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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021
OR
  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 001-38317
Luther Burbank Corporation
(Exact name of registrant as specified in its charter)
California
(State or other jurisdiction of incorporation or organization)
68-0270948
(I.R.S. employer identification number)
   
520 Third St, Fourth Floor, Santa Rosa, California
 (Address of principal executive offices)
 
95401
(Zip Code)
 

Registrant's telephone number, including area code: (844) 446-8201
Securities Registered Pursuant to Section 12(b) of the Act
Title of Each ClassTrading SymbolName of Each Exchange on Which Registered
Common stock, no par valueLBCThe Nasdaq Stock Market LLC

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

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

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer", "accelerated filer", "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
o
Accelerated filer
Non-accelerated filer
o
Smaller Reporting Company
Emerging Growth Company

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

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

As of November 1, 2021, there were 51,688,189 shares of the registrant’s common stock, no par value, outstanding.



Table of Contents
Page
PART I - FINANCIAL INFORMATION
Item 1.
Item 2.
Item 3.
Item 4.
PART II - OTHER INFORMATION
Item 1.
Item 1A.
Item 2.
Item 5.
Item 6.
1

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
 
This Quarterly Report on Form 10-Q may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. You can find many (but not all) of these statements by looking for words such as “approximates,” “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “would,” “may” and other similar expressions in this Quarterly Report on Form 10-Q. With respect to any such forward-looking statements, Luther Burbank Corporation (the "Company") claims the protection of the safe harbor provided for in the Private Securities Litigation Reform Act of 1995, as amended. The Company cautions investors that any forward-looking statements presented in this Quarterly Report on Form 10-Q, or those that the Company may make orally or in writing from time to time, are based on the beliefs of, assumptions made by, and information available to, management at the time such statements are first made. Actual outcomes will be affected by known and unknown risks, trends, uncertainties and factors that are beyond the Company’s control or ability to predict.  Although the Company believes that management’s beliefs and assumptions are reasonable, they are not guarantees of future performance and some will inevitably prove to be incorrect. As a result, the Company’s actual future results can be expected to differ from management’s expectations, and those differences may be material and adverse to the Company’s business, results of operations and financial condition. Accordingly, investors should use caution in placing any reliance on forward-looking statements to anticipate future results or trends.

Given the ongoing and dynamic nature of the coronavirus disease 2019 ("COVID-19") pandemic, the ultimate extent of the impacts on our business, financial position, results of operations, liquidity, and prospects remain uncertain. Deterioration in general business and economic conditions resulting from the continuing pandemic, including the tight labor market, supply chain disruptions, inflationary pressures, or turbulence in domestic or global financial markets could adversely affect our revenues and the values of our assets and liabilities, reduce the availability of funding, lead to a tightening of credit, and further increase stock price volatility. In addition, changes to statutes, regulations, or regulatory policies or practices as a result of, or in response to COVID-19, could affect us in substantial and unpredictable ways. Some of the other risks and uncertainties that may cause the Company’s actual results, performance or achievements to differ materially from those expressed include, but are not limited to, the following: the impact of changes in interest rates; political instability; changes in the monetary policies of the U.S. Government; a decline in economic conditions; deterioration in the value of West Coast real estate, both residential and commercial; an increase in the level of non-performing assets and charge-offs; further increased competition among financial institutions; the Company’s ability to continue to attract deposits and quality loan customers; further government regulation, including regulations regarding capital requirements, and the implementation and costs associated with the same; internal and external fraud and cyber-security threats including the loss of bank or customer funds, loss of system functionality or the theft or loss of data; management’s ability to successfully manage the Company’s operations; and the other risks set forth in the Company’s reports filed with the U.S. Securities and Exchange Commission. For further discussion of these and other factors, see “Item 1A. Risk Factors” in Part II of this Quarterly Report on Form 10-Q and the Company’s 2020 Annual Report on Form 10-K.

Any forward-looking statements in this Quarterly Report on Form 10-Q and all subsequent written and oral forward-looking statements attributable to the Company or any person acting on behalf of the Company are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. The Company does not undertake any obligation to release publicly any revisions to forward-looking statements to reflect events or circumstances after the date such forward-looking statements are made, and hereby specifically disclaims any intention to do so, unless required by law.


2

PART I.

Item 1. Financial Statements
LUTHER BURBANK CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollar amounts in thousands)
September 30,
2021 (unaudited)
December 31,
2020
ASSETS
Cash, cash equivalents and restricted cash$132,039 $178,861 
Available for sale debt securities, at fair value652,810 593,734 
Held to maturity debt securities, at amortized cost (fair value of $4,377 and $7,870 at September 30, 2021 and December 31, 2020, respectively)
4,155 7,467 
Equity securities, at fair value11,804 12,037 
Loans receivable, net of allowance for loan losses of $37,335 and $46,214 at September 30, 2021 and December 31, 2020, respectively
6,306,526 6,003,602 
Accrued interest receivable18,889 18,795 
Federal Home Loan Bank ("FHLB") stock, at cost23,411 25,122 
Premises and equipment, net16,449 18,226 
Goodwill3,297 3,297 
Prepaid expenses and other assets51,406 44,963 
Total assets$7,220,786 $6,906,104 
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits $5,587,156 $5,264,329 
FHLB advances751,647 806,747 
Junior subordinated deferrable interest debentures61,857 61,857 
Senior debt
$95,000 face amount, 6.5% interest rate, due September 30, 2024 (less debt issuance costs of $369 and $461 at September 30, 2021 and December 31, 2020, respectively)
94,631 94,539 
Accrued interest payable177 1,388 
Other liabilities and accrued expenses71,382 63,553 
Total liabilities6,566,850 6,292,413 
Commitments and contingencies (Note 15)
Stockholders' equity:
Preferred stock, no par value; 5,000,000 shares authorized; none issued and outstanding at September 30, 2021 and December 31, 2020, respectively
  
Common stock, no par value; 100,000,000 shares authorized; 51,682,604 and 52,220,266 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively
406,331 414,120 
Retained earnings244,972 192,834 
Accumulated other comprehensive income, net of taxes2,633 6,737 
Total stockholders' equity653,936 613,691 
Total liabilities and stockholders' equity$7,220,786 $6,906,104 
See accompanying notes to unaudited consolidated financial statements

3

LUTHER BURBANK CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(Dollar amounts in thousands, except per share data)
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Interest and fee income:
Loans$55,757 $56,766 $164,006 $175,661 
Investment securities2,213 2,167 6,287 7,787 
Cash, cash equivalents and restricted cash78 83 162 454 
Total interest and fee income58,048 59,016 170,455 183,902 
Interest expense:
Deposits7,535 15,744 28,890 60,146 
FHLB advances3,573 5,307 11,345 16,550 
Junior subordinated deferrable interest debentures250 279 763 1,104 
Senior debt1,574 1,574 4,723 4,727 
Total interest expense12,932 22,904 45,721 82,527 
Net interest income before provision for loan losses45,116 36,112 124,734 101,375 
(Reversal of) provision for loan losses(4,000) (9,000)10,550 
Net interest income after provision for loan losses49,116 36,112 133,734 90,825 
Noninterest income:
FHLB dividends407 368 1,145 1,277 
Other income24 219 105 779 
Total noninterest income431 587 1,250 2,056 
Noninterest expense:
Compensation and related benefits9,596 11,408 28,617 32,913 
Deposit insurance premium492 482 1,431 1,429 
Professional and regulatory fees445 431 1,543 1,316 
Occupancy1,263 1,156 3,735 3,397 
Depreciation and amortization625 673 1,958 2,029 
Data processing883 999 2,729 3,004 
Marketing380 306 907 1,511 
Other expenses951 919 2,999 2,982 
Total noninterest expense14,635 16,374 43,919 48,581 
Income before provision for income taxes34,912 20,325 91,065 44,300 
Provision for income taxes10,169 6,008 26,695 13,089 
Net income$24,743 $14,317 $64,370 $31,211 
Basic earnings per common share$0.48 $0.28 $1.25 $0.58 
Diluted earnings per common share$0.48 $0.27 $1.24 $0.58 
Dividends per common share$0.12 $0.06 $0.24 $0.17 

See accompanying notes to unaudited consolidated financial statements

4

LUTHER BURBANK CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
(Dollar amounts in thousands)

Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Net income$24,743 $14,317 $64,370 $31,211 
Other comprehensive (loss) income:
Unrealized (loss) gain on available for sale debt securities:
Unrealized holding (loss) gain arising during the period(2,482)(1)(5,785)7,222 
Tax effect722 6 1,681 (2,095)
Total other comprehensive (loss) income, net of tax(1,760)5 (4,104)5,127 
Comprehensive income$22,983 $14,322 $60,266 $36,338 

See accompanying notes to unaudited consolidated financial statements

5

LUTHER BURBANK CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)
(Dollar amounts in thousands, except per share data)

Accumulated Other Comprehensive Income (Net of Taxes)Total Stockholders' Equity
Common StockRetained EarningsAvailable for Sale Securities
SharesAmount
Balance, June 30, 202052,382,895 $414,264 $175,852 $6,566 $596,682 
Net income— — 14,317 — 14,317 
Other comprehensive income— — — 5 5 
Restricted stock award grants11,604 — — — — 
Settled restricted stock units24,188 — — — — 
Shares withheld to pay taxes on stock based compensation(7,797)(75)— — (75)
Restricted stock forfeitures(837)(5) — (5)
Stock based compensation expense— 931 — — 931 
Cash dividends ($0.06 per share)
— — (3,022)— (3,022)
Balance, September 30, 202052,410,053 $415,115 $187,147 $6,571 $608,833 
Balance, June 30, 202151,861,704 $407,860 $226,446 $4,393 $638,699 
Net income— — 24,743 — 24,743 
Other comprehensive loss— — — (1,760)(1,760)
Restricted stock forfeitures(1,332)(5)— (5)
Stock based compensation expense— 650 — — 650 
Shares repurchased(177,768)(2,174)— — (2,174)
Cash dividends ($0.12 per share)
— — (6,217)— (6,217)
Balance, September 30, 202151,682,604 $406,331 $244,972 $2,633 $653,936 

See accompanying notes to unaudited consolidated financial statements

6

Accumulated Other Comprehensive Income (Loss) (Net of Taxes)Total Stockholders' Equity
Common StockRetained EarningsAvailable for Sale Securities
SharesAmount
Balance, December 31, 201955,999,754 $447,784 $165,236 $1,444 $614,464 
Net income— — 31,211 — 31,211 
Other comprehensive income— — — 5,127 5,127 
Restricted stock award grants261,722 — — — — 
Settled restricted stock units94,408 — — — — 
Shares withheld to pay taxes on stock based compensation(64,361)(666)— — (666)
Restricted stock forfeitures(29,661)(31)8 — (23)
Stock based compensation expense— 2,742 — — 2,742 
Shares repurchased(3,851,809)(34,714)— — (34,714)
Cash dividends ($0.17 per share)
— — (9,308)— (9,308)
Balance, September 30, 202052,410,053 $415,115 $187,147 $6,571 $608,833 
Balance, December 31, 202052,220,266 $414,120 $192,834 $6,737 $613,691 
Net income— — 64,370 — 64,370 
Other comprehensive loss— — — (4,104)(4,104)
Restricted stock award grants289,473 — — — — 
Settled restricted stock units68,873 — — — — 
Shares withheld to pay taxes on stock based compensation(85,825)(901)— — (901)
Restricted stock forfeitures(54,130)(72)14— (58)
Stock based compensation expense— 1,952 — — 1,952 
Shares repurchased(756,053)(8,768)— — (8,768)
Cash dividends ($0.24 per share)
— — (12,246)— (12,246)
Balance, September 30, 202151,682,604 $406,331 $244,972 $2,633 $653,936 


See accompanying notes to unaudited consolidated financial statements

7

LUTHER BURBANK CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollar amounts in thousands)
Nine Months Ended September 30,
20212020
Cash flows from operating activities:
Net income$64,370 $31,211 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization1,958 2,029 
(Reversal of) provision for loan losses(9,000)10,550 
Amortization of deferred loan costs, net15,035 11,785 
Amortization of premiums on investment securities, net1,698 2,447 
Stock based compensation expense, net of forfeitures1,880 2,711 
Change in fair value of mortgage servicing rights639 807 
Change in fair value of equity securities233 (288)
Other items, net125 331 
Effect of changes in:
Accrued interest receivable(94)920 
Accrued interest payable(1,211)(1,647)
Prepaid expenses and other assets(1,920)(4,134)
Other liabilities and accrued expenses11,804 (3,780)
Net cash provided by operating activities85,517 52,942 
Cash flows from investing activities:
Proceeds from maturities, paydowns and calls of available for sale debt securities109,718 188,270 
Proceeds from maturities and paydowns of held to maturity debt securities3,234 2,096 
Purchases of available for sale debt securities(176,200)(181,837)
Net (increase) decrease in loans receivable(31,251)101,994 
Proceeds from loans held for sale previously classified as portfolio loans1,731  
Purchase of loans, including (discount) premium(286,917)(20,507)
Redemption of FHLB stock, net1,711 730 
Purchase of premises and equipment(191)(1,275)
Net cash (used in) provided by investing activities(378,165)89,471 
Cash flows from financing activities:
Net increase in deposits322,827 41,963 
Proceeds from long-term FHLB advances350,000 136,500 
Repayment of long-term FHLB advances(405,100)(151,955)
Net change in short-term FHLB advances (1,500)
Shares withheld for taxes on vested restricted stock(901)(666)
Shares repurchased(8,768)(34,714)
Cash paid for dividends(12,232)(9,300)
Net cash provided by (used in) financing activities245,826 (19,672)
(Decrease) increase in cash, cash equivalents and restricted cash(46,822)122,741 
Cash, cash equivalents and restricted cash, beginning of period178,861 91,325 
Cash, cash equivalents and restricted cash, end of period$132,039 $214,066 
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest$46,932 $84,174 
Income taxes$25,901 $15,069 
Non-cash investing activity:
Loans transferred to held for sale$1,706 $ 

See accompanying notes to unaudited consolidated financial statements

8

LUTHER BURBANK CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.NATURE OF OPERATIONS

Organization

Luther Burbank Corporation (the ‘‘Company’’), a California corporation headquartered in Santa Rosa, is the bank holding company for its wholly-owned subsidiary, Luther Burbank Savings (the "Bank"), and its 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 Gardena, California. It has ten 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 several loan production offices located throughout California, as well as a loan production office in Clackamas County, Oregon.

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, 2020, and the notes thereto, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 filed with the Securities and Exchange Commission (the “SEC”), under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”). The unaudited consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany accounts and transactions have been eliminated.
 
The results of operations for the three and nine months ended September 30, 2021 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, 2021.

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

Use of Estimates

Management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited consolidated 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.
Reclassifications
Certain prior balances in the unaudited consolidated financial statements have been reclassified to conform to current year presentation. These reclassifications had no effect on prior year net income or stockholders’ equity.
9

Earnings Per Share ("EPS")

Basic earnings per common share represents the amount of earnings for the period available to each share of common stock outstanding during the reporting period. Basic EPS is computed based upon net income divided by the weighted average number of common shares outstanding during the period. In determining the weighted average number of shares outstanding, vested restricted stock units are included. Diluted EPS represents the amount of earnings for the period available to each share of common stock outstanding including common stock that would have been outstanding assuming the issuance of common shares for all dilutive potential common shares outstanding during each reporting period. Diluted EPS is computed based upon net income divided by the weighted average number of common shares outstanding during each period, adjusted for the effect of dilutive potential common shares, such as restricted stock awards and units, calculated using the treasury stock method.
(Dollars in thousands, except share amounts)Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Net income$24,743 $14,317 $64,370 $31,211 
Weighted average basic common shares outstanding51,333,283 52,001,097 51,680,782 53,359,460 
Add: Dilutive effects of assumed vesting of restricted stock211,630 156,106 153,980 118,309 
Weighted average diluted common shares outstanding51,544,913 52,157,203 51,834,762 53,477,769 
Income per common share:
Basic EPS$0.48 $0.28 $1.25 $0.58 
Diluted EPS$0.48 $0.27 $1.24 $0.58 
Anti-dilutive shares not included in calculation of diluted earnings per share 26 6,291 17,623 
Adoption of New Financial Accounting Standards
FASB ASU 2016-02
In February 2016, the Financial Accounting Standards Board ("FASB") amended existing guidance that requires lessees recognize the following for all leases (with the exception of short-term leases) at the commencement date (1) a lease liability, which is the lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely unchanged. Certain targeted improvements were made to align, where necessary, lessor accounting with the lessee accounting model and Topic 606, Revenue from Contracts with Customers. These amendments are effective for Public Business Entities ("PBEs") for annual periods and interim periods within those annual periods beginning after December 15, 2018. As an emerging growth company, the Company expects to adopt this guidance on January 1, 2022. Upon adoption of this guidance, the Company will recognize a liability for its obligations under its operating leases and a corresponding right-of-use asset for its right to use leased properties over the lease term. The Company is currently evaluating the impact of ASU 2016‑02 on the consolidated financial statements. Based on leases outstanding at September 30, 2021, the Company does not expect the updates to have a material impact on the consolidated financial statements, but does anticipate the adoption of ASU 2016‑02 will result in an increase in balances of the Company's Consolidated Statements of Financial Condition as a result of recognizing right-of-use assets and lease liabilities.
2.     INVESTMENT SECURITIES
Available for Sale
The following table summarizes the amortized cost and the estimated fair value of available for sale debt
10

securities as of the dates indicated:
(Dollars in thousands)Amortized CostGross Unrealized GainsGross Unrealized LossesEstimated Fair Value
At September 30, 2021:
Government and Government Sponsored Entities:
Residential mortgage backed securities ("MBS") and collateralized mortgage obligations ("CMOs")$190,037 $1,638 $(1,136)$190,539 
Commercial MBS and CMOs418,930 4,508 (1,521)421,917 
Agency bonds10,914 260  11,174 
Other asset backed securities ("ABS")29,220 32 (72)29,180 
Total available for sale debt securities$649,101 $6,438 $(2,729)$652,810 
At December 31, 2020:
Government and Government Sponsored Entities:
Residential MBS and CMOs$213,279 $3,459 $(14)$216,724 
Commercial MBS and CMOs355,963 6,337 (312)361,988 
Agency bonds14,998 69 (45)15,022 
Total available for sale debt securities$584,240 $9,865 $(371)$593,734 
Net unrealized gains on available for sale investment securities are recorded as accumulated other comprehensive income within stockholders’ equity and totaled $2.6 million and $6.7 million, net of $1.1 million and $2.8 million in tax liabilities, at September 30, 2021 and December 31, 2020, respectively. There were no sales or transfers of available for sale investment securities and no realized gains or losses on these securities during the three or nine months ended September 30, 2021 or 2020.

The following tables summarize the gross unrealized losses and fair value of available for sale debt securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position:
September 30, 2021
Less than 12 Months12 Months or MoreTotal
(Dollars in thousands)Fair ValueUnrealized LossesFair ValueUnrealized LossesFair ValueUnrealized Losses
Government and Government Sponsored Entities:
Residential MBS and CMOs$88,252 $(1,133)$310 $(3)$88,562 $(1,136)
Commercial MBS and CMOs130,803 (1,509)11,694 (12)142,497 (1,521)
Other ABS23,851 (72)  23,851 (72)
Total available for sale debt securities$242,906 $(2,714)$12,004 $(15)$254,910 $(2,729)
At September 30, 2021, the Company held 88 residential MBS and CMOs of which 11 were in a loss position and five had been in a loss position for twelve months or more. The Company held 53 commercial MBS and CMOs of which 14 were in a loss position and two had been in a loss position for twelve months or more. The Company held three other ABS of which two were in a loss position and none had been in a loss position for twelve months or more.
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December 31, 2020
Less than 12 Months12 Months or MoreTotal
(Dollars in thousands)Fair ValueUnrealized LossesFair ValueUnrealized LossesFair ValueUnrealized Losses
Government and Government Sponsored Entities:
Residential MBS and CMOs$14,193 $(12)$4,248 $(2)$18,441 $(14)
Commercial MBS and CMOs33,986 (37)37,194 (275)71,180 (312)
Agency bonds3,331 (8)8,667 (37)11,998 (45)
Total available for sale debt securities$51,510 $(57)$50,109 $(314)$101,619 $(371)
At December 31, 2020, the Company held 86 residential MBS and CMOs of which 11 were in a loss position and six had been in a loss position for twelve months or more. The Company held 46 commercial MBS and CMOs of which ten were in a loss position and six had been in a loss position for twelve months or more. The Company held three agency bonds of which two were in a loss position and one had been in a loss position for twelve months or more.
The unrealized losses on the Company’s investments were caused by interest rate changes. In addition, the contractual cash flows of these investments are guaranteed by the U.S. government or agencies sponsored by the U.S. government. Accordingly, it is expected that the securities will not be settled at a price less than amortized cost. Because the decline in market value is attributable to changes in interest rates but not credit quality, and because the Company has the ability and intent to hold those investments until a recovery of fair value, which may be maturity, the Company does not consider these investments to be other-than-temporarily impaired at September 30, 2021 or December 31, 2020.
As of September 30, 2021 and December 31, 2020, 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 table summarizes the amortized cost and estimated fair value of held to maturity investment securities as of the dates indicated:
(Dollars in thousands)Amortized CostGross Unrecognized GainsGross Unrecognized LossesEstimated Fair Value
As of September 30, 2021:
Government Sponsored Entities:
Residential MBS$4,085 $222 $ $4,307 
Other investments70   70 
Total held to maturity investment securities$4,155 $222 $ $4,377 
As of December 31, 2020:
Government Sponsored Entities:
Residential MBS$7,391 $403 $ $7,794 
Other investments76   76 
Total held to maturity investment securities$7,467 $403 $ $7,870 
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The following table summarizes the scheduled maturities of available for sale and held to maturity investment securities as of September 30, 2021:
September 30, 2021
(Dollars in thousands)Amortized CostFair Value
Available for sale debt securities
Five to ten years$7,914 $8,056 
Beyond ten years3,000 3,118 
MBS, CMOs and other ABS638,187 641,636 
Total available for sale debt securities$649,101 $652,810 
Held to maturity investments securities
Beyond ten years$70 $70 
MBS4,085 4,307 
Total held to maturity debt securities$4,155 $4,377 
The amortized cost and fair value of debt securities are shown by contractual maturity. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. As such, mortgage backed securities, collateralized mortgage obligations and other asset backed securities are not included in the maturity categories above and instead are shown separately. No securities were pledged as of September 30, 2021 or December 31, 2020.

Equity Securities

Equity securities consist of investments in a qualified community reinvestment fund. At September 30, 2021 and December 31, 2020, the fair value of equity securities totaled $11.8 million and $12.0 million, respectively. Changes in fair value are recognized in other noninterest income. During the three and nine months ended September 30, 2021, the fair value of these investments decreased $55 thousand and $233 thousand, respectively, compared to no change in fair value and an increase in fair value of $288 thousand, respectively, during the three and nine months ended September 30, 2020. There were no sales of equity securities during the three or nine months ended September 30, 2021 or 2020.
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3.     LOANS
Loans consist of the following:
(Dollars in thousands)September 30,
2021
December 31,
2020
Permanent mortgages on:
Multifamily residential$4,226,685 $4,100,831 
Single family residential1,908,297 1,723,953 
Commercial real estate193,224 202,871 
Construction and land loans15,655 22,061 
Non-Mortgage (‘‘NM’’) loans 100 
Total6,343,861 6,049,816 
Allowance for loan losses(37,335)(46,214)
Loans held for investment, net$6,306,526 $6,003,602 

Certain loans have been pledged to secure borrowing arrangements (see Note 7).
During the nine months ended September 30, 2021, the Company purchased a pool of performing, fixed rate single family residential loans. The pool had an aggregate principal balance of $287.8 million and contained loans with a weighted average interest rate and maturity of 2.31% and 26.4 years, respectively.
14

The following