possibility that the Company will sustain some loss, either directly or indirectly (i.e., the cost of monitoring), if the deficiencies are not corrected. A deterioration in collateral value alone does not mandate that an asset be adversely classified if such factor does not indicate that the primary source of repayment is in jeopardy.

Doubtful assets have the weaknesses of those classified substandard with the added characteristic

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that the weaknesses make collection or liquidation in full highly questionable and improbable based on current facts, conditions and values.

Loss assets are considered uncollectible and of such little value that their continuance as assets, without establishment of a specific valuation allowance or charge-off, is not warranted. This classification does not necessarily mean that an asset has absolutely no recovery or salvage value; but rather, it is not practical or desirable to defer writing off a basically worthless asset (or portion thereof) even though partial recovery may be affected in the future.

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The following table presents the internal risk ratings for total loans by portfolio segment of loan and origination year as of March 31, 2023, as well as gross charge-offs for the three months ended March 31, 2023:


(Dollars in thousands)	Loans by Origination Year
(Dollars in thousands)	2023		2022		2021		2020		2019		Prior		Total

Multifamily residential
Pass	$	23,568	$	1,183,333	$	1,216,122	$	720,962	$	429,745	$	887,435	$	4,461,165
Watch	—		691		12,054		4,833		6,358		18,619		42,555
Special Mention	—		—		—		—		1,731		—		1,731
Substandard	—		—		—		3,584		3,875		9,162		16,621
Total	$	23,568	$	1,184,024	$	1,228,176	$	729,379	$	441,709	$	915,216	$	4,522,072
Year to date gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Single family residential
Pass	$	65,714	$	835,490	$	732,585	$	167,821	$	142,040	$	350,157	$	2,293,807
Watch	—		1,418		1,151		—		3,869		6,510		12,948
Special Mention	—		—		—		—		—		—		—
Substandard	—		—		—		—		—		1,730		1,730
Total	$	65,714	$	836,908	$	733,736	$	167,821	$	145,909	$	358,397	$	2,308,485
Year to date gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial real estate
Pass	$	—	$	24,186	$	1,942	$	11,607	$	24,216	$	104,546	$	166,497
Watch	—		—		—		—		—		604		604
Special Mention	—		—		—		—		948		—		948
Substandard	—		—		—		—		—		—		—
Total	$	—	$	24,186	$	1,942	$	11,607	$	25,164	$	105,150	$	168,049
Year to date gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Construction and land
Pass	$	—	$	6,528	$	18,345	$	—	$	—	$	—	$	24,873
Watch	—		—		—		—		—		—		—
Special Mention	—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—
Total	$	—	$	6,528	$	18,345	$	—	$	—	$	—	$	24,873
Year to date gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Total loans
Pass	$	89,282	$	2,049,537	$	1,968,994	$	900,390	$	596,001	$	1,342,138	$	6,946,342
Watch	—		2,109		13,205		4,833		10,227		25,733		56,107
Special Mention	—		—		—		—		2,679		—		2,679
Substandard	—		—		—		3,584		3,875		10,892		18,351
Total	$	89,282	$	2,051,646	$	1,982,199	$	908,807	$	612,782	$	1,378,763	$	7,023,479
Year to date gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—

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The following table summarizes the loan portfolio allocated by management’s internal risk ratings at ~~March 31, 2022 and~~ December 31, ~~2021.~~2022.


(Dollars in thousands)	(Dollars in thousands)	Multifamily Residential		Single Family Residential		Commercial Real Estate		Land, Construction and NM		Total		(Dollars in thousands)	Multifamily Residential		Single Family Residential		Commercial Real Estate		Construction and Land		Total
As of March 31, 2022:

Grade:	Grade:											Grade:
Pass	Pass	$	4,165,085	$	1,897,046	$	188,236	$	22,982	$	6,273,349	Pass	$	4,469,443	$	2,269,325	$	169,711	$	22,247	$	6,930,726
Watch	Watch	50,535		16,071		5,150		535		72,291		Watch	44,436		11,341		1,594		—		57,371
Special mention	Special mention	4,610		1,326		968		—		6,904		Special mention	2,460		—		953		—		3,413
Substandard	Substandard	11,997		1,777		—		—		13,774		Substandard	15,973		2,962		—		—		18,935

Total	Total	$	4,232,227	$	1,916,220	$	194,354	$	23,517	$	6,366,318	Total	$	4,532,312	$	2,283,628	$	172,258	$	22,247	$	7,010,445
As of December 31, 2021:
Grade:
Pass		$	4,129,767	$	1,856,942	$	180,950	$	17,523	$	6,185,182
Watch		66,062		22,946		6,147		389		95,544
Special mention		4,586		—		—		—		4,586
Substandard		10,320		1,788		—		—		12,108

Total		$	4,210,735	$	1,881,676	$	187,097	$	17,912	$	6,297,420

The following table summarizes an aging analysis of the loan portfolio by the time past due as of the dates indicated below:


(Dollars in thousands)	30-59 Days		60-89 Days		90+ Days		Total Past Due		Current		Total
As of March 31, 2023:
Loans:
Multifamily residential	$	5,531	$	—	$	3,121	$	8,652	$	4,513,420	$	4,522,072
Single family residential	1,665		—		—		1,665		2,306,820		2,308,485
Commercial real estate	—		—		—		—		168,049		168,049
Construction and land	—		—		—		—		24,873		24,873
Total	$	7,196	$	—	$	3,121	$	10,317	$	7,013,162	$	7,023,479
As of December 31, 2022:
Loans:
Multifamily residential	$	—	$	—	$	3,023	$	3,023	$	4,529,289	$	4,532,312
Single family residential	—		—		104		104		2,283,524		2,283,628
Commercial real estate	—		—		—		—		172,258		172,258
Construction and land	—		—		—		—		22,247		22,247
Total	$	—	$	—	$	3,127	$	3,127	$	7,007,318	$	7,010,445

As of both March 31, 2023 and December 31, 2022, there were no loans that were past due over 89 days and still accruing interest.

Loans that have been classified as collateral dependent are loans where substantially all repayment of the loan is expected to come from the operation of or eventual liquidation of the collateral. Collateral dependent loans are evaluated individually for purposes ofmeasuring the ACL, which is determined based on the estimated fair value of the collateral. Estimates for costs to sell are included in the determination of the ACL when liquidation of the collateral is anticipated. In cases where the loan is well secured and the estimated value of the collateral exceeds the amortized cost of the loan, no ACL is recorded. The following table presents the amortized cost basis of collateral dependent loans by loan type at March 31, ~~2022 and December 31, 2021:~~2023.

(Dollars in thousands) 30 Days 60 Days 90+ Days Non-accrual Current Total
As of March 31, 2022:
Loans:
Multifamily residential $ — $ 362 $ — $ 500 $ 4,231,365 $ 4,232,227
Single family residential 1,170 1,326 — 1,777 1,911,947 1,916,220
Commercial real estate — — — — 194,354 194,354
Land and construction — — — — 23,517 23,517
Total $ 1,170 $ 1,688 $ — $ 2,277 $ 6,361,183 $ 6,366,318
As of December 31, 2021:
Loans:
Multifamily residential $ — $ — $ — $ 505 $ 4,210,230 $ 4,210,735
Single family residential 271 — — 1,788 1,879,617 1,881,676
Commercial real estate — — — — 187,097 187,097
Land and construction — — — — 17,912 17,912
Total $ 271 $ — $ — $ 2,293 $ 6,294,856 $ 6,297,420


	Amortized Cost by Collateral Type						Allowance for Credit Losses
(Dollars in thousands)	Residential		Office		Industrial
Multifamily residential	$	3,504	$	—	$	—	$	—
Single family residential	1,466		—		—		—


Total	$	4,970	$	—	$	—	$	—

1520

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The following table summarizes information related to impaired loans at ~~March 31, 2022 and~~ December 31, ~~2021:~~2022:


		As of March 31, 2022						As of December 31, 2021
(Dollars in thousands)	(Dollars in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance		(Dollars in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:	With no related allowance recorded:													With no related allowance recorded:
Multifamily residential	Multifamily residential	$	500	$	577	$	—	$	505	$	582	$	—	Multifamily residential	$	485	$	562	$	—
Single family residential	Single family residential	4,813		5,004		—		4,847		5,033		—		Single family residential	5,580		5,779		—

		5,313		5,581		—		5,352		5,615		—			6,065		6,341		—
With an allowance recorded:	With an allowance recorded:													With an allowance recorded:

Multifamily residential														Multifamily residential	3,024		3,002		600
Single family residential	Single family residential	830		827		25		840		836		25		Single family residential	801		798		25

		830		827		25		840		836		25			3,825		3,800		625
Total:	Total:													Total:
Multifamily residential	Multifamily residential	500		577		—		505		582		—		Multifamily residential	3,509		3,564		600
Single family residential	Single family residential	5,643		5,831		25		5,687		5,869		25		Single family residential	6,381		6,577		25

		$	6,143	$	6,408	$	25	$	6,192	$	6,451	$	25		$	9,890	$	10,141	$	625

The following table summarizes information related to impaired loans for the three months ended March 31, ~~2022 and 2021:~~2022:


		Three Months Ended March 31,
		2022						2021
(Dollars in thousands)	(Dollars in thousands)	Average Recorded Investment		Interest Income		Cash Basis Interest		Average Recorded Investment		Interest Income		Cash Basis Interest		(Dollars in thousands)	Average Recorded Investment		Interest Income		Cash Basis Interest
With no related allowance recorded:	With no related allowance recorded:													With no related allowance recorded:
Multifamily residential	Multifamily residential	$	503	$	8	$	8	$	1,566	$	5	$	5	Multifamily residential	$	503	$	8	$	8
Single family residential	Single family residential	4,830		43		19		5,790		61		57		Single family residential	4,830		43		19

		5,333		51		27		7,356		66		62			5,333		51		27
With an allowance recorded:	With an allowance recorded:													With an allowance recorded:

Single family residential	Single family residential	835		6		—		871		7		—		Single family residential	835		6		—

		835		6		—		871		7		—			835		6		—
Total:	Total:													Total:
Multifamily residential	Multifamily residential	503		8		8		1,566		5		5		Multifamily residential	503		8		8
Single family residential	Single family residential	5,665		49		19		6,661		68		57		Single family residential	5,665		49		19

		$	6,168	$	57	$	27	$	8,227	$	73	$	62		$	6,168	$	57	$	27

The following table summarizes the allocation of the allowance for loan losses by impairment methodology as of December 31, 2022:


(Dollars in thousands)	Multifamily Residential		Single Family Residential		Commercial Real Estate		Construction and Land		Total










Ending allowance balance allocated to:
Loans individually evaluated for impairment	$	600	$	25	$	—	$	—	$	625
Loans collectively evaluated for impairment	25,817		8,539		1,539		165		36,060
Ending balance	$	26,417	$	8,564	$	1,539	$	165	$	36,685
Loans:
Ending balance: individually evaluated for impairment	$	3,509	$	6,381	$	—	$	—	$	9,890
Ending balance: collectively evaluated for impairment	4,528,803		2,277,247		172,258		22,247		7,000,555
Ending balance	$	4,532,312	$	2,283,628	$	172,258	$	22,247	$	7,010,445

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The following table summarizes the population of loans with active payment modifications for borrowers experiencing financial difficulty as of March 31, 2023:


(Dollars in thousands)	Multifamily Residential			Single Family Residential			Commercial Real Estate			Construction and Land			Total

Loan modifications	$	—		$	1,200		$	—		$	—		$	1,200
% of loan modifications to total loan category	—			0.05		%	—			—			0.02		%

Weighted average interest rate reductions	—		%	0.20		%	—		%	—		%	0.20		%
Weighted average term extension	—			6 months			—			—			6 months

The Company had no modified loans with a subsequent payment default within the twelve months following their modification during the quarter ended March 31, 2023. A loan is considered to be in default once it is 90 days contractually past due under the modified terms.

The following table summarizes the recorded investment related to troubled debt restructurings ("TDRs") at ~~March 31, 2022 and~~ December 31, ~~2021:~~2022:

(Dollars in thousands) March 31,
2022 December 31,
2021
Troubled debt restructurings:
Single family residential $ 1,607 $ 1,204


(Dollars in thousands)
Troubled debt restructurings:

Single family residential	$	1,211

The Company ~~has~~had allocated $25 thousand of its allowance for loan losses for loans modified in TDRs at ~~both March 31, 2022 and~~ December 31, ~~2021.~~2022. The Company does not have commitments to lend additional funds to borrowers with loans whose terms have been modified in TDRs.

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During the three months ended March 31, 2022, the Company modified the terms of 1one loan that qualified as a TDR. The following table provides details of this modification:


(Dollars in thousands)	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled debt restructurings:
Single family residential	1	$	405	$	412

Terms of the modification above included suspension of loan payments for six months and a similar extension of the loan term. The TDR above resulted in no increase to the allowance for loan losses and no charge-offs primarily due to collateral support provided by the secondary source of repayment. ~~There were no new TDRs during the three months ended March 31, 2021.~~

The Company had no TDRs with a subsequent payment default within the twelve months following ~~the~~their modification during the three months ended March 31, ~~2022 and 2021.~~2022. A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms.

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4. NONPERFORMING ASSETS

Nonperforming assets include nonperforming loans plus real estate owned. The ~~Company’s nonperforming assets at March 31, 2022 and December 31, 2021 are~~following table presents the composition of non-accrual loans as of the dates indicated below:

(Dollars in thousands) March 31,
2022 December 31,
2021
Non-accrual loans:
Multifamily residential $ 500 $ 505
Single family residential 1,777 1,788
Total non-accrual loans 2,277 2,293
Real estate owned — —
Total nonperforming assets $ 2,277 $ 2,293


	March 31, 2023				December 31, 2022
(Dollars in thousands)	Non-Accrual Loans with No ACL		Non-Accrual Loans		Non-Accrual Loans with No ALLL		Non-Accrual Loans
Multifamily residential	$	3,504	$	3,504	$	3,509	$	3,509
Single family residential	1,466		1,466		2,962		2,962
Commercial real estate	—		—		—		—
Construction and land	—		—		—		—
Total	$	4,970	$	4,970	$	6,471	$	6,471

The allowance for non-accrual loans is based on the CECL cash flow methodology discussed in Note 1, “Summary of Significant Accounting Policies", unless the loan is considered collateral dependent. The allowance for collateral dependent loans is determined based on the estimated fair value of the underlying collateral.

Interest income on non-accrual loans is subsequently recognized on a cash basis as long as the remaining unpaid principal amount of the loans are deemed to be fully collectible. If there is doubt regarding the collectability of the loan, then any interest payments received are applied to principal. Interest income was recognized on a cash basis on non-accrual loans during the three months ended March 31, 2023 and 2022 ~~and 2021~~ totaling ~~$27~~$28 thousand and ~~$62~~$27 thousand, respectively. Contractual interest not recorded on nonperforming loans during the three months ended March 31, 2023 and 2022 ~~and 2021~~ totaled $7$118 thousand and ~~$16~~$7 thousand, respectively.

~~Generally, nonaccrual loans are considered impaired because the repayment~~The Company did not own any other real estate owned as of ~~the loan will not be made in accordance with the original contractual agreement.~~March 31, 2023 and December 31, 2022.

5. MORTGAGE SERVICING RIGHTS

Servicing loans for others generally consists of collecting mortgage payments, maintaining escrow accounts, disbursing payments to investors, and conducting foreclosure proceedings. Loan servicing income is recorded on the accrual basis and includes servicing fees from investors and certain charges collected from borrowers. Mortgage loans serviced for others are not reported as assets. The principal

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balances of these loans are as follows:


(Dollars in thousands)	(Dollars in thousands)	March 31, 2022		December 31, 2021		(Dollars in thousands)	March 31, 2023		December 31, 2022
Mortgage loans serviced for:	Mortgage loans serviced for:					Mortgage loans serviced for:
Federal Home Loan Mortgage Corporation ("Freddie Mac")	Federal Home Loan Mortgage Corporation ("Freddie Mac")	$	105,741	$	127,431	Federal Home Loan Mortgage Corporation ("Freddie Mac")	$	78,312	$	80,478
Other financial institutions	Other financial institutions	57,249		58,298		Other financial institutions	37,220		37,503
Total mortgage loans serviced for others	Total mortgage loans serviced for others	$	162,990	$	185,729	Total mortgage loans serviced for others	$	115,532	$	117,981

Custodial account balances maintained in connection with serviced loans totaled ~~$1.3~~$1.6 million and ~~$5.0 million~~$234 thousand at March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

The Company measures servicing rights at fair value at each reporting date and reports changes in the fair value of servicing assets in earnings in the period in which the changes occur. Fair value is based on a valuation model that calculates the present value of estimated future net servicing income. Activities for mortgage servicing rights are as follows:

Three Months Ended March 31,
(Dollars in thousands) 2022 2021
Beginning balance $ 915 $ 1,599
Additions — —
Disposals — —
Changes in fair value due to changes in assumptions — —
Other changes in fair value (104) (171)
Ending balance $ 811 $ 1,428

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	Three Months Ended March 31,
(Dollars in thousands)	2023		2022
Beginning balance	$	688	$	915
Additions	—		—
Disposals	—		—
Changes in fair value due to changes in assumptions	—		—
Other changes in fair value	(19)		(104)
Ending balance	$	669	$	811

Fair value as of March 31, ~~2022~~2023 was determined using a discount rate of 10%, prepayment speeds ranging from ~~5.6%~~5.4% to ~~48.4%~~32.7% and a weighted average default rate of 5%. The weighted average prepayment speed at March 31, ~~2022~~2023 was ~~27.7%~~24.5%. Fair value as of December 31, ~~2021~~2022 was determined using a discount rate of 10%, prepayment speeds ranging from ~~7.6%~~3.5% to ~~48.8%~~32.3% and a weighted average default rate of 5%. The weighted average prepayment speed at December 31, ~~2021~~2022 was ~~29.2%~~23.0%.

6. LEASES

The Company leases various office premises under long-term operating lease agreements. These leases expire between ~~2022~~2023 and ~~2030,~~2033, with certain leases containing ~~five year~~five-year renewal options. The Company includes lease extension options in the lease term if it is reasonably certain the Company will exercise the option, when considering the economic incentive to do so. Leases are classified as operating or finance leases at the lease commencement date. Lease expense for operating leases and short-term leases is recognized on a straight-line basis over the lease term. All of the Company’s leases are classified as operating ~~leases and prior to the adoption of ASU 2016-02 on January 1, 2022, were not recognized on the Company's consolidated statements of financial condition.~~leases.

~~Upon adoption of the new lease standard on January 1, 2022, the~~The Company ~~recorded~~records operating lease right-of-use assets and operating lease liabilities on the Company's consolidated statements of financial condition. Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term.

The Company uses its incremental borrowing rate at lease commencement to discount lease payments when the rate implicit in the lease is not readily determinable. The ~~Company's incremental borrowing rate was based on the~~Company selected a FHLB advance rate at lease inception based on the lease term and other ~~factors.~~factors, as a reasonable incremental borrowing rate. In addition, the Company has elected to account for any non-lease components in its leases as part of the associated lease component. The Company also has elected to not recognize short-term leases with an original term of 12 months or less on the Company's consolidated statements of financial condition.

1824

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Supplemental lease information as of orMarch 31, 2023 and December 31, 2022 is as follows:


(Dollars in thousands)	March 31, 2023			December 31, 2022
Operating lease right-of-use assets included in prepaid expenses and other assets	$	12,478		$	13,244
Operating lease liabilities included in other liabilities and accrued expenses	12,478			13,316



Weighted average remaining lease term (years) of operating leases	5.0			5.1
Weighted average discount rate of operating leases	2.73		%	2.69		%

Supplemental lease information for the three months ended March 31, 2023 and 2022 is as follows:

~~(Dollars in thousands)~~

~~Balance sheet:~~

~~Operating lease right-of-use assets included in prepaid expenses and other assets~~

~~14,940~~

~~Operating lease liabilities included in other liabilities and accrued expenses~~

~~15,337~~

~~Income statement:~~

~~Operating lease costs included in occupancy expense~~

~~929~~

~~Weighted average remaining lease term (years) of operating leases~~

~~4.9~~

~~Weighted average discount rate of operating leases~~

~~1.67~~

~~Cash paid for amounts included in the measurement of operating lease liabilities~~

~~1,033~~


	Three Months Ended March 31,
(Dollars in thousands)	2023		2022




Operating lease costs included in occupancy expense	$	904	$	929



Cash paid for amounts included in the measurement of operating lease liabilities	976		1,033

At March 31, ~~2022,~~2023, future undiscounted lease payments with initial terms of one year or more are as follows:


(Dollars in thousands)	(Dollars in thousands)			(Dollars in thousands)
April 1 - December 31, 2022		$	2,919
2023		3,560
April 1 - December 31, 2023				April 1 - December 31, 2023	$	2,537
2024	2024	2,737		2024	2,803
2025	2025	2,311		2025	2,388
2026	2026	2,108		2026	2,203
2027				2027	1,964
Thereafter	Thereafter	2,418		Thereafter	1,640
Total undiscounted lease payments	Total undiscounted lease payments	16,053		Total undiscounted lease payments	13,535
Less: Imputed interest	Less: Imputed interest	(716)		Less: Imputed interest	(1,057)
Net lease liabilities	Net lease liabilities	$	15,337	Net lease liabilities	$	12,478

7. QUALIFIED AFFORDABLE HOUSING PROJECT INVESTMENTS

The Company is invested in qualified affordable housing projects that are expected to provide federal and state tax credits in the future. The investments are accounted for using the proportional amortization method. As of March 31, 2023 and December 31, 2022, the Company was committed to invest $18.0 million and $17.9 million, respectively, of which $5.2 million and $4.8 million, respectively, had been funded and was included in prepaid expenses and other assets in the consolidated statements of financial condition. The total unfunded commitments related to the investments totaled $12.8 million and $13.1 million at March 31, 2023 and December 31, 2022, respectively, and were included in other liabilities and accrued expenses in the consolidated statements of financial condition. During the three months ended March 31, 2023 and 2022, the Company recognized amortization expense of $364 thousand and $136 thousand, respectively, and tax benefits related to the investments of $119 thousand and $196 thousand, respectively. Amortization expense and tax benefits are included in the provision for income taxes in the unaudited consolidated statements of income.

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8. DEPOSITS

A summary of deposits at March 31, ~~2022~~2023 and December 31, ~~2021~~2022 is as follows:


(Dollars in thousands)	(Dollars in thousands)	March 31, 2022		December 31, 2021		(Dollars in thousands)	March 31, 2023		December 31, 2022
Time deposits						Time deposits	$	3,405,641	$	3,134,373
Money market savings	Money market savings	$	2,443,522	$	2,294,367	Money market savings	1,271,147		1,718,008
Time deposits		2,209,375		2,335,141
Money market checking	Money market checking	612,201		580,325		Money market checking	754,080		728,231
Interest-bearing demand	Interest-bearing demand	172,242		176,126		Interest-bearing demand	143,870		158,068
Noninterest-bearing demand	Noninterest-bearing demand	163,907		152,284		Noninterest-bearing demand	74,756		100,660
Total	Total	$	5,601,247	$	5,538,243	Total	$	5,649,494	$	5,839,340

The Company had time deposits that met or exceeded the ~~FDIC~~Federal Deposit Insurance Corporation ("FDIC") insurance limit of $250 thousand of ~~$961.8 million~~$1.4 billion and ~~$1.1~~$1.3 billion at March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

The Company utilizes brokered deposits as an additional source of funding. The Company had brokered deposits of ~~$76.0~~$543.4 million and ~~$25.8~~$455.8 million at March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

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The increase in brokered deposits was utilized to partially offset retail deposit declines during the three months ended March 31, 2023.

Maturities of the Company’s time deposits at March 31, ~~2022~~2023 are summarized as follows:


(Dollars in thousands)	(Dollars in thousands)			(Dollars in thousands)
April 1 - December 31, 2022		$	1,787,146
2023		335,529
April 1 - December 31, 2023				April 1 - December 31, 2023	$	2,462,856
2024	2024	26,210		2024	919,568
2025	2025	9,469		2025	7,357
2026	2026	44,225		2026	10,450
2027				2027	4,537
Thereafter	Thereafter	6,796		Thereafter	873
Total	Total	$	2,209,375	Total	$	3,405,641

8.9. FEDERAL HOME LOAN BANK AND FEDERAL RESERVE BANK ADVANCES

The Bank may borrow from the FHLB, on either a short-term or long-term basis, up to 40% of its assets, provided that adequate collateral has been pledged. As of March 31, ~~2022 and December 31, 2021,~~2023, the Bank had pledged various mortgage loans and securities to secure these borrowing arrangements totaling approximately ~~$2.3~~$4.3 billion and ~~$2.4~~$258.3 million, respectively, compared to pledged mortgage loans totaling approximately $4.2 billion ~~respectively,~~ as ~~well as~~of December 31, 2022. Additionally, the FHLB stock held by the Bank toas of both dates further secure these ~~borrowing~~ arrangements.

The Bank has access to the Loan and Discount Window of the ~~Federal Reserve~~FRB and the FRB's new Bank ~~of San Francisco~~Term Funding Program ("~~FRB"~~BTFP"). Advances under ~~this window~~these programs are subject to the Bank providing qualifying collateral. ~~Various mortgage~~Mortgage loans totaling approximately ~~$570.9 million~~$2.5 billion and ~~$583.0~~$904.9 million as of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively, secure ~~this~~the discount window borrowing arrangement. Securities with a current par value totaling $354.0 million secure the BFTP as of March 31, 2023. No securities were pledged to secure FRB borrowings as of December 31, 2022. There were no borrowings outstanding with the FRB as of March 31, ~~2022~~2023 or December 31, ~~2021.~~2022.

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The following table discloses the Bank’s outstanding advances from the FHLB of San Francisco:


		Outstanding Balances		As of March 31, 2022								Outstanding Balances				As of March 31, 2023
(Dollars in thousands)	(Dollars in thousands)	March 31, 2022	December 31, 2021	Minimum Interest Rate		Maximum Interest Rate		Weighted Average Rate		Maturity Dates	(Dollars in thousands)	March 31, 2023		December 31, 2022		Minimum Interest Rate		Maximum Interest Rate		Weighted Average Rate		Maturity Dates

Fixed rate short-term											Fixed rate short-term	$	150,000	$	56,500	5.27	%	5.27	%	5.27	%	June 2023
Fixed rate long-term(1)	Fixed rate long-term(1)	751,647	751,647	0.38	%	7.33	%	1.75	%	March 2023 to March 2030	Fixed rate long-term(1)	1,551,647		1,151,647		0.38	%	7.33	%	3.15	%	May 2023 to March 2030

												$	1,701,647	$	1,208,147

(1) Included in total fixed rate long-term advances is a $200.0 million advance which matures in September 2025 and contains a FHLB quarterly call provision beginning in September 2023.

The Bank's available borrowing capacity based on loans and securities pledged ~~loans~~ to the FHLB and the FRB totaled ~~$1.0~~$2.3 billion and ~~$1.2~~$1.7 billion at March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. As of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, the Bank had aggregate loan balances of ~~$2.7 billion~~$17.8 million and ~~$2.5~~$1.1 billion, respectively available to pledge to the FHLB and FRB to increase its borrowing capacity. As of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, the Bank pledged as collateral a $62.6 million FHLB letter of credit to Freddie Mac related to our multifamily securitization reimbursement obligation.

Short-term borrowings are borrowings with original maturities of 90 days or less. During the three months ended March 31, 2023, there was a maximum amount of short-term borrowings outstanding of $150.0 million, an average amount outstanding of $49.0 million, with a weighted average interest rate of 5.05%. During the three months ended March 31, 2022, there was a maximum amount of short-term borrowings outstanding of $135.3 million, ~~and~~ an average amount outstanding of $21.7 million, with a weighted average interest rate of 0.34%. During the three months ended March 31, 2021, there was a maximum amount of short-term borrowings outstanding of $203.6 million and an average amount outstanding of $88.8 million, with a weighted average interest rate of 0.14%.

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The following table summarizes scheduled principal payments on FHLB advances over the next five years as of March 31, ~~2022:~~2023:


(Dollars in thousands)	(Dollars in thousands)			(Dollars in thousands)
April 1 - December 31, 2022		$	—
2023		250,000
April 1 - December 31, 2023				April 1 - December 31, 2023	$	350,000
2024	2024	300,000		2024	500,000
2025	2025	101,500		2025	751,500
2026	2026	100,000		2026	100,000
2027				2027	—
Thereafter	Thereafter	147		Thereafter	147
		$	751,647		$	1,701,647

9.10. JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES

The Company formed 2two wholly-owned trust companies (the ‘‘Trusts’’) which issued guaranteed preferred beneficial interests (the "Trust Securities") in the Company’s junior subordinated deferrable interest debentures (the "Notes"). The Company is not considered the primary beneficiary of the Trusts and therefore, the Trusts are not consolidated in the Company’s financial statements, but rather the junior subordinated debentures are shown as a liability. The Company’s investment in the common securities of the Trusts, totaling $1.9 million, is included in other assets in the consolidated statements of financial condition. The sole asset of the Trusts are the Notes that they hold.

The Trusts have invested the proceeds of such Trust Securities in the Notes. Each of the Notes has an interest rate equal to the corresponding Trust Securities distribution rate. The Company has the right to defer payment of interest on the Notes at any time or from time to time for a period not exceeding five years provided that no extension period may extend beyond the stated maturity of the relevant Notes. During any such extension period, distributions on the Trust Securities will also be deferred, and the Company’s ability to pay dividends on its common stock will be restricted.

The Company has entered into contractual arrangements which, taken collectively, fully and unconditionally guarantee payment of: (i) accrued and unpaid distributions required to be paid on the Trust

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Securities; (ii) the redemption price with respect to any Trust Securities called for redemption by the Trusts; and (iii) payments due upon a voluntary or involuntary dissolution, winding up or liquidation of the Trusts. The Trust Securities are mandatorily redeemable upon maturity of the Notes, or upon earlier redemption as provided in the indenture. The Company has the right to redeem the Notes purchased by the Trusts, in whole or in part, on or after the redemption date. As specified in the indenture, if the Notes are redeemed prior to maturity, the redemption price will be the principal amount and any accrued but unpaid interest.

The following table is a summary of the outstanding Trust Securities and Notes at March 31, ~~2022~~2023 and December 31, ~~2021:~~2022:


		March 31, 2022				December 31, 2021				Date	Maturity	Rate Index		March 31, 2023				December 31, 2022				Date	Maturity	Rate Index
Issuer	Issuer	Amount		Rate		Amount		Rate		Issued	Date	(Quarterly Reset)	Issuer	Amount		Rate		Amount		Rate		Issued	Date	(Quarterly Reset)
(Dollars in thousands)	(Dollars in thousands)												(Dollars in thousands)
Luther Burbank Statutory Trust I	Luther Burbank Statutory Trust I	$	41,238	2.21	%	$	41,238	1.58	%	3/1/2006	6/15/2036	3 month LIBOR + 1.38%	Luther Burbank Statutory Trust I	$	41,238	6.25	%	$	41,238	6.15	%	3/1/2006	6/15/2036	3 month LIBOR + 1.38%
Luther Burbank Statutory Trust II	Luther Burbank Statutory Trust II	$	20,619	2.45	%	$	20,619	1.82	%	3/1/2007	6/15/2037	3 month LIBOR + 1.62%	Luther Burbank Statutory Trust II	$	20,619	6.49	%	$	20,619	6.39	%	3/1/2007	6/15/2037	3 month LIBOR + 1.62%

~~10.~~11. SENIOR DEBT

In September 2014, the Company issued $95 million in senior unsecured term notes to qualified institutional investors. The following table summarizes information on these notes as of March 31, ~~2022~~2023 and December 31, ~~2021:~~2022:

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		March 31, 2022				December 31, 2021								March 31, 2023				December 31, 2022
(Dollars in thousands)	(Dollars in thousands)	Principal		Unamortized Debt Issuance Costs		Principal		Unamortized Debt Issuance Costs		Maturity Date	Fixed Interest Rate		(Dollars in thousands)	Principal		Unamortized Debt Issuance Costs		Principal		Unamortized Debt Issuance Costs		Maturity Date	Fixed Interest Rate
Senior Unsecured Term Notes	Senior Unsecured Term Notes	$	95,000	$	307	$	95,000	$	338	9/30/2024	6.50	%	Senior Unsecured Term Notes	$	95,000	$	184	$	95,000	$	215	9/30/2024	6.50	%

~~11.~~12. DERIVATIVES AND HEDGING ACTIVITIES

From time to time, the Company utilizes interest rate swaps and other derivative financial instruments as part of its asset liability management strategy to manage interest rate risk positions.

Fair Value Hedges of Interest Rate Risk

As of March 31, ~~2022,~~2023, the Company held ~~3 two-year~~11 interest rate swaps with a total notional amount of ~~$750 million. During the three months ended March 31, 2022, the Company entered into a new two-year swap agreement~~$1.8 billion, two of which, with aan aggregate notional amount of ~~$100.0 million. The other 2 swaps were entered into~~$400 million, have effective dates in ~~February~~April and June ~~2021.~~2023. The swaps provide a hedge against the interest rate risk associated with both fixed rate loans and hybrid adjustable loans in their fixed rate period. Additionally, during the three months ended March 31, 2021, the Company also held 2 separate, two-year interest rate swaps with a total notional amount of $1.0 billion. These swaps, which were in equal notional amounts of $500.0 million, matured in June and August 2021, and provided a hedge against the interest rate risk related to certain hybrid multifamily loans which were in their fixed rate period.

All outstanding swaps are designated as fair value hedges and involve the payment of a fixed rate amount to a counterparty in exchange for the Company receiving a variable rate payment over the life of the swaps without the exchange of the underlying notional amount. Any gain or loss on the derivatives, as well as any offsetting loss or gain on the hedged items attributable to the hedged risk are recognized in interest income on loans.

The following table presents the effect of the Company’s interest rate swaps on the unaudited consolidated statements of income for the three months ended March 31, ~~2022~~2023 and ~~2021:~~2022:


		For the Three Months Ended March 31,				For the Three Months Ended March 31,
(Dollars in thousands)	(Dollars in thousands)	2022		2021			(Dollars in thousands)	2023		2022
Derivative - interest rate swaps:	Derivative - interest rate swaps:						Derivative - interest rate swaps:
Interest loss		$	(65)	$	(3,416)
Interest income (loss)							Interest income (loss)	$	8,164	$	(65)
Hedged items - loans:	Hedged items - loans:						Hedged items - loans:
Interest loss		(13)		(15)
Net decrease in interest income		$	(78)	$	(3,431)
Interest income (loss)							Interest income (loss)	62		(13)
Net increase (decrease) in interest income							Net increase (decrease) in interest income	$	8,226	$	(78)

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The following table presents the fair value of the Company’s interest rate swaps, as well as their classification in the consolidated statements of financial condition as of March 31, ~~2022~~2023 and December 31, ~~2021:~~2022:

Fair Values of Derivative Instruments

Asset Derivatives

Liability Derivatives

Asset Derivatives

Liability Derivatives

(Dollars in thousands)

Notional Amount

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

(Dollars in thousands)

Notional Amount

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Derivatives designated as hedging instruments:

As of March 31, 2022:

As of March 31, 2023:

Interest Rate Swaps

750,000

Prepaid Expenses and Other Assets

10,874

Other Liabilities and Accrued Expenses

—

Interest Rate Swaps

1,800,000

Prepaid Expenses and Other Assets

11,763

Other Liabilities and Accrued Expenses

18,053

As of December 31, 2021:

As of December 31, 2022:

Interest Rate Swaps

650,000

Prepaid Expenses and Other Assets

3,108

Other Liabilities and Accrued Expenses

—

Interest Rate Swaps

1,850,000

Prepaid Expenses and Other Assets

21,323

Other Liabilities and Accrued Expenses

2,136

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As of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, the following amounts were recorded in the consolidated statements of financial condition related to cumulative basis adjustments for its fair value hedges:


Line Item in the Consolidated Statements of Financial Condition in Which the Hedged Items are Included(1)	Line Item in the Consolidated Statements of Financial Condition in Which the Hedged Items are Included(1)	Carrying Amount of the Hedged Assets		Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets		Line Item in the Consolidated Statements of Financial Condition in Which the Hedged Items are Included(1)	Carrying Amount of the Hedged Assets		Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets
(Dollars in thousands)	(Dollars in thousands)					(Dollars in thousands)
As of March 31, 2022:
As of March 31, 2023:						As of March 31, 2023:
Loans receivable, net ~~(1)~~	Loans receivable, net ~~(1)~~	$	739,111	$	(10,889)	Loans receivable, net ~~(1)~~	$	1,806,180	$	6,180
As of December 31, 2021:
As of December 31, 2022:						As of December 31, 2022:
Loans receivable, net ~~(1)~~	Loans receivable, net ~~(1)~~	$	646,890	$	(3,110)	Loans receivable, net ~~(1)~~	$	1,430,641	$	(19,359)

(1) These amounts include the amortized cost basis of portfolio loans used to designate hedging relationships in which the hedged ~~items are~~item is the ~~last layer expected~~stated amount of assets in the closed portfolios anticipated to be ~~remaining at~~outstanding for the ~~end of the hedging relationship.~~designated hedge period. At March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, the amortized cost basis of the portfolio loans used in these hedging relationships were ~~$1.1~~$4.5 billion and ~~$1.0~~$3.9 billion, respectively; the cumulative basis adjustments associated with these hedging relationships were $(10.9) million and $(3.1) million, respectively, and the amount of the designated hedged items were $739.1 million and $646.9 million, respectively.

As of March 31, 2023, the Company had $8.7 million in cash collateral posted in connection with its interest rate swaps. There was no cash collateral posted as of December 31, 2022.

~~12.~~

13. STOCK BASED COMPENSATION

The Company’s stock based compensation consists of restricted stock awards ("RSAs") and restricted stock units ("RSUs") granted under the Luther Burbank Corporation Omnibus Equity and Incentive Compensation Plan ("Omnibus Plan"). In connection with its initial public offering ("IPO") in December 2017, the Company granted RSUs in exchange for unvested phantom stock awards related to a then discontinued employee benefit plan that awarded phantom stock to certain key executives and nonemployee directors. The RSUs were granted on a per share basis, with the same vesting schedule and deferral elections that existed for the original phantom stock awards. Post IPO, the Company typically grants RSAs to nonemployee directors and certain employees on an annual basis. RSA grants vest after one year for nonemployee directors and ratably over three to four years for employees.

All RSAs and RSUs are granted at the fair value of the common stock at the time of the award. RSAs and RSUs are considered fixed awards as the number of shares and fair value are known at the date of grant and the fair value at the grant date is amortized over the vesting and/or service period. Non-cash stock compensation expense recognized for RSAs ~~and RSUs~~ for the three months ended March 31, 2023 and 2022 totaled $473 thousand and $710 thousand, ~~compared with $584 thousand for the three months ended March 31, 2021.~~respectively. The fair value of RSAs ~~and RSUs~~ that vested during the three months ended March 31, 2023 and 2022 ~~and 2021~~ totaled ~~$2.6~~$2.7 million and ~~$2.4~~$2.6 million, respectively.

As of both March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, there was ~~$4.7~~$2.4 million ~~and $2.6 million, respectively,~~ of unrecognized compensation expense related to ~~445,331~~232,459 and ~~489,703~~414,004 unvested RSAs, respectively, which amounts were expected to be expensed over a weighted average period of ~~2.06~~1.50 years and ~~1.69~~1.74 years, respectively. As of March 31, ~~2022~~

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2023 and December 31, ~~2021, 84,727~~2022, 65,799 and ~~91,486~~81,225 shares, respectively, of RSUs were vested and remain unsettled per the original deferral elections. There were no unvested RSUs at March 31, 2023 or December 31, 2022.

The following table summarizes share information about RSAs and RSUs:

Three Months Ended March 31,
2022 2021
Number of Shares Weighted Average Grant Date Fair Value Number of Shares Weighted Average Grant Date Fair Value
Beginning of the period balance 581,189 $ 10.56 605,916 $ 10.93
Shares granted 206,675 13.81 283,078 10.07
Shares settled (253,706) 10.45 (265,655) 11.02
Shares forfeited (4,100) 11.93 (52,798) 10.26
End of the period balance 530,058 $ 11.87 570,541 $ 10.52

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	Three Months Ended March 31,
	2023			2022
	Number of Shares	Weighted Average Grant Date Fair Value		Number of Shares	Weighted Average Grant Date Fair Value
Beginning of the period balance	495,229	$	11.89	581,189	$	10.56
Shares granted	42,034	11.24		206,675	13.81
Shares settled	(239,005)	11.81		(253,706)	10.45
Shares forfeited	—	—		(4,100)	11.93
End of the period balance	298,258	$	11.87	530,058	$	11.87

Under its Omnibus Plan, the Company reserved 3,360,000 shares of common stock for new awards. At March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, there were ~~1,658,769~~1,640,434 and ~~1,861,344~~1,682,468 shares, respectively, of common stock reserved and available for grant through restricted stock or other awards under the Omnibus Plan. RSU awards were initially issued to replace unvested phantom stock awards under the Luther Burbank Corporation Phantom Stock Plan and were excluded from the shares reserved and available for grant under the Omnibus Plan. ~~As of January 1, 2021, all RSUs were fully vested and no longer subject to forfeiture.~~

~~13.~~14. FAIR VALUE MEASUREMENTS

Fair Value Hierarchy

The Company groups its assets and liabilities measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. Valuations within these levels are based upon:

Level 1 - Quoted market prices for identical instruments traded in active exchange markets.

Level 2 - Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable or can be corroborated by observable market data.

Level 3 - Model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect the Company’s estimates of assumptions that market participants would use on pricing the asset or liability. Valuation techniques include management judgment and estimation which may be significant.

Because broadly traded markets do not exist for most of the Company’s financial instruments, the fair value calculations attempt to incorporate the effect of current market conditions at a specific time. These determinations are subjective in nature, involve uncertainties and matters of significant judgment and do not include tax ramifications; therefore, the results cannot be determined with precision, substantiated by comparison to independent markets and may not be realized in an actual sale or immediate settlement of the instruments. There may be inherent weaknesses in any calculation technique, and changes in the underlying assumptions used, including discount rates and estimates of future cash flows, could significantly affect the results. For all of these reasons, the aggregation of the fair value calculations presented herein do not represent, and should not be construed to represent, the underlying value of the Company.

Management monitors the availability of observable market data to assess the appropriate classification of assets and liabilities within the fair value hierarchy. Changes in economic conditions or model-based valuation techniques may require the transfer of financial instruments from one fair value level to another. In such instances, the transfer is reported at the beginning of the reporting period. Management evaluates the significance of transfers between levels based upon the nature of the financial instrument and size of

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the transfer relative to total assets, total liabilities, or total earnings.

The following methods and assumptions were used to estimate the fair value of financial instruments:

For cash and cash equivalents, ~~and restricted cash,~~ accrued interest receivable and payable, demand deposits and short-term borrowings, the carrying amount was estimated to be fair value. The fair value of accrued interest receivable/payable balances were determined using inputs and fair value measurements commensurate with the asset or liability from which the accrued interest is generated.

Fair values for available for sale and held to maturity debt securities, which include primarily debt securities issued by U.S. government sponsored agencies, were based on quoted market prices for similar securities.

Fair values for equity securities, which consist of investments in a qualified community reinvestment fund, were based on quoted market prices.

Loans were valued using the exit price notion. The fair value was estimated using market quotes for similar assets or the present value of future cash flows, discounted using a market rate for similar products and

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giving consideration to estimated prepayment risk and credit risk. The fair value of loans was determined utilizing estimates resulting in a Level 3 classification.

~~Impaired~~The fair value of collateral dependent loans were measured ~~for impairment~~ based on the present value of expected future cash flows discounted at the loans' effective interest rate, except that as a practical expedient, the Company may measure impairment based on a loan’s observable market price, or the fair value of the collateral ~~(net of estimated costs to sell) if~~at the ~~loan is collateral dependent.~~reporting date, adjusted for selling costs. The fair value of ~~impaired~~collateral dependent loans was determined utilizing estimates resulting in a Level 3 classification.

It was not practicable to determine the fair value of FHLB stock due to restrictions placed on its transferability.

The fair value of servicing rights was determined using a valuation model that utilizes interest rate, prepayment speed, and default rate assumptions that market participants would use in estimating future net servicing income and that can be validated against available market data.

The fair values of derivatives were based on valuation models using observable market data as of the measurement date.

Fair values for fixed-rate time deposits were estimated using discounted cash flow analyses using interest rates offered at each reporting date by the Company for time deposits with similar remaining maturities. For deposits with no contractual maturity, the fair value was assumed to equal the carrying value.

The fair value of FHLB advances was estimated based on discounting the future cash flows using the market rate currently offered for similar terms.

The fair value of subordinated debentures was based on an indication of value provided by a third-party broker.

For senior debt, the fair value was based on an indication of value provided by a third-party broker.

2531

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Fair Value of Financial Instruments

The carrying and estimated fair values of the Company’s financial instruments were as follows:


						Fair Level Measurements Using											Fair Level Measurements Using
(Dollars in thousands)	(Dollars in thousands)	Carrying Amount		Fair Value		Level 1		Level 2		Level 3		(Dollars in thousands)	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
As of March 31, 2022:
As of March 31, 2023:												As of March 31, 2023:
Financial assets:	Financial assets:											Financial assets:
Cash and cash equivalents	Cash and cash equivalents	$	147,963	$	147,963	$	147,963	$	—	$	—	Cash and cash equivalents	$	516,913	$	516,913	$	516,913	$	—	$	—
Debt securities:	Debt securities:											Debt securities:
Available for sale	Available for sale	624,859		624,859		—		624,859		—		Available for sale	593,427		593,427		—		593,427		—
Held to maturity	Held to maturity	3,798		3,802		—		3,802		—		Held to maturity	3,080		2,891		—		2,891		—
Equity securities	Equity securities	11,116		11,116		—		11,116		—		Equity securities	10,506		10,506		—		10,506		—

Loans receivable, net	Loans receivable, net	6,333,283		6,354,197		—		—		6,354,197		Loans receivable, net	6,987,565		6,662,388		—		—		6,662,388
Accrued interest receivable	Accrued interest receivable	18,014		18,014		5		933		17,076		Accrued interest receivable	23,873		23,873		580		2,027		21,266
FHLB stock	FHLB stock	22,563		N/A		N/A		N/A		N/A		FHLB stock	46,007		N/A		N/A		N/A		N/A
Interest rate swaps	Interest rate swaps	10,874		10,874		—		10,874		—		Interest rate swaps	11,763		11,763		—		11,763		—
Financial liabilities:	Financial liabilities:											Financial liabilities:
Deposits	Deposits	$	5,601,247	$	5,583,142	$	3,106,872	$	2,476,270	$	—	Deposits	$	5,649,494	$	5,618,781	$	2,013,853	$	3,604,928	$	—
FHLB advances	FHLB advances	751,647		733,659		—		733,659		—		FHLB advances	1,701,647		1,670,831		—		1,670,831		—
Junior subordinated deferrable interest debentures	Junior subordinated deferrable interest debentures	61,857		59,519		—		59,519		—		Junior subordinated deferrable interest debentures	61,857		57,653		—		57,653		—
Senior debt	Senior debt	94,693		96,818		—		96,818		—		Senior debt	94,816		93,128		—		93,128		—
Accrued interest payable	Accrued interest payable	153		153		—		153		—		Accrued interest payable	7,430		7,430		—		7,430		—

As of December 31, 2021:
Interest rate swaps												Interest rate swaps	18,053		18,053		—		18,053		—
As of December 31, 2022:												As of December 31, 2022:
Financial assets:	Financial assets:											Financial assets:
Cash and cash equivalents	Cash and cash equivalents	$	138,413	$	138,413	$	138,413	$	—	$	—	Cash and cash equivalents	$	185,895	$	185,895	$	185,895	$	—	$	—
Debt securities:	Debt securities:											Debt securities:
Available for sale	Available for sale	647,317		647,317		—		647,317		—		Available for sale	607,348		607,348		—		607,348		—
Held to maturity	Held to maturity	3,829		4,018		—		4,018		—		Held to maturity	3,108		2,874		—		2,874		—
Equity securities	Equity securities	11,693		11,693		—		11,693		—		Equity securities	10,340		10,340		—		10,340		—
Loans receivable, net	Loans receivable, net	6,261,885		6,297,548		—		—		6,297,548		Loans receivable, net	6,973,760		6,743,783		—		—		6,743,783
Accrued interest receivable	Accrued interest receivable	17,761		17,761		1		927		16,833		Accrued interest receivable	24,306		24,306		58		4,171		20,077
FHLB stock	FHLB stock	23,411		N/A		N/A		N/A		N/A		FHLB stock	32,694		N/A		N/A		N/A		N/A
Interest rate swaps	Interest rate swaps	3,108		3,108		—		3,108		—		Interest rate swaps	21,323		21,323		—		21,323		—
Financial liabilities:	Financial liabilities:											Financial liabilities:
Deposits	Deposits	$	5,538,243	$	5,541,417	$	2,918,102	$	2,623,315	$	—	Deposits	$	5,839,340	$	5,789,929	$	2,449,966	$	3,339,963	$	—
FHLB advances	FHLB advances	751,647		755,981		—		755,981		—		FHLB advances	1,208,147		1,153,511		—		1,153,511		—
Junior subordinated deferrable interest debentures	Junior subordinated deferrable interest debentures	61,857		61,545		—		61,545		—		Junior subordinated deferrable interest debentures	61,857		56,967		—		56,967		—
Senior debt	Senior debt	94,662		103,361		—		103,361		—		Senior debt	94,785		94,652		—		94,652		—
Accrued interest payable	Accrued interest payable	118		118		—		118		—		Accrued interest payable	3,964		3,964		—		3,964		—

Interest rate swaps												Interest rate swaps	2,136		2,136		—		2,136		—

These estimates do not reflect any premium or discount that could result from offering the Company’s entire holdings of a particular financial instrument for sale at one time, nor do they attempt to estimate the value of anticipated future business related to the instruments. In addition, the tax ramifications related to the realization of unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in any of these estimates.

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Assets and Liabilities Recorded at Fair Value

The following table presents information about the Company’s assets and liabilities measured at fair value on a recurring and nonrecurring basis as of March 31, ~~2022~~2023 and December 31, ~~2021.~~

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2022.

Recurring Basis

The Company is required or permitted to record the following assets and liabilities at fair value on a recurring basis:


(Dollars in thousands)	(Dollars in thousands)	Fair Value		Level 1		Level 2		Level 3		(Dollars in thousands)	Fair Value		Level 1		Level 2		Level 3
As of March 31, 2022:
As of March 31, 2023:										As of March 31, 2023:
Financial Assets:	Financial Assets:									Financial Assets:
Available for sale debt securities:	Available for sale debt securities:									Available for sale debt securities:
Government and Government Sponsored Entities:	Government and Government Sponsored Entities:									Government and Government Sponsored Entities:
Commercial MBS and CMOs	Commercial MBS and CMOs	$	406,603	$	—	$	406,603	$	—	Commercial MBS and CMOs	$	333,725	$	—	$	333,725	$	—
Residential MBS and CMOs	Residential MBS and CMOs	180,346		—		180,346		—		Residential MBS and CMOs	195,543		—		195,543		—
Agency bonds	Agency bonds	10,500		—		10,500		—		Agency bonds	41,160		—		41,160		—
Other ABS	Other ABS	27,410		—		27,410		—		Other ABS	22,999		—		22,999		—
Total available for sale debt securities	Total available for sale debt securities	$	624,859	$	—	$	624,859	$	—	Total available for sale debt securities	$	593,427	$	—	$	593,427	$	—
Equity securities	Equity securities	$	11,116	$	—	$	11,116	$	—	Equity securities	$	10,506	$	—	$	10,506	$	—
Mortgage servicing rights	Mortgage servicing rights	811		—		—		811		Mortgage servicing rights	669		—		—		669
Interest rate swaps	Interest rate swaps	10,874		—		10,874		—		Interest rate swaps	11,763		—		11,763		—

As of December 31, 2021:
Financial Liabilities:										Financial Liabilities:
Interest rate swaps										Interest rate swaps	$	18,053	$	—	$	18,053	$	—
As of December 31, 2022:										As of December 31, 2022:
Financial Assets:	Financial Assets:									Financial Assets:
Available for sale debt securities:	Available for sale debt securities:									Available for sale debt securities:
Government and Government Sponsored Entities:	Government and Government Sponsored Entities:									Government and Government Sponsored Entities:
Commercial MBS and CMOs	Commercial MBS and CMOs	$	407,746	$	—	$	407,746	$	—	Commercial MBS and CMOs	$	340,736	$	—	$	340,736	$	—
Residential MBS and CMOs	Residential MBS and CMOs	200,133		—		200,133		—		Residential MBS and CMOs	199,384		—		199,384		—
Agency bonds	Agency bonds	10,831		—		10,831		—		Agency bonds	42,630		—		42,630		—
Other ABS	Other ABS	28,607		—		28,607		—		Other ABS	24,598		—		24,598		—
Total available for sale debt securities	Total available for sale debt securities	$	647,317	$	—	$	647,317	$	—	Total available for sale debt securities	$	607,348	$	—	$	607,348	$	—
Equity securities	Equity securities	$	11,693	$	—	$	11,693	$	—	Equity securities	$	10,340	$	—	$	10,340	$	—
Mortgage servicing rights	Mortgage servicing rights	915		—		—		915		Mortgage servicing rights	688		—		—		688
Interest rate swaps	Interest rate swaps	3,108		—		3,108		—		Interest rate swaps	21,323		—		21,323		—

Financial Liabilities:										Financial Liabilities:
Interest rate swaps										Interest rate swaps	$	2,136	$	—	$	2,136	$	—

There were no transfers between Level 1 and Level 2 during the three months ended March 31, ~~2022~~2023 or ~~2021.~~2022.

Non-recurring Basis

The Company may be required, from time to time, to measure certain assets and liabilities at fair value on a non-recurring basis. These include assets that are measured at the lower of cost or market value that were recognized at fair value which was below cost at the reporting date.

At both March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, there were no assets or liabilities measured at fair value on a non-recurring basis and the Company held no other real estate owned.

~~14.~~

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15. VARIABLE INTEREST ENTITIES ("VIE")

The Company is involved with VIEs through its loan securitization activities. The Company evaluated its association with VIEs for consolidation purposes. Specifically, a VIE is to be consolidated by its primary beneficiary, the entity that has both the power to direct the activities that most significantly impact the VIE, and a variable interest that could potentially be significant to the VIE. A variable interest is a contractual, ownership or other interest whose value fluctuates with the changes in the value of the VIE's assets and liabilities. The assessment includes an evaluation of the Company's continuing involvement with the VIE and the nature and significance of its variable interests.

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Multifamily loan securitization

With respect to the securitization transaction with Freddie Mac which settled September 27, 2017, the Company's variable interests reside with a reimbursement agreement entered into with Freddie Mac that obligates the Company to reimburse Freddie Mac for defaulted contractual principal and interest payments identified after the ultimate resolution of any defaulted loans. Such reimbursement obligations are not to exceed 10% of the original principal amount of the loans comprising the securitization pool. As part of the securitization transaction, the Company released all servicing obligations and rights to Freddie Mac who was designated as the Master Servicer. As Master Servicer, Freddie Mac appointed the Company with sub-servicing obligations, which include obligations to collect and remit payments of principal and interest, manage payments of taxes and insurance, and otherwise administer the underlying loans. The servicing of defaulted loans and foreclosed loans was assigned to a separate third party entity, independent of the Company and Freddie Mac. Freddie Mac, in its capacity as Master Servicer, can terminate the Company in its role as sub-servicer and direct such responsibilities accordingly. In evaluating the variable interests and continuing involvement in the VIE, the Company determined that it does not have the power to make significant decisions or direct the activities that most significantly impact the economic performance of the VIE's assets and liabilities. As sub-servicer of the loans, the Company does not have the authority to make significant decisions that influence the value of the VIE's net assets and therefore, is not the primary beneficiary of the VIE. Hence, the Company determined that the VIE associated with the multifamily securitization should not be included in the consolidated financial statements of the Company.

The Company believes its maximum exposure to loss as a result of involvement with the VIE associated with the securitization under the reimbursement agreement executed with Freddie Mac is 10% of the original principal amount of the loans comprising the securitization pool, or $62.6 million. The reserve for estimated losses with respect to the reimbursement obligation totaled ~~$615~~$270 thousand and ~~$727~~$439 thousand as of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively, based upon an analysis of quantitative and qualitative data of the underlying loans included in the securitization pool. No disbursements have been made in connection with the reimbursement obligation. In connection with the adoption the CECL accounting standard on January 1, 2023, the Company decreased the allowance for the reimbursement obligation by $119 thousand, which represented the difference between the CECL methodology and the prior methodology utilized for estimating losses for its reimbursement obligation.

~~15.~~16. LOAN SALE AND SECURITIZATION ACTIVITIES

The Company periodically sells loans as part of its business operations and overall management of liquidity, assets and liabilities, and financial performance. The transfer of loans is executed in securitization or sale transactions. With respect to sale transactions, the Company's continuing involvement may or may not include ongoing servicing responsibilities and general representations and warranties. With respect to securitization sales, the Company executed its first and only transaction to date on September 27, 2017 with Freddie Mac. The transaction involved the sale of $626.0 million in originated multifamily loans through a Freddie Mac sponsored transaction. The Company's continuing involvement includes sub-servicing responsibilities, general representations and warranties, and a limited reimbursement obligation.

As sub-servicer for Freddie Mac, the Bank is required to maintain a minimum net worth in accordance with GAAP of not less than $2.0 million. If the Bank's capital were to fall below this threshold, Freddie Mac would have the authority to terminate and assume the Bank’s sub-servicing duties. At March 31, ~~2022,~~2023, the Bank’s net worth was ~~$807.4~~$838.6 million which equates to its Tier 1 capital of ~~$816.1~~$868.5 million plus goodwill of $3.3 million and accumulated other comprehensive loss related to net unrealized losses on available for sale securities of ~~$12.0~~$33.3 million.

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General representations and warranties associated with loan sales and the securitization transaction require the Company to uphold various assertions that pertain to the underlying loans at the time of the transaction, including, but not limited to, compliance with relevant laws and regulations, absence of fraud, enforcement of liens, no environmental damages, and maintenance of relevant environmental insurance. Such representations and warranties are limited to those that do not meet the quality represented at the transaction date and do not pertain to a decline in value or future payment defaults. In circumstances where the Company breaches its representations and warranties, the Company would generally be required to cure such instances through a repurchase or substitution of the subject loan(s).

With respect to the securitization transaction, the Company also has continuing involvement through a reimbursement agreement executed with Freddie Mac. To the extent the ultimate resolution of defaulted loans results in contractual principal and interest payments that are deficient, the Company is obligated to

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reimburse Freddie Mac for such amounts, not to exceed 10% of the original principal amount of the loans comprising the securitization pool at the closing date of September 27, 2017.

The following table provides cash flows associated with the Company's loan sale activities:


		Three Months Ended March 31,		Three Months Ended March 31,
(Dollars in thousands)	(Dollars in thousands)	2022	2021		(Dollars in thousands)	2023		2022

Proceeds from loan sales					Proceeds from loan sales	$	—	$	—
Servicing fees	Servicing fees	97	171		Servicing fees	64		97

The following table provides information about the loans transferred through sales or securitization and not recorded in the consolidated statements of financial condition, for which the Company's continuing involvement includes sub-servicing or servicing responsibilities and/or reimbursement obligations:


(Dollars in thousands)	(Dollars in thousands)	Single Family Residential		Multifamily Residential		(Dollars in thousands)	Single Family Residential		Multifamily Residential
As of March 31, 2022:
As of March 31, 2023:						As of March 31, 2023:
Principal balance of loans	Principal balance of loans	$	11,882	$	151,108	Principal balance of loans	$	10,907	$	104,625
Loans 90+ days past due	Loans 90+ days past due	—		—		Loans 90+ days past due	—		—
Charge-offs, net	Charge-offs, net	—		—		Charge-offs, net	—		—
As of December 31, 2021:
As of December 31, 2022:						As of December 31, 2022:
Principal balance of loans	Principal balance of loans	$	12,243	$	173,486	Principal balance of loans	$	11,000	$	106,981
Loans 90+ days past due	Loans 90+ days past due	—		—		Loans 90+ days past due	—		—
Charge-offs, net	Charge-offs, net	—		—		Charge-offs, net	—		—

~~16.~~17. COMMITMENTS AND CONTINGENCIES

Financial Instruments with Off-Balance Sheet Risk

The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments represent commitments to originate fixed and variable rate loans and loans in process, and involve, to varying degrees, credit risk and interest rate risk in excess of the amount recognized in the Company’s consolidated statements of financial condition. The Company’s exposure to credit loss in the event of nonperformance by the other party for commitments to extend credit is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments to originate loans and lines of credit as it does for on-balance sheet instruments. As it relates to interest rate risk, the Company's exposure is generally limited to increases in interest rates that may result during the short period of time between the commitment and funding of fixed rate credit facilities and adjustable rate credit facilities with initial fixed rate periods. The limited timing risk associated with these credit facilities are considered within the Company's asset liability management process.

Commitments to fund loans and lines of credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have expiration dates or other termination clauses. In addition, external market forces may impact the probability of commitments

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being exercised; therefore, total commitments outstanding do not necessarily represent future cash requirements.

At March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, the Company had outstanding commitments of approximately ~~$134.0~~$36.7 million and ~~$132.8~~$37.7 million, respectively, for ~~loans and lines of credit.~~loans. Unfunded commitment reserves totaled ~~$155~~$389 thousand and ~~$153~~$125 thousand at March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. The Company adopted the CECL accounting standard on January 1, 2023. Upon adoption, the Company increased the allowance for unfunded loan commitments by $330 thousand, which represented the difference between the allowance calculated under the CECL methodology as of January 1, 2023 and the incurred loss methodology as of December 31, 2022. The $330 thousand increase in the allowance for unfunded loan commitments was primarily due to higher lifetime expected losses on unfunded commitments on construction loans under the CECL methodology.

Contingencies

At present, there are no pending or threatened proceedings against the Company which, if determined adversely, would have a material effect on the Company’s business, financial position, results of operations

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or cash flows. In the ordinary course of operations, as well as in connection with the pending merger with WAFD, the Company may be party to various legal proceedings.

Correspondent Banking Agreements

The Company maintains funds on deposit with other federally insured financial institutions under correspondent banking agreements. Insured portions of these balances are limited to $250 thousand per institution based on FDIC insurance limits. At March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, the Company had ~~$25.7 million~~$854 thousand and ~~$25.5~~$25.0 million, respectively, in uninsured available cash balances. Additionally, the Company had $8.7 million in restricted cash as collateral for its interest rate swap agreements at a correspondent bank as of March 31, 2023, compared to none at December 31, 2022. The Company also has established federal funds lines of credit with correspondent banks totaling $50.0 million at both March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, none of which were advanced at those dates. The Company periodically monitors the financial condition and capital adequacy of these correspondent banks.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following is a discussion of our financial condition at March 31, ~~2022~~2023 and December 31, ~~2021~~2022 and our results of operations for the three months ended March 31, ~~2022 and March~~2023 and December 31, ~~2021,~~2022 and the three months ended March 31, 2023 and 2022, and should be read in conjunction with our audited consolidated financial statements set forth in our Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 that was filed with the ~~Securities and Exchange Commission (the “SEC”)~~SEC on ~~March 14, 2022~~February 22, 2023 (our “Annual Report”) and with the accompanying Notes to Unaudited Consolidated Financial Statements set forth in this Quarterly Report on Form 10-Q for the quarterly period ended March 31, ~~2022~~2023 (this “Report”). During the quarter ended March 31, 2022, we are transitioning from providing a discussion of our current quarterly results of operations and the same period last year to a discussion of our current quarterly results of operations and the immediately preceding quarter. We are making this change as we believe comparing our current quarterly results to the immediately preceding quarter provides a more meaningful discussion of our financial performance than comparing our current quarterly results to the same prior year period. Because we conduct all of our material business operations through our bank subsidiary, Luther Burbank Savings (the "Bank"), the discussion and analysis relates to activities primarily conducted by the Bank.

Overview

We are a bank holding company headquartered in Santa Rosa, California, and the parent company of Luther Burbank Savings, a California-chartered commercial bank ~~headquartered in Gardena, California~~ with ~~$7.3~~$8.3 billion in assets at March 31, ~~2022.~~2023. Our principal business is providing high-value, relationship-based banking products and services to our customers, which include real estate investors, professionals, entrepreneurs, depositors and commercial businesses. We generate most of our revenue from interest on loans and investments. Our primary source of funding for our loans is retail deposits and we place secondary reliance on wholesale funding, primarily borrowings from the ~~FHLB~~Federal Home Loan Bank ("FHLB") and brokered deposits. Our largest expenses are interest on deposits and borrowings along with salaries and related employee benefits. Our principal lending products are real estate secured loans, consisting primarily of multifamily residential properties and jumbo single family residential properties on the West Coast.

Selected Financial Data

The following table sets forth the Company’s selected historical consolidated financial data for the periods and as of the dates indicated. You should read this information together with the Company’s audited consolidated financial statements included in our Annual Report and the unaudited consolidated financial statements and related notes included elsewhere in this Report. The selected historical consolidated financial data as of and for the three months ~~ended~~ March 31, ~~2022~~2023 and ~~2021~~2022 are derived from our unaudited consolidated financial statements, which are included elsewhere in this Report. The selected historical consolidated financial data for the three months ended December 31, ~~2021~~2022 are derived from our unaudited consolidated financial statements which are included in our previously filed Form 8-K on January ~~25, 2022~~24, 2023 as Exhibit 99.1. The selected historical consolidated financial data as of December 31, 2021 (except as otherwise noted below) are derived from our audited consolidated financial statements in our previously filed Annual Report. The Company’s historical results for any prior period are not necessarily indicative of future performance.

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(Dollars in thousands, except per share data)			As of or For the Three Months Ended
													As of or For the Three Months Ended

(Dollars in thousands, except per share data)	(Dollars in thousands, except per share data)		March 31, 2022			December 31, 2021			March 31, 2021			(Dollars in thousands, except per share data)	March 31, 2023			December 31, 2022			March 31, 2022
		Statements of Income and Financial Condition Data										Statements of Income and Financial Condition Data
Net Income	Net Income		$	22,940		$	23,383		$	18,411		Net Income	$	13,442		$	13,689		$	22,940
Pre-tax, pre-provision net earnings (1)	Pre-tax, pre-provision net earnings (1)		$	29,580		$	31,135		$	23,624		Pre-tax, pre-provision net earnings (1)	$	18,287		$	20,431		$	29,580
Total assets	Total assets		$	7,260,826		$	7,179,957		$	7,078,974		Total assets	$	8,302,457		$	7,974,632		$	7,260,826
Per Common Share	Per Common Share											Per Common Share
Diluted earnings per share	Diluted earnings per share		$	0.45		$	0.45		$	0.35		Diluted earnings per share	$	0.26		$	0.27		$	0.45
Book value per share	Book value per share		$	13.00		$	12.95		$	11.95		Book value per share	$	13.64		$	13.36		$	13.00
Tangible book value per share (1)	Tangible book value per share (1)		$	12.93		$	12.88		$	11.88		Tangible book value per share (1)	$	13.58		$	13.30		$	12.93

Selected Ratios	Selected Ratios											Selected Ratios
Return on average:	Return on average:											Return on average:
Assets	Assets		1.28		%	1.30		%	1.05		%	Assets	0.67		%	0.69		%	1.28		%
Stockholders' equity	Stockholders' equity		13.60		%	14.08		%	11.82		%	Stockholders' equity	7.78		%	8.04		%	13.60		%
Dividend payout ratio	Dividend payout ratio		27.14		%	26.57		%	16.34		%	Dividend payout ratio	—		%	44.84		%	27.14		%
Net interest margin	Net interest margin		2.54		%	2.57		%	2.23		%	Net interest margin	1.72		%	2.01		%	2.54		%
Efficiency ratio (1)	Efficiency ratio (1)		34.40		%	32.84		%	39.47		%	Efficiency ratio (1)	48.08		%	49.23		%	34.40		%
Noninterest expense to average assets	Noninterest expense to average assets		0.86		%	0.85		%	0.88		%	Noninterest expense to average assets	0.84		%	1.00		%	0.86		%
Loan to deposit ratio	Loan to deposit ratio		113.66		%	113.71		%	116.31		%	Loan to deposit ratio	124.32		%	120.06		%	113.66		%

Credit Quality Ratios	Credit Quality Ratios											Credit Quality Ratios
Allowance for loan losses to loans			0.52		%	0.56		%	0.70		%
Allowance for loan losses to nonperforming loans			1,450.81		%	1,549.72		%	650.99		%
Allowance for credit losses on loans to total loans												Allowance for credit losses on loans to total loans	0.51		%	0.52		%	0.52		%
Allowance for credit losses on loans to nonperforming loans												Allowance for credit losses on loans to nonperforming loans	722.62		%	566.91		%	1,450.81		%
Nonperforming assets to total assets	Nonperforming assets to total assets		0.03		%	0.03		%	0.09		%	Nonperforming assets to total assets	0.06		%	0.08		%	0.03		%
Net recoveries to average loans			—		%	—		%	(0.00)		%
Net charge-offs to average loans												Net charge-offs to average loans	—		%	—		%	—		%
Capital Ratios	Capital Ratios											Capital Ratios
Tier 1 leverage ratio	Tier 1 leverage ratio		10.27		%	10.12		%	9.71		%	Tier 1 leverage ratio	9.73		%	9.72		%	10.27		%
Total risk-based capital ratio	Total risk-based capital ratio		19.37		%	19.61		%	18.55		%	Total risk-based capital ratio	19.50		%	19.14		%	19.37		%

(1) Considered a non-GAAP financial measure. See Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - ‘‘Non-GAAP Financial Measures’’ for a reconciliation of our non-GAAP measures to the most directly comparable GAAP financial measure. Pre-tax, pre-provision net earnings is defined as net income before taxes and provision for loan losses. Tangible book value is defined as total assets less goodwill and total liabilities. Efficiency ratio is defined as the ratio of noninterest expense to net interest income plus noninterest income.
(1) Considered a non-GAAP financial measure. See Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - ‘‘Non-GAAP Financial Measures’’ for a reconciliation of our non-GAAP measures to the most directly comparable GAAP financial measure. Pre-tax, pre-provision net earnings is defined as net income before taxes and provision for credit losses. Tangible book value per share is defined as total assets less goodwill and total liabilities divided by period end shares outstanding. Efficiency ratio is defined as the ratio of noninterest expense to net interest income plus noninterest income.												(1) Considered a non-GAAP financial measure. See Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - ‘‘Non-GAAP Financial Measures’’ for a reconciliation of our non-GAAP measures to the most directly comparable GAAP financial measure. Pre-tax, pre-provision net earnings is defined as net income before taxes and provision for credit losses. Tangible book value per share is defined as total assets less goodwill and total liabilities divided by period end shares outstanding. Efficiency ratio is defined as the ratio of noninterest expense to net interest income plus noninterest income.

Critical Accounting Policies and Estimates

Our unaudited consolidated financial statements are prepared in accordance with ~~GAAP~~U.S. generally accepted accounting principles (“GAAP”) and with general practices within the financial services industry. Application of these principles requires management to make complex and subjective estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under current circumstances. These assumptions form the basis for our judgments about the carrying values of assets and liabilities that are not readily available from independent, objective sources. We evaluate our estimates on an ongoing basis. Use of alternative assumptions may have resulted in significantly different estimates. Actual results may differ from these estimates.

Our most significant accounting policies are described in Note 1 to our audited financial statements for the year ended December 31, ~~2021,~~2022, included in our Annual Report. We have identified the following accounting policies and estimates that, due to the difficult, subjective or complex judgments and assumptions inherent in those policies and estimates and the potential sensitivity of our financial statements to those judgments and assumptions, are critical to an understanding of our financial condition and results of operations. We believe that the judgments, estimates and assumptions used in the preparation of our financial statements are reasonable and appropriate.

Allowance for Credit Losses ("ACL") on Loans

~~Pursuant to~~The Company adopted the ~~Jumpstart Our Business Startups Act (the "JOBS Act"~~current expected credit loss ("CECL")~~, as an emerging growth company, we can elect to opt out of the extended transition period for adopting any new or revised accounting standards. We have~~ allowance methodology on January 1, 2023. The

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~~elected not to opt out~~ACL on loans represents the Company’s estimate of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we may adopt the standard for the private company.

We have elected to take advantage of the scaled disclosures and other relief under the JOBS Act, and we may take advantage of some or all of the reduced regulatory and reporting requirements that will be available to us under the JOBS Act, so long as we qualify as an emerging growth company. Our eligibility as an emerging growth company under the JOBS Act is expected ~~to expire on December 31, 2022, which is the last day of the fiscal year following the five year anniversary from the date of our initial public offering.~~

~~Allowance for Loan Losses~~

~~The allowance for loan losses is provided for probable incurred~~lifetime credit losses ~~inherent in the loan portfolio~~for its loans at the ~~statement~~time of ~~financial condition date. The allowance~~origination or acquisition and is ~~increased~~maintained at a level deemed appropriate by ~~a provision charged~~management to ~~expense and can be reduced by loan principal charge-offs, net of recoveries. The allowance can also be reduced by recapturing provisions when management determines that the allowance~~provide for ~~loan losses is more than adequate to absorb the probable incurred~~expected lifetime credit losses in the ~~portfolio. The allowance is based on management’s assessment of various factors including, but not limited to, the nature~~portfolio as of the date of the consolidated statements of financial condition. The ACL on loans is a valuation account that is deducted from the amortized cost basis of loans to present the net amount expected to be collected. Amortized cost does not include accrued interest, which management elected to exclude from the estimate of expected credit losses. Loans are charged-off against the allowance when management believes that the uncollectibility of a loan ~~portfolio, previous loss experience, known~~is confirmed. Recoveries will never exceed the aggregate of amounts previously charged-off.

While management estimates the ACL balance using relevant available information, from internal and ~~inherent risks in the portfolio, the estimated value of underlying collateral, information that may affect a borrower’s ability~~external sources, relating to ~~repay,~~past events, current ~~economic~~ conditions and the results of our ongoing reviews of the portfolio. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Bank’s allowance. Such agencies may require the Bank to recognize additions to the allowance based on judgments different from those of management.

~~While we use available information, including independent appraisals for collateral, to estimate the extent of probable incurred loan losses within the loan portfolio,~~reasonable and supportable forecasts, inherent uncertainties in the estimation process make it reasonably possible that ultimate losses may vary significantly from our original estimates. In addition, we utilize a number of economic variables in estimating the allowance, with the most significant drivers being unemployment levels and housing prices. Material changes in these economic variables may result in incremental changes in the estimated level of our allowance. Generally, loans are partially or fully charged off when it is determined that the unpaid principal balance exceeds the current fair value of the collateral with no other likely source of repayment. The Company currently utilizes the incurred loss methodology to determine its allowance for loan losses. The Company expects to adopt the current expected credit loss ("CECL") allowance methodology on January 1, 2023.

Fair Value Measurement

We use estimates of fair value in applying various accounting standards for our unaudited consolidated financial statements. Fair value is defined as the exit price at which an asset may be sold or a liability may be transferred in an orderly transaction between willing and able market participants. When available, fair value is measured by looking at observable market prices for identical assets and liabilities in an active market. When these are not available, other inputs are used to model fair value such as prices of similar instruments, yield curves, prepayment speeds and credit spreads. Depending on the availability of observable inputs and prices, different valuation models could produce materially different fair value estimates. The values presented may not represent future fair values and may not be realizable.

Changes in the fair value of debt securities available for sale are recorded in our consolidated statements of financial condition and comprehensive income (loss) while changes in the fair value of equity securities, loans held for sale and derivatives are recorded in the consolidated statements of financial condition and in the unaudited consolidated statements of income.

~~Investment Securities Impairment~~Non-GAAP Financial Measures

Some of the financial measures discussed in Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations contain financial measures that are not measures recognized under GAAP and therefore, are considered non-GAAP financial measures, including pre-tax, pre-provision net earnings, efficiency ratio, tangible assets, tangible stockholders' equity and tangible book value per share.

We assess on a quarterly basis whether there have been any events or economic circumstances to indicate that a security in which we have an unrealized loss is impaired on an other-than-temporary basis. In any instance, we would consider many factors, including the severity and duration of the impairment, the portion of any unrealized loss attributable to a decline in the credit quality of the issuer, our intent and ability to hold the security for a period of time sufficient for a recovery in value, recent events specific to the issuer or industry, and, for debt securities, external credit ratings and recent downgrades. Securities with respect to which there is an unrealized loss that is deemed to be other-than-temporary are written down to fair value.

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~~Non-GAAP Financial Measures~~

~~We use certain~~Our management uses these non-GAAP financial measures ~~to provide meaningful supplemental information regarding~~in their analysis of the Company’s ~~operational~~ performance, financial condition and ~~to enhance investors’ overall understanding~~the efficiency of ~~such performance. The methodology for determining these non-GAAP measures may differ among companies.~~

Pre-tax, pre-provision net earnings is defined as net income before taxes and provision for loan losses. We believe the most directly comparable GAAP financial measure is income before taxes. Disclosure of this measure enables investors to compare our operations to those of other banking companies before consideration of taxes and provision expense. Efficiency ratio is defined as noninterest expense divided by operating revenue, which is equal to net interest income plus noninterest income. Tangible book value per share is defined as tangible stockholders' equity divided by period end shares outstanding.its operations. We believe that these non-GAAP financial measures provide a greater understanding of ongoing operations and enhance comparability of results with prior periods and other companies, as well as demonstrate the effects of significant changes in the current period. We also believe that investors find these non-GAAP financial measures useful ~~information to management~~as they assist investors in understanding our underlying operating performance and ~~investors that is supplementary to our consolidated statements~~the analysis of ~~financial condition, results of income and cash flows computed in accordance with GAAP.~~ongoing operating trends. However, we acknowledge that our non-GAAP financial measures have a number of limitations. ~~As such, you~~You should not view these disclosures as a substitute for results determined in accordance with GAAP, and they are not necessarily comparable to non-GAAP financial measures that other banking companies use. Other banking companies may use names similar to those we use for the non-GAAP financial measures we disclose, but may calculate them differently. You should understand how we and other companies each calculate their non-GAAP financial measures when making comparisons.

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The following reconciliation table provides a more detailed analysis of these non-GAAP financial measures:


		As of or For the Three Months Ended									As of or For the Three Months Ended
(Dollars in thousands)	(Dollars in thousands)	March 31, 2022			December 31, 2021			March 31, 2021				(Dollars in thousands)	March 31, 2023			December 31, 2022			March 31, 2022
Pre-tax, Pre-provision Net Earnings	Pre-tax, Pre-provision Net Earnings											Pre-tax, Pre-provision Net Earnings
Income before taxes	Income before taxes	$	32,080		$	32,935		$	26,124			Income before taxes	$	19,082		$	19,781		$	32,080
Plus: Reversal of provision for loan losses		(2,500)			(1,800)			(2,500)
Plus: (Reversal of) provision for credit losses												Plus: (Reversal of) provision for credit losses	(795)			650			(2,500)
Pre-tax, pre-provision net earnings	Pre-tax, pre-provision net earnings	$	29,580		$	31,135		$	23,624			Pre-tax, pre-provision net earnings	$	18,287		$	20,431		$	29,580
Efficiency Ratio	Efficiency Ratio											Efficiency Ratio
Noninterest expense (numerator)	Noninterest expense (numerator)	$	15,512		$	15,226		$	15,404			Noninterest expense (numerator)	$	16,934		$	19,814		$	15,512
Net interest income	Net interest income	$	45,034		$	45,725		$	38,719			Net interest income	$	33,986		$	39,274		45,034
Noninterest income	Noninterest income	58			636			309				Noninterest income	1,235			971			58
Operating revenue (denominator)	Operating revenue (denominator)	$	45,092		$	46,361		$	39,028			Operating revenue (denominator)	$	35,221		$	40,245		$	45,092
Efficiency ratio	Efficiency ratio	34.40		%	32.84		%	39.47		%		Efficiency ratio	48.08		%	49.23		%	34.40		%

Tangible Book Value Per Share	Tangible Book Value Per Share											Tangible Book Value Per Share
Total assets	Total assets	$	7,260,826		$	7,179,957		$	7,078,974			Total assets	$	8,302,457		$	7,974,632		$	7,260,826
Less: Goodwill	Less: Goodwill	(3,297)			(3,297)			(3,297)				Less: Goodwill	(3,297)			(3,297)			(3,297)
Tangible assets	Tangible assets	7,257,529			7,176,660			7,075,677				Tangible assets	8,299,160			7,971,335			7,257,529
Less: Total liabilities	Less: Total liabilities	(6,592,826)			(6,510,824)			(6,455,005)				Less: Total liabilities	(7,606,296)			(7,292,096)			(6,592,826)
Tangible stockholders' equity (numerator)	Tangible stockholders' equity (numerator)	$	664,703		$	665,836		$	620,672			Tangible stockholders' equity (numerator)	$	692,864		$	679,239		$	664,703
Period end shares outstanding (denominator)	Period end shares outstanding (denominator)	51,403,914			51,682,398			52,231,912				Period end shares outstanding (denominator)	51,030,877			51,073,272			51,403,914
Tangible book value per share	Tangible book value per share	$	12.93		$	12.88		$	11.88			Tangible book value per share	$	13.58		$	13.30		$	12.93

Results of Operations - Three Months Ended March 31, ~~2022~~2023 and December 31, ~~2021~~2022

Overview

For the three months ended March 31, ~~2022,~~2023, our net income was ~~$22.9~~$13.4 million as compared to ~~$23.4~~$13.7 million for the three months ended December 31, ~~2021.~~2022. The decrease of ~~$443~~$247 thousand, or ~~1.9%~~1.8%, was attributable to a decrease in net interest income of ~~$691 thousand,~~$5.3 million, partially offset by a decrease in noninterest ~~income of $578 thousand and an increase in noninterest~~ expense of ~~$286 thousand, partially offset by an increase in reversal of provision for loan losses of $700 thousand~~$2.9 million and a decrease in ~~income tax expense~~the provision for credit losses of ~~$412 thousand.~~$1.4 million. Pre-tax, pre-provision net earnings decreased by ~~$1.6~~$2.1 million, or ~~5.0%~~10.5%, for the three months ended March 31, ~~2022~~2023 as compared to the linked quarter.

~~Table of Contents~~

Net Interest Income

Net interest income decreased by ~~$691 thousand,~~$5.3 million, or ~~1.5%~~13.5%, to ~~$45.0~~$34.0 million for the three months ended March 31, ~~2022~~2023 from ~~$45.7~~$39.3 million for the prior quarter due to ~~lower loan interest income, partially offset by lower~~higher interest expense on our deposit portfolio ~~which benefited from~~and FHLB advances, partially offset by higher ~~rate term deposits repricing into new lower cost products. The decline in loan~~ interest income ~~was primarily due to the prepayment of higher yielding~~on loans being replaced with loans at lower current interest rates, as well as a decline in prepayment penalties on early loan payoffs. As compared to the linked quarter, the yield on our loan portfolio declined by 10 basis points and ~~the cost of interest bearing deposits declined by 3 basis points.~~cash and cash equivalents.

Our net interest margin was ~~2.54%~~1.72% during the three months ended March 31, ~~2022~~2023 compared to ~~2.57%~~2.01% during the prior quarter. Our net interest margin reflects the net impact of ~~a decrease~~an increase in the cost of interest bearing liabilities, partially offset by an increase in the yield on interest earning assets. Due to the liability sensitivity of our balance sheet, our interest-bearing liabilities generally reprice more quickly than our interest-earning assets, ~~partly offset~~which will result in lower net interest income during periods of rising interest rates. During the first quarter, the cost of our interest bearing liabilities increased by ~~a decrease~~62 basis points primarily due to an increase in the cost of ~~interest bearing liabilities. During the first quarter,~~our deposits and FHLB advances, while the yield on our interest earning assets ~~decreased~~increased by 722 basis points primarily due to ~~the decline~~an increase in our loan ~~yield, discussed above, while the cost of our interest bearing liabilities decreased by 3 basis points primarily due to the decline in the cost of deposits, discussed above.~~yield. Our net interest spread in the first quarter was ~~2.46%~~1.45%, decreasing by 440 basis points as compared to the linked quarter.

Average balance sheet, interest and yield/rate analysis. The following table presents average balance sheet information, interest income, interest expense and the corresponding average yield earned and rates paid for the three months ended March 31, ~~2022~~2023 and December 31, ~~2021.~~2022. The average balances are daily averages.

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		For the Three Months Ended													For the Three Months Ended
		March 31, 2022						December 31, 2021							March 31, 2023						December 31, 2022
(Dollars in thousands)	(Dollars in thousands)	Average Balance		Interest Inc/Exp		Yield/Rate		Average Balance		Interest Inc/Exp		Yield/Rate		(Dollars in thousands)	Average Balance		Interest Inc/Exp		Yield/Rate		Average Balance		Interest Inc/Exp		Yield/Rate
Interest-Earning Assets	Interest-Earning Assets													Interest-Earning Assets
Multifamily residential	Multifamily residential	$	4,211,697	$	39,146	3.72	%	$	4,202,677	$	39,967	3.80	%	Multifamily residential	$	4,521,440	$	48,961	4.33	%	$	4,518,952	$	45,682	4.04	%
Single family residential	Single family residential	1,867,416		12,025		2.58	%	1,879,844		12,908		2.75	%	Single family residential	2,283,753		22,991		4.03	%	2,229,808		22,737		4.08	%
Commercial real estate	Commercial real estate	193,871		2,204		4.55	%	191,659		2,143		4.47	%	Commercial real estate	169,268		2,147		5.07	%	175,254		2,076		4.74	%
Construction and land	Construction and land	20,341		258		5.14	%	16,517		221		5.31	%	Construction and land	23,665		505		8.65	%	20,612		399		7.68	%
Total loans (1)	Total loans (1)	6,293,325		53,633		3.41	%	6,290,697		55,239		3.51	%	Total loans (1)	6,998,126		74,604		4.26	%	6,944,626		70,894		4.08	%
Investment securities	Investment securities	650,091		2,301		1.42	%	677,624		2,163		1.28	%	Investment securities	614,527		5,488		3.57	%	639,137		5,082		3.18	%
Cash, cash equivalents and restricted cash		153,370		66		0.17	%	154,722		62		0.16	%
Cash and cash equivalents														Cash and cash equivalents	291,706		3,303		4.59	%	215,060		1,964		3.62	%
Total interest-earning assets	Total interest-earning assets	7,096,786		56,000		3.16	%	7,123,043		57,464		3.23	%	Total interest-earning assets	7,904,359		83,395		4.22	%	7,798,823		77,940		4.00	%
Noninterest-earning assets (2)	Noninterest-earning assets (2)	92,904						73,823						Noninterest-earning assets (2)	149,670						154,605
Total assets	Total assets	$	7,189,690					$	7,196,866					Total assets	$	8,054,029					$	7,953,428
Interest-Bearing Liabilities	Interest-Bearing Liabilities													Interest-Bearing Liabilities
Transaction accounts	Transaction accounts	$	169,580	95		0.22	%	$	169,132	95		0.22	%	Transaction accounts	$	150,429	160		0.43	%	$	170,867	151		0.35	%
Money market demand accounts	Money market demand accounts	2,964,527		3,222		0.43	%	2,801,908		3,178		0.44	%	Money market demand accounts	2,271,018		13,956		2.46	%	2,622,015		12,271		1.83	%
Time deposits	Time deposits	2,231,471		2,703		0.49	%	2,457,668		3,449		0.55	%	Time deposits	3,268,933		23,491		2.88	%	2,973,058		17,043		2.25	%
Total deposits	Total deposits	5,365,578		6,020		0.45	%	5,428,708		6,722		0.48	%	Total deposits	5,690,380		37,607		2.65	%	5,765,940		29,465		2.00	%
FHLB advances	FHLB advances	761,119		3,097		1.65	%	751,653		3,190		1.68	%	FHLB advances	1,327,863		9,262		2.83	%	1,129,382		6,833		2.40	%
Junior subordinated debentures	Junior subordinated debentures	61,857		275		1.80	%	61,857		252		1.62	%	Junior subordinated debentures	61,857		966		6.33	%	61,857		794		5.09	%
Senior debt	Senior debt	94,673		1,574		6.65	%	94,642		1,575		6.66	%	Senior debt	94,796		1,574		6.64	%	94,765		1,574		6.64	%
Total interest-bearing liabilities	Total interest-bearing liabilities	6,283,227		10,966		0.70	%	6,336,860		11,739		0.73	%	Total interest-bearing liabilities	7,174,896		49,409		2.77	%	7,051,944		38,666		2.15	%
Noninterest-bearing deposit accounts	Noninterest-bearing deposit accounts	147,533						126,225						Noninterest-bearing deposit accounts	86,967						119,589
Other noninterest-bearing liabilities	Other noninterest-bearing liabilities	84,022						69,453						Other noninterest-bearing liabilities	100,627						101,234
Total liabilities	Total liabilities	6,514,782						6,532,538						Total liabilities	7,362,490						7,272,767
Total stockholders' equity	Total stockholders' equity	674,908						664,328						Total stockholders' equity	691,539						680,661
Total liabilities and stockholders' equity	Total liabilities and stockholders' equity	$	7,189,690					$	7,196,866					Total liabilities and stockholders' equity	$	8,054,029					$	7,953,428

Net interest spread (3)	Net interest spread (3)					2.46	%					2.50	%	Net interest spread (3)					1.45	%					1.85	%
Net interest income/margin (4)	Net interest income/margin (4)			$	45,034	2.54	%			$	45,725	2.57	%	Net interest income/margin (4)			$	33,986	1.72	%			$	39,274	2.01	%

(1) Non-accrual loans are included in total loan balances. No adjustment has been made for these loans in the calculation of yields. Interest income on loans includes amortization of deferred loan costs, net of deferred loan fees. Net deferred loan cost amortization totaled ~~$4.8~~$1.4 million ~~and $4.6 million~~ for both the three months ended March 31, ~~2022~~2023 and December 31, ~~2021, respectively.~~2022.

(2) Noninterest-earning assets includes the allowance for ~~loan losses.~~credit losses on loans.

(3) Net interest spread is the average yield on total interest-earning assets minus the average rate on total interest-bearing liabilities.

(4) Net interest margin is net interest income divided by total average interest-earning assets.

Interest rates and operating interest differential. Increases and decreases in interest income and interest expense result from changes in average balances (volume) of interest-earning assets and interest-bearing liabilities, as well as changes in average interest rates. The following table shows the effect that these factors had on the interest earned from our interest-earning assets and interest incurred on our interest-bearing liabilities during the periods indicated. The effect of changes in volume is determined by multiplying the change in volume by the prior period’s average rate. The effect of rate changes is calculated by multiplying the change in average rate by the prior period’s volume. The change in interest due to both rate and volume has been allocated to rate and volume changes in proportion to the relationship of the absolute dollar amounts of the changes in each.

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		Three Months Ended March 31, 2022 vs December 31, 2021							Three Months Ended March 31, 2023 vs December 31, 2022
		Variance Due To							Variance Due To
(Dollars in thousands)	(Dollars in thousands)	Volume		Yield/Rate		Total		(Dollars in thousands)	Volume		Yield/Rate		Total
Interest-Earning Assets	Interest-Earning Assets							Interest-Earning Assets
Multifamily residential	Multifamily residential	$	80	$	(901)	$	(821)	Multifamily residential	$	25	$	3,254	$	3,279
Single family residential	Single family residential	(85)		(798)		(883)		Single family residential	539		(285)		254
Commercial real estate	Commercial real estate	24		37		61		Commercial real estate	(72)		143		71
Construction and land	Construction and land	45		(8)		37		Construction and land	57		49		106
Total loans	Total loans	64		(1,670)		(1,606)		Total loans	549		3,161		3,710
Investment securities	Investment securities	(91)		229		138		Investment securities	(201)		607		406
Cash, cash equivalents and restricted cash		(1)		5		4
Cash and cash equivalents								Cash and cash equivalents	764		575		1,339
Total interest-earning assets	Total interest-earning assets	(28)		(1,436)		(1,464)		Total interest-earning assets	1,112		4,343		5,455
Interest-Bearing Liabilities	Interest-Bearing Liabilities							Interest-Bearing Liabilities
Transaction accounts	Transaction accounts	—		—		—		Transaction accounts	(20)		29		9
Money market demand accounts	Money market demand accounts	132		(88)		44		Money market demand accounts	(1,841)		3,526		1,685
Time deposits	Time deposits	(341)		(405)		(746)		Time deposits	1,688		4,760		6,448
Total deposits	Total deposits	(209)		(493)		(702)		Total deposits	(173)		8,315		8,142
FHLB advances	FHLB advances	8		(101)		(93)		FHLB advances	1,203		1,226		2,429
Junior subordinated debentures	Junior subordinated debentures	1		(2)		(1)		Junior subordinated debentures	—		172		172
Senior debt	Senior debt	—		23		23		Senior debt	—		—		—
Total interest-bearing liabilities	Total interest-bearing liabilities	(200)		(573)		(773)		Total interest-bearing liabilities	1,030		9,713		10,743

Net Interest Income	Net Interest Income	$	172	$	(863)	$	(691)	Net Interest Income	$	82	$	(5,370)	$	(5,288)

Total interest income ~~decreased~~increased by ~~$1.5~~$5.5 million, or ~~2.5%~~7.0%, for the three months ended March 31, ~~2022~~2023 as compared to the prior quarter. This ~~decline~~increase was primarily due to a ~~$1.6~~$3.7 million ~~reduction~~improvement in interest income earned on loans ~~caused by a 10~~resulting from an 18 basis point ~~decrease~~increase in the average yield on our ~~loan yield~~loans due to the ~~prepayment~~recent origination of ~~higher yielding loans being replaced with~~ loans at ~~lower~~higher current ~~interest~~ rates relative to the existing coupon on our loan portfolio, as well as ~~a decline~~higher income earned on our interest rate swaps. Interest income was also positively impacted by an increase in ~~prepayment penalties~~the average balance and yield on ~~early loan payoffs~~cash and cash equivalents of $76.6 million and 97 basis points, respectively, compared to the ~~prior~~linked quarter.

The increase in average balance was due to our purposeful plan to increase on-balance sheet liquidity, while the increase in average yield was due to the general rise in interest rates.

The volume of new loan originations totaled ~~$568.9~~$90.3 million and ~~$498.7~~$281.4 million for the three months ended March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. Declining loan originations are primarily attributable to slowing demand resulting from the general rise in interest rates and our desire to achieve a risk adjusted return on new loan volume in light of the elevated cost of new funding. The weighted average rate on new loans for the three months ended March 31, ~~2022~~2023 was ~~3.14%~~6.42% as compared to ~~3.19%~~5.68% for the linked quarter. The decline in the average coupon on originations was primarily due to competitive pricing pressures coupled with a higher percentage of single family loans originated during the current quarter. Single family residential loans generally carry a lower origination rate than our other lending products. Loan prepayment speeds were ~~26.2%~~4.2% and ~~28.1%~~5.7% during the three months ended March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. The continued lower prepayment speeds were due to rising market interest rates, which continued to impact purchase and refinancing activity. The weighted average rate on loan payoffs/curtailments during the three months ended March 31, ~~2022~~2023 was ~~3.70%~~4.43% as compared to ~~3.89%~~4.19% for the prior quarter.

Total interest expense ~~decreased $773 thousand,~~increased $10.7 million, or ~~6.6%~~27.8%, to ~~$11.0~~$49.4 million, for the three months ended March 31, ~~2022~~2023 from ~~$11.7~~$38.7 million for the prior quarter. Interest expense on deposits ~~decreased $702 thousand,~~increased $8.1 million, to ~~$6.0~~$37.6 million, for the three months ended March 31, ~~2022~~2023 from ~~$6.7~~$29.5 million for the prior quarter. The ~~decrease~~increase was primarily due to a 365 basis point ~~decline~~increase in the cost of interest-bearing deposits predominantly due to ~~our term deposit portfolio repricing~~rate increases in both retail and brokered deposits. Additionally, interest expense on FHLB advances increased $2.4 million compared to ~~lower current interest rates, as well as a $226.2 million decline~~the prior quarter due to an increase in the average balance and cost of ~~time deposits, which were generally replaced with other lower cost deposit products. We generally use both~~advances of $198.5 million and 43 basis points, respectively. The increase in FHLB advances was primarily utilized to offset declines in retail deposits and ~~FHLB advances to fund net loan growth.~~supplement our liquidity during the quarter. We also use long-term FHLB advances as a hedge of interest rate risk, as we can strategically control the duration of those funds. A discussion of instruments used to mitigate interest rate risk can be found under Part II - Item 7A. ‘‘Quantitative and Qualitative Disclosures About Market Risk.’’

~~Provision for Loan Losses~~

During the three months ended March 31, 2022 and December 31, 2021, the Company recorded a reversal of loan loss provisions of $2.5 million and $1.8 million, respectively. The current quarter recapture was related to the

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Provision for Credit Losses

During the three months ended March 31, 2023, the Company recaptured loan loss provisions of $679 thousand, compared to recognizing loan loss provisions of $650 thousand during the linked quarter. The reversal during the current quarter was predominantly due to the elimination of a specific reserve previously established on a collateral dependent loan. The provision recorded during the ~~remaining portion of qualitative reserves established for economic uncertainty early~~linked quarter was primarily related to loan growth. The Company adopted the CECL methodology on January 1, 2023 resulting in a decrease in the ~~pandemic,~~ACL on loans of $92 thousand. The CECL methodology was adopted using the modified retrospective method and results for reporting periods beginning January 1, 2023 are reported under the CECL methodology, while ~~the~~ prior ~~quarter reversal was primarily due~~period results continue to ~~a decline in criticized loans. The decision to recapture the remaining portion of our pandemic related reserve was based~~be reported under previously applicable GAAP. Our ACL on ~~the continued resilience of our loan portfolio, as well as the general strength of the economic recovery. Our allowance for loan losses~~loans as a percentage of total loans was ~~0.52% and 0.56%~~0.51% at March 31, ~~2022 and~~2023 compared to 0.52% at December 31, 2021, respectively. The allowance for loan losses and the recapture of provisions for loan losses recognized were determined based on the incurred loss methodology. The Company expects to adopt the CECL allowance methodology on January 1, 2023.2022.

Nonperforming assets totaled ~~$2.3~~$5.0 million, or ~~0.03%~~0.06% of total assets, at ~~both~~ March 31, ~~2022 and December 31, 2021. Criticized loans, which includes loans graded Special Mention and of greater risk, were $20.7 million at March 31, 2022~~2023 compared to ~~$16.7~~$6.5 million, or 0.08% of total assets, at December 31, ~~2021.~~2022. The decrease in nonperforming assets was primarily due to two single family residential loans returning to performing status during the quarter. Classified loans, which includes loans graded Substandard and of greater risk, totaled ~~$13.8~~$18.4 million and ~~$12.1~~$18.9 million at March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. ~~The increase in criticized~~Criticized loans, which includes loans graded Special Mention and classified ~~loan balances was attributed~~loans, were $21.0 million at March 31, 2023 compared to ~~isolated credit related downgrades and are not thought to represent any particular declining credit trends in our loan portfolio.~~$22.3 million at December 31, 2022. The Company's exposure to nonresidential commercial real estate remains limited, totaling ~~$194.4~~$168.0 million, or ~~3.1%~~2.4% of our loan portfolio, at the end of the current quarter. See further detail of our nonresidential commercial real estate below in this item under "Loan Portfolio Composition - Commercial real estate loans".

Noninterest Income

Noninterest income ~~decreased~~increased by ~~$578~~$264 thousand, or ~~90.9%~~27.2%, to ~~$58 thousand~~$1.2 million for the three months ended March 31, ~~2022~~2023 from ~~$636~~$971 thousand for the prior quarter. The following table presents the major components of our noninterest income:


		For the Three Months Ended									For the Three Months Ended
(Dollars in thousands)	(Dollars in thousands)	March 31, 2022		December 31, 2021		$ Increase (Decrease)		% Increase (Decrease)		(Dollars in thousands)	March 31, 2023		December 31, 2022		$ Increase (Decrease)		% Increase (Decrease)
Noninterest Income	Noninterest Income									Noninterest Income

FHLB dividends	FHLB dividends	$	354	$	413	(59)		(14.3)	%	FHLB dividends	$	577	$	529	$	48	9.1	%
Fee income	Fee income	226		271		(45)		(16.6)	%	Fee income	138		110		28		25.5	%
Other	Other	(522)		(48)		(474)		987.5	%	Other	520		332		188		56.6	%
Total noninterest income	Total noninterest income	$	58	$	636	$	(578)	(90.9)	%	Total noninterest income	$	1,235	$	971	$	264	27.2	%

The ~~decrease~~increase in noninterest income for the quarter ended March 31, ~~2022~~2023 compared to the quarter ended December 31, ~~2021,~~2022, was primarily attributable to ~~a $577 thousand decline during the current quarter~~an increase in the fair value of ~~community development investments that are classified as~~ equity securities during the current quarter compared to ~~a $111 thousand decline during~~ the ~~linked quarter, both attributed~~prior quarter. Changes in fair value are primarily attributable to ~~the rise~~changes in market interest rates.

Noninterest Expense

Noninterest expense ~~increased $286 thousand,~~decreased $2.9 million, or ~~1.9%~~14.5%, to ~~$15.5~~$16.9 million for the three months ended March 31, ~~2022~~2023 from ~~$15.2~~$19.8 million for the three months ended December 31, ~~2021.~~2022. The following table presents the major components of our noninterest expense:

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		For the Three Months Ended									For the Three Months Ended
(Dollars in thousands)	(Dollars in thousands)	March 31, 2022		December 31, 2021		$ Increase (Decrease)		% Increase (Decrease)		(Dollars in thousands)	March 31, 2023		December 31, 2022		$ Increase (Decrease)		% Increase (Decrease)
Noninterest Expense	Noninterest Expense									Noninterest Expense
Compensation and related benefits	Compensation and related benefits	$	10,219	$	10,007	$	212	2.1	%	Compensation and related benefits	$	10,671	$	12,039	$	(1,368)	(11.4)	%
Deposit insurance premium	Deposit insurance premium	481		489		(8)		(1.6)	%	Deposit insurance premium	884		551		333		60.4	%
Professional and regulatory fees	Professional and regulatory fees	539		433		106		24.5	%	Professional and regulatory fees	436		629		(193)		(30.7)	%
Occupancy	Occupancy	1,194		1,198		(4)		(0.3)	%	Occupancy	1,184		1,191		(7)		(0.6)	%
Depreciation and amortization	Depreciation and amortization	603		603		—		—	%	Depreciation and amortization	649		794		(145)		(18.3)	%
Data processing	Data processing	988		1,056		(68)		(6.4)	%	Data processing	862		1,050		(188)		(17.9)	%
Marketing	Marketing	458		333		125		37.5	%	Marketing	739		1,318		(579)		(43.9)	%

Merger costs										Merger costs	553		1,090		(537)		(49.3)	%
Other expenses	Other expenses	1,030		1,107		(77)		(7.0)	%	Other expenses	956		1,152		(196)		(17.0)	%
Total noninterest expense	Total noninterest expense	$	15,512	$	15,226	$	286	1.9	%	Total noninterest expense	$	16,934	$	19,814	$	(2,880)	(14.5)	%

The ~~increase~~decrease in noninterest expense during the quarter ended March 31, ~~2022~~2023 compared to the linked quarter was predominantly due to a ~~$212 thousand increase~~$1.4 million decrease in compensation costs ~~including~~primarily due to a $2.9 million decrease in salaries and related benefits related to a reduction in lending workforce at the ~~first calendar quarter impact~~end of ~~payroll taxes,~~2022, partially offset by ~~an increase~~a $1.6 million decline in capitalized loan origination ~~costs.~~costs due to lower loan origination volume. Noninterest expense was also positively impacted by a $579 thousand decrease in marketing expenses due to lower costs incurred related to our specialty deposit gathering efforts and a $537 thousand decline in costs incurred in connection with our previously announced merger with Washington Federal, Inc. ("WAFD") compared to the prior quarter.

Income Tax Expense

For the three months ended March 31, ~~2022,~~2023, we recorded income tax expense of ~~$9.1~~$5.6 million as compared to ~~$9.6~~$6.1 million for the prior quarter with effective tax rates of ~~28.5%~~29.6% and ~~29.0%~~30.8%, respectively. ~~Compared to the prior quarter, the decrease in income tax expense was due to our lower pre-tax earnings during the current quarter.~~

Results of Operations - Three Months Ended March 31, ~~2022~~2023 and ~~2021~~2022

Overview

For the three months ended March 31, ~~2022,~~2023, our net income was ~~$22.9~~$13.4 million as compared to ~~$18.4~~$22.9 million for the three months ended March 31, 2022. The decrease of $9.5 million, or 41.4%, was primarily attributable to a decrease of $11.0 million in net interest income as compared to the same period last year. ~~The increase of $4.5 million, or 24.6%, was attributable to an increase in net interest income of $6.3 million, partially offset by an increase of $1.4 million in income tax expense.~~ Pre-tax, pre-provision net earnings ~~increased~~decreased by ~~$6.0~~$11.3 million, or ~~25.2%~~38.2%, for the three months ended March 31, ~~2022 as compared to the same period last year.~~

~~Net Interest Income~~

Net interest income increased by $6.3 million, or 16.3%, to $45.0 million for the three months ended March 31, 2022 from $38.7 million for the same period last year. Net interest income was predominantly impacted by a $5.6 million decrease in interest expense on deposits due to a 44 basis point decline in the cost of interest-bearing deposits compared to the same period last year, and to a lesser extent an increase in the percentage of non-maturity accounts in our deposit portfolio over term deposits during the same period. Additionally, interest expense on FHLB advances decreased $836 thousand due to a decline in the cost and average balance of FHLB advances of 25 basis points and $77.7 million, respectively, as compared to the same period last year. These improvements were partially offset by a decrease of $425 thousand in interest income on loans due to a decrease in our loan yield of 9 basis points compared to the same period last year, partially offset by a $121.9 million increase in the average balance of loans. The decrease in loan yield was primarily a result of the prepayment of higher yielding loans, which were being replaced by loans at lower interest rates, partially offset by a $3.4 million decline in the cost of our interest rate swaps2023 as compared to the same period last year.

~~Our net~~Net Interest Income

Net interest ~~margin increased~~income decreased by $11.0 million, or 24.5%, to ~~2.54% during~~$34.0 million for the three months ended March 31, ~~2022~~2023 from ~~2.23% during~~$45.0 million for the same period last year due to higher interest expense on deposits and FHLB advances, partially offset by higher interest income on loans, investments and cash and cash equivalents.

Net interest margin for the three months ended March 31, 2023 was 1.72% compared to 2.54% for the same period last year. The ~~improvement~~decrease in our ~~net interest~~ margin was primarily ~~due~~related to a 42207 basis point ~~decline~~increase in the cost of our interest-bearing liabilities, ~~which benefited from low market interest rates. The decline in our cost of interest-bearing liabilities was~~ partially offset by a 7106 basis point ~~decline~~increase in the yield onof our interest-earning ~~assets during the quarter ended March 31, 2022 as compared to the same period last year.~~assets.

Average balance sheet, interest and yield/rate analysis. The following table presents average balance sheet

~~Table of Contents~~

information, interest income, interest expense and the corresponding average yield earned and rates paid for the three months ended March 31, ~~2022~~2023 and ~~2021.~~2022. The average balances are daily averages.

For the Three Months Ended March 31,
2022 2021
(Dollars in thousands) Average Balance Interest Inc/Exp Yield/Rate Average Balance Interest Inc/Exp Yield/Rate
Interest-Earning Assets
Multifamily residential $ 4,211,697 $ 39,146 3.72 % $ 4,122,614 $ 37,555 3.64 %
Single family residential 1,867,416 12,025 2.58 % 1,823,869 13,858 3.04 %
Commercial real estate 193,871 2,204 4.55 % 202,798 2,315 4.57 %
Construction and land 20,341 258 5.14 % 22,154 330 6.04 %
Total loans (1)
6,293,325 53,633 3.41 % 6,171,435 54,058 3.50 %
Investment securities 650,091 2,301 1.42 % 614,500 1,982 1.29 %
Cash, cash equivalents and restricted cash 153,370 66 0.17 % 152,974 51 0.14 %
Total interest-earning assets 7,096,786 56,000 3.16 % 6,938,909 56,091 3.23 %
Noninterest-earning assets (2)
92,904 59,043
Total assets $ 7,189,690 $ 6,997,952
Interest-Bearing Liabilities
Transaction accounts $ 169,580 95 0.22 % $ 155,038 109 0.28 %
Money market demand accounts 2,964,527 3,222 0.43 % 2,027,828 2,921 0.58 %
Time deposits 2,231,471 2,703 0.49 % 3,042,619 8,576 1.13 %
Total deposits 5,365,578 6,020 0.45 % 5,225,485 11,606 0.89 %
FHLB advances 761,119 3,097 1.65 % 838,851 3,933 1.90 %
Junior subordinated debentures 61,857 275 1.80 % 61,857 258 1.69 %
Senior debt 94,673 1,574 6.65 % 94,550 1,575 6.66 %
Total interest-bearing liabilities 6,283,227 10,966 0.70 % 6,220,743 17,372 1.12 %
Noninterest-bearing deposit accounts 147,533 89,626
Other noninterest-bearing liabilities 84,022 64,669
Total liabilities 6,514,782 6,375,038
Total stockholders' equity 674,908 622,914
Total liabilities and stockholders' equity $ 7,189,690 $ 6,997,952
Net interest spread (3)
2.46 % 2.11 %
Net interest income/margin (4)
$ 45,034 2.54 % $ 38,719 2.23 %

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	For the Three Months Ended March 31,
	2023						2022
(Dollars in thousands)	Average Balance		Interest Inc/Exp		Yield/Rate		Average Balance		Interest Inc/Exp		Yield/Rate
Interest-Earning Assets
Multifamily residential	$	4,521,440	$	48,961	4.33	%	$	4,211,697	$	39,146	3.72	%
Single family residential	2,283,753		22,991		4.03	%	1,867,416		12,025		2.58	%
Commercial real estate	169,268		2,147		5.07	%	193,871		2,204		4.55	%
Construction and land	23,665		505		8.65	%	20,341		258		5.14	%
Total loans (1)	6,998,126		74,604		4.26	%	6,293,325		53,633		3.41	%
Investment securities	614,527		5,488		3.57	%	650,091		2,301		1.42	%
Cash and cash equivalents	291,706		3,303		4.59	%	153,370		66		0.17	%
Total interest-earning assets	7,904,359		83,395		4.22	%	7,096,786		56,000		3.16	%
Noninterest-earning assets (2)	149,670						92,904
Total assets	$	8,054,029					$	7,189,690
Interest-Bearing Liabilities
Transaction accounts	$	150,429	160		0.43	%	$	169,580	95		0.22	%
Money market demand accounts	2,271,018		13,956		2.46	%	2,964,527		3,222		0.43	%
Time deposits	3,268,933		23,491		2.88	%	2,231,471		2,703		0.49	%
Total deposits	5,690,380		37,607		2.65	%	5,365,578		6,020		0.45	%
FHLB advances	1,327,863		9,262		2.83	%	761,119		3,097		1.65	%
Junior subordinated debentures	61,857		966		6.33	%	61,857		275		1.80	%
Senior debt	94,796		1,574		6.64	%	94,673		1,574		6.65	%
Total interest-bearing liabilities	7,174,896		49,409		2.77	%	6,283,227		10,966		0.70	%
Noninterest-bearing deposit accounts	86,967						147,533
Other noninterest-bearing liabilities	100,627						84,022
Total liabilities	7,362,490						6,514,782
Total stockholders' equity	691,539						674,908
Total liabilities and stockholders' equity	$	8,054,029					$	7,189,690

Net interest spread (3)					1.45	%					2.46	%
Net interest income/margin (4)			$	33,986	1.72	%			$	45,034	2.54	%

(1) Non-accrual loans and loans held for sale are included in total loan balances. No adjustment has been made for these loans in the calculation of yields. Interest income on loans includes amortization of deferred loan costs, net of deferred loan fees. Net deferred loan cost amortization totaled ~~$4.8~~$1.4 million and ~~$4.6~~$4.8 million for the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively.

(2) Noninterest-earning assets includes the allowance for ~~loan~~credit losses.

(3) Net interest spread is the average yield on total interest-earning assets minus the average rate on total interest-bearing liabilities.

(4) Net interest margin is net interest income divided by total ~~average~~ interest-earning assets.

Interest rates and operating interest differential. Increases and decreases in interest income and interest expense result from changes in average balances (volume) of interest-earning assets and interest-bearing liabilities, as well as changes in average interest rates. The following table shows the effect that ~~these factors~~changes in volume and average interest rates had on the interest earned from our interest-earning assets and interest incurred on our interest-bearing liabilities during the periods indicated. The effect of changes in volume is determined by multiplying the change in volume by the prior period’s average rate. The effect of rate changes is calculated by multiplying the change in average rate by the prior period’s volume. The change in interest due to both rate and volume has been allocated to rate and volume changes in proportion to the relationship of the absolute dollar amounts of the changes in each.

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		Three Months Ended March 31, 2022 vs 2021							Three Months Ended March 31, 2023 vs 2022
		Variance Due To							Variance Due To
(Dollars in thousands)	(Dollars in thousands)	Volume		Yield/Rate		Total		(Dollars in thousands)	Volume		Yield/Rate		Total
Interest-Earning Assets	Interest-Earning Assets							Interest-Earning Assets
Multifamily residential	Multifamily residential	$	789	$	802	$	1,591	Multifamily residential	$	3,039	$	6,776	$	9,815
Single family residential	Single family residential	322		(2,155)		(1,833)		Single family residential	3,114		7,852		10,966
Commercial real estate	Commercial real estate	(101)		(10)		(111)		Commercial real estate	(295)		238		(57)
Construction and land	Construction and land	(25)		(47)		(72)		Construction and land	48		199		247
Total loans	Total loans	985		(1,410)		(425)		Total loans	5,906		15,065		20,971
Investment securities	Investment securities	116		203		319		Investment securities	(132)		3,319		3,187
Cash, cash equivalents and restricted cash	Cash, cash equivalents and restricted cash	—		15		15		Cash, cash equivalents and restricted cash	109		3,128		3,237
Total interest-earning assets	Total interest-earning assets	1,101		(1,192)		(91)		Total interest-earning assets	5,883		21,512		27,395
Interest-Bearing Liabilities	Interest-Bearing Liabilities							Interest-Bearing Liabilities
Transaction accounts	Transaction accounts	10		(24)		(14)		Transaction accounts	(12)		77		65
Money market demand accounts	Money market demand accounts	1,168		(867)		301		Money market demand accounts	(914)		11,648		10,734
Time deposits	Time deposits	(1,879)		(3,994)		(5,873)		Time deposits	1,808		18,980		20,788
Total deposits	Total deposits	(701)		(4,885)		(5,586)		Total deposits	882		30,705		31,587
FHLB advances	FHLB advances	(345)		(491)		(836)		FHLB advances	3,145		3,020		6,165
Junior subordinated debentures	Junior subordinated debentures	—		17		17		Junior subordinated debentures	—		691		691
Senior debt	Senior debt	1		(2)		(1)		Senior debt	—		—		—
Total interest-bearing liabilities	Total interest-bearing liabilities	(1,045)		(5,361)		(6,406)		Total interest-bearing liabilities	4,027		34,416		38,443

Net Interest Income	Net Interest Income	$	2,146	$	4,169	$	6,315	Net Interest Income	$	1,856	$	(12,904)	$	(11,048)

Total interest income ~~decreased~~increased by ~~$91 thousand,~~$27.4 million, or ~~0.2%~~48.9%, for the three months ended March 31, 2022 as compared to the same period last year. This decline was primarily due to a $425 thousand reduction in interest income earned on loans caused by a 9 basis point decrease in our loan yield as compared to the same period last year, partially offset by a $121.9 million increase in the average balance of loans2023 as compared to the same period last year. The ~~contraction~~increase was primarily due to an 85 basis point increase in loan ~~yield was primarily a result of the prepayment of higher yielding loans, which were being replaced by loans at lower interest rates~~yields and a ~~decline in prepayment penalties collected on early loan payoffs, somewhat offset by a $3.4~~$704.8 million ~~decline~~increase in the ~~cost~~average balance of loans. The increase in loan yields was attributable to an $8.3 million increase in interest income earned on our interest rate swaps as well as loans originated in the past twelve months at increasing interest rates. The average balance of loans increased due to strong prior year loan originations and slowing prepayment speeds. Additionally, interest income on investments and cash and cash equivalents increased $3.1 million and $3.2 million, respectively, primarily due to a 215 basis point and a 442 basis point, respectively, increase in yield compared to the same period last ~~year. The decline in loan~~year due to rising market interest ~~income was partially offset by~~rates. At March 31, 2023, over 63% of our available for sale securities portfolio consisted of floating rate securities with an ~~increase in interest income on investment securities~~average repricing period of ~~$319 thousand, related to an increase in the average balance and yield on investment securities of $35.6 million and 13 basis points, respectively, as compared to the same period last year.~~

approximately 14 months.

The volume of new ~~loan originations~~loans originated totaled ~~$568.9~~$90.3 million and ~~$391.0~~$568.9 million for the three months ended March 31, 2023 and 2022, ~~and 2021,~~ respectively. ~~Improvement~~The decline in ~~the volume of~~ loan originations was ~~mainly due~~primarily attributable to ~~stronger borrower~~slowing demand ~~during the quarter ended March 31, 2022 as the economy continued to recover~~resulting from the ~~pandemic, furthered by concerns regarding rising~~general rise in interest rates ~~which incented borrowers~~and our desire to ~~lock-in rates.~~achieve a risk adjusted return on new loan volume in light of the elevated cost of new funding. The weighted average interest rate on ~~these~~ new loans for the three months ended March 31, ~~2022~~2023 was ~~3.14%~~6.42% as compared to ~~3.35%~~3.14% for the same period last year. The ~~decline~~increase in the average coupon on originations was primarily due to ~~competitive pricing pressures.~~the rising interest rate environment. Loan prepayment speeds were ~~26.2%~~4.2% and ~~24.6%~~26.2% during the three months ended March 31, 2023 and 2022, respectively. The decrease in prepayment speeds was due to rising market interest rates, which slowed purchase and ~~2021, respectively.~~refinancing activity during the current year-to-date period. The weighted average rate on loan payoffs/curtailments during the three months ended March 31, ~~2022~~2023 was ~~3.70%~~4.43% as compared to ~~4.03%~~3.70% for the same period last year.

Total interest expense ~~decreased $6.4~~increased $38.4 million, or ~~36.9%~~350.6%, to ~~$11.0~~$49.4 million for the three months ended March 31, ~~2022~~2023 from ~~$17.4~~$11.0 million for the same period last year. Interest expense on deposits ~~decreased $5.6~~increased $31.6 million primarily due to ~~$6.0~~the cost of interest-bearing deposits increasing 220 basis points due to the general rise in market interest rates. Interest expense on advances from the FHLB increased by $6.2 million ~~for~~during the three months ended March 31, ~~2022 from $11.6 million for~~2023 compared to the same period last ~~year. The decrease was primarily~~year, due to a 44 basis point decline in the cost of interest-bearing deposits predominantly due to our deposit portfolio repricing to lower current market interest rates and, to a lesser extent, a $811.1 million declinean increase in the average balance ~~of time deposits, which were generally replaced with other lower~~and cost ~~deposit products. Additionally, interest expense on~~of FHLB advances ~~decreased $836 thousand due~~of $566.7 million and 118 basis points, respectively. The increase in FHLB advances has been utilized to ~~a decline~~fund loan growth, mitigate interest rate risk and, during the current quarter, increase liquidity. The increase in the ~~cost and~~

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~~average balance of FHLB advances of 25 basis points and $77.7 million, respectively, as compared to the same period last year. The decline in the~~ cost of FHLB advances ~~was primarily~~is due to ~~long-term FHLB advances being replaced with new long-term borrowings at lower~~rising market interest rates. We generally use both deposits and FHLB advances to fund net loan growth. We also use long-term FHLB advances as a hedge of interest rate risk, as we can strategically control the duration of those funds. A discussion of instruments used to mitigate interest rate risk can be found under Part II - Item 7A. ‘‘Quantitative and Qualitative Disclosures About Market Risk.’’

Provision for ~~Loan~~Credit Losses

For ~~both quarters ended March 31, 2022 and 2021, we recorded a reversal of loan loss provisions of $2.5 million. As discussed above, the loan loss provisions reversed during~~ the three months ended March 31, 2023 and 2022, we recorded $679 thousand and $2.5 million, respectively, in reversals of provisions for loan losses. During the three months ended March 31, 2023, the reversal was predominantly due to the elimination of a specific reserve previously established on a collateral dependent loan while the prior year amount was related to the reversal of the remaining portion of qualitative reserves established ~~with~~for economic uncertainty early in the ~~onset of~~COVID-19 pandemic. As discussed above, the ~~pandemic. The decision to recapture~~Company adopted the ~~remaining portion of our pandemic related reserve was based~~CECL methodology on ~~the continued resilience of our loan portfolio, as well as the general strength of the economic recovery.~~

Nonperforming loans totaled $2.3 million, or 0.04% of total loans, at March 31, 2022 compared to $6.7 million, or 0.11%, of total loans, at March 31, 2021. The decline in nonperforming loans from the same period last year was mainly due to the payoff or upgrade of these loans. Criticized loans totaled $20.7 million and $34.1 million at March 31, 2022 and 2021, respectively. The decline in criticized loans from March 31, 2021 was primarily attributable to the satisfactory performance of loans that were initially impacted by the pandemic.January 1, 2023.

Noninterest Income

Noninterest income ~~decreased by $251 thousand, or 81.2%,~~increased to ~~$58 thousand~~$1.2 million for the three months ended March 31, ~~2022~~2023 from ~~$309~~$58 thousand for the same period last year.

The following table presents the major components of our noninterest income:


		For the Three Months Ended March 31,									For the Three Months Ended March 31,
(Dollars in thousands)	(Dollars in thousands)	2022		2021		$ Increase (Decrease)		% Increase (Decrease)		(Dollars in thousands)	2023		2022		$ Increase (Decrease)		% Increase (Decrease)
Noninterest Income	Noninterest Income									Noninterest Income

FHLB dividends	FHLB dividends	$	354	$	367	(13)		(3.5)	%	FHLB dividends	$	577	$	354	$	223	63.0	%
Fee income	Fee income	226		85		141		165.9	%	Fee income	138		226		(88)		(38.9)	%
Other	Other	(522)		(143)		(379)		265.0	%	Other	520		(522)		1,042		(199.6)	%
Total noninterest income	Total noninterest income	$	58	$	309	$	(251)	(81.2)	%	Total noninterest income	$	1,235	$	58	$	1,177	2,029.3	%

The ~~decrease~~increase in noninterest income for the ~~quarter~~three months ended March 31, 2023 compared to the three months ended March 31, 2022 ~~compared to the quarter ended March 31, 2021,~~ was primarily ~~attributable~~due to a ~~$577~~$743 thousand ~~decline~~net increase in the fair value of equity securities during the current ~~quarter~~period compared to ~~a $211 thousand decline during~~ the same period last year.

Noninterest Expense

Noninterest expense increased ~~$108 thousand,~~$1.4 million, or ~~0.7%~~9.2%, to ~~$15.5~~$16.9 million for the three months ended March 31, ~~2022~~2023 from ~~$15.4~~$15.5 million for the ~~three months ended March 31, 2021.~~ same period last year.

The following table presents the major components of our noninterest expense:


	For the Three Months Ended March 31,
(Dollars in thousands)	2023		2022		$ Increase (Decrease)		% Increase (Decrease)
Noninterest Expense
Compensation and related benefits	$	10,671	$	10,219	$	452	4.4	%
Deposit insurance premium	884		481		403		83.8	%
Occupancy	1,184		1,194		(10)		(0.8)	%
Depreciation and amortization	649		603		46		7.6	%
Professional and regulatory fees	436		539		(103)		(19.1)	%
Data processing	862		988		(126)		(12.8)	%
Marketing	739		458		281		61.4	%
Merger costs	553		—		553		N/A
Other expenses	956		1,030		(74)		(7.2)	%
Total noninterest expense	$	16,934	$	15,512	$	1,422	9.2	%

The increase in noninterest expense during the three months ended March 31, 2023 as compared to the same

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For the Three Months Ended March 31,
(Dollars in thousands) 2022 2021 $ Increase (Decrease) % Increase (Decrease)
Noninterest Expense
Compensation and related benefits $ 10,219 $ 10,380 $ (161) (1.6) %
Deposit insurance premium 481 472 9 1.9 %
Professional and regulatory fees 539 484 55 11.4 %
Occupancy 1,194 1,215 (21) (1.7) %
Depreciation and amortization 603 655 (52) (7.9) %
Data processing 988 973 15 1.5 %
Marketing 458 292 166 56.8 %
Other expenses 1,030 933 97 10.4 %
Total noninterest expense $ 15,512 $ 15,404 $ 108 0.7 %

~~The~~period last year was primarily attributable to $553 thousand of costs incurred in connection with our previously announced merger with WAFD and a $452 thousand increase in ~~noninterest~~compensation expense ~~during~~due to a decline in capitalized salary costs due to lower loan origination volume, partially offset by a decrease in salaries and related benefits related to a reduction in our lending workforce at the ~~quarter ended March 31, 2022~~end of 2022. Additionally, deposit insurance premiums increased $403 thousand compared to the same period last year ~~was attributable~~due to ~~a $166 thousand~~an increase in marketing costs primarily related to deposit gathering efforts, partially offset by a decrease in compensation costs mainly due to increased capitalized salary amounts related to higher loan production volumes compared toassessment rates effective at the ~~same period last year.~~beginning of 2023.

Income Tax Expense

For the three months ended March 31, ~~2022,~~2023, we recorded income tax expense of ~~$9.1~~$5.6 million as compared to ~~$7.7~~$9.1 million for the same period last year with effective tax rates of ~~28.5%~~29.6% and ~~29.5%~~28.5%, respectively. Compared to the same period last year, the increase in income tax expense was due to our higher pre-tax earnings during the current quarter. The decline in effective tax rate primarily relates to the impact from the vesting of restricted stock awards.

Financial Condition - As of March 31, ~~2022~~2023 and December 31, ~~2021~~2022

Total assets at March 31, ~~2022~~2023 were ~~$7.3~~$8.3 billion, an increase of ~~$80.9~~$327.8 million, or ~~1.1%~~4.1%, from December 31, ~~2021.~~2022. The increase was primarily due to a ~~$68.9~~$331.0 million increase in ~~loans~~cash and ~~a $24.1 million increase in prepaid expenses and other assets, partially offset by a $23.1 million decline in investment securities~~cash equivalents as compared to ~~December 31, 2021.~~prior year-end. Total liabilities were ~~$6.6~~$7.6 billion at quarter end, an increase of ~~$82.0~~$314.2 million, or ~~1.3%~~4.3%, from December 31, ~~2021.~~2022. The increase in total liabilities was primarily attributable to ~~growth~~a $493.5 million increase in FHLB advances, partially offset by a $189.8 million decline in our ~~deposits of $63.0 million and an increase of $18.9 million in other liabilities and accrued expenses compared to the prior year end.~~deposits.

Loan Portfolio Composition

Our loan portfolio is our largest class of earning assets and typically provides higher yields than other types of earning assets. Associated with the higher yields is an inherent amount of credit risk which we attempt to mitigate with strong underwriting. As of both March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, our total loans amounted to ~~$6.4 billion and $6.3 billion, respectively.~~$7.0 billion. The following table presents the balance and associated percentage of each major product type within our portfolio as of the dates indicated.

As of March 31, 2022 As of December 31, 2021
(Dollars in thousands) Amount % of total Amount % of total
Real estate loans
Multifamily residential $ 4,203,656 66.5 % $ 4,183,194 66.9 %
Single family residential 1,892,924 30.0 % 1,859,524 29.8 %
Commercial real estate 193,733 3.1 % 186,531 3.0 %
Construction and land 23,746 0.4 % 18,094 0.3 %
Total loans before deferred items 6,314,059 100.0 % 6,247,343 100.0 %
Deferred loan costs, net 52,259 50,077
Total loans $ 6,366,318 $ 6,297,420

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	As of March 31, 2023				As of December 31, 2022
(Dollars in thousands)	Amount		% of total		Amount		% of total
Real estate loans
Multifamily residential	$	4,490,561	64.5	%	$	4,500,500	64.8	%
Single family residential	2,278,658		32.7	%	2,253,987		32.4	%
Commercial real estate	167,590		2.4	%	171,767		2.5	%
Construction and land	25,167		0.4	%	22,533		0.3	%

Total loans before deferred items	6,961,976		100.0	%	6,948,787		100.0	%
Deferred loan costs, net	61,503				61,658
Total loans	$	7,023,479			$	7,010,445

The relative composition of the loan portfolio has not changed significantly over the past several years. Our primary focus remains multifamily real estate lending, which constituted ~~67%~~65% of our portfolio at both March 31, ~~2022~~2023 and December 31, ~~2021.~~2022. Single family residential lending is our secondary lending emphasis and represented ~~30%~~33% and 32% of our portfolio at ~~both~~ March 31, ~~2022~~2023 and December 31, ~~2021.~~2022, respectively.

We recognize that our multifamily and single family residential loan products represent concentrations within our balance sheet. Multifamily loan balances as a percentage of risk-based capital were 548% and ~~551%~~560% as of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. Our single family loans as a percentage of risk-based capital were ~~248%~~280% and ~~246%~~281% as of the same dates. Additionally, our loans are geographically concentrated with borrowers and collateral properties on the West Coast. At March 31, ~~2022, 63%~~2023, 61%, 27% and 9% of our real estate loans were collateralized by properties in southern California counties, northern California counties and Washington, respectively, compared to ~~63%~~61%, ~~26%~~27% and 9%, respectively, at December 31, ~~2021.~~2022.

Our lending strategy has been to focus on products and markets where we have significant expertise. Given our concentrations, we have established strong risk management practices including risk-based lending standards, self-established product and geographical limits, annual cash flow evaluations of income property loans and semi-annual stress testing.

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We had a small portfolio of construction loans with commitments (funded and unfunded) totaling ~~$43.5 million and $38.1~~$38.7 million at both March 31, ~~2022~~2023 and December 31, ~~2021, respectively.~~2022. As of both March 31, 2023 and December 31, 2022, the average loan commitment for our single family construction product, which includes small tract housing and condominium projects, and our multifamily residential construction loans was ~~$5.1~~$5.7 million and ~~$6.1~~$3.4 million, ~~respectively, compared to $5.1 million and $6.4 million, respectively, at December 31, 2021.~~respectively. Our construction lending typically focuses on non-owner occupied single family residential projects with completed per-unit values of $4.0 million or less and multifamily projects with loan commitments of $15.0 million or less. In late 2022, we stopped accepting any new construction loan applications.

The following table presents the activity in our loan portfolio for the periods shown:


		Three Months Ended						Three Months Ended
(Dollars in thousands)	(Dollars in thousands)	March 31, 2022		December 31, 2021		March 31, 2021			(Dollars in thousands)	March 31, 2023		December 31, 2022		March 31, 2022
Loan increases:	Loan increases:								Loan increases:
Multifamily residential	Multifamily residential	$	297,128	$	315,742	$	248,604		Multifamily residential	$	23,380	$	108,978	$	297,128
Single family residential	Single family residential	251,964		175,987		138,064			Single family residential	66,927		166,694		251,964
Commercial real estate	Commercial real estate	14,420		—		2,000			Commercial real estate	—		—		14,420
Construction and land	Construction and land	5,400		6,955		2,351			Construction and land	—		5,707		5,400

Purchases		—		—		287,751

Total loans originated and purchased	Total loans originated and purchased	568,912		498,684		678,770			Total loans originated and purchased	90,307		281,379		568,912

Loan decreases:	Loan decreases:								Loan decreases:
Loan principal reductions and payoffs	Loan principal reductions and payoffs	(495,715)		(537,771)		(451,537)			Loan principal reductions and payoffs	(105,288)		(134,361)		(495,715)

Other (1)	Other (1)	(4,299)		(7,354)		(5,693)			Other (1)	28,015		8,972		(4,299)
Total loan outflows	Total loan outflows	(500,014)		(545,125)		(457,230)			Total loan outflows	(77,273)		(125,389)		(500,014)
Net change in total loan portfolio	Net change in total loan portfolio	$	68,898	$	(46,441)	$	221,540		Net change in total loan portfolio	$	13,034	$	155,990	$	68,898

(1) Other changes in loan balances primarily represent the net change in disbursements on unfunded commitments, deferred loan costs, fair value adjustments and, to the extent applicable, may include foreclosures, charge-offs and negative amortization.
(1) Other changes in loan balances primarily represent the net change in disbursements on unfunded commitments, deferred loan costs, fair value adjustments and, to the extent applicable, may include foreclosures and charge-offs. Fair value adjustments totaled $25.5 million, $7.9 million and $(7.8) million for the three months ended March 31, 2023, December 31, 2022 and March 31, 2022, respectively.									(1) Other changes in loan balances primarily represent the net change in disbursements on unfunded commitments, deferred loan costs, fair value adjustments and, to the extent applicable, may include foreclosures and charge-offs. Fair value adjustments totaled $25.5 million, $7.9 million and $(7.8) million for the three months ended March 31, 2023, December 31, 2022 and March 31, 2022, respectively.

Multifamily residential loans. We provide multifamily residential loans for the purchase or refinance of apartment buildings of five units or more, with the financed properties serving as collateral for the loan. Our multifamily lending is built around three core principles: market selection, deal selection and sponsor selection. We focus on markets with a high barrier to entry for new development, where there is a limited supply of new housing and where there is a high variance between the cost to rent and the cost to own. We typically lend on stabilized and seasoned assets and focus on older, smaller properties with rents at or below market levels, catering to low and middle income renters. Our customers are generally experienced real estate professionals who desire regular income/cash flow

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streams and are focused on building wealth steadily over time. We have instituted strong lending policies to mitigate credit and concentration risk. At March 31, ~~2022,~~2023, our multifamily real estate portfolio had an average loan balance of $1.6 million, ~~an average unit count of 13.8 units,~~ a weighted average loan to value of ~~56.9%~~56.4%, a weighted average debt service coverage ratio of 1.6 times and supporting collateral averaging 13.7 housing units, as compared to an average loan balance of $1.7 million, a weighted average loan to value of 56.7%, a weighted average debt service coverage ratio of 1.5 times ~~as compared to an average loan balance of $1.6 million, an average unit count of 14.0~~and supporting collateral averaging 13.7 housing units ~~a weighted average loan to value of 56.9% and a weighted average debt service coverage ratio of 1.5 times~~ at December 31, ~~2021.~~

2022.

Single family residential loans. We provide permanent financing on single family residential properties primarily located in our market areas, which are both owner-occupied and investor owned. We conduct this business primarily through a network of third party mortgage brokers with the intention of retaining these loans in our portfolio. The majority of our originations are for purchase transactions, but we also provide loans to refinance single family properties. Our underwriting criteria focuses on debt ratios, credit scores, liquidity of the borrower and the borrower’s cash reserves. At March 31, 2023, our single family residential real estate portfolio had an average loan balance of $905 thousand, a weighted average loan to value of 64.1% and a weighted average borrower credit score at origination/refreshed of 759. At December 31, 2022, our single family residential real estate portfolio had an average loan balance of ~~$875~~$907 thousand, a weighted average loan to value of ~~62.8%~~64.0% and a weighted average borrower credit score at origination/refreshed of 760. At December 31, 2021, our single family residential real estate portfolio had an average loan balance of $859 thousand, a weighted average loan to value of 62.5% and a weighted average credit score at origination/refreshed of 759.

Commercial real estate loans. While not a large part of our portfolio during any period presented, we also lend on

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nonresidential commercial real estate. Our nonresidential commercial real estate loans are generally used to finance the purchase or refinance of established multi-tenant industrial, office and retail sites. At March 31, ~~2022,~~2023, our commercial real estate portfolio had an average loan balance of $2.2 million, a weighted average loan to value of ~~54.1%~~53.8% and a weighted average debt service coverage ratio of ~~1.7~~2.8 times, as compared to an average loan balance of ~~$2.1~~$2.2 million, a weighted average loan to value of ~~54.2%~~53.9% and a weighted average debt service coverage ratio of 1.7 times at December 31, ~~2021.~~2022. Our exposure to nonresidential commercial real estate is limited. Additional detail is provided within the table below as of March 31, 2023:


(Dollars in thousands)	Count	Balance		Weighted Average LTV	% of Total Loans
Multifamily Real Estate	2,741	$	4,522,072	56.4%	64.4%
Single Family Real Estate	2,547	2,308,485		64.1%	32.9%
Commercial Real Estate Type:
Mid Rise Office	7	37,615		62.3%	0.5%
Strip Retail	13	23,203		50.3%	0.3%
Medical Office	5	18,466		59.0%	0.3%
Shopping Center	5	17,925		56.6%	0.3%
Low Rise Office	10	17,035		50.9%	0.2%
Unanchored Retail	8	14,540		44.3%	0.2%
Anchored Retail	3	11,479		50.7%	0.2%
More than 50% commercial	10	10,867		47.5%	0.2%
Multi-Tenant Industrial	5	6,961		41.3%	0.1%
Shadow Retail	3	3,915		61.4%	0.1%
Flex Industrial	2	2,367		61.0%	0.0%
Warehouse	3	2,350		44.1%	0.0%
Restaurant	2	1,253		26.1%	0.0%
Other	1	73		14.0%	0.0%
Commercial Real Estate	77	168,049		53.8%	2.4%
Construction (1)	8	24,873		57.7%	0.3%
Total	5,373	$	7,023,479	58.8%	100.0%

(1) Construction LTV is calculated based on an "as-completed" property value.Undisbursed commitments for construction loans totaled $13.6 million at March 31, 2023.

Construction and land. Other categories of loans included in our portfolio consist of construction and land loans. Construction loans include a single family construction product, which includes small tract housing and condominium projects, and multifamily construction projects.

As of March 31, 2023 and December 31, 2022, the Company had no land loans outstanding.

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The following table sets forth the contractual maturity distribution of our loan portfolio:


(Dollars in thousands)	(Dollars in thousands)	Due in 1 year or less		Due after 1 year through 5 years		Due after 5 years through 15 years		Due after 15 years		Total		(Dollars in thousands)	Due in 1 year or less		Due after 1 year through 5 years		Due after 5 years through 15 years		Due after 15 years		Total
As of March 31, 2022:
As of March 31, 2023:												As of March 31, 2023:
Loans	Loans											Loans
Real estate mortgage loans:	Real estate mortgage loans:											Real estate mortgage loans:
Multifamily residential	Multifamily residential	$	2,284	$	898	$	37,992	$	4,162,482	$	4,203,656	Multifamily residential	$	49	$	735	$	38,897	$	4,450,880	$	4,490,561
Single family residential	Single family residential	10		656		55,108		1,837,150		1,892,924		Single family residential	20		418		50,463		2,227,757		2,278,658
Commercial real estate	Commercial real estate	—		18,757		174,976		—		193,733		Commercial real estate	33		55,941		111,616		—		167,590
Construction and land	Construction and land	11,989		11,757		—		—		23,746		Construction and land	18,582		6,585		—		—		25,167
Total loans	Total loans	$	14,283	$	32,068	$	268,076	$	5,999,632	$	6,314,059	Total loans	$	18,684	$	63,679	$	200,976	$	6,678,637	$	6,961,976

Fixed interest rates	Fixed interest rates	$	—	$	200	$	48,323	$	241,211	$	289,734	Fixed interest rates	$	—	$	196	$	44,191	$	273,178	$	317,565
Floating or hybrid adjustable rates	Floating or hybrid adjustable rates	14,283		31,868		219,753		5,758,421		6,024,325		Floating or hybrid adjustable rates	18,684		63,483		156,785		6,405,459		6,644,411
Total loans	Total loans	$	14,283	$	32,068	$	268,076	$	5,999,632	$	6,314,059	Total loans	$	18,684	$	63,679	$	200,976	$	6,678,637	$	6,961,976
As of December 31, 2021:
As of December 31, 2022:												As of December 31, 2022:
Loans	Loans											Loans
Real estate mortgage loans:	Real estate mortgage loans:											Real estate mortgage loans:
Multifamily residential	Multifamily residential	$	30	$	2,225	$	37,730	$	4,143,209	$	4,183,194	Multifamily residential	$	72	$	537	$	39,917	$	4,459,974	$	4,500,500
Single family residential	Single family residential	27		631		56,858		1,802,008		1,859,524		Single family residential	27		468		51,443		2,202,049		2,253,987
Commercial real estate	Commercial real estate	—		11,403		175,128		—		186,531		Commercial real estate	—		41,505		130,262		—		171,767
Construction and land	Construction and land	10,648		7,446		—		—		18,094		Construction and land	17,464		5,069		—		—		22,533
Total loans	Total loans	$	10,705	$	21,705	$	269,716	$	5,945,217	$	6,247,343	Total loans	$	17,563	$	47,579	$	221,622	$	6,662,023	$	6,948,787

Fixed interest rates	Fixed interest rates	$	—	$	201	$	49,385	$	240,337	$	289,923	Fixed interest rates	$	—	$	197	$	45,045	$	270,285	$	315,527
Floating or hybrid adjustable rates	Floating or hybrid adjustable rates	10,705		21,504		220,331		5,704,880		5,957,420		Floating or hybrid adjustable rates	17,563		47,382		176,577		6,391,738		6,633,260
Total loans	Total loans	$	10,705	$	21,705	$	269,716	$	5,945,217	$	6,247,343	Total loans	$	17,563	$	47,579	$	221,622	$	6,662,023	$	6,948,787

Our fixed interest rate loans generally consist of 30 and 40-year loans that are primarily secured by single family residential properties, often in conjunction with our efforts to provide affordable housing financing to low-to-moderate income individuals. Our floating and adjustable rate loans are largely hybrid interest rate programs that provide an initial fixed term of three to ten years and then convert to quarterly or semi-annual repricing adjustments thereafter. As of March 31, ~~2022~~2023 and December 31, ~~2021, $4.9~~2022, $4.4 billion and ~~$4.8~~$4.6 billion, respectively, of our floating or hybrid adjustable rate loans were at their floor rates. The weighted average minimum interest rate on loans at their floor rates was ~~3.68%~~3.65% and ~~3.75%~~3.66% at March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. Hybrid adjustable rate loans still within their initial fixed term totaled ~~$5.2~~$5.6 billion and ~~$5.1~~$5.7 billion at March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. These loans had a weighted average term to first repricing date of ~~3.7~~3.6 years and ~~3.6~~3.7 years at March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

Asset Quality

Our primary objective is to maintain a high level of asset quality in our loan portfolio. We believe our underwriting practices and policies, established by experienced professionals, appropriately govern the risk profile for our loan portfolio. These policies are continually evaluated and updated as necessary. All loans are assessed and assigned a risk classification at origination based on underlying characteristics of the transaction such as collateral type, collateral cash flow, collateral coverage and borrower strength. We believe that we have a comprehensive methodology to proactively monitor our credit quality after origination. Particular emphasis is placed on our commercial portfolio where risk assessments are re-evaluated as a result of reviewing commercial property operating statements and borrower financials on at least an annual basis. Single family residential loans are subject to an annual regrading based upon a credit score refresh, among other factors. On an ongoing basis, we also monitor payment performance, delinquencies, and tax and property insurance compliance, as well as any other

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pertinent information that may be available to determine the collectability of a loan. We believe our practices

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facilitate the early detection and remediation of problems within our loan portfolio. ~~Assigned risk ratings, as well as the evaluation of other credit metrics, are an integral part of management assessing the adequacy of our allowance for loan losses.~~ We periodically employ the use of an outside independent consulting firm to evaluate our underwriting and risk assessment processes. Like other financial institutions, we are subject to the risk that our loan portfolio will be exposed to increasing pressures from deteriorating borrower credit due to general economic conditions.

Nonperforming assets. Our nonperforming assets consist of nonperforming loans and foreclosed real estate, if any. It is our policy to place a loan on non-accrual status in the event that the borrower is 90 days or more delinquent, unless the loan is well secured and in the process of collection, or earlier if the timely collection of contractual payments appears doubtful. Cash payments subsequently received on non-accrual loans are recognized as income only where the future collection of the remaining principal is considered by management to be probable. Loans are restored to accrual status only when the loan is less than 90 days delinquent and not in foreclosure, and the borrower has demonstrated the ability to make future payments of principal and interest.

~~Troubled debt restructurings.~~ Loans for which the terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties, are considered TDRs. Concessions could include reductions of interest rates, extension of the maturity date at a rate lower than the current market rate for a new loan with similar risk, reduction of accrued interest, principal forgiveness, forbearance, or other material modifications. The assessment of whether a borrower is experiencing or will likely experience financial difficulty and whether a concession has been granted is highly subjective in nature, and management’s judgment is required when determining whether a modification is classified as a TDR.

The following table provides details of our nonperforming and restructured assets as of the dates presented and certain other related information:

(Dollars in thousands) March 31,
2022 December 31,
2021
Non-accrual loans
Multifamily residential portfolio $ 500 $ 505
Single family residential portfolio 1,777 1,788
Total non-accrual loans 2,277 2,293
Real estate owned — —
Total nonperforming assets $ 2,277 $ 2,293
Performing TDRs $ 1,192 $ 1,204
Allowance for loan losses to period end nonperforming loans 1,450.81 % 1,549.72 %
Nonperforming loans to period end loans 0.04 % 0.04 %
Nonperforming assets to total assets 0.03 % 0.03 %
Nonperforming loans plus performing TDRs to total loans 0.05 % 0.06 %


(Dollars in thousands)	March 31, 2023			December 31, 2022
Non-accrual loans
Multifamily residential portfolio	$	3,504		$	3,509
Single family residential portfolio	1,466			2,962


Total non-accrual loans	4,970			6,471
Real estate owned	—			—
Total nonperforming assets	$	4,970		$	6,471

Allowance for credit losses on loans to period end nonperforming loans	722.62		%	566.91		%
Nonperforming loans to period end loans	0.07		%	0.09		%
Nonperforming assets to total assets	0.06		%	0.08		%

When assessing whether a loan should be placed on non-accrual status because contractual payments appear doubtful, consideration is given to information we collect from third parties and our borrowers to substantiate their future ability to repay principal and interest due on their loans as contractually agreed.

~~For the three months ended March 31, 2022, $27 thousand in interest~~Interest income ~~was~~ recognized on non-accrual loans subsequent to their classification as non-accrual totaled $28 thousand for the three months ended March 31, 2023 compared to $8$55 thousand and ~~$62~~$27 thousand for the three months ended December 31, ~~2021~~2022 and March 31, ~~2021, respectively. For the three months ended March 31,~~ 2022, ~~the Company recorded $9 thousand of interest income related to performing TDR loans compared to $9 thousand and $11 thousand during the three months ended December 31, 2021 and March 31, 2021,~~ respectively. Gross interest income that would have been recorded on non-accrual loans had they been current in accordance with their original terms was ~~$27~~$146 thousand for the three months ended March 31, ~~2022~~2023 compared to ~~$12~~$44 thousand and ~~$78~~$27 thousand for the three months ended December 31, ~~2021~~2022 and March 31, ~~2021,~~2022, respectively.

Allowance for ~~loan~~credit losses. ~~Our~~The Company adopted the CECL allowance methodology on January 1, 2023. The ACL on loans represents the Company’s estimate of expected lifetime credit losses for ~~loan losses~~its loans at the time of origination or acquisition and is maintained at a level deemed appropriate by management ~~believes is adequate~~ to ~~account~~provide for ~~probable incurred~~expected lifetime credit losses in the ~~loan~~ portfolio as of the ~~reporting date. We determine~~date of the consolidated statements of financial condition. Management estimates the allowance ~~based on a quarterly evaluation of risk. That evaluation gives consideration~~balance using relevant available information, from internal and external sources, relating to ~~the nature of the loan~~

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~~portfolio, historical loss experience, known and inherent risks in the portfolio, the estimated value of any underlying collateral, adverse situations that may affect a borrower’s ability to repay,~~past events, current ~~economic and environmental~~ conditions and ~~risk assessments assigned to each loan as~~reasonable and supportable forecasts. The use of reasonable and supportable forecasts requires significant judgment. The ACL model leverages projections provided by reputable, well-recognized independent economic advisory companies and incorporates a ~~result~~forecast of ~~our ongoing reviews of the loan portfolio. This process involves a considerable degree of judgment and subjectivity.~~macroeconomic factors which is updated quarterly. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Bank’s allowance. Such agencies may require the Bank to recognize additions to the allowance based on judgments different from those of management.

~~Our~~The ACL on loans is a valuation account that is deducted from the amortized cost basis of loans to present the net amount expected to be collected. Amortized cost does not include accrued interest, which management elected to exclude from the estimate of expected credit losses. Loans are charged-off against the allowance when management believes that the uncollectibility of a loan is ~~established through charges~~confirmed. Recoveries will never exceed the aggregate of amounts previously charged-off. The Company also maintains an ACL on unfunded commitments and other off-balance sheet credit exposures in other liabilities and accrued expenses in the consolidated statements of financial condition. This ACL is estimated over a commitment's contractual period and is determined in a manner consistent with the ACL for loans, which includes consideration of the likelihood that funding will occur. Adjustments to the ACL

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for unfunded commitments are included in the provision for ~~loan losses. Loans, or portions~~(or reversal of) credit losses on the unaudited consolidated statements of ~~loans, deemed to be uncollectible~~income. All ACL balances are charged against the allowance. Recoveries of previously charged-off amounts are credited to our allowance for loan losses. The allowance is decreased by the reversal of prior provisions when the total allowance balance is deemed excessive for the risks inherent in the portfolio. The allowance for loan losses balance is neither indicative of the specific amounts of future charge-offs that may occur, nor ~~is it~~are they an indicator of any future loss trends.

The following ~~table provides~~tables provide information on the activity within the allowance ~~for loan losses~~ as of and for the periods indicated:


		Three Months Ended
(Dollars in thousands)	(Dollars in thousands)	March 31, 2022			December 31, 2021			March 31, 2021			(Dollars in thousands)	Beginning Balance		Impact of CECL Adoption		Charge-Offs		Recoveries		Provision		Ending Balance

Allowance for loan losses at beginning of period		$	35,535		$	37,335		$	46,214
Charge-offs:
Three months ended March 31, 2023											Three months ended March 31, 2023
Multifamily residential	Multifamily residential	—			—			—			Multifamily residential	$	26,417	$	2,882	$	—	$	—	$	(2,007)	$	27,292
Single family residential	Single family residential	—			—			—			Single family residential	8,564		(2,472)		—		—		1,339		7,431
Commercial real estate	Commercial real estate	—			—			—			Commercial real estate	1,539		(784)		—		—		22		777
Construction and land	Construction and land	—			—			—			Construction and land	165		282		—		—		(33)		414
Total charge-offs		—			—			—
Recoveries:

Single family residential		—			—			2

Construction and land		—			—			50
Total recoveries		—			—			52
Net recoveries		—			—			52
Reversal of provision for loan losses		(2,500)			(1,800)			(2,500)
Allowance for loan losses at period end		$	33,035		$	35,535		$	43,766
Allowance for loan losses to period end loans held for investment		0.52		%	0.56		%	0.70		%
Annualized net recoveries to average loans:
Allowance for credit losses on loans											Allowance for credit losses on loans	36,685		(92)		—		—		(679)		35,914
Allowance for credit losses on off-balance sheet credit exposures											Allowance for credit losses on off-balance sheet credit exposures	563		211		—		—		(116)		658
Total allowance for credit losses											Total allowance for credit losses	$	37,248	$	119	$	—	$	—	$	(795)	$	36,572
Three months ended December 31, 2022											Three months ended December 31, 2022
Multifamily residential	Multifamily residential	—		%	—		%	—		%	Multifamily residential	$	26,204	$	—	$	—	$	—	$	213	$	26,417
Single family residential	Single family residential	—		%	—		%	(0.00)		%	Single family residential	8,157		—		—		—		407		8,564
Commercial real estate	Commercial real estate	—		%	—		%	—		%	Commercial real estate	1,543		—		—		—		(4)		1,539
Construction and land	Construction and land	—		%	—		%	(0.90)		%	Construction and land	131		—		—		—		34		165
Annualized net recoveries to average loans		—		%	—		%	(0.00)		%
Allowance for loan losses											Allowance for loan losses	$	36,035	$	—	$	—	$	—	$	650	$	36,685
Three months ended March 31, 2022											Three months ended March 31, 2022
Multifamily residential											Multifamily residential	$	26,043	$	—	$	—	$	—	$	(1,892)	$	24,151
Single family residential											Single family residential	7,224		—		—		—		(427)		6,797
Commercial real estate											Commercial real estate	2,094		—		—		—		(212)		1,882
Construction and land											Construction and land	174		—		—		—		31		205
Allowance for loan losses											Allowance for loan losses	$	35,535	$	—	$	—	$	—	$	(2,500)	$	33,035


	Three Months Ended
(Dollars in thousands)	March 31, 2023		December 31, 2022		March 31, 2022

















Allowance for credit losses on loans to period end loans	0.51	%	0.52	%	0.52	%
Annualized net charge-offs to average loans:
Multifamily residential	—	%	—	%	—	%
Single family residential	—	%	—	%	—	%
Commercial real estate	—	%	—	%	—	%
Construction and land	—	%	—	%	—	%
Annualized net charge-offs to average loans	—	%	—	%	—	%

Investment Portfolio

Our investment portfolio is generally comprised of government agency securities which are high-quality liquid investments under Basel ~~III.~~III, with over 97.9% classified as available for sale. The portfolio is primarily maintained to serve as a contingent, on-balance sheet source of liquidity and as such, is generally kept unencumbered. We manage our investment portfolio according to written investment policies approved by our board of directors. Our investment strategy aims to maximize earnings while maintaining liquidity in securities with minimal credit risk and interest rate risk which is reflective in the yields obtained on those securities. Most of our securities are classified as available for sale, although we occasionally purchase long-term fixed rate mortgage backed securities or municipal securities for community reinvestment purposes and classify those as held to maturity. In addition, we have equity securities which consist of investments in a qualified community reinvestment fund.

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The following table presents the book value of our investment portfolio:


		March 31, 2022				December 31, 2021					March 31, 2023				December 31, 2022
(Dollars in thousands)	(Dollars in thousands)	Book Value		% of Total		Book Value		% of Total		(Dollars in thousands)	Book Value		% of Total		Book Value		% of Total
Available for sale debt securities:	Available for sale debt securities:									Available for sale debt securities:
Government and Government Sponsored Entities:	Government and Government Sponsored Entities:									Government and Government Sponsored Entities:
Commercial mortgage backed securities ("MBS") and collateralized mortgage obligations ("CMOs")	Commercial mortgage backed securities ("MBS") and collateralized mortgage obligations ("CMOs")	$	406,603	63.55	%	$	407,746	61.52	%	Commercial mortgage backed securities ("MBS") and collateralized mortgage obligations ("CMOs")	$	333,725	54.98	%	$	340,736	54.89	%
Residential MBS and CMOs	Residential MBS and CMOs	180,346		28.20	%	200,133		30.19	%	Residential MBS and CMOs	195,543		32.21	%	199,384		32.11	%
Agency bonds	Agency bonds	10,500		1.64	%	10,831		1.63	%	Agency bonds	41,160		6.78	%	42,630		6.87	%
Other asset backed securities	Other asset backed securities	27,410		4.28	%	28,607		4.32	%	Other asset backed securities	22,999		3.79	%	24,598		3.96	%
Total available for sale debt securities	Total available for sale debt securities	624,859		97.67	%	647,317		97.66	%	Total available for sale debt securities	593,427		97.76	%	607,348		97.83	%
Held to maturity:	Held to maturity:									Held to maturity:
Government Sponsored Entities:	Government Sponsored Entities:									Government Sponsored Entities:
Residential MBS	Residential MBS	3,731		0.58	%	3,761		0.57	%	Residential MBS	3,022		0.50	%	3,047		0.49	%
Other investments	Other investments	67		0.01	%	68		0.01	%	Other investments	58		0.01	%	61		0.01	%
Total held to maturity debt securities	Total held to maturity debt securities	3,798		0.59	%	3,829		0.58	%	Total held to maturity debt securities	3,080		0.51	%	3,108		0.50	%
Equity securities	Equity securities	11,116		1.74	%	11,693		1.76	%	Equity securities	10,506		1.73	%	10,340		1.67	%
Total investment securities	Total investment securities	$	639,773	100.00	%	$	662,839	100.00	%	Total investment securities	$	607,013	100.00	%	$	620,796	100.00	%

The unrealized losses in the Company's available for sale and held to maturity portfolios were $46.9 million and $189 thousand, respectively, and represented 7.73% and 0.03%, respectively, of our total investment portfolio at March 31, 2023. Over 63% of our available for sale securities portfolio consisted of floating rate securities with an average repricing period of approximately 14 months. As of March 31, 2023, securities with a book value totaling $573.5 million were pledged to the FHLB and FRB to increase our borrowing capacity in response to the bank failures in that occurred in March 2023. There were no advances against these pledged securities during the current quarter. No securities were pledged as of December 31, 2022.

Prepaid Expenses and Other Assets

Prepaid expenses and other assets totaled $104.5 million at March 31, 2023 compared to $120.2 million at December 31, 2022, a decrease of $15.8 million, or 13.1%. This decrease was primarily due to a $9.6 million decline in the fair value of our swaps during the quarter.

Deposits

Representing ~~85.0%~~74.3% of our total liabilities as of March 31, ~~2022,~~2023, deposits are our primary source of funding for our business operations. ~~We have historically maintained and grown~~Despite the recent volatility in the banking sector caused by bank closures during the current quarter, our deposit ~~customer base in various rate environments based on~~outflows appear to have generally stabilized following an initial period of elevated withdrawals. We attribute the return to a more normalized environment to our competitive pricing of deposit products, as well as our strong customer relationships, ~~evidenced in part by increased deposits over recent years, as well as~~ our reputation as a safe, sound, secure and "well-capitalized" institution and our commitment to excellent customer ~~service. We are~~service, evidenced in part by increased deposits over recent years. Further, we remain focused on growing ~~our~~ deposits by deepening our relationships with our existing loan and deposit customers and looking to expand our traditional product footprint with newer emphasis placed on specialty/business ~~affiliations and transaction accounts.~~affiliations. When competitively priced, or when there is market disruption, and/or for asset liability management purposes, we will supplement our deposits with wholesale deposits.

Total deposits ~~increased~~decreased by ~~$63.0~~$189.8 million, or ~~1.1%~~3.3%, to $5.6 billion at March 31, ~~2022~~2023 from ~~$5.5~~$5.8 billion at December 31, ~~2021. Brokered and~~2022. Retail deposits declined $277.4 million, while brokered deposits increased $87.6 million during the three months ended March 31, 2023. The decline in retail deposits ~~increased $50.2 million~~during the quarter accelerated after the bank failures on March 10th and ~~$12.8 million, respectively. During~~12th, 2023, with 62% of the retail deposit outflows during the quarter occurring after these events. The deposit declines were primarily experienced in money market accounts, partially offset by increases in time deposits. Consequently, the proportion of non-maturity deposits within the portfolio ~~increased~~decreased to ~~60.6%~~39.7% at

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March 31, 2023 compared to ~~57.8%~~46.3% at December 31, ~~2021,~~2022, while our portfolio of time deposits ~~decreased~~increased to ~~39.4%~~60.3% from ~~42.2%, respectively.~~53.7% as of the same dates. The ~~change~~increase in brokered deposits was utilized to partially offset the ~~composition of our deposit portfolio was attributed to a combination of consumer preferences to maintain flexibility~~decline in ~~low interest rate environments, as well as our strategic goal of increasing transaction accounts. We consider approximately 75.7% of~~ our retail deposits atand further supplement our liquidity position. Our cost of interest bearing deposits was 2.65% during the quarter ended March 31, 2023, compared to 2.00% and 0.45% during the three months ended December 31, 2022 ~~to be core~~and March 30, 2022, respectively. As discussed above, the increase in our cost of interest bearing deposits ~~based on our internal methodology, which gives consideration~~compared to the ~~tenure of customer relationships, product penetration~~prior quarter and ~~the relative cost of the deposit accounts.~~

prior year-to-date period was predominantly due to interest rate increases in both retail and brokered deposits.

Our loan to deposit ratio was ~~114%~~124% and 120% at ~~both~~ March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. It is common for us to operate with a loan to deposit ratio exceeding those commonly seen at other banks. Our higher than average ratio is attributed to our use of FHLB borrowings to supplement loan growth and to strategically manage our interest rate risk, as well as our preference to maintain a large proportion of our assets in real estate loans which generally provide a better yield than high-quality liquid investments.

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The increase in this ratio during the current quarter was due to the retail deposit outflows discussed above.

The following ~~table summarizes~~tables summarize our deposit composition by average deposits and average rates paid for the periods indicated:


		Three Months Ended																			Three Months Ended
		March 31, 2022						December 31, 2021						March 31, 2021							March 31, 2023						December 31, 2022						March 31, 2022
(Dollars in thousands)	(Dollars in thousands)	Average amount		Weighted average rate paid		Percent of total deposits		Average amount		Weighted average rate paid		Percent of total deposits		Average amount		Weighted average rate paid		Percent of total deposits		(Dollars in thousands)	Average amount		Weighted average rate paid		Percent of total deposits		Average amount		Weighted average rate paid		Percent of total deposits		Average amount		Weighted average rate paid		Percent of total deposits
Noninterest-bearing deposit accounts	Noninterest-bearing deposit accounts	$	147,533	—	%	2.7	%	$	126,225	—	%	2.3	%	$	89,626	—	%	1.6	%	Noninterest-bearing deposit accounts	$	86,967	—	%	1.5	%	$	119,589	—	%	2.0	%	$	147,533	—	%	2.7	%
Interest-bearing transaction accounts	Interest-bearing transaction accounts	169,580		0.22	%	3.1	%	169,132		0.22	%	3.0	%	155,038		0.28	%	2.9	%	Interest-bearing transaction accounts	150,429		0.43	%	2.6	%	170,867		0.35	%	2.9	%	169,580		0.22	%	3.1	%
Money market demand accounts	Money market demand accounts	2,964,527		0.43	%	53.8	%	2,801,908		0.44	%	50.4	%	2,027,828		0.58	%	38.2	%	Money market demand accounts	2,271,018		2.46	%	39.3	%	2,622,015		1.83	%	44.6	%	2,964,527		0.43	%	53.8	%
Time deposits	Time deposits	2,231,471		0.49	%	40.4	%	2,457,668		0.55	%	44.3	%	3,042,619		1.13	%	57.3	%	Time deposits	3,268,933		2.88	%	56.6	%	2,973,058		2.25	%	50.5	%	2,231,471		0.49	%	40.4	%
Total	Total	$	5,513,111	0.44	%	100.0	%	$	5,554,933	0.47	%	100.0	%	$	5,315,111	0.87	%	100.0	%	Total	$	5,777,347	2.60	%	100.0	%	$	5,885,529	1.96	%	100.0	%	$	5,513,111	0.44	%	100.0	%

The Company estimated its balance of uninsured deposits at approximately $1.0 billion, or 17.9% or total deposits, and $1.3 billion, or 22.5% of total deposits, at March 31, 2023 and December 31, 2022, respectively. The following table summarizes our deposit composition by source and segregates balances between estimated insured and uninsured balances for each deposit category as of March 31, 2023 and December 31, 2022.


	March 31, 2023				December 31, 2022
(Dollars in thousands)	Insured		Uninsured		Insured		Uninsured
Consumer	$	3,175,326	$	846,762	$	3,090,797	$	931,454
Business	917,867		166,139		981,692		379,560
Brokered	543,400		—		455,837		—
Total deposits	$	4,636,593	$	1,012,901	$	4,528,326	$	1,311,014

The following table sets forth the maturity of time deposits and estimated insured and uninsured balances as of March 31, ~~2022:~~2023:


(Dollars in thousands except for column headings)	(Dollars in thousands except for column headings)	Insured			Uninsured			(Dollars in thousands except for column headings)	Insured			Uninsured
Remaining maturity:	Remaining maturity:							Remaining maturity:
Three months or less	Three months or less	$	436,148		$	158,231		Three months or less	$	601,950		$	109,572
Over three through six months	Over three through six months	622,706			142,479			Over three through six months	796,443			185,759
Over six through twelve months	Over six through twelve months	471,920			166,358			Over six through twelve months	1,170,083			248,594
Over twelve months	Over twelve months	180,268			31,265			Over twelve months	241,240			52,000
Total	Total	$	1,711,042		$	498,333		Total	$	2,809,716		$	595,925
Percent of total deposits		30.55		%	8.90		%
Percent of time deposits to total deposits								Percent of time deposits to total deposits	49.73		%	10.55		%

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The Company estimated its balance of uninsured deposits at approximately $1.4 billion at both March 31, 2022 and December 31, 2021, respectively. At the same dates, the Company had $76.0 million and $25.8 million of wholesale deposits, respectively.

FHLB Advances and Other Borrowings

In addition to deposits, we utilize collateralized FHLB borrowings to fund our asset ~~growth.~~growth and, more recently, to add liquidity to our balance sheet. FHLB advances can, at times, have attractive rates and we have commonly used them to strategically extend the duration of our liabilities as part of our interest rate risk ~~management. Total~~management efforts to reduce the liability sensitive position of our balance sheet. FHLB advances totaled ~~$751.6 million~~$1.7 billion and $1.2 billion at ~~both~~ March 31, ~~2022~~2023 and December 31, ~~2021.~~2022, respectively. The increase in FHLB advances this quarter was primarily utilized to supplement our liquidity in response to the unexpected bank closures in March 2023 and offset the declines in retail deposits discussed above. As of the same dates, the Bank had a FHLB letter of credit outstanding totaling $62.6 million.

Historically, we have utilized other instruments such as trust preferred securities and senior debt at the bank holding company level as a source of capital for our Bank to support asset growth. We have established two trusts (the "Trusts") of which we own all the common securities, that have issued trust preferred securities, ("Trust Securities"), to investors in private placement transactions. The proceeds of the securities qualify as Tier 1 capital under the applicable regulations for community banks with total assets less than $15 billion. In accordance with GAAP, the Trusts are not consolidated in our consolidated statements of financial condition but rather, the common securities are included in our other assets and the junior subordinated debentures ("Notes") issued to the Trusts are shown as a liability. The following table is a summary of our outstanding Trust Securities and related Notes as of the dates indicated:

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		March 31, 2022				December 31, 2021				Date	Maturity	Rate Index		March 31, 2023				December 31, 2022				Date	Maturity	Rate Index
Issuer	Issuer	Amount		Rate		Amount		Rate		Issued	Date	(Quarterly Reset)	Issuer	Amount		Rate		Amount		Rate		Issued	Date	(Quarterly Reset)
(Dollars in thousands)	(Dollars in thousands)												(Dollars in thousands)
Luther Burbank Statutory Trust I	Luther Burbank Statutory Trust I	$	41,238	2.21	%	$	41,238	1.58	%	3/1/2006	6/15/2036	3 month LIBOR + 1.38%	Luther Burbank Statutory Trust I	$	41,238	6.25	%	$	41,238	6.15	%	3/1/2006	6/15/2036	3 month LIBOR + 1.38%
Luther Burbank Statutory Trust II	Luther Burbank Statutory Trust II	$	20,619	2.45	%	$	20,619	1.82	%	3/1/2007	6/15/2037	3 month LIBOR + 1.62%	Luther Burbank Statutory Trust II	$	20,619	6.49	%	$	20,619	6.39	%	3/1/2007	6/15/2037	3 month LIBOR + 1.62%

We have the right to defer payment of interest on the Notes at any time or from time to time for a period not exceeding five years provided that no extension period may extend beyond the stated maturity of the relevant Note. During any such extension period, distributions on the Trust Securities will also be deferred, and our ability to pay dividends on our common stock will be restricted.

We have entered into contractual arrangements which, taken collectively, fully and unconditionally guarantee payment of: (i) accrued and unpaid distributions required to be paid on the Trust Securities; (ii) the redemption price with respect to any Trust Securities called for redemption by the Trusts; and (iii) payments due upon a voluntary or involuntary dissolution, winding up or liquidation of the Trusts. The Trust Securities are mandatorily redeemable upon maturity of the Notes, or upon earlier redemption as provided in the indenture. We have the right to redeem the Notes purchased by the Trusts, in whole or in part, on or after the redemption date. As specified in the indenture, if the Notes are redeemed prior to maturity, the redemption price will be the principal amount and any accrued but unpaid interest.

In 2014, we issued senior debt totaling $95.0 million to qualified institutional investors. These senior notes are unsecured, carry a fixed interest coupon of 6.5%, pay interest only on a quarterly basis and mature on September 30, 2024. The senior debt is redeemable at any time prior to August 31, 2024, at a redemption price equal to the greater of (i) 100% of the principal amount, or (ii) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted to the redemption date on a semi-annual basis at the calculated rate for a U. S. Treasury security having a comparable remaining maturity, plus 30 basis points, plus in each case, accrued and unpaid interest. On or after September 1, 2024, the senior debt may be redeemed at 100% of the principal amount plus accrued and unpaid interest.

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The following table presents information regarding our FHLB advances and other borrowings as of or for the periods indicated:


												As of or For the Three Months Ended
		As of or For the Three Months Ended
(Dollars in thousands)	(Dollars in thousands)	March 31, 2022			December 31, 2021			March 31, 2021			(Dollars in thousands)	March 31, 2023			December 31, 2022			March 31, 2022
FHLB advances	FHLB advances										FHLB advances
Average amount outstanding during the period	Average amount outstanding during the period	$	761,119		$	751,653		$	838,851		Average amount outstanding during the period	$	1,327,863		$	1,129,382		$	761,119
Maximum amount outstanding at any month-end during the period	Maximum amount outstanding at any month-end during the period	751,647			751,647			897,147			Maximum amount outstanding at any month-end during the period	1,704,647			1,208,147			751,647
Balance outstanding at end of period	Balance outstanding at end of period	751,647			751,647			840,947			Balance outstanding at end of period	1,701,647			1,208,147			751,647
Weighted average maturity (in years)	Weighted average maturity (in years)	2.3			2.3			1.4			Weighted average maturity (in years)	1.6			1.7			2.3
Weighted average interest rate at end of period	Weighted average interest rate at end of period	1.75		%	1.68		%	1.82		%	Weighted average interest rate at end of period	3.34		%	2.64		%	1.75		%
Weighted average interest rate during the period	Weighted average interest rate during the period	1.65		%	1.68		%	1.90		%	Weighted average interest rate during the period	2.83		%	2.40		%	1.65		%

Junior subordinated deferrable interest debentures	Junior subordinated deferrable interest debentures										Junior subordinated deferrable interest debentures
Balance outstanding at end of period	Balance outstanding at end of period	$	61,857		$	61,857		$	61,857		Balance outstanding at end of period	$	61,857		$	61,857		$	61,857
Weighted average maturity (in years)	Weighted average maturity (in years)	14.8			15.0			15.8			Weighted average maturity (in years)	13.7			14.0			14.8
Weighted average interest rate at end of period	Weighted average interest rate at end of period	2.29		%	1.66		%	1.64		%	Weighted average interest rate at end of period	6.33		%	6.23		%	2.29		%
Weighted average interest rate during the period	Weighted average interest rate during the period	1.80		%	1.62		%	1.69		%	Weighted average interest rate during the period	6.33		%	5.09		%	1.80		%

Senior unsecured term notes	Senior unsecured term notes										Senior unsecured term notes
Balance outstanding at end of period	Balance outstanding at end of period	$	94,693		$	94,662		$	94,570		Balance outstanding at end of period	$	94,816		$	94,785		$	94,693
Weighted average maturity (in years)	Weighted average maturity (in years)	2.4			2.7			3.6			Weighted average maturity (in years)	1.4			1.7			2.4
Weighted average interest rate at end of period	Weighted average interest rate at end of period	6.65		%	6.66		%	6.66		%	Weighted average interest rate at end of period	6.64		%	6.64		%	6.65		%
Weighted average interest rate during the period	Weighted average interest rate during the period	6.65		%	6.66		%	6.66		%	Weighted average interest rate during the period	6.64		%	6.64		%	6.65		%

Our level of FHLB advances can fluctuate on a daily basis depending on our funding needs and the availability of other sources of funds to satisfy those needs. Short-term advances allow us flexibility in funding our daily liquidity needs.

The following table sets forth the amount of short-term borrowings outstanding, comprised entirely of FHLB advances, as well as the weighted average interest rate thereon, as of or for the dates indicated:


												As of or For the Three Months Ended
		As of or For the Three Months Ended
(Dollars in thousands)	(Dollars in thousands)	March 31, 2022			December 31, 2021			March 31, 2021			(Dollars in thousands)	March 31, 2023			December 31, 2022			March 31, 2022
Outstanding at period end	Outstanding at period end	$	—		$	—		$	134,200		Outstanding at period end	$	150,000		$	56,500		$	—
Average amount outstanding	Average amount outstanding	21,694			—			88,771			Average amount outstanding	48,993			75,561			21,694
Maximum amount outstanding at any month end	Maximum amount outstanding at any month end	—			—			190,400			Maximum amount outstanding at any month end	150,000			100,000			—
Weighted average interest rate:
During period		0.34		%	—		%	0.14		%
End of period		—		%	—		%	0.14		%
Weighted average interest rate at end of period											Weighted average interest rate at end of period	5.27		%	4.65		%	—		%
Weighted average interest rate during the period											Weighted average interest rate during the period	5.05		%	3.19		%	0.34		%

Stockholders’ Equity

~~Stockholders’~~The Company's stockholders’ equity totaled ~~$668.0 million and $669.1~~$696.2 million at March 31, ~~2022 and~~2023, an increase of $13.6 million, or 2.0%, compared to December 31, ~~2021, respectively.~~2022. The ~~decrease~~increase in stockholders' equity was primarily ~~related~~due to ~~a decline in the fair value of available for sale investment securities, net of tax, of $12.0 million, dividends paid of $6.2 million and stock repurchases of $5.6 million, partially offset by~~ net income of ~~$22.9 million during the three months ended March 31, 2022.~~

During the three months ended March 31, 2022, the Company repurchased 425 thousand of its shares at an average price of $13.25 per share and a total cost of $5.6 million in connection with its current $20.0 million stock repurchase program that was approved by the Board of Directors of the Company on October 30, 2020. As of March 31, 2022, there were $4.1 million of authorized funds remaining under the current share repurchase program.

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$13.4 million.

Off-Balance Sheet Arrangements

In the normal course of business, we enter into various transactions that are not included in our consolidated statements of financial condition in accordance with GAAP. These transactions include commitments to extend credit in the ordinary course of business including commitments to fund new loans and undisbursed funds, as well

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as certain guarantees and derivative transactions.

Loan commitments represent contractual cash requirements to a borrower although, a portion of these commitments to extend credit may expire without being drawn upon. Therefore, the total commitment amounts, shown below, do not necessarily represent future cash obligations. The following is a summary of our off-balance sheet arrangements outstanding as of the dates presented.


(Dollars in thousands)	(Dollars in thousands)	March 31, 2022		December 31, 2021		(Dollars in thousands)	March 31, 2023		December 31, 2022
Commitments to fund loans and lines of credit		$	134,023	$	132,769
Commitments to fund loans						Commitments to fund loans	$	36,712	$	37,741

In connection with our Freddie Mac multifamily loan securitization, we entered into a reimbursement agreement pursuant to which we may be required to reimburse Freddie Mac for the first losses in the underlying loan portfolio, not to exceed 10% of the unpaid principal amount at settlement, or approximately $62.6 million. A $62.6 million letter of credit with the FHLB is pledged as collateral in connection with this reimbursement agreement. We have recorded a reserve for estimated losses with respect to the reimbursement obligation of ~~$615~~$270 thousand and ~~$727~~$439 thousand at March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively, which is included in other liabilities and accrued expenses in the consolidated statements of financial condition. In connection with the adoption of the CECL accounting standard on January 1, 2023, the Company decreased the allowance for the reimbursement obligation by $119 thousand, which represented the difference between the CECL methodology and the prior methodology utilized for estimating losses for its reimbursement obligation. The prior period allowance is reported in accordance with previous GAAP.

~~The~~As of March 31, 2023, the Company ~~entered into a new two-year~~held eleven interest rate ~~swap agreement,~~swaps with a total notional amount of $1.8 billion, two of which, with an aggregate notional amount of ~~$100~~$400 million, ~~during the three months ended March 31, 2022.~~have effective dates in April and June 2023. The ~~swap provides~~swaps provide a hedge against the interest rate risk associated with both hybrid adjustable loans in their fixed rate ~~period. As~~period and a pool of ~~March 31, 2022, the Company held swaps with an aggregate notional amount of $750 million.~~fixed rate single family loans. Our swaps involve the payment of a fixed rate amount to a counterparty in exchange for the Company receiving a variable rate payment over the life of the swaps without the exchange of the underlying notional amounts. As of March 31, 2023, these swaps carried a weighted average fixed payment rate of 2.74%, while receiving a federal funds weighted average rate of 4.83%. The net hedging impact associated with our swaps is reported in interest income on loans.

We guarantee distributions and payments for redemption or liquidation of the Trust Securities issued by the Trusts to the extent of funds held by the Trusts. Although this guarantee is not separately recorded, the obligation underlying the guarantee is fully reflected on our consolidated statements of financial condition as junior subordinated debentures held by the Trusts. The junior subordinated debentures currently qualify as Tier 1 capital under the Federal Reserve capital adequacy guidelines. With the exception of our obligations in connection with its Trust Securities and the other items detailed above, we have no other off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources, that are material to investors.

Contractual Obligations

The following table presents, as of March 31, ~~2022,~~2023, our significant contractual obligations to third parties on debt and lease agreements and service obligations. For more information about our contractual obligations, see Part I, Item 1, "Financial Statements and Supplementary Data", Note ~~16.~~17. ‘‘Commitments and Contingencies,’’ in the notes to our unaudited consolidated financial statements in this Report.

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				Payments Due by Period										Payments Due by Period
				Less than 1 Year		1 to 3 Years			3 to 5 Years		More than 5 Years			Less than 1 Year			1 to 3 Years		3 to 5 Years		More than 5 Years
(Dollars in thousands)	(Dollars in thousands)	Total						(Dollars in thousands)								Total
Contractual Cash Obligations	Contractual Cash Obligations																	Contractual Cash Obligations
Time deposits (1)	Time deposits (1)	$	2,209,375	$	1,997,842	$	155,964		$	55,569	$	—	Time deposits (1)	$	3,112,401		$	277,476	$	15,764	$	—	$	3,405,641
FHLB advances ~~(1)~~(2)	FHLB advances ~~(1)~~(2)	751,647		50,000		601,500			100,000		147		FHLB advances ~~(1)~~(2)	450,000			1,151,500		100,000		147		1,701,647
Senior debt (1)	Senior debt (1)	95,000		—		95,000			—		—		Senior debt (1)	—			95,000		—		—		95,000
Junior subordinated debentures (1)	Junior subordinated debentures (1)	61,857		—		—			—		61,857		Junior subordinated debentures (1)	—			—		—		61,857		61,857
Operating leases	Operating leases	16,053		3,890		5,971			4,312		1,880		Operating leases	3,282			4,994		3,941		1,318		13,535
Significant contract ~~(2)~~(3)	Significant contract ~~(2)~~(3)	8,482		2,065		4,130			2,287		—		Significant contract ~~(2)~~(3)	1,545			3,089		166		—		4,800
Total	Total	$	3,142,414	$	2,053,797	$	862,565		$	162,168	$	63,884	Total	$	3,567,228		$	1,532,059	$	119,871	$	63,322	$	5,282,480

(1) Amounts exclude interest.	(1) Amounts exclude interest.												(1) Amounts exclude interest.
(2) We have one significant, long-term contract for core processing services which expires May 9, 2026. The actual obligation is unknown and dependent on certain factors including volume and activities. For purposes of this disclosure, future obligations are estimated using our year-to-date 2022 average monthly expense extrapolated over the remaining life of the contract.
(2) Included in total FHLB advances is a $200.0 million advance which matures in September 2025 and contains a FHLB quarterly call provision beginning in September 2023.													(2) Included in total FHLB advances is a $200.0 million advance which matures in September 2025 and contains a FHLB quarterly call provision beginning in September 2023.
(3) We have one significant, long-term contract for core processing services which expires May 9, 2026. The actual obligation is unknown and dependent on certain factors including volume and activities. For purposes of this disclosure, future obligations are estimated using our year-to-date 2023 average monthly expense extrapolated over the remaining life of the contract.													(3) We have one significant, long-term contract for core processing services which expires May 9, 2026. The actual obligation is unknown and dependent on certain factors including volume and activities. For purposes of this disclosure, future obligations are estimated using our year-to-date 2023 average monthly expense extrapolated over the remaining life of the contract.

We believe that we will be able to meet our contractual obligations as they come due. Adequate cash levels are expected through profitability, repayments from loans and securities, deposit gathering activity, access to borrowing sources and periodic loan sales.

Liquidity Management and Capital Adequacy

Liquidity Management

Liquidity refers to our capacity to meet our cash obligations at a reasonable cost. Our cash obligations require us to have cash flow that is adequate to fund loan growth and maintain on-balance sheet liquidity while meeting present and future obligations of deposit withdrawals, borrowing maturities and other contractual cash obligations. In managing our cash flows, management regularly confronts situations that can give rise to increased liquidity risk. These include funding mismatches, market constraints in accessing sources of funds and the ability to convert assets into cash. Changes in economic conditions, the banking industry, such as bank failures, or exposure to credit, market, operational, legal and reputational risks also could affect the Company’s liquidity risk profile and are considered in the assessment of liquidity management.

We continually monitor our liquidity position to ensure that our assets and liabilities are managed in a manner to meet all reasonably foreseeable short-term, long-term and strategic liquidity demands. Management has established a comprehensive management process for identifying, measuring, monitoring and controlling liquidity risk. Because of its critical importance to the viability of the Company, liquidity risk management is fully integrated into our risk management processes. Critical elements of our liquidity risk management include: effective corporate governance consisting of oversight by the board of directors and active involvement by management; appropriate strategies, policies, procedures, and limits used to manage and mitigate liquidity risk; comprehensive liquidity risk measurement and monitoring systems including stress tests that are commensurate with the complexity of our business activities; active management of intraday liquidity and collateral; an appropriately diverse mix of existing and potential future funding sources; adequate levels of highly liquid marketable securities free of legal, regulatory, or operational impediments, that can be used to meet liquidity needs in stressful situations; comprehensive contingency funding plans that sufficiently address potential adverse liquidity events and emergency cash flow requirements; and internal controls and internal audit processes sufficient to determine the adequacy of the Company’s liquidity risk management process.

Our liquidity position is supported by management of our liquid assets and liabilities and access to alternative sources of funds. Our liquidity requirements are met primarily through our deposits, FHLB advances and the principal and interest payments we receive on loans and investment securities. Cash on hand, unrestricted cash at third party banks, investments available for sale and maturing or prepaying balances in our investment and loan portfolios are our most liquid assets. Other sources of liquidity that are routinely available to us include funds from retail and wholesale deposits, advances from the FHLB and proceeds from the sale of loans. Less commonly used

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sources of funding include borrowings from the ~~FRB~~Federal Reserve Bank ("FRB") discount window and the newly established FRB Bank Term Funding Program ("BTFP"), draws on established federal funds lines from unaffiliated commercial banks and the issuance of debt or equity securities. Our reliance on wholesale funding sources may fluctuate as economic conditions and customer preferences change.

We ~~believe~~proactively and prudently manage liquidity, which became even more important during the first quarter of 2023 in light of the recent bank failures and other deposit dislocations resulting from the rapidly rising interest rate environment. During the quarter, we increased our on-balance sheet liquidity by $308.6 million through additional borrowings from the FHLB. Usage of our FHLB line to augment our liquidity is consistent with our past borrowing practices. In addition, we supplemented our borrowing capacity by pledging substantially all of our investment portfolio, as well as the majority of previously unpledged loans, to the FHLB and FRB. Although the Bank has established a $354 million line under the BTFP and expanded its discount window capacity, we have ~~ample~~not utilized either line during the current year. At the end of the quarter, our total liquidity, as shown below, represented 314% of our estimated uninsured deposit balances. As of March 31, 2023, we maintained the following liquidity position:


(Dollars in thousands)	As of March 31, 2023		% of Assets
Unrestricted cash & cash equivalents	$	508,233	6.12%
Unpledged liquid securities	33,505		0.40%
Unutilized brokered deposit capacity(1)	304,024		3.66%
Unutilized FHLB borrowing capacity(2)(3)	1,135,446		13.68%
Unutilized FRB borrowing capacity(2)	1,150,979		13.86%
Commercial lines of credit	50,000		0.60%
Total liquidity	$	3,182,187	38.33%

~~Table~~(1)Capacity based on internal guidelines.

(2)Capacity based on pledged collateral specific to the FHLB or FRB, as applicable.

(3)Availability to borrow from the FHLB is permitted up to 40% of ~~Contents~~

~~resources~~Luther Burbank Savings’ (the “Bank”) assets or $3.3 billion, subject to ~~fund future growth and meet other cash needs as necessary.~~collateral capacity.

Our total deposits at March 31, ~~2022~~2023 and December 31, ~~2021~~2022 were $5.6 billion and ~~$5.5~~$5.8 billion, respectively. Based on the values of loans and securities pledged as collateral, our ~~$751.6 million~~$1.7 billion of FHLB advances outstanding and our $62.6 million FHLB letter of credit outstanding, we had ~~$815.5 million~~$1.1 billion of additional borrowing capacity with the FHLB at March 31, ~~2022.~~2023. Based on the values of other loans and securities pledged as collateral, we had ~~$207.5 million~~$1.2 billion of borrowing capacity with the FRB at March 31, ~~2022.~~2023. There were no outstanding advances with the FRB at March 31, ~~2022.~~2023. In addition to the liquidity provided by the FHLB and FRB described above, we have established federal funds lines of credit with unaffiliated banks totaling $50.0 million at March 31, ~~2022,~~2023, none of which were advanced at that date. In the ordinary course of business, we maintain correspondent bank accounts with unaffiliated banks which are used for normal business activity including ordering cash for our branch network, the purchase of investment securities and the receipt of principal and interest on those investments. Available cash balances at correspondent banks, including amounts at the FRB, totaled ~~$148.0~~$508.2 million at March 31, ~~2022.~~2023.

The Company is a corporation separate and apart from our Bank and, therefore, must provide for its own liquidity, including liquidity required to meet its debt service requirements on its senior notes and junior subordinated debentures. The Company’s main source of cash flow is dividends declared and paid to it by the Bank. There are statutory and regulatory limitations that affect the ability of our Bank to pay dividends to the Company. We believe that these limitations will not impact our ability to meet our ongoing short-term cash obligations. For contingency purposes, the Company typically maintains a minimum level of cash to fund one year’s projected operating cash flow needs.

Capital Adequacy

We are subject to various regulatory capital requirements administered by federal and state banking regulators. Our capital management consists of providing equity to support our current operations and future growth. Failure to meet minimum regulatory capital requirements may result in mandatory and possible additional discretionary actions by regulators that, if undertaken, could have a direct material effect on our financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, we must meet specific capital guidelines that involve quantitative measures of our assets, liabilities and off-balance sheet items as calculated under regulatory accounting policies. As of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, we were in

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compliance with all applicable regulatory capital requirements, including the capital conservation buffer, and the Bank qualified as ‘‘well-capitalized’’ for purposes of the FDIC’s prompt corrective action regulations. ~~At March 31, 2022, the capital conservation buffer was 2.50%.~~

The vast majority of our multifamily residential loans and single family residential loans are currently eligible for 50% risk-weighting for purposes of calculating our regulatory capital levels. Risk-weighting requirements of multifamily residential loans and single family residential loans are contingent upon meeting specific criteria, which, if not adequately met, would increase the required risk-weighting percentage for these loans. Commercial real estate lending collateralized by real estate other than multifamily residential properties are generally risk weighted at 100%. Our leverage ratio is not impacted by the composition of our assets.

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The following table presents our regulatory capital ratios as of the dates presented, as well as the regulatory capital ratios that are required by FDIC regulations to maintain ‘‘well-capitalized’’ status:


						Minimum Required																	Minimum Required
		Actual				For Capital Adequacy Purposes				Plus Capital Conservation Buffer				For Well- Capitalized Institution					Actual				For Capital Adequacy Purposes				Plus Capital Conservation Buffer				For Well- Capitalized Institution
(Dollars in thousands)	(Dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio		(Dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
Luther Burbank Corporation	Luther Burbank Corporation																	Luther Burbank Corporation
As of March 31, 2022
As of March 31, 2023																		As of March 31, 2023
Tier 1 Leverage Ratio	Tier 1 Leverage Ratio	$	738,518	10.27	%	$	287,615	4.00	%	N/A				N/A				Tier 1 Leverage Ratio	$	787,992	9.73	%	$	323,924	4.00	%	N/A				N/A
Common Equity Tier 1 Risk-Based Ratio	Common Equity Tier 1 Risk-Based Ratio	676,611		16.97	%	179,432		4.50	%	$	279,117	7.00	%	N/A				Common Equity Tier 1 Risk-Based Ratio	726,135		17.18	%	190,243		4.50	%	$	295,933	7.00	%	N/A
Tier 1 Risk-Based Capital Ratio	Tier 1 Risk-Based Capital Ratio	738,518		18.52	%	239,243		6.00	%	338,928		8.50	%	N/A				Tier 1 Risk-Based Capital Ratio	787,992		18.64	%	253,657		6.00	%	359,348		8.50	%	N/A
Total Risk-Based Capital Ratio	Total Risk-Based Capital Ratio	772,323		19.37	%	318,991		8.00	%	418,676		10.50	%	N/A				Total Risk-Based Capital Ratio	824,586		19.50	%	338,210		8.00	%	443,900		10.50	%	N/A
As of December 31, 2021
As of December 31, 2022																		As of December 31, 2022
Tier 1 Leverage Ratio	Tier 1 Leverage Ratio	$	727,606	10.12	%	$	287,509	4.00	%	N/A				N/A				Tier 1 Leverage Ratio	$	775,259	9.72	%	$	319,051	4.00	%	N/A				N/A
Common Equity Tier 1 Risk-Based Ratio	Common Equity Tier 1 Risk-Based Ratio	665,749		17.09	%	175,296		4.50	%	$	272,683	7.00	%	N/A				Common Equity Tier 1 Risk-Based Ratio	713,402		16.80	%	191,066		4.50	%	$	297,214	7.00	%	N/A
Tier 1 Risk-Based Capital Ratio	Tier 1 Risk-Based Capital Ratio	727,606		18.68	%	233,728		6.00	%	331,115		8.50	%	N/A				Tier 1 Risk-Based Capital Ratio	775,259		18.26	%	254,755		6.00	%	360,902		8.50	%	N/A
Total Risk-Based Capital Ratio	Total Risk-Based Capital Ratio	764,048		19.61	%	311,638		8.00	%	409,025		10.50	%	N/A				Total Risk-Based Capital Ratio	812,529		19.14	%	339,673		8.00	%	445,820		10.50	%	N/A
Luther Burbank Savings	Luther Burbank Savings																	Luther Burbank Savings
As of March 31, 2022
As of March 31, 2023																		As of March 31, 2023
Tier 1 Leverage Ratio	Tier 1 Leverage Ratio	$	816,055	11.35	%	$	287,526	4.00	%	N/A				$	359,407	5.00	%	Tier 1 Leverage Ratio	$	868,546	10.73	%	$	323,836	4.00	%	N/A				$	404,796	5.00	%
Common Equity Tier 1 Risk-Based Ratio	Common Equity Tier 1 Risk-Based Ratio	816,055		20.48	%	179,326		4.50	%	$	278,951	7.00	%	259,026		6.50	%	Common Equity Tier 1 Risk-Based Ratio	868,546		20.56	%	190,117		4.50	%	$	295,737	7.00	%	274,613		6.50	%
Tier 1 Risk-Based Capital Ratio	Tier 1 Risk-Based Capital Ratio	816,055		20.48	%	239,101		6.00	%	338,726		8.50	%	318,801		8.00	%	Tier 1 Risk-Based Capital Ratio	868,546		20.56	%	253,489		6.00	%	359,110		8.50	%	337,985		8.00	%
Total Risk-Based Capital Ratio	Total Risk-Based Capital Ratio	849,860		21.33	%	318,801		8.00	%	418,427		10.50	%	398,502		10.00	%	Total Risk-Based Capital Ratio	905,140		21.42	%	337,985		8.00	%	443,606		10.50	%	422,482		10.00	%
As of December 31, 2021
As of December 31, 2022																		As of December 31, 2022
Tier 1 Leverage Ratio	Tier 1 Leverage Ratio	$	799,457	11.13	%	$	287,407	4.00	%	N/A				$	359,259	5.00	%	Tier 1 Leverage Ratio	$	856,631	10.74	%	$	318,970	4.00	%	N/A				$	398,712	5.00	%
Common Equity Tier 1 Risk-Based Ratio	Common Equity Tier 1 Risk-Based Ratio	799,457		20.54	%	175,190		4.50	%	$	272,518	7.00	%	253,052		6.50	%	Common Equity Tier 1 Risk-Based Ratio	856,631		20.19	%	190,945		4.50	%	$	297,026	7.00	%	275,809		6.50	%
Tier 1 Risk-Based Capital Ratio	Tier 1 Risk-Based Capital Ratio	799,457		20.54	%	233,587		6.00	%	330,915		8.50	%	311,449		8.00	%	Tier 1 Risk-Based Capital Ratio	856,631		20.19	%	254,593		6.00	%	360,674		8.50	%	339,458		8.00	%
Total Risk-Based Capital Ratio	Total Risk-Based Capital Ratio	835,899		21.47	%	311,449		8.00	%	408,777		10.50	%	389,311		10.00	%	Total Risk-Based Capital Ratio	893,901		21.07	%	339,458		8.00	%	445,538		10.50	%	424,322		10.00	%

Impact of Inflation and Changing Prices

Our unaudited consolidated financial statements and related notes have been prepared in accordance with GAAP, which require the measurement of financial position and operating results in terms of historical dollars, without considering the changes in the relative purchasing power of money over time due to inflation. The impact of inflation is reflected in the increased cost of operations. Unlike most industrial companies, nearly all of our assets and liabilities are monetary in nature. As a result, interest rates have a greater impact on our performance than do the effects of general levels of inflation. Interest rates do not necessarily move in the same direction or to the same extent as the price of goods or services.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market risk represents the exposure to unanticipated changes in net interest earnings or loss due to changes in the market value of assets and liabilities as a result of fluctuations in interest rates. As a financial institution, our primary

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market risk is interest rate risk. Interest rate risk is the risk to earnings and value arising from volatility in market interest rates. Interest rate risk arises from timing differences in the repricings and maturities of interest-earning assets and interest-bearing liabilities (repricing risk), changes in the expected maturities of assets and liabilities arising from embedded options, such as borrowers’ ability to prepay loans at any time and depositors’ ability to redeem certificates of deposit before maturity (option risk), changes in the shape of the yield curve where interest rates increase or decrease in a nonparallel fashion (yield curve risk), and changes in spread relationships between different yield curves, such as U.S. Treasuries and LIBOR (basis risk).

We manage market risk though our Asset Liability Council ("ALCO") which is comprised of senior management who are responsible for ensuring that board approved strategies, policy limits, and procedures for managing interest rate risk are appropriately executed within the designated lines of authority and responsibility. The ALCO meets monthly

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to review, among other things, the composition of our assets and liabilities, the sensitivity of our assets and liabilities to interest rate changes, our actual and forecasted liquidity position, investment activity and our interest rate hedging transactions. The chairperson of the ALCO reports regularly to our board of directors. Our board reviews all policies impacting asset and liability management and establishes risk tolerance limits for business operations on at least an annual basis.

Interest rate risk management is an active process that encompasses monitoring loan and deposit flows complemented by investment and funding activities. Effective management of interest rate risk begins with understanding the dynamic characteristics of assets and liabilities and determining the appropriate interest rate risk posture given business forecasts, management objectives, market expectations, and policy constraints. In recognition of this, we actively manage our assets and liabilities to maximize our net interest income and return on equity, while managing our risk exposure and maintaining adequate liquidity and capital positions.

Given the nature of our loan and deposit activities, we are liability sensitive to volatility in interest rates. A liability sensitive position refers to a balance sheet position in which an increase in short-term interest rates is expected to generate lower net interest income, as rates paid on our interest-bearing liabilities would reprice upward more quickly than rates earned on our interest-earning assets, thus compressing our net interest margin. Conversely, an asset sensitive position refers to a balance sheet position in which an increase in short-term interest rates is expected to generate higher net interest income, as rates earned on our interest-earning assets would reprice upward more quickly than rates paid on our interest-bearing liabilities, thus expanding net interest margin.

We use two primary modeling techniques to assess our exposure to interest rates that simulate the earnings and valuation effects of variations in interest rates: Net Interest Income at Risk ("NII at Risk") and the Economic Value of Equity ("EVE"). These models require that we use numerous assumptions, including asset and liability pricing and repricing, future growth, prepayment rates, non-maturity deposit sensitivity and decay rates. These assumptions are inherently uncertain and, as a result, the models cannot precisely predict the fluctuations in market interest rates or precisely measure the impact of future changes in interest rates. Actual results will differ from the model’s simulated results due to timing, magnitude and frequency of interest rate changes as well as changes in market conditions and the application and timing of various management strategies.

Stress testing the balance sheet and net interest income using instantaneous parallel shock movements in the yield curve of ~~-100~~-400 to +400 basis points is a regulatory and banking industry practice. However, these stress tests may not represent a realistic forecast of future interest rate movements in the yield curve. ~~Because of the low level of market interest rates, we have not run these models with a yield curve shock beyond -100 basis points.~~

Instantaneous parallel interest rate shock modeling is not a predictor of actual future performance of earnings. It is a financial metric used to manage interest rate risk, implement hedging transactions if the metric rises above policy limits for interest rate risk, and track the movement of the Company's interest rate risk position over a historical time frame for comparison purposes.

Our earnings are a function of collecting both a credit risk premium on our loans and an interest rate risk premium on our balance sheet position. The purpose of these premiums being to diversify our earnings position with both credit risk and interest rate risk, which generally tend to be negatively correlated historically for the Company. During weak economic times, our loan losses have been higher than normal, but the Federal Reserve will generally reduce short-term interest rates in an attempt to stimulate the economy and add liquidity. As a result, our interest rate spread will generally increase during those periods. During strong economic times, when the Federal Reserve raises short-term interest rates to dampen economic activity, the Company’s interest rate spread decreases. These periods have historically been indicative of inflation and real property value increases. As such, the decrease in net interest income is typically somewhat offset by declining loan losses in our loan portfolio. There is no guarantee, however, that the past countercyclical nature of our loan losses and our net interest spread declines will continue in

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the future.

On a quarterly basis, we measure and report NII at Risk to isolate the change in income related solely to interest-earning assets and interest-bearing liabilities. The following table illustrates the results of our NII at Risk analysis to determine the extent to which our net interest income over the following 12 months would change if prevailing interest rates increased or decreased by the specified amounts at March 31, ~~2022.~~2023. It models instantaneous parallel shifts in market interest rates, implied by the forward yield curve over the next one year period.

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Interest Rate Risk to Earnings (NII)	Interest Rate Risk to Earnings (NII)			Interest Rate Risk to Earnings (NII)
March 31, 2022
March 31, 2023				March 31, 2023
(Dollars in millions)	(Dollars in millions)			(Dollars in millions)
Change in Interest Rates (basis points)	Change in Interest Rates (basis points)	$ Change NII	% Change NII	Change in Interest Rates (basis points)	$ Change NII	% Change NII
+400 BP	+400 BP	$(10.1)	(6.5)%	+400 BP	$(10.0)	(23.7)%
+300 BP	+300 BP	(5.8)	(3.7)%	+300 BP	(6.1)	(14.3)%
+200 BP	+200 BP	(2.5)	(1.6)%	+200 BP	(3.3)	(7.7)%
+100 BP	+100 BP	(0.6)	(0.4)%	+100 BP	(1.1)	(2.6)%
-100 BP	-100 BP	(1.0)	(0.6)%	-100 BP	(0.2)	(0.4)%
-200 BP				-200 BP	(0.2)	(0.5)%
-300 BP				-300 BP	(0.8)	(2.0)%
-400 BP				-400 BP	(1.5)	(3.5)%

The NII at Risk reported at March 31, ~~2022~~2023 reflects that our earnings were in a liability sensitive position in which an increase in interest rates is expected to generate lower net interest income. In addition, a decrease in short-term interest rates is expected to generate slightly lower net interest income because of our current hedge position. During the three months ended March 31, ~~2022,~~2023, our NII at Risk decreased in connection with upward interest rate shocks as compared to December 31, ~~2021~~2022 primarily due to a decline in longer-term interest rates, a decrease in the months to repricing of our loan balances and an increase in the level of our ~~hedged positions. For the downward rate shock during the same period, our NII at Risk increased due to our hedged~~hedge positions, ~~repricing~~partially offset by ~~the full 100 basis point shock, while the repricing of our deposits were not permitted by our model to reprice below zero.~~slower loan prepayments and lower loan market values.

EVE measures the period end market value of assets minus the market value of liabilities and the change in this value as rates change. The EVE results included in the table below reflect the analysis reviewed monthly by management. It models instantaneous parallel shifts in market interest rates, implied by the forward yield curve. The EVE model calculates the market value of capital by taking the present value of all asset cash flows less the present value of all liability cash flows.


Interest Rate Risk to Capital (EVE)	Interest Rate Risk to Capital (EVE)			Interest Rate Risk to Capital (EVE)
March 31, 2022
March 31, 2023				March 31, 2023
(Dollars in millions)	(Dollars in millions)			(Dollars in millions)
Change in Interest Rates (basis points)	Change in Interest Rates (basis points)	$ Change EVE	% Change EVE	Change in Interest Rates (basis points)	$ Change EVE	% Change EVE
+400 BP	+400 BP	$(397.5)	(52.0)%	+400 BP	$(279.4)	(60.6)%
+300 BP	+300 BP	(275.4)	(36.0)%	+300 BP	(184.0)	(39.9)%
+200 BP	+200 BP	(166.0)	(21.7)%	+200 BP	(105.5)	(22.9)%
+100 BP	+100 BP	(73.1)	(9.6)%	+100 BP	(43.6)	(9.5)%
-100 BP	-100 BP	53.2	7.0%	-100 BP	22.7	4.9%
-200 BP				-200 BP	29.0	6.3%
-300 BP				-300 BP	25.6	5.6%
-400 BP				-400 BP	5.9	1.3%

The EVE reported at March 31, ~~2022~~2023 reflects that our market value of capital was in a liability sensitive position in which an increase in interest rates is expected to generate lower market values of capital. During the three months ended March 31, ~~2022,~~2023, our EVE at risk increased as compared to December 31, ~~2021~~2022 primarily due to a decline in longer-term interest rates, a decrease in the ~~steepened yield curve, partially offset by~~months to repricing of our loan balances and an increase in the level of our ~~hedged positions.~~hedge positions, partially offset by slower loan prepayments and lower loan market values.

Certain shortcomings are inherent in the NII at Risk and EVE analyses presented above. Both the NII at Risk and

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EVE simulations include assumptions regarding balances, asset prepayment speeds, deposit repricing and runoff and interest rate relationships among balances that we believe to be reasonable for the various interest rate environments. Differences in actual occurrences from these assumptions, as well as nonparallel changes in the yield curve, may change our market risk exposure. Simulated results are not intended to be used as a forecast of the actual effect of changes in market interest rates on our results, but rather as a means to better plan and execute appropriate interest rate risk strategies.

Hedge Positions

In managing our market risk, our board of directors has authorized the ALCO to utilize long-term borrowings and derivatives, including interest rate caps and swaps, to mitigate interest rate risk in accordance with regulations and our internal policy. We use or expect to use borrowings, interest rate caps and swaps as macro hedges against interest rate sensitivity in our loan portfolio, other interest-earning assets and our interest-bearing liabilities. Positions for hedging purposes are undertaken as mitigation to exposure primarily from mismatches between the repricing of assets and liabilities.

We are currently utilizing FHLB advances and interest rate swaps to hedge our liability sensitive interest rate risk position. As of March 31, ~~2022,~~2023, the Company maintained ~~three~~11 interest rate swaps with an aggregate notional

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amount of ~~$750.0 million~~$1.8 billion to primarily hedge the interest rate risk associated with both fixed rate loans and hybrid adjustable loans in their fixed rate period. All of our swaps are designated as fair value hedges and involve the payment of a fixed rate amount to a counterparty in exchange for the Company receiving a variable rate payment over the life of the swaps without the exchange of the underlying notional amount. The gain or loss on derivatives, as well as the offsetting ~~loss~~gain or ~~gain~~loss on the hedged items attributable to the hedged risk are recognized in interest income for loans in our unaudited consolidated statements of income. During the three months ended March 31, ~~2022,~~2023, the Company recognized ~~a reduction~~an increase in interest income of ~~$78 thousand~~$8.2 million in connection with interest rate swaps compared to a reduction of ~~$3.4 million~~interest income of $78 thousand during the three months ended March 31, 2021. The prior year reduction in interest income primarily related to two separate, two-year interest rate swaps with a total notional amount of $1.0 billion, which matured during the year ended December 31, 2021.2022.

The following table summarizes derivative instruments utilized by us as interest rate risk hedge positions as of March 31, ~~2022:~~2023:


(Dollars in thousands)	(Dollars in thousands)					Fair Value				(Dollars in thousands)					Fair Value
Hedging Instrument	Hedging Instrument	Hedge Accounting Type	Months to Maturity	Notional		Other Assets		Other Liabilities		Hedging Instrument	Hedge Accounting Type	Months to Maturity	Notional		Other Assets		Other Liabilities
Interest rate swap	Interest rate swap	Fair value hedge	11	$	350,000	$	4,656	$	—	Interest rate swap	Fair value hedge	3	$	300,000	$	3,168	$	—
Interest rate swap	Interest rate swap	Fair value hedge	15	300,000		6,190		—		Interest rate swap	Fair value hedge	12	100,000		2,323		—
Interest rate swap	Interest rate swap	Fair value hedge	24	100,000		28		—		Interest rate swap	Fair value hedge	15	100,000		1,755		—
Interest rate swap										Interest rate swap	Fair value hedge	26	100,000		2,670		—
Interest rate swap										Interest rate swap	Fair value hedge	35	200,000		—		1,336
Interest rate swap										Interest rate swap	Fair value hedge	36	100,000		—		1,533
Interest rate swap (1)										Interest rate swap (1)	Fair value hedge	39	200,000		—		4,209
Interest rate swap										Interest rate swap	Fair value hedge	53	100,000		1,847		—
Interest rate swap										Interest rate swap	Fair value hedge	54	200,000		—		2,828
Interest rate swap										Interest rate swap	Fair value hedge	55	200,000		—		4,055
Interest rate swap (2)										Interest rate swap (2)	Fair value hedge	61	200,000		—		4,092
													$	1,800,000	$	11,763	$	18,053
				$	750,000	$	10,874	$	—
(1) Effective date of June 24, 2023										(1) Effective date of June 24, 2023
(2) Effective date of April 27, 2023										(2) Effective date of April 27, 2023

Counterparty Credit Risk

Derivative contracts involve the risk of dealing with institutional derivative counterparties and their ability to meet contractual terms. Our policies require that counterparties must be approved by our ALCO. Additionally, contracts are in place to ensure that minimum transfer amounts and collateral requirements are established.

Item 4. Controls and Procedures

Management of the Company, with the participation of its Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness as of March 31, ~~2022,~~2023, of the Company's disclosure controls and

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procedures, as defined in Rules 13a-15(e) and 15(d)-15(e) under the Exchange Act. Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of March 31, ~~2022~~2023 in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to management of the Company as appropriate to allow timely decisions regarding required disclosures.

Changes in Internal Control over Financial Reporting

On January 1, 2023, the Company adopted ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which replaces the incurred loss methodology (Allowance for Loan and Leases Losses or "ALLL") with an expected loss methodology that is referred to as the CECL methodology. The Company designed new controls and modified existing controls as part of its adoption. These additional controls over financial reporting included controls around model assumptions and forecasted macroeconomic factors, as well as expanded controls over loan level data. There ~~was~~were no ~~change~~other changes in the ~~Company's~~Company’s internal control over financial reporting that occurred during the ~~Company's last fiscal quarter~~period covered by this report that ~~has~~have materially affected, or isare reasonably likely to materially affect, ~~such controls.~~the Company’s internal control over financial reporting.

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PART II.

Item 1. Legal Proceedings

~~From~~On March 24, 2023, Martin Siegel, a purported Luther Burbank Corporation shareholder, filed and served a putative class action on behalf of our shareholders in the Superior Court for the County of Sonoma, California captioned Siegel v. Lagomarsino, et al. (Case No. SCV-272922). The Siegel complaint alleges that our board of directors breached their fiduciary duty by failing to disclose certain internal projections and other information allegedly underlying the fairness opinion of our financial adviser, Piper Sandler & Co., in connection with our pending merger transaction with Washington Federal, Inc. Following the filing of our Current Report on Form 8-K on April 10, 2023 containing certain supplemental information regarding unaudited prospective financial estimates received and considered by Piper Sandler & Co., Mr. Siegel withdrew his request for a preliminary injunction to require us to disclose the internal projections and other information and to delay our May 4, 2023 shareholders meeting, but reserved the right to seek an award of attorney’s fees and expenses.

In addition, two other purported Luther Burbank Corporation shareholders have filed similar actions in the United States District Court for the Southern District of New York alleging violations of the Securities Exchange Act of 1934, as amended in matters captioned Wang v. Luther Burbank Corporation, et al. (Civil Action No. 23-cv-01949) and O’Dell v. Luther Burbank Corporation, et al. (Civil Action No. 23-cv-1912), and one other purported Luther Burbank Corporation shareholder has filed a similar action in the Superior Court for the County of Sonoma, California captioned Coffman v. Luther Burbank Corporation, et al. (Case No. SCV-273074). None of the plaintiffs have taken any action to serve these actions or otherwise prosecute their claims.

We believe the Siegel complaint and the other complaints are without merit.

In addition to the matters described above, from time to time, we are party to legal actions that are routine and incidental to our business. ~~Given~~In addition, given the nature, scope and complexity of the extensive legal and regulatory landscape applicable to our business, we, like all banking organizations, are subject to heightened regulatory compliance and legal risk. However, based on available information, management does not expect the ultimate disposition of any or a combination of these actions, including those described above, to have a material adverse effect on our business, financial condition or results of ~~operation.~~operations.

Item 1A. Risk Factors

There have been no material changes from the risks disclosed in the Risk Factors section of the Company's Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022, other than as described below.

Recent negative developments affecting the banking industry, and resulting media coverage, have eroded customer confidence in the banking system. The recent high-profile bank failures involving Silicon Valley Bank, Signature Bank and First Republic Bank, among other recent events within the banking industry, and responses to them, have generated significant market volatility among publicly traded bank holding companies and, in particular, banks like the Company. These market developments have negatively impacted customer confidence in the safety and soundness of certain banks. As a result, customers may choose, and some of our customers have chosen, to maintain deposits with larger financial institutions or invest in higher yielding short-term fixed income securities, all of which could materially adversely impact the Company’s liquidity, loan funding capacity, net interest margin, capital and results of operations. While the Department of the Treasury, the Federal Reserve, and the FDIC have made statements ensuring that depositors of these recently failed banks would have access to their deposits, including uninsured deposit accounts, there is no guarantee that such actions will be successful in restoring customer confidence in banks and the banking system more broadly. In addition, the banking operating environment and public trading prices of banking institutions can be highly correlated, in particular during times of stress, which could adversely impact the trading prices of our common stock and potentially our results of operations. Additional bank failures or other events that erode confidence in the banking industry, or in community banks, or our bank specifically, could quickly escalate and have consequences that we may not be able to adequately predict or mitigate and may also exacerbate the “Risk Factors” discussed in Part I, Item 1A of our annual report on Form 10-K for the year ended December 31, 2022.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

~~Purchases of Equity Securities~~

~~The table below summarizes the Company's monthly~~There were no repurchases ~~of equity securities during the quarter ended March 31, 2022:~~

Period Total Number of Shares Purchased Average Price Paid Per Share
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)
Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Program (1)
(Dollars in thousands, except per share data)
January 1-31, 2022 16,100 $ 12.91 16,100 $ 9,527
February 1-28, 2022 153,500 13.05 153,500 7,525
March 1-31, 2022 255,796 13.39 255,796 4,098
Total 425,396 $ 13.25 425,396 $ 4,098

~~(1) On October 30, 2020, the Board of Directors of the Company authorized the repurchase of $20.0 million~~or unregistered sales of the Company’s ~~common~~ stock ~~pursuant to a formal program adopted on that date (the “Plan”). The Plan has been adopted in accordance with guidelines specified by Rule 10b5-1 and under Rule 10b-18 under~~during the Exchange Act and the Company’s Insider Trading Policy. On October 29, 2021, the board of directors of the Company amended the Plan to eliminate its expiration date of December 31, 2021. The amended Plan will remain open until the remaining balance of previously-authorized funds are fully utilized for repurchases pursuant to the Plan, or until the board of directors of the Company otherwise terminates the Plan.quarter.

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Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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Item 6. Exhibits

Incorporated by Reference
Exhibit Number Description Filed Herewith Form File No. Exhibit Filing Date
3.1
Amended and Restated Articles of Incorporation of Luther Burbank Corporation
S-1 333-221455 3.1 11/9/2017
3.2
Amended and Restated Bylaws of Luther Burbank Corporation
S-1 333-221455 3.2 11/9/2017
4.1
Specimen Certificate for Common Stock
S-1 333-221455 4.1 11/9/2017
Pursuant to Item 601(b) (4) (iii) (A) of Regulation S-K, copies of instruments defining the rights of holders of long-term debt and preferred securities are not filed. The Company agrees to furnish a copy thereof to the SEC upon request.
31.1
Rule 13a-14(a) Certification of Chief Executive Officer*
X
31.2
Rule 13a-14(a) Certification of Chief Financial Officer*
X
32.1
Section 1350 Certification of Chief Executive Officer*
X
32.2
Section 1350 Certification of Chief Financial Officer*
X
101.INS XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document X
101.SCH Inline XBRL Taxonomy Extension Schema Document X
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document X
101.DEF Inline XBRL Taxonomy Extension Definitions Linkbase Document X
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document X
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document X
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) X

Incorporated by Reference

Exhibit Number

Description

Filed Herewith

Form

File No.

Exhibit

Filing Date

2.1

Agreement and Plan of Reorganization, dated November 13, 2022, by and between Washington Federal, Inc. and Luther Burbank Corporation*

8-K

001-38317

2.1

11/14/2022

3.1

Amended and Restated Articles of Incorporation of Luther Burbank Corporation

S-1

333-221455

3.1

11/9/2017

3.2

Amended and Restated Bylaws of Luther Burbank Corporation

8-K

001-38317

3.1

4/27/2018

4.1

Specimen Certificate for Common Stock

S-1

333-221455

4.1

11/9/2017

Pursuant to Item 601(b) (4) (iii) (A) of Regulation S-K, copies of instruments defining the rights of holders of long-term debt and preferred securities are not filed. The Company agrees to furnish a copy thereof to the SEC upon request.

31.1

Rule 13a-14(a) Certification of Chief Executive Officer

31.2

Rule 13a-14(a) Certification of Chief Financial Office r

32.1

Section 1350 Certification of Chief Executive Officer

32.2

Section 1350 Certification of Chief Financial Officer

101.INS

XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH

Inline XBRL Taxonomy Extension Schema Document

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

Inline XBRL Taxonomy Extension Definitions Linkbase Document

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

*Schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule will be furnished supplementally to the SEC upon request; provided, however, that the parties may request confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, for any document so furnished.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		LUTHER BURBANK CORPORATION

DATED:	MAY ~~6, 2022~~5, 2023	By: /s/ Simone Lagomarsino
		Simone Lagomarsino
		President and Chief Executive Officer

DATED:	MAY ~~6, 2022~~5, 2023	By: /s/ Laura Tarantino
		Laura Tarantino
		Executive Vice President and Chief Financial Officer

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	March 31, 2022 (unaudited)		December 31, 2021
ASSETS
Cash and cash equivalents	$	147,963	$	138,413

Available for sale debt securities, at fair value	624,859		647,317
Held to maturity debt securities, at amortized cost (fair value of $3,802 and $4,018 at March 31, 2022 and December 31, 2021, respectively)	3,798		3,829
Equity securities, at fair value	11,116		11,693

Loans receivable, net of allowance for loan losses of $33,035 and $35,535 at March 31, 2022 and December 31, 2021, respectively	6,333,283		6,261,885
Accrued interest receivable	18,014		17,761
Federal Home Loan Bank ("FHLB") stock, at cost	22,563		23,411
Premises and equipment, net	15,590		16,090
Goodwill	3,297		3,297
Prepaid expenses and other assets	80,343		56,261
Total assets	$	7,260,826	$	7,179,957

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits	$	5,601,247	$	5,538,243
FHLB advances	751,647		751,647
Junior subordinated deferrable interest debentures	61,857		61,857
Senior debt
$95,000 face amount, 6.5% interest rate, due September 30, 2024 (less debt issuance costs of $307 and $338 at March 31, 2022 and December 31, 2021, respectively)	94,693		94,662
Accrued interest payable	153		118
Other liabilities and accrued expenses	83,229		64,297
Total liabilities	6,592,826		6,510,824

Commitments and contingencies (Note 16)	0		0

Stockholders' equity:
Preferred stock, no par value; 5,000,000 shares authorized; none issued and outstanding at March 31, 2022 and December 31, 2021, respectively	—		—
Common stock, no par value; 100,000,000 shares authorized; 51,403,914 and 51,682,398 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively	401,102		406,904
Retained earnings	278,856		262,141
Accumulated other comprehensive income (loss), net of taxes	(11,958)		88
Total stockholders' equity	668,000		669,133
Total liabilities and stockholders' equity	$	7,260,826	$	7,179,957


(Dollars in thousands)	30 Days		60 Days		90+ Days		Non-accrual		Current		Total
As of March 31, 2022:
Loans:
Multifamily residential	$	—	$	362	$	—	$	500	$	4,231,365	$	4,232,227
Single family residential	1,170		1,326		—		1,777		1,911,947		1,916,220
Commercial real estate	—		—		—		—		194,354		194,354
Land and construction	—		—		—		—		23,517		23,517
Total	$	1,170	$	1,688	$	—	$	2,277	$	6,361,183	$	6,366,318
As of December 31, 2021:
Loans:
Multifamily residential	$	—	$	—	$	—	$	505	$	4,210,230	$	4,210,735
Single family residential	271		—		—		1,788		1,879,617		1,881,676
Commercial real estate	—		—		—		—		187,097		187,097
Land and construction	—		—		—		—		17,912		17,912
Total	$	271	$	—	$	—	$	2,293	$	6,294,856	$	6,297,420


Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)	Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Program (1)
(Dollars in thousands, except per share data)
January 1-31, 2022	16,100	$	12.91	16,100	$	9,527
February 1-28, 2022	153,500	13.05		153,500	7,525
March 1-31, 2022	255,796	13.39		255,796	4,098
Total	425,396	$	13.25	425,396	$	4,098