California (State or other jurisdiction of incorporation or organization) | 68-0270948 (I.R.S. employer identification number) | |
520 Third St, Fourth Floor Santa Rosa (Address of principal executive offices) | 95401 (Zip Code) |
Page | ||
PART I - FINANCIAL INFORMATION | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
PART II - OTHER INFORMATION | ||
Item 1. | ||
Item 1A. | ||
June 30, 2018 (unaudited) | December 31, 2017 | ||||||
ASSETS | |||||||
Cash and cash equivalents | $ | 76,018 | $ | 75,578 | |||
Available for sale investment securities, at fair value | 583,035 | 503,288 | |||||
Held to maturity investment securities, at amortized cost (fair value of $11,725 and $6,925 at June 30, 2018 and December 31, 2017, respectively) | 12,009 | 6,921 | |||||
Loans held for sale | 21,575 | — | |||||
Loans receivable, net of allowance for loan losses of $33,358 and $30,312 as of June 30, 2018 and December 31,2017, respectively | 5,701,559 | 5,011,235 | |||||
Accrued interest receivable | 18,310 | 14,901 | |||||
Federal Home Loan Bank ("FHLB") stock, at cost | 32,995 | 27,733 | |||||
Premises and equipment, net | 21,870 | 22,452 | |||||
Goodwill | 3,297 | 3,297 | |||||
Prepaid expenses and other assets | 39,565 | 38,975 | |||||
Total assets | $ | 6,510,233 | $ | 5,704,380 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Liabilities: | |||||||
Deposits | $ | 4,592,155 | $ | 3,951,238 | |||
Federal Home Loan Bank advances | 1,150,746 | 989,260 | |||||
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 $772 and $839 at June 30, 2018 and December 31, 2017, respectively) | 94,228 | 94,161 | |||||
Accrued interest payable | 3,304 | 1,781 | |||||
Other liabilities and accrued expenses | 45,763 | 56,338 | |||||
Total liabilities | 5,948,053 | 5,154,635 | |||||
Commitments and contingencies (Note 17) | |||||||
Stockholders' equity: | |||||||
Common stock, no par value; 100,000,000 shares authorized; 56,559,655 and 56,422,662 shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively | 456,289 | 454,287 | |||||
Retained earnings | 113,673 | 102,459 | |||||
Accumulated other comprehensive loss, net of taxes | (7,782 | ) | (7,001 | ) | |||
Total stockholders' equity | 562,180 | 549,745 | |||||
Total liabilities and stockholders' equity | $ | 6,510,233 | $ | 5,704,380 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Interest income: | ||||||||||||||||
Interest and fees on loans | $ | 51,343 | $ | 41,173 | $ | 97,906 | $ | 79,916 | ||||||||
Interest and dividends on investment securities | 3,343 | 1,863 | 6,061 | 3,516 | ||||||||||||
Total interest income | 54,686 | 43,036 | 103,967 | 83,432 | ||||||||||||
Interest expense: | ||||||||||||||||
Interest on deposits | 14,560 | 9,058 | 26,492 | 17,371 | ||||||||||||
Interest on FHLB advances | 6,823 | 4,260 | 11,643 | 7,537 | ||||||||||||
Interest on junior subordinated deferrable interest debentures | 567 | 408 | 1,054 | 788 | ||||||||||||
Interest on senior debt | 1,577 | 1,577 | 3,154 | 3,154 | ||||||||||||
Total interest expense | 23,527 | 15,303 | 42,343 | 28,850 | ||||||||||||
Net interest income before provision for (reversal of) loan losses | 31,159 | 27,733 | 61,624 | 54,582 | ||||||||||||
Provision for (reversal of) loan losses (Note 3) | 1,300 | (6,481 | ) | 2,800 | (6,172 | ) | ||||||||||
Net interest income after provision for (reversal of) loan losses | 29,859 | 34,214 | 58,824 | 60,754 | ||||||||||||
Noninterest income: | ||||||||||||||||
Increase in cash surrender value of life insurance | 48 | 47 | 101 | 95 | ||||||||||||
Net loss on sale/fair value adjustments of loans | — | (693 | ) | — | (856 | ) | ||||||||||
FHLB dividends | 509 | 562 | 1,103 | 1,195 | ||||||||||||
Other income | 260 | 285 | 638 | 649 | ||||||||||||
Total noninterest income | 817 | 201 | 1,842 | 1,083 | ||||||||||||
Noninterest expense: | ||||||||||||||||
Compensation and related benefits | 9,199 | 9,523 | 18,818 | 19,720 | ||||||||||||
Deposit insurance premium | 467 | 431 | 899 | 829 | ||||||||||||
Professional and regulatory fees | 503 | 840 | 901 | 1,025 | ||||||||||||
Occupancy | 1,304 | 1,223 | 2,600 | 2,521 | ||||||||||||
Depreciation and amortization | 694 | 728 | 1,408 | 1,463 | ||||||||||||
Data processing | 807 | 797 | 1,595 | 1,587 | ||||||||||||
Marketing | 561 | 205 | 774 | 384 | ||||||||||||
Other expenses | 1,387 | 1,093 | 2,640 | 2,013 | ||||||||||||
Total noninterest expense | 14,922 | 14,840 | 29,635 | 29,542 | ||||||||||||
Income before provision for income taxes | 15,754 | 19,575 | 31,031 | 32,295 | ||||||||||||
Provision for income taxes | 4,528 | 654 | 8,703 | 1,079 | ||||||||||||
Net income | $ | 11,226 | $ | 18,921 | $ | 22,328 | $ | 31,216 | ||||||||
Basic earnings per common share | $ | 0.20 | $ | 0.45 | $ | 0.40 | $ | 0.74 | ||||||||
Diluted earnings per common share | $ | 0.20 | $ | 0.45 | $ | 0.39 | $ | 0.74 | ||||||||
Weighted average common shares outstanding - basic | 56,190,970 | 42,000,000 | 56,190,970 | 42,000,000 | ||||||||||||
Weighted average common shares outstanding - diluted | 56,820,076 | 42,000,000 | 56,787,615 | 42,000,000 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Net income | $ | 11,226 | $ | 18,921 | $ | 22,328 | $ | 31,216 | ||||||||
Other comprehensive (loss) income: | ||||||||||||||||
Unrealized (loss) gain on available for sale investment securities: | ||||||||||||||||
Unrealized holding (loss) gain arising during the period | (941 | ) | 183 | (3,912 | ) | 791 | ||||||||||
Tax effect | 272 | (6 | ) | 1,115 | (27 | ) | ||||||||||
Net of tax | (669 | ) | 177 | (2,797 | ) | 764 | ||||||||||
Unrealized gain on cash flow hedge: | ||||||||||||||||
Unrealized holding gain arising during the period | 192 | 85 | 373 | 135 | ||||||||||||
Tax effect | (55 | ) | (3 | ) | (107 | ) | (4 | ) | ||||||||
Net of tax | 137 | 82 | 266 | 131 | ||||||||||||
Total other comprehensive (loss) income | (532 | ) | 259 | (2,531 | ) | 895 | ||||||||||
Comprehensive income | $ | 10,694 | $ | 19,180 | $ | 19,797 | $ | 32,111 |
Accumulated Other Comprehensive (Loss) Income (Net of Taxes) | Total Stockholders' Equity | |||||||||||||||||||||
Common Stock | Retained Earnings | Available for Sale Securities | Cash Flow Hedge | |||||||||||||||||||
Shares | Amount | |||||||||||||||||||||
Balance, December 31, 2016 | 42,000,000 | $ | 2,262 | $ | 407,648 | $ | (4,374 | ) | $ | (1,161 | ) | $ | 404,375 | |||||||||
Comprehensive income: | ||||||||||||||||||||||
Net income | — | — | 31,216 | — | — | 31,216 | ||||||||||||||||
Other comprehensive income | — | — | — | 764 | 131 | 895 | ||||||||||||||||
Cash dividends ($0.48 per share) | — | — | (20,200 | ) | — | — | (20,200 | ) | ||||||||||||||
Balance, June 30, 2017 | 42,000,000 | $ | 2,262 | $ | 418,664 | $ | (3,610 | ) | $ | (1,030 | ) | $ | 416,286 | |||||||||
Balance, December 31, 2017 | 56,422,662 | $ | 454,287 | $ | 102,459 | $ | (6,214 | ) | $ | (787 | ) | $ | 549,745 | |||||||||
Comprehensive income: | ||||||||||||||||||||||
Net income | — | — | 22,328 | — | — | 22,328 | ||||||||||||||||
Other comprehensive (loss) income | — | — | — | (2,797 | ) | 266 | (2,531 | ) | ||||||||||||||
Reclassification of prior year tax benefit related to re-measuring deferred taxes on items recorded to other comprehensive income | — | — | (1,750 | ) | 1,529 | 221 | — | |||||||||||||||
Issuance of restricted stock awards | 131,140 | — | — | — | — | — | ||||||||||||||||
Vested restricted stock units | 12,710 | — | — | — | — | — | ||||||||||||||||
Shares withheld to pay taxes on stock based compensation | (4,057 | ) | (49 | ) | — | — | — | (49 | ) | |||||||||||||
Restricted stock forfeitures | (2,800 | ) | (3 | ) | 0 | — | — | (3 | ) | |||||||||||||
Stock-based compensation expense | — | 2,054 | — | — | — | 2,054 | ||||||||||||||||
Cash dividends ($0.17 per share) | — | — | (9,364 | ) | — | — | (9,364 | ) | ||||||||||||||
Balance, June 30, 2018 | 56,559,655 | $ | 456,289 | $ | 113,673 | $ | (7,482 | ) | $ | (300 | ) | $ | 562,180 |
Six Months Ended June 30, | |||||||
2018 | 2017 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 22,328 | $ | 31,216 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 1,408 | 1,463 | |||||
Provision for loan losses | 2,800 | (6,172 | ) | ||||
Amortization of deferred loan costs, net | 4,634 | 4,642 | |||||
Amortization of premiums on investment securities, net | 1,060 | 695 | |||||
Net loss on sale/fair value adjustment of loans | — | 856 | |||||
Originations of loans held for sale | — | (25,809 | ) | ||||
Proceeds from sale of loans held for sale | — | 33,618 | |||||
Stock based compensation expense, net of forfeitures | 2,051 | — | |||||
Other items, net | (34 | ) | (28 | ) | |||
Effect of changes in: | |||||||
Accrued interest receivable | (3,409 | ) | (2,420 | ) | |||
Accrued interest payable | 1,523 | 1,890 | |||||
Prepaid expenses and other assets | 891 | (4,205 | ) | ||||
Other liabilities and accrued expenses | (10,575 | ) | (2,749 | ) | |||
Net cash provided by operating activities | 22,677 | 32,997 | |||||
Cash flows from investing activities: | |||||||
Proceeds from maturities or calls of available for sale investment securities | 40,422 | 60,721 | |||||
Proceeds from maturities or calls of held to maturity investment securities | 273 | 331 | |||||
Purchases of available for sale investment securities | (125,126 | ) | (85,301 | ) | |||
Purchases of held to maturity investment securities | (5,375 | ) | — | ||||
Net increase in loans receivable | (719,333 | ) | (573,842 | ) | |||
Proceeds from sale of portfolio loans | — | 26,564 | |||||
Purchase of FHLB stock, net | (5,262 | ) | (8,172 | ) | |||
Purchase of premises and equipment | (826 | ) | (380 | ) | |||
Net cash used in investing activities | (815,227 | ) | (580,079 | ) | |||
Cash flows from financing activities: | |||||||
Net increase in customer deposits | 640,917 | 347,206 | |||||
Proceeds from long term FHLB advances | 425,000 | 100,000 | |||||
Net change in short term FHLB advances | (263,514 | ) | 147,687 | ||||
Shares withheld for taxes on vested restricted stock | (49 | ) | — | ||||
Cash paid for dividends | (9,364 | ) | (20,200 | ) | |||
Net cash provided by financing activities | 792,990 | 574,693 | |||||
Increase in cash and cash equivalents | 440 | 27,611 | |||||
Cash and cash equivalents, beginning of period | 75,578 | 59,208 | |||||
Cash and cash equivalents, end of period | $ | 76,018 | $ | 86,819 | |||
Supplemental disclosure of cash flow information: | |||||||
Cash paid during the period for: | |||||||
Interest | $ | 40,820 | $ | 26,960 | |||
Income taxes | $ | 10,994 | $ | 1,590 | |||
Non-cash investing activity: | |||||||
Loans transferred to held for sale | $ | 21,575 | $ | 686,078 |
1. | NATURE OF OPERATIONS |
(Dollars in thousands, except per share amounts) | Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Net income | $ | 11,226 | $ | 18,921 | $ | 22,328 | $ | 31,216 | ||||||||
Weighted average basic common shares outstanding | 56,190,970 | 42,000,000 | 56,190,970 | 42,000,000 | ||||||||||||
Add: Dilutive effects of assumed vesting of restricted stock | 629,106 | — | 596,645 | — | ||||||||||||
Weighted average diluted common shares outstanding | 56,820,076 | 42,000,000 | 56,787,615 | 42,000,000 | ||||||||||||
Income per common share: | ||||||||||||||||
Basic | $ | 0.20 | $ | 0.45 | $ | 0.40 | $ | 0.74 | ||||||||
Diluted | $ | 0.20 | $ | 0.45 | $ | 0.39 | $ | 0.74 | ||||||||
Anti-dilutive shares not included in calculation of diluted earnings per share | — | — | — | — |
2. | INVESTMENT SECURITIES |
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||
At June 30, 2018: | |||||||||||||||
Government and Government Sponsored Entities: | |||||||||||||||
Mortgage-backed securities | $ | 405,849 | $ | 281 | $ | (6,180 | ) | $ | 399,950 | ||||||
Agency bonds | 120,405 | 7 | (4,113 | ) | 116,299 | ||||||||||
Collateralized mortgage obligations | 42,550 | 242 | 0 | 42,792 | |||||||||||
SBA securities | 11,742 | — | (129 | ) | 11,613 | ||||||||||
U.S. Treasury | 1,009 | — | (44 | ) | 965 | ||||||||||
CRA Qualified Investment Fund | 12,000 | — | (584 | ) | 11,416 | ||||||||||
Total available for sale investment securities | $ | 593,555 | $ | 530 | $ | (11,050 | ) | $ | 583,035 | ||||||
At December 31, 2017: | |||||||||||||||
Government and Government Sponsored Entities: | |||||||||||||||
Mortgage-backed securities | $ | 316,134 | $ | 112 | $ | (3,327 | ) | $ | 312,919 | ||||||
Agency bonds | 120,405 | 30 | (3,213 | ) | 117,222 | ||||||||||
Collateralized mortgage obligations | 46,920 | 249 | (1 | ) | 47,168 | ||||||||||
SBA securities | 13,427 | — | (125 | ) | 13,302 | ||||||||||
U.S. Treasury | 1,010 | — | (26 | ) | 984 | ||||||||||
CRA Qualified Investment Fund | 12,000 | — | (307 | ) | 11,693 | ||||||||||
Total available for sale investment securities | $ | 509,896 | $ | 391 | $ | (6,999 | ) | $ | 503,288 |
June 30, 2018 | |||||||||||||||||||||||
Less than 12 Months | 12 Months or More | Total | |||||||||||||||||||||
Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | ||||||||||||||||||
Government and Government Sponsored Entities: | |||||||||||||||||||||||
Mortgage-backed securities | $ | 167,838 | $ | (2,008 | ) | $ | 172,890 | $ | (4,172 | ) | $ | 340,728 | $ | (6,180 | ) | ||||||||
Agency bonds | 9,713 | (287 | ) | 103,579 | (3,826 | ) | 113,292 | (4,113 | ) | ||||||||||||||
Collateralized mortgage obligations | 96 | 0 | — | — | 96 | 0 | |||||||||||||||||
SBA securities | — | — | 11,613 | (129 | ) | 11,613 | (129 | ) | |||||||||||||||
U.S. Treasury | — | — | 965 | (44 | ) | 965 | (44 | ) | |||||||||||||||
CRA Qualified Investment Fund | 4,831 | (169 | ) | 6,585 | (415 | ) | 11,416 | (584 | ) | ||||||||||||||
Total available for sale investment securities | $ | 182,478 | $ | (2,464 | ) | $ | 295,632 | $ | (8,586 | ) | $ | 478,110 | $ | (11,050 | ) |
December 31, 2017 | |||||||||||||||||||||||
Less than 12 Months | 12 Months or More | Total | |||||||||||||||||||||
Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | ||||||||||||||||||
Government and Government Sponsored Entities: | |||||||||||||||||||||||
Mortgage-backed securities | $ | 93,403 | $ | (805 | ) | $ | 182,343 | $ | (2,522 | ) | $ | 275,746 | $ | (3,327 | ) | ||||||||
Agency bonds | 9,851 | (148 | ) | 104,340 | (3,065 | ) | 114,191 | (3,213 | ) | ||||||||||||||
Collateralized mortgage obligations | 1,959 | (1 | ) | — | — | 1,959 | (1 | ) | |||||||||||||||
SBA securities | — | — | 13,302 | (125 | ) | 13,302 | (125 | ) | |||||||||||||||
U.S. Treasury | — | — | 984 | (26 | ) | 984 | (26 | ) | |||||||||||||||
CRA Qualified Investment Fund | 4,948 | (52 | ) | 6,745 | (255 | ) | 11,693 | (307 | ) | ||||||||||||||
Total available for sale investment securities | $ | 110,161 | $ | (1,006 | ) | $ | 307,714 | $ | (5,993 | ) | $ | 417,875 | $ | (6,999 | ) |
Amortized Cost | Gross Unrecognized Gains | Gross Unrecognized Losses | Estimated Fair Value | ||||||||||||
As of June 30, 2018: | |||||||||||||||
Government Sponsored Entities: | |||||||||||||||
Mortgage-backed securities | $ | 11,733 | $ | 26 | $ | (310 | ) | $ | 11,449 | ||||||
Other investments | 276 | — | — | 276 | |||||||||||
Total held to maturity investment securities | $ | 12,009 | $ | 26 | $ | (310 | ) | $ | 11,725 | ||||||
As of December 31, 2017: | |||||||||||||||
Government Sponsored Entities: | |||||||||||||||
Mortgage-backed securities | $ | 6,636 | $ | 73 | $ | (69 | ) | $ | 6,640 | ||||||
Other investments | 285 | — | — | 285 | |||||||||||
Total held to maturity investment securities | $ | 6,921 | $ | 73 | $ | (69 | ) | $ | 6,925 |
Less than 12 Months | 12 Months or More | Total | |||||||||||||||||||||
Fair Value | Unrecognized Losses | Fair Value | Unrecognized Losses | Fair Value | Unrecognized Losses | ||||||||||||||||||
As of June 30, 2018: | |||||||||||||||||||||||
Government Sponsored Entities: | |||||||||||||||||||||||
Mortgage-backed securities | $ | 10,299 | $ | (310 | ) | $ | — | $ | — | $ | 10,299 | $ | (310 | ) | |||||||||
As of December 31, 2017: | |||||||||||||||||||||||
Government Sponsored Entities: | |||||||||||||||||||||||
Mortgage-backed securities | $ | 1,047 | $ | (4 | ) | $ | 3,029 | $ | (65 | ) | $ | 4,076 | $ | (69 | ) |
June 30, 2018 | |||||||
Amortized Cost | Fair Value | ||||||
Available for sale investments securities | |||||||
One to five years | $ | 118,414 | $ | 114,257 | |||
Five to ten years | — | — | |||||
Beyond ten years | 3,000 | 3,007 | |||||
Equity securities | 12,000 | 11,416 | |||||
Mortgage-backed securities and collateralized mortgage obligations | 460,141 | 454,355 | |||||
Total available for sale investment securities | $ | 593,555 | $ | 583,035 | |||
Held to maturity investments securities | |||||||
Beyond ten years | $ | 276 | $ | 276 | |||
Mortgage-backed securities | 11,733 | 11,449 | |||||
Total held to maturity investment securities | $ | 12,009 | $ | 11,725 |
3. | LOANS RECEIVABLE |
June 30, 2018 | December 31, 2017 | ||||||
Permanent mortgages on: | |||||||
Multifamily residential | $ | 3,335,958 | $ | 2,887,438 | |||
Single family residential | 2,167,341 | 1,957,546 | |||||
Commercial real estate | 151,610 | 112,492 | |||||
Construction and land loans on single family residential | 31,569 | 41,165 | |||||
Non-Mortgage (‘‘NM’’) loans | 100 | 50 | |||||
Total | 5,686,578 | 4,998,691 | |||||
Deferred loan costs, net | 48,339 | 42,856 | |||||
Allowance for loan losses | (33,358 | ) | (30,312 | ) | |||
Loans receivable held for investment, net | $ | 5,701,559 | $ | 5,011,235 |
Multifamily Residential | Single Family Residential | Commercial Real Estate | Land, NM, and Construction | Total | |||||||||||||||
Three months ended June 30, 2018 | |||||||||||||||||||
Allowance for loan losses: | |||||||||||||||||||
Beginning balance allocated to portfolio segments | $ | 19,833 | $ | 9,214 | $ | 1,887 | $ | 1,046 | $ | 31,980 | |||||||||
Provision for (reversal of) loan losses | 727 | 881 | (46 | ) | (262 | ) | 1,300 | ||||||||||||
Charge-offs | — | — | — | — | — | ||||||||||||||
Recoveries | — | 3 | — | 75 | 78 | ||||||||||||||
Ending balance allocated to portfolio segments | $ | 20,560 | $ | 10,098 | $ | 1,841 | $ | 859 | $ | 33,358 | |||||||||
Three months ended June 30, 2017 | |||||||||||||||||||
Allowance for loan losses: | |||||||||||||||||||
Beginning balance allocated to portfolio segments | $ | 19,873 | $ | 10,097 | $ | 1,950 | $ | 1,779 | $ | 33,699 | |||||||||
Reversal of provision for loan losses | (4,300 | ) | (1,270 | ) | (38 | ) | (873 | ) | (6,481 | ) | |||||||||
Charge-offs | — | (5 | ) | — | — | (5 | ) | ||||||||||||
Recoveries | — | 3 | — | 140 | 143 | ||||||||||||||
Ending balance allocated to portfolio segments | $ | 15,573 | $ | 8,825 | $ | 1,912 | $ | 1,046 | $ | 27,356 | |||||||||
Six months ended June 30, 2018 | |||||||||||||||||||
Allowance for loan losses: | |||||||||||||||||||
Beginning balance allocated to portfolio segments | $ | 18,588 | $ | 9,044 | $ | 1,734 | $ | 946 | $ | 30,312 | |||||||||
Provision for (reversal of) loan losses | 1,972 | 1,048 | 17 | (237 | ) | 2,800 | |||||||||||||
Charge-offs | — | — | — | — | — | ||||||||||||||
Recoveries | — | 6 | 90 | 150 | 246 | ||||||||||||||
Ending balance allocated to portfolio segments | $ | 20,560 | $ | 10,098 | $ | 1,841 | $ | 859 | $ | 33,358 | |||||||||
Six months ended June 30, 2017 | |||||||||||||||||||
Allowance for loan losses: | |||||||||||||||||||
Beginning balance allocated to portfolio segments | $ | 18,478 | $ | 11,559 | $ | 1,823 | $ | 1,438 | $ | 33,298 | |||||||||
(Reversal of) provision for loan losses | (2,905 | ) | (2,735 | ) | 89 | (621 | ) | (6,172 | ) | ||||||||||
Charge-offs | — | (5 | ) | — | — | (5 | ) | ||||||||||||
Recoveries | — | 6 | — | 229 | 235 | ||||||||||||||
Ending balance allocated to portfolio segments | $ | 15,573 | $ | 8,825 | $ | 1,912 | $ | 1,046 | $ | 27,356 |
Multifamily Residential | Single Family Residential | Commercial Real Estate | Land, NM, and Construction | Total | |||||||||||||||
As of June 30, 2018: | |||||||||||||||||||
Ending allowance balance allocated to: | |||||||||||||||||||
Loans individually evaluated for impairment | $ | — | $ | 25 | $ | — | $ | — | $ | 25 | |||||||||
Loans collectively evaluated for impairment | 20,560 | 10,073 | 1,841 | 859 | 33,333 | ||||||||||||||
Ending balance | $ | 20,560 | $ | 10,098 | $ | 1,841 | $ | 859 | $ | 33,358 | |||||||||
Loans: | |||||||||||||||||||
Ending balance: individually evaluated for impairment | $ | 1,543 | $ | 7,143 | $ | 871 | $ | — | $ | 9,557 | |||||||||
Ending balance: collectively evaluated for impairment | 3,334,415 | 2,160,198 | 150,739 | 31,669 | 5,677,021 | ||||||||||||||
Ending balance | $ | 3,335,958 | $ | 2,167,341 | $ | 151,610 | $ | 31,669 | $ | 5,686,578 | |||||||||
As of December 31, 2017: | |||||||||||||||||||
Ending allowance balance allocated to: | |||||||||||||||||||
Loans individually evaluated for impairment | $ | — | $ | 25 | $ | — | $ | — | $ | 25 | |||||||||
Loans collectively evaluated for impairment | 18,588 | 9,019 | 1,734 | 946 | 30,287 | ||||||||||||||
Ending balance | $ | 18,588 | $ | 9,044 | $ | 1,734 | $ | 946 | $ | 30,312 | |||||||||
Loans: | |||||||||||||||||||
Ending balance: individually evaluated for impairment | $ | 2,246 | $ | 8,991 | $ | 656 | $ | — | $ | 11,893 | |||||||||
Ending balance: collectively evaluated for impairment | 2,885,192 | 1,948,555 | 111,836 | 41,215 | 4,986,798 | ||||||||||||||
Ending balance | $ | 2,887,438 | $ | 1,957,546 | $ | 112,492 | $ | 41,215 | $ | 4,998,691 |
Multifamily Residential | Single Family Residential | Commercial Real Estate | Land, NM and Construction | Total | |||||||||||||||
As of June 30, 2018: | |||||||||||||||||||
Grade: | |||||||||||||||||||
Pass | $ | 3,246,277 | $ | 2,140,414 | $ | 149,012 | $ | 29,654 | $ | 5,565,357 | |||||||||
Watch | 78,221 | 17,357 | 1,727 | — | 97,305 | ||||||||||||||
Special mention | 4,941 | 5,675 | — | 2,015 | 12,631 | ||||||||||||||
Substandard | 6,519 | 3,895 | 871 | — | 11,285 | ||||||||||||||
Total | $ | 3,335,958 | $ | 2,167,341 | $ | 151,610 | $ | 31,669 | $ | 5,686,578 | |||||||||
As of December 31, 2017: | |||||||||||||||||||
Grade: | |||||||||||||||||||
Pass | $ | 2,847,720 | $ | 1,923,960 | $ | 106,539 | $ | 41,215 | $ | 4,919,434 | |||||||||
Watch | 25,354 | 20,178 | 4,315 | — | 49,847 | ||||||||||||||
Special mention | 6,569 | 9,025 | — | — | 15,594 | ||||||||||||||
Substandard | 7,795 | 4,383 | 1,638 | — | 13,816 | ||||||||||||||
Total | $ | 2,887,438 | $ | 1,957,546 | $ | 112,492 | $ | 41,215 | $ | 4,998,691 |
30 Days | 60 Days | 90+ Days | Non-accrual | Current | Total | ||||||||||||||||||
As of June 30, 2018: | |||||||||||||||||||||||
Loans: | |||||||||||||||||||||||
Multifamily residential | $ | 660 | $ | — | $ | — | $ | 1,543 | $ | 3,333,755 | $ | 3,335,958 | |||||||||||
Single family residential | 1,711 | 2,230 | — | 2,372 | 2,161,028 | 2,167,341 | |||||||||||||||||
Commercial real estate | — | — | — | 871 | 150,739 | 151,610 | |||||||||||||||||
Land, NM, and construction | — | — | — | — | 31,669 | 31,669 | |||||||||||||||||
Total | $ | 2,371 | $ | 2,230 | $ | — | $ | 4,786 | $ | 5,677,191 | $ | 5,686,578 | |||||||||||
As of December 31, 2017: | |||||||||||||||||||||||
Loans: | |||||||||||||||||||||||
Multifamily residential | $ | 2,751 | $ | — | $ | — | $ | 2,246 | $ | 2,882,441 | $ | 2,887,438 | |||||||||||
Single family residential | 4,870 | 3,364 | — | 4,135 | 1,945,177 | 1,957,546 | |||||||||||||||||
Commercial real estate | — | — | — | 656 | 111,836 | 112,492 | |||||||||||||||||
Land, NM, and construction | — | — | — | — | 41,215 | 41,215 | |||||||||||||||||
Total | $ | 7,621 | $ | 3,364 | $ | — | $ | 7,037 | $ | 4,980,669 | $ | 4,998,691 |
As of June 30, 2018 | As of December 31, 2017 | ||||||||||||||||||||||
Recorded Investment | Unpaid Principal Balance | Related Allowance | Recorded Investment | Unpaid Principal Balance | Related Allowance | ||||||||||||||||||
With no related allowance recorded: | |||||||||||||||||||||||
Multifamily residential | $ | 1,543 | $ | 1,680 | $ | — | $ | 2,246 | $ | 2,545 | $ | — | |||||||||||
Single family residential | 6,196 | 6,443 | — | 8,029 | 8,237 | — | |||||||||||||||||
Commercial real estate | 871 | 871 | — | 656 | 798 | — | |||||||||||||||||
8,610 | 8,994 | — | 10,931 | 11,580 | — | ||||||||||||||||||
With an allowance recorded: | |||||||||||||||||||||||
Single family residential | 947 | 947 | 25 | 962 | 962 | 25 | |||||||||||||||||
947 | 947 | 25 | 962 | 962 | 25 | ||||||||||||||||||
Total: | |||||||||||||||||||||||
Multifamily residential | 1,543 | 1,680 | — | 2,246 | 2,545 | — | |||||||||||||||||
Single family residential | 7,143 | 7,390 | 25 | 8,991 | 9,199 | 25 | |||||||||||||||||
Commercial real estate | 871 | 871 | — | 656 | 798 | — | |||||||||||||||||
$ | 9,557 | $ | 9,941 | $ | 25 | $ | 11,893 | $ | 12,542 | $ | 25 |
Three Months Ended June 30, | |||||||||||||||||||||||
2018 | 2017 | ||||||||||||||||||||||
Average Recorded Investment | Interest Income | Cash Basis Interest | Average Recorded Investment | Interest Income | Cash Basis Interest | ||||||||||||||||||
With no related allowance recorded: | |||||||||||||||||||||||
Multifamily residential | $ | 1,553 | $ | — | $ | — | $ | 2,211 | $ | — | $ | — | |||||||||||
Single family residential | 7,728 | 38 | — | 7,275 | 47 | — | |||||||||||||||||
Commercial real estate | 218 | — | — | 702 | — | — | |||||||||||||||||
9,499 | 38 | — | 10,188 | 47 | — | ||||||||||||||||||
With an allowance recorded: | |||||||||||||||||||||||
Single family residential | 951 | 10 | — | 982 | 8 | — | |||||||||||||||||
951 | 10 | — | 982 | 8 | — | ||||||||||||||||||
Total: | |||||||||||||||||||||||
Multifamily residential | 1,553 | — | — | 2,211 | — | — | |||||||||||||||||
Single family residential | 8,679 | 48 | — | 8,257 | 55 | — | |||||||||||||||||
Commercial real estate | 218 | — | — | 702 | — | — | |||||||||||||||||
$ | 10,450 | $ | 48 | $ | — | $ | 11,170 | $ | 55 | $ | — |
Six months ended June 30, | |||||||||||||||||||||||
2018 | 2017 | ||||||||||||||||||||||
Average Recorded Investment | Interest Income | Cash Basis Interest | Average Recorded Investment | Interest Income | Cash Basis Interest | ||||||||||||||||||
With no related allowance recorded: | |||||||||||||||||||||||
Multifamily residential | $ | 1,847 | $ | — | $ | — | $ | 1,894 | $ | — | $ | — | |||||||||||
Single family residential | 7,759 | 75 | — | 6,751 | 95 | — | |||||||||||||||||
Commercial real estate | 403 | — | — | 775 | — | — | |||||||||||||||||
10,009 | 75 | — | 9,420 | 95 | — | ||||||||||||||||||
With an allowance recorded: | |||||||||||||||||||||||
Single family residential | 1,389 | 27 | — | 986 | 17 | — | |||||||||||||||||
1,389 | 27 | — | 986 | 17 | — | ||||||||||||||||||
Total: | |||||||||||||||||||||||
Multifamily residential | 1,847 | — | — | 1,894 | — | — | |||||||||||||||||
Single family residential | 9,148 | 102 | — | 7,737 | 112 | — | |||||||||||||||||
Commercial real estate | 403 | — | — | 775 | — | — | |||||||||||||||||
$ | 11,398 | $ | 102 | $ | — | $ | 10,406 | $ | 112 | $ | — |
June 30, 2018 | December 31, 2017 | ||||||
Troubled Debt Restructurings: | |||||||
Multifamily residential | $ | — | $ | 667 | |||
Single family residential | 5,503 | 5,653 | |||||
Total recorded investment in troubled debt restructurings | $ | 5,503 | $ | 6,320 |
4. | NONPERFORMING ASSETS |
June 30, 2018 | December 31, 2017 | ||||||
Non-accrual loans: | |||||||
Multifamily residential | $ | 1,543 | $ | 2,246 | |||
Single family residential | 2,372 | 4,135 | |||||
Commercial real estate | 871 | 656 | |||||
Total non-accrual loans | 4,786 | 7,037 | |||||
Real estate owned | — | — | |||||
Total nonperforming assets | $ | 4,786 | $ | 7,037 |
5. | MORTGAGE SERVICING RIGHTS |
June 30, 2018 | December 31, 2017 | ||||||
Mortgage loans serviced for: | |||||||
FHLMC | $ | 575,440 | $ | 625,545 | |||
Other financial institutions | 141,471 | 158,136 | |||||
Total mortgage loans serviced for others | $ | 716,911 | $ | 783,681 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Beginning Balance | $ | 4,124 | $ | 1,153 | $ | 4,255 | $ | 1,099 | |||||||
Additions | — | 158 | — | 241 | |||||||||||
Disposals | — | — | — | — | |||||||||||
Change in fair value due to changes in assumptions | — | — | — | — | |||||||||||
Other changes in fair value | (256 | ) | (53 | ) | (387 | ) | (82 | ) | |||||||
Ending balance | $ | 3,868 | $ | 1,258 | $ | 3,868 | $ | 1,258 |
6. | DEPOSITS |
June 30, 2018 | December 31, 2017 | ||||||
Certificate accounts | $ | 2,962,858 | $ | 2,242,682 | |||
Money market savings | 1,306,189 | 1,389,425 | |||||
NOW accounts | 173,120 | 203,159 | |||||
Money market checking | 82,447 | 85,073 | |||||
Non-interest bearing demand | 67,541 | 30,899 | |||||
$ | 4,592,155 | $ | 3,951,238 |
July 1 - December 31, 2018 | $ | 1,443,189 | |
Year ending December 31, 2019 | 1,001,904 | ||
Year ending December 31, 2020 | 364,093 | ||
Year ending December 31, 2021 | 115,749 | ||
Year ending December 31, 2022 | 32,670 | ||
Thereafter | 5,253 | ||
$ | 2,962,858 |
7. | FEDERAL HOME LOAN BANK AND FEDERAL RESERVE BANK ADVANCES |
As of June 30, 2018 | ||||||||||||||||||
Outstanding Balances | Minimum Interest Rate | Maximum Interest Rate | Weighted Average Rate | |||||||||||||||
June 30, 2018 | December 31, 2017 | Maturity Dates | ||||||||||||||||
Fixed rate short-term | $ | 148,100 | $ | 411,600 | 2.08 | % | 2.08 | % | 2.08 | % | July 2018 | |||||||
Fixed rate long-term | 852,646 | 427,660 | 1.38 | % | 7.69 | % | 2.24 | % | July 2018 to August 2032 | |||||||||
Variable rate long-term | 150,000 | 150,000 | 2.30 | % | 2.49 | % | 2.37 | % | July 2018 to January 2020 | |||||||||
$ | 1,150,746 | $ | 989,260 |
July 1 - December 31, 2018 | $ | 323,600 | |
Year ending December 31, 2019 | 275,000 | ||
Year ending December 31, 2020 | 150,000 | ||
Year ending December 31, 2021 | 150,600 | ||
Year ending December 31, 2022 | — | ||
Thereafter | 251,546 | ||
$ | 1,150,746 |
8. | JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES |
June 30, 2018 | December 31, 2017 | Date | Maturity | Rate Index | ||||||||||||||||
Issuer | Amount | Rate | Amount | Rate | Issued | Date | (Quarterly Reset) | |||||||||||||
Luther Burbank Statutory Trust I | $ | 41,238 | 3.72 | % | $ | 41,238 | 2.97 | % | 3/1/2006 | 6/15/2036 | 3 month LIBOR + 1.38% | |||||||||
Luther Burbank Statutory Trust II | $ | 20,619 | 3.96 | % | $ | 20,619 | 3.21 | % | 3/1/2007 | 6/15/2037 | 3 month LIBOR + 1.62% |
9. | SENIOR DEBT |
June 30, 2018 | December 31, 2017 | ||||||||||||||||||||
Principal | Unamortized debt issuance costs | Principal | Unamortized debt issuance costs | Maturity Date | Fixed Interest Rate | ||||||||||||||||
Senior Unsecured Term Notes | $ | 95,000 | $ | 772 | $ | 95,000 | $ | 839 | 9/30/2024 | 6.50 | % |
10. | INCOME TAXES |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Statutory U.S. Federal Income Tax | $ | 3,308 | $ | 6,851 | $ | 6,517 | $ | 11,303 | |||||||
Increase (decrease) resulting from: | |||||||||||||||
Benefit of S Corporation status | — | (6,851 | ) | — | (11,303 | ) | |||||||||
State Taxes | 1,596 | 654 | 2,892 | 1,079 | |||||||||||
Other | (376 | ) | — | (706 | ) | — | |||||||||
Provision for income taxes | $ | 4,528 | $ | 654 | $ | 8,703 | $ | 1,079 |
11. | STOCK BASED COMPENSATION |
Number of Shares | Weighted Average Grant Date Fair Value | |||||||
Beginning of the period balance | 1,319,700 | $ | 10.75 | |||||
Shares granted | 131,140 | 12.77 | ||||||
Shares settled | (53,059 | ) | 10.75 | |||||
Shares forfeited | (2,800 | ) | 10.75 | |||||
End of the period balance | 1,394,981 | $ | 10.97 |
12. | FAIR VALUE MEASUREMENTS |
Fair Level Measurements Using | |||||||||||||||||||
Carrying Amount | Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||||
As of June 30, 2018: | |||||||||||||||||||
Financial assets: | |||||||||||||||||||
Cash and cash equivalents | $ | 76,018 | $ | 76,018 | $ | 76,018 | $ | — | $ | — | |||||||||
Investment securities: | |||||||||||||||||||
Available for sale | 583,035 | 583,035 | 965 | 582,070 | — | ||||||||||||||
Held to maturity | 12,009 | 11,725 | — | 11,725 | — | ||||||||||||||
Loans held for sale | 21,575 | 21,642 | — | 21,642 | — | ||||||||||||||
Loans receivable, net | 5,701,559 | 5,673,337 | — | — | 5,673,337 | ||||||||||||||
Accrued interest receivable | 18,310 | 18,310 | 91 | 1,526 | 16,693 | ||||||||||||||
Federal Home Loan Bank stock | 32,995 | N/A | N/A | N/A | N/A | ||||||||||||||
Interest Rate Cap Premium | 5 | 5 | — | 5 | — | ||||||||||||||
Financial liabilities: | |||||||||||||||||||
Deposits | $ | 4,592,155 | $ | 4,546,837 | $ | 1,629,436 | $ | 2,917,401 | $ | — | |||||||||
FHLB advances | 1,150,746 | 1,151,622 | — | 1,151,622 | — | ||||||||||||||
Junior subordinated deferrable interest debentures | 61,857 | 58,017 | — | 58,017 | — | ||||||||||||||
Senior debt | 94,228 | 98,325 | — | 98,325 | — | ||||||||||||||
Accrued interest payable | 3,304 | 3,304 | — | 3,304 | — | ||||||||||||||
As of December 31, 2017: | |||||||||||||||||||
Financial assets: | |||||||||||||||||||
Cash and cash equivalents | $ | 75,578 | $ | 75,578 | $ | 75,578 | $ | — | $ | — | |||||||||
Investment securities: | |||||||||||||||||||
Available for sale | 503,288 | 503,288 | 984 | 502,304 | — | ||||||||||||||
Held to maturity | 6,921 | 6,925 | — | 6,925 | — | ||||||||||||||
Loans receivable, net | 5,011,235 | 5,022,250 | — | — | 5,022,250 | ||||||||||||||
Accrued interest receivable | 14,901 | 14,901 | 27 | 1,320 | 13,554 | ||||||||||||||
Federal Home Loan Bank stock | 27,733 | N/A | N/A | N/A | N/A | ||||||||||||||
Interest rate cap premium | 1 | 1 | — | 1 | — | ||||||||||||||
Financial liabilities: | |||||||||||||||||||
Deposits | $ | 3,951,238 | $ | 3,917,999 | $ | 1,708,556 | $ | 2,209,443 | $ | — | |||||||||
FHLB advances | 989,260 | 989,833 | — | 989,833 | — | ||||||||||||||
Junior subordinated deferrable interest debentures | 61,857 | 58,624 | — | 58,624 | — | ||||||||||||||
Senior debt | 94,161 | 104,500 | — | 104,500 | — | ||||||||||||||
Accrued interest payable | 1,781 | 1,781 | — | 1,781 | — |
Description | Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||
As of June 30, 2018: | |||||||||||||||
Financial Assets: | |||||||||||||||
Available for sale investment securities: | |||||||||||||||
Government and Government Sponsored Entities: | |||||||||||||||
Mortgage-backed securities | $ | 399,950 | $ | — | $ | 399,950 | $ | — | |||||||
Agency bonds | 116,299 | — | 116,299 | — | |||||||||||
Collateralized mortgage obligations | 42,792 | — | 42,792 | — | |||||||||||
SBA securities | 11,613 | — | 11,613 | — | |||||||||||
U.S. Treasury | 965 | 965 | — | — | |||||||||||
CRA Qualified Investment Fund | 11,416 | — | 11,416 | — | |||||||||||
Total investment securities available for sale | $ | 583,035 | 965 | $ | 582,070 | — | |||||||||
Interest rate cap premium | $ | 5 | $ | — | $ | 5 | $ | — | |||||||
As of December 31, 2017: | |||||||||||||||
Financial Assets: | |||||||||||||||
Available for sale investment securities: | |||||||||||||||
Government and Government Sponsored Entities: | |||||||||||||||
Mortgage-backed securities | $ | 312,919 | $ | — | $ | 312,919 | $ | — | |||||||
Agency bonds | 117,222 | — | 117,222 | — | |||||||||||
Collateralized mortgage obligations | 47,168 | — | 47,168 | — | |||||||||||
SBA securities | 13,302 | — | 13,302 | — | |||||||||||
U.S. Treasury | 984 | 984 | — | — | |||||||||||
CRA Qualified Investment Fund | 11,693 | — | 11,693 | — | |||||||||||
Total investment securities available for sale | $ | 503,288 | $ | 984 | $ | 502,304 | $ | — | |||||||
Interest rate cap premium | $ | 1 | $ | — | $ | 1 | $ | — |
Description | Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||
As of December 31, 2017: | |||||||||||||||
Impaired Loans | |||||||||||||||
Single family residential | $ | 191 | $ | — | $ | — | $ | 191 | |||||||
Total assets measured at fair value on a non-recurring basis | $ | 191 | $ | — | $ | — | $ | 191 |
13. | VARIABLE INTEREST ENTITIES ("VIE") |
14. | LOAN SALE AND SECURITIZATION ACTIVITIES |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
(In thousands) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Proceeds from loan sales | $ | — | $ | 35,491 | $ | — | $ | 60,182 | ||||||||
Servicing fees | 396 | 109 | 804 | 217 |
Single Family Residential | Multifamily Residential | ||||||
June 30, 2018 | |||||||
Principal balance of loans | $ | 27,925 | $ | 688,986 | |||
Loans 90+ days past due | — | — | |||||
Charge-offs, net | — | — | |||||
December 31, 2017 | |||||||
Principal balance of loans | 29,772 | 753,909 | |||||
Loans 90+ days past due | — | — | |||||
Charge-offs, net | — | — |
15. | COMMITMENTS AND CONTINGENCIES |
July 1 - December 31, 2018 | $ | 2,708 | |
Year ending December 31, 2019 | 5,117 | ||
Year ending December 31, 2020 | 3,723 | ||
Year ending December 31, 2021 | 3,267 | ||
Year ending December 31, 2022 | 2,419 | ||
Thereafter | 3,018 | ||
$ | 20,252 |
(Dollars in thousands, except per share data) | As of or For the Three Months Ended | As of or For the Six Months Ended | ||||||||||||||||||
June 30, 2018 | March 31, 2018 | June 30, 2017 | June 30, 2018 | June 30, 2017 | ||||||||||||||||
Per Common Share | ||||||||||||||||||||
Diluted earnings per share | $ | 0.20 | $ | 0.20 | $ | 0.45 | $ | 0.39 | $ | 0.74 | ||||||||||
Book value per share | $ | 9.94 | $ | 9.79 | $ | 9.91 | $ | 9.94 | $ | 9.91 | ||||||||||
Tangible book value per share (1) | $ | 9.88 | $ | 9.73 | $ | 9.83 | $ | 9.88 | $ | 9.83 | ||||||||||
Pro Forma Statements of Income and Per Common Share Data (1) | ||||||||||||||||||||
Pro forma net income | $ | 11,226 | $ | 11,102 | $ | 11,353 | $ | 22,328 | $ | 18,731 | ||||||||||
Diluted pro forma earnings per share | $ | 0.20 | $ | 0.20 | $ | 0.27 | $ | 0.39 | $ | 0.45 | ||||||||||
Selected Ratios | ||||||||||||||||||||
Return on average: | ||||||||||||||||||||
Assets | 0.71 | % | 0.76 | % | 1.37 | % | 0.73 | % | 1.17 | % | ||||||||||
Stockholders' equity | 8.00 | % | 7.98 | % | 18.41 | % | 7.99 | % | 15.22 | % | ||||||||||
Dividend payout ratio | 29.41 | % | 54.59 | % | 54.97 | % | 41.93 | % | 64.71 | % | ||||||||||
Net interest margin | 2.00 | % | 2.11 | % | 2.03 | % | 2.05 | % | 2.07 | % | ||||||||||
Efficiency ratio (1) | 46.67 | % | 46.72 | % | 53.13 | % | 46.69 | % | 53.07 | % | ||||||||||
Loan to deposit ratio | 124.89 | % | 129.47 | % | 117.00 | % | 124.89 | % | 117.00 | % | ||||||||||
Pro Forma Selected Ratios (1) | ||||||||||||||||||||
Pro forma return on average assets | 0.71 | % | 0.76 | % | 0.82 | % | 0.73 | % | 0.70 | % | ||||||||||
Pro forma return on average equity | 8.00 | % | 7.98 | % | 11.04 | % | 7.99 | % | 9.13 | % | ||||||||||
Credit Quality Ratios | ||||||||||||||||||||
Allowance for loan losses to loans | 0.58 | % | 0.60 | % | 0.64 | % | 0.58 | % | 0.64 | % | ||||||||||
Allowance for loan losses to nonperforming loans | 696.99 | % | 459.42 | % | 446.77 | % | 696.99 | % | 446.77 | % | ||||||||||
Nonperforming assets to total assets | 0.07 | % | 0.12 | % | 0.11 | % | 0.07 | % | 0.11 | % | ||||||||||
Net recoveries to average loans | 0.01 | % | 0.01 | % | 0.01 | % | 0.01 | % | 0.01 | % | ||||||||||
(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. 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. For periods prior to January 1, 2018, we calculate our pro forma net income, return on average assets and return on average equity by adding back our franchise S Corporation tax to net income, and using a combined C Corporation effective tax rate for federal and California income taxes of 42.0%. This calculation reflects only the change in our status as an S Corporation and does not give effect to any other transaction. Beginning January 1, 2018, our pro forma provision for tax expense is our actual C Corporation provision. |
As of or For the Three Months Ended | As of or For the Six Months Ended | |||||||||||||||||||
(Dollars in thousands except per share data) | June 30, 2018 | March 31, 2018 | June 30, 2017 | June 30, 2018 | June 30, 2017 | |||||||||||||||
Pre-tax, pre-provision net earnings | ||||||||||||||||||||
Income before taxes | $ | 15,754 | $ | 15,277 | $ | 19,575 | $ | 31,031 | $ | 32,295 | ||||||||||
Plus: Provision for (reversal of) loan losses | 1,300 | 1,500 | (6,481 | ) | 2,800 | (6,172 | ) | |||||||||||||
Pre-tax, pre-provision net earnings | $ | 17,054 | $ | 16,777 | $ | 13,094 | $ | 33,831 | $ | 26,123 | ||||||||||
Efficiency Ratio | ||||||||||||||||||||
Noninterest expense (numerator) | $ | 14,922 | $ | 14,713 | $ | 14,840 | $ | 29,635 | $ | 29,542 | ||||||||||
Net interest income | 31,159 | 30,465 | 27,733 | 61,624 | 54,582 | |||||||||||||||
Noninterest income | 817 | 1,025 | 201 | 1,842 | 1,083 | |||||||||||||||
Operating revenue (denominator) | $ | 31,976 | $ | 31,490 | $ | 27,934 | $ | 63,466 | $ | 55,665 | ||||||||||
Efficiency ratio | 46.67 | % | 46.72 | % | 53.13 | % | 46.69 | % | 53.07 | % | ||||||||||
Pro Forma Net Income | ||||||||||||||||||||
Income before provision for income taxes | $ | 15,754 | $ | 15,277 | $ | 19,575 | $ | 31,031 | $ | 32,295 | ||||||||||
Actual/pro forma provision for income taxes | 4,528 | 4,175 | 8,222 | 8,703 | 13,564 | |||||||||||||||
Actual/pro forma net income (numerator) | $ | 11,226 | $ | 11,102 | $ | 11,353 | $ | 22,328 | $ | 18,731 | ||||||||||
Pro Forma Diluted Earnings Per Share | ||||||||||||||||||||
Weighted average common shares outstanding - diluted (denominator) | 56,820,076 | 56,755,154 | 42,000,000 | 56,787,615 | 42,000,000 | |||||||||||||||
Actual/pro forma diluted earnings per share | $ | 0.20 | $ | 0.20 | $ | 0.27 | $ | 0.39 | $ | 0.45 | ||||||||||
Pro Forma Return on Average Assets | ||||||||||||||||||||
Actual/pro forma net income (numerator) | $ | 11,226 | $ | 11,102 | $ | 11,353 | $ | 22,328 | $ | 18,731 | ||||||||||
Average assets (denominator) | $ | 6,310,087 | $ | 5,848,751 | $ | 5,517,404 | $ | 6,080,693 | $ | 5,345,749 | ||||||||||
Actual/pro forma return on average assets | 0.71 | % | 0.76 | % | 0.82 | % | 0.73 | % | 0.70 | % | ||||||||||
Pro Forma Return on Average Stockholders' Equity | ||||||||||||||||||||
Actual/pro forma net income (numerator) | $ | 11,226 | $ | 11,102 | $ | 11,353 | $ | 22,328 | $ | 18,731 | ||||||||||
Average stockholders' equity (denominator) | $ | 560,961 | $ | 556,661 | $ | 411,176 | $ | 558,823 | $ | 410,318 | ||||||||||
Actual/pro forma return on average stockholders' equity | 8.00 | % | 7.98 | % | 11.04 | % | 7.99 | % | 9.13 | % |
(Dollars in thousands except per share data) | June 30, 2018 | March 31, 2018 | June 30, 2017 | ||||||||
Tangible Book Value Per Share | |||||||||||
Total Assets | $ | 6,510,233 | $ | 6,033,888 | $ | 5,669,417 | |||||
Less: Goodwill | (3,297 | ) | (3,297 | ) | (3,297 | ) | |||||
Tangible assets | 6,506,936 | 6,030,591 | 5,666,120 | ||||||||
Less: Total Liabilities | (5,948,053 | ) | (5,480,137 | ) | (5,253,131 | ) | |||||
Tangible Stockholders' Equity (numerator) | $ | 558,883 | $ | 550,454 | $ | 412,989 | |||||
Period end shares outstanding (denominator) | 56,559,655 | 56,561,055 | 42,000,000 | ||||||||
Tangible Book Value Per Share | $ | 9.88 | $ | 9.73 | $ | 9.83 |
Loan Type | Number of Mortgage Loans | Principal Balance (1)(2) | Percentage of Mortgage Pool Balance | Weighted Average Mortgage Rate (2) | Loan to Value Ratio (2) | Debt Service Coverage Ratio (2) | |||||||
Post-Reset Hybrid Loans | 65 | $ | 91,552 | 14.6 | % | 3.66 | % | 53.2 | % | 1.88 | |||
Pre-Reset Hybrid Loans (3) | 237 | 415,628 | 66.4 | 3.39 | 54.2 | 1.67 | |||||||
Pre-Reset Hybrid Loans (4) | 70 | 118,880 | 19.0 | 3.51 | 46.5 | 1.70 | |||||||
Total | 372 | $ | 626,060 | 100.0 | % | 3.45 | % | 52.6 | % | 1.71 |
(1) | Dollars in thousands |
(2) | Represents balance, weighted average rate and ratios at the security cut-off date of September 1, 2017. |
(3) | Loans have 1 to 40 months until their first rate reset. |
(4) | Loans have 41 or more months until their first rate reset. |
For the Three Months Ended June 30, | |||||||||||||||||||||||
2018 | 2017 | ||||||||||||||||||||||
(Dollars in thousands) | Average Balance | Interest Inc/Exp | Average Yield/Rate | Average Balance | Interest Inc/Exp | Average Yield/Rate | |||||||||||||||||
Interest-Earning Assets | |||||||||||||||||||||||
Multifamily residential | $ | 3,249,423 | $ | 30,758 | 3.79 | % | $ | 2,987,171 | $ | 25,680 | 3.44 | % | |||||||||||
Single family residential | 2,132,806 | 18,664 | 3.50 | % | 1,780,312 | 14,179 | 3.19 | % | |||||||||||||||
Commercial | 141,811 | 1,607 | 4.53 | % | 71,908 | 841 | 4.68 | % | |||||||||||||||
Construction, land and NM | 32,204 | 314 | 3.90 | % | 48,069 | 473 | 3.94 | % | |||||||||||||||
Total Loans (1) | 5,556,244 | 51,343 | 3.70 | % | 4,887,460 | 41,173 | 3.37 | % | |||||||||||||||
Securities available for sale | 558,051 | 2,807 | 2.01 | % | 473,233 | 1,588 | 1.34 | % | |||||||||||||||
Securities held to maturity (2) | 12,095 | 94 | 3.11 | % | 7,249 | 61 | 3.37 | % | |||||||||||||||
Cash and cash equivalents | 102,891 | 442 | 1.72 | % | 85,418 | 214 | 1.00 | % | |||||||||||||||
Total interest-earning assets | 6,229,281 | 54,686 | 3.51 | % | 5,453,360 | 43,036 | 3.16 | % | |||||||||||||||
Noninterest-earning assets (3) | 80,806 | 64,044 | |||||||||||||||||||||
Total assets | $ | 6,310,087 | $ | 5,517,404 | |||||||||||||||||||
Interest-Bearing Liabilities | |||||||||||||||||||||||
Transaction accounts (4) | $ | 216,938 | $ | 382 | 0.70 | % | $ | 212,295 | $ | 359 | 0.68 | % | |||||||||||
Money market demand accounts | 1,404,954 | 3,217 | 0.92 | % | 1,553,124 | 3,085 | 0.79 | % | |||||||||||||||
Time deposits | 2,654,169 | 10,961 | 1.65 | % | 1,861,806 | 5,614 | 1.21 | % | |||||||||||||||
Total deposits | 4,276,061 | 14,560 | 1.36 | % | 3,627,225 | 9,058 | 1.00 | % | |||||||||||||||
FHLB advances | 1,264,250 | 6,823 | 2.16 | % | 1,271,353 | 4,260 | 1.34 | % | |||||||||||||||
Senior debt | 94,206 | 1,577 | 6.70 | % | 94,073 | 1,577 | 6.71 | % | |||||||||||||||
Junior subordinated debentures | 61,857 | 567 | 3.67 | % | 61,857 | 408 | 2.64 | % | |||||||||||||||
Total interest-bearing liabilities | 5,696,374 | 23,527 | 1.65 | % | 5,054,508 | 15,303 | 1.21 | % | |||||||||||||||
Noninterest-bearing liabilities | 52,752 | 51,720 | |||||||||||||||||||||
Total stockholders' equity | 560,961 | 411,176 | |||||||||||||||||||||
Total liabilities and stockholders' equity | $ | 6,310,087 | $ | 5,517,404 | |||||||||||||||||||
Net interest spread (5) | 1.86 | % | 1.95 | % | |||||||||||||||||||
Net interest income/margin (6) | $ | 31,159 | 2.00 | % | $ | 27,733 | 2.03 | % |
(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 fees, net of deferred loan costs. Net deferred loan cost amortization totaled $2.3 million and $2.4 million for the three months ended June 30, 2018 and 2017, respectively. |
(2) | Securities held to maturity include obligations of states and political subdivisions of $276 thousand and $294 thousand as of June 30, 2018 and June 30, 2017, respectively. Yields are not calculated on a tax equivalent basis. |
(3) | Noninterest earning assets includes the allowance for loan losses. |
(4) | Transaction accounts include both interest and non-interest bearing deposits. |
(5) | Net interest spread is the average yield on total interest-earning assets minus the average rate on total interest-bearing liabilities. |
(6) | Net interest margin is net interest income divided by total interest-earning assets. |
Three Months Ended June 30, 2018 vs 2017 | |||||||||||
Variance Due To | |||||||||||
(Dollars in thousands) | Volume | Yield/Rate | Total | ||||||||
Interest-Earning Assets | |||||||||||
Multifamily residential | $ | 2,361 | $ | 2,717 | $ | 5,078 | |||||
Single family residential | 2,992 | 1,493 | 4,485 | ||||||||
Commercial | 794 | (28 | ) | 766 | |||||||
Construction, land and NM | (155 | ) | (4 | ) | (159 | ) | |||||
Total Loans | 5,992 | 4,178 | 10,170 | ||||||||
Securities available for sale | 323 | 896 | 1,219 | ||||||||
Securities held to maturity | 38 | (5 | ) | 33 | |||||||
Cash and cash equivalents | 51 | 177 | 228 | ||||||||
Total interest-earning assets | 6,404 | 5,246 | 11,650 | ||||||||
Interest-Bearing Liabilities | |||||||||||
Transaction accounts | 8 | 15 | 23 | ||||||||
Money market demand accounts | (311 | ) | 443 | 132 | |||||||
Time deposits | 2,862 | 2,485 | 5,347 | ||||||||
Total deposits | 2,559 | 2,943 | 5,502 | ||||||||
FHLB advances | (24 | ) | 2,587 | 2,563 | |||||||
Senior debt | 2 | (2 | ) | — | |||||||
Junior subordinated debentures | — | 159 | 159 | ||||||||
Total interest-bearing liabilities | 2,537 | 5,687 | 8,224 | ||||||||
Net Interest Income | $ | 3,867 | $ | (441 | ) | $ | 3,426 |
For the Three Months Ended June 30, | ||||||||||||||
(Dollars in thousands) | 2018 | 2017 | $ Increase (Decrease) | % Increase (Decrease) | ||||||||||
Noninterest Income | ||||||||||||||
FHLB stock dividends | $ | 509 | $ | 562 | $ | (53 | ) | (9.4 | )% | |||||
Fee income | 182 | 254 | (72 | ) | (28.3 | )% | ||||||||
Net loss on sale/fair value adjustments of loans | — | (693 | ) | 693 | (100.0 | )% | ||||||||
Earnings on CSV life insurance | 48 | 47 | 1 | 2.1 | % | |||||||||
Other | 78 | 31 | 47 | 151.6 | % | |||||||||
Total noninterest income | $ | 817 | $ | 201 | $ | 616 | 306.5 | % |
For the Three Months Ended June 30, | ||||||||||||||
(Dollars in thousands) | 2018 | 2017 | $ Increase (Decrease) | % Increase (Decrease) | ||||||||||
Noninterest Expense | ||||||||||||||
Compensation and related benefits | $ | 9,199 | $ | 9,523 | $ | (324 | ) | (3.4 | )% | |||||
Deposit insurance premium | 467 | 431 | 36 | 8.4 | % | |||||||||
Occupancy | 1,304 | 1,223 | 81 | 6.6 | % | |||||||||
Depreciation and amortization | 694 | 728 | (34 | ) | (4.7 | )% | ||||||||
Professional and regulatory fees | 503 | 840 | (337 | ) | (40.1 | )% | ||||||||
Advertising | 561 | 205 | 356 | 173.7 | % | |||||||||
Data processing | 807 | 797 | 10 | 1.3 | % | |||||||||
Operating | 1,069 | 892 | 177 | 19.8 | % | |||||||||
Other | 318 | 201 | 117 | 58.2 | % | |||||||||
Total noninterest expense | $ | 14,922 | $ | 14,840 | $ | 82 | 0.6 | % |
For the Six Months Ended June 30, | |||||||||||||||||||||||
2018 | 2017 | ||||||||||||||||||||||
(Dollars in thousands) | Average Balance | Interest Inc/Exp | Average Yield/Rate | Average Balance | Interest Inc/Exp | Average Yield/Rate | |||||||||||||||||
Interest-Earning Assets | |||||||||||||||||||||||
Multifamily residential | $ | 3,125,430 | $ | 58,688 | 3.76 | % | $ | 2,856,765 | $ | 49,170 | 3.44 | % | |||||||||||
Single family residential | 2,071,408 | 35,470 | 3.42 | % | 1,767,785 | 28,297 | 3.20 | % | |||||||||||||||
Commercial | 129,752 | 3,070 | 4.73 | % | 66,461 | 1,625 | 4.89 | % | |||||||||||||||
Construction, land and NM | 35,294 | 678 | 3.84 | % | 42,759 | 824 | 3.85 | % | |||||||||||||||
Total Loans (1) | 5,361,884 | 97,906 | 3.65 | % | 4,733,770 | 79,916 | 3.38 | % | |||||||||||||||
Securities available for sale | 541,179 | 5,190 | 1.92 | % | 464,215 | 3,053 | 1.32 | % | |||||||||||||||
Securities held to maturity (2) | 11,324 | 182 | 3.21 | % | 7,350 | 121 | 3.29 | % | |||||||||||||||
Cash and cash equivalents | 86,557 | 689 | 1.59 | % | 78,240 | 342 | 0.87 | % | |||||||||||||||
Total interest-earning assets | 6,000,944 | 103,967 | 3.47 | % | 5,283,575 | 83,432 | 3.16 | % | |||||||||||||||
Noninterest-earning assets (3) | 79,749 | 62,174 | |||||||||||||||||||||
Total assets | $ | 6,080,693 | $ | 5,345,749 | |||||||||||||||||||
Interest-Bearing Liabilities | |||||||||||||||||||||||
Transaction accounts (4) | $ | 220,784 | $ | 790 | 0.72 | % | $ | 209,022 | $ | 709 | 0.68 | % | |||||||||||
Money market demand accounts | 1,456,000 | 6,531 | 0.90 | % | 1,549,300 | 6,003 | 0.77 | % | |||||||||||||||
Time deposits | 2,465,542 | 19,171 | 1.56 | % | 1,789,457 | 10,659 | 1.19 | % | |||||||||||||||
Total deposits | 4,142,326 | 26,492 | 1.28 | % | 3,547,779 | 17,371 | 0.98 | % | |||||||||||||||
FHLB advances | 1,167,705 | 11,643 | 1.99 | % | 1,178,642 | 7,537 | 1.28 | % | |||||||||||||||
Senior debt | 94,190 | 3,154 | 6.70 | % | 94,056 | 3,154 | 6.71 | % | |||||||||||||||
Junior subordinated debentures | 61,857 | 1,054 | 3.41 | % | 61,857 | 788 | 2.55 | % | |||||||||||||||
Total interest-bearing liabilities | 5,466,078 | 42,343 | 1.55 | % | 4,882,334 | 28,850 | 1.18 | % | |||||||||||||||
Noninterest-bearing liabilities | 55,792 | 53,097 | |||||||||||||||||||||
Total stockholders' equity | 558,823 | 410,318 | |||||||||||||||||||||
Total liabilities and stockholders' equity | $ | 6,080,693 | $ | 5,345,749 | |||||||||||||||||||
Net interest spread (5) | 1.92 | % | 1.98 | % | |||||||||||||||||||
Net interest income/margin (6) | $ | 61,624 | 2.05 | % | $ | 54,582 | 2.07 | % |
(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 fees, net of deferred loan costs. Net deferred loan cost amortization totaled $4.6 million and $4.6 million for the six months ended June 30, 2018 and 2017, respectively. |
(2) | Securities held to maturity include obligations of states and political subdivisions of $276 thousand and $294 thousand as of June 30, 2018 and June 30, 2017, respectively. Yields are not calculated on a tax equivalent basis. |
(3) | Noninterest earning assets includes the allowance for loan losses. |
(4) | Transaction accounts include both interest and non-interest bearing deposits. |
(5) | Net interest spread is the average yield on total interest-earning assets minus the average rate on total interest-bearing liabilities. |
(6) | Net interest margin is net interest income divided by total interest-earning assets. |
Six Months Ended June 30, 2018 vs 2017 | |||||||||||
Variance Due To | |||||||||||
(Dollars in thousands) | Volume | Yield/Rate | Total | ||||||||
Interest-Earning Assets | |||||||||||
Multifamily residential | $ | 4,838 | $ | 4,680 | $ | 9,518 | |||||
Single family residential | 5,101 | 2,072 | 7,173 | ||||||||
Commercial | 1,499 | (54 | ) | 1,445 | |||||||
Construction, land and NM | (143 | ) | (3 | ) | (146 | ) | |||||
Total Loans | 11,295 | 6,695 | 17,990 | ||||||||
Securities available for sale | 568 | 1,569 | 2,137 | ||||||||
Securities held to maturity | 64 | (3 | ) | 61 | |||||||
Cash and cash equivalents | 39 | 308 | 347 | ||||||||
Total interest-earning assets | 11,966 | 8,569 | 20,535 | ||||||||
Interest-Bearing Liabilities | |||||||||||
Transaction accounts | 41 | 40 | 81 | ||||||||
Money market demand accounts | (378 | ) | 906 | 528 | |||||||
Time deposits | 4,707 | 3,805 | 8,512 | ||||||||
Total deposits | 4,370 | 4,751 | 9,121 | ||||||||
FHLB advances | (71 | ) | 4,177 | 4,106 | |||||||
Senior debt | 4 | (4 | ) | — | |||||||
Junior subordinated debentures | — | 266 | 266 | ||||||||
Total interest-bearing liabilities | 4,303 | 9,190 | 13,493 | ||||||||
Net Interest Income | $ | 7,663 | $ | (621 | ) | $ | 7,042 |
For the Six Months Ended June 30, | ||||||||||||||
(Dollars in thousands) | 2018 | 2017 | $ Increase (Decrease) | % Increase (Decrease) | ||||||||||
Noninterest Income | ||||||||||||||
FHLB stock dividends | $ | 1,103 | $ | 1,195 | $ | (92 | ) | (7.7 | )% | |||||
Fee income | 496 | 591 | (95 | ) | (16.1 | )% | ||||||||
Net loss on sale/fair value adjustments of loans | — | (856 | ) | 856 | (100.0 | )% | ||||||||
Earnings on CSV life insurance | 101 | 95 | 6 | 6.3 | % | |||||||||
Other | 142 | 58 | 84 | 144.8 | % | |||||||||
Total noninterest income | $ | 1,842 | $ | 1,083 | $ | 759 | 70.1 | % |
For the Six Months Ended June 30, | ||||||||||||||
(Dollars in thousands) | 2018 | 2017 | $ Increase (Decrease) | % Increase (Decrease) | ||||||||||
Noninterest Expense | ||||||||||||||
Compensation and related benefits | $ | 18,818 | $ | 19,720 | $ | (902 | ) | (4.6 | )% | |||||
Federal deposit insurance | 899 | 829 | 70 | 8.4 | % | |||||||||
Occupancy | 2,600 | 2,521 | 79 | 3.1 | % | |||||||||
Depreciation and amortization | 1,408 | 1,463 | (55 | ) | (3.8 | )% | ||||||||
Professional and regulatory fees | 901 | 1,025 | (124 | ) | (12.1 | )% | ||||||||
Advertising | 774 | 384 | 390 | 101.6 | % | |||||||||
Data processing | 1,595 | 1,587 | 8 | 0.5 | % | |||||||||
Operating | 2,094 | 1,932 | 162 | 8.4 | % | |||||||||
Other | 546 | 81 | 465 | 574.1 | % | |||||||||
Total noninterest expense | $ | 29,635 | $ | 29,542 | $ | 93 | 0.3 | % |
As of June 30, 2018 | As of December 31, 2017 | |||||||||||||
(Dollars in thousands) | Amount | % of total loans | Amount | % of total loans | ||||||||||
Real estate loans held-for-investment | ||||||||||||||
Multifamily residential | $ | 3,335,958 | 58.6 | % | $ | 2,887,438 | 57.7 | % | ||||||
Single family residential | 2,167,341 | 38.1 | % | 1,957,546 | 39.2 | % | ||||||||
Other: | ||||||||||||||
Commercial real estate | 151,610 | 2.7 | % | 112,492 | 2.3 | % | ||||||||
Construction and land | 31,569 | 0.6 | % | 41,165 | 0.8 | % | ||||||||
Non-mortgage | 100 | — | % | 50 | — | % | ||||||||
Total loans held-for-investment before deferred items | 5,686,578 | 100.0 | % | 4,998,691 | 100.0 | % | ||||||||
Deferred loan costs, net | 48,339 | 42,856 | ||||||||||||
Total loans held-for-investment | $ | 5,734,917 | $ | 5,041,547 | ||||||||||
Real estate loans held-for-sale | ||||||||||||||
Multifamily residential | $ | 21,537 | 100.0 | % | $ | — | — | % | ||||||
Deferred loan costs, net | 38 | — | ||||||||||||
Total loans held-for-sale | $ | 21,575 | $ | — |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(Dollars In thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Loan Inflows: | |||||||||||||||
Multifamily residential | $ | 352,665 | $ | 274,140 | $ | 594,425 | $ | 684,312 | |||||||
Single family residential | 252,561 | 188,374 | 467,809 | 312,280 | |||||||||||
Commercial real estate | 29,587 | 3,805 | 50,382 | 20,503 | |||||||||||
Construction and land | 1,623 | 14,501 | 1,623 | 29,010 | |||||||||||
Non-mortgage | — | — | 50 | — | |||||||||||
Mortgage banking originations | — | — | — | 18,041 | |||||||||||
Total loans originated | 636,436 | 480,820 | 1,114,289 | 1,064,146 | |||||||||||
Loan Outflows: | |||||||||||||||
Portfolio loan sales | — | (26,644 | ) | — | (26,644 | ) | |||||||||
Mortgage banking loan sales | — | (495 | ) | — | (25,187 | ) | |||||||||
Loan principal reductions and payoffs | (210,650 | ) | (225,149 | ) | (410,766 | ) | (479,304 | ) | |||||||
Other (1) | 4,298 | 3,105 | 11,422 | 1,090 | |||||||||||
Total loan outflows | (206,352 | ) | (249,183 | ) | (399,344 | ) | (530,045 | ) | |||||||
Net increase in total loan portfolio | $ | 430,084 | $ | 231,637 | $ | 714,945 | $ | 534,101 | |||||||
(1) Other changes in loan balances primarily represent the net change in disbursements on unfunded commitments and may include foreclosures, charge-offs and negative amortization. |
June 30, | December 31, | ||||||||
(Dollars in thousands) | 2018 | 2017 | |||||||
Non-accrual loans | |||||||||
Multifamily residential portfolio | $ | 1,543 | $ | 2,246 | |||||
Single family residential portfolio | 2,372 | 4,135 | |||||||
Commercial real estate | 871 | 656 | |||||||
Total non-accrual loans | 4,786 | 7,037 | |||||||
Real estate owned | — | — | |||||||
Total nonperforming assets | $ | 4,786 | $ | 7,037 | |||||
Performing troubled debt restructurings | $ | 4,771 | $ | 4,857 | |||||
Allowance for loan losses to period end nonperforming loans | 696.99 | % | 430.75 | % | |||||
Nonperforming loans to period end loans | 0.08 | % | 0.14 | % | |||||
Nonperforming assets to total assets | 0.07 | % | 0.12 | % | |||||
Nonperforming loans plus performing TDRs to total loans | 0.17 | % | 0.24 | % |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
(Dollars in thousands) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Loans held-for-investment | $ | 5,734,917 | $ | 4,306,893 | $ | 5,734,917 | $ | 4,306,893 | ||||||||
Allowance for loan losses at beginning of period | $ | 31,980 | $ | 33,699 | $ | 30,312 | $ | 33,298 | ||||||||
Charge-offs: | ||||||||||||||||
Single family residential | — | (5 | ) | — | (5 | ) | ||||||||||
Total charge-offs | — | (5 | ) | — | (5 | ) | ||||||||||
Recoveries: | ||||||||||||||||
Single family residential | 3 | 3 | 6 | 6 | ||||||||||||
Commercial real estate | — | — | 90 | — | ||||||||||||
Construction and land | 75 | 140 | 150 | 229 | ||||||||||||
Total recoveries | 78 | 143 | 246 | 235 | ||||||||||||
Net recoveries | 78 | 138 | 246 | 230 | ||||||||||||
Provision for (reversal of) loan losses | 1,300 | (6,481 | ) | 2,800 | (6,172 | ) | ||||||||||
Allowance for loan losses at period end | $ | 33,358 | $ | 27,356 | $ | 33,358 | $ | 27,356 | ||||||||
Allowance for loan losses to period end loans held-for-investment | 0.58 | % | 0.64 | % | 0.58 | % | 0.64 | % | ||||||||
Annualized net recoveries to average loans | 0.01 | % | 0.01 | % | 0.01 | % | 0.01 | % |
(Dollars in thousands) | June 30, 2018 | December 31, 2017 | ||||||||||||
Book Value | % of Total | Book Value | % of Total | |||||||||||
Available for sale (at fair value): | ||||||||||||||
Government and Government Sponsored Entities: | ||||||||||||||
Mortgage-backed securities | $ | 399,950 | 67.22 | % | $ | 312,919 | 61.33 | % | ||||||
Agency bonds | 116,299 | 19.54 | % | 117,222 | 22.98 | % | ||||||||
Collateralized mortgage obligations | 42,792 | 7.19 | % | 47,168 | 9.24 | % | ||||||||
SBA securities | 11,613 | 1.95 | % | 13,302 | 2.61 | % | ||||||||
CRA Qualified Investment Fund | 11,416 | 1.92 | % | 11,693 | 2.29 | % | ||||||||
U.S. Treasury | 965 | 0.16 | % | 984 | 0.19 | % | ||||||||
Total available for sale | 583,035 | 97.98 | % | 503,288 | 98.64 | % | ||||||||
Held to maturity (at amortized cost): | ||||||||||||||
Government Sponsored Entities: | ||||||||||||||
Mortgage-backed securities | 11,733 | 1.97 | % | 6,636 | 1.30 | % | ||||||||
Other investments | 276 | 0.05 | % | 285 | 0.06 | % | ||||||||
Total held to maturity | 12,009 | 2.02 | % | 6,921 | 1.36 | % | ||||||||
Total investment securities | $ | 595,044 | 100.00 | % | $ | 510,209 | 100.00 | % |
Three Months Ended June 30, | |||||||||||||||||||
2018 | 2017 | ||||||||||||||||||
(Dollars in thousands) | Average Amount | Weighted average rate paid | Percent of total deposits | Average Amount | Weighted average rate paid | Percent of total deposits | |||||||||||||
Transaction accounts | $ | 216,938 | 0.70 | % | 5.1 | % | $ | 212,295 | 0.68 | % | 5.9 | % | |||||||
Money market demand accounts | 1,404,954 | 0.92 | % | 32.9 | % | 1,553,124 | 0.79 | % | 42.8 | % | |||||||||
Time deposits | 2,654,169 | 1.65 | % | 62.0 | % | 1,861,806 | 1.21 | % | 51.3 | % | |||||||||
$ | 4,276,061 | 1.36 | % | 100.0 | % | $ | 3,627,225 | 1.00 | % | 100.0 | % |
Six Months Ended June 30, | |||||||||||||||||||
2018 | 2017 | ||||||||||||||||||
(Dollars in thousands) | Average Amount | Weighted average rate paid | Percent of total deposits | Average Amount | Weighted average rate paid | Percent of total deposits | |||||||||||||
Transaction accounts | $ | 220,784 | 0.72 | % | 5.3 | % | $ | 209,022 | 0.68 | % | 5.9 | % | |||||||
Money market demand accounts | 1,456,000 | 0.90 | % | 35.2 | % | 1,549,300 | 0.77 | % | 43.7 | % | |||||||||
Time deposits | 2,465,542 | 1.56 | % | 59.5 | % | 1,789,457 | 1.19 | % | 50.4 | % | |||||||||
$ | 4,142,326 | 1.28 | % | 100.0 | % | $ | 3,547,779 | 0.98 | % | 100.0 | % |
(Dollars in thousands except for column headings) | Under $100,000 | $100,000 and greater | ||||||
Remaining maturity: | ||||||||
Three months or less | $ | 67,333 | $ | 675,192 | ||||
Over three through six months | 64,835 | 635,829 | ||||||
Over six through twelve months | 124,019 | 683,703 | ||||||
Over twelve months | 116,712 | 595,235 | ||||||
Total | $ | 372,899 | $ | 2,589,959 | ||||
Percent of total deposits | 8.12 | % | 56.40 | % |
June 30, 2018 | December 31, 2017 | Date | Maturity | Rate Index | ||||||||||||||||
Issuer | Amount | Rate | Amount | Rate | Issued | Date | (Quarterly Reset) | |||||||||||||
Luther Burbank Statutory Trust I | $ | 41,238 | 3.72 | % | $ | 41,238 | 2.97 | % | 3/1/2006 | 6/15/2036 | 3 month LIBOR + 1.38% | |||||||||
Luther Burbank Statutory Trust II | $ | 20,619 | 3.96 | % | $ | 20,619 | 3.21 | % | 3/1/2007 | 6/15/2037 | 3 month LIBOR + 1.62% |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
(Dollars in thousands) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
FHLB advances | ||||||||||||||||
Average amount outstanding during the period | $ | 1,264,250 | $ | 1,271,353 | $ | 1,167,705 | $ | 1,178,642 | ||||||||
Maximum amount outstanding at any month-end during the period | 1,366,851 | 1,362,875 | 1,366,851 | 1,362,875 | ||||||||||||
Balance outstanding at end of period | 1,150,746 | 1,359,573 | 1,150,746 | 1,359,573 | ||||||||||||
Weighted average maturity (in years) | 1.9 | 1.1 | 1.9 | 1.1 | ||||||||||||
Weighted average interest rate at end of period | 2.23 | % | 1.37 | % | 2.23 | % | 1.37 | % | ||||||||
Weighted average interest rate during the period | 2.16 | % | 1.34 | % | 1.99 | % | 1.28 | % | ||||||||
Junior subordinated deferrable interest debentures | ||||||||||||||||
Balance outstanding at end of period | $ | 61,857 | $ | 61,857 | $ | 61,857 | $ | 61,857 | ||||||||
Weighted average maturity (in years) | 18.6 | 19.6 | 18.6 | 19.6 | ||||||||||||
Weighted average interest rate at end of period | 3.80 | % | 2.65 | % | 3.80 | % | 2.65 | % | ||||||||
Weighted average interest rate during the period | 3.67 | % | 2.64 | % | 3.41 | % | 2.55 | % | ||||||||
Senior unsecured term notes | ||||||||||||||||
Balance outstanding at end of period | $ | 94,228 | $ | 94,095 | $ | 94,228 | $ | 94,095 | ||||||||
Weighted average maturity (in years) | 6.3 | 7.4 | 6.3 | 7.4 | ||||||||||||
Weighted average interest rate at end of period | 6.70 | % | 6.71 | % | 6.70 | % | 6.71 | % | ||||||||
Weighted average interest rate during the period | 6.70 | % | 6.71 | % | 6.70 | % | 6.71 | % |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
(Dollars in thousands) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Outstanding at period end | $ | 148,100 | $ | 146,900 | $ | 148,100 | $ | 146,900 | ||||||||
Average amount outstanding | 325,887 | 257,450 | 387,981 | 272,800 | ||||||||||||
Maximum amount outstanding at any month end | 489,200 | 430,200 | 495,700 | 430,200 | ||||||||||||
Weighted average interest rate: | ||||||||||||||||
During period | 1.89 | % | 0.95 | % | 1.69 | % | 0.79 | % | ||||||||
End of period | 2.08 | % | 1.04 | % | 2.08 | % | 1.04 | % |
(Dollars in thousands) | June 30, 2018 | December 31, 2017 | ||||||
Commitments to fund loans held-for-investment | $ | 118,427 | $ | 65,767 |
Payments Due by Period | |||||||||||||||||||
Less than 1 Year | 1 to 3 Years | 3 to 5 Years | More than 5 Years | ||||||||||||||||
(Dollars in thousands) | Total | ||||||||||||||||||
Contractual Cash Obligations | |||||||||||||||||||
Time deposits (1) | $ | 2,962,858 | $ | 2,250,911 | $ | 644,101 | $ | 67,846 | $ | — | |||||||||
FHLB advances (1) | 1,150,746 | 448,600 | 450,000 | 250,600 | 1,546 | ||||||||||||||
Senior debt (1) | 95,000 | — | — | — | 95,000 | ||||||||||||||
Junior subordinated debentures (1) | 61,857 | — | — | — | 61,857 | ||||||||||||||
Operating leases (net of sublease income) | 18,269 | 4,703 | 6,731 | 4,579 | 2,256 | ||||||||||||||
Significant contract (2) | 4,320 | 1,512 | 2,808 | — | — | ||||||||||||||
Total | $ | 4,293,050 | $ | 2,705,726 | $ | 1,103,640 | $ | 323,025 | $ | 160,659 | |||||||||
(1) Amounts exclude interest | |||||||||||||||||||
(2) We have one significant, long-term contract for core processing services which expires May 9, 2021. Actual obligation is unknown and dependent on certain factors including volume and activities. For purposes of this disclosure, future obligations are estimated using our June 30, 2018 year to date average monthly expense extrapolated over the remaining life of the contract. |
Minimum Required | |||||||||||||||||||||||
Actual | For Capital Adequacy Purposes | Plus Capital Conservation Buffer | For Well- Capitalized Institution | ||||||||||||||||||||
(Dollars in thousands) | Amount | Ratio | Amount | Ratio | Amount | Ratio | Amount | Ratio | |||||||||||||||
Luther Burbank Corporation | |||||||||||||||||||||||
As of June 30, 2018 | |||||||||||||||||||||||
Tier 1 Leverage Ratio | $ | 628,107 | 9.93 | % | $ | 252,895 | 4.00 | % | N/A | N/A | N/A | N/A | |||||||||||
Common Equity Tier 1 Risk-Based Ratio | 566,250 | 14.78 | % | 172,428 | 4.50 | % | $ | 244,273 | 6.38 | % | N/A | N/A | |||||||||||
Tier 1 Risk-Based Capital Ratio | 628,107 | 16.39 | % | 229,904 | 6.00 | % | 301,749 | 7.88 | % | N/A | N/A | ||||||||||||
Total Risk-Based Capital Ratio | 663,369 | 17.31 | % | 306,539 | 8.00 | % | 378,384 | 9.88 | % | N/A | N/A | ||||||||||||
As of December 31, 2017 | |||||||||||||||||||||||
Tier 1 Leverage Ratio | $ | 615,010 | 11.26 | % | $ | 218,499 | 4.00 | % | N/A | N/A | N/A | N/A | |||||||||||
Common Equity Tier 1 Risk-Based Ratio | 553,153 | 16.05 | % | 155,107 | 4.50 | % | $ | 198,192 | 5.75 | % | N/A | N/A | |||||||||||
Tier 1 Risk-Based Capital Ratio | 615,010 | 17.84 | % | 206,809 | 6.00 | % | 249,894 | 7.25 | % | N/A | N/A | ||||||||||||
Total Risk-Based Capital Ratio | 647,421 | 18.78 | % | 275,746 | 8.00 | % | 318,831 | 9.25 | % | N/A | N/A | ||||||||||||
Luther Burbank Savings | |||||||||||||||||||||||
As of June 30, 2018 | |||||||||||||||||||||||
Tier 1 Leverage Ratio | $ | 709,253 | 11.23 | % | $ | 252,627 | 4.00 | % | N/A | N/A | $ | 315,783 | 5.00 | % | |||||||||
Common Equity Tier 1 Risk-Based Ratio | 709,253 | 18.52 | % | 172,312 | 4.50 | % | $ | 244,108 | 6.38 | % | 248,895 | 6.50 | % | ||||||||||
Tier 1 Risk-Based Capital Ratio | 709,253 | 18.52 | % | 229,749 | 6.00 | % | 301,546 | 7.88 | % | 306,332 | 8.00 | % | |||||||||||
Total Risk-Based Capital Ratio | 744,516 | 19.44 | % | 306,332 | 8.00 | % | 378,129 | 9.88 | % | 382,915 | 10.00 | % | |||||||||||
As of December 31, 2017 | |||||||||||||||||||||||
Tier 1 Leverage Ratio | $ | 685,434 | 12.54 | % | $ | 218,585 | 4.00 | % | N/A | N/A | $ | 273,232 | 5.00 | % | |||||||||
Common Equity Tier 1 Risk-Based Ratio | 685,434 | 19.90 | % | 154,980 | 4.50 | % | $ | 198,030 | 5.75 | % | 223,859 | 6.50 | % | ||||||||||
Tier 1 Risk-Based Capital Ratio | 685,434 | 19.90 | % | 206,640 | 6.00 | % | 249,689 | 7.25 | % | 275,519 | 8.00 | % | |||||||||||
Total Risk-Based Capital Ratio | 717,845 | 20.84 | % | 275,519 | 8.00 | % | 318,569 | 9.25 | % | 344,399 | 10.00 | % |
Interest Rate Risk to Earnings (NII) | ||
June 30, 2018 | ||
(Dollars in millions) | ||
Change in Interest Rates (basis points) | $ Change NII | % Change NII |
+400 BP | (42.4) | (33.0)% |
+300 BP | (28.4) | (22.1)% |
+200 BP | (16.1) | (12.5)% |
+100 BP | (7.0) | (5.4)% |
-100 BP | 9.4 | 7.3% |
Interest Rate Risk to Capital (EVE) | ||
June 30, 2018 | ||
(Dollars in millions) | ||
Change in Interest Rates (basis points) | $ Change EVE | % Change EVE |
+400 BP | (377.3) | (64.3)% |
+300 BP | (251.3) | (42.9)% |
+200 BP | (146.1) | (24.9)% |
+100 BP | (62.2) | (10.6)% |
-100 BP | 48.8 | 8.3% |
(Dollars in thousands) | Fair Value | ||||||||||||||
Hedging Instrument | Hedge Accounting Type | Months to Maturity | Notional | Other Assets | Other Liabilities | ||||||||||
Interest rate cap | Cash Flow Hedge | 1 | $ | 50,000 | $ | 1 | $ | — | |||||||
Interest rate cap | Cash Flow Hedge | 9 | 50,000 | 4 | — | ||||||||||
FHLB fixed rate advance | With embedded cap | 12 | 75,000 | — | — | ||||||||||
FHLB fixed rate advance | With embedded cap | 15 | 75,000 | — | — | ||||||||||
FHLB fixed rate advance | With embedded cap | 16 | 30,000 | — | — | ||||||||||
FHLB fixed rate advance | With embedded cap | 16 | 45,000 | — | — | ||||||||||
FHLB variable rate advance | With embedded cap | 19 | 50,000 | — | — | ||||||||||
FHLB fixed rate advance | With embedded cap | 20 | 50,000 | — | — | ||||||||||
FHLB fixed rate advance | With embedded cap | 22 | 50,000 | — | — | ||||||||||
FHLB fixed rate advance | With embedded cap | 32 | 100,000 | — | — | ||||||||||
FHLB fixed rate advance | With embedded cap | 32 | 50,000 | — | — | ||||||||||
$ | 625,000 | $ | 5 | $ | — |
Exhibit Number | Description |
31.1 | |
31.2 | |
32.1 | |
32.2 | |
101 | Pursuant to Rule 405 of Regulation S-T, the following financial information from the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2018 is formatted in XBRL (Extensible Business Reporting Language) interactive data files: (i) the Consolidated Statements of Financial Condition (Unaudited), (ii) the Consolidated Statements of Income (Unaudited), (iii) the Consolidated Statements of Comprehensive Income (Unaudited), (iv) the Consolidated Statements of Changes in Stockholders' Equity (Unaudited), (v) the Consolidated Statements of Cash Flows (Unaudited), and (vi) the Notes to Unaudited Condensed Consolidated Financial Statements. |
* Filed herewith |
LUTHER BURBANK CORPORATION | |||
DATED: | AUGUST 9, 2018 | By: /s/ John G. Biggs | |
John G. Biggs | |||
President and Chief Executive Officer | |||
DATED: | AUGUST 9, 2018 | By: /s/ Laura Tarantino | |
Laura Tarantino | |||
Executive Vice President and Chief Financial Officer | |||
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
1. | I am the Chief Executive Officer of Luther Burbank Corporation (the "Corporation"). |
2. | I hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: |
• | The Quarterly Report on Form 10-Q of the Corporation for the quarter ended June 30, 2018 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and |
• | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation as of, and for, the periods presented. |
1. | I am the Chief Financial Officer of Luther Burbank Corporation (the "Corporation"). |
2. | I hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: |
• | The Quarterly Report on Form 10-Q of the Corporation for the quarter ended June 30, 2018 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and |
• | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation as of, and for, the periods presented. |
Document and Entity Information Document - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Aug. 03, 2018 |
|
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Amendment Flag | false | |
Entity Registrant Name | Luther Burbank Corp. | |
Entity Central Index Key | 0001475348 | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Well Known Seasoned Issuer | No | |
Entity Common Stock Shares Outstanding | 56,548,614 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q2 |
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION - Parenthetical - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
ASSETS | ||
Fair value of held-to-maturity securities | $ 11,725 | $ 6,925 |
Allowance for loan losses | $ 33,358 | $ 30,312 |
Liabilities: | ||
Debt interest rate | 6.50% | |
Stockholders' Equity Attributable to Parent [Abstract] | ||
Common stock shares authorized | 100,000,000 | 100,000,000 |
Common stock shares issued | 56,559,655 | 56,422,662 |
Common stock shares outstanding | 56,559,655 | 56,422,662 |
Senior Unsecured Term Notes, September 2014 | Senior Unsecured Term Notes | ||
Liabilities: | ||
Principal | $ 95,000 | $ 95,000 |
Debt interest rate | 6.50% | |
Unamortized debt issuance costs | $ 772 | $ 839 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) Statement - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 11,226 | $ 18,921 | $ 22,328 | $ 31,216 |
Unrealized (loss) gain on available for sale investment securities: | ||||
Unrealized holding (loss) gain arising during the period | (941) | 183 | (3,912) | 791 |
Tax effect | 272 | (6) | 1,115 | (27) |
Net of tax | (669) | 177 | (2,797) | 764 |
Unrealized gain on cash flow hedge: | ||||
Unrealized holding gain arising during the period | 192 | 85 | 373 | 135 |
Tax effect | (55) | (3) | (107) | (4) |
Net of tax | 137 | 82 | 266 | 131 |
Total other comprehensive (loss) income | (532) | 259 | (2,531) | 895 |
Comprehensive income | $ 10,694 | $ 19,180 | $ 19,797 | $ 32,111 |
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED) (Parenthetical) - $ / shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Statement of Stockholders' Equity [Abstract] | ||
Cash dividends | $ 0.17 | $ 0.48 |
NATURE OF OPERATIONS |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NATURE OF OPERATIONS | 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 wholly-owned subsidiary, Burbank Investor Services. The Company also owns Burbank Financial Inc., a real estate investment company, 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 in Manhattan Beach, California. It has nine full service branches in California located in Sonoma, Marin, Santa Clara, and Los Angeles Counties and one full service branch in Washington located in King County. Additionally, there are seven loan production offices located throughout California, as well as loan production offices in King County, Washington and Clackamas County, Oregon. On April 27, 2017, the Company declared a 200-for-1 stock split, increasing the number of issued and authorized shares from 210,000 to 42,000,000 and 500,000 to 100,000,000, respectively. The Company also declared that the stock has zero par value, whereas the stock had previously held a stated value of $8 per share (stated value not adjusted for split). Additional shares issued as a result of the stock split were distributed immediately upon issuance to the stockholders. Share and per share amounts included in the unaudited consolidated financial statements and accompanying notes reflect the effect of the split for all periods presented. We terminated our status as a “Subchapter S” corporation as of December 1, 2017, in connection with our Initial Public Offering ("IPO") and became a taxable C Corporation. Prior to that date, as an S-Corporation, we had no U.S. federal income tax expense. On December 12, 2017, the Company completed the IPO of its common stock. In connection with the Company’s IPO, the Company sold and issued 13,972,500 shares of common stock at $10.75 per share. After deducting underwriting discounts and offering expenses, the Company received total net proceeds of $138.3 million from the IPO. 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, 2017, and the notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 filed with the SEC, under the Securities and Exchange Act of 1934, (the “Exchange Act”). The unaudited consolidated financial statements include the accounts of the Company and the Bank. All intercompany accounts and transactions have been eliminated. The results of operations for the three and six months ended June 30, 2018 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, 2018. 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 consolidated 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. 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 year. 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 commons 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. The factors used in the earnings per share computation follow:
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INVESTMENT SECURITIES |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVESTMENT SECURITIES | INVESTMENT SECURITIES Available for Sale The following tables summarize the amortized cost and the estimated fair value of available for sale investment securities as of the dates indicated (dollars in thousands):
Net unrealized losses on available for sale investment securities are recorded as accumulated other comprehensive income within stockholders’ equity totaling $7.5 million and $6.2 million, net of $3.0 million and $394 thousand in tax assets at June 30, 2018 and December 31, 2017, respectively. At December 31, 2017, $394 thousand of a total $1.9 million tax asset resides in accumulated other comprehensive income, while the remaining $1.5 million was included in the provision for income taxes on the consolidated statements of income related to the tax rate changes associated with the termination of S Corporation status and the change in tax law during the year ended December 31, 2017. The Company adopted ASU 2018-02 effective January 1, 2018 and reclassified the $1.5 million in stranded tax effects from the change in federal corporate tax rates on our available for sale investment securities from accumulated other comprehensive loss, net to retained earnings. There were no sales or transfers of available for sale investment securities and no gains or losses on these securities during the three or six months ended June 30, 2018 and 2017. The following tables summarize the gross unrealized losses and fair value of available for sale investment securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position (dollars in thousands):
At June 30, 2018, the Company held 96 mortgage-backed securities of which 69 were in a loss position and 48 had been in a loss position for twelve months or more. The Company held 13 agency bonds of which 12 were in a loss position and 11 had been for twelve months or more. The Company also held 15 collateralized mortgage obligations, one of which were in an unrealized loss position. Of the total 4 SBA securities held at June 30, 2018, all 4 were in a loss position for greater than twelve months. Of the 3 total investments in CRA Qualified Investment Fund, all 3 were in a loss position and 2 had been for greater than 12 months. The Company held 1 U.S. Treasury note at June 30, 2018. This note was in a loss position for greater than 12 months.
At December 31, 2017, the Company held 87 mortgage-backed securities of which 68 were in a loss position and 30 had been in a loss position for twelve months or more. The Company held 13 agency bonds of which 12 were in a loss position and 11 had been for twelve months or more. The Company also held 15 collateralized mortgage obligations, 1 of which was in an unrealized loss position. Of the total 4 SBA securities held at year end, all 4 were in a loss position for greater than twelve months. Of the 3 total investments in CRA Qualified Investment Fund, all 3 were in a loss position and 2 had been for greater than 12 months. The Company held 1 U.S. Treasury note at year end. This note was in a loss position for greater than 12 months. 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 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 those investments to be other-than-temporarily impaired at June 30, 2018 and December 31, 2017. As of June 30, 2018 and December 31, 2017, 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. Held to Maturity The following tables summarize the amortized cost and estimated fair value of held to maturity investment securities as of the dates indicated (dollars in thousands):
The following tables summarize 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 been in a continuous unrecognized loss position (dollars in thousands):
The unrecognized losses on the Company’s investments were caused by interest rate changes. It is likely that management will not be required to sell the securities prior to their anticipated recovery, and the decline in fair value is largely due to changes in interest rate and other market conditions. The issuers continue to make timely principal and interest payments on the investments. The fair value is expected to recover as the investments approach maturity. The following table summarizes the scheduled maturities of available for sale and held to maturity investment securities as of June 30, 2018 (dollars in thousands):
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 and collateralized mortgage obligations are not included in the maturity categories above and instead are shown separately. No securities were pledged as of June 30, 2018 and December 31, 2017. |
LOANS RECEIVABLE |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LOANS RECEIVABLE | LOANS RECEIVABLE Loans receivable consist of the following (dollars in thousands):
Certain loans have been pledged to secure borrowing arrangements (see Note 7). The following table summarizes activity in and the allocation of the allowance for loan losses by portfolio segment (dollars in thousands):
The following tables summarize the allocation of the allowance for loan losses by impairment methodology (dollars in thousands):
The Company assigns a risk rating to all loans and periodically performs detailed reviews of all such loans to identify credit risks and to assess the overall collectability of the portfolio. During these internal reviews, management monitors and analyzes the financial condition of borrowers and guarantors, as well as the financial performance and 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 next 90 to 120 days 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 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 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. The following tables summarize the loan portfolio allocated by management’s internal risk ratings at June 30, 2018 and December 31, 2017 (dollars in thousands):
The following tables summarize an aging analysis of the loan portfolio by the time past due at June 30, 2018 and December 31, 2017 (dollars in thousands):
The following table summarizes information related to impaired loans at June 30, 2018 and December 31, 2017 (dollars in thousands):
The following table summarizes information related to impaired loans for the three and six months ended June 30, 2018 and 2017 (dollars in thousands):
The following table summarizes the recorded investment related to troubled debt restructurings at June 30, 2018 and December 31, 2017 (dollars in thousands):
The Company has allocated $25 thousand of allowances for loans modified in troubled debt restructurings at June 30, 2018 and December 31, 2017. The Company does not have commitments to lend additional funds to borrowers with loans whose terms have been modified in troubled debt restructurings. There were no troubled debt restructurings during the three and six months ended June 30, 2018 and 2017. The Company had no troubled debt restructurings with a subsequent payment default within twelve months following the modification during the three and six months ended June 30, 2018 and 2017. A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms. The terms of certain other loans were modified during the six months ended June 30, 2018 and 2017 that did not meet the definition of a troubled debt restructuring. These loans have a total recorded investment of $9.8 million and $17.5 million as of June 30, 2018 and June 30, 2017, respectively. The modification of these loans involved either a modification of the terms of a loan to borrowers who were not experiencing financial difficulties or a delay in a payment that was considered to be insignificant such as delays in payment of up to 4 months. |
NONPERFORMING ASSETS |
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NONPERFORMING ASSETS | NONPERFORMING ASSETS Nonperforming assets include nonperforming loans plus real estate owned (foreclosed property). The Company’s nonperforming assets and trends related to those assets at June 30, 2018 and December 31, 2017 are indicated below (dollars in thousands):
No interest income was recognized on non-accrual loans during the three and six months ended June 30, 2018 and 2017. Contractual interest not accrued on nonperforming loans during the three and six months ended June 30, 2018 totaled $62 thousand and $153 thousand, respectively, compared with $62 thousand and $109 thousand for the three and six months ended June 30, 2017, respectively. Generally, nonperforming loans are considered impaired, because the repayment of the loan will not be made in accordance with the original contractual agreement. |
MORTGAGE SERVICING RIGHTS |
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Transfers and Servicing [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
MORTGAGE SERVICING RIGHTS | 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 balances of these loans are as follows (dollars in thousands):
Custodial account balances maintained in connection with serviced loans totaled $12.0 million and $5.2 million at June 30, 2018 and December 31, 2017, respectively. Activity for mortgage servicing rights are as follows (dollars in thousands):
Fair value as of June 30, 2018 was determined using a discount rate of 10%, prepayment speeds ranging from 5.9% to 70.4%, depending on the stratification of the specific right, and a weighted average default rate of 5%. Fair value as of December 31, 2017 was determined using a discount rate of 10%, prepayment speeds ranging from 5.8% to 70.4%, depending on the stratification of the specific right, and a weighted average default rate of 5%. |
DEPOSITS |
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Banking and Thrift [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DEPOSITS | DEPOSITS A summary of deposits at June 30, 2018 and December 31, 2017 is as follows (dollars in thousands):
The Company had certificates of deposit with a denomination of $100 thousand or more totaling $2.6 billion and $1.9 billion at June 30, 2018 and December 31, 2017, respectively. The Company had certificates of deposit that meet or exceed the FDIC Insurance limit of $250 thousand of $1.0 billion and $1.1 billion at June 30, 2018 and December 31, 2017, respectively. The Company utilizes brokered deposits as an additional source of funding. The Company had brokered deposits of $562.6 million and $278.4 million at June 30, 2018 and December 31, 2017, respectively. Maturities of the Company’s certificate accounts at June 30, 2018 are summarized as follows (dollars in thousands):
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FEDERAL HOME LOAN BANK AND FEDERAL RESERVE BANK ADVANCES |
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Banking and Thrift [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FEDERAL HOME LOAN BANK AND FEDERAL RESERVE BANK ADVANCES | FEDERAL HOME LOAN BANK AND FEDERAL RESERVE BANK ADVANCES The Bank may borrow from the Federal Home Loan Bank ("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 June 30, 2018 and December 31, 2017, the Bank had pledged various mortgage loans totaling approximately $2.4 billion and $2.4 billion, respectively, as well as the FHLB stock held by the Bank to secure these borrowing arrangements. The Bank has access to the Loan and Discount Window of the Federal Reserve Bank of San Francisco ("FRB"). Advances under this window are subject to the Bank providing qualifying collateral. Various mortgage loans totaling approximately $399.7 million and $379.0 million as of June 30, 2018 and December 31, 2017, respectively, secure this borrowing arrangement. There were no borrowings outstanding with the FRB as of June 30, 2018 and December 31, 2017. The following table discloses the Bank’s outstanding advances from the Federal Home Loan Bank of San Francisco (dollars in thousands):
The Bank's available borrowing capacity based on pledged loans to the FRB and the FHLB totaled $899.6 million and $1.1 billion at June 30, 2018 and December 31, 2017, respectively. Short-term borrowings are borrowings with original maturities of 90 days or less. During the three months ended June 30, 2018 there was a maximum amount of short term borrowings outstanding of $489.2 million, an average amount outstanding of $325.9 million and a weighted average interest rate of 1.89%. The following table summarizes maturities over the next five years as of June 30, 2018 (dollars in thousands):
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JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES | JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES The Company formed wholly owned trust companies (the ‘‘Trusts’’) which issued guaranteed preferred beneficial interests in the Company’s junior subordinated deferrable interest debentures (‘‘the Trust Securities’’). 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, are included in other assets on the unaudited consolidated statements of financial condition. The sole asset of the Trusts are junior subordinated deferrable interest debentures (the ‘‘Notes’’). At June 30, 2018 and December 31, 2017, the Company had two Trusts which have issued Trust Securities in a private placement transaction. 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 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 June 30, 2018 and December 31, 2017 (dollars in thousands):
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SENIOR DEBT |
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SENIOR DEBT | SENIOR DEBT In September 2014, the Company issued $95 million in senior unsecured term notes to qualified institutional investors. The proceeds of this debt were used to retire senior unsecured term notes issued between 2009 and 2011 totaling $62.7 million, including a prepayment penalty of $243 thousand, and make an additional contribution to the Bank of $28 million in the form of paid-in capital. The balance of the proceeds, or approximately $2.7 million, was retained at the holding company to be used as cash reserves and for general corporate purposes. The following table summarizes information on these notes as of June 30, 2018 and December 31, 2017 (dollars in thousands):
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INCOME TAXES |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INCOME TAXES | INCOME TAXES In connection with the initial public offering, the Company terminated its S Corporation status and became a taxable entity (“C Corporation”) on December 1, 2017. As such, any periods prior to December 1, 2017 will only reflect an effective state income tax rate. The provision for income tax for the three and six months ended June 30, 2018 and 2017 differs from the statutory federal rate of 21% and 35%, respectively, due to the following (dollars in thousands):
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STOCK BASED COMPENSATION |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK BASED COMPENSATION | STOCK BASED COMPENSATION The Company’s stock based compensation consists of restricted stock awards (RSAs) and restricted stock units (RSUs) granted under its 2017 Omnibus Equity and Incentive Compensation Plan ("Omnibus Plan"). In connection with its IPO in December 2017, the Company granted RSAs and RSUs to employees and nonemployee directors which all vest ratably over three years. At the same time, the Company granted RSUs in exchange for unvested phantom stock awards held by employees and all vested and unvested phantom stock awards held by nonemployee directors on a per share basis. The RSUs were subjected to the same vesting schedule and deferral elections that existed for the original phantom stock awards. In recognition of prior and current service, additional RSAs were granted during the first quarter of 2018. These awards to nonemployee directors vest over one year, while awards to employees vest ratably over three years. All RSAs and RSUs were granted at the fair value of the common stock at the time of the award. The 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 and six months ended June 30, 2018 totaled $1.0 million and $2.1 million, respectively. No RSAs or RSUs had been granted prior to December 2017. As of June 30, 2018, there was $6.8 million of unrecognized compensation expense related to 1,225,491 unvested RSAs and RSUs. This expense is expected to be recognized over a weighted average period of 2.08 years. As of June 30, 2018, 169,490 shares of RSUs were vested and remain unsettled per the original deferral elections. The following table summarizes share information about restricted stock awards and restricted stock units for the six months ended June 30, 2018:
Under its Omnibus Plan, the Company reserved 3,360,000 shares of common stock for new awards. At June 30, 2018 and December 31, 2017, there were 2,561,359 and 2,689,699 shares, respectively, of common stock reserved and available for grant through restricted stock or other awards under the Omnibus Plan. |
FAIR VALUE MEASUREMENTS |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS 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 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, variable rate loans, accrued interest receivable and payable, demand deposits and short-term borrowings, the carrying amount is estimated to be fair value. The fair value of accrued interest receivable/payable balances are 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 investment securities, which include primarily debt securities issued by U.S. government sponsored agencies, are based on quoted market prices for similar securities. The fair value of loans held for sale recorded at level three are determined by two methodologies. The first methodology is used for single family portfolio loans that have been designated as held for sale after having been retained on the balance sheet for at least twelve months of seasoning. To be announced ("TBA") prices for Fannie Mae mortgage backed securities are provided by a third party with prices varying depending upon the underlying loan’s weighted average coupon rate. These prices are then used to determine the fair value of the loan pool using each loan’s coupon rate. As compensating evidence, the loans are also run through a valuation model taking into consideration loan level adjustments such as loan to value ratios, property type, and an estimated servicing release premium. The second methodology is used for multifamily portfolio loans that have been designated as held for sale. This analysis begins with a third party quoted price for a risk free government guaranteed security comprised of these same multifamily loans. This information is then input into an interest rate risk model to generate an option adjusted spread ("OAS"). This OAS is added to a credit risk spread, based primarily on the cost of the Freddie Mac guarantee fee, to generate a fair market value for the loan pool. Both of these methodologies are performed monthly and compared to the prior month analysis for reasonableness. Loans held for sale which are under contract for sale are considered Level 2 in the fair value hierarchy. For loans, the fair value is estimated using market quotes for similar assets or the present value of future cash flows, discounted using the current rate at which similar loans would be made to borrowers with similar credit ratings and for the same maturities and giving consideration to estimated prepayment risk and credit risk. The fair value of loans is determined utilizing estimates resulting in a Level 3 classification. Impaired loans are measured for impairment based on the present value of expected future cash flows discounted at the loan’s 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 the loan is collateral dependent. The fair value of impaired loans is determined utilizing estimates resulting in a Level 3 classification. Typical unobservable inputs used for computing the fair value of impaired loans include adjustments made by appraisers and brokers for differences between comparable property sales, net operating income assumptions and capitalization rates. Other factors considered include geographic sales trends and the values of comparable surrounding properties as well as the condition of the subject property. In measuring the fair value of impaired collateral dependent loans, the Company assumes a 100% default rate. The valuation techniques used by third party appraisers is consistent among all loan classes held by the Company due to the similarities in the type of loan collateral. For loans measured at fair value on a non-recurring basis in the Company’s loan portfolio at June 30, 2018 and December 31, 2017, adjustments made by appraisers and brokers to comparable property sales generally ranged from (10)% to 20%. Additionally, all appraisals are reviewed in accordance with Uniform Standards of Professional Appraisal Practice, or USPAP, by in house licensed appraisers who review not only the appraisal but independently search for comparable properties to ensure selected comparable properties and corresponding adjustments are appropriate. When necessary appraisal staff will adjust or reject an appraised value. The Company estimates that selling costs approximate 6% of the collateral fair value. It was not practicable to determine the fair value of FHLB stock due to restrictions placed on its transferability. Real estate owned fair values are categorized as Level 3 due to ongoing assumptions in fair value measurements related to real estate market conditions which may require adjustments made by appraisers and brokers for differences between comparable property sales, net operating income assumptions, and capitalization rates. The fair values of derivatives are based on valuation models using observable market data as of the measurement date. Fair values for fixed-rate certificates of deposit are estimated using discounted cash flow analyses using interest rates offered at each reporting date by the Company for certificates with similar remaining maturities. For deposits with no contractual maturity, the fair value is assumed to equal the carrying value. The fair value of FHLB advances is estimated based on discounting the future cash flows using the market rate currently offered. The fair value of subordinated debentures is based on an indication of value provided by a third-party broker. For senior debt, the fair value is based on an indication of value provided by a third-party broker. The fair values of commitments are estimated using the fees currently charged to enter into similar agreements and are not significant. Fair Value of Financial Instruments The carrying and estimated fair values of the Company’s financial instruments are as follows (dollars in thousands):
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 Assets and Liabilities Recorded at Fair Value The following tables present information about the Company’s assets and liabilities measured at fair value on a recurring and nonrecurring basis as of June 30, 2018 and December 31, 2017. Recurring Basis The Company is required or permitted to record the following assets and liabilities at fair value on a recurring basis under other accounting pronouncements (dollars in thousands):
There were no transfers between Level 1 and Level 2 during the three and six months ended June 30, 2018 and 2017. 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 (dollars in thousands):
For the three and six months ended June 30, 2018, there were no charge offs on impaired loans. At December 31, 2017, an impaired loan of $196 thousand was adjusted to a fair value of $191 thousand by recording charge-offs of $5 thousand. The fair value of impaired, collateral dependent loans is estimated at the fair value of the underlying collateral, less estimated selling costs. These loans are categorized as Level 3 due to ongoing real estate market conditions which may require the use of unobservable inputs and assumptions in fair value measurements. The company held no real estate owned at June 30, 2018 and December 31, 2017. Management periodically obtains updated valuations of properties after foreclosure. |
VARIABLE INTEREST ENTITIES (VIE) |
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Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
VARIABLE INTEREST ENTITIES (VIE) | VARIABLE INTEREST ENTITIES ("VIE") The Company is involved with VIEs through its loan securitization activities. We evaluated our 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. Our assessment includes an evaluation of our continuing involvement with the VIE and the nature and significance of our variable interests. Multifamily loan securitization With respect to the securitization transaction with Freddie Mac which settled September 27, 2017, our variable interests reside with a reimbursement agreement entered into with Freddie Mac that obligates the Bank to reimburse Freddie Mac for any defaulted contractual principal and interest payments identified after the ultimate resolution of the 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 Bank released all servicing obligations and rights to Freddie Mac who was designated as the Master Servicer. As Master Servicer, Freddie Mac appointed the Bank 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 Bank and Freddie Mac. Freddie Mac, in its capacity as Master Servicer, can terminate the Bank in its role as sub-servicer and direct such responsibilities accordingly. In evaluating our variable interests and continuing involvement in the VIE, we determined that we do 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 Bank 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. Therefore, we determined that the VIE associated with the multifamily securitization should not be included in the consolidated financial statements of the Bank. We believe that our maximum exposure to loss as a result of our 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. Our reserve for estimated losses with respect to the reimbursement obligation totaled $1.6 million and $1.7 million as of June 30, 2018 and December 31, 2017, respectively, based upon our analysis of quantitative and qualitative data over the underlying loans included in the securitization pool. |
LOAN SALE AND SECURITIZATION ACTIVITIES |
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Transfers and Servicing [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LOAN SALE AND SECURITIZATION ACTIVITIES | LOAN SALE AND SECURITIZATION ACTIVITIES The Company sells originated and acquired 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 transaction on September 27, 2017 with Freddie Mac. The transaction involved the sale of $626 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 reimbursement obligations. As sub-servicer for Freddie Mac, the Bank is required to maintain a minimum net worth in accordance with generally accepted accounting principles of not less than $2.0 million. If Luther Burbank Savings’ capital were to fall below this threshold, Freddie Mac would have the authority to terminate and assume the Bank’s sub-servicing duties. At June 30, 2018, the Bank’s actual net worth was $705.2 million. Servicing responsibilities on loan sales generally include obligations to collect and remit payments of principal and interest, provide foreclosure services, manage payments of tax and insurance, and otherwise administer the underlying loans. In connection with the securitization transaction, Freddie Mac was designated as the Master Servicer and appointed Luther Burbank Savings to perform sub-servicing responsibilities, which generally include the servicing responsibilities described above with exception to the servicing of foreclosed or defaulted loans. The overall management, servicing, and resolution of defaulted loans and foreclosed loans are separately designated to the special servicer, a third party institution that is independent of the Master Servicer and the Bank. The Master Servicer has the right to terminate the Bank in its role as sub-servicer and direct such responsibilities accordingly. General representations and warranties associated with loan sales and securitization sales require the Bank 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 Bank breaches its representations and warranties, the Bank 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 Bank 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 Bank is obligated to 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. We recognized a liability of $1.6 million and $1.7 million as of June 30, 2018 and December 31, 2017, respectively, for our exposure to the reimbursement agreement with Freddie Mac. The following table provides cash flows associated with the Company's loan sale activities:
The following table provides information about the loans transferred through sales or securitization and not recorded on our unaudited 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):
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COMMITMENTS AND CONTINGENCIES |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||
COMMITMENTS AND CONTINGENCIES | 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 lines of credit and loans in process, and involve, to varying degrees, elements of interest rate risk and credit risk in excess of the amount recognized in the Company’s consolidated statement of financial condition. The Company’s exposure to credit loss in the event of nonperformance by the other party for commitments to extend credit and lines of 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. Commitments to fund loans and home equity 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 being exercised; therefore, total commitments outstanding do not necessarily represent future cash requirements. At June 30, 2018 and December 31, 2017, the Company had outstanding commitments of approximately $118.4 million and $65.8 million, respectively, for real estate loans. Unfunded loan commitment reserves totaled $568 thousand and $197 thousand at June 30, 2018 and December 31, 2017, respectively. Operating Leases The Company leases various office premises under long-term operating lease agreements. These leases expire between 2018 and 2028, with certain leases containing either three, five or ten year renewal options. At June 30, 2018, minimum commitments under these non-cancellable leases with initial or remaining terms of one year or more are as follows (dollars in thousands):
Rent expense under operating leases was $1.1 million and $2.2 million for the three and six months ended June 30, 2018, respectively, compared with $1.1 million and $2.2 million for the three and six months ended June 30, 2017, respectively. Contingencies The Company is involved in legal proceedings arising in the normal course of business. In the opinion of management, the outcomes of such proceedings will not have a material adverse effect on the Company’s financial position or results of operations. Correspondent Banking Agreements The Company maintains funds on deposit with other federally insured financial institutions under correspondent banking agreements. These balances are insured by the FDIC up to $250 thousand. At June 30, 2018 and December 31, 2017, the Company had $701 thousand and $845 thousand, respectively, in cash balances exceeding the insured amounts. |
NATURE OF OPERATIONS (Policies) |
6 Months Ended |
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Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis of Accounting | 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, 2017, and the notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 filed with the SEC, under the Securities and Exchange Act of 1934, (the “Exchange Act”). The unaudited consolidated financial statements include the accounts of the Company and the Bank. All intercompany accounts and transactions have been eliminated. The results of operations for the three and six months ended June 30, 2018 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, 2018. The Company’s accounting and reporting policies conform to GAAP and to general practices within the banking industry. |
Use of Estimates | 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 consolidated 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. |
Fair Value Measurements | 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 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, variable rate loans, accrued interest receivable and payable, demand deposits and short-term borrowings, the carrying amount is estimated to be fair value. The fair value of accrued interest receivable/payable balances are 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 investment securities, which include primarily debt securities issued by U.S. government sponsored agencies, are based on quoted market prices for similar securities. The fair value of loans held for sale recorded at level three are determined by two methodologies. The first methodology is used for single family portfolio loans that have been designated as held for sale after having been retained on the balance sheet for at least twelve months of seasoning. To be announced ("TBA") prices for Fannie Mae mortgage backed securities are provided by a third party with prices varying depending upon the underlying loan’s weighted average coupon rate. These prices are then used to determine the fair value of the loan pool using each loan’s coupon rate. As compensating evidence, the loans are also run through a valuation model taking into consideration loan level adjustments such as loan to value ratios, property type, and an estimated servicing release premium. The second methodology is used for multifamily portfolio loans that have been designated as held for sale. This analysis begins with a third party quoted price for a risk free government guaranteed security comprised of these same multifamily loans. This information is then input into an interest rate risk model to generate an option adjusted spread ("OAS"). This OAS is added to a credit risk spread, based primarily on the cost of the Freddie Mac guarantee fee, to generate a fair market value for the loan pool. Both of these methodologies are performed monthly and compared to the prior month analysis for reasonableness. Loans held for sale which are under contract for sale are considered Level 2 in the fair value hierarchy. For loans, the fair value is estimated using market quotes for similar assets or the present value of future cash flows, discounted using the current rate at which similar loans would be made to borrowers with similar credit ratings and for the same maturities and giving consideration to estimated prepayment risk and credit risk. The fair value of loans is determined utilizing estimates resulting in a Level 3 classification. Impaired loans are measured for impairment based on the present value of expected future cash flows discounted at the loan’s 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 the loan is collateral dependent. The fair value of impaired loans is determined utilizing estimates resulting in a Level 3 classification. Typical unobservable inputs used for computing the fair value of impaired loans include adjustments made by appraisers and brokers for differences between comparable property sales, net operating income assumptions and capitalization rates. Other factors considered include geographic sales trends and the values of comparable surrounding properties as well as the condition of the subject property. In measuring the fair value of impaired collateral dependent loans, the Company assumes a 100% default rate. The valuation techniques used by third party appraisers is consistent among all loan classes held by the Company due to the similarities in the type of loan collateral. For loans measured at fair value on a non-recurring basis in the Company’s loan portfolio at June 30, 2018 and December 31, 2017, adjustments made by appraisers and brokers to comparable property sales generally ranged from (10)% to 20%. Additionally, all appraisals are reviewed in accordance with Uniform Standards of Professional Appraisal Practice, or USPAP, by in house licensed appraisers who review not only the appraisal but independently search for comparable properties to ensure selected comparable properties and corresponding adjustments are appropriate. When necessary appraisal staff will adjust or reject an appraised value. The Company estimates that selling costs approximate 6% of the collateral fair value. It was not practicable to determine the fair value of FHLB stock due to restrictions placed on its transferability. Real estate owned fair values are categorized as Level 3 due to ongoing assumptions in fair value measurements related to real estate market conditions which may require adjustments made by appraisers and brokers for differences between comparable property sales, net operating income assumptions, and capitalization rates. The fair values of derivatives are based on valuation models using observable market data as of the measurement date. Fair values for fixed-rate certificates of deposit are estimated using discounted cash flow analyses using interest rates offered at each reporting date by the Company for certificates with similar remaining maturities. For deposits with no contractual maturity, the fair value is assumed to equal the carrying value. The fair value of FHLB advances is estimated based on discounting the future cash flows using the market rate currently offered. The fair value of subordinated debentures is based on an indication of value provided by a third-party broker. For senior debt, the fair value is based on an indication of value provided by a third-party broker. The fair values of commitments are estimated using the fees currently charged to enter into similar agreements and are not significant. |
NATURE OF OPERATIONS (Tables) |
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Schedule of Earnings Per Share, Basic and Diluted | The factors used in the earnings per share computation follow:
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INVESTMENT SECURITIES (Tables) |
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Available-for-sale Securities |
The following tables summarize the gross unrealized losses and fair value of available for sale investment securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position (dollars in thousands):
The following tables summarize the amortized cost and the estimated fair value of available for sale investment securities as of the dates indicated (dollars in thousands):
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Schedule of Held-to-maturity Securities | The following tables summarize the amortized cost and estimated fair value of held to maturity investment securities as of the dates indicated (dollars in thousands):
The following tables summarize 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 been in a continuous unrecognized loss position (dollars in thousands):
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Schedule of Debt Maturities of Available-for-sale and Held-to-maturity Securities | The following table summarizes the scheduled maturities of available for sale and held to maturity investment securities as of June 30, 2018 (dollars in thousands):
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LOANS RECEIVABLE (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Loans Receivable | Loans receivable consist of the following (dollars in thousands):
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Schedule Allowance for Loan Losses | The following table summarizes activity in and the allocation of the allowance for loan losses by portfolio segment (dollars in thousands):
The following tables summarize the allocation of the allowance for loan losses by impairment methodology (dollars in thousands):
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Schedule of Loan Portfolio by Internal Risk Indicators | The following tables summarize the loan portfolio allocated by management’s internal risk ratings at June 30, 2018 and December 31, 2017 (dollars in thousands):
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Schedule or Past Due Loans Receivable | The following tables summarize an aging analysis of the loan portfolio by the time past due at June 30, 2018 and December 31, 2017 (dollars in thousands):
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Schedule of Impaired Loans Receivables | The following table summarizes information related to impaired loans for the three and six months ended June 30, 2018 and 2017 (dollars in thousands):
The following table summarizes information related to impaired loans at June 30, 2018 and December 31, 2017 (dollars in thousands):
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Schedule of Troubled Debt Restructurings | The following table summarizes the recorded investment related to troubled debt restructurings at June 30, 2018 and December 31, 2017 (dollars in thousands):
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NONPERFORMING ASSETS (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Nonperforming Assets | The Company’s nonperforming assets and trends related to those assets at June 30, 2018 and December 31, 2017 are indicated below (dollars in thousands):
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MORTGAGE SERVICING RIGHTS (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transfers and Servicing [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Mortgage Loans Serviced for Others | The principal balances of these loans are as follows (dollars in thousands):
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Schedule of Changes in Servicing Assets | Activity for mortgage servicing rights are as follows (dollars in thousands):
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DEPOSITS (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Banking and Thrift [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Deposits | A summary of deposits at June 30, 2018 and December 31, 2017 is as follows (dollars in thousands):
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Schedule of Certificate Account Maturities | Maturities of the Company’s certificate accounts at June 30, 2018 are summarized as follows (dollars in thousands):
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FEDERAL HOME LOAN BANK AND FEDERAL RESERVE BANK ADVANCES (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Banking and Thrift [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of FHLB Advances | The following table summarizes maturities over the next five years as of June 30, 2018 (dollars in thousands):
The following table discloses the Bank’s outstanding advances from the Federal Home Loan Bank of San Francisco (dollars in thousands):
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JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Outstanding Trust Securities | The following table is a summary of the outstanding Trust Securities and Notes at June 30, 2018 and December 31, 2017 (dollars in thousands):
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SENIOR DEBT (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt | The following table summarizes information on these notes as of June 30, 2018 and December 31, 2017 (dollars in thousands):
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INCOME TAXES (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Effective Income Tax Rate Reconciliation | The provision for income tax for the three and six months ended June 30, 2018 and 2017 differs from the statutory federal rate of 21% and 35%, respectively, due to the following (dollars in thousands):
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STOCK BASED COMPENSATION (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restricted Stock Activity | The following table summarizes share information about restricted stock awards and restricted stock units for the six months ended June 30, 2018:
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FAIR VALUE MEASUREMENTS (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value of Assets and LIabilities | The carrying and estimated fair values of the Company’s financial instruments are as follows (dollars in thousands):
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Schedule of Fair Value of Assets Measured on a Recurring Basis | The Company is required or permitted to record the following assets and liabilities at fair value on a recurring basis under other accounting pronouncements (dollars in thousands):
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Schedule of Fair Value of Liabilities Measured on a Recurring Basis | The Company is required or permitted to record the following assets and liabilities at fair value on a recurring basis under other accounting pronouncements (dollars in thousands):
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Schedule of Fair Value of Assets Measured on a Nonrecurring 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 (dollars in thousands):
|
LOAN SALE AND SECURITIZATION ACTIVITIES (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transfers and Servicing [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Cash Flows From Loan Sale Activities | The following table provides cash flows associated with the Company's loan sale activities:
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Schedule of Loans Transfered Through Sale or Securitization | The following table provides information about the loans transferred through sales or securitization and not recorded on our unaudited 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):
|
COMMITMENTS AND CONTINGENCIES (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||
Schedule of Operating Lease Maturities | At June 30, 2018, minimum commitments under these non-cancellable leases with initial or remaining terms of one year or more are as follows (dollars in thousands):
|
NATURE OF OPERATIONS - Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Accounting Policies [Abstract] | ||||
Net income | $ 11,226 | $ 18,921 | $ 22,328 | $ 31,216 |
Weighted average common shares outstanding - basic | 56,190,970 | 42,000,000 | 56,190,970 | 42,000,000 |
Add: Dilutive effects of assumed vesting of restricted stock | 629,106 | 0 | 596,645 | 0 |
Weighted average common shares outstanding - diluted | 56,820,076 | 42,000,000 | 56,787,615 | 42,000,000 |
Basic earnings per common share (in usd per share) | $ 0.20 | $ 0.45 | $ 0.40 | $ 0.74 |
Diluted earnings per common share (in usd per share) | $ 0.20 | $ 0.45 | $ 0.39 | $ 0.74 |
Anti-dilutive shares not included in calculation of diluted earnings per share | 0.00 | 0.00 | 0.00 | 0.00 |
INVESTMENT SECURITIES - Held-to-maturity Securities (Details) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Schedule of Held-to-maturity Securities [Line Items] | ||
Amortized Cost | $ 12,009 | $ 6,921 |
Gross Unrecognized Gains | 26 | 73 |
Gross Unrecognized Losses | (310) | (69) |
Estimated Fair Value | 11,725 | 6,925 |
Mortgage-backed securities | ||
Schedule of Held-to-maturity Securities [Line Items] | ||
Amortized Cost | 11,733 | 6,636 |
Gross Unrecognized Gains | 26 | 73 |
Gross Unrecognized Losses | (310) | (69) |
Estimated Fair Value | 11,449 | 6,640 |
Fair Value | ||
Less than 12 Months | 10,299 | 1,047 |
12 Months or More | 0 | 3,029 |
Total | 10,299 | 4,076 |
Unrecognized Losses | ||
Less than 12 Months | (310) | (4) |
12 Months or More | 0 | (65) |
Total | (310) | (69) |
Other investments | ||
Schedule of Held-to-maturity Securities [Line Items] | ||
Amortized Cost | 276 | 285 |
Gross Unrecognized Gains | 0 | 0 |
Gross Unrecognized Losses | 0 | 0 |
Estimated Fair Value | $ 276 | $ 285 |
INVESTMENT SECURITIES - Schedule of Investment Securities Maturities (Details) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Amortized Cost | ||
One to five years | $ 118,414 | |
Five to ten years | 0 | |
Beyond ten years | 3,000 | |
Amortized Cost | 593,555 | $ 509,896 |
Fair Value | ||
One to five years | 114,257 | |
Five to ten years | 0 | |
Beyond ten years | 3,007 | |
Fair Value | 583,035 | 503,288 |
Amortized Cost | ||
Held-to-maturity investment securities beyond ten years | 276 | |
Amortized Cost | 12,009 | 6,921 |
Fair Value | ||
Beyond ten years | 276 | |
Total held to maturity investment securities | 11,725 | $ 6,925 |
Equity securities | ||
Amortized Cost | ||
Equity securities | 12,000 | |
Fair Value | ||
Equity securities | 11,416 | |
Mortgage-backed securities and collateralized mortgage obligations | ||
Amortized Cost | ||
Equity securities | 460,141 | |
Fair Value | ||
Equity securities | 454,355 | |
Mortgage-backed securities | ||
Amortized Cost | ||
Held to maturity investments securities, Mortgage-backed securities | 11,733 | |
Fair Value | ||
Held to maturity investments securities, Mortgage-backed securities | $ 11,449 |
LOANS RECEIVABLE - Troubled Debt Restructurings (Details) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
Jun. 30, 2017 |
---|---|---|---|
Financing Receivable, Modifications [Line Items] | |||
Total recorded investment | $ 5,503 | $ 6,320 | |
Related Allowance | 25 | 25 | |
Modification of Terms or Payment Deferral | |||
Financing Receivable, Modifications [Line Items] | |||
Total recorded investment | 9,800 | $ 17,500 | |
Multifamily residential | |||
Financing Receivable, Modifications [Line Items] | |||
Total recorded investment | 0 | 667 | |
Related Allowance | 0 | 0 | |
Single family residential | |||
Financing Receivable, Modifications [Line Items] | |||
Total recorded investment | 5,503 | 5,653 | |
Related Allowance | $ 25 | $ 25 |
NONPERFORMING ASSETS (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Jun. 30, 2018 |
Dec. 31, 2017 |
|
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||||
Total non-accrual loans | $ 4,786 | $ 4,786 | $ 7,037 | ||
Real estate owned | 0 | 0 | 0 | ||
Total nonperforming assets | 4,786 | 4,786 | 7,037 | ||
Contractual interest not accrued during the quarter | 62 | $ 62 | $ 109 | 153 | |
Multifamily residential | |||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||||
Total non-accrual loans | 1,543 | 1,543 | 2,246 | ||
Single family residential | |||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||||
Total non-accrual loans | 2,372 | 2,372 | 4,135 | ||
Commercial real estate | |||||
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||||
Total non-accrual loans | $ 871 | $ 871 | $ 656 |
MORTGAGE SERVICING RIGHTS - Mortgage Loans Seviced for Others (Details) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Schedule of Loans Serviced for Others [Line Items] | ||
Total mortgage loans serviced for others | $ 716,911 | $ 783,681 |
FHLMC | ||
Schedule of Loans Serviced for Others [Line Items] | ||
Total mortgage loans serviced for others | 575,440 | 625,545 |
Other financial institutions | ||
Schedule of Loans Serviced for Others [Line Items] | ||
Total mortgage loans serviced for others | $ 141,471 | $ 158,136 |
MORTGAGE SERVICING RIGHTS - Mortgage Servicing Rights Activity (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Servicing Asset at Fair Value, Amount [Roll Forward] | ||||
Beginning Balance | $ 4,124 | $ 1,153 | $ 4,255 | $ 1,099 |
Additions | 0 | 158 | 0 | 241 |
Disposals | 0 | 0 | 0 | 0 |
Change in fair value due to changes in assumptions | 0 | 0 | 0 | 0 |
Other changes in fair value | (256) | (53) | (387) | (82) |
Ending balance | $ 3,868 | $ 1,258 | $ 3,868 | $ 1,258 |
MORTGAGE SERVICING RIGHTS - Narrative (Details) - USD ($) $ in Millions |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2018 |
Dec. 31, 2017 |
|
Assumption for Fair Value as of Balance Sheet Date of Assets or Liabilities that relate to Transferor's Continuing Involvement [Line Items] | ||
Custodial account balances maintained in connection with serviced loans | $ 12.0 | $ 5.2 |
Discount rate used to calculate fair value of MSRs | 10.00% | 10.00% |
Default rate used to calculate fair value of MSRs | 5.00% | 5.00% |
Minimum | ||
Assumption for Fair Value as of Balance Sheet Date of Assets or Liabilities that relate to Transferor's Continuing Involvement [Line Items] | ||
Prepayment speed rate used to calculate fair value of MSRs | 5.90% | 5.80% |
Maximum | ||
Assumption for Fair Value as of Balance Sheet Date of Assets or Liabilities that relate to Transferor's Continuing Involvement [Line Items] | ||
Prepayment speed rate used to calculate fair value of MSRs | 70.40% | 70.40% |
DEPOSITS - Deposits (Details) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Deposits [Abstract] | ||
Certificate accounts | $ 2,962,858 | $ 2,242,682 |
Money market savings | 1,306,189 | 1,389,425 |
NOW accounts | 173,120 | 203,159 |
Money market checking | 82,447 | 85,073 |
Non-interest bearing demand | 67,541 | 30,899 |
Deposits | $ 4,592,155 | $ 3,951,238 |
DEPOSITS - Narrative (Details) - USD ($) $ in Millions |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Banking and Thrift [Abstract] | ||
Certificates of deposit with a denomination of $100,000 or More | $ 2,600.0 | $ 1,900.0 |
Certificates of deposit that meet or exceed FDIC insurance limit | 1,000.0 | 1,100.0 |
Brokered deposits | $ 562.6 | $ 278.4 |
DEPOSITS - Maturities (Details) $ in Thousands |
Jun. 30, 2018
USD ($)
|
---|---|
Maturities of Time Deposits, Twelve months ending March 31, | |
2019 | $ 1,443,189 |
2020 | 1,001,904 |
2021 | 364,093 |
2022 | 115,749 |
2023 | 32,670 |
Thereafter | 5,253 |
Time Deposits | $ 2,962,858 |
FEDERAL HOME LOAN BANK AND FEDERAL RESERVE BANK ADVANCES - Narrative (Details) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Dec. 31, 2017 |
|
Short-term Debt [Line Items] | ||
Borrowing capacity based on pledged loans to the FRB and FHLB | $ 899.6 | $ 1,100.0 |
Maximum short-term debt outstanding during period | 489.2 | |
Average short-term debt outstanding during period | $ 325.9 | |
Weighted average interest rate | 1.89% | |
FHLB Advances | ||
Short-term Debt [Line Items] | ||
Mortgage loans pledged as collateral | $ 2,400.0 | 2,400.0 |
FRB Advances | ||
Short-term Debt [Line Items] | ||
Mortgage loans pledged as collateral | $ 399.7 | $ 379.0 |
FEDERAL HOME LOAN BANK AND FEDERAL RESERVE BANK ADVANCES - Schedule of Maturities (Details) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Federal Home Loan Bank, Advances, Fiscal Year Maturity [Abstract] | ||
Outstanding advances from FHLB | $ 1,150,746 | $ 989,260 |
FHLB of San Francisco | ||
Federal Home Loan Bank, Advances, Fiscal Year Maturity [Abstract] | ||
July 1 - December 31, 2018 | 323,600 | |
Year ending December 31, 2019 | 275,000 | |
Year ending December 31, 2020 | 150,000 | |
Year ending December 31, 2021 | 150,600 | |
Year ending December 31, 2022 | 0 | |
Thereafter | 251,546 | |
Outstanding advances from FHLB | $ 1,150,746 | $ 989,260 |
JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES - Narrative (Details) - Trusts $ in Millions |
6 Months Ended |
---|---|
Jun. 30, 2018
USD ($)
trust
| |
Investment [Line Items] | |
Investment in common securities | $ | $ 1.9 |
Number of wholly owned trusts | trust | 2 |
JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES - Schedule of Trusts (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Dec. 31, 2017 |
|
Debt Instrument [Line Items] | ||
Amount | $ 61,857 | $ 61,857 |
Trust Preferred Securities Subject to Mandatory Redemption | Luther Burbank Statutory Trust I | Trusts | ||
Debt Instrument [Line Items] | ||
Amount | $ 41,238 | $ 41,238 |
Rate | 3.72% | 2.97% |
Trust Preferred Securities Subject to Mandatory Redemption | Luther Burbank Statutory Trust I | Trusts | LIBOR | ||
Debt Instrument [Line Items] | ||
Rate index | 1.38% | |
Trust Preferred Securities Subject to Mandatory Redemption | Luther Burbank Statutory Trust II | Trusts | ||
Debt Instrument [Line Items] | ||
Amount | $ 20,619 | $ 20,619 |
Rate | 3.96% | 3.21% |
Trust Preferred Securities Subject to Mandatory Redemption | Luther Burbank Statutory Trust II | Trusts | LIBOR | ||
Debt Instrument [Line Items] | ||
Rate index | 1.62% |
SENIOR DEBT - Narrative (Details) - Senior Unsecured Term Notes - USD ($) $ in Thousands |
1 Months Ended | ||
---|---|---|---|
Sep. 30, 2014 |
Jun. 30, 2018 |
Dec. 31, 2017 |
|
Senior Unsecured Term Notes, 2009-2011 | |||
Debt Instrument [Line Items] | |||
Debt retired | $ 62,700 | ||
Senior Unsecured Term Notes, September 2014 | |||
Debt Instrument [Line Items] | |||
Principal | 95,000 | $ 95,000 | $ 95,000 |
Prepayment penalty on retired debt | 243 | ||
Proceeds kept as additional paid-in capital | 28,000 | ||
Proceeds kept as cash reserves | $ 2,700 |
SENIOR DEBT - Schedule of Debt (Details) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
Sep. 30, 2014 |
---|---|---|---|
Debt Instrument [Line Items] | |||
Fixed Interest Rate | 6.50% | ||
Senior Unsecured Term Notes, September 2014 | Senior Unsecured Term Notes | |||
Debt Instrument [Line Items] | |||
Principal | $ 95,000 | $ 95,000 | $ 95,000 |
Unamortized debt issuance costs | $ 772 | $ 839 | |
Fixed Interest Rate | 6.50% |
INCOME TAXES - Effective Income Tax Reconciliation (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Income Tax Disclosure [Abstract] | ||||
Statutory U.S. Federal Income Tax | $ 3,308 | $ 6,851 | $ 6,517 | $ 11,303 |
Benefit of S Corporation status | 0 | (6,851) | 0 | (11,303) |
State Taxes | 1,596 | 654 | 2,892 | 1,079 |
Other | (376) | 0 | (706) | 0 |
Total income tax provision | $ 4,528 | $ 654 | $ 8,703 | $ 1,079 |
STOCK BASED COMPENSATION - Awards Activity (Details) - RSUs and RSAs shares in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2018
$ / shares
shares
| |
Number of Shares | |
Beginning of the period balance | shares | 1,319,700 |
Shares granted | shares | 131,140 |
Shares settled | shares | (53,059) |
Shares forfeited | shares | (2,800) |
End of the period balance | shares | 1,394,981 |
Weighted Average Grant Date Fair Value | |
Beginning of the period balance (in usd per share) | $ / shares | $ 10.75 |
Shares granted | $ / shares | 12.77 |
Shares settled | $ / shares | 10.75 |
Shares forfeited | $ / shares | 10.75 |
End of the period balance (in usd per share) | $ / shares | $ 10.97 |
VARIABLE INTEREST ENTITIES (VIE) (Details) - Variable Interest Entity, Not Primary Beneficiary - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Dec. 31, 2017 |
|
Variable Interest Entity [Line Items] | ||
Maximum loss exposure as a percentage of original principal amount | 10.00% | |
Maximum loss exposure | $ 62.6 | |
Reserved for estimated losses | $ 1.6 | $ 1.7 |
LOAN SALE AND SECURITIZATION ACTIVITIES - Cash Flow from Sale of Loans (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Transfers and Servicing [Abstract] | ||||
Proceeds from sale of loans held for sale | $ 0 | $ 35,491 | $ 0 | $ 60,182 |
Servicing fees | $ 396 | $ 109 | $ 804 | $ 217 |
LOAN SALE AND SECURITIZATION ACTIVITIES - Loans Transfered Through Loans or Securitization (Details) - USD ($) $ in Thousands |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2018 |
Dec. 31, 2017 |
|
Single family residential | ||
Derecognized Assets, Securitized or Asset-backed Financing Arrangement Assets and any Other Financial Assets Managed Together [Line Items] | ||
Principal balance of loans | $ 27,925 | $ 29,772 |
Loans 90 days past due | 0 | 0 |
Charge-offs, net | 0 | 0 |
Multifamily residential | ||
Derecognized Assets, Securitized or Asset-backed Financing Arrangement Assets and any Other Financial Assets Managed Together [Line Items] | ||
Principal balance of loans | 688,986 | 753,909 |
Loans 90 days past due | 0 | 0 |
Charge-offs, net | $ 0 | $ 0 |
COMMITMENTS AND CONTINGENCIES - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
Dec. 31, 2017 |
|
Operating Leased Assets [Line Items] | |||||
Rent expense for operating leases | $ 1,100 | $ 1,100 | $ 2,200 | $ 2,200 | |
Cash balances held at other institutions that exceed FDIC insured limits | 701 | $ 701 | $ 845 | ||
Operating Lease Arrangement Type One | |||||
Operating Leased Assets [Line Items] | |||||
Renewal term | 3 years | ||||
Operating Lease Arrangement Type Two | |||||
Operating Leased Assets [Line Items] | |||||
Renewal term | 5 years | ||||
Operating Lease Arrangement Type Three | |||||
Operating Leased Assets [Line Items] | |||||
Renewal term | 10 years | ||||
Commitments to Extend Credit [Member] | |||||
Operating Leased Assets [Line Items] | |||||
Real estate loan funding commitments | 118,400 | $ 118,400 | 65,800 | ||
Unfunded Loan Commitment | |||||
Operating Leased Assets [Line Items] | |||||
Reserve recorded on real estate loan funding commitments | $ 568 | $ 568 | $ 197 |
COMMITMENTS AND CONTINGENCIES - Operating Lease Maturities (Details) $ in Thousands |
Jun. 30, 2018
USD ($)
|
---|---|
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | |
July 1 - December 31, 2018 | $ 2,708 |
Year ending December 31, 2019 | 5,117 |
Year ending December 31, 2020 | 3,723 |
Year ending December 31, 2021 | 3,267 |
Year ending December 31, 2022 | 2,419 |
Thereafter | 3,018 |
Operating Leases Payable | $ 20,252 |
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